SUPERIOR RESOURCES LIMITED

ANNUAL REPORT 2011 2011 Superior Resources Limited ABN 72 112 844 407

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ABN 72 112 844 407

Contents
Chairman’s Review 20101	1
Corporate Review	2
Operations Report	3
Directors' Report	13
Auditor's Independence Declaration	21
Corporate Governance Statement	22
Financial Report	34
Directors' Declaration	62
Independent Auditor’s Report	63
Shareholder Information	65
Tenement Schedule	67

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Corporate Directory

Directors

Kenneth James Harvey David John Horton Peter Henry Hwang

Corporate Secretary Carlos Alberto Fernicola

Stock Exchange

ASX LIMITED ASX Code: SPQ

Company

SUPERIOR RESOURCES LIMITED ABN 72 112 844 407

Registered Office Level 2, 87 Wickham Terrace Spring Hill, Queensland, 4000

Principal Office Level 2, 87 Wickham Terrace Spring Hill, Queensland, 4000

Telephone: 07 3839 5099 Facsimile: 07 3832 5300 Email: [email protected]

Internet Address www.superiorresources.com.au

Postal Address PO Box 10288 Brisbane Adelaide Street, Queensland, 4000

Share Registry

LINK MARKET SERVICES LIMITED ANZ Building Level 15, 324 Queen Street Brisbane, Queensland, 4000

Postal Address

Locked Bag A14 Sydney South, New South Wales, 1235 Telephone: 1300 554 474 or 02 8280 7454 Facsimile: 02 9287 0303 Email: [email protected]

Auditor

Lawler Hacketts Audit Level 3, 549 Queen Street Brisbane, Queensland, 4000 Telephone: 07 3839 9733 Facsimile: 07 3832 1407 Email: [email protected]

Superior Resources Limited

Chairman’s Review 2011

Base and precious metal prices have remained high during the last year and the gold price has been at record levels in response to financial problems faced by many countries around the world. As a result, the Australian resources industry has performed well and this has underpinned a healthy exploration industry in Australia but with some concerns for the future which are outlined below.

During the 2010 / 2011 financial year, exploration by Superior Resources Limited (“Superior”) continued with the principal objective of finding major base metal deposits of the Mount Isa style in northwest Queensland. However, because of high metal prices, Superior's exploration targets have been extended to include Palaeozoic volcanogenic massive sulphide (VMS) copper-gold deposits in northeast Queensland as well as Proterozoic gold deposits in northwest Queensland. Superior's management and consultants have extensive experience in exploration for, and successful discovery of, deposits of these types. Exploration for these types of deposits of course takes some attention away from the search for Mount Isa style deposits.

Whilst VMS copper-gold deposits and Proterozoic gold deposits are likely to have smaller tonnages than the larger Proterozoic base metal deposits of northwest Queensland, these deposits represent valid targets as they typically contain high metal grades. The added advantage of searching for these types of deposits is that the search is typically conducted adjacent to, or along strike from, existing mineralisation and the chance of economic discovery is higher than with the conceptual exploration conducted for the higher tonnage Mount Isa style deposits.

Regrettably, there have been some changes that have impacted on the Queensland exploration industry during the past year and Superior has had to adapt in response to those changes.

In particular, there has been an increasing level of government bureaucracy and regulation relating to exploration permits. This particularly affects exploration over the larger areas needed for conceptual exploration but also impacts on exploration elsewhere. Government charges have also increased substantially. Most shareholders would be aware of the problems Superior has had in being able to drill its Kingfisher Copper Prospect due to the Wild Rivers High-Preservation declaration over ordinary country many kilometres from any river. The Queensland government has been inflexible when approached to adopt a resolution of this issue.

In a response to the impositions of the government, Superior has in part shifted its focus from exploration permits to granted mining leases and has acquired two new projects covered by such leases (One Mile and Tick Hill). Granted mining leases provide more certainty of access and, in the longer term, the fact that these leases are already granted should circumvent the long drawn out complex process of getting mining tenure granted in Queensland should our continuing exploration be successful.

With the changes that have occurred during the year and with the additional properties that Superior has taken on board, the coming year promises to be an exciting one and shareholders should be looking forward to it as much as I am.

David John Horton Chairman

Annual Report 2011

Corporate Review

COMPANY BACKGROUND

Superior Resources Limited (ASX code: SPQ) is a Brisbane based company exploring for copper, lead-zinc-silver and gold deposits in northern Queensland, Australia.

Superior currently holds a total of eight granted exploration permits and seven exploration permit applications in northwest Queensland and two exploration permit applications in northeast Queensland. Superior also holds a granted mining lease at One Mile in northeast Queensland. Superior has recently agreed to farm into three mining leases in northwest Queensland which comprise the Tick Hill Gold Project. In total these tenements cover approximately 4,000 km of 2 prospective ground.

Superior has an active exploration program on these tenement areas with activity directed to the discovery of major base metal deposits of the Mount Isa style in Proterozoic rocks in northwest Queensland, gold deposits in Proterozoic rocks in northwest Queensland and copper-gold deposits in Palaeozoic rocks in northeast Queensland. Uranium and phosphate are secondary targets for exploration.

CORPORATE PHILOSOPHY

Superior's aim is to increase shareholder value through the discovery of significant mineral deposits and it has a strategy consistent with this aim.

Superior's exploration has traditionally targetted large Mount Isa style deposits. However, with the current favourable base metal and gold prices, more moderate sized high-grade deposits of these metals are also attractive exploration targets. Superior has therefore more recently extended its exploration program to include Proterozoic gold and Palaeozoic volcanogenic massive sulphide (VMS) copper-gold deposits.

