Resolute Mining Limited — Interim / Quarterly Report 2006

Mar 7, 2006

ASX ANNOUNCEMENT

HALF YEAR REPORT

31 DECEMBER 2005

INCOME STATEMENT

Resolute Mining Limited's consolidated net loss before tax and unrealised treasury losses for the half year ended 31 December 2005 is $2.0m (half year ended 31 December 2004 : $11.8m profit).

The total Resolute Mining group gold production for the half year was 146,494 ounces at an average cash cost of $499/oz. The Golden Pride gold mine in Tanzania, produced 74,351 ounces of gold in the 6 months ended 31 December 2005 at a cash cost of $396/oz (or US$296/oz) and the Ravenswood gold mine in Queensland, Australia. produced 72,143 ounces of gold at a cash cost of $606/oz (or US$454/oz).

The average accounting revenue price achieved per ounce of gold shipped during the period was $592/oz.

The consolidated net loss after tax and unrealised treasury losses of $47.9m has been adversely impacted by the $46.2m charge relating to unrealised treasury losses. As previously announced on 3 January 2006, due to the introduction on 1 July 2005 of the new Australian equivalents to International Financial Reporting Standards (AIFRS), Resolute has been required to charge to its Income Statement the change in the fair value of certain of its financial instruments.

It is important to understand that this is simply a change to the accounting treatment of these instruments and the vast majority of the unrealised loss in this period will be fully reversed in future periods through the reporting of higher than realised profits in those periods. This situation arises as a number of the financial instruments entered into by Resolute Mining do not meet the strict criteria to be classified as "effective hedges". Movements in the fair value of the effective hedges are not required to be accounted for through the Income Statement.

CASH AND BORROWINGS

As at 31 December 2005, Resolute Mining had $14.8m of cash and bullion and liquid investments (including its 83% interest in Valhalla Uranium Ltd) with a market value at that time of $57m. Borrowings at period end totalled $27.1m.

The net operating cashflow reported in the Condensed Statement of Cash Flows of negative $16.7m included the investment of $7m into the cut backs at Ravenswood and Golden Pride, a further investment of $6m purchasing longer term gold put options, a $4m increase in gold in circuit and a $3m reduction in trade creditors. Other cash reserves were reinvested into growth opportunities associated with the feasibility work at Syama, exploration in Australia. Tanzania. Mali and Ghana, and capital expenditure at Ravenswood and Golden Pride.

HEDGING

Details of Resolute's financial instruments have been provided in the recent December 2005 quarterly report. Resolute has flexibility in its hedging lines to roll out to subsequent years the vast majority of its forward sales contracts and call options maturing in the period ending 30 June 2006. Approximately 20% of Resolute's reserves have been committed to hedging contracts, with the remaining 80% of its gold reserves fully participating in upward movements in the gold price.

OUTLOOK

Operations

Golden Pride is a mature operation that has consistently delivered above or in line with expectation. A stronger performance is anticipated in the coming half as a result of the planned mining of higher-grade sections of the orebody. This may be possibly offset by a need to lower throughput levels should the current drought conditions in Tanzania persist.

The re-optimisation of the Golden Pride pit has recently been completed and this has resulted in an increase of around 680,000 ounces to the mineable gold resources and an extension of mine life out to eight years.

Ravenswood's gold production and cash costs for the second half are expected to be better than that achieved in the first half. This results from the better grade "Bell" zone ore body being exposed following completion of the cutback in the Sarsfield pit.

Project Development

The Syama Gold Project in Mali has the potential to deliver a third long life gold mine to the Resolute group. An update of the feasibility study completed in April 2005 incorporating the results of a number of activities carried out over the last six months is currently being prepared and the results of this work will be finalised in this quarter. Following this full reassessment of the project, the Company is expecting to then make a decision on further progress of the project.

As announced in January, a decision to develop the Mt Wright underground deposit at Ravenswood was made. The Mt Wright Feasibility Study, which was completed during the December quarter, shows a strongly cash positive project with around 650,000 ounces of gold recoverable over an eight year mine life at an average cash cost of approximately $336 per ounce. Design work and equipment procurement has commenced and major site works are scheduled to start in July 2006. First production ore is anticipated in late 2007.

Exploration

The company has invested strongly in exploration of the very prospective tenure around each of its key assets. This has seen good results at Golden Pride on the south side of the pit. Also, the Tabakoroni project in Mali continues to show promise. Further high grade intersections near the Buck Reef West and Sarsfield mines at Ravenswood increase the potential additional underground resource there.

The intensive exploration programs in these areas will continue at the same pace in the second half of the year with a number of promising targets still to be tested.

Overall, reserve upgrades and mine life extensions at Golden Pride and Ravenswood and the pending development of the Syama gold mine leave Resolute well placed to benefit from the strong gold price.

This report together with other general information on the Company and Quarterly Reports are available at www.resolute-ltd.com.au

PETER SULLIVAN Chief Executive Officer

8 March 2006

APPENDIX 4D

REPORTING PERIOD

The reporting period is the half year ended 31 December 2005 with the corresponding reporting period being for the half year ended 31 December 2004.

RESULTS FOR ANNOUNCEMENT TO THE MARKET

Results			A$'000
Revenues from continuing operations	down	3.5%	86,230
Loss from continuing operations before treasury and tax	down	n/a	(1,991)
Loss after tax attributable to members from continuing operations	down	n/a	(47,909)
Net loss for the period attributable to members	down	n/a	(47,909)

Dividends	Amount persecurity	Franked amountper security
Final dividend	n/a	n/a
Interim dividend - no interim dividend is proposed	n/a	n/a
Record date for determining entitlements to the dividend	n/a

This half yearly report should be read in conjunction with the most recent annual financial report.

TABLE OF CONTENTS

Directors' Report	1
Condensed Income Statement	3
Condensed Balance Sheet	4
Condensed Statement of Cash Flows	5
Condensed Statement of Changes in Equity	6
Notes to the Financial Statements	7
Directors' Declaration	25
Auditor's Independence Declaration	26
Independent Review Report	27

DIRECTORS' REPORT

Your directors submit the report of Resolute Mining Limited for the half year ended 31 December 2005.

Directors

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

Peter Ernest Huston (Non-Executive Chairman) Peter Ross Sullivan (Chief Executive Officer) Thomas Cummings Ford (Non-Executive Director) Henry Thomas Stuart Price (Non-Executive Director)

Results

Consolidated entity loss from ordinary activities after tax and outside equity interests for the half year was $47,909,081 (2004: $9,995,000 profit).

