SANDFIRE RESOURCES LIMITED — Annual Report 2004

Sep 28, 2004

SANDFIRE RESOURCES NL

ABN 55 105 154 185

ANNUAL REPORT

2004

CORPORATE DIRECTORY

DIRECTORS	Peter S THOMAS Non-executive Chairman
	Gregory H STEEMSON Managing Directo r
	Graeme J HUTTON Technical Director
COMPANY SECRETARY	Malcolm K Smartt FCPA FCIS
PRINCIPAL REGISTERED OFFICE	10 Walker Avenue West Perth Western Australia, 6005 Telephone: (08) 9226 5833 Facsimile: (08) 9226 5844 Email: admin@sandfire.com.au Internet: www.sandfire.com.au
AUDITOR	Somes & Cooke Chartered Accountants 1304 Hay Street West Perth Western Australia, 6005
SHARE REGISTRY	Security Transfer Registrars Pty Ltd 770 Canning Highway Applecross Western Australia, 6153 Telephone: (08) 9315 0933 Facsimile: (08) 9315 2233 Email:
SOLICITORS	Smyth & Thomas 10 Walker Avenue West Perth Western Australia, 6005
STOCK EXCHANGE LISTING	The Company's shares are quoted on the Australian Stock Exchange. The Home Exchange is Perth.
ASX CODE	SFR - ordinary shares SFRO - options

CHAIRMAN'S REPORT

Dear Shareholder

On behalf of the Board, it is my pleasure to submit to you this annual report of Sandfire.

In my letter to investors in the prospectus for Sandfire's initial public offering, I observed that the Board was comprised of experienced and successful geologists and unconventional thinkers looking to generate and test targets from conceptual prospects with a view to making really big discoveries.

Since listing in March 2004, Sandfire enthusiastically and successfully embarked on a aggressive exploration endeavour with a view to generating exploration targets on its projects; the results of that endeavour reinforce the Board's conviction that at least one of its projects will yield a truly significant discovery on a world scale.

Drilling of Sandfire's targets will commence as soon as native title, climatic and rig availability issues permit – the Board has directed that drilling at Borroloola is to be given absolute priority as soon as a rig can be secured. Meanwhile target generation work on Sandfire's other projects continues.

Shareholders aspirations to participate in an inspirational and successful exploration company via Sandfire can only be realised if Sandfire has a fair dinkum go which involves not only the application of modern techniques to its conceptual prospects to "uncover" deposits with no surface expression but deep drilling at great expense. The risks are high as will be the rewards upon success. The Board remains committed to having a real go.

Sandfire looks forward to your continuing support as it strives to reap the potentially huge rewards that will be on offer if any of its Greenfields projects is proved to host a world-class deposit.

P S Thomas Chairman

THE PERIOD IN REVIEW

OPERATIONS REPORT

At the time of the preparation of the Operations Report for 2004 the Company is preparing for drilling at Borroloola, is on the ground at Sandfire undertaking a gravity survey, is preparing for an IP survey at Mt Genoa and is awaiting data from the Yannarie and Urandy airborne surveys. The Company has also decided to expand its tenement holdings in the Bangemall Basin and has applied for 8 new exploration licences north of the Abra base metal project. The locations of the Company's projects are shown on the inside cover of this report.

Changes to the administrative procedures for the grant of tenements has caused delays to the processing of some of the Company's Western Australian tenements. The Company has now met the requirements of these procedures and expects most of its tenements to be ready for grant in the near future.

Borroloola

The Borroloola Project is located approximately 80 km west of the McArthur River lead-zinc deposit in the Northern Territory. The tenements cover approximately 16 square km of lower Proterozoic rocks of the Batten Trough. The exploration target is base metal mineralisation associated with McArthur Group rocks and bounding structures. Based on the results of previous explorers, such a target probably would not outcrop. The Company's initial program was therefore composed of structural mapping, gravity and induced polarization geophysical surveys which could result in the discovery of non-outcropping mineralisation.

The results of the structural work confirmed that the geological setting is indeed complex and could result in mineralisation being 'blind'. This model has been confirmed by the IP work.

The gravity survey was completed in June and provided good geological information on the project area and defined a gravity anomaly (low) adjacent to the Four Archers Fault. The source of the gravity low is not readily apparent from mapping.

Following the gravity survey, the Company completed an IP survey centred mainly on the Coppermine Creek Fault where six lines were surveyed. Five of the lines were separated by 500m. The sixth line was 900m east of the next closest line. This survey was successful in defining IP anomalies along the Coppermine Creek Fault and within the McArthur Group rocks to the south. The latter anomalies are not well defined and further IP work will need to be done to fully define these targets.

The anomalies along the Coppermine Creek Fault are probably related to that structure notwithstanding the wide line separation. Further IP work is planned to fully define these targets.

One IP line was surveyed across the gravity low. The inversion of the resistivity data has defined a saucer-shaped structure.

The Company is planning to drill a selection of these targets in 2004 subject to access approval and drilling rig availability.

Sandfire

Mississippi Valley Type (MVT) lead-zinc deposits are replacement type deposits typically found in carbonate sequences. In Western Australia, examples of these types of deposits are found on the Lennard Shelf in the northern part of the Canning Basin. Another occurrence known as the Admiral Bay prospect and of particular interest to the Company is located south east of Broome. This occurrence is associated with the structures on the south side of the Broome Platform and in particular the Admiral Bay and Nita Downs Faults. A laterally extensive mineralised system was established by CRA Exploration at this prospect associated with the Admiral Bay Fault.

The Admiral Bay and Nita Downs Faults are interpreted to extend to the north west from the Admiral Bay prospect along the southern margin of a much larger (in area) basement feature compared to that at the Admiral Bay prospect within the Broome Platform. The Company has tenure to this feature. By analogy with the Admiral Bay prospect, mineralisation may exist within carbonate complexes on the south side of this basement feature. Existing gravity data suggests that this feature may be more complex than the basement feature at the Admiral Bay prospect and therefore potential for mineralisation may also exist in other sites.