Superior has adopted a conceptual approach in its search for Mount Isa style deposits which identifies permissive environments for these deposits and then explores these areas. Models, derived from the existing large mineral deposits, are an integral part of this approach. Once a permissive environment is identified, Superior utilises advanced exploration methods (particularly geophysics) with modern computer modelling of results to produce targets for further testing.

While a conceptual approach is also appropriate to a search for Proterozoic gold and VMS copper-gold deposits, Superior has adopted the more traditional approach in this search of exploring around existing indications of mineralisation.

Drilling is an essential part of Superior's exploration programs with drill testing of conceptual targets being part of the search for Mount Isa style deposits and drilling around and beneath existing mineralisation part of the search for gold and copper-gold deposits.

Superior continues to utilise experienced explorers in its exploration as they offer the best chance for discovery of resources.

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Superior Resources Limited

Operations Report

INTRODUCTION

Superior Resources Limited (”Superior”) holds a number of exploration permits and exploration permit applications in northwest and northeast Queensland. The current tenement situation is shown in Figures 1 and 2.

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138° E Walford Creek (Pb,Zn,Ag) 140° E
18° S
Nicholson Project Bluebush (Pb,Zn,Ag)
Century (Pb,Zn,Ag)
Highland Plains (Ph) 0 1000km
Grevillea (Pb,Zn,Ag)
Victor Project
Undilla Project
Lady Jayne (Ph)
D-Tree (Ph)
Lady Loretta (Pb,Zn,Ag)
Camooweal Lady Annie (Ph)
20° S
20° S
Inca Project Dugald River (Pb,Zn,Ag)
Sherrin Creek (Ph)
Ernest Henry (Cu)
Hilton (Pb,Zn,Ag) Rocklands (Cu)
NORTHERN Mount Isa (Pb,Zn,Ag) Cloncurry
Mount Isa (Cu) Mount Isa
TERRITORY
QUEENSLAND
Tick Hill
Gold Project
Dajarra
Ardmore (Ph)
Phosphate Hill (Ph) Cannington (Pb,Zn,Ag)
Steamboat (Ph)
Pegmont (Pb,Zn,Ag) 22° S
22° S0 50 100km
Osborne (Cu)
LEGEND Dajarra Project
Exploration Permit - granted
Exploration Permit - application
Base metal mine or deposit
Boulia
Phosphate mine or deposit
140° E N
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Figure 1: Superior Resources Limited – project and tenement locations in northwest Queensland.

Annual Report 2011

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144° E 145° E 146° E
Mount Garnet
18° S
0 1000km
Cassidy Project
Einasleigh N
(Cu)
Ingham
Balcooma
(Cu,Pb,Zn,Ag)
Cockie Project
Kidston
(Au)
19° S Greenvale 19° S
Greenvale
(Ni)
0 25 50km
ML6750
LEGEND Ben Lomond TOWNSVILLE
(U)
Exploration Permit - application
Mine or deposit
145° E 146° E
----- End of picture text -----

Figure 2: Superior Resources Limited – project and tenement locations in northeast Queensland.

During the 2010 - 2011 year Superior completed exploration in northwest and northeast Queensland for a range of target styles and commodites. The work included:

part of the Mount Isa Inlier. Some encouragement came from the intersection of silica-dolomite veining with low-grade copper values within Mount Isa Group sediments at the Elizabeth Prospect.

! Exploration for copper and lead-zinc-silver of the Mount Isa style in Proterozoic rocks at a number of projects in northwest Queensland (Proterozoic Copper and Lead-Zinc-Silver),
! Exploration for phosphate in Cambrian sediments at the Wills Phosphate Prospect in the southern part of the Mount Isa Inlier in northwest Queensland (Cambrian Phosphate),
! Exploration for gold at the Quita Gold Project in the southwestern part of the Mount Isa Inlier in northwest Queensland (Proterozoic Gold) and
! Exploration for copper-gold at the One Mile Mining Lease in the Greenvale area of northeast Queensland (Palaeozoic Copper-Gold).

Proterozoic Copper and Lead-Zinc-Silver

Superior holds a number of exploration permits and exploration permit applications in northwest Queensland to explore for large Proterozoic copper and lead-zinc-silver deposits of the Mount Isa style.

During the early part of the year a drilling program, which was commenced in the 2009 - 2010 year, continued on the Elizabeth, Cannon and Carbine prospects in the Dajarra Project in the southern

At the Victor Project northwest of Mount Isa attempts to gain access to drill the Kingfisher Copper Prospect, which is within the highpreservation area of the Gregory Wild Rivers area, were continued but without success. The prospect has considerable outcropping copper

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Photograph 1: Kingfisher Copper Prospect – outcropping copper mineralisation in brecciated Proterozoic siltstones.

Superior Resources Limited

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268000 E 270000 E EPM16028 272000 E
N
7879000 N 7879000 N
-9.4
-9.6
LEGEND -10.0-9.8
-10.2 TARGET 2
Drill Hole -10.4
-10.5
Copper Outcrop -10.7
Gravity contour -10.9-11.7
( 0.1 mgal interval) Bouguer Gravity
(mgals)
EPM16028
TARGET 1
TARGET 3
7877000 N 7877000 N
Extensive
Cambrian Cover
TARGET 4
Extensive
Cambrian Cover
TARGET 6
7875000 N 7875000 N
TARGET 5
0 1km
268000 E 270000 E 272000 E
Anticlinal Axis
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Figure 3: Kingfisher Copper Prospect – gravity survey with target areas shown.

mineralisation (Photograph 1) and a number of deeper drilling targets have been defined by a gravity survey (Figure 3). Some possibility of access exists following a Queensland state election due early in 2012.

