SABRE RESOURCES LIMITED — Annual Report 2004

Sep 27, 2004

SABRE RESOURCES LTD

ABN: 68 003 043 570

ANNUAL REPORT 2004

SBR Annual Report 2004.Doc

SABRE RESOURCES LTD CONTENTS

Corporate Directory	1
Directors' Report	2
Statement of Financial Performance	6
Statement of Financial Position	7
Statement of Cash Flows	8
Notes to the Financial Statements	9
Directors' Declaration	21
Independent Audit Report	22
Shareholder Information	24
Corporate Governance Statement	26

DIRECTORS

Robert John COLLINS - Resigned 18/08/2003

Alexander CLEMEN

Bruce R McCULLAGH

David Nathan ZUKERMAN - Appointed 18/08/2003

AUDITORS Stanton Partners 1 Havelock Street West Perth WA 6005

BANKERS National Australia Bank Wright Street Belmont WA 6105

COMPANY SECRETARY Bruce R McCullagh

REGISTERED OFFICE 1^st Floor, 8 Parliament Place West Perth WA 6005

Telephone:	(08) 9481 7833
Facsimile:	(08) 9481 7835
Email:	sabre@sabresources.com
Website:	www.sabresources.com

SHARE REGISTRY

Computershare Investor Services Level 2 Reserve Bank Building 45 St. Georges Terrace Perth WA 6000 GPO Box D182 Perth WA 6840 Investor Enquiries (08) 9323 2059 Telephone: $(08)$ 9323 2000 Facsimile: $(08)$ 9323 2096 perth.services@computershare.com.au

ASX code for shares: SBR

The Directors present their report of Sabre Resources Ltd ("the Company") for the year ended 30 June 2004.

DIRECTORS

The Directors of the Company during or since the end of the financial year were:-

Robert John Collins - resigned August 18 2003 Alexander Clemen Bruce Russell McCullagh David Nathan Zukerman - appointed August 18 2003

Shares of Sabre Resources Ltd held by Directors at June 30 2004:

B R McCullagh	20
D N Zukerman	10
A Clemen.	10

PRINCIPAL ACTIVITIES

The principal activity of the Company is mineral exploration.

RESULTS

The operating loss for the financial year after providing for income tax amounted to \$234,765 (2003: \$360,325).

DIVIDENDS

Since the end of the previous financial year, no dividend has been declared or paid by the Company. The Directors do not recommend the payment of a dividend.

LIKELY DEVELOPMENTS

At the Annual General Meeting on 29 November 2001 shareholders approved the following resolution:-

"That the Directors of the Company be authorised and directed to seek opportunities and investments for the Company in industrial and technology sectors in addition to the resources sector."

The Board is actively seeking suitable acquisitions to augment its current activities.

INFORMATION ON DIRECTORS

• $(a)$ Qualifications, experience and special responsibilities:-
• Alexander CLEMEN B.Sc (Hons), M.Aus.I.M.M. $(i)$

Mr Clemen is a qualified geologist with over 20 years experience practising in this field. He has worked for several large, international mining companies in various parts of the world and has gained experience in exploring for gold, base metals, industrial minerals and diamonds.

$(ii)$ Bruce Russell McCULLAGH CPA, ACIS

Mr McCullagh has extensive experience in accounting, company secretarial and management in the petroleum and mineral industries in Australia, Libyan Arab Republic, the Arabian Gulf, United Kingdom and USA. He is a member of the Australian Society of Certified Practising Accountants and of the Chartered Institute of Secretaries.

David Nathan Zukerman $(iii)$

Mr Zukerman has an accounting and finance background. He has held a number of public company directorships in Australia and Asia during the past 25 years.

EMOLUMENTS OF BOARD MEMBERS

The level of fees paid to Directors, detailed below, is influenced by comparing fees paid to directors in other companies within the exploration industry, and then set at a level to attract qualified people to accept the responsibilities of Directorship.

Names	Directors Fees	Superannuation	Consulting Fees	Total
R J Collins	3.000	270		3.270
B R McCullagh	10.500	945	19,659	31,104
A Clemen	12.000	-		12,000
D N Zukerman	-	$\overline{\phantom{0}}$	5.774	5.774
TOTAL	25,500 ___	1.215 .	25.433 .	52,148 -----------------

The Company does not have any officers or senior executives, other than the Directors.

MEETINGS OF DIRECTORS

The following table sets out the number of meetings of the Company's Directors held during the year ended 30 June 2004, and the number of meetings attended by each Director.

Name:	Eligible to attend:	Attended:
R J Collins
A Clemen	6	3
B R McCullagh	6	6
D N Zukerman	6	6

RETIREMENT, ELECTION AND CONTINUATION OF OFFICE OF DIRECTORS

Alex Clemen retired by rotation as a Director at the Annual General Meeting on November 27, 2003 and was re-elected.

David Zukerman retired as a Director at the Annual General Meeting on November 27, 2003 and was reelected.

At the forthcoming Annual General Meeting, to be held on 25 November 2004, Bruce McCullagh retires by rotation as a Director and offers himself for re-election.

EVENTS SUBSEQUENT TO BALANCE DATE

The Directors are not aware of any matter or circumstance not otherwise dealt with in the report or financial statements that has significantly 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 years.

ENVIRONMENTAL ISSUES

The Company's objective is to ensure that a high standard of environmental care is achieved and maintained on all properties. There are no known environmental issues outstanding.

SHARE OPTIONS

There are 17,500,000 share options outstanding at 30 June 2004 exercisable at 10 cents per share on or before June 30^th 2006. 10,000,000 options were issued during the year. No option holder has any right under the options to participate in any other issue of the Company, or any other entity.