The project area is subject to a Native Title determination in favour of the Karajarri People.

The Company has successfully negotiated a heritage protection agreement with the Karajarri People enabling the planned field work proceed. This phase of the exploration program is planned to be completed in September/October 2004.

Bangemall Basin Projects – Mt Augustus, Yannarie, Tangadee

The Company has three tenement packages in the southern part of the Bangemall Basin. The exploration target in each of these areas is Sedex base metal (mainly lead-zinc) mineralisation.

The Yannarie and Mt Augustus tenements cover inferred sub-basins in the western part of the Bangemall Basin. Notwithstanding the limited previous exploration, several base metal occurrences are known. An airborne magnetometer and spectrometer survey will be undertaken over the Yannarie project in 2004.

The Mt Genoa tenements are located at the eastern end of the Mt Augustus project area and cover base metal occurrences within the Irregully Formation. The Company has entered into an option agreement over E09/997 and has applied for a new exploration licence covering the available ground around this tenement. E09/997 covers two occurrences of lead and copper mineralisation separated by 700m in an area of very little outcrop.

A gravity survey has been completed over E09/997. This has defined the inferred contact between the Irregully Formation and the underlying Mt Augustus Formation. A gravity feature has also been defined in the footwall below the two base metal occurrences.

An IP survey is to be completed in September/October 2004.

In August 2004 the Company made application for eight exploration licences on the western side of the Tangadee Lineament. These tenements are located immediately north of the Abra base metal sedex deposit.

Urandy

The Urandy Project tenements cover Wyloo Group sediments which are being targeted for Carlin type gold deposits. Mapped transfer faults by the Geological Survey of WA suggest an extensional tectonic period during the geological evolution of the area. This may have been the underlying mechanism for the mineralisation in the area.

An airborne magnetometer and spectrometer survey will be completed in 2004.

Doolgunna

The Doolgunna tenements cover approx 40 km of the Jenkins Fault which was inferred to have been active during the evolution of the Glengarry Basin. The Company has targeted this structure for gold mineralisation. Activity to date has consisted of data compilation and Native Title negotiations.

SUMMARY OF TENEMENTS

(as at 17 September 2004)

Tenement Listing
Project	Interest	Tenement
Doolgunna	100%	E52/1697
	100%	E52/1698
	100%	E52/1699
	100%	E52/1715
Yannarie	100%	E08/1374
	100%	E08/1409
	100%	E09/1111
Mt Augustus	100%	E09/1138
	100%	E09/1139
	100%	E09/1140
Mt Genoa	0%	E09/997
	100%	E09/1173
Urandy	100%	E08/1462
	100%	E08/1146
Sandfire	100%	E04/1344
	100%	E04/1424
	100%	E04/1425
	100%	E04/1445
	100%	E04/1449
	100%	E04/1450
	100%	E04/1451
Tangadee 1	100%	E52/1794
Tangadee 2	100%	E52/1795
Tangadee 3	100%	E52/1796
Tangadee 4	100%	E52/1797
Tangadee 5	100%	E52/1798
Tangadee 6	100%	E52/1799
Tangadee 7	100%	E52/1800
Tangadee 8	100%	E52/1801
Borroloola	100%	EL 10121
	100%	MLN 624

DIRECTORS' REPORT

The Directors present their report on Sandfire Resources NL at the end of, or during the period ended 30 June 2004.

DIRECTORS

The names and details of the Directors of Sandfire Resources NL at the date of this report are:

Peter S Thomas B. Juris, LLB Non-executive Chairman

Mr Thomas is a practicing solicitor with more than 20 years national and international experience in the resource sector, both oil and minerals, specialising in the provision of general contractual and corporate advice to both miners and explorers. He is also Chairman of Image Resources NL and Meteoric Resources NL and was a Director of Magnetic Minerals Limited until it was taken over by Ticor in early 2003.

Gregory H Steemson B.Sc (Geology), MSc (Geophysics), F.Aus. I.M.M, FAIG Managing Director

Mr Steemson is a graduate of the University of Queensland and the University of Utah. He is a qualified geologist and geophysicist and has held senior positions within the mining industry during his 30 year career. Greg has been directly involved in successful exploration programs for gold, base metals, diamonds, iron ore, mineral sands and coal. He has professional work experience throughout Australia and in South Africa, New Zealand, New Guinea, Fiji, Canada, South America and China. He is also a Director of Mineral Commodities Limited and Nord Pacific Limited. Mr Steemson brings management and expertise in exploration to the Board.

Graeme J Hutton B.Sc(Hons), F.Aus.I.M.M Technical Director

Mr Hutton is a graduate of the University of Western Australia. Since graduating some 40 years ago, Graeme has established himself as a highly successful prospecting geologist. His early prospecting career was centered on the Hamersely Iron Province. These activities, undertaken on behalf of DFD Rhodes Pty Ltd, have since been rewarded with Graeme's family Company receiving or being entitled to receive royalties from the Rhodes Ridge Group and West Angelas owned by Rio Tinto, Hope Downs owned by Kumba resources and Hancock Prospecting and McAmeys owned by BHP Iron. These royalties give recognition to Graeme's pioneering role in the development of this mineral field.

In the late 1970's, Graeme, together with Mr Peter Ingram , formed Metana Minerals NL which was one of the star performers of the developing gold mining industry in WA during the 1980's. Leaving the Metana Group in the early 1990's, Graeme was the driving force behind the establishment of Kimberley Diamond Company (KDC), now Australia's second commercial diamond producer. Graeme maintains an active involvement with KDC in the role of Technical Director. Graeme also serves on the Board of Herald Resources, a successful Western Australian resource company having developed its own gold mining operations and now developing its own base metal operations.

PRINCIPAL ACTIVITIES

The principal activities of Sandfire Resource NL during the period consisted of mineral exploration.

RESULTS OF OPERATIONS

The net loss after income tax for the Company for the period was \$ 770,693.