To the south of the Victor Project at the Undilla Base Metal Project, Superior agreed to cooperate with mineral explorer Hapsburg Exploration Pty Ltd (Hapsburg), in an attempt to farm out two of its exploration permit applications with two of Hapsburg's exploration permits. The area contains a large lead soil and stream geochemical anomaly (Figure 4) in Cambrian rocks and there is potential for Mississippi Valley lead-zinc deposits as well as copper and leadzinc-silver deposits in the underlying Proterozoic rocks.

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Annual Report 2011

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250000 E 300000 E 350000 E
500
Century 400
300
200
100
7900000 N 0 7900000 N
Lead
(ppm)
Undilla Base Grevillea
Metal Project
Kingfisher
7850000 N 7850000 N
Mount Oxide
Gunpowder
Lady Loretta
Lady Annie
7800000 N Mount Kelly 7800000 N
N
LEGEND
EPM
7750000 N Fault 7750000 N
Deposits
Copper
Lead-Zinc-Silver
0 25 50km Hilton
The image in this map is derived from geochemical data
compiled by Terra Search Pty Ltd from historical stream and soil
geochemical surveys. The purpose of the imaging is to provide Mount Isa
an overall impression of the mineralised areas. The process of
creating the image involves some 'smearing' of values. The
colouring of the image is based on a linear stretch from 0 ppm Mount Isa
7700000 N
(blue) to 500 ppm (magenta). Shading is used to highlight the
anomalous areas. The absence of data from the Mount Isa
Mining Lease reduces the apparent size and intensity of the Mount
natural Mount Isa anomaly.
Novitt
250000 E 300000 E 350000 E
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Figure 4: Northwest Queensland – lead image from combined soil and stream geochemistry.

Superior Resources Limited

At the Nicholson Project approximately 350km north of Mount Isa preparations have been made for drilling of a VTEM anomaly at the Nicholson West prospect (Figure 5) just east of the Queensland –

Northern Territory border. A long intense wet season has delayed the drilling. Completion of this drilling will depend on the availability of a suitable drilling rig at a time when access is possible.

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184000 E 186000 E 188000 E 190000 E
8020000 N 8020000 N
N
0 1 2km
8018000 N 8018000 N
8016000 N 8016000 N
Lithological Anomaly
VTEM Anomaly
on Pandanus Siltstone
(Psap)
8014000 N 8014000 N
P2
P4
8012000 N P1 8012000 N
P3
Drilling Target
VTEM Anomaly
on Mt Les Siltstone
(Pfl)
8010000 N 8010000 N
0.010
0.009
0.008
0.007
Lithological Anomaly 0.006
VTEM Anomaly 0.005
on Wallis Siltstone 0.004
(Psaw) 0.003
0.002
8008000 N 8008000 N
0.001
EPM15670 VTEM
(Channel 6340)
184000 E 186000 E 188000 E 190000 E
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Figure 5: Nicholson West Prospect – VTEM channel 6340 anomaly and proposed drill holes.

Annual Report 2011

Field work at the Inca Project has not resulted in any targets for base metals but the area has been retained for its phosphate potential.

The Myally Project to the northeast of Mount Isa was relinquished during the year.

Cambrian Phosphate

Superior holds two principal areas for phosphate in Cambrian sediments in northwest Queensland.

Work at the Wills Phosphate prospect in the Dajarra Project about 180km south of Mount Isa included drilling and geological mapping. Drilling was initially completed on a mesa which was capped by Cambrian phosphatic rocks. Results indicated leaching had removed most of the phosphate. Scout drilling of Cambrian sediments in a soil covered area (Wills South), however, located a thick intersection of moderate-grade phosphate (10m @ 10.3% P O from 8m). 2 5 Geological mapping in this area indicates a potential strike length of many kilometres of phosphatic horizon (Photograph 2) on the eastern side of a triangular shaped area. Further work is proposed once all three exploration permits that cover the area are granted.

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Proterozoic Gold

During the 2010 - 2011 year Superior increased its emphasis on gold exploration and now has two principal gold projects.

At the Quita Gold Project gold had previously been reported by Placer and MIM who completed soil, stream and rock-chip geochemistry in the area. Up until this year, work completed by Superior to confirm the gold potential of the area had not met with much success. However, because of the favourable gold price and the fact that previous bulk cyanide leach (BCL) sampling indicated that the stream gold anomaly was considerably larger than the area in which follow-up work had been completed, Superior completed further work during the year.

Photograph 2: Wills South Phosphate – outcropping Inca Shale which occurs above the phosphatic horizon.

The work included a BCL stream sampling program (Figure 6) to confirm the earlier Placer BCL sample results and to provide an increased sample density in areas that appeared, on the basis of the earlier results, to be gold bearing. This work validated the extensive gold BCL anomaly and indicated higher gold values in some areas than obtained by previous explorers.

Previous drilling by earlier explorers at the Yelvertoft Prospect in the Inca Project northwest of Mount Isa intersected phosphate in a number of holes with the best intersection being 5.3m @ 16.5% P O 2 5 in hole Y43. Superior has not completed any drilling for phosphate at this stage as the Wills South Prospect appears to have better potential.

Both Cambrian and Mesozoic unconformities affect the Quita area and redistribution of gold has probably occurred in these old land surfaces. Surface gold values may therefore reflect both hard-rock gold mineralisation as well as redistributed gold from the hard-rock

Superior Resources Limited

sources. Superior recently completed a soil sampling program in one of the areas of better Proterozoic outcrop (Area 1 in Figure 6), with a line separation of 500m, to try to locate the bedrock source for the gold. This area incorporates a quartz vein that is known to be gold bearing with rock-chip samples to 0.5g/t Au.