Review of Operations

(a) Production

The total Resolute Mining Limited group gold production for the half year ended 31 December 2005 was 146,494 ounces (2004: 164,239) at an average cash cost of A$499/oz (or US$374/oz) (2004: A$398/oz or US$292/oz). The total production for the group for the half year ended 31 December 2005 came from the Golden Pride Mine and the Ravenswood Mine.

Golden Pride Mine

The Golden Pride mine in Tanzania produced 74.351 ounces of gold in the 6 months ended 31 December 2005 at a cash cost of A$396/oz (or US$296/oz) compared to gold production of 72,364 ounces at a cash cost of A$355/oz (or US$261/oz) in the 6 months ended 31 December 2004.

Ravenswood Gold Mine

The Ravenswood mine in Queensland, Australia, produced 72,143 ounces of gold in the 6 months ended 31 December 2005 at a cash cost of A$606/oz (or US$454/oz) compared to gold production of 91,875 ounces at a cash cost of A$431/oz (or US$316/oz) in the 6 months ended 31 December 2004.

(b) Exploration and Development

Exploration programs undertaken during the half year under review concentrated on advancing Resolute's range of exploration properties located in Australia, Tanzania, Mali, and Ghana and a variety of encouraging results were generated.

Syama

During the period, progress was made on a range of aspects associated with the Syama project. These activities were targeted at enhancing the project and moving it towards a development decision.

Feasibility Update

An update of the existing feasibility study has commenced incorporating the results of activities conducted during the last six months, any potential escalation of capital and operating costs since its completion in April 2005, and the impact of higher gold prices. The update is expected to be completed during the March 2006 quarter enabling a reassessment of the project to be made.

Mt Wright

The Company recently announced the development of the Mt Wright underground ore body at Ravenswood. Design work and equipment procurement is to commence in the March 2006 quarter with major site works scheduled to start in July 2006. First production ore is anticipated in late 2007.

Uranium Assets

The Company completed a separate listing of its uranium assets through its subsidiary, Valhalla Uranium Ltd after completing an $8 million Initial Public Offer.

Significant Events after the Balance Date

Subsequent to balance date, the Golden Pride minable gold resources have been increased and the life of mine has been extended as a result of a pit re-optimization study being completed.

Auditor's Independence Declaration

The Auditor's Independence Declaration to the directors of Resolute Mining Limited on page 26 forms part of the Directors' Report for the half year ended 31 December 2005.

Rounding

Resolute Mining Limited is a company of the kind specified in Australian Securities & Investments Commission Class Order 98/0100. In accordance with that class order, amounts in the financial report have been rounded to the nearest thousand dollars unless specifically stated to be otherwise.

Signed in accordance with a resolution of the directors.

P.R. Sullivan Director

Perth, Western Australia 8 March 2006

CONDENSED INCOME STATEMENT

for the half year ended 31 December 2005

	Note		Consolidated
		For the halfyear ended31-Dec-05$'000	For the halfyear ended31-Dec-04$'000
Continuing Operations
Revenue from gold sales	f(a)	83.935	86,325
Cost of sales	f(b)	(81,220)	(75,058)
Gross profit		2,715	11,267
Other income	1(c)	2,296	3,066
Other expenses	t(d)	(5,671)	(1,466)
Profit/(loss) from continuing operations before treasury, tax and finance costs		(660)	12,867
Finance costs	f(e)	(1, 331)	(1,065)
Profit/(loss) before treasury and tax		(1,991)	11,802
Treasury - unrealised gains/(losses)		(46, 166)
Profit/(loss) before tax		(48, 157)	11,802
Income tax benefit/(expense)		247	(1,895)
Profit/(loss) from continuing operations after income tax		(47, 910)	9,907
Net loss attributable to outside equity interests		Ť.	88
Net profit/(loss) attributable to members of Resolute Mining Limited		(47,909)	9,995
Basic earnings per share for profit for the half year (cents per share)		(21.0)	5.6
Diluted earnings per share for profit for the half year (cents per share)		(20.8)	5.0

Maritim ammoonmedSelbork (2, 2, 5)Ad 12-1 super (2, 7)A 3 6 7 3 7 7 7 (3)

HALF YEAR REPORTfor the period ended 31 December 2005

CONDENSED BALANCE SHEET

as at 31 December 2005

	Consolidated
	As at31-Dec-05$'000	As at30-June-05$'000
CURRENT ASSETS
Cash and cash equivalents	12,217	36,144
Receivables	15,762	13,053
inventories	27,430	24,990
Financial derivative assets	455
Deferred expenditureOther	8,3462,878	2,8571,777
TOTAL CURRENT ASSETS	67,088	78,821
NON-CURRENT ASSETS
Receivables	22	35
Available for sale financial assetsOther financial assets	10,018
Financial derivative assets	5,617	7,054
Mineral exploration and development interests	62,715	53,730
Property, plant and equipment	83,069	85,714
Deferred expenditure	31,366	39.171
Other		1,622
TOTAL NON-CURRENT ASSETS	192,807	187,326
TOTAL ASSETS	259,895	266,147
CURRENT LIABILITIES
Pavables	22,000	25,032
Interest bearing liabilities	19,604	18,199
Tax liabilities	288	103
Financial derivative liabilitiesProvisions	24,4273,326	8,290
TOTAL CURRENT LIABILITIES	69,645	51,624
NON-CURRENT LIABILITIES
Payables		1,581
Interest bearing liabilities	7,282	11,994
ProvisionsFinancial derivative liabilities	24,812	30,563
Deferred tax liabilities	42,7377,296	7,379
TOTAL NON-CURRENT LIABILITIES	82,127	51,517
TOTAL LIABILITIES	151,772	103,141
NET ASSETS	108,123	163,006
EQUITY
Parent entity interest:
Contributed equity	112,607	112,483
Reserves	(16, 848)	(3,489)
Retained profits	3,084	52,757
Parent entity interest in equity	98,843	161,751
Outside equity interests:	9,280	1,255
	108,123	163,006

