ROX RESOURCES LIMITED — Annual Report 2009

Sep 24, 2009

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ROX RESOURCES LIMITED ABN 53 107 202 602

ANNUAL REPORT

2009

CONTENTS

	Page No
CHAIRMAN’S REVIEW	1
PROJECTS	2
DIRECTORS’ REPORT	5
AUDITORS INDEPENDENCE DECLARATION	19
CORPORATE GOVERNANCE	20
FINANCIAL STATEMENTS
Balance Sheet	29
Income Statement	30
Cash Flow Statement	31
Statement of Changes in Equity	32
Notes to and Forming Part of the Financial Statements	33
Directors' Declaration	62
Independent Audit Report to the Members of Rox Resources Limited	63
SCHEDULE OF MINING TENEMENTS	65
OTHER INFORMATION	66

i

CORPORATE DIRECTORY

Directors:

Mr Jeff Gresham Non-Executive Chairman

Mr Ian Mulholland Managing Director

Mr Michael Blakiston Non-Executive Director

Company Secretary:

Mr Brett D Dickson

Stock Exchange:

ASX Limited

Company Code: RXL (Fully Paid Shares) RXLO (Options exercisable at $0.10,expire 30 June 2011)

Issued Capital:

217,160,852 Fully paid ordinary shares 30,160,238 10 cent, 30 June 2011 options 38,003,192 1.5 cent, 31 July 2011 options

1,700,000 35 cent, 30 November 2009 options 400,000 35 cent, 31 May 2010 options

2,000,000 35 cent, 30 November 2010 options

Bankers:

Westpac Banking Corporation 40 St George’s Terrace Perth WA 6000

Auditor:

Ernst & Young Ernst & Young Building 11 Mounts Bay Road Perth WA 6000

Telephone: (08) 9429 2222 Facsimile: (08) 9429 2436

Solicitor:

Blakiston & Crabb 1202 Hay Street West Perth WA 6005

Telephone: (08) 9322 7644 Facsimile: (08) 9322 1506

For shareholder information contact:

Share Registry:

Computershare Registry Services Pty Ltd Level 2, Reserve Bank Building 45 St Georges Terrace Perth WA 6000

Telephone: (08) 9323 2000 Facsimile: (08) 9323 2033

For information on your company contact:

Principal & Registered Office:

Level 1 30 Richardson Street West Perth WA 6005

Telephone: (08) 6380 2966 Facsimile: (08) 6380 2988 Web: www.roxresources.com.au

ii

CHAIRMAN’S REVIEW

Dear Shareholder,

It gives me great pleasure to present my third Rox Annual Report as Chairman of your Company. The 2009 financial year was without doubt one of the most difficult in recent times. However as the new financial year unfolds, metal prices have significantly improved and there is growing confidence that the worst of the Global Financial Crisis is behind us.

Your Board of Directors and our management team quickly responded to the deteriorating economic situation by successfully undertaking a number of actions to minimise expenditures and reduce overheads. Despite the difficulties experienced, your Company was able to raise further funds during the financial year. These funds were used to sustain the business and pursue important technical and economic assessment work on our exciting Myrtle zinc-lead deposit in the Northern Territory.

Following completion of a successful diamond and reverse circulation drilling program at Myrtle in the second half of 2008 an inferred resource of 37 million tonnes grading 5.2% zinc plus lead at a 3% combined zinc plus lead cut-off was defined. At the higher cut-off of 5% combined zinc and lead, 15 million tonnes grading 7% combined zinc and lead has been defined. This substantial resource places Myrtle amongst the 10 largest sedimentary-hosted zinc deposits in Australia. There is considerable potential to expand this resource. Importantly our work delineated the presence of near surface mineralisation that may be amenable to open pit mining. A preliminary order of magnitude study has indicated the potential to economically develop the deposit.

As you would be aware your Company has been exploring the Pha Luang zinc-lead deposit in Laos since 2005. Unfortunately, despite our best endeavours, no progress was made in having our Foreign Investment Licence granted by the Laotian Government. This has been an extremely frustrating and disappointing outcome. Given this situation we have maintained the project, with minimal expenditure, on a care and maintenance basis for the full year. We have no plans to do any further work unless the Licence is granted.

With the improving economic situation in the second half of 2009, your Company undertook a further capital raising through an underwritten rights issue. The high level of take up of rights by our shareholders was most pleasing and I would like to thank all our shareholders who supported the issue. These funds will be used to pursue our evaluation of the Myrtle project. This work will involve initial metallurgical test work and further drilling to expand the resource, particularly in the near surface environment. The results of this work will be incorporated into a scoping study to assess the potential economics of the project.

Although the 2008/09 financial year was extremely difficult there are many positive signs of better times ahead. Your Company has a quality project at Myrtle and we are now in a position to pursue further important evaluation work. Equity markets have improved considerably. Zinc prices have increased by 50% and lead prices by 100% since the beginning of 2009. We have retained our small but outstanding management team during these difficult times. I am confident that we will see positive results from our planned work programs at Myrtle that will benefit all our shareholders. I look forward to the year ahead.

Jeffrey J Gresham Chairman

1

PROJECTS

MYRTLE ZINC – LEAD PROJECT, AUSTRALIA

The Myrtle zinc-lead project is shaping up to be a significant project for the Company. Based on drilling completed by Rox in 2008 together with previous drilling, an Inferred Mineral Resource has been estimated as:

• 37 million tonnes grading 5.2% combined zinc + lead at a 3% combined zinc + lead cutoff.

The deposit contains a higher grade core, and if cut-offs are increased to 5% and 6% combined zinc + lead respectively, the resource can be stated as:

• 15 million tonnes grading 7.0% combined zinc + lead, or

• 8.2 million tonnes grading 8.3% combined lead + zinc.

This higher grade core is important as it demonstrates that the Myrtle deposit is not only large, but in places it is high grade. With only a small portion of the potential resource area drilled, the Company expects the ultimate resource (at each cut-off) will be much larger.

That makes Myrtle a very significant zinc-lead deposit both in Australian terms and globally. The current resource ranks the deposit in the top ten of sedimentary hosted (SEDEX) zinc deposits in Australia. The top ten list includes Broken Hill, Mt Isa, McArthur River, Century, Cannington, all owned (or developed) by major Australian companies. Myrtle is the only deposit in the top ten owned by a junior company.

As part of the Company’s evaluation of the deposit, an Order of Magnitude Study was completed and although prepared for internal use only, this study showed that the project could be developed economically if certain criteria were met. This justifies further work on the project by the Company.

The attractiveness of Myrtle as a major deposit of zinc (and lead) attracted interest from a number of major Chinese mining companies and a Memorandum of Understanding was signed with one company and they conducted due diligence. The project was not yet developed to the point where it met their investment hurdles, so Rox has elected to continue exploration on its own.

The work program scheduled by the Company going forward includes metallurgical testwork, further resource drilling, and completion of a Scoping Study.

Preliminary mineralogical work observed that the sulphide grainsize is quite coarse, and the mineralogist commented that the ore should give good metallurgical recoveries. This is in contrast to the nearby McArthur River zinc deposit where the sulphide grainsize is very fine, requiring ultra-fine grinding and a high recovery cost. The coarse-grained nature of the Myrtle mineralisation is a positive indication for the project.

Metallurgical testwork during the third quarter of 2009 will be undertaken to determine the metallurgical recoveries, operating costs, capital costs, and likely marketing returns for input into the Scoping Study.

2

PROJECTS

Resource drilling in late 2009 will focus on defining the open pit potential, especially along the 1.2km undrilled portion of the 2km zinc-in-soil anomaly defined at Myrtle. Hopefully these near surface zones will give us indications for where future deeper drilling, to locate higher grade zones, needs to be located.

Being located just 20km south of the operating McArthur River zinc-lead mine, Myrtle will enjoy access to much of the costly infrastructure already installed, such as the dual lane bitumen road to the ship loader located on the Gulf of Carpentaria, the ship loader itself, the gas pipeline which can supply gas for cheap power generation, and the major airport at McArthur River.

A Scoping Study to be completed by early 2010, will use all of the above inputs to determine potential project economics, and identify the issues that the Company may need to focus on.

On a more regional scale, Myrtle is just one of a number of known base-metal occurrences on the Company’s tenement, and work to progress the other prospects is planned for the next year.

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Location Map of Myrtle Project

3

PROJECTS

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PHA LUANG ZINC – LEAD PROJECT, LAOS

Rox has been involved in the Pha Luang zinc-lead project in Laos since 2005. Unfortunately the Laos Government has delayed granting the necessary Foreign Investment Licence to the Company, so all work has ceased for the present. Given the unacceptable delays in the granting of licences necessary to continue operating in Laos the Company is currently re-evaluating it's involvement in the project.

The information in this report that relates to Exploration Results and Mineral Resources is based on information compiled by Mr Ian Mulholland BSc (Hons), MSc, FAusIMM, FAIG, FSEG, MAICD, who is a Fellow of The Australasian Institute of Mining and Metallurgy and a Fellow of the Australian Institute of Geoscientists. Mr Mulholland has sufficient experience which is relevant to the style of mineralisation and type of deposit 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 of Exploration Results, Mineral Resources and Ore Reserves”. Mr Mulholland is a full time employee of the Company and consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

4

DIRECTORS’ REPORT

DIRECTORS

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

Names, Qualifications, Experience and Special Responsibilities

Mr Jeff Gresham (Non-Executive Chairman, appointed 1/10/2006 - B.Sc. (Hons), MAusIMM, MGSA, MAICD

Mr Gresham is a geologist with a distinguished industry career of varied exploration, operational and corporate experience both in Australia and internationally spanning 40 years. Mr Gresham is also a NonExecutive Director of Breakaway Resources and View Resources.

Previously he was Managing Director of Titan Resources, an active nickel explorer in Western Australia, and roles prior to that have included Managing Director of gold miner Wiluna Mines Limited, General Manager – Exploration for Homestake Gold of Australia, and several senior executive roles with Western Mining Corporation (WMC) including Chief Geologist of the Kambalda Nickel Operations, and Executive Vice President Exploration for WMC’s Canadian subsidiary Westminster Canada Ltd.

Mr Gresham’s extensive professional experience covers numerous mineral deposit types and he has authored a number of technical and professional papers on the Kambalda nickel deposits and the Olympic Dam copper-uranium deposit, and has a B.Sc (Hons) degree from the Victoria University, Wellington, New Zealand.

During the past three years Mr Gresham has also served as a Director of the following other listed companies:

• Titan Resources (appointed 01/06/2004 and resigned 01/09/2006)

• Breakaway Resources (appointed 01/10/2006)

• View Resources (appointed 24/04/2007)

Mr Ian Mulholland (Managing Director, appointed 27/11/2003 - B.Sc. (Hons), M.Sc. FAusIMM, FAIG, FSEG, MAICD

Mr Mulholland is a geologist with over 25 years broad experience in the exploration and mining industry in a number of commodity groups including gold, silver, copper, lead, zinc, uranium, nickel and kaolin. He has been Managing Director of Rox Resources since it’s inception, and prior to that he managed activities from grass roots exploration to advanced resource definition, feasibility studies and mining operations for a number of major, medium sized and junior companies including WMC, Esso, Otter Gold, Aurora Gold, Anaconda Nickel, Archaean Gold, Summit Resources and Conquest Mining. His strength is in bringing resources to economic fruition and his experience is particularly appropriate for his role with Rox.

5

DIRECTORS’ REPORT

Mr Mulholland has been involved in the Nimbus silver-zinc project, the Mt Martin, Mt Muro, Toka Tindung, Tanami and Mt Carlton gold-silver projects, the Murrin Murrin, Weld Range, Marshall Pool, Lawlers and Cawse nickel projects, the Valhalla and Olympic Dam uranium projects, and the Mt Windsor VMS copperlead-zinc projects.

Mr Mulholland has a B.Sc. (Hons), Geology from the University of Sydney and a M.Sc. in Exploration and Mining Geology from the James Cook University of North Queensland. He is a Fellow of the AusIMM, the AIG, and the Society of Economic Geologists.

Mr Mulholland has not been a director of any other listed company in the last three years.

Mr Michael Blakiston (Non-Executive Director, appointed 27/11/2003) - B.Juris. LLB

Mr Blakiston is a practicing solicitor with legal experience in the resources sector, and holds the degrees of Bachelor of Jurisprudence and Bachelor of Laws from the University of Western Australia and is a partner of the corporate and resource law firm, Blakiston & Crabb. Mr Blakiston has been practicing law for over 25 years.

Mr Blakiston has extensive commercial experience both in advisory and directorial capacities having been involved in project assessment, structuring and financing, joint ventures and strategic alliances in the resource industry. In addition, Mr Blakiston has experience in initial public offerings, takeovers and mergers, corporate and project fundraisings (either with debt or equity), construction, offtake and sales contracts.

Mr Blakiston is also a Director of the following companies:

• Platinum Australia Ltd (appointed 21/06/2000)

• Vulcan Resources Limited (appointed 28/03/2002)

• Aurora Oil & Gas Limited (appointed 07/11/2003)

• Axiom Properties Limited (appointed 24/06/2006)

Interest in the Share and Options of the Company

As at the date of this report, the interest of the Directors in the shares and options of Rox Resources Limited were:

Limited were:
	Ordinary Shares	Listed Options	Unlisted Options
J Gresham I Mulholland M Blakiston	361,667 4,790,354 1,963,452	60,278 2,067,339 327,242	1,000,000 2,000,000 -

Included in the Director’s Interest in unlisted options are the following unlisted options that have vested and are able to be exercised.

Director	Number of options	Exercise Price	Expiry
J Gresham	1,000,000	35 cents	30 November 2009
I Mulholland	2,000,000	35 cents	30 November 2009
M Blakiston	Nil	Nil	Nil

6

DIRECTORS’ REPORT

COMPANY SECRETARY AND CHIEF FINANCIAL OFFICER

Mr Brett Dickson - B.Bus, CPA

Mr Dickson has over 20 years experience in the financial management of companies, principally companies in early stage development of its resource or production, and offers broad financial management skills. He has been Company Secretary and Chief Financial Officer (CFO) for a number of successful resource companies listed on the ASX, and in addition to Rox Resources currently also acts as Company Secretary and CFO for Azure Minerals Limited.

LOSS PER SHARE

Basic Loss per share 2009: (2.2 cents) 2008: (5.8 cents) Diluted Loss per share 2009: (2.2 cents) 2008: (5.8 cents)

DIVIDENDS

No amounts have been paid or declared by way of dividend of the Company since the date of incorporation and the Directors do not recommend the payment of any dividend.

OPERATING AND FINANCIAL REVIEW

Corporate Structure

Rox Resources Limited is a company limited by shares which is incorporated and domiciled in Australia. The Group comprising Rox Resources Limited and Rox (Laos) Pty Ltd is not considered to be materially different to the Company as Rox (Laos) Pty Ltd has not traded and therefore consolidated and Company accounts have been presented as one.

Nature of Operations and Principal Activities

The principal activity of the Company during the year was the continued exploration of its Myrtle lead-zinc deposit in the Northern Territory of Australia; the Pha Luang project in Laos was on care and maintenance for the full period.

Results from Operations and Financial Position

During the period the Company and Consolidated Entity have incurred a net loss after tax for the year ended 30 June 2009 of $1,843,979 which is considerably less than the previous year’s loss of $3,359,706. The loss includes exploration expenditure charged direct to the profit and loss account of $676,314 (2008:$2,025,143). Net cash outflows from operating activities were $1,680,041 compared to cash outflow of $3,007,832 for the previous year.

At 30 June 2009 the Company and Consolidated Entity had cash on hand of $423,389. The Directors believe the Company and Consolidated Entity maintains a sound capital structure and is in an excellent position to progress its mineral properties.

