SABRE RESOURCES LIMITED — Annual Report 2005

Sep 29, 2005

SABRE RESOURCES LTD

ABN: 68 003 043 570

ANNUAL REPORT 2005

SBR Annual Report 2005.Doc

SABRE RESOURCES LTD CONTENTS

Page No.
----------	--

Corporate Directory	1
Review of Operations	$\overline{2}$
Directors' Report	4
Statement of Financial Performance	7
Statement of Financial Position	8
Statement of Cash Flows	9
Notes to the Financial Statements	10
Directors' Declaration	22
Auditor's Report	23
Auditor's Independence Report	25
Corporate Governance Statement	26
Shareholder Information	29

SABRE RESOURCES LTD CORPORATE DIRECTORY

DIRECTORS

Alexander CLEMEN

Bruce R McCULLAGH

David Nathan ZUKERMAN

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

SOLICITORS

Blakiston & Crabb 1202 Hay Street West Perth WA 6005 PO Box 454 West Perth WA 6872 Telephone: (08) 9322-7644 Facsimile: $(08)$ 9322 1506 Email: office@blakcrab.com.au

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

REVIEW OF OPERATIONS

GNAMMA DAM NICKEL PROSPECT

The prospect comprises 14 Prospecting Licences (P25/1766-1775 and P25/1783-1786 covering a total of 20 square kilometres in the Bulong area east of Kalgoorlie, Western Australia.

The prospect area covers Archaean mafic, ultramafic and felsic volcanic rock types as well as sedimentary suites, comprising the Bulong Greenstone Belt. Younger dolerites have intruded the sequence.

Nickel potential in the ultramafic units has been previously recognised and evidence of sulphides has been observed in bedrock outcrops but no significant exploration for this commodity has been carried out until now.

A soil sampling programme consisting of 1,039 samples and a ground magnetic survey were completed on the project. The samples identified a significant number of anomalous nickel values greater than 1,000 ppm Ni, associated with elevated chrome values. The ground magnetic survey lines confirmed that the regions of anomalous nickel and chrome are associated with distinct magnetic highs within a north south trending ultramafic sequence. The results are encouraging and further infill sampling and ground magnetics will be undertaken to delineate suitable drilling targets.

URANIUM PROSPECTS - TANZANIA

On 19 September 2005 the Company announced the acquisition of three Uranium prospective properties totalling 381km² in the Lindi and Ruvuma Regions of Southern Tanzania. Two of the licences, PLR 3323/2005 and PLR 3324/2005, form the Mkunju group whilst the third licence PLR 3447/2005 represents the Madaba Project.

The two Mkuniu licences totalling 246km² are located in southern Tanzania, some 460 kilometres southwest of Dar es Salaam, near the southern boundary of the Selous Game Reserve. The licences are proximal to the Mkuju River Project currently being explored by OmegaCorp Limited. Adjoining licence holders include Uranium Resources plc and Pan African Mining Corp.

The 135km² Madaba licence is situated near the northern boundary of the Selous Game Reserve about 260km to the south of Dar es Salaam. The licence is located adjacent to those of Sterling Resources Limited.

The Mkunju and Madaba licence areas were part of the focused search area for uranium between 1978 and 1982 by a German company Uranerzbergbu GMBH (UEB). The exploration initiative commenced in 1976-1979 when the Government of Tanzania contracted Geosurvey International Company to carry out a systematic airborne survey of the whole country to illustrate the geology and uranium mineralisation potential. Total magnetic field and radiation intensity data were collected using spectrometry, EM and magnetics. From this work, UEB defined six areas of interest and staked large areas with prospecting licences, to field check the geophysical anomalies.

No detailed work was undertaken on the areas covered by the Mkunju and Madaba licences, however the licences are located adjacent to and proximal to areas of detailed exploration by UEB and their discovered uranium occurrences.

Uranium in the district is within a favourable geological setting, being associated with fine to medium grained sandstone and siltstones of the upper Carboniferous to lower Jurasic, Karoo system. By the end of 1979 a total of 78 airborne anomalies were investigated on the ground by UEB of which 16 areas contained visible mineralisation at the surface within an area of 10 $\times$ 10 km and over an elevation interval of 220 m. The uranium occurrences of southern Tanzania within the Karoo have been compared to the sandstone uranium deposits in the Colorado Plateau area of Western USA.