DIVIDENDS

As the Company was only incorporated on 16 June 2003, no dividend has been paid and no dividend is recommended for the current year.

REVIEW OF ACTIVITIES

A detailed review of the Company's activities during the period is set out in the section titled "The Year in Review – Operations and Exploration " in this Annual Report.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

In the opinion of the Directors there were no significant changes in the state of affairs of the Company that were not declared in or contemplated by the Prospectus dated 14 January 2004 that occurred during the period under review.

OPTIONS OVER UNISSUED CAPITAL

As at 1 July 2004 there were Options as follows:

i Listed Opt ons

Number of Options	Exercise Price	Expiry Date
12,729,420	10 cents each	30 September 2005

These options allow conversion to a contributing share paid to .001 cents with 15 cents to pay to become a fully paid share.

Unlisted Options

Number of Options	Exercise Price	Expiry Date
3,000,000	25 cents each	31 December 2008

EVENTS SUBSEQUENT TO BALANCE DATE

There has not arisen in the interval between the end of the period and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company, to affect significantly the operations of the Company, the results of those operations, or the state of affairs of the Company in future financial years.

LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS

Likely developments in the operations of the Company are included elsewhere in this Annual Report. Disclosure of any further information has not been included in this report because, in the reasonable opinion of the Directors to do so would be likely to prejudice the business activities of the Company.

ENVIRONMENTAL REGULATION AND PERFORMANCE

The Company holds various environmental licences and authorities to regulate its exploration activities in Australia. These licences include conditions and regulations with respect to the rehabilitation of areas disturbed during the course of its exploration activities.

So far as the Directors are aware, all exploration activities have been undertaken in compliance with all relevant environmental regulations.

Directors' Report

INFORMATION ON DIRECTORS

As at the date of this report, the position of the Directors and their interests in the shares and options of the Company are as follows:

Director	Position	Director's Interests in Ordinary Shares	Director's Interests in Contributing Shares	Director's Interests in Listed Options
Peter S Thomas	Non Executive Chairman Appointed on 18 June 2003	400,000	1,000,000	700,000
Gregory H Steemson	Managing Director Appointed on 18 June 2003	1,400,000	-	-
Graeme J Hutton	Technical Director Appointed on 18 June 2003	5,638,111	-	-

Listed options with an exercise price of 10 cents expiring on 30 September 2005 convert to a contributing share with 15 cents to pay.

Each Director's holdings from the start of the period and movements to the end of the period are detailed at Note 15.

DIRECTORS' MEETINGS

The number of meetings of the Company's held in the period each Director held office during the period and the number of meetings attended by each Director were:

Director	Director			Meetings whilst Director
	Appointed	Resigned	Held	Attended
P S Thomas	18 Jun 03		8	8
G H Steemson	18 Jun 03		8	8
G J Hutton	18 Jun 03		8	8

DIRECTORS' AND EXECUTIVES' EMOLUMENTS

The Board of Directors is responsible for determining and reviewing compensation arrangements for the Directors and the executive team. The Board of Directors assesses the appropriateness of the nature and amount of emoluments of such officers on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum benefit from the retention of a high quality Board and executive team. Such officers are given the opportunity to receive their base emolument in a variety of forms including cash and fringe benefits such as motor vehicles.

Remuneration of Non-Executive Directors is determined by the Board with the maximum amount approved by the shareholders from time to time.

Details of the nature and amount of each element of the emoluments of each Director of Sandfire Resources NL are as follows:

Director	Base Emolument \$	Superannuation Contributions \$	Non Cash Benefits \$	Consultancy Fees \$	Total \$
P S Thomas (Non-Executive Chairman)	16,129	-	-	25,000	41,129
G H Steemson (Managing Director)	-	-	-	43,120	43,120
G J Hutton (Technical Director)	17,648	2,664	-	-	20,312

Other than the Directors disclosed above there were no other executive officers who received emoluments during the period period under review.

Directors' Report

OFFICERS' INDEMNITIES AND INSURANCE

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

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

DATED at Perth this 29th day of September 2004

Signed in accordance with a resolution of the Directors.

____________________________________

G H Steemson Managing Director

STATEMENT OF FINANCIAL PERFORMANCE

(for the Period 18 June 2003 to 30 June 2004)

	NOTE	2004 \$
Revenue from ordinary activities	2	-
Other revenue	2	75,163
Total revenue	2	75,163
Administration Expenses	3	(147,683)
Depreciation and amortisation expense	3	(4,235)
Exploration expenditure written off	3	(693,938)
Loss from ordinary activities before related income tax expense		(770,693)
Income tax relating to ordinary activities	4	-
Net loss attributable to members of the Company	12	(770,693)
Basic earnings/(loss) per share (cents per share)	20	(4.43)

The statement of financial per ormance is to be read in f conjunction with the notes to the financial statements.

STATEMENT OF FINANCIAL POSITION

(as at 30 June 2004)

	NOTE	2004 \$
CURRENT ASSETS
Cash assets	5	3,775,017
Receivables	6	98,963
TOTAL CURRENT ASSETS		3,873,980
NON-CURRENT ASSETS
Property, plant and equipment	7	241,039
Capitalised mineral exploration and evaluation expenditure	8	-
TOTAL NON-CURRENT ASSETS		241,039
TOTAL ASSETS		4,115,019
CURRENT LIABILITIES
Payables	9	114,563
Provisions	10	2,396
TOTAL CURRENT LIABILITIES		116,959
TOTAL LIABILITIES		116,959
NET ASSETS		3,998,060
EQUITY
Contributed equity	11	4,513,785
Option Reserve	13	254,968
Accumulated losses	12	770,693
TOTAL EQUITY	19	3,998,060

The statement of financial position is to be read in conjunction with the notes to the financial statements.