Employees

At 30 June 2009 the Company had two employees (2008: two employees).

7

DIRECTORS’ REPORT

Review of Operations

During the year the Company focussed its activities at its Myrtle zinc-lead project in the Northern Territory; its Pha Luang zinc-lead project in Laos was placed on care and maintenance pending the completion of the review of the mining sector by the Laotian government. The Myrtle project is a sediment hosted (SEDEX) zinc-lead project with analogies to the large McArthur River deposit, located just 20km to the north. Since acquiring the Myrtle project the Company has completed 2000m of diamond core drilling and 300m of RC drilling at the Myrtle prospect. Results of this drilling have been very encouraging and have resulted in the estimation of a JORC compliant Inferred Mineral Resource at a 3% combined lead + zinc cut-off of 37 million tonnes grading 4.2% zinc and 1.0% lead.

RISK MANAGEMENT

The Company takes a proactive approach to risk management. The Board is responsible for ensuring that risks, and also opportunities, are identified on a timely basis and the Company’s objectives and activities are aligned with the risks and opportunities identified by the Board.

The Company believes that it is important for all Board members to be part of this process, and as such the Board has not established a separate risk management committee.

The Board has a number of mechanisms in place to ensure that management’s objectives and activities are aligned with the risks identified by the Board. These include the following:

• Board approval of a strategic plan, which encompasses the Company’s vision, mission and strategy statements, designed to meet stakeholders needs and manage business risk;

• Implementation of Board approved budgets and Board monitoring of progress against those budgets.

SIGNIFICANT CHANGES IN STATE OF AFFAIRS

There were no significant changes in the state of affairs of the Company during the year.

MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR

The following matters have arisen since the end of the financial year:

• The Company finalised a pro-rata rights issue of 108,580,426 new shares on the basis of 1 new share for every share held at an issue price of $0.015 together with 10,858,043 free attaching options exercisable at $0.015 on or before 31 July 2011 and as a result raised $1,638,706.

No other matter or circumstance has arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Company, the results of those operations or the state of affairs of the Company in subsequent financial periods.

ENVIRONMENTAL ISSUES

The Company carries out mineral exploration at its various projects which are subject to environmental regulations under both Commonwealth and State legislation. During the financial year there has been no breach of these regulations.

8

DIRECTORS’ REPORT

LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS

Likely developments in the operations of the Company and the expected results of those operations in future financial years 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 Company.

DIRECTORS’ MEETINGS

The number of meetings of Directors (including meetings of committees of Directors) held during the year and the number of meetings attended by each Director was as follows:

	Directors’ Normal Meetings	Directors’ Normal Meetings	Directors’ Audit Meetings	Directors’ Audit Meetings	Directors’ Remuneration Meetings	Directors’ Remuneration Meetings	Directors’ Nomination	Directors’ Nomination
	No. Eligible	No. Attended	No. Eligible	No. Attended	No. Eligible	No. Attended	No. Eligible	No. Attended
J Gresham	11	11	1	1	-	-	-	-
M Blakiston	11	9	1	1	-	-	-	-
I Mulholland	11	11	1	1	-	-	-	-

Committee Membership

As at the date of this report, the Company does not have separately constituted Audit, Nomination and Remuneration Committees. The full board acts as those committees under specific charters.

INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS

During the year the Company paid an insurance premium to insure certain officers of the Company. The officers of the Company covered by the insurance policy include the Directors and the Company Secretary named in this report.

The Director and Officers Liability insurance provides cover against all costs and expenses that may be incurred in defending civil or criminal proceedings that fall within the scope of the indemnity and that may be brought against the Directors and officers in their capacity as officers of the Company. The insurance policy does not contain details of the premium paid in respect of individual officers of the Company. Disclosure of the nature of the liability cover and the amount of the premium is subject to a confidentiality clause under the insurance policy.

The Company has not entered into any agreement to indemnify the auditor.

9

DIRECTORS’ REPORT

SHARE OPTIONS

At the reporting date there were 4,100,000 unlisted options exercisable at $0.35 and 30,160,238 listed options exercisable at $0.10 on issue. Since the reporting date a further 38,003,192 listed options exercisable at $0.015 have been issued. During the year 5,250,000 options, which had an intrinsic value of nil, lapsed and 784 were exercised. Refer to note 10 of the Financial Statements for further details on options outstanding.

Option holders do not have any right, by virtue of the option, to participate in any share issue of the Company or any related body corporate or in the interest issue of any other registered scheme.

AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES

Section 307C of the Corporations Act 2001 requires the Company’s Auditors to provide the Directors of Rox Resources Limited with an Independence Declaration in relation to the audit of the full-year financial report. This report has been received and is attached to the Directors Report at page 19.

NON AUDIT SERVICES

The following non-audit services were provided by the entity’s auditor, Ernst & Young. The Directors are satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act. The nature and scope of each type of non-audit services provided means that auditor independence was not compromised.

Ernst & Young received or are due to receive the following amounts for the provision of non-audit services: Tax compliance services $15,532

10

DIRECTORS’ REPORT

REMUNERATION REPORT (AUDITED)

This remuneration Report outlines the Director and executive remuneration arrangements of the Company and the Group in accordance with the requirements of the Corporations Act 2001 and its Regulations. For the purposes of this report Key Management Personnel (KMP) of the Group are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company and the Group, directly or indirectly, including any Director (whether executive or otherwise) of the Parent Company, and includes the executives, of which there is one, in the Parent and the Group that fits within the above mentioned definition.

For the purposes of this report, the term ‘executive’ encompasses the Managing Director and Company Secretary of the Parent and the Group.

Details of Key Management Personnel

(i) Directors Jeffrey Gresham Non-executive Chairman ( appointed 1 October 2006) Ian Mulholland Managing Director ( appointed 27 November 2003) Michael Blakiston Non-executive Director ( appointed 27 November 2003)

(ii) Executives Brett Dickson Company Secretary ( appointed 27 November 2003)

There were no changes of KMP after reporting date and before the date the financial report was authorised for issue.

Remuneration Committee

The full Board acts as the Remuneration Committee and is responsible for determining and reviewing compensation arrangements for the Directors, the Managing Director (MD) and the senior management team.

The Board assesses the appropriateness of the nature and amount of remuneration of Directors and senior managers on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality board and executive team.

Remuneration Philosophy

The performance of the Company depends upon the quality of its Directors and executives. To prosper, the Company must attract, motivate and retain highly skilled Directors and executives.

• To this end, the Company embodies the following principles in its remuneration framework:

• Provide competitive rewards to attract high calibre executives

• Establish appropriate hurdles for variable executive remuneration

• Encouragement for Directors to sacrifice a portion of their fees to acquire shares in the Company at market price

11

DIRECTORS’ REPORT

Remuneration Structure

In accordance with best practice corporate governance, the structure of Non-Executive Director and Senior Manager remuneration is separate and distinct.

Non-Executive Director Remuneration

Objective

The Board seeks to set aggregate remuneration at a level which provides the Company with the ability to attract and retain Directors of the highest calibre, whilst incurring a cost which is acceptable to shareholders.

Structure

The Constitution and the ASX Listing Rules specify that the aggregate remuneration of Non-Executive Directors shall be determined from time to time by a general meeting. An amount not exceeding the amount determined is then divided between the Directors as agreed. The latest determination was in 2004 when shareholders approved an aggregate remuneration of $150,000 per year.

The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is apportioned amongst Directors is reviewed annually. The Board considers the fees paid to NonExecutive Directors of comparable companies when undertaking the annual review process.

Each Director receives a fee for being a Director of the Company.

Non-Executive Directors have long been encouraged by the Board to hold shares in the Company (purchased by the Director on market). It is considered good governance for Directors to have a stake in the Company whose board he or she sits. In addition long term incentives in the form of options may be awarded to Non-Executive Directors, subject to shareholder approval, in a manner which aligns this element of remuneration with the creation of shareholder wealth.

The remuneration of Non-Executive Directors for the year ending 30 June 2009 is detailed later in this report.

Senior Manager and Executive Director Remuneration

Objective

The Company aims to reward executives with a level and mix of remuneration commensurate with their position and responsibilities within the Company and so as to:

• reward executives for company and individual performance against targets set by reference to appropriate benchmarks;

• align the interests of executives with those of shareholders;

• link reward with the strategic goals; and

• ensure total remuneration is competitive by market standards.

12

DIRECTORS’ REPORT

Structure

In determining the level and make-up of executive remuneration the Board considered market conditions and remuneration paid to senior executives of companies similar in nature to Rox Resources Limited.

Remuneration consists of the following key elements:

• Fixed Remuneration

• Variable Remuneration – short term incentive (“STI”), and

• long term incentive (“LTI”)

Fixed Remuneration

Objective

The level of fixed remuneration is set so as to provide a base level of remuneration which is both appropriate to the position and is competitive in the market.

Fixed remuneration is reviewed annually by the Board and the process consists of a review of individual performance, relevant comparative remuneration in the market and, where appropriate, external advice on policies and practices.

Structure

Senior managers are given the opportunity to receive their fixed (primary) remuneration in a variety of forms including cash and fringe benefits such as motor vehicles. It is intended that the manner of payment chosen will be optimal for the recipient without creating undue cost for the Company.

The fixed remuneration component of the most highly remunerated senior managers is detailed later in this report.

Variable Remuneration – Short Term Incentive (“STI”)

Objective

The objective of the STI program is to link the achievement of the Company’s operational targets with the remuneration received by the executives charged with meeting those targets. The total potential STI available is set at a level so as to provide sufficient incentive to the executive to achieve those operational targets and such that the cost to the Company is reasonable in the circumstances.

Structure

Actual STI payments granted to executives depend on the extent to which specific targets set at the beginning of the review period, being a calendar year. The targets consist of a number of Key Performance Indicators (KPI’s) covering both financial and non-financial, corporate and individual measures of performance. Typically included are measures such as contribution to exploration success, share price appreciation, risk management and cash flow sustainability. These measures were chosen as they represent the key drivers for the short term success of the business and provide a framework for delivering long term value.

The Board has predetermined benchmarks that must be met in order to trigger payments under the STI scheme. On an annual basis, after consideration of performance against KPI’s, the Board, acting as a Remuneration Committee, determines the amount, if any, of the STI to be paid to each executive. This process usually occurs in the first quarter of the calendar year. Payments made are delivered as a cash bonus in the fourth quarter of the fiscal year.

13

DIRECTORS’ REPORT

STI bonus for 2008 and 2009 financial years

During the 2008 financial year specific performance conditions were agreed with the Managing Director, Mr Mulholland, where a STI bonus to a maximum of $40,000 would be paid based on the achievement of four key objectives which would most reflect significant advances being made by the Company in its exploration and financial performance, being:

1. The location, through drilling, of a further 3 potentially economic sulphide occurrences, in addition to Nam Yen, at Pha Luang project.

2. The development of a second significant project for Rox either by ground acquisition, farm in or purchase.

3. Increase the market capitalisation of Rox by 50% as from the date of signing the letter of contract.

4. Maximisation of Rox’s investments and a clear demonstration of technical and managerial leadership. Measures will include staff stability, technical breakthroughs, improved geological understanding of mineralisation at Pha Luang, preparation for board meetings and statutory compliance.

Determination on the extent to which performance conditions have been met is made by the independent board members acting as the Remuneration Committee. For the 2007/08 financial year Mr Mulholland was awarded a bonus of 50% of the maximum achievable, being $20,000 paid on 14 April 2008.

An incentive bonus to the maximum of $60,000 was agreed with Mr Mulholland for the 2008/09 financial year. Criteria used when assessing the bonus were:

1. The granting of the Foreign Investment Licence in Laos and the identification of potential resource of > 5 million tonnes @ 6.5% Zn + Pb within the Pha Luang project.

2. Identification of a resource based on the planned drilling program, of > 20 million tonnes @ 6.5% Zn + Pb at the Myrtle prospect.

3. The development of another significant project for Rox either by ground acquisition, farm in or purchase.

4. Facilitate a successful capital raising of a minimum of $2m.

5. Increase the Rox share price to 25c.

6. Maximisation of Rox’s investments and a clear demonstration of technical and managerial leadership. Measures will include staff stability, technical breakthroughs including drilling success and the quality of reporting, board preparation and statutory compliance.

In addition, similar performance criteria have been set for the Company Secretary, Mr Brett Dickson, with a maximum performance bonus payable of $30,000.

The minimum amount payable assuming no executives meet their KPI’s is nil. There have been no alterations to the STI bonus plans since their grant date

Even though several KPI’s were achieved for the 2009 financial year executives agreed to forgo any bonus due to the deterioration of global financial markets.

14

DIRECTORS’ REPORT

Variable Remuneration – Long Term Incentive (“LTI”)

Objective

The objective of the LTI plan is to reward senior managers in a manner which aligns this element of remuneration with the creation of shareholder wealth.

As such LTI grants are only made to executives who are able to influence the generation of shareholder wealth.

Structure

LTI grants to executives are delivered in the form of options.

The options, when issued to executives, will not be exercisable for a price less than the then current market price of the Company’s shares. The grant of LTI’s are reviewed annually, though LTI’s may not be granted each year. Exercise price and performance hurdles, if any, are determined at the time of grant of the LTI.

To date no performance hurdles have been set on options issued to executives. The Company believes that as options are issued at not less than the current market price of the Company’s shares there is an inherent performance hurdle on those options as the share price of the Company’s shares have to increase significantly before there is any reward to the executive.

Employment Contracts

The Managing Director, Mr Mulholland is employed under contract. The current employment contract commenced on 27 April 2007 and was due to terminate on 27 May 2009, however the contract was extended to 26 September 2009, at which time the Company may chose to commence negotiation to enter into a new employment contract with Mr Mulholland. Under the terms of the present contact:

• Mr Mulholland may resign from his position and terminate this contract by giving three months notice.

• The Company may terminate this employment agreement by providing three months’ written notice. On termination on notice by the Company, the Company will pay Mr Mulholland an amount equal to the fixed component of his remuneration for the remainder of the term of the contract.

• The Company may terminate the contract at any time without notice if serious misconduct has occurred. Where termination with cause occurs, the MD is only entitled to that portion of remuneration which is fixed, and only up to the date of termination. On termination with cause any unvested options will immediately be forfeited.

The Company Secretary, Mr Dickson is employed under a service contract. The current contract commenced on 26 September 2006 and terminates on 26 September 2009, at which time the Company may chose to commence negotiation to enter into a new service contract with Mr Dickson. Under the terms of the present contact:

• Mr Dickson may terminate the contract by giving three months written notice.

• The Company may terminate the service contract agreement by providing three months’ written notice. On termination on notice by the Company, subject to ASX Listing Rule 10.19 and section 200F(3) of the Corporations Act 2001, will pay Mr Dickson an amount equal to the fixed component of his remuneration for the remainder of the term of the contract,.

• The Company may terminate the contract at any time without notice if serious misconduct has occurred. Where termination with cause occurs, Mr Dickson is only entitled to that portion of remuneration which is fixed, and only up to the date of termination. On termination with cause any unvested options he holds will immediately be forfeited.