An exploration programme will be established and supervised by our Technical Consultant, Klaus Eckhof, a senior exploration geologist who has world wide contacts and has been instrumental in locating successful projects in Australia, Africa, the Philippines, Russia and South America. He was a former Director of Spinifex Gold Ltd and Layfayette Mining Ltd and is currently an executive director of Moto Goldmines Ltd and a Director of Tiger Resources Ltd.

Exploration will focus on a review of existing airborne radiometric data with the view to designing a detailed ground borne radiometric survey. Anomalous ground borne radiometric surveys would then be mapped and sampled by trenching in exposed areas and drilling where the favourable sequences are buried. The deeply dissected landscape is conducive to exploration as it provides large exposures of the prospective sequence.

Location map showing the project areas.

GOLD PROSPECTS (WESTERN AUSTRALIA)

During the year the Company relinquished exploration licences E70/2382 and E70/2383.

The Directors present their report of Sabre Resources Ltd ("the Company") for the year ended 30 June 2005.

DIRECTORS

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

Alexander Clemen Bruce McCullagh David Zukerman

Shares of Sabre Resources Ltd held by Directors at the date of this report:

	Ordinary Shares
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 \$298,393 (2004: \$234,765).

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

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

INFORMATION ON DIRECTORS AND COMPANY SECRETARY

• The Directors held office for the entire year and their qualifications, experience and special $(a)$ responsibilities are as follows:-
• $(i)$ Alexander CLEMEN B.Sc (Hons), M.Aus.I.M.M.

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. For the past three years he has also served as a director of Australian United Gold Ltd and Golden Deeps Ltd.

Bruce Russell McCULLAGH CPA, ACIS - Director and Company Secretary $(ii)$

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, and for the past three years he has also served as a director of Golden Deeps Ltd.

$(iii)$ David Nathan Zukerman

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 and for the past three years he has also served as a director of Australian United Gold Ltd, Golden Deeps Ltd, Tiger Resources Ltd and Eastern Group Ltd.

REMUNERATION REPORT

Names	Directors Fees	Superannuation	Consulting Fees	Total \$
B R McCullagh	10,000	900	25.555	36,455
A Clemen	12,000			12,000
D N Zukerman	$\overline{\phantom{0}}$		11.195	11.195
	ETER ETERTMAN, MANA MANA MANA, ANAZ ANAZ ANAZ	5.58886.00000.00000.00000.0000000000.00000.0000		EEEEE EEEEE EEEEEMAAA MAAA MAAA MAAA
TOTAL	22.000	900	36,750	59,650

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

Directors receive a fixed fee (plus statutory superannuation), with executive directors being remunerated for any professional 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.

Board policy on the remuneration for this exploration Company 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. No director, executive or employee has an employment contract.

Being an exploration company, with no earnings, a relationship is yet to be established between an emolument policy and the company's performance.

MEETINGS OF DIRECTORS

The following table sets out the number of meetings of the Company's Directors held during the year ended 30 June 2005, and the number of meetings attended by each Director.

Name:	Eligible to attend:	Attended:
A Clemen.	6	З
B R McCullagh	6	6
D N Zukerman	в

RETIREMENT, ELECTION AND CONTINUATION OF OFFICE OF DIRECTORS

Bruce McCullagh retired by rotation as a Director at the Annual General Meeting on 25 November, 2004 and was re-elected.

At the forthcoming Annual General Meeting, to be held on 24 November 2005, Alex Clemen retires by rotation as a Director and offers himself for re-election.

EVENTS SUBSEQUENT TO BALANCE DATE

On 19 September 2005, the Company entered into an agreement to acquire three prospective Uranium properties totalling 381 square kilometres in Tanzania. Exploration will focus on a review of existing airborne radiometric data with a view to designing a detailed ground borne radiometric survey. Consideration comprised payments A\$84,697 and the issue of 2,180,000 fully paid ordinary shares and the issue of 1,000,000 unlisted options exercisable at 10 cents on or before 30 June 2006..

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 21,000,000 share options outstanding at the date of this report exercisable at 10 cents per share on or before June 30^th 2006. 3,500,000 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.