STATEMENT OF CASH FLOWS

(for the Period 18 June 2003 to 30 June 2004)

	NOTE	2004 \$
Cash flows from operating activities Receipts from customers Interest received Other income received		- 25,435 -
Payments to suppliers and employees		(143,686)
Net cash used in operating activities	21(b)	(118,251)
Cash flows from investing activities Payments for exploration and evaluation Payments for property, plant and equipment		(644,000) (232,815)
Net cash used in investing activities		(876,815)
Cash flows from financing activities Payments for share issue expenses Proceeds from the issue of shares and options		(487,385) 5,257,468
Net cash provided by financing activities		4,770,083
Net increase in cash held		3,775,017
Cash at the beginning of the period		Nil
Cash at the end of the period	21(a)	3,775,017

The statement of cash flows is to be read in conjunction with the notes to the financial statements.

NOTES TO THE FINANCIAL STATEMENTS

(for the Period 18 June 2003 to 30 June 2004)

1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies adopted in preparing the financial report of the Company, Sandfire Resources NL are stated to assist in a general understanding of the financial report. These policies have been consistently applied throughout the period.

(a) Basis of Accounting

This financial report has been prepared on the basis of accounting principles applicable to a going concern, which assumes the commercial realisation of the future potential of the Company's assets and the discharge of its liabilities in the normal course of business.

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

The financial report has been prepared on the basis of historical costs and does not take into account changing money values or, except where stated, current valuations of non-current assets.

(b) Income Tax

The Company adopts the income statement liability method of tax effect accounting. Income tax expense is calculated on the operating result adjusted for permanent differences between taxable and accounting income. The tax effect of timing differences, which arise from items being brought to account in different periods for income tax and accounting purposes, is carried forward in the statement of financial position as a future income tax benefit or a provision for deferred income tax. 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 from the deductions to be realised and the Company will continue to comply with the conditions of deductibility imposed by the law.

(c) Property Plant and Equipment

Depreciable non-current assets, other than freehold land, are depreciated over their expected economic life using the straight line method. Profits and losses on disposal of non-current assets are taken into account in determining the operating loss for the year. The depreciation rate used for each class of assets is as follows:

• Plant and equipment 13 40%
• Motor vehicles 15 20%

The carrying amounts of non-current assets, other than exploration, evaluation and development expenditure carried forward (refer Note 1(f)), are reviewed to determine whether they are in excess of their recoverable amount at balance date. If the carrying amount of a non-current asset exceeds the recoverable amount the asset is written down to the lower amount. In assessing recoverable amounts, the relevant cash flows have not been discounted to their present value.

(d) Acquisition of Assets

The cost method of accounting is used for all acquisitions of assets regardless of whether shares or other assets are acquired. Cost is determined as the fair value of the assets given up at the date of acquisition plus costs incidental to acquisition. Costs relating to the acquisition of new areas of interest are classified as either exploration and evaluation expenditure, development properties or mine properties based upon the stage of development reached at the date of acquisition.

(e) Investments

Interests in listed and unlisted securities are brought to account at cost and dividend income is recognised in the statement of financial performance when received. Where, in the opinion of the Directors, there has been a permanent diminution in the value of any individual investment, a provision for diminution is made.

(f) Exploration and Evaluation Expenditure

All exploration and evaluation expenditure is expensed to profit and loss as incurred.

(g) Receivables and Revenue Recognition

Interest income on short term investments is recognised as it accrues.

The gross proceeds of asset sales are included as revenue of the Company.

(h) Employee Entitlements

Liabilities for employees' entitlements to wages and salaries, annual leave, and other current employee entitlements are accrued at nominal amounts on the basis of current wage and salary rates.

Liabilities for other employee entitlements, which are not expected to be paid or settled within 12 months of balance date, are accrued, where material, in respect of all employees at the present values of future amounts expected to be paid.

Contributions to employee superannuation plans are charged as an expense as the contributions are paid or become payable.

(i) Payables

These amounts represent liabilities for goods and services provided to the Company prior to the end of the period and which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.

(j) Goods and Services Tax

Revenues, expenses and assets are recognised net of the amount of goods and services tax ("GST"), except where the amount of GST incurred is not recoverable from the Australian Taxation Office ("ATO"). In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense.

Receivables and payables are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the statement of financial position.

Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows.

(k) Contributed Equity

Issued capital is recognised as the fair value of the consideration received by the Company.

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

(l) Earnings per Share

Basic EPS is calculated based upon the net loss divided by the weighted average number of shares. Diluted EPS is calculated as the net loss divided by the weighted average number of shares and dilutive potential shares.

(m) Comparative Amounts

There are no comparative figures as the Company was incorporated on 18 June 2003. The operating results and cash flows are prepared for the period 18 June 2003 to 30 June 2004.

2 REVENUE

			2004 \$
Revenue from operating activities Interest received			75,163
Total revenue activities	from	ordinary	75,163

3 EXPENSES

The loss from ordinary activities before income tax expense has been determined after charging the following items:

	2004 \$
Auditors' remuneration
Audit or review of the Company's financial	(6,750)
statements
Contributions to	employee
superannuation plans
Depreciation	(4,235)
Administration Expenses	(139,287)
Mineral exploration and expenditure written off	evaluation (693,938)
Provision for employee entitlements	(2,396)

4 INCOME TAX

(a) Reconciliation

The aggregate amount of income tax attributable to the period differs by more than 15% from the prima facie tax benefit on the operating loss.

The differences are reconciled as follows:

	2004 \$
Operating loss	(770,693)
Prima facie tax benefit at 30%	231,209
Tax effect of permanent differences:	6,000
Future income tax benefits not brought to account	225,209
Income tax expense attributable to ordinary activities	-

(b) Future income tax benefits

The future income tax benefits of \$225,209 not brought to account relate to income tax losses, the benefit of which will only be realised if the following conditions for deductibility are met:

• (i) the entity derives future assessable income of a nature and of an amount sufficient to enable the benefit from the deductions for the losses to be realised, and
• (ii) the entity continues to comply with the conditions for deductibility imposed by tax legislation, and (iii) no changes in tax legislation adversely affect the entity in realising the benefit from the deductions for the losses.