15

DIRECTORS’ REPORT

Remuneration of Key Management Personnel

	SHORT	TERM			POST	SHARE-BASED
					EMPLOYMENT	PAYMENTS	TOTAL	PERCENTAGE
2009	Salary &	Bonus	Other	1	Superannuation	Options		PERFORMANCE
	Fees	$	$		$	$	$	RELATED
	$							%
DIRECTORS
J Gresham	-	-	-		27,251	-	27,251	-
M Blakiston	16,250	-	-		1,462	-	17,712	-
I Mulholland	197,438	-	-		27,562	14,172	239,172	6
EXECUTIVES
B Dickson	-	-	120,000		-	12,521	132,521	9
TOTAL	213,688	-	120,000		56,275	26,693	416,656	6
	SHORT	TERM			POST	SHARE-BASED
					EMPLOYMENT	PAYMENTS	TOTAL	PERCENTAGE
2008	Salary &	Bonus	Other	1	Superannuation	Options		PERFORMANCE
	Fees	$	$		$	$	$	RELATED
	$							%
DIRECTORS
J Gresham	-	-	-		54,500	-	54,500	-
M Blakiston	35,000	-	-		3,150	-	38,150	-
I Mulholland	213,490	20,000	-		29,006	23,658	286,154	8
EXECUTIVES
B Dickson	-	-	120,000		-	41,120	161,120	26
TOTAL	248,490	20,000	120,000		86,656	64,778	539,924	12

1. Coolform Investments Pty Ltd, a company in which Mr Dickson is a Director and shareholder, received fees totalling $120,000 (2008: $120,000) for the provision of services by Mr Dickson.

Compensation options: Granted and vested during the year

	GRANTED	GRANTED			TERMS AND CONDITIONS FOR EACH	TERMS AND CONDITIONS FOR EACH	TERMS AND CONDITIONS FOR EACH	GRANT	VESTED	VESTED
2009	Number		Date	Fair	Exercise	Expiry	First	Last	Number		%
				value	Price	date	exercise	exercise
				$	$		date	date
Directors
J Gresham	-		-	-	-	-	-	-		-	-
M Blakiston	-		-	-	-	-	-	-		-	-
I Mulholland	-	19	Dec 07	0.024	0.35	30/11/10	27/04/08	30/11/10	1,000,000	1	50
Executives
B Dickson	-	27 Nov 06		0.206	0.35	30/11/09	01/04/07	30/11/09	200,000	2	33
Total	-								1,200,000

1. During the year a further 1,000,000 options granted on 19 December 2007 vested.

2. During the year a further 200,000 options granted on 27 November 2006 vested.

16

DIRECTORS’ REPORT

GRANTED TERMS AND CONDITIONS FOR EACH GRANT VESTED 2008 Number Date Fair value $ Exercise Price $ Expiry date First exercise date Last exercise date Number %	GRANTED TERMS AND CONDITIONS FOR EACH GRANT VESTED 2008 Number Date Fair value $ Exercise Price $ Expiry date First exercise date Last exercise date Number %
Directors J Gresham - - - - - M Blakiston - - - - - I Mulholland 2,000,000 19 Dec ‘07 0.024 0.35 30/11/10 Executives B Dickson 600,000 27 Nov ‘06 0.206 0.35 30/11/09	- - - - - - - - 27/4/08 30/11/10 1,000,000 50 1/04/07 30/11/09 200,000 33
Total 2,600,000	1,200,000

Value of Options granted as part of remuneration – 2009

2009	Value of options		Value of options	Value of options	Remuneration
	granted during		exercised during	lapsed during the	consisting of options
	the year		the year	year	for the year
	$		$	$	%
Directors
J Gresham		-	-	-
M Blakiston		-	-	-
I Mulholland		-	-	-	6
Executives
B Dickson		-	-	-	9

There were no alterations to the terms and conditions of options granted as remuneration since their grant date. There were no forfeitures nor shares issued on exercise of Compensation Options during 2009 or 2008

The Company’s remuneration policy prohibits directors and executives from entering into transactions or arrangements which limit the economic risk of participating in unvested entitlements.

Company’s Performance

Company’s share price performance

The Company’s share price performance shown in the below graph is a reflection of the Company’s performance during the year.

The variable components of the executives’ remuneration including short-term and long-term incentives are indirectly linked to the Company’s share price performance during the year as the Company’s share price is directly correlated to the achievement of its short-term as well as long-term goals and objectives.

The graph below shows the Company’s share price performance during the financial year ended 30 June 2009.

17

DIRECTORS’ REPORT

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----- Start of picture text -----

Company's share price performance
0.10
0.08
0.06
0.04
0.02
0.00
Period
Share Price ($)
1/07/08 15/07/08 29/07/08 12/08/08 26/08/08 9/09/08 23/09/08 7/10/08 21/10/08 4/11/08 18/11/08 2/12/08 16/12/08 30/12/08 13/01/09 27/01/09 10/02/09 24/02/09 10/03/09 24/03/09 7/04/09 21/04/09 5/05/09 19/05/09 2/06/09 16/06/09 30/06/09
----- End of picture text -----

Loss per share

Below is information on the Company’s loss per share for the previous four financial years and for the current year ended 30 June 2009.

2009 2008 2007 2006 2005 Basic loss per share (cents) (2.2) (5.8) (5.8) (6.1) (4.9)

Signed in accordance with a resolution of the Directors.

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J Gresham Chairman Perth, 25 September 2009

18

AUDITORS INDEPENDENCE DECLARATION

==> picture [103 x 62] intentionally omitted <==

Auditor's Independence Declaration to the Directors of Rox Resources Limited

In relation to our audit of the financial report of Rox Resources Limited for the year ended 30 June 2009, 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.

==> picture [73 x 52] intentionally omitted <==

Ernst & Young

==> picture [59 x 65] intentionally omitted <==

R Curtin Partner Perth 25 September 2009

Liability limited by a scheme approved under Professional Standards Legislation

19

CORPORATE GOVERNANCE

Rox Resources Limited (" Company ") has made it a priority to adopt systems of control and accountability as the basis for the administration of corporate governance. Some of these policies and procedures are summarised in this statement. Commensurate with the spirit of the ASX Corporate Governance Council's Corporate Governance Principles and Recommendations (" Principles & Recommendations "), the Company has followed each recommendation where the Board has considered the recommendation to be an appropriate benchmark for its corporate governance practices. Where the Company's corporate governance practices follow a recommendation, the Board has made appropriate statements reporting on the adoption of the recommendation. Where, after due consideration, the Company's corporate governance practices depart from a recommendation, the Board has offered full disclosure and reason for the adoption of its own practice, in compliance with the "if not, why not" regime.

Disclosure of Corporate Governance Practices

Summary Statement

ASX P & R1 If not, why not2 Recommendation 1.1 � Recommendation 1.2 � Recommendation 1.3³ n/a n/a Recommendation 2.1 � Recommendation 2.2 � Recommendation 2.3 � Recommendation 2.4 � Recommendation 2.5 � Recommendation 2.6³ n/a n/a Recommendation 3.1 � Recommendation 3.2 � Recommendation 3.3³ n/a n/a Recommendation 4.1 � Recommendation 4.2 �	ASX P & R~~1~~ If not, why not2 Recommendation 4.3 � Recommendation 4.4³ n/a n/a Recommendation 5.1 � Recommendation 5.2³ n/a n/a Recommendation 6.1 � Recommendation 6.2³ n/a n/a Recommendation 7.1 � Recommendation 7.2 � Recommendation 7.3 � Recommendation 7.4³ n/a n/a Recommendation 8.1 � Recommendation 8.2 � Recommendation 8.3³ n/a n/a

• 1 Indicates where the Company has followed the Principles & Recommendations.

• 2 Indicates where the Company has provided "if not, why not" disclosure.

• 3 Indicates an information based recommendation. Information based recommendations are not adopted or reported against using "if not, why not" disclosure – information required is either provided or it is not.

Website Disclosures

Further information about the Company's charters, policies and procedures may be found at the Company's website at www.roxresources.com.au, under the section marked Corporate Governance. A list of the charters, policies and procedures which are referred to in this Corporate Governance Statement, together with the Recommendations to which they relate, are set out below.

Charters	Recommendation(s)
Board	1.3
Audit Committee	4.4
NominationCommittee	2.6
RemunerationCommittee	8.3
Policies and Procedures
Policy andProcedureforSelectionand (Re)Appointment of Directors	2.6
Processfor PerformanceEvaluation	1.2,2.5
Policy on Assessing theIndependence of Directors	2.6
Policyfor TradinginCompany Securities (summary)	3.2, 3.3
Code ofConduct (summary)	3.1, 3.3
Policy on ASX ListingRule Compliance (summary)	5.1, 5.2
Procedureforthe Selection,Appointment andRotationof External Auditor	4.4
ShareholderCommunicationStrategy	6.1, 6.2
Risk ManagementPolicy (summary)	7.1,7.4

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CORPORATE GOVERNANCE

Disclosure – Principles & Recommendations

The Company reports below on how it has followed (or otherwise departed from) each of the Principles & Recommendations during the 2008/2009 financial year (" Reporting Period ").

Principle 1 – Lay solid foundations for management and oversight

Recommendation 1.1:

Companies should establish the functions reserved to the Board and those delegated to senior executives and disclose those functions.

Disclosure:

The Company has established the functions reserved to the Board and has set out these functions in its Board Charter. The Board is collectively responsible for promoting the success of the Company through its key functions of overseeing the management of the Company, providing overall corporate governance of the Company, monitoring the financial performance of the Company, engaging appropriate management commensurate with the Company's structure and objectives, involvement in the development of corporate strategy and performance objectives and reviewing, ratifying and monitoring systems of risk management and internal control, codes of conduct and legal compliance.

The Company has established the functions delegated to senior executives and has set out these functions in its Board Charter. Senior executives are responsible for supporting the Managing Director and assisting the Managing Director in implementing the running of the general operations and financial business of the Company, in accordance with the delegated authority of the Board.

Senior executives are responsible for reporting all matters which fall within the Company's materiality thresholds at first instance to the Managing Director or, if the matter concerns the Managing Director, then directly to the Chair or the lead independent director, as appropriate.

Recommendation 1.2:

Companies should disclose the process for evaluating the performance of senior executives.

Disclosure:

The Chair is responsible for evaluating the senior executives. Each year the Chair, in conjunction with each senior executive, determines specific goals and targets for that senior executive to achieve. The Chair reviews the performance of the senior executives by completing written appraisals of each senior executive against the determined goals and targets for that executive. The Chair then meets with each of the senior executives to discuss the outcome of the review and to provide feedback to the senior executive.

Recommendation 1.3:

Companies should provide the information indicated in the Guide to reporting on Principle 1.

Disclosure:

During the Reporting Period there were no performance evaluations for the senior executives, however, since the end of the reporting period the Company has conducted performance evaluations in accordance with the process disclosed at Recommendation 1.2.

Principle 2 – Structure the board to add value

Recommendation 2.1:

A majority of the Board should be independent directors.

Disclosure:

The Board has a majority of directors who are independent.

The independent directors of the Board are Jeff Gresham and Michael Blakiston. The non independent director of the Board is Ian Mulholland.

Recommendation 2.2:

The Chair should be an independent director.

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CORPORATE GOVERNANCE

Disclosure:

The independent Chair of the Board is Jeff Gresham.

Recommendation 2.3:

The roles of the Chair and Managing Director should not be exercised by the same individual.

Disclosure:

The Managing Director is Ian Mulholland who is not Chair of the Board.

Recommendation 2.4:

The Board should establish a Nomination Committee.

Notification of Departure:

The full Board fulfils the function of a Nomination Committee.

Explanation for Departure:

The full Board considers those matters that would usually be the responsibility of a Nomination Committee. The composition of the Board does not make the establishment of a separate Nomination Committee practicable and the Board considers that no efficiencies or other benefits would be gained by doing so. Items that are usually required to be discussed by a Nomination Committee are marked as separate agenda items at Board meetings when required. When the Board convenes as the Nomination Committee it carries out those functions which are delegated in the Company’s Nomination Committee Charter. The Board deals with any conflicts of interest that may occur when convening in the capacity of Nomination Committee by ensuring the director with conflicting interests is not party to the relevant discussions.

Recommendation 2.5:

Companies should disclose the process for evaluating the performance of the Board, its committees and individual directors.

Disclosure:

The Chair is responsible for evaluation of the Board and, when deemed appropriate, Board committees and individual directors. The Nomination Committee is responsible for evaluating the Managing Director.

Given the current size and composition of the Company believes that the most efficient way to conduct these evaluations is by way of informal discussions as required.

Recommendation 2.6:

Companies should provide the information indicated in the Guide to reporting on Principle 2 .

Disclosure:

Skills, Experience, Expertise and term of office of each Director

A profile of each director containing their skills, experience, expertise and term of office is set out in the Directors' Report.

Identification of Independent Directors

The independent directors of the Company are Jeff Gresham and Michael Blakiston. These directors are independent as they are non-executive directors who are not members of management and who are free of any business or other relationship that could materially interfere with, or could reasonably be perceived to materially interfere with, the independent exercise of their judgment.

In the interests of disclosure, Mr Blakiston is a principal of the firm Blakiston & Crabb. Blakiston & Crabb has been the provider of legal services to the Company. However, this relationship does not cause relevant materiality thresholds to be exceeded from the perspective of either the Company or Mr Blakiston.

Independence is measured having regard to the relationships listed in Box 2.1 of the Principles & Recommendations and the Company's materiality thresholds. The materiality thresholds are set out below.

22

CORPORATE GOVERNANCE

Company's Materiality Thresholds

The Board has agreed on the following guidelines for assessing the materiality of matters, as set out in the Company's Board Charter:

• Balance sheet items are material if they have a value of more than 10% of pro-forma net asset.

• Profit and loss items are material if they will have an impact on the current year operating result of 10% or more.

• Items are also material if they impact on the reputation of the Company, involve a breach of legislation, are outside the ordinary course of business, they could affect the Company’s rights to its assets, if accumulated they would trigger the quantitative tests, involve a contingent liability that would have a probable effect of 10% or more on balance sheet or profit and loss items, or they will have an effect on operations which is likely to result in an increase or decrease in net income or dividend distribution of more than 10%.

• Contracts will be considered material if they are outside the ordinary course of business, contain exceptionally onerous provisions in the opinion of the Board, impact on income or distribution in excess of the quantitative tests, there is a likelihood that either party will default, and the default may trigger any of the quantitative or qualitative tests, are essential to the activities of the Company and cannot be replaced, or cannot be replaced without an increase in cost of such a quantum, triggering any of the quantitative tests, contain or trigger change of control provisions, they are between or for the benefit of related parties, or otherwise trigger the quantitative tests.

Statement concerning availability of Independent Professional Advice

To assist directors with independent judgement, it is the Board's policy that if a director considers it necessary to obtain independent professional advice to properly discharge the responsibility of their office as a director then, provided the director first obtains approval for incurring such expense from the Chair, the Company will pay the reasonable expenses associated with obtaining such advice.

Nomination Matters

The full Board carries out the role of the Nomination Committee. The full Board did not officially convene as a Nomination Committee during the Reporting Period, however the Board discussed nomination-related matters from time to time during the year as required. To assist the Board to fulfil its function as the Nomination Committee, it has adopted a Nomination Committee Charter.

The explanation for departure set out under Recommendation 2.4 above explains how the functions of the Nomination Committee are performed.

Performance Evaluation

During the Reporting Period there were no individual performance evaluations conducted however a performance evaluation of the Board as a whole was undertaken, which evaluation occurred in accordance with the process disclosed at Recommendation 2.5.

The Company expects to conduct performance evaluations in the forthcoming reporting period in accordance with the process disclosed at Recommendation 2.5.

Selection and (Re)Appointment of Directors

In determining candidates for the Board, the Nomination Committee (or equivalent) follows a prescribed procedure whereby it considers the balance of independent directors on the Board as well as the skills and qualifications of potential candidates that will best enhance the Board's effectiveness.

The Board recognises that Board renewal is critical to performance and the impact of Board tenure on succession planning. At every annual general meeting one-third of the directors (other than alternate directors and the Managing Director) shall retire from office. No director (other than alternate directors and the Managing Director) may hold office for more than 3 years without retiring from office. A retiring director is eligible for re-election. Re-appointment of directors is not automatic.