No shares have been issued through the exercise of options during or since the end of the financial year.

No options have been granted since the end of the financial year.

SIGNIFICANT CHANGES

There have not been any significant changes in the state of affairs of the Company during the financial year, other than as noted in this financial report.

REVIEW OF OPERATIONS

Exploration for the year involved the detailed evaluation of both Sabre Resources exploration data and the WAMEX open file database, which will allow better targeted exploration to be undertaken throughout the company's project areas.

The Company's tenements are in the Jitarning region, some 250 kilometres to the southeast of Perth, in the Western Australian wheat belt. They overlie the recently identified Corrigin Greenstone Belt, which has been lightly explored to date.

1. Jitarning NorthWest (E 70/2381)

Located 15 kilometres to the south west of the Kulin township. Exploration to date has included reconnaissance roadside soil sampling as well as limited follow up soil sampling, where appropriate. Infill soil sampling is to be undertaken, in the up coming field season, to follow up on elevated gold geochemistry. In addition to this work, multi-element geochemistry will be undertaken to better define interpreted ultramafic units within the stratigraphy, and their nickel sulphide potential.

2. Jitarning SouthEast (E 70/2382)

Located 26 Kilometres to the northwest of the Lake Grace township. The tenement was partially tested by North Ltd in the late 1990's, utilizing auger sampling, with some infill and check sampling having being undertaken by Sabre Resources in more recent programs.

In addition to this work, North Ltd undertook a limited RAB drilling program at it's 'Columbia' & 'Challenger' prospects, located in the south-eastern tenement area.

North obtained several encouraging results, including 4m @ 0.2 gpt Au, near the base of oxidation. This drilling is currently being analysed with a view to follow up drilling on the prospect utilizing either aircore or reverse circulation drilling, as these holes do not seem to have been effective in testing either the surface anomaly or the bedrock geochemistry

3. Neendaling (E 70/2383)

Located 14 Kilometres to the northwest of the Lake Grace township, and adjacent to the previously mined Griffin's Find open pit gold mine. The tenement has been partially tested by auger sampling, undertaken by North Ltd in the late 1990's. Extensional soil sampling has been undertaken by Sabre Resources to further test areas of anomalism. Infill soil sampling is being planned in several locations in the tenement area to be undertaken as access allows, in the coming field season.

SABRE RESOURCES LTD DIRECTORS' REPORT

Overall the work program has been one of evaluation and reconnaissance in the past year, as the Company refines its exploration strategy in the region. Drilling and soil sampling is being planned to test a number of areas in the coming field season, which commences in November.

This report is made in accordance with a resolution of the Directors of the Board and Section 298(2) of the Corporations Act 2001.

CO

D N Zukerman DIRECTOR

Dated this 22^nd day of September 2004. Perth, Western Australia

SABRE RESOURCES LTD STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 30 JUNE 2004

			Consolidated		Parent Entity
	Note	2004 s	2003 \$	2004 \$	2003 S
Revenue from ordinary activities	2	57,754	13,019	57,754	13,019
Depreciation Exploration expenditure		4,068 18,199	4.068 88,127	4,068 (2,271)	4,068 12,130
Provision against investment Provision for doubtful debt Management fee			500 100,625 97,722	20,470 100,625	500 75,997 97,722
Directors' fees and services Other expenses from ordinary activities		52,148 66,347	85,695 56,907	52,148 66,347	85,695 56,907
Occupancy costs Expenses from ordinary activities		51,132 292.519	40,325 373.344	51,132 --------------------------------------- 292.519	40,325 373.344
Loss from ordinary activities		(234, 765)		$(360,325)$ $(234,765)$	(360.325)
Income tax expense	4
Loss from ordinary activities	20			(234.765)
after income tax expense		(234.765) ----------	(360.325) ---------		(360.325)

Earnings per share		2004 Cents	2003 Cents
Loss per share	17	(1.5)	(2.4)

The accompanying notes form part of these financial statements

SABRE RESOURCES LTD STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2004

			Consolidated		Parent Entity
	Note	2004	2003	2004	2003
		\$	\$	\$	\$
CURRENT ASSETS
Cash assets	22	149,317	55,487	149,317	55,487
Receivables	21	5,688 .	11,133 -------------	4,717 --------------	6,101 _______
TOTAL CURRENT ASSETS		155,005 ______	66,620 -------------	154,034 --------------	61,588
NON-CURRENT ASSETS Plant and Equipment	7.	1,018	5,086	1,018	5,086
Receivables Investment in subsidiary	21 8			971	5,032
Investment in listed entity	3		37,000		37,000
TOTAL NON-CURRENT ASSETS		1,018	42,086	1,989	47,118
TOTAL ASSETS		156,023	108,706	156,023	108,706
CURRENT LIABILITIES Payables	10	4,150	7,068	4,150	7,068
TOTAL CURRENT LIABILITIES		4,150	7,068	4,150	7,068
TOTAL LIABILITIES		4,150 -------------	7,068 -------------	4,150 ------------	7,068 ----------
NET ASSETS		151,873	101,638	151,873	101,638
		--------	--------------------------------------	--------------------------------------	========
EQUITY
Contibuted equity	$11 -$			14,607,457 14,417,457 14,607,457 14,417,457
Share option reserve	12	95,000		95,000
Accumulated losses	20		$(14,550,584)$ $(14,315,819)$	$(14,550,584)$ $(14,315,819)$
TOTAL EQUITY		151,873	101,638	151,873	101,638
			---------------------------------------	sassassassassa sassassassassa