5 CASH ASSETS

	2004
	\$
Cash	475,017
Bank Bills	3,300,000
	3,775,017

6 RECEIVABLES

	2004
	\$
GST recoverable	49,235
Accrued Interest	49,728
	98,963

7 PROPERTY, PLANT AND EQUIPMENT

	2004
	\$
Office furniture and equipment
At cost	21,622
Accumulated depreciation	(905)
	20,717
Buildings and infrastructure
At cost	30,429
Accumulated depreciation	-
	30,429
Exploration plant and equipment
At cost	7,514
Accumulated depreciation	(424)
	7,090
Motor vehicles
At cost	185,709
Accumulated depreciation	(2,906)
	182,803
Total property, plant and equipment at book value	241,039

Reconciliation

There were no assets at the beginning of the period and only additions and no disposals during the period.

8 CAPITALISED MINERAL EXPLORATION EXPENDITURE

			2004 \$
	Balance at the beginning of the period		-
	Purchase price for tenements Exploration Expenditure		20,000 673,938
Total			693,938
	Less expenditure written off during the year		(693,938)
	Total amount capitalised as at 30 June 2004		-
9	PAYABLES
	Current
	Unsecured Trade creditors and accruals		114,563
	Amounts owed to Directors and/or Director-related entities		-
			114,563
10	PROVISIONS
	Current Employee entitlements		2,396
	Number of employees at year end		3
11	CONTRIBUTED EQUITY
(a)	Ordinary Shares 39,000,000		4,512,285
(b)	Contributing Shares 4,015,000
	Paid to .001 cents with 15 cents unpaid Total		1,500 4,513,785
(c)	Ordinary Share
	Movements During The Period	2004	2004 \$
	Balance at the beginning of the period	-	-
	Promoter shares Ordinary shares issued under a Prospectus Less:	14,000,000 25,000,000	- 5,000,000
	Brokerage on share issues		(487,715)
	Balance at the end of the year	39,000,000	4,512,285

(d) Contributing Share

(Paid to .001 cents with 15 cents unpaid)

	2004 Number	2004 \$
Movements During The Year
Balance at the beginning of the period	-	-
Promoter shares	4,000,000	-
Converted from options	15,000	1,500
Balance at end of year	4,015,000	1,500

(e) Options

Listed options issued under a Prospectus

The listed options on issue at the end of the period are as follows:

Number of Options Issued	Exercise Price	Expiry Date
12,729,420	10 cents	31 September 2005

These options allow conversion to a contributing share paid to .001 cents with 15 cents to pay to become a fully paid share.

Unlisted options

There are 3,000,000 on issue at the end of the period.

(f) Terms and Conditions of Contributed Equity

Ordinary Shares

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

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

Contributing Shares

Contributing shares require a further payment of 15 cents to become fully paid.

12 ACCUMULATED LOSSES

	2004 \$
Accumulated loss at the beginning of the period	-
Net loss attributable to members of the Company	770,693
Accumulated loss at the end of the year	770,693

13 RESERVES

Option Premium Reserve

	2004 \$
Movements during period
Balance at beginning of period	-
Issue 12,744,420 options at	254,968
2 cents each
Balance 30 June 2004	254,968

14 DIRECTORS' AND EXECUTIVES' REMUNERATION

(a) Remuneration Disclosures

SANDFIRE Resources NL Period Ended: 30-Jun 2004
\$'000	Primary	Cash	Non		Post Employment	Equity	Other	TOTAL
	Salary & Fees	Bonus	cash	Super annuation	Retirement Benefits	Options	Benefits	\$'000
Specified Directors
	Thomas, P. Chairman (Non Executive)
2003	-	-	-	-	-	-	-	-
2004	41,129	-	-	-	-	-	-	41,129
	Steemson, G. Managing Director
2003	-	-	-	-	-	-	-	-
2004	43,120	-	-	-	-	-	-	43,120
	Hutton,G Technical Director
2003	-	-	-	-	-	-	-	-
2004	17,648	-	-	2,664	-	-	-	20,312
TOTALS	101,897	-	-	2,664	-	-	-	104,561

(b) Remuneration Reviews

The Board of Directors is responsible for determining and reviewing compensation arrangements for the Directors and the executive team. The Board of Directors assesses the appropriateness of the nature and amount of emoluments of such officers on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum benefit from the retention of a high quality Board and executive team. Such officers are given the opportunity to receive their base emolument in a variety of forms including cash and fringe benefits such as motor vehicles.

(c) Related Party Transactions

Transaction with Directors during the year, that were made on normal commercial terms and conditions, are as follows:

• 1 Smyth & Thomas, legal practice of which Mr P Thomas is the sole proprietor, provided legal services to the Company and was paid \$25,000 (2003: Nil).
• 2 Mr G Steemson at Sandfire's expense, allowed the erection of a shed on his property at Paulls Valley in which Sandfire will store samples and other items. Mr Steemson is allowing the Company the use of the facility for a period of 3 years at no charge. At the three year point, the Company may remove the shed or sell it to Mr Steemson at its written down value.

15 DIRECTORS' AND EXECUTIVES' SHARE TRADING DISCLOSURES

	SANDFIRE RESOURCES NL– Period Ended 30 June 2004
	Number of Shares held: Specific Directors
	Balance	Issued during	Options	Net Change	Balance
	18 June 03	Period	Exercised	Other	30 Jun 04
			Specified Directors
Thomas, P.	-	400,000	-	-	400,000
Steemson, G.	-	1,400,000	-	-	1,400,000
Hutton, G.	-	5,662,536	-		5,662,536
Totals		7,462,536			7,462,536

SANDFIRE RESOURCES NL– Period Ended 30 June 2004
Number of Options held: Specific Directors
	Balance	Issued during	Options	Net Change	Balance
	18 June 03	Period	Exercised	Other	30 Jun 04
Specified Directors
Thomas, P.	-	700,000	-	-	700,000

SANDFIRE RESOURCES NL– Period Ended 30 June 2004
Number of Contributing Shares held: Specific Directors
	Balance	Issued during	Options	Net Change	Balance
	18 June 03	Period	Exercised	Other	30 Jun 04
Specified Directors
Thomas, P.	-	1,000,000	-	-	1,000,000

16 AUDITORS' REMUNERATION

	2004
	\$
Audit Services – Financial Report	6,750
Other Services – IPO	9,000

17 EMPLOYEE ENTITLEMENTS AND SUPERANNUATION COMMITMENTS

The Company contributes to superannuation plans at the statutory rate.