23

CORPORATE GOVERNANCE

Principle 3 – Promote ethical and responsible decision-making

Recommendation 3.1:

Companies should establish a Code of Conduct and disclose the code or a summary of the code as to the practices necessary to maintain confidence in the company's integrity, the practices necessary to take into account their legal obligations and the reasonable expectations of their stakeholders and the responsibility and accountability of individuals for reporting and investigating reports of unethical practices.

Disclosure:

The Company has established a Code of Conduct as to the practices necessary to maintain confidence in the Company's integrity, practices necessary to take into account their legal obligations and the expectations of their stakeholders and responsibility and accountability of individuals for reporting and investigating reports of unethical practices.

Recommendation 3.2:

Companies should establish a policy concerning trading in company securities by directors, senior executives and employees, and disclose the policy or a summary of that policy.

Disclosure:

The Company has established a policy concerning trading in the Company's securities by directors, senior executives and employees.

Recommendation 3.3:

Companies should provide the information indicated in the Guide to reporting on Principle 3.

Disclosure:

Please refer to the section above marked Website Disclosures.

Principle 4 – Safeguard integrity in financial reporting

Recommendation 4.1 and Recommendation 4.2:

The Board should establish an Audit Committee and the Audit Committee should be structured so that it:

• consists only of non-executive directors

• consists of a majority of independent directors

• is chaired by an independent Chair, who is not Chair of the Board

• has at least three members.

Notification of Departure:

A separate Audit Committee has not been formed. Accordingly, the full Board carrying out the functions of the Audit Committee is not structured in accordance with Recommendation 4.2 as it does not consist only of non-executive directors and Mr Gresham maintains the Chair during audit related discussions.

Explanation for Departure:

The full Board carries out the role of an Audit Committee. The composition of the Board is not suitable for the formation of a separate Audit Committee and therefore no efficiencies or other benefits would be gained by forming a separate Audit Committee. The Board has adopted, and applies, an Audit Committee Charter and the independent directors are available to meet separately with the external auditor, should this be considered necessary. Items that are usually required to be discussed by an Audit Committee are marked as separate agenda items at Board meetings when required. The Board deals with any conflicts of interest that may occur when convening in the capacity of Audit Committee by ensuring the director with conflicting interests is not party to the relevant discussions.

Recommendation 4.3:

The Audit Committee should have a formal charter.

24

CORPORATE GOVERNANCE

Disclosure:

The Company has adopted an Audit Committee Charter.

Recommendation 4.4:

Companies should provide the information indicated in the Guide to reporting on Principle 4.

Disclosure:

The full Board, in its capacity as the Audit Committee, held one meeting during the Reporting Period. All Board members were in attendance at the meeting. To assist the Board to fulfil its function as the Audit Committee, it has adopted an Audit Committee Charter.

The explanation for departure set out under Recommendation 4.1 above explains how the functions of the Audit Committee are performed.

Details of each of the director's qualifications are set out in the Directors' Report.

While none of the Board members have formal financial qualifications, all have substantial industry knowledge and experience and consider themselves to be financially literate. Further, it is usual practice that Brett Dickson, the Company Secretary, attends meetings which involve audit related discussions. Mr Dickson is a Certified Practising Accountant with a Bachelors Degree in Economics and Finance.

The Company has established procedures for the selection, appointment and rotation of its external auditor. The Board is responsible for the initial appointment of the external auditor and the appointment of a new external auditor when any vacancy arises, as recommended by the Audit Committee (or its equivalent). Candidates for the position of external auditor must demonstrate complete independence from the Company through the engagement period. The Board may otherwise select an external auditor based on criteria relevant to the Company's business and circumstances. The performance of the external auditor is reviewed on an annual basis by the Audit Committee (or its equivalent) and any recommendations are made to the Board.

Principle 5 – Make timely and balanced disclosure

Recommendation 5.1:

Companies should establish written policies designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior executive level for that compliance and disclose those policies or a summary of those policies.

Disclosure:

The Company has established written policies designed to ensure compliance with ASX Listing Rule disclosure and accountability at a senior executive level for that compliance.

Recommendation 5.2 :

Companies should provide the information indicated in the Guide to reporting on Principle 5.

Disclosure:

Please refer to the section above marked Website Disclosures.

Principle 6 – Respect the rights of shareholders

Recommendation 6.1:

Companies should design a communications policy for promoting effective communication with shareholders and encouraging their participation at general meetings and disclose their policy or a summary of that policy.

Disclosure:

The Company has designed a communications policy for promoting effective communication with shareholders and encouraging shareholder participation at general meetings.

25

CORPORATE GOVERNANCE

Recommendation 6.2:

Companies should provide the information indicated in the Guide to reporting on Principle 6.

Disclosure:

Please refer to the section above marked Website Disclosures.

Principle 7 – Recognise and manage risk

Recommendation 7.1:

Companies should establish policies for the oversight and management of material business risks and disclose a summary of those policies.

Disclosure:

The Board has adopted a Risk Management Policy, which sets out the Company's risk profile. Under the policy, the Board is responsible for approving the Company's policies on risk oversight and management and satisfying itself that management has developed and implemented a sound system of risk management and internal control.

Under the policy, the Board delegates day-to-day management of risk to the Managing Director, who is responsible for identifying, assessing, monitoring and managing risks. The Managing Director is also responsible for updating the Company's material business risks to reflect any material changes, with the approval of the Board.

In fulfilling the duties of risk management, the Managing Director may have unrestricted access to Company employees, contractors and records and may obtain independent expert advice on any matter they believe appropriate, with the prior approval of the Board.]

In addition, the following risk management measures have been adopted by the Board to manage the Company's material business risks:

• the Board has established authority limits for management which, if exceeded, will require prior Board approval;

• the Board has adopted a compliance procedure for the purpose of ensuring compliance with the Company's continuous disclosure obligations; and

• the Board has adopted a corporate governance manual which contains other policies to assist the Company to establish and maintain its governance practices]

The Company does not have a formalised and documented risk management system in place. The board does receive a detailed report from management each month which enables an assessment by the board of activities that may impact on the risk profile of the company. Specific areas of risk that are identified in the report include operational activities, asset management (including title to exploration and mining leases) and staff. Any matter identified from the monthly report is then discussed at the following board meeting. In September 2009, the Board resolved to review, formalise and document the management of its material business risks and expects to implement this system in the second quarter of the 2009/2010 financial year. This system is expected to include the preparation of a risk register by management to identify the Company's material business risks and risk management strategies for these risks. In addition, the process of management of material business risks will be allocated to members of senior management. The risk register will be reviewed quarterly and updated, as required.

Recommendation 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.

Disclosure:

The Board has required management to design, implement and maintain risk management and internal control systems to manage the Company's material business risks. The Board also requires management to report to it confirming that those risks are being managed effectively. Further, the Board has received a

26

CORPORATE GOVERNANCE

report from management as to the effectiveness of the Company's management of its material business risks.

Recommendation 7.3:

The Board should disclose whether it has received assurance from the Chief Executive Officer (or equivalent) and the Chief Financial Officer (or equivalent) that the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks.

Disclosure:

The Managing Director and the Chief Financial Officer (or equivalent) have provided a declaration to the Board in accordance with section 295A of the Corporations Act and have assured the Board that such declaration is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial risk.

Recommendation 7.4:

Companies should provide the information indicated in the Guide to reporting on Principle 7.

Disclosure:

The Board has received the report from management under Recommendation 7.2.

The Board has received the assurance from the Managing Director and the Chief Financial Officer (or equivalent) under Recommendation 7.3.

Principle 8 – Remunerate fairly and responsibly

Recommendation 8.1:

The Board should establish a Remuneration Committee.

Notification of Departure:

A separate Remuneration Committee has not been formed.

Explanation for Departure:

The full Board considers those matters that would usually be the responsibility of a Remuneration Committee. The composition of the Board does not make the establishment of a separate Remuneration Committee practicable and the Board considers that no efficiencies or other benefits would be gained by doing so. Items that are usually required to be discussed by a Remuneration Committee are marked as separate agenda items at Board meetings when required. When the Board convenes as the Remuneration Committee it carries out those functions which are delegated in the Company’s Remuneration Committee Charter. The Board deals with any conflicts of interest that may occur when convening in the capacity of Remuneration Committee by ensuring the director with conflicting interests is not party to the relevant discussions.

Recommendation 8.2:

Companies should clearly distinguish the structure of non-executive directors’ remuneration from that of executive directors and senior executives.

Disclosure:

The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is apportioned amongst non-executive directors is reviewed annually. The Board considers the fees paid to non-executive directors of comparable companies when undertaking the annual review process. Nonexecutive directors have long been encouraged by the Board to hold shares in the Company (through onmarket purchase) in order for the directors to have a stake in the Company whose board he or she sits. From time to time the Company may grant options to non-executive directors. The grant of options is designed to recognise and reward efforts as well as to provide non-executive directors with additional incentive to continue those efforts for the benefit of the Company.

27

CORPORATE GOVERNANCE

Pay and rewards for executive directors and senior executives consists of the following key elements:

• fixed remuneration; and

• variable remuneration – long term incentives. Long term incentives are delivered in the form of options.

In determining the level and composition of executive remuneration, the Board may engage an external consultant to provide independent advice detailing market levels of remuneration for comparable executive roles.

Recommendation 8.3:

Companies should provide the information indicated in the Guide to reporting on Principle 8.

Disclosure:

Details of remuneration, including the Company’s policy on remuneration, are contained in the “Remuneration Report” which forms of part of the Directors’ Report.

The full Board carries out the role of the Remuneration Committee. The full Board did not officially convene as a Remuneration Committee during the Reporting Period, however the Board discussed remunerationrelated matters from time to time during the year as required. To assist the Board to fulfil its function as the Remuneration Committee, it has adopted a Remuneration Committee Charter.

The explanation for departure set out under Recommendation 8.1 above explains how the functions of the Remuneration Committee are performed.

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

The Company's Remuneration Committee Charter includes a statement of the Company's policy on prohibiting transactions in associated products which limit the risk of participating in unvested entitlements under any equity based remuneration schemes.

28

BALANCE SHEET As at 30 June 2009

Notes ASSETS Current Assets Cash and cash equivalents 12 Trade and other receivables 13 Prepayments Assets of disposal group classified as held for sale Total Current Assets Non-Current Assets Available for Sale investments 14 Plant and equipment 15 Other financial assets 16 Total Non-Current Assets TOTAL ASSETS LIABILITIES Current Liabilities Trade and other payables 18 Provisions 19 Income Tax payable 7 Deferred tax liability 7 Liabilities directly associated with the assets classified as held for sale 8 Total Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity 20 Reserves 20 Accumulated losses 22 TOTAL EQUITY	Consolidated & Company 2009 ($) 423,389 - 3,957 427,346 - 427,346 70,500 71,158 26,850 168,508 595,854 46,638 55,667 8,086 - 110,391 - 110,391 110,391 485,463 12,074,860 887,043 (12,476,440) 485,463	Consolidated & Company 2008 ($) 771,274 32,633 6,113
		810,020 182,250
		992,270 114,750 101,662 143,227
		359,639
		1,351,909
		185,132 56,145 8,086 28,493
		277,856 2,700
		280,556
		280,556
		1,071,353
		10,896,360 807,454 (10,632,461)
		1,071,353

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

29

INCOME STATEMENT For the Year Ended 30 June 2009

Notes Continuing operations Revenue 6(a) Depreciation and amortisation expense 6(b) Other expenses 6(c),6(d) Loss from continuing operations before income tax Income tax benefit/(expense) 7 Loss from continuing operations after income tax Discontinued Operations Profit/ (loss) from discontinued operations after income tax 8 Net loss attributable to members Loss per share for loss for the year from continuing operations attributable to ordinary equity holders: - basic loss per shares (cents) 9 - diluted loss per share (cents) Loss per share for loss for the year attributable to ordinary equity holders: - basic loss per shares (cents) - diluted loss per share (cents)	Consolidated & Company 2009 ($) 21,418 (30,504) (1,863,386) (1,872,472) 28,493 (1,843,979) - (1,843,979) (2.2) (2.2) (2.2) (2.2)	Consolidated & Company 2008 ($) 155,353 (27,275) (3,454,599)
		(3,326,521) (36,579)
		(3,363,100)
		3,394
		(3,359,706)
		(5.8) (5.8) (5.8) (5.8)

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

30

CASH FLOW STATEMENT For the Year Ended 30 June 2009

Note CASH FLOWS FROM OPERATING ACTIVITIES Interest received Payments to suppliers and employees Expenditure on mineral interests Net cash used in operating activities 12(b) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of equipment Security bonds received (paid) Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of ordinary shares Share issue costs Net cash provided by financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period 12(a)	Consolidated & Company 2009 ($) 21,418 (927,945) (773,514) (1,680,041) - 116,377 116,377 1,376,944 (161,165) 1,215,779 (347,885) 771,274 423,389	Consolidated & Company 2008 ($) 155,353 (1,044,363) (2,118,822)
		(3,007,832)
		(69,148) (6,775)
		(75,923)
		- -
		-
		(3,083,755) 3,855,029
		771,274

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

31

STATEMENT OF CHANGES IN EQUITY For the Year Ended 30 June 2009

At 1 July 2008 Unrealised gain/(loss) on available for sale investments Impairment on available for sale reserves Loss for the year Total recognised income and expense for the year	Consolidated & Company Issued Capital $ Share Option Reserve $ Available for Sale Reserve $ Accumulated Losses $ Total $ 10,896,360 807,454 - (10,632,461) 1,071,353 - - 9,000 - 9,000 - - - - - - - - (1,843,979) (1,843,979) - - 9,000 (1,843,979) (1,834,979) 1,376,944 - - - 1,376,944 (198,444) 37,279 (161,165) - 33,310 - - 33,310 12,074,860 878,043 9,000 (12,476,440) 485,463 10,896,360 714,553 (45,000) (7,272,755) 4,293,158 - - (198,000) - (198,000) - - 243,000 - 243,000 - - - (3,359,706) (3,359,706) - - - (3,359,706) (3,359,706)
Issue of share capital Transaction costs of share issue Options issued – employees At 30 June 2009 At 1 July 2007 Unrealised gain/(loss) on available for sale investments Impairment on available for sale reserves Loss for the year Total recognised income and expense for the year
Issue of share capital Options issued – employees At 30 June 2008	- - - - - - 92,901 - - 92,901 10,896,360 807,454 - (10,632,461) 1,071,353

32

NOTES TO THE FINANCIAL STATEMENTS

NOTE 1 CORPORATE INFORMATION

The financial report of Rox Resources Limited (the Company) for the year ended 30 June 2009 was authorised for issue in accordance with a resolution of the Directors on 24 September 2009.

Rox Resources Limited is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian stock exchange.

The nature of the operations and principal activities of the Group are described in the Directors Report.

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Preparation

The financial report is a general-purposed financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board. The financial report has also been prepared on a historical cost basis, except for available for sale investments and assets held for sale which are measured at fair value. The financial report is presented in Australian dollars.

As a result of the uncertainties inherent in business and other activities, certain items in a financial report cannot be measured with precision but can only be estimated. The estimation process involves best estimates based on the latest information available.

Going Concern

This report has been prepared on the going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and settlement of liabilities in the normal course of business.

The Company and Consolidated Entity have incurred a net loss after tax for the year ended 30 June 2009 of $1,843,979 (2008: $3,359,706) and experienced net cash outflows from operating activities of $1,680,041 (2008: $3,007,832). At 30 June 2009, the Company and Consolidated Entity had net current assets of $316,955 (30 June 2008: net current assets of $711,714).

Since the end of the financial year a further $1,628,706 has been raised through an entitlements issue to shareholders. The Directors believe there are sufficient funds to meet the Company’s working capital requirements and as at the date of this report the Company and Consolidated Entity believe they can meet all liabilities as and when they fall due. However the Directors recognise that additional funding either through the issue of further shares, convertible notes or a combination of both may be required for the Company and Consolidated Entity to continue to actively explore its mineral properties in the long term.