AUDITORS INDEPENDENCE DECLARATION

A copy of the independent auditor's declaration as required by section 307c of the Corporations Act 2001, is set out on page 25.

NON AUDIT SERVICES

The following non audit service was provided by the entity's auditor, Stanton Partners. 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 2001. The nature and scope of each type of audit service provided, means that auditor independence was not compromised. Stanton Partners received the following amount for the provision of non audit services: Tax compliance services \$2,000, and Independent Experts Report \$2,500.

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

D N Zukerman DIRECTOR

Dated this 21^st day of September 2005. Perth, Western Australia

SABRE RESOURCES LTD STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 30 JUNE 2005

			Consolidated		Parent Entity
	Note	2005 Ś	2004 \$	2005 \$	2004 S
Revenue from ordinary activities	2	14,903	57.754	14.903	57.754
Depreciation Exploration expenditure Provision for doubtful debt Management fee		1.018 49,142 106,419	4.068 18.199 100.625	1.018 44.602 4,540 106.419	4.068 (2,271) 20,470 100,625
Directors' fees and services Other expenses from ordinary activities Occupancy costs		59,650 46,746 50.321	52,148 66.347 51.132	59,650 46.746 50.321	52,148 66,347 51.132 300 000 000 300 000 000 000 000 000 000
Expenses from ordinary activities		313.296	292.519	313.296	292.519
Loss from ordinary activities		(298, 393)	(234.765)	(298.393)	(234, 765)
Income tax expense	3
Loss from ordinary activities after income tax expense	19	(298,393) , we we we we we we we	(234.765) was yang yang yang yang yang yang yang yang	(298.393) ana jaar anu jaar jaar jaar jaar jaar jaar jaar	(234,765) --------------------------------------

Earnings per share		2005 Cents	2004 Cents
Loss per share	16	(1.6)	(1.5)

The accompanying notes form part of these financial statements

SABRE RESOURCES LTD STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2005

	Note	2005 \$	Consolidated 2004 \$	2005 \$	Parent Entity 2004 \$
CURRENT ASSETS Cash assets Receivables	21 20	134,276 9,959 ------------	149,317 5,688 -------------	134,276 9,959 ---------------------------------------	149,317 4,717 ---------------------------------------
TOTAL CURRENT ASSETS		144.235 ---------------------------------------	155,005	144,235 --------------------------------------	154,034
NON-CURRENT ASSETS Plant and equipment Receivables Investment in subsidiary Exploration - Gnamma Dam	6 20 7. 8	222,500 --------------------------------------	1,018 the first that were over the program was the three program and	222,500 ---------------------------------------	1,018 971 --------------------------------------
TOTAL NON-CURRENT ASSETS		222,500	1,018	222,500	1,989
TOTAL ASSETS		366,735 .	156,023 .	366,735 . Ang tao ang tao ang tao ang tao ang tao ang tao ang tao ang tao ang tao ang tao ang tao ang tao ang tao ang ta	156,023 .
CURRENT LIABILITIES Payables	9	20,755	4,150	20,755	4,150
TOTAL CURRENT LIABILITIES		20,755 --------------------------------------	4.150	20,755	4,150
TOTAL LIABILITIES		20,755 .	4,150 ---------------------------------------	20.755 ---------------------------------------	4.150 ---------------------------------------
NET ASSETS		345,980 $\begin{array}{cccccccccccccc} \textbf{1111} & \textbf{1212} & \textbf{1313} & \textbf{1313} & \textbf{1414} & \textbf{1414} & \textbf{1415} & \textbf{1416} & \textbf{1417} & \textbf{1417} & \textbf{1418} & \textbf{1419} & \textbf{1419} & \textbf{1419} & \textbf{1419} & \textbf{1419} & \textbf{1419} & \textbf{1419} & \textbf{1419} & \textbf{1419} & \textbf{1419} &$	151,873 $\frac{1}{100000000000000000000000000000000000$	345.980 $\begin{array}{cccccccccccccc} \textbf{1} & \textbf{1} & \textbf{1} & \textbf{1} & \textbf{1} & \textbf{1} & \textbf{1} & \textbf{1} & \textbf{1} & \textbf{1} & \textbf{1} & \textbf{1} & \textbf{1} & \textbf{1} & \textbf{1} & \textbf{1} & \textbf{1} & \textbf{1} & \textbf{1} & \textbf{1} & \textbf{1} & \textbf{1} & \textbf{1} & \textbf{1} & \textbf{1} & \textbf{1} & \textbf{1} & \textbf{1} & \textbf{1} & \textbf{1} &$	151.873 ---------------------------------------
EQUITY Contributed equity Share option reserve Accumulated losses	10 11 19	15,064,957 130,000 (14,848,977) . Ang hay ang tao ang kata sa pag-ang ang ang tao ang tao ang ang ang ang tao ang tao ang tao ang tao ang ang an	14,607,457 95,000 (14, 550, 584)	15,064,957 130,000 (14, 848, 977) tas das tas una anciara anciar de casa una tas de anciar de una una data da anc	14,607,457 95,000 (14, 550, 584)
TOTAL EQUITY		345,980 ---------------------------------------	151,873 $\begin{array}{cccccccccc} \text{1.111} & \text{1.122} & \text{1.133} & \text{1.144} & \text{1.145} & \text{1.145} & \text{1.145} & \text{1.145} & \text{1.145} & \text{1.155} & \text{1.155} & \text{1.155} & \text{1.155} & \text{1.155} & \text{1.155} & \text{1.155} & \text{1.155} & \text{1.155} & \text{1.155} & \text{1.155} & \text{1.155} & \$	345,980 $\begin{array}{cccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccc$	151,873 --------------------------------------