18 EXPENDITURE COMMITMENTS

The Company has certain obligations to perform minimum exploration work on mineral leases held. These obligations may vary over time, depending on the Company's exploration programs and priorities. As at balance date, total exploration expenditure commitments on tenements held by the Company which have not been provided for in the financial statements and which cover the following twelve month period amount to \$123,800 respectively. These obligations are also subject to variations by things such as farm-out arrangements or sale of the relevant tenements.

19 SEGMENT INFORMATION

The Company operates predominantly in one segment involved in the mineral exploration and development industry. Geographically, the Company operates in Australia only.

20 EARNINGS/(LOSS) PER SHARE

The following reflects the loss and share data used in the calculations of basic and diluted earnings/(loss) per share:

	2004 \$
Earnings/(loss) used in calculating basic and diluted earnings/(loss) cents per share	(770,693)
Weighted average number of ordinary shares used in calculating basic loss per share:	17,443,299

A diluted earnings per share has not been calculated, as the shares are not dilutive.

21 NOTES TO THE STATEMENTS OF CASH FLOWS

(a) Reconciliation of Cash

Cash at the end of the period as shown in the statements of cash flows is reconciled to the related items in the statement of financial position as follows:

	2004 \$
Cash at bank Deposits at call	475,017 3,300,000
	3,775,017

(b) Reconciliation of the loss from ordinary activities after income tax to the net cash flows used in operating activities

Loss from ordinary activities after income tax	2004 \$ (770,693)
Non-cash items: Depreciation Exploration expenditure written off	4,235 693,938
Change in operating assets and liabilities: (Decrease)/increase in trade creditors and employee entitlements (Increase)/ decrease in receivables	53,232 (98,963)
Net cash outflows used in operating activities	(118,251)

22 FINANCIAL INSTRUMENTS

(a) Interest Rate Risk

The Company'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, is as follows:

2004

	Note	Weighted Average Effective Interest	Floating Interest Rate	Fixed Interest Rate Maturing		Non Interest Bearing	Total
				12 months or less	12 – 60 months
		%	\$	\$	\$	\$	\$
Financial Assets Cash assets	21(a)	5.29	3,300,000	-	-	475,017	3,775,017
Receivables	5	0	-	-	-	98,963	98,963
Total Financial Assets			3,300,000	-	-	573,980	3,873,980
Financial Liabilities
Payables	12	-	-	-	-	114,563	114,563
Total Financial Liabilities			-	-	-	-	-
Net Financial Assets/(Liabilities)			-	-	-	-	3,759,417

(b) Credit Risk

The Company's maximum exposures to credit risk at balance date in relation to each class of recognized financial asset is the carrying amount of those assets as indicated in the statement of financial position.

(c) Net Fair Values

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

23 CONTINGENT LIABILITIES

At the date of this report there were no known contingent liabilities.

24 SUBSEQUENT EVENTS

There has not arisen in the interval between the end of the period and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company, to affect significantly the operations of the Company, the results of those operations, or the state of affairs of the Company In future financial years.

25 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 will change and may have an impact on the financial report of the Company are set out below.

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:

• (a) Financial asset or financial liability measured at fair value through the statement of financial performance
• (b) Held to maturity investments measured at amortised cost, subject to impairment
• (c) Loans and receivables measured at amortised cost, subject to impairment
• (d) Available for sale assets measured at fair value with changes in fair value measured directly in equity
• (e) 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 will be recognized sooner and the amount of write downs will be greater.

DIRECTORS' DECLARATION

In the opinion of the Directors of Sandfire Resources NL ("the Company")

• (a) the financial statements and notes as set out on pages 10 to 24 are in accordance with the Corporations Act 2001, including:
• (i) complying with Accounting Standards in Australia and the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
• (ii) giving a true and fair view of the financial position of the Company as at 30 June 2004 and of their performance, as represented by the results of their operations and their cash flows, for the period ended on that date.
• (b) there are reasonable grounds to believe that Sandfire Resources NL 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 Directors.

Signed at Perth this 29th day of September 2004

G H Steemson Managing Director

CORPORATE GOVERNANCE STATEMENT

GOOD GOVERNANCE AND PRACTICE RULES

The Australian Stock Exchange Corporate Governance Council has determined a total of ten Governance and Good Practice Rules, and although not mandatory at this time, these rules must be listed and an explanation provided on whether the Company Complies with the rule, or a reason why it does not.

Full details of the Company Corporate Governance can be viewed on the internet at www.sandfire.com.au or contact the Sandfire Office 08 9226 5833 and a copy of the full Corporate Governance will be sent to you.