BE SERVICE IN FIRM OFControl de CalReceived Street		HALF YEAR REPORT
	for the period ended 31 December 2005
CONDENSED STATEMENT OF CASH FLOWS
for the half year ended 31 December 2005
	Consolidated
	For the halfyear ended	For the halfyear ended
	31-Dec-05	31-Dec-04
	$$^*000$	$000
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers	74,499	88,583
Payments to suppliers and employeesInterest received	(90.967)608	(79, 432)205
Interest and other costs of finance paid	(781)	(806)
Income taxes paid	(106)	(519)
Net operating cash flows	(16.747)	8,031
CASH FLOWS FROM INVESTING ACTIVITIES
Payment for property, plant and equipment	(4,032)	(6,938)
Proceeds from sale of plant and equipment	31	88
Payments for investments		(300)
Proceeds from sale of investmentsProceeds on sale of exploration properties	250	3
Expenditure on exploration and development areas	(9,454)	(11,007)
Royalties received	846
Net investing cash flows	(12.359)	(18, 154)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issues of securities	8.118	109
Cost of issuing securities	(2)	(4)
Proceeds from borrowings		3,151
Repayment of borrowingsRepayment of lease liability	(4, 152)	(42)
	(147)
Net financing cash flows	3,817	3,214
Net increase in cash held	(25.289)	(6,909)
Cash assets held at the beginning of the period	36,144	13,362
Exchange rate adjustment	1,362	(2, 106)

Page 5

HALF YEAR REPORTfor the period ended 31 December 2005

CONDENSED STATEMENT OF CHANGES IN EQUITY

for the half year ended 31 December 2005

	fasuadCapital	RatainadEamings	Foreign CurrencyTranslationReserve	Hedge RosorvePut Options	Hedge ReserveForwards	OtherReserves	OutsideEquity Interest	TotalEquity
	$'000	$'000	$'000	$'000	$'000	$'000	$'000	$'000
As at 1 July 2005	112,483	50,993	(3,757)	(4, 834)	(18,083)	11,927	1,255	149,984
Exercise of options	126							126
Share issue costs	(2)		٠				ä,	(2)
Currency translation differences			960					960
Share option reserve						101		101
Hadge reserve put options				860				038
Hadge reserve forwards					(3,963)			(3,963)
Unrealised gains/(fosses) reserve						(59)		(69)
DE1 movement in share capital							8,000	8,000
DE1 movement in reserves							255	266
DE1 movement in retained profits							(229)	(229)
Total income/(expense) for the period recogniseddirectly in equity.	124		960	860	(3,963)	42	8,026	6,049
Loss for the period		(47, 909)	٠	$\cdot$		٠	(1)	(47, 910)
Total income/(expense) for the period	124	(47, 909)	960	860	(3,963)	42	8,025	(41, 861)
As at 31 December 2005	112,607	3,084	(2,797)	(3,974)	(22,046)	11,969	9,288	108,123
As at 1 July 2004	71,442	39,564					1,511	112,517
Exercise of options	109							109
Share issue costs	(4)							(4)
Currency translation differences			(6,085)					(6,085)
DE1 movement in reserves							(99)	(99)
Total income/(expense) for the period recogniseddirectly in equity	105		(6,085)				(99)	(6,079)
Profit for the period		9,995					(8.9)	9,907
Total income/(expense) for the period	105	9,995	(6,085)				(187)	4,828
As at 31 December 2004	71,547	49,559	(5,085)				1,324	117,345

for the half year ended 31 December 2005

		ConsolidatedFor the halfyear ended31-Dec-05$'000	For the halfyear ended31-Dec-04$'000
NOTE 1	PROFIT/(LOSS) FROM CONTINUING OPERATIONS
(a)	Revenues from gold sales
	Gold sales	83,935	86,325
(b)	Cost of sales
	Cost of productionAmortisation of exploration & development costsDepreciation of mine properties, plant & equipmentRoyaltyOperational support costsOther cost of salesTotal cost of sales	69,4141,5646,3292,88176926381,220	64.0292.3885.7642.365709(197)75.058
(c)	Other incomeProfit on sale of plant and equipmentProfit on sale of investmentsInterest income - other persons/corporationsNet option premiumRoyalty incomeOther incomeTotal other income	246111,0745872,296	7532052.423$\ddot{}$3603.066
(d)	Other expenses from ordinary activitiesManagement and administration expensesInsurance costsOperating lease expenseForeign exchange gainWrite down of mineral exploration and development costsDepreciation of non mine site assetsRealised loss on sold call optionsPut option expenseOtherTotal other expenses from ordinary activities	1,367228184(63)146542.7338471755,671	1.123234252(1, 272)219518591.466
(e)	Borrowing costsInterest and fees paid/payable to other entitiesRehabilitation provision discount adjustmentTotal borrowing costs	1,1042271,331	1.004611.065

HALF YEAR REPORT For the period ended 31 December 2005

NOTES TO THE FINANCIAL STATEMENTS

For the half vear ended 31 December 2005

NOTE 2: SUMMARY OF ACCOUNTING POLICIES

Basis of Preparation

The half year financial report does not include all notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the consolidated entity as the full financial report.

The half year financial report should be read in conjunction with the Annual Financial Report of Resolute Mining Limited as at 30 June 2005, which was prepared based on Australian Accounting Standards applicable before 1 July 2005 ("AGAAP").

It is also recommended that this report be considered together with any public announcements made by Resolute Mining Limited and its controlled entities during the half year ended 31 December 2005 in accordance with the continuous disclosure obligations of the Corporations Act 2001 and Stock Exchange Listing Rules.

Basis of Accounting

The half year financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, applicable Accounting Standards including AASB 134 "Interim Financial Reporting" and other mandatory professional reporting requirements.

The half year financial report has been prepared on a historical cost basis, except for derivative financial instruments and available-for-sale financial assets that have been measured at fair value.

For the purpose of preparing the half year financial report, the half year has been treated as a discrete reporting period.

Statement of Compliance

The half vear financial report complies with Australian Accounting Standards, which include Australian equivalents to International Financial Reporting Standards ('AIFRS'). Compliance with AIFRS ensures that the half year financial report, comprising the financial statements and notes thereto, complies with International Financial Reporting Standard IAS 34 "Interim Financial Reporting".

This is the first half year financial report prepared based on AIFRS and comparatives for the half year ended 31 December 2004 and full year ended 30 June 2005 have been restated accordingly except for the accounting policies in respect of financial instruments. A summary of the significant accounting policies of the consolidated entity under AIFRS are disclosed below.