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This area not 300000 E Cambrian 305000 E 310000 E
held by SPQ Limestone
1.2
LEGEND
Exploration Permit BoundaryRock-chip Sample 82.4 2 1.1
0.25 Gold in ppm > 0.1 ppm 2.5
BCL Stream Sample 4.1 3.0 8.1
7.6 Gold in ppb > 1 ppb EPM15329
0 2.5km 1.5
0.25 1.1
0.12
7565000 N 1.3 7565000 N
This area not
held by SPQ
N
1.0
2.1
1.0 7.6
3.3
3.8
3 1.7 4.3 1.0 2.4 1.2 4.3
1.2
EPMA18542 2.4 1 1.5
Cambrian 2.7
85.5
Sandstone 25.4
1.1
1.1
5.1 EPM15046
7560000 N 7560000 N
1.2
EPMA18542
This area not
1.3
held by SPQ
300000 E 305000 E 310000 E
Major Fault Zone
Rufus Fault Zone
----- End of picture text -----

Figure 6: Quita Gold Project – BCL sample results on Google Earth image.

Since the end of the 2010 – 2011 year Superior has announced reaching agreement with Diatreme Resources Limited to farm into three granted mining leases at the Tick Hill Gold Project (Photograph 3) where previous mining by Carpentaria Gold Pty Ltd produced 513,333 ounces of gold from 705,000 tonnes of ore at a recovered grade of 22.6 g/t Au (Photograph 4). The agreement is conditional on a number of tenement administrative issues being resolved.

The prime purpose of Superior's exploration program will be to define a high-grade gold resource similar to that previously mined by Carpentaria Gold Pty Ltd.

Additional work proposed includes assessment of other potentially gold bearing areas within the mining leases, testing of the tailings from the previous mining to determine if these contain sufficient gold to warrant reprocessing, assessment of potential alluvial resources and investigation of the grade of the old mine dumps.

One of the best locations to explore for gold is around previous gold mines particularly high-grade gold mines.

The Quita and Tick Hill gold projects are located about 90km apart and the two projects give Superior a strong gold position in the southern part of the Mount Isa Inlier.

Superior's work to date has focussed on a fault near the bottom of the previously mined gold shoot with the possibility that the gold shoot may exist at depth in an offset position from the previously mined area. Once the agreement conditions have been met Superior proposes to commence drilling for the possible offset extension of the mined gold shoot.

Annual Report 2011

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Photograph 3: Tick Hill Gold Project – Tick Hill Gold Mine (circa 1993).

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Photograph 4: Tick Hill Gold Project – High-grade gold seen under the microscope in a thin section of gold ore.

Palaeozoic Copper-Gold

The Cambro-Ordovician volcano-sedimentary sequences in eastern Australia have potential for volcanogenic massive sulphide (VMS) deposits of copper-lead-zinc-silver-gold and deposits of this type occur in the Charters Towers and Greenvale areas of northeast Queensland (eg. Thalanga, Reward and Balcooma deposits).

Early in the 2011 year Superior purchased a granted mining lease (ML6750) at One Mile in the Greenvale area of northeast Queensland some 210km west-northwest of Townsville with potential for a VMS deposit.

The mining lease covers two gossan horizons that were drilled by MIM in the early 1990s and were shown to be reflecting massive pyrite with some generally minor chalcopyrite at depth. No drilling has been done on the area since that time.

Following the purchase of the mining lease, Superior completed the necessary administrative requirements including a plan of operations and then completed a detailed magnetic survey of the mining lease area. The magnetic survey showed a prominent magnetic anomaly adjacent to the gossan horizons (Figure 6). Drilling is currently in progress on both the gossan horizons and the magnetic anomaly (Photograph 5).

Superior Resources Limited

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

49531.1
49429.0
49351.1
49298.2
49257.5
49226.1
49197.5
49173.1
49151.6
49129.0
49103.8
49080.9
49059.8
49036.5
49016.1
48999.7
48982.3
48962.1
48940.0
Magnetics
(RTP)
(nT)
OMDH3 OMDH2
OMD2 OMDH4
OMD3
MIM DDH1 contains OMDH6 Gossan Target
Massive Sulphides
OMDH5
OMD1 OMDH1
Magnetic Target
Metabasalt
ML6750
LEGEND
Gossan Outcrop
Ground EM Anomaly
Existing Drill Hole 0 200 400m
Magnetic Contour (25nT)
N
7902500 N
7902000 N
7901500 N
7901000 N
263000
E
262000 E
262500
E
----- End of picture text -----

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Photograph 5: One Mile Mining Lease – reverse circulation drilling in progress.

Full details of projects held, work completed and results obtained by Superior Resources Limited (ASX Code: SPQ) have been released in quarterly and other reports submitted to the ASX during the 2010 – 2011 year.

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K J Harvey

Figure 7: One Mile Copper-Gold Project – ground magnetic survey image (RTP).

The information in this report that relates to Exploration Results is based on information compiled by Mr Ken Harvey, a full-time employee of the Company, who is a Member of the Australasian Institute of Mining and Metallurgy and a Member of the Australian Institute of Geoscientists. Mr Harvey has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr Harvey consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.

. . . focussed on exploration for major deposits

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12
----- End of picture text -----

Superior Resources Limited

Directors’ Report

Your Directors present their report on Superior Resources Limited (“Superior”, “the company”) for the year ended 30 June 2011.

Directors

The following persons were Directors of Superior Resources Limited during the whole of the year and up to the date of this report:

K J Harvey D J Horton

Mr Lawrie Litzow was a director from the beginning of the financial year until his resignation on 3 December 2010.