The Directors have reviewed the business outlook and the assets and liabilities of the Company and Consolidated Entity and are of the opinion that the use of the going concern basis of accounting is appropriate.

(a) Compliance statement

The financial report complies with Australian Accounting Standards and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards board.

(b) New accounting standards and interpretations

Australian Accounting Standards and interpretations that have recently been issued or amended but are not yet effective have not been adopted by the Company for the annual reporting period ending 30 June 2009. These are outlined below.

33

NOTES TO THE FINANCIAL STATEMENTS

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)

Reference	Title	Summary	Application date of *standard **	Impact on Group financial report	Application date for *Group **
AASB Int. 16	Hedges of a Net Investment in a Foreign Operation	This Interpretation requires that the hedged risk in a hedge of a net investment in a foreign operation is the foreign currency risk arising between the functional currency of the net investment and the functional currency of any parent entity. This also applies to foreign operations in the form of joint ventures, associates or branches.	1 October 2008	To date the company does not have any investments in a foreign operation and as such there will be no impact on the financial statements when this standard is adopted for the first time.	1 July 2009
AASB 8 and AASB 2007-3	Operating Segments and consequential amendments to other Australian Accounting Standards	New Standard replacing AASB 114_Segment Reporting_, which adopts a management reporting approach to segment reporting.	1 January 2009	The impact of change has not yet been assessed by the Company	1 July 2009
AASB 101 (Revised), AASB 2007-8 and AASB 2007-10	Presentation of Financial Statements and consequential amendments to other Australian Accounting Standards	Introduces a statement of comprehensive income. Other revisions include impacts on the presentation of items in the statement of changes in equity, new presentation requirements for restatements or reclassifications of items in the financial statements, changes in the presentation requirements for dividends and changes to the titles of the financial statements.	1 January 2009	The amendments are expected to only affect the presentation of the Group’s financial report and will not have a direct impact on the measurement and recognition of amounts under the current AASB 101. The Group has not determined at this stage whether to present the new statement of comprehensive income as a single ortwo statements.	1 July 2009
AASB 2008-1	Amendments to Australian Accounting Standard – Share-based Payments: Vesting Conditions and Cancellations	The amendments clarify the definition of “vesting conditions”, introducing the term “non-vesting conditions” for conditions other than vesting conditions as specifically defined and prescribe the accounting treatment of an award that is effectively cancelled because a non-vesting condition is not satisfied.	1 January 2009	The impact of change has not yet been assessed by the Company	1 July 2009
AASB 3 (Revised)	Business Combinations	The revised Standard introduces a number of changes to the accounting for business combinations, the most significant of which includes the requirement to have to expense transaction costs and a choice (for each business combination entered into) to measure a non- controlling interest (formerly a minority interest) in the acquiree either at its fair value or at its proportionate interest in the acquiree’s net assets. This choice will effectively result in recognising goodwill relating to 100% of the business (applying the fair value option) or recognising goodwill relating to the percentage interest acquired. The changes apply prospectively.	1 July 2009	The impact of change has not yet been assessed by the Company	1 July 2009
AASB 127 (Revised)	Consolidated and Separate Financial Statements	There are a number of changes arising from the revision to AASB 127 relating to changes in ownership interest in a subsidiary without loss of control, allocation of losses of a subsidiary and accounting for the loss of control of a subsidiary. Specifically in relation to a change in the ownership interest of a subsidiary (that does not result in loss of control) – such a transaction will be accounted for as an equity transaction.	1 July 2009	The impact of change has not yet been assessed by the Company	1 July 2009

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)

34

NOTES TO THE FINANCIAL STATEMENTS

Reference	Title	Summary	Application date of *standard **	Impact on Group financial report	Application date for *Group **
AASB 2008-3	Amendments to Australian Accounting Standards arising from AASB 3 and AASB 127	Amending Standard issued as a consequence of revisions to AASB 3 and AASB 127. Refer above.	1 July 2009	The impact of change has not yet been assessed by the Company	1 July 2009
AASB 2008-5	Amendments to Australian Accounting Standards arising from the Annual Improvements Project	The improvements project is an annual project that provides a mechanism for making non-urgent, but necessary, amendments to IFRSs. The IASB has separated the amendments into two parts: Part 1 deals with changes the IASB identified resulting in accounting changes; Part II deals with either terminology or editorial amendments that the IASB believes will have minimal impact. This was the first omnibus of amendments issued by the IASB arising from the Annual Improvements Project and it is expected that going forward, such improvements will be issued annually to remove inconsistencies and clarify wording in the standards. The AASB issued these amendments in two separate amending standards; one dealing with the accounting changes effective from 1 January 2009 and the other dealing with amendments to AASB 5, which will be applicable from 1 July 2009 [refer below AASB 2008-6].	1 January 2009	The impact of change has not yet been assessed by the Company	1 July 2009
AASB 2008-6	Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project	This was the second omnibus of amendments issued by the IASB arising from the Annual Improvements Project. Refer to AASB 2008-5 above for more details.	1 July 2009	The impact of change has not yet been assessed by the Company	1 July 2009
AASB 2008- 9**	Amendments to AASB 1049 for consistency with AASB 101	Reflects the revised requirements of AASB 101 and AASB 2007-8 with clarification to apply the requirements in a government context.	1 January 2009	The impact of change has not yet been assessed by the Company	1 July 2009
AASB 123 (Revised) and AASB 2007-6	Borrowing Costs and consequential amendments to other Australian Accounting Standards	The amendments to AASB 123 require that all borrowing costs associated with a qualifying asset be capitalised.	1 January 2009	The impact of change has not yet been assessed by the Company	1 January 2009

35

NOTES TO THE FINANCIAL STATEMENTS

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)

Reference	Title	Summary	Application date of *standard **	Impact on Group financial report	Application date for *Group **
AASB 2009-2	Amendments to Australian Accounting Standards – Improving Disclosures about Financial Instruments [AASB 4, AASB 7, AASB 1023 & AASB 1038]	The main amendment to AASB 7 requires fair value measurements to be disclosed by the source of inputs, using the following three-level hierarchy: ► quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1); ► inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (Level 2); and ► inputsfor the asset or liability that are not based on observable market data (unobservable inputs) (Level 3). These amendments arise from the issuance of_Improving_ Disclosures about Financial Instruments (Amendments to _IFRS 7)_by the IASB in March 2009. The amendments to AASB 4, AASB 1023 and AASB 1038 comprise editorial changes resulting from the amendments to AASB 7.	Annual reporting periods beginning on or after 1 January 2009 that end on or after 30 April 2009.	The impact of change has not yet been assessed by the Company	1 July 2009
AASB 2009-4	Amendments to Australian Accounting Standards arising from the Annual Improvements Project [AASB 2 and AASB 138 and AASB Interpretations 9 & 16]	The amendments to some Standards result in accounting changes for presentation, recognition or measurement purposes, while some amendments that relate to terminology and editorial changes are expected to have no or minimal effect on accounting. The main amendment of relevance to Australian entities is that made to IFRIC 16 which allows qualifying hedge instruments to be held by any entity or entities within the group, including the foreign operation itself, as long as the designation, documentation and effectiveness requirements in AASB 139 that relate to a net investment hedge are satisfied. More hedging relationships will be eligible for hedge accounting as a result of the amendment. These amendments arise from the issuance of the IASB’s Improvements to IFRSs. The amendments pertaining to IFRS 5, 8, IAS 1,7, 17, 36 and 39 have been issued in Australia as AASB 2009-5 (refer below).	1 July 2009	The impact of change has not yet been assessed by the Company	1 July 2009

36

NOTES TO THE FINANCIAL STATEMENTS

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)

Reference	Title	Summary	Application date of *standard **	Impact on Group financial report	Application date for *Group **
AASB 2009-5	Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project [AASB 5, 8, 101, 107, 117, 118, 136 & 139]	The amendments to some Standards result in accounting changes for presentation, recognition or measurement purposes, while some amendments that relate to terminology and editorial changes are expected to have no or minimal effect on accounting. The main amendment of relevance to Australian entities is that made to AASB 117 by removing the specific guidance on classifying land as a lease so that only the general guidance remains. Assessing land leases based on the general criteria may result in more land leases being classified as finance leases and if so, the type of asset which is to be recorded (intangible v property, plant and equipment) needs to be determined. These amendments arise from the issuance of the IASB’s Improvements to IFRSs. The AASB has issued the amendments to IFRS 2, IAS 38, IFRIC 9 as AASB 2009-4 (refer above).	1 January 2010	The impact of change has not yet been assessed by the Company	1 July 2010
AASB 2009-Y	Amendments to Australian Accounting Standards [AASB 5, 7, 107, 112, 136 & 139 and Interpretation 17]	These comprise editorial amendments and are expected to have no major impact on the requirements of the amended pronouncements.	1 July 2009	The impact of change has not yet been assessed by the Company	1 July 2009
Amendments to International Financial Reporting Standards	Amendments to IFRS 2	The amendments clarify the accounting for group cash- settled share-based payment transactions, in particular: ► the scope of AASB 2; and ► the interaction between IFRS 2 and other standards. An entity that receives goods or services in a share-based payment arrangement must account for those goods or services no matter which entity in the group settles the transaction, and no matter whether the transaction is settled in shares or cash. A “group” has the same meaning as in IAS 27 Consolidated and Separate Financial Statements, that is, it includes only a parent and its subsidiaries. The amendments also incorporate guidance previously included in IFRIC 8_Scope of IFRS 2_and IFRIC 11_IFRS_ 2—Group and Treasury Share Transactions. As a result, IFRIC 8 and IFRIC 11 have been withdrawn.	1 January 2010	The impact of change has not yet been assessed by the Company	1 July 2010
AASB 123 (revised) and AASB 2007-6	Borrowing Costs and consequential amendments to other Australian Accounting Standards.	The amendments to AASB 123 require that all borrowing costs associated with a qualifying asset be capitalised.	1 July 2009	The Group has no borrowing costs associated with qualifying assets and as such the amendments are not expected to have any impact on the Group's financial report	1 July 2009

37

NOTES TO THE FINANCIAL STATEMENTS

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)

(c) Summary of significant accounting policies

(i) Basis of consolidation

The consolidated financial statements comprise the financial statements of Rox Resources Limited and its subsidiaries as at 30 June each year (the Group).

Subsidiaries are all those entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies so as to obtain benefits from their activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether a group controls another entity.

The financial statements if the subsidiaries are prepared for the same reporting period as the Parent

Company, using consistent accounting policies.

In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and profit and losses resulting from intra-group transactions have been eliminated in full.

Subsidiaries are fully consolidated from the date on which control is obtained by the Group and cease to be consolidated from the date on which control is transferred out of the Group.

The acquisition of subsidiaries is accounted for using the purchase method of accounting. The purchase method of accounting involves allocating the cost of the business combination to the fair value of the assets acquired and the liabilities and contingent liabilities assumed at the date of acquisition.

Minority interests not held by the Group are allocated their share of net profit after tax in the income statement and are presented within equity in the consolidated balance sheet, separately from parent shareholders’ equity.

(ii) Segment reporting

A business segment is a distinguishable component of the entity that is engaged in providing products or services that are subject to risks and returns that are different to those of other operating business segments. A geographical segment is a distinguishable component of the entity that is engaged in providing products or services within a particular economic environment and is subject to risks and returns that are different than those of segments operating in other economic environments.

(iii) Cash and cash equivalents

Cash and short-term deposits in the balance sheet comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less.

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

• (iv) Non-current assets and disposal groups held for sale and discontinued operations

Non-current assets and disposal groups are classified as held for sale and measured at the lower of their carrying amount and fair value less costs to sell if their carrying amount will be recovered principally through a sale transaction. They are not depreciated or amortised. For an asset or disposal group to be classified as held for sale, it must be available for immediate sale in its present condition and its sale must be highly probable.

An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset (or disposal group) is recognised at the date of derecognition.

A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single coordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately on the face of the income statement and the assets and liabilities are presented separately on the face of the balance sheet.

38

NOTES TO THE FINANCIAL STATEMENTS

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)

(v) Deferred exploration and evaluation expenditure

Exploration and evaluation costs are written off in the year they are incurred apart from acquisition costs which 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 reached a stage that permits reasonable assessment of the existence of economically recoverable reserves.

Where an area of interest is abandoned or the directors decide that it is not commercial, any accumulated acquisition costs in respect of that area are written off in the financial period the decision is made. Each area of interest is also reviewed at the end of each accounting period and accumulated costs written off to the extent that they will not be recoverable in the future.

Amortisation is not charged on costs carried forward in respect of areas of interest in the development phase until production commences.

• (vi) Trade and other payables

Trade payables and other payables are carried at amortised costs and represent liabilities for goods and services provided to the Company prior to the end of the financial year that are unpaid and arise when the Company becomes obliged to make future payments in respect of the purchase of these goods and services.

(vii) Issued capital

Ordinary share 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, net of tax, of the share proceeds received.

(viii) 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 laws used to compute the amount are those that are enacted or substantially enacted by the balance sheet date.

Deferred income tax is provided on all temporary difference 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 goodwill or 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; and

• in respect of taxable temporary differences associated with investments in subsidiaries, associates and interest 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.

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 assets and unused tax losses can be utilised:

• except where 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; and

• in respect of deductible temporary differences associated with investments in subsidiaries, associates and interest 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.

39

NOTES TO THE FINANCIAL STATEMENTS

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)

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.

Unrecognised deferred income tax assets are reassessed at each balance sheet 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.

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 sheet date.

Income taxes relating to items recognised directly in equity are recognised in equity and not in the income

statement.

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 preferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.

(ix) Trade and other receivables

Trade receivables generally have 30 day terms and 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 when identified.

(x) Plant and equipment

All classes of plant and equipment are stated at historical cost less accumulated depreciation and any accumulated impairment losses.

Depreciation

Depreciation is provided on a straight-line basis over the estimated useful life of the specific asset as follows:

2009 2008 Computers 3 years 3 years Office Equipment 3 - 4 years 3 – 4 years Vehicles 10 years 10 years Impairment

The carrying values of plant and equipment are reviewed for impairment at each balance date, with recoverable amount being estimated 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, unless the asset’s value in use can be estimated to be close to its fair value.

An impairment exists when the carrying values of an asset or cash generating unit exceeds its estimated recoverable amount. The asset or cash-generating unit is then written down to its recoverable amount.

The recoverable amount of plant and equipment is the greater of 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.

Derecognition

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset.

Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the income statement in the period the item is derecognised.

40

NOTES TO THE FINANCIAL STATEMENTS

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)

(xi) Employee benefits

Provision is made for the employee benefits accumulated as a result of employees rendering services up to the reporting date. These benefits include wages and salaries, annual leave, sick leave and long service leave.

Liabilities arising in respect of wages and salaries, annual leave and other employee benefits expected to be settled within 12 months of the reporting date are measured at the nominal amounts based on remuneration rates which are expected to be paid when the liability is settled. All other employee benefit liabilities are measured at the present value of the estimated future cash outflow to be made in respect of services provided by employees up to the reporting date. In determining the present value of future cash outflows, the market yield as at the reporting date on national government bonds, which have terms to maturity approximating the terms of the related liability, are used.

(xii) Revenue recognition

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

Interest

Revenue is recognised as the interest accrues (using the effective interest method, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial instrument) to the net carrying amount of the financial asset.

(xiii) Leases

Leases are classified at the inception as either operating or finance leases, based on the economic substance of the agreement so as to reflect the risks and benefits incidental to ownership.

Operating leases

The minimum lease payments of operating leases, where the lessor effectively retains substantially all of the risks and benefits of ownership of the leased item, are recognised as an expense on a straight-line basis.