Reconciliation of:

• AIFRS equity as at 1 July 2004, 31 December 2004 and 30 June 2005; and
• AIFRS profit of the half year 31 December 2004 and full year ended 30 June 2005,

to the balances prepared in the 31 December 2004 half year report and 30 June 2005 full year financial report prepared under AGAAP are detailed in Note 6.

For the half year ended 31 December 2005

Statement of Compliance (continued)

From 1 July 2005, the Group elected to take the exemption under AASB 1 "First-Time Adoption of Australian Equivalents to International Reporting Standards" to apply AASB 139 "Financial Instruments: Recognition and Measurement" from 1 July 2005. Accordingly, comparatives have not been restated. For information on previous accounting policies, refer to the 2005 annual financial report under previous AGAAP.

Basis of Consolidation

The consolidated financial statements include the financial statements of the parent entity Resolute Mining Limited, and its controlled entities, referred to collectively throughout these financial statements as the "consolidated entity".

The financial statements of controlled entities are prepared for the same reporting period as the parent entity, using consistent accounting policies.

Financial statements of foreign controlled entities presented in accordance with overseas accounting principles are, for consolidation purposes, adjusted where necessary to comply with group policy and AIFRS. Adjustments are also made to bring into line any dissimilar accounting policies that may exist.

All intercompany balances and transactions, including unrealised profits arising from intra-group transactions, have been eliminated in full. Unrealised losses are eliminated unless costs cannot be recovered.

Controlled entities are consolidated from the date on which control is transferred to the consolidated entity and cease to be consolidated from the date on which control is transferred out of the consolidated entity.

Foreign Currency Translation

Both the functional and presentation currency of Resolute Mining Limited and its Australian subsidiaries is Australian dollars (A$).

Transactions in foreign currencies are initially recorded in the functional currency at the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance sheet date.

Tax charges and credits attributable to exchange differences on those borrowings are also recognised in equity.

The functional currency of all the overseas subsidiaries is United States dollars (US$).

As at the reporting date the assets and liabilities of these overseas subsidiaries are translated into the presentation currency of Resolute Mining Limited at the rate of exchange ruling at the balance sheet date and the income statements are translated at the weighted average exchange rates for the period.

The exchange differences arising on the retranslation are taken directly to a separate component of equity - included as part of reserves.

On disposal of a foreign entity, the deferred cumulative amount in equity in relation to that particular operation is recognised in the income statement.

HALF YEAR REPORT For the period ended 31 December 2005

NOTES TO THE FINANCIAL STATEMENTS

For the half year ended 31 December 2005

Property, Plant and Equipment

$(a)$ Cost and Valuation

Property, plant and equipment are stated at cost less any accumulated depreciation and any impairment in value.

The cost of an item of property, plant and equipment comprises:

• Its purchase price, including import duties and non refundable purchase taxes, after deducting trade discounts and rebates;
• Any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management; and
• The initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located.

$(b)$ Depreciation

Depreciation is provided on a straight-line basis on all property plant and equipment other than land. Major depreciation periods are:

	Life	Method
Motor vehicles	3 years	straight line
Office equipment	3 years	straight line
Plant and equipment	6 years	straight line

$\left( c\right)$ Impairment

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.

For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets or cash-generating units are written down to their recoverable amount.

The recoverable amount of plant and equipment is the greater of the fair value less costs to sell and value in use. 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.

HALF YEAR REPORT For the period ended 31 December 2005

NOTES TO THE FINANCIAL STATEMENTS

For the half year ended 31 December 2005

Mineral Exploration and Development Costs

(a) Areas in Exploration and Evaluation

Exploration and evaluation costs related to an area of interest are carried forward only when rights of tenure to the area of interest are current and provided that one of the following conditions is met:

• such costs are expected to be recouped through successful development and exploitation of the area of interest, or alternatively by its sale; or
• exploration and/or evaluation activities in the area of interest have not yet reached a state which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area are continuing.

Costs carried forward in respect of an area of interest that is abandoned are written off in the year in which the decision to abandon is made.

$(b)$ Areas in Development

Areas in development represent the costs incurred in preparing mines for production. The costs are carried forward to the extent that these costs are expected to be recouped through the successful exploitation of the Company's Mining Leases.

$(c)$ Areas in Production

Areas in production represent the accumulation of all exploration, evaluation and development expenditure incurred by or on behalf of the entity in relation to areas of interest in which mining of a mineral resource has commenced. Amortisation of costs is provided on the unit-of-production method, with separate calculations being made for each mineral resource. The unit-of-production basis results in an amortisation charge proportional to the depletion of the economically recoverable mineral resources.

The net carrying value of each mine property is reviewed regularly and, to the extent to which this value exceeds its recoverable amount, that excess is fully provided against in the financial year in which this is determined.

Deferred Mining Costs

Periodically, pre-strip and waste removal costs are incurred to enable mining of a new resource or a substantial re-design of a current pit. These pre-strip costs are deferred and amortised over the remaining life of the particular pit in accordance with the life of the pit strip ratio.

Joint Venture Operations

Interests in joint venture operations are brought to account by including in the respective classifications, the share of the individual assets employed and share of liabilities and expenses incurred.

For the half vear ended 31 December 2005

Leased Assets

Finance leases, which effectively transfer to the consolidated entity all of the risks and benefits incidental to ownership of the leased item, are capitalised at the present value of the minimum lease payments, disclosed as leased property, plant and equipment, and amortised over the period the consolidated entity is expected to benefit from the use of the leased assets. Lease payments are allocated between interest expense and reduction in the lease liability.

Operating lease payments where the lessor effectively retains substantially all of the risks and benefits of ownership of the leased items, are included in the determination of profit from ordinary activities in equal instalments over the lease term.

Recoverable Amount of Assets

At each reporting date, the Group assesses whether there is any indication that an asset may be impaired.

Where an indicator of impairment exists, the Group makes a formal estimate of recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount the asset is considered impaired and is written down to is recoverable amount.

Recoverable amount is the greater of fair value less costs to sell and value in use. It is determined for an individual asset, unless the asset's value in use cannot be estimated to be close to its fair value less costs to sell and it does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case, the recoverable amount is determined for the cashgenerating unit to which it belongs.

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 that asset.

Borrowing Costs

Borrowing costs may be either expensed in the period they are incurred, or where the borrowing costs incurred are directly associated with the construction, purchase or acquisition of a qualifying asset, the borrowing costs may be capitalised as part of the cost of the asset.