Mr Peter Hwang was appointed a director on 11 November 2010 and continues in office at the date of this report.

Principal activities

During the year the principal activity of the company was exploration for base metals and gold in Australia. There were no significant changes in the nature of the company's activities during the year and no changes are anticipated.

Dividends

There were no dividends paid to members during the financial year.

Review of operations

The loss for the year was $1,108,119 after income tax benefit of $376,040 (2010: loss of $126,962).

Superior commenced the 2010 – 2011 year in the Dajarra Project area with a drilling program on the Elizabeth, Cannon and Carbine prospects in a search for large copper and lead-zinc-silver deposits. Some encouragement came from the intersection of silica-dolomite veining with low-grade copper values at Elizabeth. Efforts at Dajarra then shifted to the Wills Phosphate prospect where drilling intersected a thick moderate-grade phosphate intersection and geological mapping showed a prospective phosphatic horizon extending for many kilometres. During the latter part of the year work at the Quita Gold Project in the Dajarra Project defined a widespread gold BCL anomaly which is currently under investigation.

Work on project areas to the north of Mount Isa was limited by the extended 2010 – 2011 wet season and by the focus on other areas.

In the Greenvale area of northeast Queensland, Superior purchased the One Mile Mining Lease early in 2011 and the initial work program outlined copper-gold targets which are currently being drilled.

After the end of the 2010 – 2011 year, Superior agreed to joint venture with Diatreme Resources Limited, subject to a number of tenement administrative issues being resolved, on three granted mining leases at Tick Hill in northwest Queensland.

During the 2010-2011 year there has been a subtle shift in Superior's target commodities and in its approach to exploration. Exploration for gold has increased because of the favourable gold price and because of access to worthy gold properties. The original conceptual approach to exploration adopted by Superior, and which is essential for the discovery of large copper and lead-zinc-silver deposits, has, in part, been supplemented by a more outcrop discovery approach on the gold properties.

Annual Report 2011

DIRECTORS’ REPORT (continued)

Significant changes in the state of affairs

Significant changes in the state of affairs of the company during the financial year were as follows:

		2011
		$
(a)	Significant gains and expenses:
	Expenses:
	Exploration written off	(1,287,643)
(b)	Other comprehensive items:
	Fair value adjustment on revaluation of available-for-sale financial assets	98,000

Matters subsequent to the end of the financial year

Subsequent to the end of the financial year the market value of the company's investment in financial assets available-for-sale has decreased by $70,000.

No other matter or circumstance has arisen since 30 June 2011 that have significantly affected, or may significantly affect:

(a) the company's operations in future financial years, or
(b) the results of those operations in future financial years, or
(c) the company's state of affairs in future financial years.

Likely Developments and Expected Results from Operations

In the near term exploration will be focussed on the One Mile, Quita and Tick Hill projects since these are most likely to produce results and they are also projects where gold is an important commodity. In the longer term Superior will continue exploration for larger copper and lead-zinc-silver deposits of the Mount Isa style. If the access issue is resolved, Superior will move to drill its Kingfisher Copper Prospect as quickly as possible.

Results from exploration are difficult to predict in advance so expected results are uncertain.

Environmental regulation

The company's operations are subject to significant environmental regulation under the laws of the commonwealth and state. The company is compliant with all aspects of these requirements. The directors are not aware of any environmental law that is not being complied with.

Superior Resources Limited

DIRECTORS’ REPORT (continued)

Information on Directors

Kenneth James Harvey M.Sc, MAusIMM, MAIG, MSEG, MGSA. Managing director . Age 66

Experience and expertise

Mr Harvey has 41 years experience in mineral exploration, project evaluation, resource estimation and exploration management.

Other current directorships

None.

Former directorships in last 3 years

None.

Special responsibilities

Managing Director.

Interests in shares and options

5,594,964 ordinary shares in Superior Resources Limited

David John Horton M.Sc, MGSA, MAIG, MSEG. Non-executive director . Age 61

Experience and expertise

Mr Horton has 38 years experience in mineral exploration, project and prospect generation, management and resource evaluation.

Other current directorships

Executive director of Opal Horizon Limited since 2002.

Former directorships in last 3 years

None.

Special responsibilities

Chairman

Interests in shares and options

2,695,000 ordinary shares in Superior Resources Limited

Annual Report 2011

DIRECTORS’ REPORT (continued)

Peter Henry Hwang B.Sc(Hons), LLB. Non-executive director . Age 42

Experience and expertise

Mr Hwang is a lawyer working as a solicitor for national law firm Blake Dawson specialising in resource and native title law. He has extensive experience in advising on the development of mining and major infrastructure projects as well as resource mergers and acquisitions. Mr Hwang is a member of the Australian Government Attorney-General's Department Native Title Practitioner's Panel and previously a member of the Government of Western Australia Native Title Taskforce on Mineral Tenement and Land Title Applications.

Other current directorships

None

Former directorships in last 3 years

ActivEx Limited Non-Executive Director (18 March 2005 to 16 March 2009).

Special responsibilities

Chairman of the audit committee.

Interests in shares and options

Nil

Company Secretary

The Company Secretary is Mr Carlos Alberto Fernicola B.Com, CA, F Fin ACIS. Graduate Diploma Advanced Accounting, Graduate Diploma Applied Finance and Investments, Graduate Diploma Corporate Governance and Graduate Certificate Financial Planning. Mr Fernicola was appointed to the position of Company Secretary on 11 November 2010.