The accompanying notes form part of these financial statements

SABRE RESOURCES LTD STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2004

		Consolidated		Parent Entity
	Note	2004 s.	2003 \$	2004 \$	2003 \$
Cashflow from operating activities
Payments: Suppliers and employees Interest received		(230, 630) 3,659 **	(277, 785) 13,074 **	(234, 690) 3,659 ------------------	(275, 319) 13,074 --------------
Net cash outflow from operating activities	16	(226, 971) ---------------	(264, 711) **	(231, 031) ---------------	(262, 245) --------------
Cashflow from investing activities
Sale of investment Investment in listed entity Loan to subsidiary Exploration expenditure	9	54,000 (18, 199)	(37, 500) (88, 127)	54,000 $\tilde{\phantom{a}}$ (16, 410) 2,271	(37, 500) (78, 463) (12, 130)
Net cash inflow (outflow) from investing activities		-------------- 35,801	--------------- (125, 627)	-------------- 39,861	-------------- (125, 627)
Cashflow from financing activities
Proceeds from issue of shares Placement fee Proceeds from issue of options Placement fee Net cash inflow from financing activities	11 11 12 12	200,000 (10,000) 100,000 (5,000) 285,000		200,000 (10,000) 100,000 (5,000) ----------------- 285,000	-------------
Net increase / (decrease) in cash held		93,830	(390, 338)	93.830	(390, 338)
Cash at the beginning of the financial year		55,487	445,825	55.487	445.825
Cash at end of the financial year	22	149,317 ========	--------------- 55.487 -------	NTOANNTOOAAAAN 149.317 ========	55,487 ========

The accompanying notes form part of these financial statements

$\mathbf{1}$ . Statement of Significant Accounting Policies

The financial report is a general purpose financial report that has been prepared in accordance with Accounting Standards, Urgent Issues Group Consensus Views, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.

The financial report covers the economic entity of Sabre Resources Limited and controlled entities, and Sabre Resources Limited as an individual parent entity. Sabre Resources Limited is a listed public company, incorporated and domiciled in Australia.

The financial report has been prepared on an accruals basis and is based on historical costs and does not take into account changing money values or, except where stated, current valuations of non-current assets. Cost is based on the fair values of the consideration given in exchange for assets.

The ability of the company to continue as a going concern is dependent on the company obtaining adequate funding for existing commitments and new ongoing business activities.

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

Principles of Consolidation $(a)$

A controlled entity is any entity controlled by Sabre Resources Limited. Control exists where Sabre Resources Limited has the capacity to dominate the decision making in relation to the financial and operating policies of another entity so that the other entity operates with Sabre Resources Limited to achieve the objectives of Sabre Resources Limited. A list of controlled entities is contained in Note 23 to the financial statements.

All inter-company balances and transactions between entities in the economic entity, including any unrealised profits or losses, have been eliminated on consolidation.

Where controlled entities have entered or left the economic entity during the year, their operating results have been included from the date control was obtained or until the date control ceased.

Outside interests in the equity and results of the entities that are controlled are shown as a separate item in the consolidated financial report.

Income Tax $(b)$

The company adopts the liability method of tax-effect accounting whereby the income tax expense shown in the statement of financial performance is based on the operating profit before income tax. adjusted for any permanent differences.

Timing differences which arise due to the different accounting periods in which items of revenue and expenses are included in the determination of operating profit before income tax and taxable income are brought to account as either a provision for deferred income tax or an asset described as future income tax benefit at the rate of income tax applicable to the period in which the benefit will be received or the liability will become payable.

Future income tax benefits are not brought to account unless realisation of the asset is assured beyond reasonable doubt. Future income tax benefits in relation to tax losses are not brought to account unless there is virtual certainty of realisation of the benefit.

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the company will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by law.

Deferred Exploration, Evaluation and Development Expenditure $(c)$

Exploration, evaluation and development costs are accumulated in respect of each separate area of interest. These costs are carried forward where they are expected to be recouped through the sale of successful development and exploitation of the area of interest: or where activities in the area of interest have not reached a stage that permits reasonable assessment of the existence of economically recoverable reserves.

When an area of interest is abandoned or the directors decide that it is not commercial, any accumulated costs in respect of that area are written off in the year the decision is made. Each area of interest is also reviewed annually 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. If production commences, carried forward exploration, evaluation and development costs are amortised on a units of production basis over the life of the economically recoverable reserves, for the period of production.

Plant and Equipment $(d)$

Any items of plant and equipment are stated at cost and are depreciated on a straight line basis over their estimated useful lives to the company commencing from the time the assets held are ready for use. Representative rates are: Automobiles 25%.

$(e)$ Cash

For the purpose of the statement of cash flows, cash includes cash on hand and at call, deposits with banks or financial institutions, and bank bills.

$(f)$ Interests in Joint Ventures

The company's share of the assets, liabilities, revenue and expense of joint ventures are included in the appropriate items of the statement of financial position and statement of financial performance.

$(q)$ Leases

Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal ownership, are transferred to entities in the economic entity are classified as finance leases. Finance leases are capitalised, recording an asset and a liability equal to the present value of the minimum lease payments, including any guaranteed residual values. Leased assets are amortised on a straight line basis over their estimated useful lives where it is likely that the company will obtain ownership of the asset or over the term of the lease. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period. Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses in the periods in which they are incurred.

$(h)$ Recoverable Amount of Non-Current Assets

The carrying amounts of all non-current assets are reviewed at least annually to determine whether they are in excess of their recoverable amount. If the carrying amount of a non-current asset exceeds the recoverable amount, then the asset is written down to the lower value. In assessing recoverable amounts the relevant cash flows have not been discounted to their present value.

$(i)$ Comparative Figures

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

$(i)$ Receivables

Receivables are recorded at amounts due less any provisoin for doubtful debts.