Available-for-Sale Financial Assets

The Group has taken the exemption available under AASB 1 to apply AASB 132 and AASB 139 from 1 July 2005. The Group has applied previous AGAAP in the comparative information on financial instruments within the scope of AASB 132 and AASB 139. For further information, refer to the 2005 annual financial report under previous AGAAP.

All investments are initially recognised at cost, being the fair value of the consideration given including acquisition charges associated with the investment.

HALF YEAR REPORT For the period ended 31 December 2005

NOTES TO THE FINANCIAL STATEMENTS

For the half year ended 31 December 2005

Available-for-Sale Financial Assets (continued)

After initial recognition, investments, which are classified as available for sale, are measured at fair value. Gains or losses on available-for-sale investments are recognised as a separate component of equity until the investment is sold, collected or otherwise disposed of, or until the investment is determined to be impaired, at which time the cumulative gain or loss previously reported in equity is included in the income statement.

For investments that are actively traded in organised financial markets, fair value is determined by reference to Stock Exchange quoted market bid prices at the close of business on the balance sheet date.

Inventories

Gold in circuit and stockpiles of unprocessed ore have been valued at the lower of cost and estimated net realisable value. In determining costs, an absorption basis is used including variable costs and an appropriate portion of fixed overheads. Average costs over the relevant period of production are assigned to balance date inventory quantities. Consumables have been valued at cost less an appropriate provision for obsolescence. Cost is determined on a first-in-first-out basis.

Amounts Receivable

Trade receivables are recognised and carried at original invoice amount less a provision for any uncollectible debts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred.

Receivables from related parties are recognised and carried at the nominal amount due. Where interest is charged it is taken up as income on an accruals basis.

Cash and Cash Equivalents

For the purposes of the Statement of Cash Flows, cash includes cash on hand and at financial institutions at call.

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 consolidated entity.

Payables to related parties are carried at the principal amount. Interest, when charged by the lender, is recognised as an expense on an accruals basis.

Interest-Bearing Loans and Borrowings

All loans and borrowings are initially recognised at cost, being the fair value of the consideration received net of issue costs associated with the borrowing.

After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. Amortised cost is calculated by taking into account any issue costs, and any discount or premium on settlement.

Gains and losses are recognised in the income statement when the liabilities are derecognised and as well as through the amortisation process. Also, refer to "Borrowing Costs" on the previous page.

For the half year ended 31 December 2005

Provisions

Provisions are recognised when the Group has a present obligation 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.

If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

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

Provisions for Site Restoration

The consolidated entity records the present value of the estimated cost of legal and constructive obligations (such as those under the consolidated entity's Environmental Policy) to restore operating locations in the period in which the obligation is incurred. The nature of restoration activities includes dismantling and removing structures, rehabilitating mines, dismantling operating facilities, closure of plant and waste sites and restoration, reclamation and revegetation of affected areas.

Typically the obligation arises when the asset is installed at the production location. When the liability is initially recorded, the estimated cost is capitalised by increasing the carrying amount of the related mining assets. Over time, the liability is increased for the change in the present value based on the discount rates that reflect the current market assessments and the risks specific to the liability. Additional disturbances or changes in rehabilitation costs will be recognised as additions or changes to the corresponding asset and rehabilitation liability when incurred.

The unwinding of the effect of discounting on the provision is recorded as a finance cost in the income statement. The carrying amount capitalised is depreciated over the life of the related asset.

Employee Entitlements

Provision is made for employee benefits accumulated as a result of employee services up to the reporting date. These employee benefits include wages and salaries, annual leave, and long service leave, and include related on-costs such as superannuation, payroll tax and workers compensation insurance.

Provision for annual leave and the current portion of long service leave together with the associated employment on-costs are measured at their nominal amounts based on remuneration rates expected to be paid when the liability is settled. The non-current portions of long service leave and its associated employment on-costs are measured at the present value of estimated future cash flows. No provision is made for non-vesting sick leave as the anticipated pattern of future sick leave taken indicates that accumulated non-vesting leave will never be paid.

Contributions to defined contribution superannuation plans are expensed as incurred.

Share-Based Payment Transactions

An employee option plan has been established where certain directors, executives and members of staff of the consolidated entity are issued with options over the ordinary shares of Resolute Mining Limited.

HALF YEAR REPORT For the period ended 31 December 2005

NOTES TO THE FINANCIAL STATEMENTS

For the half year ended 31 December 2005

Share-Based Payment Transactions (continued)

The cost of these option ownership schemes with employees is measured by reference to the fair value at the date at which the options are granted. The fair value of options granted is recorded as an expense on a straight line basis over the vesting period of the option. The cost of options granted is recognised, together with a corresponding increase in an "option reserve", over the period in which the performance conditions are fulfilled, ending on the date on which the relevant employees became fully entitled to the options ("vesting date").

The fair value is determined by using the Binomial option pricing model.

Leases

Finance leases, which transfer to the consolidated entity substantially all the risks and benefits incidental to the ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments.

Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charges directly against income.

Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiation of an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as the lease income.

Operating lease payments are recognised as an expense in the income statement on a straight-line basis over the lease term.

Revenue

Gold sales

Revenue from production of gold is recognised when the product is shipped from the mine site and all the risks and benefits of ownership have passed to the buyer.

Sale of assets

Revenue from the sale of assets is recognised when control of the goods has passed to the buyer.

Interact

Interest revenue is recognised when control of the right to receive the interest payment is received.

Derivative Financial Instruments

The Group has taken the exemption available under AASB 1 to apply AASB 132 and AASB 139 from 1 July 2005. The Group has applied previous AGAAP in the comparative information on financial instruments within the scope of AASB 132 and AASB 139. For further information on previous AGAAP refer to the annual financial report for the year ended 30 June 2005.

The Group uses derivative financial instruments such as gold options, forward contracts and interest rate swaps to hedge its risks associated with commodity prices and interest rate fluctuations.

For the half year ended 31 December 2005

Derivative Financial Instruments (continued)

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value. The fair value of derivative financial instruments that are traded on an active market is based on quoted market prices at the balance sheet date. The fair value of financial instruments not traded on an active market is determined using appropriate valuation techniques.

At the inception of the transaction, the Group documents the relationship between hedge instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions have been and will continue to be highly effective in offsetting changes in fair values or cash flows of hedged items.

Cash Flow Hedges

The effective portion of changes in fair value of derivatives that are designated and qualify as cash flow hedges are recognised in equity in the hedging reserve. The gain or loss relating to the ineffective portion is recognised in the income statement immediately.