Mr Fernicola is the Principal of Carlos Fernicola & Co., Chartered Accountants. He is a Chartered Accountant and a Chartered Secretary being an Associate Member of Chartered Secretaries Australia and Fellow of the Financial Services Institute of Australia. Mr Fernicola has over 30 years experience in accounting, taxation audit and financial services industry and has worked previously with Deloitte and BDO Kendalls.

Meetings of Directors

The numbers of meetings of the company's board of Directors held during the year ended 30 June 2011, and the numbers of meetings attended by each director were:

tor were:
*Board*
		Meetings
Director	Meetings held	attended
L J Litzow	3	3
K J Harvey	7	7
D J Horton	7	7
P H Hwang	4	4
*Audit Committee*		Meetings
Director	Meetings held	attended
L J Litzow	1	1
K J Harvey	n/a	n/a
D J Horton	2	2
P H Hwang	1	1

Superior Resources Limited

DIRECTORS’ REPORT (continued)

Remuneration report

This remuneration report sets out remuneration information for Superior Resources Limited's non-executive directors, executive directors, other key management personnel and the five highest remunerated executives of the company.

Directors and executives disclosed in this report

For details of non-executive, executive directors and company secretary see pages 15–16 above. The company does not have any other key management personnel or executives.

Principles used to determine the nature and amount of remuneration

Non-executive directors

Fees and payments to non-executive directors reflect the demands which are made on, and the responsibilities of, the directors. Non-executive directors' fees and payments are reviewed annually by the Board.

Directors' fees

Non-executive directors' fees are determined within an aggregate directors' fee pool limit, which is periodically recommended for approval by shareholders. The maximum currently stands at $250,000 in aggregate plus statutory superannuation.

Executive pay

The combination of base salary and superannuation make up the executive director's total remuneration. Base salary for the executive director is reviewed annually to ensure the executive's salary is competitive with the market. The board ensures that executive reward satisfies the following key criteria for good reward governance practices:

! competitiveness and reasonableness
! acceptability to shareholders
! transparency
! capital management

B Details of remuneration

Amounts of remuneration

Details of the remuneration of the directors and the key management personnel (as defined in AASB 124 Related Party Disclosures ) of Superior Resources Limited are set out in the following tables.

The key management personnel of Superior Resources Limited includes the directors as per pages 15–16 above.

Annual Report 2011

DIRECTORS’ REPORT (continued)

Key management personnel of Superior Resources Limited

2011	benefits Short-term	Post - employment benefits	Share-based payment
Name	Cash salary and fees $	Superannuation $	Options $	Total $
Non-executive directors L J Litzow,Chairman * D J Horton P H Hwang **	24,000 24,000 14,030	- - 1,263	- - -	24,000 24,000 15,293
Sub-total non-executive directors	62,030	1,263	-	63,293
Executive director K J Harvey Other key management personnel C A Fernicala	200,000 14,000	18,000 -	- -	218,000 14,000
Totals	276,030	19,263	-	295,293

* Resigned 3 December 2010

** Appointment 11 November 2010

2010	benefits Short-term	Post - employment benefits	Share-based payment
Name	Cash salary and fees $	Superannuation $	Options $	Total $
Non-executive directors L J Litzow,Chairman D J Horton	48,000 24,000	- -	- -	48,000 24,000
Sub-total non-executive directors	72,000	-	-	72,000
Executive director K J Harvey	200,000	18,000	-	218,000
Totals	272,000	18,000	-	290,000

Superior Resources Limited

DIRECTORS’ REPORT (continued)

Service agreements

Remuneration and other terms of employment of the Managing Director are formalised in an agreement. The major provisions of the agreements relating to remuneration are set out below.

K J Harvey, Managing Director

! Term of employment agreement – indefinite commencing 1 July 2007.
! Base salary, inclusive of superannuation, for the year ended 30 June 2011 of $218,000, to be reviewed at least annually by the Board.
! Payment of a termination benefit on early termination by the company, other than for gross misconduct, equal to six months remuneration plus four weeks salary for every year of service.
! Agreement may be terminated by employee giving one months notice in writing.

Share-based compensation

There have been no options granted affecting remuneration in the current or a future reporting period.

Shares under option

There are no unissued ordinary shares of Superior Resources Limited under option at the date of this report.

During the year ended 30 June 2011, and since year end, there were no shares issued on the exercise of options granted.

Insurance of officers

During the financial year the company paid a premium to insure all officers of the company under a Directors and Officers insurance policy.

Proceedings on behalf of the company

No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the company or to intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for all or part of those proceedings.

No proceedings have been brought or intervened in or on behalf of the company with leave of the court under section 237 of the Corporations Act 2001.

Auditor

Lawler Hacketts Audit (formerly Hacketts DFK) were appointed as auditor of the company by shareholders at the company's 2009 annual general meeting.

There are no former partners or directors of the company's auditor, or former auditor, who is or was at any time during the year an officer of the company.

Non-audit services

The company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor's expertise and experience with the company are important.

Details of amounts paid or payable to the auditor for audit and non-audit services provided during the year are set out below.

Annual Report 2011

DIRECTORS’ REPORT (continued)

Non-audit services (continued)

The board of directors has considered the position and, in accordance with the advice received from the audit committee is satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:

! all non-audit services have been reviewed by the audit committee to ensure they do not impact the impartiality and objectivity of the auditor, and
! none of the services undermine the general principles relating to auditor independence as set out in APES 110: Code of Ethics for Professional Accountants, including reviewing or auditing the auditor's own work, acting in a management or a decision-making capacity for the company, acting as advocate for the company or jointly sharing economic risk and rewards.