The accompanying notes form part of these financial statements

SABRE RESOURCES LTD STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2005

			Consolidated	Parent Entity
	Note	2005 \$	2004 \$	2005 \$	2004 S
Cashflow from operating activities
Payments: Suppliers and employees Interest received		(250, 980) 5.081 ---------------	(230, 630) 3.659 ---------------	(251, 951) 5,081 **	(234, 690) 3.659 **
Net cash (outflow) from operating activities 15		(245, 899) --------------	(226, 971) ---------------	(246, 870) --------------	(231, 031) ***
Cashflow from investing activities
Sale of investment Sale of tenement Loan to subsidiary Exploration expenditure	8	10,000 (49, 142)	54,000 (18, 199)	10,000 (3,569) (44, 602)	54,000 (16, 410) 2,271
Net cash (outflow) inflow from investing activities		----------------- (39, 142)	-------------------- 35.801	-------------- (38, 171)	** 39.861
Cashflow from financing activities
Proceeds from issue of shares Placement fee Proceeds from issue of options Placement fee	10 10 11 11	270,000 $\blacksquare$ $\blacksquare$	200,000 (10,000) 100,000 (5,000)	270,000	200,000 (10,000) 100,000 (5,000)
Net cash inflow from financing activities		270,000 -----------------	--------------- 285,000	270,000	285,000
Net (decrease) /increase in cash held		(15,041)	93,830	(15,041)	93,830
Cash at the beginning of the financial year		149,317	55.487	149,317	55,487
Cash at end of the financial year	21.	*** 134,276 $\begin{array}{cccccccccc} \text{1.111} & \text{1.122} & \text{1.133} & \text{1.133} & \text{1.144} & \text{1.145} & \text{1.145} & \text{1.146} & \text{1.147} & \text{1.147} & \text{1.148} & \text{1.149} & \text{1.149} & \text{1.149} & \text{1.149} & \text{1.140} & \text{1.140} & \text{1.140} & \text{1.140} & \text{1.140} & \text{1.140} & \$	--------------- 149,317 $\frac{1}{100000000000000000000000000000000000$	*** 134.276 $\begin{tabular}{l c c c c c c c c c c c c c c c c c c c$	---------------- 149,317 ---------------------------------------

The accompanying notes form part of these financial statements

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 financial statements have been prepared on the going concern basis which assumes that 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 adopted 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 22 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.

$(b)$ Income Tax

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 or loss 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 may be carried forward where they are expected to be recouped through the sale or 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.

Leases $(q)$

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.

Borrowings $(1)$

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 buyer.

Interest income is recognised on an accruals basis.