Amounts accumulated in equity are taken to the income statement in the periods when the hedged item will affect profit and loss, for instance when the forecast sale that is hedged takes place.

Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or no longer qualifies for hedge accounting. At that point in time, any cumulative gain or loss on the hedging instrument recognised in equity remains in equity until the forecasted transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in equity is transferred to the income statement for the year.

Interest rates

Interest rate swaps utilised to manage interest rate exposure are fair valued by reference to the market value of similar financial instruments with movements reported in the income statement where fair value hedge accounting criteria is not met.

Embedded derivatives

Embedded derivatives inherent in the Group's contracts that change the nature of a host contract's risk are separately recorded at fair value with movements reported in the income statement.

Income Tax

Deferred income tax is provided on all temporary differences at the balance sheet 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 where the deferred income tax liability arises from the initial recognition of an asset or $\bullet$ liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting nor taxable profit or loss; and
• in respect of taxable temporary differences associated with investments in subsidiaries and interests in joint ventures, except where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

For the half year ended 31 December 2005

Income Tax (continued)

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

• except where the deferred income tax asset relating to the deductible temporary differences ٠ 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 nor taxable profit or loss; and
• in respect of deductible temporary differences associated with investments in subsidiaries and $\bullet$ interests in joint ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

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 substantially enacted at the balance sheet date.

Goods and Services Tax

Revenues, expenses and assets are recognised net of the amount of GST except:

• where the GST incurred on the purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable: and
• receivables and payables are stated with the amount of GST included.

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

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

Contributed Equity

Issued and paid up capital is recognised at the fair value of the consideration received by the Company.

Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received.

For the half year ended 31 December 2005

Earnings Per Share ("EPS")

Basic EPS is calculated as net profit attributable to members, adjusted to exclude costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus element.

Diluted EPS is calculated as the net profit attributable to members, adjusted for:

• costs of servicing equity (other than dividends) and preference share dividends;
• the after tax effect of dividends and interest associated with dilutive potential ordinary shares $\overline{a}$ that have been recognised as expenses; and
• other non-discretionary changes in revenues or expenses during the period that would result $\overline{a}$ from the dilution of potential ordinary shares;

divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.

for the half year ended 31 December 2005

NOTE3 SUBSEQUENT EVENTS

Subsequent to balance date, the Golden Pride minable gold resources have been increased and the life of mine has been extended as a result of a pit re-optimization study being completed.

NOTE 4 CONTINGENT LIABILITIES

Since the last annual reporting date, there has been no material changes in any contingent liabilities.

NOTE 5 SEGMENT INFORMATION

Primary Segment - Geographical

The consolidated entity operates in four geographical segments.

2005

Geographical Segments	TanzaniaHalf Year 2005$A'000	GhanaHalf Year 2006$A'000	MaliHalf Year 2005$A'000	AustraliaHalf Year 2005$A'000	UnallocatedHalf Year 2005$A'000	ConsolidatedHalf Year 2005$A'000
Revenue
Sales to customersOther revenueSegment revenue	40,7534040,793	$\overline{a}$357357	$\overline{\phantom{a}}$	43.0596443,123	1231,8351,958	83,9352,29686,231
Results
Segment results	7.626	(18)		(20, 353)	(35, 412)	(48, 157)
Consolidated entity loss from ordinary activitiesbefore income tax benefit						(48, 157)
Income tax benefit						247
Consolidated entity loss from ordinary activitiesafter income tax benefit						(47,910)
2004
Geographical Segments	TanzaniaHalf Year 2004$A'000	GhanaHalf Year 2004$A'000	MaliHalf Year 2004$A'000	AustraliaHalf Year 2004$A'000	UnallocatedHalf Year 2004$A'000	ConsolidatedHalf Year 2004$A'000
Revenue
Sales to customersOther revenueSegment revenue	35,358(807)34,551	ŧ$\ddagger$	÷.	50,9673.87254.839		86,3253,06689.391
Results
Segment results	3,999	(1, 111)	$\overline{\phantom{a}}$	8.849	65	11,802
Consolidated entity profit from ordinary activities
before income tax expense						11,802
Income tax expense						(1,895)

HALF YEAR REPORT for the period ended 31 December 2005

NOTES TO THE FINANCIAL STATEMENTS

for the half year ended 31 December 2005

NOTE 6 IMPACT OF ADOPTING AUSTRALIAN EQUIVALENTS TO AIFRS

Introduction

From 1 July 2005, the consolidated entity prepares its financial statements in accordance with Australian Equivalents to International Financial Reporting Standards ("AIFRS"). Due to the requirement to publish comparative information for the previous corresponding period, the effective date for transition is 1 July 2004.

AASB 1 Transitional Exemptions

The rules for the first time adoption of AIFRS are set out in AASB 1 "First-Time Adoption of Australian Equivalents to International Reporting Standards". In general, a company is required to determine its AIFRS accounting policies and apply these retrospectively to determine its opening balance sheet at 1 July 2004 (Transitional Balance Sheet), under AIFRS. The standard allows a number of exemptions to this general principle to assist companies as they transition to reporting under AIFRS.

The consolidated entity has made its election in refation to the transitional exemptions allowed by AASB 1 "First-Time Adoption of Australian Equivalents to International Financial Reporting Standards" to:

• (1) Not restate comparative information for AASB 132 "Financial Instruments: Presentation and Disclosure" and AASB 139 "Financial Instruments Recognition and Measurement";
• (2) Not retrospectively apply AASB 3 "Business Combinations";
• (3) Use previous AGAAP revaluations of items of property, plant and equipment as deemed cost at the date of transition:
• (4) Restate the cumulative foreign translation differences that were disclosed as a component of equity at the date of transition to zero: and
• (5) Not apply AASB 2 "Share-Based Payment" to equity instruments that were granted after 7 November 2002 that vested before 1 January 2005.

Impact of Adoption of AIFRS

The impacts of adopting AIFRS on the total equity and profit after tax as reported under previous Australian Generally Accepted Accounting Principles ("AGAAP") are illustrated below.