Assurance services Audit services Fees paid for audit and review of financial report and other work under the Corporations Act 2001 to: - Lawler Hacketts Audit Total remuneration for assurance services Other compliance services Taxation services Fees paid for tax compliance services, including preparation of company income tax returns to: - Lawler Hacketts Audit Total remuneration for other services During the year the following fees were paid or payable for services provided by the auditor of the company:	22,000 22,000 - - 2011 $	23,500 2010 $
		23,500
		-
		-

Auditor's independence declaration

A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 21.

This report is made in accordance with a resolution of Directors.

D J Horton

Chairman

Brisbane, 16 September 2011

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Auditor's Independence Declaration under Section 307C of the Corporations Act 2001 to the Directors of Superior Resources Limited

I declare that, to the best of my knowledge and belief during the year ended 30 June 2011 there have been:

(a) No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (b) No contraventions of any applicable code of professional conduct in relation to the audit.

Yours faithfully

Lawler Hacketts Audit

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L J Murphy Partner

Brisbane, 16 September 2011

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Annual Report 2011

Corporate Governance Statement

Corporate Governance practices that form the basis of a comprehensive system of control and accountability for the administration of the Company have been adopted. The Board is committed to administering the policies and procedures with openness and integrity, pursuing the true spirit of corporate governance commensurate with the Company's needs.

To the extent they are applicable to the Company, the Board has adopted the ASX Corporate Governance Council's Corporate Governance Principles and Recommendations. Although the Company's practices are largely consistent with the Council's principles, in certain cases they are not compliant. The following table sets out the Company's current position.

	Compliant	R	Non Compliant		S

Principle 1: Lay solid foundations for management and oversight Companies should establish and disclose the respective roles and responsibilities of board and management.				R
Recommendation 1.1: Companies should establish the functions reserved to the board and those delegated to senior executives and disclose those functions.				R
Recommendation 1.2: Companies should disclose the process for evaluating the performance of senior executives.				R
Recommendation 1.3: Companies should provide the information indicated in the Guide to reporting on Principle 1.				R

The Board of Directors of Superior Resources Limited (“the Company”) is responsible for the corporate governance of the Company.

The Board:

! Guides and monitors the business and affairs of the Company on behalf of the Company's members to whom they are accountable.
! Provides corporate strategy and guidance.
! Reviews appropriate plans and annual budgets, including allocation of resources and capital expenditure.
! Monitors financial performance.
! Protects and enhances the Company's reputation.
! Ensures compliance with regulatory and other requirements, and manages risks to the Company and its business.
! Appoints the Managing Director and appraises his performance.

Day to day management of the Company's affairs and the implementation of the corporate strategy and policy is currently delegated to the managing director. The delegation policy is reviewed at least annually.

The Board has established the following guidelines to ensure the effective operation and discharge of its responsibilities.

Superior Resources Limited

CORPORATE GOVERNANCE STATEMENT (continued)

The Board has adopted and discloses a code of conduct to guide compliance with legal and other obligations to legitimate stakeholders. This includes trade practices and fair dealing laws, consumer protection, respect for privacy, employment law, occupational health and safety, equal employment opportunity, superannuation and environment controls.

The Company will provide an explanation of any departures from best practice recommendations (if any) in its future annual reports.

Principle 2: Structure the Board to add value

Principle 2: Structure the Board to add value	Principle 2: Structure the Board to add value
Companies should have a Board of effective composition, size and commitment to adequately discharge its responsibilities and duties.	R
Recommendation 2.1: A majority of the Board should be independent directors.	R
Recommendation 2.2: The chair should be an independent director.	R
Recommendation 2.3: The roles of the chair and chief executive officer should not be exercised by the same individual.	R
Recommendation 2.4: The board should establish a nomination committee.	R
Recommendation 2.5: Companies should disclose the process for evaluating the performance of the Board, its committees and individual directors.	R
	R
Recommendation 2.6: Companies should provide the information indicated in the Guide to reporting on Principle 2.

Board Structure

The Board currently comprises one executive director and two non-executive directors. The Board, which meets at least quarterly, comprises directors with an appropriate blend of qualifications and expertise in:

! Finance and legal.
! Marketing and sales.
! Mineral exploration experience.
! CEO level experience.

The Chairperson, (Mr David John Horton), is a non-executive director.

The Board strives to ensure that all transactions between the Company and any related party are always conducted on arms length terms.

Where possible, the Board undertakes an annual review of the performance of the Board and the individual directors and examines the appropriate mix of skills to ensure maximum effectiveness and contribution to the results of the Company's business. Newly appointed directors are required to attend the appropriate induction.

Annual Report 2011

CORPORATE GOVERNANCE STATEMENT (continued)

Directors

The Company provides details of each director, such as their skills, experience and expertise relevant to their position, together with an explanation of any departures from the best practice recommendations.

In accordance with the Corporations Act and the Company's Constitution, the directors must advise the Board on an on-going basis of any interests that might conflict with those of the Company. Where the Board believes that a conflict exists, the director concerned is not permitted to be present at the meeting when the relevant issue is considered and does not receive the relevant Board papers.

The code of conduct adopted by the Board promotes ethical and responsible decision-making and guides directors, key executives and designated officers as to:

! The practices necessary to maintain confidence in the Company's integrity; and
! The responsibility and accountability of individuals for reporting and investigating reports of unethical practices.

Nomination Committee

The Board as a whole comprises the Nomination Committee. Responsibilities include Board succession as well as evaluation of directors' performance and competencies.

The Nomination Committee:

! Conducts an annual review of the membership of the Board having regard to the present and future perceived needs of the Company and makes recommendations as considered appropriate to be considered at a Board meeting.
! Annually examines the independence status of each director.
! Oversees the annual review and assessment program.