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

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	2005	2004	2005	2004
			\$	\$	\$	\$
2.	Revenue from Ordinary Activities
	Other Revenue:
	Sale of investments			54,000		54.000
	Sale of tenement		10,000		10,000
	Interest earned		4.903	3.754	4.903	3.754
			14,903	57.754	14.903	57.754
					---------------------------------------	_

$3.$ 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	(298, 393)	(234, 765)	(298, 393)	(234, 765)
Prima facie income tax benefit thereon at 30%	(89, 518)	(70, 429)	(89, 518)	(70, 429)
Adjusted for the tax effect of:
Permanent differences
Provision for non recovery of loans Gain on sale of shares		(5,100)	1,362	6.141 (5, 100)
Timing differences and tax losses not brought to account as future income tax benefit
	89,518	75,529	88,156	69,388
				------------
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	.758.000	.669.000	702,000	$^{\circ}$ 14. 1.000
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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	2005 \$	2004 \$	2005 \$	2004 \$
4.	Auditor's Remuneration
	Amounts received or due and receivable by the Company's auditors for:-
	Auditing the Company's financial statements	10.804	4.224	10.804	4.224
	Other services to the Company	4.500	1.990	4.500	1.990
		15,304	6.214	15.304	6.214
		---------------------------------------	---------------------------------------	---------------------------------------	--------------------------------------

5. Remuneration of Directors - For the Year Ending June 30 2005

Names	Directors	Superannuation	Consulting	Total
	Fees		Fees
BR McCullagh - Executive Director	10,000	900	25.555	36.455
and Company Secretary
A Clemen - Non executive Director	12.000			12,000
DN Zukerman - Executive Chairman			11.195	11.195
TOTAL	22.000	900	36,750	59.650

Remuneration of Directors - For the Year Ending June 30 2004

Names	Directors	Superannuation	Consulting	Total
	Fees		Fees
RJ Collins - Executive Director	3.000	270		3.270
Resigned August 18 2003
BR McCullagh - Executive Director	10,500	945	19.659	31.104
and Company Secretary
A Clemen - Non executive Director	12.000			12,000
DN Zukerman - Executive Chairman			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 professional 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 B R McCullagh, received fees for the provision of services during the year. The aggregate amount shown above, charged for such services was \$25,555 (2004: \$19,659).

Shareholdings

Number of shares held at 30 June 2005: Specified Directors

			Balance 1 July 2004	Net Change Other	Balance 30 June 2005
	B R McCullagh D N Zukerman A Clemen Totals		20 10 10 40		20 10 10 40
	Note	2005 \$	Consolidated 2004 \$	2005 \$	Parent Entity 2004 \$
6.	Plant and Equipment
	Plant and Equipment, at cost Less: accumulated depreciation	16,273 (16, 273)	16,273 (15, 255)	16,273 (16, 273)	16,273 (15, 255)
			1.018 ---------------------------------------		1,018 $\begin{array}{cccccccccccccc} \textbf{1111} & \textbf{1212} & \textbf{1313} & \textbf{1313} & \textbf{1314} & \textbf{1314} & \textbf{1314} & \textbf{1314} & \textbf{1314} & \textbf{1314} & \textbf{1314} & \textbf{1314} & \textbf{1314} & \textbf{1314} & \textbf{1314} & \textbf{1314} & \textbf{1314} & \textbf{1314} & \textbf{1314} & \textbf{1314} & \textbf{1314} &$
	Movement: Opening written down value	1,018	5,086	1,018	5,086
	Depreciation	(1,018)	(4,068)	(1,018)	(4,068)
	Closing written down value		1.018 --------------------------------------		1,018 --------------------------------------
7.	Investments - Non - Current
	Investment in subsidiary, at cost Less: provision for diminution			194,000 (194,000)	194,000 (194,000)
8.	Exploration Expenditure
	Opening balance Exploration expenditure Exploration expenditure written off	271,642 (49, 142)	18,199 (18, 199)	267,102 (44, 602)	(2,271) 2.271
		222,500 --------------------------------------	---------------------------------------	222,500 --------------------------------------	---------------------------------------

Included in exploration expenditure is the acquisition of the Gnamma Dam Nickel Project for \$222,500.

The ultimate recovery of any 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.