$(k)$ Payables

Trade payables and other accounts payable are recognised when the company becomes obliged to make future payment resulting from the purchase of goods and services.

$(1)$ Borrowings

Bank loans and other loans are recorded at an amount equal to the net proceeds received. Interest expense is recognised on an accruals basis.

$(m)$ Revenue Recognition

Revenue from the sale of goods and disposal of other assets is recognised when control of the goods or other assets passes to the buver.

Interest income is recognised on an accruals basis.

$(n)$ Goods and Services Tax (GST)

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

				Consolidated	Parent Entity
		Note	2004	2003	2004	2003
			\$	\$	\$	\$
2.	Revenue from Ordinary Activities
	Other Revenue:
	Sale of investments		54.000		54,000
	Interest received		3.754	13.019	3.754	13,019
			57.754	13.019	57.754	13.019

$3.$ Investment

$\overline{4}$ .

Purchase Provision for writedown		37,500 (500) ***		37,500 (500) ****
		37,000 an un an un un un un un		37,000 ---------------------------------------
Income Tax
Reconciliation of prima facie income tax benefit on loss from ordinary activities to income tax as provided in the financial statements
Loss from ordinary activities	(234, 765) ---------------------------------------	(360, 325) ---------------------------------------	(234, 765) ----------	(360, 325) way and was and was and was and
Prima facie income tax benefit thereon at 30%	(70, 429)	(108, 097)	(70, 429)	(108,097)
Adjusted for the tax effect of:
Permanent differences
Provision for non recovery of loans Gain on sale of shares	(5, 100)		6,141 (5,100)	22,799
Provision for diminution in investment Other items		165		150
Timing differences and tax losses not brought to account as future income tax benefit	75,529	107,932	69,388	85,148
Income tax expense	---------------------------------------	-----------
The directors estimate that the potential future income tax benefits at 30% at year end not brought to account should be:

Tax loss benefit	.669.000	.593.000	.614.000	.544.000
	---------------------------------------	معمده ومعمر محمد معمد ومعمر ومعد معمد ومعمر ومحمر	---------------------------------------	---------------------------------------
	---------	____	__	___

The benefits will only be obtained if:-

• The companies derive future assessable income of a nature and of an amount sufficient to $(i)$ enable the benefit from the deduction for the losses to be realised;
• $(ii)$ The companies continue to comply with the conditions for deductibility imposed by the Law; and
• $(iii)$ No changes in tax legislation adversely affect the companies in realising the benefits from the deductions for the losses.

			Consolidated	Parent Entity
	Note	2004 \$	2003 \$	2004 \$	2003 \$
5.	Auditors' Remuneration
	Amounts received or due and receivable by the Company's auditors for:-
	Auditing the Company's financial statements	4,224	5,047	4.224	5,047
	Other services to the Company	1,990	1,850	1.990	1.850
		6.214	6.897	6.214	6,897
		-------	-----	.	-----

6. Remuneration of Directors

Directors a)

Names	Directors Fees	Superannuation	Consulting Fees	Total
RJ Collins - Executive Director Resigned August 18 2003	3.000	270		3,270
BR McCullagh - Executive Director and Company Secretary	10,500	945	19,659	31,104
A Clemen - Non executive Director	12,000			12,000
DN Zukerman - Executive Chairman Appointed August 18 2003			5.774	5.774
TOTAL	25,500	1.215	25,433	52,148

Directors receive a fixed fee (plus statutory superannuation), with executive directors being remunerated for any profressional services conducted for the Company. Directors or any executive employees do not receive any other performance or equity based remuneration, (shares or options), nor are there any retirement schemes for any directors or any loans or any other type of compensation.

Executive/Employee

The Company has no other employees.

A company under the control of Mr B R McCullagh, received fees for the provision of services during the year. The aggregate amount shown above, charged for such services was \$19,659 (2003: \$22,610).

Shareholdings

Number of shares held: Specified Directors

		Balance 1 July 2003	Net Change Other	Balance 30 June 2004
B R McCullagh		20		20
R J Collins - Resigned August 18 2003	(i)	20		$\overline{\phantom{0}}$
D N Zukerman - Appointed August 18 2003		$\blacksquare$	10	10
A Clemen			10	10
Totals		40	20	40

(i) shares held at date of resignation

			Consolidated		Parent Entity
		Note	2004	2003	2004	2003
			\$	\$	\$	\$
7.	Plant and Equipment
	Plant and Equipment, at cost Less: accumulated depreciation		16,273 (15, 255)	16,273 (11, 187)	16,273 (15, 255)	16,273 (11, 187)
			1,018	**** 5,086 ---------------------------------------	*** 1.018 ---------------------------------------	***** 5,086 an mi mi mi mi mi mi mi
	Movement:
	Opening written down value		5,086	9,154	5,086	9,154
	Depreciation		(4,068)	(4,068)	(4,068)	(4,068)
	Closing written down value		1,018 --------------------------------------	----------------- 5,086 -------------------------------------	------------------ 1,018 --------------------------------------	5.086 - - - - - - - - - - - - - - - - - - -
8.	Investments - Non - Current
	Investment in subsidiary, at cost				194,000	194,000
	Less: provision for diminution				(194,000)	(194,000)
				an mi me mi me mi am me.	----------------	---------------------------------------
9.	Exploration Expenditure
	Opening Balance
	Exploration expenditure		18,199	88,127	(2,271)	12,130
	Exploration expenditure written off		(18, 199)	(88, 127)	2,271	(12, 130)
			--------------------------------------	---------------------------------------	---------------------------------------	---------------------------------------

The ultimate recovery of the capitalised exploration costs carried forward is dependent upon the successful development and commercial exploitation, or realisation by disposal of the mining tenements at an amount equal to at least the carrying value.