(i) Reconciliation of total equity as presented under previous AGAAP to that under AIFRS

	Notes		CONSOLIDATED
		1-Jul-04$' 000	31-Dec-04$' 000	30-Jun-05$' 000
Total equity under previous AGAAP		115,178	120.307	165,790
Adjustments to equity:
Derecognition of revenue	(a)	(1,395)	(829)	(402)
Recognition of rehabilitation asset (net)	(b)	4.456	3.318	2.513
Recognition of provision for rehabilitation	(c)	(6, 558)	(5.568)	(4, 881)
Foreign currency translation reserve	(d)	(18, 810)	(19.096)	(18, 479)
Recognition of share-based payment expense	(e)	-		(268)
Tax effect of the above adjustments	(f)	836	117	(14)
		93.707	98.249	144.259
Adjustments to other reserves:
Foreign currency translation reserve	(d)	18,810	19.096	18.479
Option reserve	(e)			268
Total equity under AIFRS		112,517	117.345	163,006

(a) Under AASB 118 "Revenue", gold sales are recognised when the entity has transferred the significant risks and rewards of ownership to the buyer. This resulted in a change in the group's previous accounting policy which recognised revenue when the product is ready for dispatch to a gold refinery. The Group has elected to recognise revenue when the gold is shipped from the mine site.

(b) Under AASB 116 "Property, Plant and Equipment", the cost of property, plant and equipment includes the initial estimate of the costs of dismantling and removing the item and restoring the site in which it is located. This resulted in a change in the group's previous accounting policy which did not include the cost of dismantling and removing the item and restoring the site in which it is located when measuring property, plant and equipment. This asset is also subject to depreciation which is charged to the income statement over the life of mine.

HALF YEAR REPORT for the period ended 31 December 2005

$(850)$

12.744

$(720)$

9,995

NOTES TO THE FINANCIAL STATEMENTS

for the half year ended 31 December 2005

Adjustments to income tax expense

Profit under AIFRS

NOTE 6 IMPACT OF ADOPTING AUSTRALIAN EQUIVALENTS TO AIFRS (CONTINUED

(c) Under AASB 137 "Provisions, Contingent Liabilities and Contingent Assets", the rehabilitation provision should be measured of the Basic estimate of the expenditure required to settle the present obligation. This resulted in a change to the group'sprevious accounting policy which recognised the rehabilitation obligation required at the cessati gradually over the mine's life of production.

(d) Under AASB 1 "First-time Adoption of Australian Equivalents to International Financial Reporting Standards", the curriulative translation differences for all foreign operations are deemed to be zero and are netted off against opening retained earnings. Any subsequent transition (1 July 2004) movements are due to foreign currency movements adjusted AIFRS assets and liabilities.

(e) Share-based payment costs are charged to the income statement under AASB 2 "Share-based Payments", but not expensed under AGAAP.

(f) AASB 112 "Income Taxes" requires the Group to use a balance sheet liability method, rather than the income statement method which recognises deferred tax balances where there is a difference between the carrying value of an asset or liability and its tax base.

The above changes resulted in an increase in deferred tax liability under AIFRS as follows:

		CONSOLIDATED
	1-Jul-04$'000	31-Dec-04$ 000	30-Jun-05$'000
Retained earnings	836	117	(14)
Increase/(decrease) in deferred tax liability	836	117	(14)
(ii) Reconciliation of profit after tax under AGAAP to that under AIFRS
	Notes	CONSOLIDATEDHalf year ended31-Dec-04$' 000	CONSOLIDATEDYear ended30-Jun-05$.000
Profit after tax as previously reported		10,356	13,915
Revenue recognition	As above - (a)	566	993
Amortisation of rehabilitation asset	As above - (b)	(343)	(692)
Rehabilitation provision discount adjustment	А	(61)	(490)
Adjustments to rehabilitation expense	А	197	136
Recognition of share-based payment expense	As above - (e)		(268)

As above - (f)

(A) In addition to point (b) above, under AIRFS, the present value of rehabilitation obligations is recognised as a liability and the cost of future restoration is capitalised as part of the relevant project. The capitalised cost is depreciated over the life of the project and the provision is accreted periodically as the discounting of the liability unwinds. The unwinding of the discount is recorded as a finance cost. The impact at the end of each transitional period is to reduce the rehabilitation provision, reflecting the difference between the previously recorded value under AGAAP and the present value recorded under AIFRS.

for the half year ended 31 December 2005

NOTE 6 IMPACT OF ADOPTING AUSTRALIAN EQUIVALENTS TO AIFRS (CONTINUED)

(iii) Comparative information regarding financial instruments

The consolidated entity has elected not to restate comparative information for financial instruments withinthe scope of AASB 132 "Financial Instruments: Disclosure and Presentation" and AASB 139 "FinancialInstruments: Re

		Consolidated
	30-Jun2005$' 000	Effect ofadoption$' 000	1-Jul2005$' 000
CURRENT ASSETS
Cash and cash equivalents	36,144	$\qquad \qquad \blacksquare$	36.144
Receivables	13,053	$\overline{\phantom{a}}$	13.053
Inventories	24,990	L.	24.990
Financial derivative assets		215	215
Deferred expenditure	2.857		2.857
Other	1,777	$\overline{\phantom{a}}$	1,777
TOTAL CURRENT ASSETS	78,821	215	79.036
NON-CURRENT ASSETS
Receivables	35		35
Available for sale financial assets		9.504	9.504
Other financial assets	7.054	(7.054)
Financial derivative assets		19	19
Mineral exploration and development interests	53.730	$\overline{\phantom{a}}$	53.730
Property, plant and equipment	85,714	÷.	85,714
Deferred expenditureOther	39,1711,622	(1,622)	39,171
TOTAL NON-CURRENT ASSETS	187,326	847	188.173
TOTAL ASSETS	266,147	1.062	267,209
CURRENT LIABILITIES
Payables	25,032	$\overline{\phantom{a}}$	25.032
Interest bearing liabilities	18,199	÷,	18.199
Tax liabilities	103		103
Financial derivative liabilitiesProvisions	8.290	11.252	11.2528.290
TOTAL CURRENT LIABILITIES	51,624	11,252	62,876
NON-CURRENT LIABILITIES
Payables	1,581	÷,	1.581
Interest bearing liabilities	11,994	$\overline{\phantom{a}}$	11.994
Provisions	30,563		30.563
Financial derivative liabilitiesDeferred tax liabilities	7,379	2.478354	2.478
			7,733
TOTAL NON-CURRENT LIABILITIES	51,517	2.832	54,349
TOTAL LIABILITIES	103,141	14,084	117,225
NET ASSETS	163,006	(13,022)	149.984
EQUITY
Parent entity interest:
Contributed equity	112,483		112.483
Reserves	(3, 489)	(11, 258)	(14, 747)
Retained profits/(accumulated losses)	52,757	(1,764)	50,993
Parent entity interest in equity	161,751	(13.022)	148,729
Outside equity interests in equity	1,255		1,255
TOTAL EQUITY	163,006	(13,022)	149,984

HALF YEAR REPORT for the period ended 31 December 2005

NOTES TO THE FINANCIAL STATEMENTS

for the half year ended 31 December 2005

NOTE 6 IMPACT OF ADOPTING AUSTRALIAN EQUIVALENTS TO AIFRS (CONTINUED)

The main adjustments necessary that would make the comparative financial statements comply with AASB 132 and AASB 139 are listed below. Similar adjustments were made at 1 July 2005 to restate the opening financial position of the consolidated entity to a position consistent with the accounting policies specified in Note 2.