9. Payables

Current
Payables	755 20.7 v	150	20.755	150
	--------------------------------------- where there are a second company are a second company are only	--------------------------------------- course some some some some most some course and	--------------------------------------- ---------------------------------------	منحتم محمدا محمد محمدا محمد محمدا محمد محمدا state were stated and stated and stated and stated and

10. 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 Less: Placement fee	2.500.000	8	200,000 (10,000)
30 June 2004	Balance	17.594.851		14.607,457
24 February 2005	Issue	2.160,000	12.5	270,000
6 May 2005	Issue to acquire tenements	1,500,000	12.5	187,500
30 June 2005		21,254,851		15,064,957

$11.$ 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
6 May 2005	Issued exercisable at 10 cents expiring June 30 2006 to acquire tenements	3,500,000		35,000
30 June 2005	Balance	21,000,000		130,000

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

$12₁$ 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 2005 these commitments amounted to \$80,400 (2004: \$93,800).

(ii) Management Agreement

The Company has an agreement with a management service company for the provision of services at \$150,000 per annum plus CPI. Charges are at commercial terms in accordance with the agreement entered into on 1 June 2005 for a five year term.

$13.$ 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. There are no contingent liabilities as at 30 June 2005.

$14.$ Segment Reporting

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

			Consolidated	Parent Entity
	Note	2005 S	2004 \$	2005 \$	2004 s
15.	Cashflow Information
	Operating loss after income tax	(298, 393)	(234, 765)	(298,393)	(234, 765)
	Surplus on sale of tenement	(10.000)		(10,000)
	Surplus on sale of shares		(17,000)		(17,000)
	Depreciation of plant and equipment	1.018	4.068	1.018	4,068
	Exploration expenditure written off	49.142	18.199	44.602	(2,271)
	Provision for doubtful debts Change in assets and liabilities:			4.540	20.470
	(Increase) Decrease in receivables	(4.271)	5.445	(5, 242)	1.384
	Increase (Decrease) in creditors	16.605	(2,918)	16.605	(2,917)
	Net cash used by operating activities	(245,899)	(226.971)	(246.870)	(231, 031)

Non Cash Investing Activity

The Company during the year issued 1,500,000 shares at 12.5 cents each and 3,500,000 options at 1.0 cent each to acquire Gnamma Dam Nickel Project.

16.	Earnings per share	2005 Number	2004 Number
	Weighted average number of shares on issue
	during the financial year used in the calculation	18.566.522	15.951.015
	of basic earnings per share

Options to purchase ordinary shares not exercised at June 30, 2005 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.

	2005	2004
Loss per share – cents	(1.6)	(1.5)
Non-cash value of shares - cents	11	$\blacksquare$

$17.$ 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 consolidated entity, the results of those operations or the state of affairs of the consolidated entity in subsequent financial years.

$18.$ 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		Non-Interest Bearing		TOTAL
	2005	2004	2005 2004		2005	2004
	$5.32\% - 5.35\%$	$5.35\% - 5.39\%$
Financial Assets	\$	\$			\$
Cash	134,276	(2,656)			134,276	(2,656)
Short Term Deposits	$\bullet$	151.973
Receivables			9.959	5,688	9.959	5.688
Investment	$\bullet\circ$	$\mathbf{r}$	$\bullet\circ$
Total Financial Assets	134.276	149,317
Financial Liabilities
Liabilities - Creditors			(20.755)	(4.150)	(20, 755)	(4, 150)
Net Financial Assets	134.276	149.317	(10.796)	1.538	123.480	150.855

Reconciliation of Financial Assets to Net Assets

	Consolidated
	2005 \$	2004 S
Net financial assets Fixed assets Exploration expenditure	123,480 222,500	150,855 1,018
	and the party street that the party was that would have a second 345.980	151,873

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.

$(c)$ Net Fair Values

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
		2005 \$	2004 Ŝ	2005 \$	2004 S
19.	Accumulated Losses
	Accumulated losses at the beginning of the year	(14, 550, 584)	(14, 315, 819)	(14, 550, 584)	(14, 315, 819)
	Loss for year	(298, 393)	(234, 765)	(298, 393)	(234, 765)
	Accumulated losses at the end of the financial year	(14, 848, 977)	(14, 550, 584)	(14, 848, 977)	(14, 550, 584)
20.	Receivables - Current
	Other debtors	9.959	5.688	9.959	4.717
	Receivables - Non Current
	Loan to subsidiary Provision for non recovery of loan			190,870 (190.870)	187,301 (186, 330)
					971 --------------------------------------

The Company has advanced \$190,870 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.