The company's exploration properties may be subject to claim(s) under native title, or contain sacred sites or sites of significance to Aboriginal people. As a result exploration properties or areas within the tenement may be subject to exploration and/or mining restrictions or incur a liability for compensation. It is not possible to quantify these restrictions and liabilities at this time.

$10.$ Payables

Current
Payables	150	.068	150 л	068
	يعمعه بعمعه يعممه بعمعه معمد بمعمه معمد بعمعه	فللملخ بمعماد لمحمد بمعمار لمعماء بمعمار لمحمد بمعما	فللمخ بمعمو فمعمر بمعمو فمعمر بمعمو فمعمد إعماده	الممعد إعماما بمعمار إعماما إعماما إعماما المناب المعا

$11.$ Issued Capital

Movement in ordinary share capital of the Company during the last two years.

Date	Details	Number of Shares	Issue Price (cents)	Amount \$
30 June 2003	Balance	15,094,851		14,417,457
26 February 2004	Issue ordinary shares Less: Placement fee	2,500,000	8	200,000 (10,000)
30 June 2004	Balance	17,594,851		14,607,457

$12.$ Share Option Reserve

Date	Details	Number of Options	Issue Price (cents)	Amount \$
30 June 2003	Balance	7,500,000
26 February 2004	Issued exercisable at 10 cents expiring June 30, 2006	10,000,000		100,000
	Less: Placement fee			(5,000)
30 June 2004	Balance	17,500,000		95,000

Should the options not be exercised, capital gains tax will be assessed against the funds contributed.

$13.$ Commitments

(i) Mining Tenements

As part of ongoing activities, the Company is required to commit to minimum expenditures to retain its interest in mining tenements. At 30 June 2004 these commitments amounted to \$93,800 (2003: \$93,800).

(ii) Management Agreement

The Company has an agreement with a management service company for the provision of services at \$90,000 per annum plus CPI. Charges are at commercial terms in accordance with the agreement entered into on 1 June 2000 for a five year term.

$14.$ Contingent Liabilities

No contingent liability exists for termination benefits under service agreements with directors or persons who take part in the management of the company.

$15.$ Segment Reporting

The company operates in Western Australia and is involved in the resources industry.

			Consolidated		Parent Entity
	Note	2004 \$	2003 \$	2004 \$	2003 \$
16.	Cashflow Information
	Operating loss after income tax	(234, 765)	(360, 325)	(234, 765)	(360, 325)
	Surplus on sale of shares	(17,000)		(17,000)
	Depreciation of plant and equipment	4.068	4.068	4.068	4,068
	Exploration expenditure	18.199	88,127	(2,271)	12,130
	Provision against investments		500.		500
	Provision for doubtful debts			20,470	75,997
	Change in assets and liabilities:			1.384
	(Increase) Decrease in receivables Increase (Decrease) in creditors	5,445 (2,918)	(93) 3,012	(2, 917)	2,373 3,012
	Net cash used by operating activities	(226.971)	(264.711)	(231.031)	(262, 245)
17.	Earnings per share			2004 Number	2003 Number
	Weighted average number of shares on issue
	during the financial year used in the calculation			15.951.015	15,094,851
	of basic earnings per share			=========	=========

Options to purchase ordinary shares not exercised at June 30, 2004 have not been included in the determination of basic earnings per share. Diluted loss per share has not been disclosed, as it does not show a position which is inferior to basic earnings per share.

18. Events Subsequent to Balance Date

The Directors are not aware of any matter or circumstance not otherwise dealt with in the report or financial statements that has significantly 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 years.

19. Financial Instruments

Interest Rate Risk $(a)$

The consolidated entity's exposure to interest rate risk, which is the risk that a financial instrument's value will fluctuate as a result of changes in market interest rates and the effective weighted average interest rates on those financial assets and financial liabilities, is as follows:

		Floating Interest Rate $(5.32\% - 5.39\%)$		Non-Interest Bearing
	2004	2003	2004	2003
Financial Assets			\$
Cash	(2.656)	(4.609)
Short Term Deposits	151.973	60.096
Receivables			5,688	11,133
Investment	÷	37,000
Total Financial Assets	149.317	92.487
Financial Liabilities
Liabilities - Creditors			(4, 150)	(7,068)
Net Financial Assets	149.317	92,487	1.538	4.065

Reconciliation of Financial Assets to Net Assets

		Consolidated
	2004 S	2003 \$
Net financial assets Fixed assets	150,855 1.018	96.552 5.086
	142 334 335 336 135 336 336 336 337 132 337 151,873	101,638

Credit Risk $(b)$

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

The consolidated entity does not have any material credit risk exposure to any single debtor or group of debtors under financial instruments entered into by the consolidated entity.

Net Fair Values $(c)$

The carrying amount of financial assets and financial liabilities recorded in the financial statements represent their respective net fair values determined in accordance with the accounting policies disclosed in Note 1 to the financial statements.

		Consolidated		Parent Entity
		2004 \$	2003 \$	2004 \$	2003 \$
20.	Accumulated Losses
	Accumulated losses at the beginning of the year	(14, 315, 819)	(13, 955, 494)	(14, 315, 819)	(13, 955, 494)
	Loss for year	(234, 765)	(360, 325)	(234, 765)	(360, 325)
	Accumulated losses at the end of the financial year	**** (14.550.584) ----------	--------------- (14.315.819) ---------------------------------------	--------------- (14, 550, 584) --------------------------------------	*** (14, 315, 819) --------------------------------------
21.	Receivables - Current
	Other debtors	5,688	11,133	4.717	6.101
	Receivables - Non Current
	Loan to subsidiary Provision for non recovery of loan			187,301 (186, 330)	170,891 (165, 859)
				971 ---------------------------------------	5.032 --------------------------------------

The Company has advanced \$187,301 to Raslot Pty Ltd, a wholly owned subsidiary of Sabre Resources Ltd. The loan is at call and interest free and is not subject to be repaid in the next 12 months.