Contingent rentals are recognised as an expense in the financial year in which they are incurred.

(xiv) Impairment of assets

At each reporting date, the Company assesses whether there is any indication that an asset may be impaired. Where an indicator of impairment exists, the Company 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 its 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 cash-generating unit to which the asset 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 risk specific to the asset.

Impairment losses relating to continuing operations are recognised in those expense categories consistent with the function of the impaired asset.

41

NOTES TO THE FINANCIAL STATEMENTS

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)

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.

(xv) Goods and service tax (GST)

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

• where the GST incurred on a 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 Cash Flow Statement 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.

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

(xvi) Earnings/loss per share

Basic earnings/loss per share is calculated by dividing the profit from ordinary activities after related income tax expense by the weighted average number of ordinary shares outstanding during the financial year.

Diluted earnings/loss per share is calculated as net profit/loss attributable to members, adjusted for:

• costs of servicing equity (other than dividends);

• the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and

• other discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares;

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

(xvii) Share based payment transactions

The Company provides benefits to employees (including Directors) of the Company in the form of sharebased payment transactions, whereby employees render services in exchange for shares or rights over shares (‘equity-settled transactions’).

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.

In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of Rox 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’).

42

NOTES TO THE FINANCIAL STATEMENTS

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)

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.

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition.

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 transactions 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 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.

(xviii) Foreign currency

The functional currency of the Company is measured using the currency of the primary economic environment in which it operates, being Australia. The financial statements are presented in Australian dollars.

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year end exchange rate.

(xix) Available-for-sale investments

Available-for-sale investments are those non-derivative financial assets that are designated as availablefor-sale. After initial recognition available-for-sale investments are measured at fair value with gains or losses being recognised as a separate component of equity until the investment is derecognised or until the investment is determined to be impaired, at which time the cumulative gain or loss previously reported in equity is recognised in profit or loss.

The fair value of investments that are actively traded in organised financial markets are determined by reference to quoted market bid prices at the close of business on the balance sheet date. For investments with no active market, fair values are determined using valuation techniques. Such techniques include: using recent arm’s length market transactions; reference to the current market value of another instrument that is substantially the same; discounted cash flow analysis and option pricing models making as much use of available and supportable market data as possible and keeping judgemental inputs to a minimum.

Impairment

If there is objective evidence that an available-for-sale investment is impaired, an amount comprising the difference between its cost and its current value, less any impairment loss previously recognised in profit or loss, is transferred from equity to the income statement. Reversals of impairment losses for equity instruments classified as available-for-sale are not recognised in profit. Reversals of impairment losses for debt instruments are reversed through profit or loss if the increase in an instrument’s fair value can be objectively related to an event occurring after the impairment loss was recognised in profit or loss.

43

NOTES TO THE FINANCIAL STATEMENTS

NOTE 3 FINANCIAL RISK MANAGEMENT AND POLICIES

Overview

The Company has exposure to the following risks from its use of financial instruments:

• credit risk

• liquidity risk

• market risk

• price risk

This note presents information about the Company’s exposure to each of the above risks, its 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. Management monitors and manages the financial risks relating to the operations of the Company through regular reviews of the risks.

Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers and investment securities. For the Company it arises from receivables due from subsidiaries, if any.

Trade and other receivables

As the Company operates in the mining exploration sector, it does not have trade receivables and therefore is not exposed to credit risk in relation to trade receivables.

Presently, the Company undertakes exploration and evaluation activities in Australia and Laos. At the balance sheet date there were no significant concentrations of credit risk.

Exposure to credit risk

The carrying amount of the Company’s financial assets represents the maximum credit exposure. The Company’s maximum exposure to credit risk at the reporting date was:

		Carrying	amount
	Note	2009	2008
Trade and other receivables	13	-	32,633
Cash and cash equivalents	12	423,389	771,274

None of the Company’s trade and other receivables are past due (2008: nil). At 30 June 2009 the Company does not have any collective impairments on its other receivables (2008: nil).

Guarantees

Company policy is to provide financial guarantees only to wholly-owned subsidiaries. At the date of this report there are no outstanding guarantees.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company’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 Company’s reputation.

The Company manages liquidity risk by maintaining adequate reserves by continuously monitoring forecast and actual cash flows.

The Company anticipated a need to raise additional capital in the next 12 months to meet forecasted exploration activities. Since the end of the financial period the Company has raised approximately $1,628,706 by way of a pro-rata rights issue of 108,580,426 shares on the basis of 1 new share for every share held at an issue price of $0.015, together with 10,858,043 free attaching options, each exercisable at $0.015 on or before 30 June 2011 on the basis of 1 new option for every 10 shares issued.

Typically the Company ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 12 months, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.

44

NOTES TO THE FINANCIAL STATEMENTS

NOTE 3 FINANCIAL RISK MANAGEMENT AND POLICIES (cont’d)

The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements:

Consolidated & Company

							More
	Carrying	Contractual	6 mths	6-12			than 5
	amount	cash flows	or less	mths	1-2 years	2-5 years	years
30 June 2009
Trade and other	46,638	-	46,638	-	-	-	-
payables
30 June 2008
Trade and other	185,132	-	185,132	-	-	-	-
payables

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 Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

Currency risk

The Company is exposed to currency risk on investments and purchases that are denominated in a currency other than the respective functional currencies of Company entities, primarily the Australian dollar (AUD), but also the United States Dollar (USD). The currencies in which these transactions primarily are denominated are AUD and USD.

The Company has not entered into any derivative financial instruments to hedge such transactions and anticipated future receipts or payments that are denominated in a foreign currency.

The Company considers that its exposure to currency risk is minimal and has not developed any policies or procedures to manage such risk.

Exposure to currency risk

The Company’s exposure to foreign currency risk at balance date was as Nil (2008: Nil)

Price Risk

Equity securities price risk arises from investments in equity securities. The Company does not actively invest in equity securities and its exposure to price risk is minimal, though from time to time it will acquire holdings in equity securities as a result of dealings in its exploration interests. The Company reviews its portfolio at least each quarter. The equity investments held by the Company are publicly traded on the ASX (Australian Securities Exchange) and as such there is a ready market for the investments at most times.

The financial instruments exposed to movements in equity prices are as follows:

					Carrying amount	Carrying amount
				Note	2009	2008
Available for sale	investments			14	70,500	114,750
Sensitivity analysis
			Effect on:		Effect on:
		Profit		Equity	Profit	Equity
Risk Variable	Sensitivity	2009		2009	2008	2008
Share Price Sensitivity	+5%	-		3,525	-	5,738
Share Price Sensitivity	-5%	-		(3,525)	-	(5,738)

45

NOTES TO THE FINANCIAL STATEMENTS

NOTE 3 FINANCIAL RISK MANAGEMENT AND POLICIES (cont’d)

Interest rate risk

The Company is exposed to interest rate risk. The Company considers that its exposure to interest risk is minimal, however it has a policy of monitoring interest rates offered by competing financial institutions to ensure it is aware of of market trends and it receives competitive interest rates.

Profile

At the reporting date the interest rate profile of the Company’s interest-bearing financial instruments was:

	Consolidated & Company
	Carrying amount
	2009 2008
Variable rate instruments
Financial assets	423,389 771,274

Fair value sensitivity analysis for fixed rate instruments

The Company does not account for any fixed rate financial assets and liabilities at fair value through profit or loss, and the Company does not carry any derivative or hedging instruments. Therefore a change in interest rates at the reporting date would not affect profit or loss.

The Company holds financial assets subject to variable interest rates and fluctuating interest rates would affect the Groups profit and equity. A change of 100 basis points in variable interest rates would have increased or decreased the Company’s equity and profit by $4,234 (2008: $7,712 ), and would have had the same effect on cash flow. The difference between 2009 and 2008 reflects the difference in value of financial assets subject to variable interest rates. The difference in interest rates during this and the previous financial period have had no material impact on the results of the Company. The 1% sensitivity is based on reasonable possible movements over a financial year, after observation of a range of actual historical rate movement over the past five years.

Capital Management

When managing capital, managements objective is to ensure the entity continues as a going concern as well as to maintain optimal returns to shareholders and benefits for other stakeholders. Management also aims to maintain a capital structure that ensures the lowest cost of capital available to the entity.

The group will raise equity through the issue of shares from time to time as the board sees fit to ensure it meets its objective of continuing as a going concern. The group’s does not have any borrowings and has no current plans to obtain any debt facilities, as a result the groups total capital is defined as shareholders’ equity and at 30 June stood at:

stood at:
	Consolidated	& Company
	2009	2008
Equity	485,463	1,071,353

The group is not subject to any externally imposed capital requirements

Fair Values

Other than for available for sale investments and assets held for sale the net fair value approximates their carrying value because of their short term to maturity.

Available for sale investments are readily traded on organised markets in standardised form and the carrying value equates to fair value.

46

NOTES TO THE FINANCIAL STATEMENTS

NOTE 4 SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTMATES AND ASSUMPTIONS

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements and estimates on historical experience and on various factors it believes to be reasonable under the circumstances, the result of which form the basis of the carrying values of assets and liabilities that are not readily assumptions and conditions.

Management has identified the following critical accounting policies for which significant judgements, estimates and assumptions are made. Actual results may differ from these estimates under different assumptions and conditions and may materially affect financial results or the financial position reported in future periods.

Further details of the nature of these assumptions and conditions may be found in the relevant notes to the financial statements.

Exploration and Evaluation

The Company’s accounting policy for exploration and evaluation is set out in note 2 to the accounts. The application of this policy necessarily requires management to make certain estimates and assumptions as to future events and circumstances, in particular, the assessment of whether economic quantities of reserves have been found. Any such estimates and assumptions may change as new information becomes available. If, after having capitalised expenditure under our policy, we conclude that we are unlikely to recover the expenditure by future exploitation or sale, then the relevant capitalised amount will be written off to the Income Statement.

NOTE 5 SEGMENT INFORMATION

The Company operates as a mineral exploration company in Western Australia, South Africa and Laos and these are the primary segments for reporting purposes.

Consolidated & Company

	Australia	Australia	South	Africa (i)	Laos	Laos	Total	Total
	2009	2008	2009	2008	2009	2008	2009	2008
Revenue Interest revenue (Unallocated)	-	-	-	-	-	-	21,418	155,353
Segment expenses	(1,544,962)	(2,133,677)	(182,250)	-	(166,678)	(1,208,145)	(1,893,890)	(3,341,822)
Total Segment Result	(1,523,544)	(2,133,677)	(182,250)	-	(166,678)	(1,208,145)	(1,872,472)	(3,341,822)
Result-discontinued operations	-	-	-	3,394	-	-	-	3,394
Other segment information
Segment assets	595,854	1,151,827	-	182,250	-	17,832	595,854	1,351,909
Capital expense	-	69,149	-	-	-	-	-	69,149
Segment liabilities	(102,305)	(241,277)	(8,086)	(39,279)	-	-	(110,391)	(280,556)
Non-cash transactions (i)
Depreciation	(30,504)	(27,275)	-	-	-	-	(30,504)	(27,275)
Impairment loss	-	-	(182,250)	(21,278)	-	-	(182,250)	(21,278)

(i) Refer to note 8 and 17 for details of the impairment loss recognised on the South African Diamond project.

47

NOTES TO THE FINANCIAL STATEMENTS

NOTE 6 REVENUE AND EXPENSES FROM CONTINUING OPERATIONS Notes (a) Revenue and other income from non-operating activities Bank interest received (b) Depreciation (c) Other expenses from ordinary activities Corporate expenses Occupancy and related expenses Exploration expenditure expensed during the period Impairment of exploration and evaluation expenditure Impairment of fair value of available for sale investments (d) Employee benefits expense Salaries and wages Superannuation Share based payments NOTE 7 INCOME TAX The major components of income tax expenses are: Income Statement Current Income Tax Current income tax charge/(Benefit) Deferred Income Tax Relating to origination and reversal of temporary differences Income tax expense reported in the income statement	Consolidated & Company 2009 ($) 21,418	Consolidated & Company 2008 ($) 155,353
	30,504 270,570 162,660 676,314 182,250 53,250 1,345,044 455,105 29,927 33,310 518,342 1,863,386 $ - (28,493) (28,493)	27,275 329,468 160,367 2,025,143 21,278 243,000
		2,779,256 551,465 30,977 92,901
		675,343
		3,454,599
		$ 8,086 28,493
		36,579

48

NOTES TO THE FINANCIAL STATEMENTS

NOTE 7 INCOME TAX (cont’d)	Notes	Consolidated	Consolidated		Consolidated	Consolidated
		& Company			& Company
		2009				2008
		($)				($)
A reconciliation between tax expense and the product of accounting profit before income tax multiplied by
the Company’s applicable income tax rate is as	follows:
Accounting loss before tax from continuing
operations		(1,872,472)				(3,326,521)
Profit before tax from discontinued operations			-			3,394
Accounting loss before income tax		(1,872,472)				(3,323,127)
At the Company’s statutory income tax rate of		(561,742)				(996,938)
30%
Foreign exploration expenditure not deductible			50,223			391,125
Loss on investments			67,950			79,283
Capital gains tax		(28,493)				36,579
Other			(3,956)			9,844
Share based payments			9,993			27,870
Losses not recognised		437,532				488,816
Income tax expense reported in the income		(28,493)				36,579
statement
	BALANCE	SHEET	INCOME STATEMENT
	2009	2008		2009		2008
	($)	($)		($)		($)
Deferred income tax
Deferred income tax at 30 June relates
to the following:
Deferred tax liabilities
Prepayments	(1,187)	(1,834)			647	(487)
Plant & equipment	4,506	2,550		1,956		3,098
Assets held for sale	-	(28,493)		28,493		49,889
Deferred tax assets
Accruals	9,300	16,500		(7,200)		13,500
Share issue costs	43,803	7,685		36,118		(45,782)
Provision for annual leave	16,700	16,844		(144)		9,330
Revenue tax losses	1,643,454	1,294,285	437,303			425,507
Deferred tax assets not brought to
account as realisation is not
probable	(1,716,576)	(1,279,044)	(525,666)			(426,562)
	-	28,493
Current year losses not
recognised					-	-
Deferred tax (income)/expense			(28,493)			28,493

49

NOTES TO THE FINANCIAL STATEMENTS

NOTE 7 INCOME TAX (cont’d)

Potential future income tax benefits attributable to tax losses of $5,771,968 (2008: $4,313,528) carried forward have not been brought to account at 30 June 2009 because Directors do not believe it is appropriate to regard realisation of the future tax benefit as probable. These benefits will only be obtained if:

• (i) the Company derives future assessable income of a nature and of an amount sufficient to enable the benefit from the losses and deductions to be released;

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

• (iii) no changes in tax legislation adversely affect the Company in realising the benefit from the deductions for the losses.

Tax losses carried forward have no expiry date. Tax consolidation for the Group has not been adopted.

NOTE 8 DISCONTINUED OPERATIONS

The Company reached agreement for the sale of its South African diamond projects on the 15 August 2006 and was undertaken to enable the Company to concentrate on its Pha Luang lead-zinc project in Laos.

The disposal of the South African diamond projects has been conditional on a number of preconditions. The Company has been attempting to satisfy those preconditions since August 2006 without success. Given that the preconditions have not been able to be met in the three years since agreement was reached to sell the South African diamond projects there is considerable uncertainty as to whether the preconditions to the sale will be able to be met and any further sales proceeds realised. As it is no longer highly probable that the preconditions to the sale will be met at 30 June 2009 the South African diamond project assets have been transferred to Exploration and Evaluation and written down to a nil carrying value (refer to note 17).