(i) the recognition and measurement of all derivatives (including embedded derivatives at fair value);

(ii) the recognition in profit or loss of the movement in the fair value of derivatives which did not qualify for hedge accounting or were not designated as hedging instruments;

(iii) the transfer of deferred hedging gains and losses recognised as assets and liabilities arising from previous AGAAP to the hedging reserve or if applicable, the unrealised gains/losses reserve;

(iv) the derecognition of other deferred hedging gains and losses recognised as assets and liabilities; and

(v) the recognition of any current or deferred taxes in relation to the adjustments described above.

for the half year ended 31 December 2005

ISSUED AND QUOTED SECURITIES NOTE7 AT END OF CURRENT PERIOD

	TotalNumber	NumberQuoted	Issue PricePer Security	Amount PaidUp Per Security
Ordinary securities
As at 31 December 2005	228.649.059	228.649.059
Changes during current period
Increases through exercise of unlisted optionsIncreases through exercise of listed options	146,0009.750	9,750	$0.81$0.80	$0.81$0.80
	TotalNumber	NumberQuoted	ExercisePrice	ExpiryDate
Options
As at 31 December 2005	2.000.0001.178.000630.000	u.ı.	$0.42$0.81$1.57	10/12/0619/09/0721/12/09
Changes during current period
Exercise of unlisted options during the current periodExercise of unlisted options during the current periodLapsed during current periodLapsed during current period	(96,000)(50,000)(35,000)(105,000)	٠$\omega$٠	$0.81$0.81$0.81$1.57	19/09/0713/08/0813/08/0821/12/09

HALF YEAR REPORT For the period ended 31 December 2005

DIRECTORS' DECLARATION

In accordance with a resolution of the Directors of Resolute Mining Limited, we state that:

In the opinion of the Directors:

(a) the financial statements and notes of the consolidated entity:

• give a true and fair view of the financial position as at 31 December 2005 and of their $(i)$ performance for the half year ended on that date of the consolidated entity; and
• comply with Accounting Standard AASB 134 "Interim Financial Reporting" and the $(ii)$ Corporations Regulations 2001; and
• (b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

P.R. Sullivan Director

Perth, Western Australia 8 March 2006

EIL ERNST & YOUNG

a The Frast & Young Suiding 11 Moures Bay Road Perth WA (000) Australia

■ W6 61894292223 Fax: 61 8 9429 2436

GPO Box 5939 Perth WA 6843

Auditor's Independence Declaration to the Directors of Resolute Mining Limited

In relation to our review of the financial report of Resolute Mining Limited for the half-year ended 31 December 2005, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct.

Commt + Tang

Ernst & Young

$7.74$

V W Tidy Partner Perth 8 March 2006

EII FRAGT & YOU INC.

a The Frast & Young Building 11 Abans Hay Road Perli WA (4008) Australia

■ 『48 - 61 8 9429 2222 Fax: 61 8 9429 2436

GPO Box 5939 Perh WA 6843

Independent review report to members of Resolute Mining Limited

Scope

The financial report and directors' responsibility

The financial report comprises the balance sheet, income statement, cash flow statement, statement of changes in equity and accompanying notes to the financial statements for the consolidated entity comprising both Resolute Mining Limited (the company) and the entities it controlled during the half year, and the directors' declaration for the company, for the period ended 31 December 2005.

The directors of the company are responsible for preparing a financial report that gives a true and fair view of the financial position and performance of the consolidated entity, and that complies with Accounting Standard AASB 134 "Interim Financial Reporting", in accordance with the Corporations Act $200I$ . This includes responsibility for the maintenance of adequate accounting records and internal controls that are designed to prevent and detect fraud and error, and for the accounting policies and accounting estimates inherent in the financial report.

Review approach

We conducted an independent review of the financial report in order to make a statement about it to the members of the company, and in order for the company to lodge the financial report with the Australian Stock Exchange and the Australian Securities and Investments Commission.

Our review was conducted in accordance with Australian Auditing Standards applicable to review engagements, in order to state whether, on the basis of the procedures described, anything has come to our attention that would indicate that the financial report is not presented fairly in accordance with the Corporations Act 2001, Accounting Standard AASB 134 "Interim Financial Reporting" and other mandatory financial reporting requirements in Australia, so as to present a view which is consistent with our understanding of the consolidated entity's financial position, and of its performance as represented by the results of its operations and cash flows.

A review is limited primarily to inquiries of company personnel and analytical procedures applied to the financial data. These procedures do not provide all the evidence that would be required in an audit, thus the level of assurance is less than given in an audit. We have not performed an audit and, accordingly, we do not express an audit opinion.

Independence

We are independent of the company, and have met the independence requirements of Australian professional ethical pronouncements and the Corporations Act 2001. We have given to the directors of the company a written Auditor's Independence Declaration, a copy of which is included in the Directors' Report. In addition to our review of the financial report, we were engaged to undertake other non-audit services. The provision of these services has not impaired our independence.

Statement

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the financial report of the consolidated entity, comprising Resolute Mining Limited and the entities it controlled during the half year is not in accordance with:

$(a)$ the Corporations Act 2001, including:

• $(i)$ giving a true and fair view of the financial position of the consolidated entity at 31 December 2005 and of its performance for the half year ended on that date; and
• $(ii)$ complying with Accounting Standard AASB 134 "Interim Financial Reporting" and the Corporations Regulations 2001; and
• $(b)$ other mandatory financial reporting requirements in Australia.

Commt + Tay

Ernst & Young

$7.74$

VW Tidy Partner Perth 8 March 2006

Page 27