$22.$ Cash Assets

Represented by

Cash at bank and on deposit	149.317	55,487	149.317	55,487
	---------------------------------------	بعمع عممه بممع عممه بمعمر عممه بمعمر	بمعمر معمدا بعمع معمدا بمعمر معمدا بمعمر	---------------------------------------
	-------	-------	______	--------

23. Investment in controlled entities

Name of Entity	Country of Incorporation	Class of Shares		Equity Book Value Holding of Investment %			Consolidated Result	Contribution to
			2004	2003	2004	2003	2004	2003
Rasiot Pty Ltd	Australia	Ordinary	100	100	$\overline{\phantom{a}}$	$\overline{\phantom{0}}$	(20.470)	(76.997)

Related Parties 24.

Wholly owned subsidiary, Raslot Pty Ltd, has been loaned \$187,301 to date, to conduct exploration.

Impact of Adopting AASB Equivalents to IASB Standards

The Australian Accounting Standards Board is adopting the Standards of the International Accounting Standards Board for application to reporting periods beginning on or after 1 January 2005. Pending Accounting standard AASB 1 'First-time Adoption of Australian Equivalents to International Financial Reporting Standards' prescribes transitional provision for first-time adopters.

AASB 1047 'Disclosing the Impacts of Adopting Australian Equivalents to International Financial Reporting Standards' requires financial reports to disclose information about the impacts of any changes in accounting policies in the transition period leading up to the adoption date and will apply for June 2004 reporting.

The company has allocated internal resources and in conjunction with its auditors is assessing those accounting policies and key areas that are likely to be impacted by the transition to International Financial Reporting Standards (IFRS). As the company has a 30 June year end, priority has been given to the consideration of the impact of the Australian equivalents to the IFRS and the preparation of a balance sheet in accordance with those Australian equivalent standards as at 30 June 2004. This will form the basis of accounting for Australian equivalents of IFRS in the future, and is required when the company prepares its first fully IFRS compliant report for the year ended 30 June 2006. As required by AASB 1047, the key accounting policies which may change and have an impact on the financial report of the company are set out below.

Exploration and evaluation expenditure

In terms of the exposure drafts issued by the International Accounting Standards Board (IASB) and the Australian Accounting Standards Board (AASB) on exploration and evaluation expenditure, entities are permitted to continue their previous accounting policies but all exploration and evaluation expenditure would be subject to an annual impairment test. Under the impairment test, exploration and evaluation expenditure would be carried at recoverable value which will be determined at the higher of fair value less costs to sell, and value in use. The likely impact is that exploration and evaluation expenditure will not meet the recoverable value test and will need to be written off in the year incurred.

Goodwill

Under the Australian equivalents to IFRS 3 "Business Combinations" and IFRS 28 "Accounting for Investments in Associates", goodwill acquired on a business combination or in acquiring an investment in an associate company will no longer be able to be amortised, but instead will be subject to annual impairment testing. Under the new policy, amortisation will no longer be charged and if there is any impairment, it will be recognized immediately through the statement of financial performance.

Taxation

Under the Australian equivalent to IAS 12 "Income Taxes", a balance sheet approach will be adopted for calculating taxation, replacing the "statement of financial performance approach". This method recognizes deferred tax balances for all temporary differences arising between the carrying value of an asset or liability and its tax base. Whilst there will be enhanced disclosure of the composition of the deferred tax assets and liabilities it is not expected that there will be any significant impact in terms of the statement of financial position or performance.

Financial Instruments

Under AASB 139 "Financial Instruments: Recognition and Measurement" financial instruments will be required to be classified into five categories and to be measured based on the nature of the classification. The five categories and basis of measurement are:

• Financial asset or financial liability measured at fair value through the statement of financial performance $\bullet$
• Held to maturity investments measured at amortised cost, subject to impairment
• Loans and receivables measured at amortised cost, subject to impairment
• Available for sale assets measured at fair value with changes in fair value measured directly in equity
• Financial liability measured at amortised cost

This will result in a change in the current accounting policy that does not classify financial instruments.

Impairment of Assets

Under the Australian equivalent to IAS 36 "Impairment of Assets" the recoverable amount of an asset is determined as the higher of net selling price and value in use. This will result in a change in the company's current accounting policy which determines recoverable amount of an asset on the basis of undiscounted cashflows. Under the new policy it is likely that the impairment of assets may be recognized sooner and the amount of write downs may be greater.

The Directors of the Company declare that:

• $\mathbf{1}$ . the financial statements and notes, as set out on pages 6 to 20 are in accordance with the Corporations Act 2001:
• comply with Accounting Standards and the Corporations Regulations 2001; and $(a)$
• $(b)$ give a true and fair view of the financial position as at 30 June 2004 and of the performance for the year ended on that date of the company and economic entity;
• $2¹$ In the directors' opinion there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

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

ا بن سے بنایات
مناسب

D N Zukerman DIRECTOR

Dated this 22^nd day of September 2004 Perth, Western Australia

STANTON PARTNERS

I FOWELOOK STREET WEST PRRIH ROOS VESTERN AUSTRALIA

TELEPHONE: (08) 9481 3188

Facsimile: (08) 9321 1204 Emil australin@istantext.com.am

INDEPENDENT AUDIT REPORT

TO THE MEMBERS OF SABRE RESOURCES LIMITED

SCOPE

The financial report and directors' responsibility

The financial report comprises the statement of financial position, statement of financial performance, statement of cash-flows, accompanying notes to the financial statements, and the director's declaration for Sabre Resources Limited (the Company) and the consolidated entity for the year ended 30 June 2004. The consolidated entity comprises both the company and the entities it controlled during the year.