PRINCIPAL	COMPLIANCE OR DETAILS OF
	PLANNING

PRINCIPAL 1: Lay sold foundations for management and oversight
1.1 Formalise and disclose the functions reserved to the Board and those	All Board and Management
delegated to management	functions fully detailed.
PRINCIPAL 2: Structure the Board to add value
2.1 A majority of the Board should be independent directors	Not complied with for economic reasons.
2.2 The Chairperson should be an independent director	Complied with.
2.3 The roles of Chairperson and Chief Executive Officer should not be	Complied with.
exercised by the same individual
2.4 The board should establish a nomination committee	The Board fulfills role of
	Nomination Committee.
PRINCIPAL 3: Promote ethical and responsible decision-making
3.1 Establish a code of conduct to guide the director's, the Chief Executive
Officer (or equivalent), the Chief Financial Officer (or equivalent) and any
other key executives as to:
3.1.1 the practices necessary to maintain confidence in the
Company's integrity. 3.1.2 The responsibility and accountability of individuals for reporting	A comprehensive Code of Conduct has been adopted.
or investigating reports of unethical practices.
3.2 Disclose the policy concerning trading in Company securities by	A strict policy has been adopted.
Directors. Officers and Employees;
PRINCIPAL 4: Safeguard integrity in financial reporting
4.1 Require the Chief Executive Officer (or equivalent) to state in writing to	Completed by Managing Director
the Board that the Company's financial reports present a true and fair	in conjunction with Auditor.
view, in all material respects, of the Company's financial condition and
operational results and are in accordance with relevant accounting
standards.
4.2 The board should establish an audit committee.	The role of Audit Committee has
	been assumed by the full Board.
4.3 Structure the audit committee so that it consists of:
• Only non-executive directors • A majority of independent directors.	Not Complied with – see above.
• An independent chairperson who is not the chairperson of the
Board.
• At least three members.
4.4 The audit committee should have a formal operating charter.	Not appropriate at this time.
PRINCIPAL 5: Make timely and balanced disclosure.
5.1 Establish written policies and procedures designed to ensure compliance
with ASX Listing Rule disclosure requirements and to ensure
accountability at a senior management level for that compliance.	Complied with.

Corporate Governance Statement

PRINCIPAL 6: Respect the rights of shareholders.
6.1 Design and disclose a communications strategy to promote effective
communication with shareholders and encourage effective participation	Complied with.
at general meetings.
6.2 Request the external auditor to attend the annual general meeting and
be available to answer shareholder questions about the audit and the
preparation and content of the auditors report.	Complied with.
PRINCIPAL 7: Recognise and manage risk.
7.1 The Board or appropriate Board committee should establish policies on
risk oversight and management.	Complied with.
7.2 The Chief Executive Officer (or equivalent) and the Chief Financial
Officer (or equivalent) should state to the Board in writing that:
7.2.1 the statement given in accordance with best practice
recommendation 4.1 (the integrity of financial statements) is
founded on a sound system of risk management and internal
compliance and control which implements the policies adopted by
the Board.	Complied with.
7.2.2 the Company's risk management and internal compliance and control system is operating efficiently and effectively in all
material respects.
PRINCIPAL 8: Encourage enhanced performance.
8.1 Disclose the process for performance evaluation of the Board, its
committees and individuals directors, and key executives.	Complied with.
PRINCIPAL 9: Remunerate fairly and responsibly.
9.1 Provide disclosure in relation to the Company's remuneration policies to
enable investors to understand (i) the cost and benefits of these policies
and (ii) the link between remuneration paid to directors and key	Complied with.
executives and corporate performance.
9.2 The Board should establish a remuneration committee.	Complied with.
9.3 Clearly distinguish the structure of non-executive directors' remuneration
from that of executives.	Complied with.
9.4 Ensure that payment of equity-based executive remuneration is made in
accordance with thresholds set in plans approved by shareholders.	Complied with.
PRINCIPAL 10: Recognise the legitimate interest of stakeholders.
10.1 Establish and disclose a code of conduct to guide compliance with legal
and other obligations to legitimate stakeholders	Complied with.

BOARD OF DIRECTORS

The Board is responsible for the overall Corporate Governance of the Company including the strategic direction, establishing goals for management and monitoring the achievement of these goals. The Board has also established a framework for the management of the Company including setting levels of remuneration for Directors and senior personnel, an overall framework of internal control and the establishment of appropriate ethical standards.

The Board regularly reviews the Company's operational and financial performance and reviews and approves detailed budgets and investment opportunities. The Board works closely with executive management to identify and manage operational, financial and legislative risks.

To ensure the Board is well equipped to discharge its responsibilities it has established guidelines for the nomination and selection of Directors and for the operation of the Board.

COMPOSITION OF THE BOARD

Principle 2 of the Good Governance and Practice Rules recommends that:

The Majority of the Board should be non-executive – The Company has only a small "working" Board and at this time the lack of non-executives is not seen as a problem. This will be constantly reviewed.

When a vacancy exists, through whatever cause, or where it is considered that the Board would benefit from the services of a new Director with particular skills, the Board selects a candidate or panel of candidates with the appropriate expertise and experience. The Board then appoints the most suitable candidate who must stand for election at the next general meeting of shareholders. The Company does not have a formal Nomination Committee and that role is fulfilled by the whole Board.

The full Board currently holds scheduled meetings each year plus any extraordinary meetings at such other times as may be necessary to address any specific significant matters that may arise.

BOARD RESPONSIBILITIES

As the Board acts on behalf of and is accountable to the shareholders, the Board seeks to identify the expectations of shareholders, as well as other regulatory and ethical expectations and obligations. In addition, the Board is responsible for identifying areas of significant business risk and ensuring arrangements are in place to adequately manage those risks. The Board seeks to discharge these responsibilities in a number of ways.

The responsibility for the operation and administration of the Company entity is delegated by the Board to the executive team. The Board ensures that this team is appropriately qualified and experienced to discharge their responsibilities and has in place procedures to assess the performance of the executive team.

The Board is responsible for ensuring that managements' objectives and activities are aligned with the expectations and risks identified by the Board.

MONITORING OF THE BOARD'S PERFORMANCE AND COMMUNICATION TO SHAREHOLDERS

The Board aims to ensure that the shareholders, on behalf of whom they act, are informed of all information necessary to assess the performance of the Directors. Information is communicated to the shareholders through:

• the annual report which is distributed to all shareholders;
• the half-yearly report; and
• the annual general meeting and other meetings so called to obtain approval for board action as appropriate.

All documents that are released publicly are made available on the Company's website at www.sandfire.com.au.

INDEPENDENT PROFESSIONAL ADVICE

Each Director has the right to seek independent professional advice at the Company's expense. However, prior approval of the Chairman is required, which should not be unreasonably withheld.

REMUNERATION

Remuneration levels are set by the Board in accordance with industry standards to attract suitably qualified and experienced Directors and senior executives.