$21.$ Cash Assets

Represented by

	معمعا معمد معما معما سمعت المعد معما معمار	---------------------------------------	---------------------------------------	---------------------------------------
	---------------------------------------	---------------------------------------	come come come come come come come	-course, present present servers present present servers.
Cash at bank and on deposit	134.276	149.317	134.276	149.317

$22.$ Investment in controlled entity

Name of Entity	Country of Incorporation	Class of Shares	Equity Holding %		Book Value of Investment		Contribution to Consolidated Result
			2005 %	2004 %	2005	2004	2005	2004 S
Rasiot Pty Ltd	Australia	Ordinary	100	100	$\blacksquare$	٠	(4.540)	(20.470)

23. Related Parties

Wholly owned subsidiary, Raslot Pty Ltd, has been loaned \$190,870 to date, to conduct exploration.

24. 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 2005 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 2005. 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.

The figures here are the best estimates of the quantative impact of the change as at the date of preparing this report, the actual effects of the transition to AIFRS may differ from the estimates shown here due (a) the ongoing work being undertaken by the Company, (b) potential amendments to AIFRS and interpretations thereof being issued by the standard setters, and (c) emerging accepted practices in the interpretations and applications of AIFRS and UIG interpretations.

Exploration and evaluation expenditure

In terms of the Accounting Standard AASB 6 exploration for and evaluation of mineral resources issued by the Australian Accounting Standards Board (AASB) entities are permitted to continue their previous accounting policies but all exploration and evaluation expenditure would be subject to an 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 may not meet the recoverable value test and may need to be written off in the year incurred. AASB 6 is unlikely to have a material impact on the financial statements of the group.

Goodwill

Under AASB 3 "Business Combinations" and AASB 128 "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. The implementation of AASB 3 and AASB 128 is not expected to have a material impact on the financial statements of the Company.

Taxation

Under the AASB 112 "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
• 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

Whilst this will result in a change in the current accounting policy that does not classify financial instruments it is not expected that there will be any material impact on the financial statements of the economic entity as at 30 June 2005.

Impairment of Assets

Under AASB 136 "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, however as at June 30 2005 the new policy will not have a material impact on the carrying value of the assets.

There are no material adjustments to equity, or 2005 and 2004 results, on the adoption of AIFRS.

The Directors of the Company declare that:

• $1₁$ The financial statements and notes, as set out on pages 7 to 21 are in accordance with the Corporations Act 2001:
• comply with Accounting Standards, the Corporations Regulations 2001; and $(a)$
• give a true and fair view of the financial position as at 30 June 2005 and of the performance for $(b)$ the year ended on that date of the company and economic entity.
• $2.$ The Chief Executive Officer and Chief Finance Officer have each declared that:
• the financial records of the company for the financial year have been properly maintained in $(a)$ accordance with section 286 of the Corporations Act 2001;
• $(b)$ the financial statements and notes for the financial year comply with Accounting Standards; and
• $(c)$ the financial statements and notes for the financial year give a true and fair view.
• 1. In the Directors' opinion there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

The Company guarantees the debts of its subsidiary, Raslot Pty Ltd.

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

D N Zukerman DIRECTOR

Dated this 21^st day of September 2005 Perth, Western Australia

STANTON PARTNERS

1 HAVELOCK STREET WEST PERTH 6005 WESTERN AUSTRALIA

TELEPHONE: (08) 9481 3188

Facsimile: (08) 9321 1204 e-mail: australia@stanton.com.au

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 2005. 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.

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.

In accordance with ASIC Class Order 05/83, we declare to the best of our knowledge and belief that the auditor's independence declaration set out on page 25 of the financial report has not changed as at the date of providing our audit opinion.

AUDIT OPINION

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

• the Corporations Act 2001, including: a)
• (i) giving a true and fair view of the Company's and consolidated entity's financial position as at 30 June 2005 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
• other mandatory professional reporting requirements in Australia. b).