The results of the discontinued operations for the comparative period are presented below:

Revenue Expenses Gross profit (loss) Impairment Gain from sale of non current assets Profit(Loss) before tax from discontinued operations Related income tax Profit(Loss) for the year from discontinued operations	Consolidated & Company 2009 $ Consolidated & Company 2008 $ South Africa Diamonds South Africa Diamonds - - - 3,394
	- 3,394 - -
	- -
	- 3,394 - -
	- 3,394

50

NOTES TO THE FINANCIAL STATEMENTS

NOTE 8 DISCONTINUED OPERATIONS (cont’d)

Consolidated & Company 2009 $ The major classes of assets and liabilities of the South African diamond projects at 30 June 2009 are as follows: Assets Other- capitalised exploration expenditure (a) - Liabilities - Trade creditors and payables - Net assets attributable to discontinued operations - The net cash flows of the South African diamond projects are as follows: Operating activities - Investing activities - Finance activities - Net cash outflows - (a) Assets of Disposal Group Classified as Held for Sale 2009 $	Consolidated & Company 2009 $ The major classes of assets and liabilities of the South African diamond projects at 30 June 2009 are as follows: Assets Other- capitalised exploration expenditure (a) - Liabilities - Trade creditors and payables - Net assets attributable to discontinued operations - The net cash flows of the South African diamond projects are as follows: Operating activities - Investing activities - Finance activities - Net cash outflows - (a) Assets of Disposal Group Classified as Held for Sale 2009 $	Consolidated & Company 2008 $ 182,250 - (2,700)
	-	179,550
	- - -	(12,406) - - (12,406) 2008 $
	-
	2009 $
At 1 July	182,250	261,278
Part consideration for sale	-	(57,750)
Impairment Loss	-	(21,278)
Transferred to Exploration and Evaluation (note 17)	(182,250)	-
At 30 June	-	182,250

51

NOTES TO THE FINANCIAL STATEMENTS

NOTE 9 LOSS PER SHARE The following reflects the income and share data used in the calculation of basic and diluted earnings per share Net loss Adjustments: - Nil - Earnings used in calculating basic and diluted earnings per share Weighted average number of ordinary shares used in calculating basic earnings per share Effective of dilutive securities: - Share options (i) Adjusted weighted average number of ordinary shares used in calculating diluted earnings per share	Consolidated & Company 2009 $ (1,843,979) - (1,843,979) 84,710,697 - 84,710,697	Consolidated & Company 2008 $ (3,359,706) -
		(3,359,706)
		57,875,333
		-
		57,875,333

• (i) Share options are not dilutive as their exercise would have the impact of decreasing loss per share.

There were a total of 36,760,238 share options that were potentially dilutive shares on issue at 30 June 2009 (2008: 11,850,000).

Conversion, calls, subscriptions or issues after 30 June 2009

Since the end of the financial year no ordinary shares have been issued pursuant to the exercise of options.

Since the end of the financial year 108,580,426 fully paid ordinary shares and 38,003,192 options exercisable at $0.015 by 31 July 2011 have been issued as a result of an entitlements issue to shareholders.

There have been no other conversions to, calls of, or subscriptions for ordinary shares or issues of potential ordinary shares since the reporting date and before the completion of this financial report.

NOTE 10 DIRECTOR AND EXECUTIVE DISCLOSURES

(a) Details of Key Management Personnel

Jeffrey Gresham Non-executive Chairman ( appointed 1 October 2006) Ian Mulholland Managing Director ( appointed 27 November 2003) Michael Blakiston Non-executive Director ( appointed 27 November 2003) Brett Dickson Company Secretary ( appointed 27 November 2003)

(b) Compensation of Key Management Personnel by Category

Short Term Post Employment Share-Based Payments	Consolidated & Company 2009 $ 333,688 56,275 26,693 416,656	Consolidated & Company 2008 $ 388,490 86,656 64,778
		539,924

52

NOTES TO THE FINANCIAL STATEMENTS

NOTE 10 DIRECTOR AND EXECUTIVE DISCLOSURES (cont’d)

(c) Share holdings of Key Management Personnel

2009	Balance at 1 July 2008	Granted as Remuneration	Purchased	Net Change Other	Balance at 30 June 2009
M Blakiston	1,197,857	-	765,595	-	1,963,452
I Mulholland	1,800,000	-	2,990,354	-	4,790,354
J Gresham	130,000	-	231,667	-	361,667
B Dickson	1,939,279	-	2,522,576	-	4,461,855
	5,067,136	-	6,510,192	-	11,577,328
2008	Balance at 1 July 2007	Granted as Remuneration	Purchased	Net Change Other	Balance at 30 June 2008
M Blakiston	1,197,857	-	-	-	1,197,857
I Mulholland	1,400,000	-	400,000	-	1,800,000
J Gresham	20,000	-	110,000	-	130,000
B Dickson	1,712,279	-	427,000	(200,000)	1,939,279
	4,330,136	-	937,000	(200,000)	5,067,136

(d) Options holdings of Key Management Personnel

2009 J Gresham M Blakiston I Mulholland B Dickson	Balance at 1 July 2008 Granted as Remuneration Options Purchased Options Expired Balance at 30 June 2009 1,000,000 - 60,278 - 1,060,278 1,000,000 - 327,342 (1,000,000) 327,342 5,000,000 - 2,067,399 (3,000,000) 4,067,399 600,000 - 1,622,399 - 2,222,399
	7,600,000 - 4,077,418 (4,000,000) 7,677,418

All options purchased during the year were a result of the key management personnel participating in the Company’s entitlement share issue.

At 30 June 2009 all options held by directors and executives are fully vested and may be exercised any time until expiry.

2008 J Gresham M Blakiston I Mulholland B Dickson	Balance at 1 July 2007 Granted as Remuneration Options Exercised Net Change Other Balance at 30 June 2008 1,000,000 - - - 1,000,000 1,000,000 - - - 1,000,000 3,000,000 2,000,000 - - 5,000,000 600,000 - - - 600,000
	5,600,000 2,000,000 - - 7,600,000

At 30 June 2008 all options held by directors and executives are fully vested and may be exercised any time until expiry except for 1,000,000 held by I Mulholland which are not exercisable until after 27 April 2009 and 200,000 held by B Dickson which are not exercisable until after 1 April 2009.

53

NOTES TO THE FINANCIAL STATEMENTS

NOTE 11 AUDITOR’S REMUNERATION Notes Consolidated & Company 2009 ($) Remuneration of the auditor of the Company, Ernst & Young (Australia) for: Auditing and reviewing the financial report 43,054 Taxation services 15,532 58,586 NOTE 12 CASH AND CASH EQUIVALENTS (a) Cash and cash equivalents 423,389 Cash at bank earns interest at floating rates based on daily deposit rates (b) Reconciliation of net loss after income tax to net cash flow from operations: Net loss after Income Tax 1,843,979 Adjustments for non-cash expense items - Depreciation (30,504) - Share based payments (33,310) - Impairment of exploration and evaluation (182,250) - impairment of available for sale investments (53,250) Changes in assets and liabilities - Increase (decrease) in prepayments (2,156) - Increase (decrease) in provisions 478 - Increase (decrease) in receivables (32,633) - Increase (decrease) in payables 141,194 - Increase in income tax payable - - Increase in deferred tax liability 28,493 Cash out-flow from operations 1,680,041		Consolidated & Company 2008 ($) 54,140 12,200
		66,340
		771,274
		3,359,706 (27,275) (92,901) (21,278) (243,000) 1,623 (31,099) 32,453 66,182 (8,086) (28,493)
		3,007,832

(c) During the 2008 and 2009 financial years there were no non-cash financing and investing activities.

(d) The Company does not have any credit standby arrangements, used or unused loan facilities.

NOTE 13 TRADE AND OTHER RECEIVABLES

Trade Debtors erms and Conditions rade debtors are non-interest bearing and generally on 30 day terms. NOTE 14 NON-CURRENT ASSETS - AVAILABLE FOR SALE INVESTMENTS At fair value Shares – listed (b)	- 32,633 70,500 114,750

Terms and Conditions

Trade debtors are non-interest bearing and generally on 30 day terms.

Available for sale investments consists of investments in ordinary shares, and therefore have no fixed maturity date or coupon rate.

54

NOTES TO THE FINANCIAL STATEMENTS

NOTE 14 NON-CURRENT ASSETS - AVAILABLE FOR SALE INVESTMENTS (cont’d) Notes (a) Movements in available for sale assets Balance at 1 July Acquisitions Unrealised gain/(loss) on available for sale investments transferred to equity Impairment written down through income statement Balance at 30 June	Consolidated & Company 2009 ($) Consolidated & Company 2008 ($) 114,750 255,000 - 57,750 9,000 - (53,250) (198,000)
	70,500 114,750

An impairment loss of $53,250 in respect of available for sale investments was recognised during the current year in the profit and loss (2008: $243,000) owing to a reduction in the trading value of those securities.

(b) Listed shares

The fair value of listed available for sale investments has been determined directly by reference to published price quotations in an active market.

There are no individually material investments.

NOTE 15 PLANT AND EQUIPMENT

Equipment at cost Accumulated depreciation (a) Movements in plant and equipment - At 1 July, net of accumulated depreciation - Additions - Disposals - Depreciation At 30 June, net of accumulated depreciation NOTE 16 OTHER FINANCIAL ASSETS Receivables - Security deposits	156,915 (85,759) 71,158 101,662 - - (30,504) 71,158 26,850	156,915 (55,253)
		101,662
		59,789 69,148 - (27,275)
		101,662
		143,227

Cash security deposits have been placed with the Company’s bank to secure guarantees required to be put in place to cover environmental bonds placed with the Western Australia Department of Industry and Resources. The deposits are interest bearing with interest maturing each 180 days.

NOTE 17 EXPLORATION AND EVALUATION

NOTE 17 EXPLORATION AND EVALUATION
Areas of interest in exploration and evaluation phases Balance at beginning of period Transfer from assets of disposal group held for sale Impairment writedown	- 182,250 (182,250) -	- - -
		-

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

As a result of the impairment test carried out at 30 June 2009 the carrying amount of the South African diamond project transferred from the Disposal Group Held for Sale was determined to be higher than its recoverable amount and an impairment loss of $182,250 (2008; 21,278) has been recognised at 30 June 2009. The project recoverable value is taken to be its fair value less cost to sell. As there is a considerable uncertainties as to whether the preconditions for the sale of this project will be met (refer note 8), the fair value less costs to sell at 30 June 2009 is considered to be nil.

55

NOTES TO THE FINANCIAL STATEMENTS

	Notes	Consolidated	Consolidated
NOTE 18 TRADE AND OTHER PAYABLES		& Company 2009	& Company 2008
		($)	($)
Trade creditors and accruals (a)		46,638	185,132
(a) Terms and Conditions
Creditors, including related parties, are non-interest bearing and		generally on 30 day	terms.
NOTE 19 PROVISIONS
Employee benefits	19(a)	55,667	56,145
(a) Movements in Employee Benefits
At 1 July		56,145	25,046
Additions		(478)	31,099
At 30 June		55,667	56,145
NOTE 20 CONTRIBUTED EQUITY AND RESERVES
(i) Contributed Equity
(a) Issued and paid up capital
Ordinary shares fully paid		12,074,860	10,896,360
(b) Movement in shares on issue
Issued and paid up capital – Ordinary shares fully paid
Ordinary shares at beginning of period – 57,875,333
(2008: 57,875,333)		10,896,360	10,896,360
Issue of 14,511,095 shares at $0.045 per share (net of share
issue costs)		613,821	-
Issue of 36,193,214 shares at $0.02 per share (net of share		573,327	-
issue costs)
Exercise of 784 options at $0.10 each		78	-
Preliminary expenses for entitlements issue		(8,726)	-
At reporting date: 108,580,426 ordinary shares		12,074,860	10,896,360

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

(c) Share Options

During the year 5,250,000 director options expired. In addition 30,161,022 options exercisable at $0.10 which expire on 30 June 2011 were issued as a result of the entitlements issue undertaken.

During the year 784 options were exercised at a price of $0.10. No other options were issued during the year and no other options have been exercised up to the date of this financial report.

At the end of the financial year there were 36,760,238 (2008: 11,850,000) unissued ordinary shares in respect of which options were outstanding. Since the end of the financial year and, to the date of this report a further 38,003,192 options exercisable at $0.015 and which expire on 31 July 2011 were issued and 2,500,000 options lapsed.

56

NOTES TO THE FINANCIAL STATEMENTS

NOTE 20 CONTRIBUTED EQUITY AND RESERVES (cont’d)

(d) Terms and Conditions of Contributed Equity

Ordinary shares have the right to receive dividends as declared and, in the event of winding up the Company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held.

Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting on the Company.

(ii) Reserves

Notes Reserves (a) Share Option Reserve Movements Balance at beginning of year Options issued - staff Options issued - other Balance at end of year (b) Available for Sale Reserve Movements Balance at beginning of year Impairment on available for sale investments Unrealised gain/(loss) Balance at end of year	Consolidated & Company 2009 ($) 887,043 807,454 33,310 37,279 878,043 - - 9,000	Consolidated & Company 2008 ($)
		807,454
		714,553 92,901 -
		807,454 (45,000) 45,000 -
	9,000	-

Nature and Purpose of Reserves

Share Option Reserve

This reserve is used to record the value of equity benefits provided to employees and unrelated parties for services and the acquisition of mineral exploration projects.

Asset held for sale reserve

This reserve is used to record the unrealised gains and losses on available for sale investments.

NOTE 21 SHARE BASED PAYMENTS

A. Directors and Employees

(i) Employee Share Incentive Scheme

An Employee Share Scheme (ESS) has been established where Rox Resources Limited may, at the discretion of Directors, grant options over the ordinary shares of Rox Resources Limited to Directors, executives and employees of the Company. The plan is designed to provide long-term incentives for employees and to deliver long term shareholder returns. Participation in the plan is at the Board’s discretion and no individual has a contractual right to participate in the plan or to receive guaranteed benefits. In addition, under the Plan, the Board determines the terms of the options including exercise price, expiry date and vesting conditions, if any.

Options granted under the plan are unlisted and carry no dividend or voting rights. When exercised, each option is convertible into an ordinary share of the Company with full dividend and voting rights.

57

NOTES TO THE FINANCIAL STATEMENTS

NOTE 21 SHARE BASED PAYMENTS (cont’d)

Set out below are summaries of options granted under the plan .

Grant Date Expiry Date Exercise Price (cents) Value per option at grant date (cents)	Balance of the start of the year Number Granted during the year Number	Exercised during the year Number Forfeited during the year Number Balance at end of the year Number Vested and exercisable at end of the year Number
2009 27/11/06 30/11/09 35.0 20.6 31/05/07 31/05/10 35.0 13.8 19/12/07 30/11/09 35.0 2.5 Weighted average exercise price Grant Date Expiry Date Exercise Price (cents) Value per option at grant date (cents)	600,000 - 400,000 - 100,000 -	- - 600,000 600,000 - - 400,000 400,000 - - 100,000 100,000
	1,100,000 - $0.35 Balance of the start of the year Number Granted during the year Number	- - 1,100,000 1,100,000 - - $0.35 $0.35 Exercised during the year Number Forfeited during the year Number Balance at end of the year Number Vested and exercisable at end of the year Number
2008 27/11/06 30/11/09 35.0 20.6 31/05/07 31/05/10 35.0 13.8 19/12/07 30/11/09 35.0 2.5 Weighted average exercise price	600,000 - 950,000 - - 100,000	- - 600,000 400,000 - (550,000) 400,000 400,000 - - 100,000 50,000
	1,550,000 100,000 $0.35 $0.35	- (550,000) 1,100,000 850,000 - $0.35 $0.35 $0.35

The weighted average remaining contractual life of share options outstanding at the end of the year was 0.6 years (2008: 1.6 years).

Fair value of options granted

There were no options issued during the year. For the 2008 year the weighted average fair value of the options granted was 2.5 cents. The price was calculated by using the Binominal Option valuation methodology.