The directors of the Company are responsible for the preparation and true and fair presentation of the financial report in accordance with the Corporations Act 2001. This includes responsibility for the maintenance of adequate accounting records and internal controls that are designed to prevent and detect fraud and error, and for the accounting policies and accounting estimates inherent in the financial report.

Audit approach

We conducted an independent audit in order to express an opinion to the members of the Company. Our audit was conducted in accordance with Australian Auditing Standards in order to provide reasonable assurance as to whether the financial report is free of material misstatement. The nature of an audit is influenced by factors such as the use of professional judgement, selective testing, the inherent limitations of internal control, and the availability of persuasive rather than conclusive evidence. Therefore, an audit cannot guarantee that all material misstatements have been detected.

We performed procedures to assess whether in all material respects the financial report presents fairly, in accordance with the Corporations Act 2001, including compliance with Accounting Standards and other mandatory financial reporting requirements in Australia, a view which is consistent with our understanding of the Company's and the consolidated entity's financial position, and of their performance as represented by the results of their operations and cash flows.

Au-SAB66382004-01ARconsolidated.doc -22 Pseastered Proprator: Stanton Partners Australians Ptv Ltd. A.B.N. 60 946 269 553 as trustee for the Steritors Partners Unit Trust

We formed our opinion on the basis of these procedures, which included:

• · examining, on a test basis, information to provide evidence supporting the amounts and disclosures in the financial report, and
• assessing the appropriateness of the accounting policies and disclosures used and the reasonableness of significant accounting estimates made by the directors.

While we considered the effectiveness of management's internal controls over financial reporting when determining the nature and extent of our procedures, our audit was not designed to provide assurance on internal controls.

INDEPENDENCE

In conducting our audit, we followed applicable independence requirements of Australian professional ethical pronouncements and the Corporations Act 2001.

AUDIT OPINION

In our opinion, the financial report of Sabre Resources Limited is in accordance with:

• a) the Corporations Act 2001, including:
• (i) giving a true and fair view of the Company's and consolidated entity's financial position as at 30 June 2004 and of their performance for the year ended on that date; and
• (ii) complying with Accounting Standards in Australia and the Corporations Regulations $2001$ ; and
• b) other mandatory professional reporting requirements in Australia.

INHERENT UNCERTAINTY REGARDING GOING CONCERN

Without qualification to the audit opinion expressed above, attention is drawn to the following matter.

The ability of the Company and of its subsidiary to continue as going concerns and meet their planned exploration, administration, and other commitments is dependent upon the Company and its subsidiary raising further working capital, and/or commencing profitable operations. In the event that the Company cannot raise further equity, the Company may not be able to meet its liabilities as they fall due and the realisable value of the Company's and consolidated entity's non-current assets may be significantly less than book values.

STANTON PARTNERS

Stanter facture

J P Van Dieren Partner

Perth, Western Australia 24 September 2004

Au:SAB6638\2004-01AReonsolidated.dec

23

Distribution of Shareholders $1.$

$(a)$ As at 21 September 2004 the distribution of members and their shareholdings were:-

Range of Holding			Holders	Shares Held	Percent
1		1.000	283	119.425	0.68
1.001		5.000	324	868.592	4.94
5.001	۰	10,000	64	511.541	2.90
10.001	۰	100,000	59	1,913,675	10.88
100,001		and over	17	14,181,618	80.60
			747	17,594,851	100.00

There exists 629 shareholders with unmarketable parcels of shares. $(b)$

$2.$ Voting Rights

There were 747 holders of fully paid ordinary shares who on a poll have one vote for each share held.

Substantial Shareholders $3.$

The names of the substantial shareholders who have notified the Company in accordance with Section 671B of the Corporation Act 2001 are:

Name	Number of Ordinary Shares	Percentage of Issued Capital
Kalgoorlie Mine Management Pty Ltd together with group member	2,270,020	12.9%
James John del Piano.

The twenty largest shareholders as at 21 September 2004 which represents 82.31% of the paid up capital were as follows :

Name of Holder	Number	%
Bow Lane Nominees Pty Ltd	7,550,000	42.91
Kalgoorlie Mine Management Pty Ltd	1,300,000	7.39
James John del Piano	970.020	5.51
Todea Holdings	900,000	5.12
Chesilton Pty Ltd	600.000	3.41
Piat Corp Pty Ltd	500,000	2.84
Balfes (Qld) Pty Ltd	358,409	2.04
Inxs Pty Limited	300,000	1.71
Timothy Phillip Coleman & Maria Marciniak	290,698	1.65
Intercorp Pty Ltd	255,224	1.45
Mark William Swan	205,000	1.17
Hales & Co Pty Ltd	200,000	1.14
Paso Holdings Pty Ltd	200,000	1.14
Timothy Phillip Coleman & Maria Marciniak	171,724	0.98
Inxs Pty Limited	150.000	0.85
Simon Nominees Pty Ltd	130.000	0.74
J & E Kerr Investments Pty Ltd	100.543	0.57
Feldmann Pty Ltd	100,000	0.57
Karalon Pty Ltd	100,000	0.57
Eric and Kim Murphy	100.000	0.57
Total	14.481.618	82.31
	========	$=$ $=$ $=$ $=$

Optionholders exercisable at 10 cents each on or before 30^th June 2006.