ETHICAL STANDARDS

All Directors and employees are expected to act with the utmost of integrity and objectivity, striving at all times to enhance the reputation and performance of the Company.

CONFLICT OF INTEREST

In accordance with the Corporations Act 2001 and the Company's Constitution, Directors must keep the Board advised, on an ongoing basis, of any interest that could potentially conflict with those of the Company. Where the Board believes that a significant conflict exists the Director concerned does not receive the relevant board papers and is not present at the meeting whilst the item is considered. There are no director related entity transactions with the Company.

DIRECTORS DEALINGS IN COMPANY SHARES

The Constitution permits Directors to acquire shares in the Company. Company policy prohibits Directors from dealing in Company shares whilst in possession of price sensitive information. Directors must notify the Company Secretary once they have bought or sold securities in the Company. In accordance with the provisions of the Corporations Act 2001 and the Listing Rules of the Australian Stock Exchange, the Company on behalf of the Directors must advise the Australian Stock Exchange of any transactions conducted by them in shares and/or options in the Company.

ASX ADDITIONAL INFORMATION

Pursuant to the Listing Requirements of the Australian Stock Exchange Limited, the shareholder information set out below was applicable as at 08 September 2004.

Number of Shares and Options Holders

39,000,000 Ordinary Shares (SFR)

12,729,420 Options (SFRO) to convert to a contributing share for 10 cents on or before 30 September 2005. 4,015,000 Contributing Shares paid to .001 cents with 15 cents to pay to convert to a fully paid share.

Distribution of Equity Securities

Analysis of numbers of shareholders by size of holding:

Distribution	Number of	Number of
	Shareholders	Option Holders
1 – 1,000	1	1
1,001 – 5,000	23	125
5,001 – 10,000	8	36
10,001 – 100,000	454	116
More than 100,000	53	18
Totals	539	296

Holders of Non Marketable Parcels

There were zero holders of less than a marketable parcel of ordinary shares.

Substantial Shareholders

The following shareholders are recorded in the register of Substantial Shareholders

	Number	Percentage
Faustus Nominees Pty Ltd	5,662,536	14.52
Resource Development Co	3,672,536	9.42

Restricted Securities

Details of restricted ordinary shares are as follows:

24 Months from 1 March 2004 20,750,000

Voting Rights

In accordance with the Company's Constitution, voting rights in respect of ordinary shares are on a show of hands whereby each member present in person or by proxy shall have one vote and upon a poll each share shall have one vote. The contributing shares have a vote which is proportional to the amount actually paid thereon and relative to the aggregate amount paid on that share when it is fully paid.

Ordinary Shares

On-market buy back

There is currently no on-market buy back of the Company's securities.

Use of cash and assets

From the period of ASX Listing (11 March 2004) until the date of this report, the Company has used the cash and assets as declared on admission to the ASX, in a form consistent with the Company's business objectives.

ASX Additional Information

C Twenty Largest Shareholders

The names of the twenty largest holders of shares are listed below:

		Number
	Shareholders	(as at 09 Sep 04)	Percentage
1	Faustus Nominees Pty ltd	5,662,536	14.52
2	Resource Development Co	3,672,536	9.42
3	All-State Finance Pty Ltd	1,400,000	3.59
4	Steemson Gregory Hugh	1,400,000	3.59
5	I E Properties Pty ltd	1,150,000	2.95
6	West Aust NT Exploration	1,000,000	2.56
7	Tongaat Pty Ltd	1,000,000	2.56
8	Topseed Pty Ltd	919,000	2.36
9	Weybridge Pty Ltd	674,928	1.73
10	National Nominees Pty Ltd	460,000	1.18
11	Thomas Peter + Goodwin Su	400,000	1.03
12	Neeves Gregory Charles	380,000	0.97
13	Fund Academic Growth Inst	356,000	0.91
14	Computer Visions Pty Ltd	350,000	0.90
15	Adams Peter Daniel	320,000	0.82
16	James Commodity Exports	310,000	0.79
17	Barrymore Geoffrey William	285,000	0.73
18	Pinbrook Pty Ltd	250,000	0.64
19	Nutsville Pty Ltd	250,000	0.64
20	Uuro Pty Ltd	250,000	0.64
		20,490,000	52.53%
	Total Ordinary Shares on Issue	39,000,000

D Twenty Largest Option holders

The names of the twenty largest holders of shares are listed below:

	Option Holders	Number (as at 09 Sep 04)	Percentage
1	Resource Development Co	1,836,268	14.44
2	Thomas Peter + Goodwin Su	700,000	5.51
3	All-State Finance Pty Ltd	700,000	5.51
4	I E Properties Pty Ltd	645,000	5.07
5	O'Mara Denis William	500,000	3.93
6	Tongaat Pty Ltd	500,000	3.93
7	Biddlecombe Pty Ltd	500,000	3.93
8	West Aust NT Exploration	500,000	3.93
9	Equity Underwriters Limited	206,232	1.62
10	Australia Commercial World	200,000	1.57
11	James Commodity Exports	155,000	1.22
12	Neeves Gregory Charles	145,000	1.14
13	Sharples John	132,500	1.04
14	Europa Investment Service	130,000	1.02
15	Fund Academic Growth Inst	125,000	0.98
16	Nutsville Pty Ltd	125,000	0.98
17	Barrymore Geoffrey William	112,500	0.88
18	Ezzy Mervin Everett	102,000	0.80
19	Seaton Ross Holdings Pty Ltd	100,000	0.79
20	Running Water Limited	100,000	0.79
		7,514,500	59.08%
	Total Ordinary Shares on Issue	12,744,420

E Voting Rights

In accordance with the Company's Constitution, voting rights in respect of ordinary shares are on a show of hands whereby each member present in person or by proxy shall have one vote and upon a poll each share shall have one vote. The contributing shares have a vote which is proportional to the amount actually paid thereon and relative to the aggregate amount paid on that share when it is fully paid.