Weighted average exercise price (cents)	35.0
Weighted average life of the option (years)	1.3
Weighted average underlying share price (cents)	10.0
Expected share price volatility	93%
Risk free interest rate	6.64%

Historical volatility has been the basis for determining expected share price volatility as it assumed that this

is indicative of future trends, which may not eventuate.

The life of the options is based on historical exercise patterns, which may not eventuate in the future.

No other features of options granted were incorporated into the measurement of fair value.

58

NOTES TO THE FINANCIAL STATEMENTS

NOTE 21 SHARE BASED PAYMENTS (cont’d)

(ii) Other Share Options

The following illustrates the options issued to Directors other than through the ESS.

Grant Date Expiry Date Exercise Price (cents) Value per option at grant date (cents)	Balance of the start of the year Number Granted during the year Number	Exercised during the year Number Expired during the year Number Balance at end of the year Number Vested and exercisable at end of the year Number
2009 14/01/04 31/01/09 20.0 - 27/11/06 30/11/09 35.0 17.5 19/12/07 30/11/10 35.0 3.9 Weighted average exercise price Grant Date Expiry Date Exercise Price (cents) Value per option at grant date (cents)	5,250,000 - 1,000,000 - 2,000,000 -	- 5,250,000 - - - - 1,000,000 1,000,000 - - 2,000,000 2,000,000
	8,250,000 - $0.224 - Balance of the start of the year Number Granted during the year Number	- 5,250,000 3,000,000 3,000,000 - $0.20 $0.35 $0.35 Exercised during the year Number Forfeited during the year Number Balance at end of the year Number Vested and exercisable at end of the year Number
2008 14/01/04 31/01/09 20.0 - 27/11/06 30/11/09 35.0 17.5 19/12/07 30/11/10 35.0 3.9 Weighted average exercise price	5,250,000 - 1,000,000 - - 2,000,000	- - 5,250,000 5,250,000 - - 1,000,000 1,000,000 - - 2,000,000 1,000,000
	6,250,000 2,000,000 $0.224 $0.350	- - 8,250,000 7,250,000 $0.255 $0.241

The weighted average remaining contractual life of share options outstanding at the end of the year was 1.08 years (2008: 0.96 years).

Fair value of options granted

There were no options issued during the year. For the 2008 year the weighted average fair value of the options granted was 17.5 cents. The price was calculated by using the Binominal Option valuation methodology.

Weighted average exercise price (cents)	35.0
Weighted average life of the option (years)	4.8
Weighted average underlying share price (cents)	10.0
Expected share price volatility	86%
Risk free interest rate	6.7%

Historical volatility has been the basis for determining expected share price volatility as it assumed that this is indicative of future trends, which may not eventuate.

The life of the options is based on historical exercise patterns, which may not eventuate in the future.

No other features of options granted were incorporated into the measurement of fair value.

59

NOTES TO THE FINANCIAL STATEMENTS

NOTE 21 SHARE BASED PAYMENTS (cont’d)

B. Unrelated Parties

During the year 30,161,022 options were issued in accordance with the terms of a pro-rata entitlements issue offered to shareholders. The following table illustrates the number, exercise prices and movements in share options held by unrelated parties during the year.

Set out below are summaries of options granted .

Grant Date Expiry Date Exercise Price (cents) Value per option at grant date (cents)	Balance of the start of the year Number Granted during the year Number Exercised during the year Number Forfeited during the year Number Balance at end of the year Number Vested and exercisable at end of the year Number
2009 12/07/06 12/07/09 67.5 8.5 03/02/09 30/06/11 10.0 0.1 Weighted average exercise price Grant Date Expiry Date Exercise Price (cents) Value per option at grant date (cents)	2,500,000 - - - 2,500,000 2,500,000 0 30,161,022 784 - 30,160,238 30,160,238
	2,500,000 30,161,022 784 - 32,660,238 32,660,238 $0.675 $0.10 $0.10 - $0.144 $0.144 Balance of the start of the year Number Granted during the year Number Exercised during the year Number Forfeited during the year Number Balance at end of the year Number Vested and exercisable at end of the year Number
2008 12/07/06 12/07/09 67.5 8.5 Weighted average exercise price	2,500,000 - - - 2,500,000 2,500,000
	2,500,000 - - - 2,500,000 2,500,000 $0.675 - - - $0.675 $0.675

The weighted average remaining contractual life of share options outstanding at the end of the year was 1.8 years (2008: 1.0 years).

NOTE 22 ACCUMULATED LOSSES Note s Balance at beginning of year Net loss attributable to members of Rox Resources Limited Balance at end of year	Consolidated & Company 2009 ($) 10,632,461 1,843,979 12,476,440	Consolidated & Company 2008 ($) 7,272,755 3,359,706
		10,632,461

No dividends were paid during or since the financial year. The amount of franking credits available are nil (2008: nil)

NOTE 23 EXPENDITURE COMMITMENTS

(a) Exploration Commitments

The Company has expenditure commitments in regard to its exploration project as follows:

	2009 $ 2008 $
Not later than one year Later than one year and not later than five years	300,000 380,000 - 300,000
	300,000 680,000

60

NOTES TO THE FINANCIAL STATEMENTS

NOTE 23 EXPENDITURE COMMITMENTS (cont’d)

(b) Lease expenditure Commitments

The Company has entered into a non-cancellable operating lease over its office premises. Future minimum rentals payable are:

(b) Lease expenditure Commitments The Company has entered into a non-cancellable rentals payable are:	operating lease over its office p
	2009 $ 2008 $
Not later than one year Later than one year and not later than five years	34,847 120,597 9,482 284,910
	44,329 405,507

(c) Remuneration Commitments

Commitments for the payment of salaries and other remuneration under long-term employment contracts in existence at the reporting date but not recognised as liabilities, payable:

	2009 $ 2008 $
Not later than one year Later than one year and not later than five years	92,500 349,167 - 30,000
	92,500 379,167

NOTE 24 CONTINGENT LIABILITIES

The Company has a bond of $26,850 in place to secure its office premises.

NOTE 25 EVENTS SUBSEQUENT TO REPORTING DATE

The following matters have arisen since the end of the reporting date:

The Company issued 108,858,043 shares and 38,003,192 options exercisable at $0.015 by 31 July 2011 as a result of a pro rata rights issue shareholders raising $1,628,706.

No other matter or circumstance has arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Company, the results of those operations or the state of affairs of the Company in subsequent financial periods.

NOTE 26 RELATED PARTY TRANSACTIONS

(a) Other Director Related Transactions

Blakiston & Crabb, an entity of which Mr Blakiston is a partner, received fees totalling $65,212 (2008: $11,692) for legal advice. An amount of $9,600 is payable at year end. Coolform Investments Pty Ltd, a company in which Mr Dickson is a Director and shareholder, received fees totalling $120,000 (2008: $120,000) for the provision of services. No amount is payable at year end.

The above transactions were entered into on normal commercial terms.

(b) Subsidiaries

The consolidated financial statements include the financial statements of Rox resources Limited and its subsidiaries listed in the following table.

		%	Equity	Investment $	Investment $
		Interest
Name	Country of Incorporation	2009	2008	2009	2008
Rox (Laos) Pty Ltd	Australia	100	100	2	2
Nyala Resources (Proprietary) Limited	South Africa	100	100	-	182,250

(c) Ultimate Parent

Rox Resources Limited is the ultimate Australian parent entity.

61

DIRECTORS’ DECLARATION

In accordance with a resolution of the Directors of Rox Resources Limited, I state that:

1. In the opinion of the Directors:

2. (a) The financial statements, notes and the additional disclosures included in the Director’s Report designated as audited, of the Company are in accordance with the Corporations Act 2001 , including:

   • (i) giving a true and fair view of the Company’s financial position as at 30 June 2009 and its performance for the year ended on that date; and

   • (ii) complying with Accounting Standards and Corporations Regulations 2001; and

3. (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.

4. This declaration is made after receiving the declarations required to be made to the Directors in accordance with section 295A of the Corporations Act 2001 for the financial period ending 30 June 2009.

On behalf of the Board

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J Gresham Chairman Perth, 25 September 2009

62

INDEPENDENT AUDIT REPORT TO THE MEMBERS OF ROX RESOURCES LIMITED

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Independent auditor’s report to the members of Rox Resources Limited

Report on the Financial Report

We have audited the accompanying financial report of Rox Resources Limited, which comprises the balance sheet as at 30 June 2009, and the income statement, statement of changes in equity and cash flow statement for the year ended on that date, a summary of significant accounting policies, other explanatory notes and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the year’s end or from time to time during the financial year.

Directors’ Responsibility for the Financial Report

The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with the Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining internal controls relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In Note 2, the directors also state that the financial report, comprising the financial statements and notes, complies with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Auditor’s Responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, we consider internal controls relevant to the entity’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independence

In conducting our audit we have met the independence requirements of 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 audit of the financial report, we were engaged to undertake the services disclosed in the notes to the financial statements. The provision of these services has not impaired our independence

Liability limited by a scheme approved under Professional Standards Legislation

63

INDEPENDENT AUDIT REPORT TO THE MEMBERS OF ROX RESOURCES LIMITED

Auditor’s Opinion

In our opinion:

1. the financial report of Rox Resources Limited is in accordance with the Corporations Act 2001, including:

2. i giving a true and fair view of the financial position of Rox Resources Limited and the consolidated entity at 30 June 2009 and of their performance for the year ended on that date; and

3. ii complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001.

4. the financial report also complies with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Report on the Remuneration Report

We have audited the Remuneration Report included in pages 11 to 18 of the directors’ report for the year ended 30 June 2009. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

Auditor’s Opinion

In our opinion the Remuneration Report of Rox Resources Limited for the year ended 30 June 2009, complies with section 300A of the Corporations Act 2001.

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Ernst & Young

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R Curtin Partner Perth 25 September 2009

64

SCHEDULE OF MINING TENEMENTS

Laos Projects

PROJECT	INTEREST	INTEREST HELD
Pha Luang	Sulphide lead & zinc & associatedminerals	Entitled to 60%
Nam Them	All minerals	Application for 100%

Australian Projects

PROJECT	INTEREST	INTEREST HELD
Myrtle
E10316	All minerals	100%

**South African Diamond Projects ***

PROJECT	INTEREST	INTEREST HELD
Annex Klipfontein	Alluvial Diamonds	100%
Pampoene Pan	Diamonds General	100%
Williamstown	Alluvial and Kimberlite Diamonds	100%
Zoutpansfontein South	Diamonds General	100%
Harrisdale	Option for Kimberlite Diamonds	100%

• Note that the Company has reached agreement to sell these projects to Paramount Mining Corporation Limited

65

OTHER INFORMATION

The following information was applicable as at 14 September 2009.

(a) Top 20 shareholders of each class of listed security Ordinary Fully Paid Shares

op 20 shareholders of each class of listed security rdinary Fully Paid Shares
Name 1 Mr Phillip John Coulson 2 Benjay Pty Ltd 3 Skye Equity Pty Ltd 4 Nefco Nominees Pty Ltd 5 Forty Traders Pty Ltd 6 Mr Ian Robert Mulholland 7 Superluminal Pty Ltd 8 Mr Ianaki Semerdziev 9 Mr Ian Robert Mulholland 10 National Nominees Limited 11 Yeaman Nominees Pty Ltd 12 Ms Meng Qin 13 Uniting Properties Pty Ltd 14 Toltec Holdings Pty Ltd 15 Jasper Hill Resources Pty Ltd 16 Howard-Smith Investments Pty Ltd 17 Mr Brett Dickson & Mrs Georgina Dickson 18 Mr John Damian Kenny 19 Mr Bruce Hawley and Mrs Wendy Hawley 20 Tromso Pty Ltd	Number of Shares 10,810,073 8,096,437 7,081,244 6,339,726 5,743,032 5,647,374 5,000,000 4,000,000 3,933,334 3,320,676 3,000,003 2,915,254 2,898,101 2,716,466 2,453,246 2,443,000 2,282,020 2,263,090 2,153,461 2,041,667 85,138,204	% of Issued Share Capital 4.98 3.73 3.26 2.92 2.64 2.60 2.30 1.84 1.81 1.53 1.38 1.34 1.33 1.25 1.13 1.12 1.05 1.04 0.99 0.94
		39.18

Options exercisable at $0.10 each and expire on 30 June 2011

Name 1 Mr Phillip John Coulson 2 Ms Meng Qin 3 Forty Traders Pty Ltd 4 Mr Ian Robert Mulholland 5 Mr Bruce Hawley and Mrs Wendy Hawley 6 Mr Brett Dickson & Mrs Georgina Dickson 7 Ackland Printing Pty Ltd 8 Lawrence Crowe Consulting Pty Ltd 9 Mr Walter Graham 10 Mr Kit Foo Chye 11 Enigmaco Pty Ltd 12 Mr Robert Tucker 13 Mr Alistair Walker and Mrs Maraine Walker 14 Mr Ianaki Semerdziev 15 Ms Janet Elizabeth White 16 Pacway Investments 17 Mr Ian Robert Mulholland 18 Residuum Nominees Pty Ltd 19 Uniting Properties Pty Ltd 20 Jomot Pty Ltd	Number of Shares 7,195,282 2,878,113 2,014,680 1,739,621 1,601,557 1,499,343 1,439,057 1,000,000 650,000 575,622 575,622 575,622 575,622 522,750 448,137 343,369 327,778 327,242 322,184 291,528 24,903,129	% of Issued Class 23.86 9.54 6.68 5.77 5.31 4.97 4.77 3.32 2.16 1.91 1.91 1.91 1.91 1.73 1.49 1.14 1.09 1.09 1.07 0.97
		82.60

66

OTHER INFORMATION

Options exercisable at $0.015 and expire on 31 July 2011

ptions exercisable at $0.015 and expire on 31 July 2011
Name 1 Skye Equity Pty Ltd 2 Mr Phillip John Coulson 3 Forty Traders Pty Ltd 4 Nefco Nominees Pty Ltd 5 Lawrence Crowe Consulting Pty Ltd 6 Mr Keith William Sheppard 7 Jasper Hill Resources Pty Ltd 8 Impact Nominees Pty Ltd 9 Cheetah Holdings Pty Ltd 10 Cornela Pty Ltd 11 T T Nicholls Pty Ltd 12 Cambourne Capital Pty Ltd 13 Mr Boon Leng Low 14 Benjay Pty Ltd 15 Westcap Pty Ltd 16 Toltec Holdings Pty Ltd 17 Ackland Printing Pty Ltd 18 Mr Harry Capararo & Mrs Matilde Capararo 19 Superluminal Pty Ltd 20 Mr Ian Robert Mulholland	Number of Shares 5,714,286 3,505,276 3,190,066 2,205,466 2,000,000 1,514,533 1,281,646 1,262,110 1,255,596 1,255,596 1,255,596 1,000,000 934,557 809,644 757,266 724,501 631,056 631,056 500,000 479,036 30,907,287	% of Issued Share Capital 15.04 9.22 8.39 5.80 5.26 3.99 3.37 3.32 3.30 3.30 3.30 2.63 2.46 2.13 1.99 1.91 1.66 1.66 1.32 1.26
		81.31

(b) Distribution of Shareholders Number

Category (size of Holding)	Ord. Shares	$0.10 Options	$0.015 Options
	Number	Number	Number
1 – 1,000	9	12	37
1,001 – 5,000	80	49	54
5,001 - 10,000	103	14	31
10,001 - 100,000	38	65	84
100,001 and over	260	32	39

The number of shareholdings held in less than marketable parcel of ordinary fully paid shares is 342.

There is a total of 217,160,852 fully paid ordinary shares on issue, all of which are listed on the ASX. 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.

• (c) Restricted Securities

• There are no restricted securities

67