Name of Holder	Number	%
Kalgoorlie Mine Management Pty Ltd	10,300,000	58.86
Bow Lane Nominees Pty Ltd	6,250,000	35.71
Perth Glass Distribution Pty Ltd	750.000	4.29
Simon Nominees Pty Ltd	130.000	0.74
Alexis Pty Ltd	10.000	0.06
Kipto Pty Ltd	10.000	0.06
Debra Majteles	10.000	0.06
Lisa Matteles	10.000	0.06
Simon Majteles	10.000	0.06
Solomon Majteles	10.000	0.06
Simon Nominees Pty Ltd	10.000	0.06
		---------
Total	17.500.000	100.00
	========	=====

CORPORATE GOVERNANCE

Sabre Resources Ltd has adopted the Ten Essential Corporate Governance Principles and the Best Practice Recommendations as published by the Australian Stock Exchange Corporate Governance Council. These are set out in the company's website under the following headings.

Lay solid foundations for management and oversight by the Board

Structure the Board to add value and discharge responsibilities

Promotion of ethical and responsible decision making

Safequard integrity in financial reporting

Make timely and balanced disclosure

Respect the rights of shareholders

Risk management

Enhance performance of the Company

Remunerate fairly and responsibly

Recognise the interests of stakeholders

Explanations for departures from best practice recommendations

Principle 1: Lay solid foundations for management and oversight by Board.

Functions of management and Board were formalized on June 28 2004. Prior to formal adoption, separate procedures existed and were practiced, by both Board and management.

Principle 2: Structure the Board to add value and discharge responsibilities.

The Company does not have a chief executive officer having delegated the management of the company to a management services company. Director David Zukerman is a member of the executive and a consultant to the management services company. The Company considers that for the purposes of best practice recommendations. David Zukerman's position is the equivalent of chief executive officer. The Board does not have a majority of independent directors. It is comprised of one independent director and two nonindependent directors. The board has appointed Mr Clemen as the lead independent director to facilitate any areas where it is inappropriate for Mr Zukerman to act. The third director Mr McCullagh, is also company secretary.

The Company recognizes the ASX recommends that one individual should not hold the combination of positions described above, the existing arrangement is considered appropriate due to the small size of the Company and its economic practicalities.

A separate nomination committee has not been formed as the Board comprises just three members and it was considered that no efficiencies would be achieved. The whole Board carries out the duties, but with each member excluding himself from matters in which he has a material personal interest.

Principle 3: Promotion of an ethical and responsible decision making.

A code of conduct was adopted by the Company on June 28 2004. Prior to that time the Board considers its practices were the equivalent of a code of conduct. These practices are now outlined in the written code.

A written securities trading policy was adopted on June 28 2004. Prior to that time the Directors had an understanding of the appropriate time to trade in the Company's securities.

Principle 4: Safeguard integrity in financial reporting.

A formal audit committee charter was adopted on June 28 2004 although separate audit committee has not been formed, as due to the small size and structure of the Board, it was considered that no efficiencies would be achieved, hence the full Board carries out the function, of an audit committee. Mr McCullagh and Mr Zukerman meet the requirements of financial literacy and experience.

Principle 5: Make timely and balanced disclosure.

Informal procedures were in place prior to June 28 2004 when written policies and procedures were implemented to ensure compliance with the ASX Listing Rules.

Principle 6: Respect the rights of shareholders.

The Company adopted a formal information strategy on June 28 2004 to communicate to shareholders through the website.

Principle 7: Risk Management.

The Company adopted a formal policy on risk management on June 28 2004. Prior to that time the Board had informal policies and procedures in place to identify and manage operational and financial risks.

Principle 8: Enhance performance of the Company.

The Company has a process for performance evaluation of the individual directors by way of an informal review by the Chairman.

Principle 9: Remunerate fairly and responsibly.

The Company adopted a remuneration committee charter on June 28 2004 but has not established a separate remuneration committee as due to its small size (three directors), all members are involved in assessing remuneration.

Principle 10: Recognise the interests of stakeholders.

The Company adopted a formal code of conduct to quide compliance with legal and other obligations in June 2004. Prior to that time the Board considered that its business practices were the equivalent of a code of conduct.

Summary

A profile of each director is shown in the Directors' Report. The independent director of the three person Board of the Company is Alex Clemen. Each director may, with approval of the Chairman, seek independent professional advice to assist the director in the exercise and discharge of his duties as a director, and be reimbursed for reasonable expenses in obtaining that advice. The full board carries out the functions of a nomination committee in accordance with the Charter, relevant issues are considered at Board meetings on an as required basis.

The full three-man board carries out the functions of the audit committee with Mr Zukerman and Mr Majteles meeting the requirements of financial literacy, expertise and industry experience. During the Reporting Period the full board conducted informal reviews of the Company accounts on a six monthly basis.

A formal evaluation of the board was not carried out. With a board of three members, informal evaluation is conducted on an ongoing basis.

The full board carries out the functions of a remuneration committee. The level of fees paid to directors is influenced by comparing fees paid within the exploration industry and then set to attract qualified people to accept the responsibilities of directorship. Directors receive a fixed fee (plus statutory superannuation), with executive directors being remunerated for any professional services conducted for the Company. Directors do not receive any performance or equity based remuneration nor are there any retirement schemes for any directors.

Board Structure

Name of Director	Year Appointed	Executive	Non- Executive	Independent	Seeking re-election at 2004 AGM
DN Zukerman - Chairman	2003	YES	NO.	NO.	NO
A Clemen	1999	NO	YES	YES	NO
BR McCullagh and	1999	YES	NO.	NΟ	YES
Company Secretary