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

Sporter Sarten $g_{\nu}$

J P Van Dieren Partner Perth, Western Australia 27^th September 2005

SABRE RESOURCES LTD AUDITORS' INDEPENDENCE DECLARATION

STANTON PARTNERS

1 HAVELOCK STREET WEST PERTH 6005 WESTERN AUSTRALIA

TELEPHONE: (08) 9481 3188

Facsimile: (06) 9321 1204

e-mail: australia@stanton.com.au

$27^{\text{th}}$ September 2005

Board of Directors Sabre Resources Limited $1^st$ Floor. 8 Parliament Place WEST PERTH WA 6005

Dear Directors

RE: SABRE RESOURCES LIMITED

In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of Sabre Resources Limited.

As Audit Partner for the audit of the financial statements of Sabre Resources Limited for the year ended 30 June 2005, I declare that to the best of my knowledge and belief, there have been no contraventions of:

• $(i)$ the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
• (ii) any applicable code of professional conduct in relation to the audit.

Yours sincerely STANTON PARTNERS

John Van Dieren Partner

Registered Proprietor: Stanton Partners Australasia Pty Ltd A.B.N 60 948 259 529
as trustee for the Stanton Partners Unit Trust

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 a 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 guide 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 McCullagh 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 2005 AGM
DN Zukerman - Chairman	2003	YES	ΝO	NO.	NO
A Clemen	1999	NO	YES	YES	YES
BR McCullagh and	1999	YES	NO.	NO	NO
Company Secretary

$\mathbf{1}$ . Distribution of Shareholders

As at 16 September 2005 the distribution of members and their shareholdings were:- $(a)$

Range of Holding			Holders	Shares Held	Percent
1.001	۰	1.000 5.000	270 286	112,414 766,476	0.53 3.61
5.001	۰	10,000	60	483,164	2.27
10.001	٠	100,000	76	2.936,719	13.82
100.001		and over	20	16.956.078	79.77
			712	21.254.851	100.00

$(b)$ There exists 305 shareholders with unmarketable parcels of shares.

$2.$ Substantial Shareholders

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
Coniston Pty Ltd, Kalgoorlie Mine Management Pty Ltd together with group member James John del Piano	3.706.020	17.43%
McNeil Nominees Pty Ltd	1.890.956	8.90%

The twenty largest shareholders as at 16 September 2005 which represents 79.78% of the paid up capital were as follows :

Name of Holder	Number	%
Bow Lane Nominees Pty Ltd	5,160,000	24.28
McNeil Nominees Pty Limited	2.052.750	9.66
ANZ Nominees Limited	2,023,192	9.52
Coniston Pty Ltd	1,500,000	7.06
Kalgoorlie Mine Management Pty Ltd	1.300.000	6.12
James John del Piano	906,020	4.26
Dog Meat Pty Ltd	800,000	3.76
Pio Services Limited	740.000	3.48
Todea Holdings	500,000	2.35
Inxs Pty Limited	300.000	1.41
Nefco Nominees Pty Ltd	300,000	1.41
Gregory Keith Holmsen	200.000	0.94
Jeffrey Maxwell Jones	200,000	0.94
Hugh John Ness & Sallie May Boyd	179.116	0.84
Amalgamation Sale & Takeover Consultants Pty Ltd	150,000	0.71
Tansearch Pty Ltd	150,000	0.71
Seabrooke Pty Ltd	140,000	0.66
Simon Nominees Pty Ltd	130,000	0.61
Redtown Enterprises Pty Ltd	120,000	0.56
Lee Zaugra	105,000	0.49
Total	16,956,078	-------- 79.78
	========	$=$ $=$ $=$ $=$

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

Name of Holder	Number	%
Kalgoorlie Mine Management Pty Ltd	9,300,000	44.29
Bow Lane Nominees Pty Ltd	6.250,000	29.76
Coniston Pty Ltd	3.500,000	16.67
Worldpower Pty Ltd	1.000.000	4.76
Perth Glass Distribution Pty Ltd	750.000	3.57
Simon Nominees Pty Ltd	130.000	0.62
Alexis Pty Ltd	10.000	0.05
Kipto Pty Ltd	10.000	0.05
Debra Majteles	10.000	0.05
Lisa Maiteles	10.000	0.05
Simon Maiteles	10.000	0.05
Solomon Majteles	10.000	0.05
Simon Nominees Pty Ltd	10,000	0.05
		---------
Total	21.000.000	100.00
	========	=====