Principle 3: Promote ethical and responsible decision-making

Companies should actively promote ethical and responsible decision-making. R Recommendation 3.1: Companies should establish a code of conduct and disclose the code or a summary of the code as to: · the practices necessary to maintain confidence in the company’s integrity. · the practices necessary to take into account their legal obligations and the reasonable expectations of their stakeholders. R · the responsibility and accountability of individuals for reporting and investigating reports of unethical practices. Recommendation 3.2: Companies should establish a policy concerning diversity and disclose the policy or a summary of that policy. R The policy should include requirements for the Board to establish measurable objectives for achieving gender diversity for the Board to assess annually both the objectives and progress in achieving them.

Recommendation 3.2: Companies should establish a policy concerning diversity and disclose the policy or a summary of that policy. The policy should include requirements for the Board to establish measurable objectives for achieving gender diversity for the Board to assess annually both the objectives and progress in achieving them.	R
Recommendation 3.3:
Companies should disclose in each annual report the measurable objectives for achieving gender diversity set	R
by the Board in accordance with the diversity policy and progress towards achieving them.
Recommendation 3.4:
Companies should disclose in each annual report the proportion of women employees in the whole organisation,	R
women in senior executive positions and women on the Board.
Recommendation 3.5:
Companies should provide the information indicated in the Guide to reporting on Principle 3.	R

Superior Resources Limited

CORPORATE GOVERNANCE STATEMENT (continued)

The Company will provide an explanation of any departures from best practice recommendations (if any) in its future annual reports.

Diversity Policy

The company is an equal opportunity employer.

The Board has considered the following matters in formulating the diversity policy.

The use of appropriate diversity to maximise the achievement of corporate goals.
The corporate benefits arising from employee and Board diversity.
The importance of benefiting from all available talent.
The promotion of an environment conducive to attracting and employing suitably qualified. employees, senior management and Board candidates.
Diversity includes and is not limited to gender, age, ethnicity and cultural background.

Due to its size the company is currently meeting gender diversity through the use of consulting services whereby women are engaged in the provision of financial, accounting and field exploration services.

The Board and senior management currently comprises directors and officers that are multiculturally diverse together with an appropriate blend of qualifications and skills. There is currently no vacancy on the Board. Future appointments will be made based on the principles of equal opportunity, relative ability, performance and potential.

The Board will monitor the progress and assess the effectiveness of diversity on an ongoing basis.

Securities Trading Policy

The purpose of this document is to:

provide a summary of the legislation relating to “insider trading” and
set out the guidelines for Directors, senior executives and employees dealing (buying or selling) in securities (shares, options, derivatives and other types of financial products) in Superior Resources Limited.

Prohibition

Directors, senior executives and employees are prohibited from engaging in insider trading in breach of the Corporations Law.

What is “insider trading”?

Insider trading is defined in Part 7.10, Division 3 of the Corporations Act 2001 (Cwlth). There are three separate types of insider trading:

a trading offence,
a procuring offence and
a tipping offence.

Annual Report 2011

CORPORATE GOVERNANCE STATEMENT (continued)

Who is an “insider”?

An insider is defined in section 1043A of the Corporations Act 2001 (Cwlth) as someone who:

possesses information:
a. that is not generally available and
b. that a reasonable person would expect to have a material effect on the price of shares if it were generally available and
knows or should know that the information:
a. is not generally available and
b. might have a material effect on the price or value of shares if it was generally available.

What is a “trading offence”?

A person commits a trading offence if they are an insider (defined above) in relation to a particular company and they apply for, buy or sell the company's securities.

What is a “procuring offence”?

An insider commits a procuring offence if they procure someone else to apply for, buy or sell the company's securities.

The Corporations Act defines “procure” more broadly than its dictionary meaning. Section 1042F of the Corporations Act 2001 (Cwlth) states that a person procures someone else to do something not only if they “incite” or “induce” them to do it, but also if they simply “encourage” them to do it.

What is a “tipping offence”?

An insider commits a tipping offence if they communicate the inside information to someone else and the insider knows, or should know, that the other person will be likely to apply for, buy or sell the company's securities or procures a third person to apply for, buy or sell the company's securities.

Which information is “material”?

Section 1042D of the Corporations Act 2001 (Cwlth) provides that a reasonable person would expect information to have a material effect on the price or value of the shares if the information would be likely to influence people who commonly invest in shares deciding whether to apply for, buy or sell those shares.

When is information “generally available”?

Section 1042C of the Corporations Act 2001 (Cwlth) says information is generally available if:

it consists of observable matter, or
it has been made known (disseminated) in a manner likely to bring it to the attention of investors and a reasonable time period has elapsed.

Superior Resources Limited

CORPORATE GOVERNANCE STATEMENT (continued)

What are the defences?

There are several defences to the insider trading offence including:

where the trading occurs as part of underwriting an issue of securities,
where someone buys securities such as shares because they are legally required to do so (eg. family law order) and
where a company trades in shares and an officer or employee has inside information provided there is a “Chinese Wall” separating the person with inside information from those conducting the trading (eg. a bank advising on a takeover where it also has a share broking department - the person providing advice on the takeover cannot provide information to the persons employed as share brokers).

What are the consequences of a breach?

A breach of the insider trading legislation is a criminal offence and there are civil penalty provisions.

Punishment. The maximum criminal penalty for an individual who is found guilty is a $200,000 fine or five years gaol or both and for a company the maximum penalty is $1,000,000.

Compensation . Someone who suffers loss or damage due to an insider trader's activities may recover from the insider trader compensation amounting to the loss suffered.

Other orders. A court has powers to make a wide range of orders including directing the disposal of securities and cancelling agreements where an insider trading offence has occurred.

Have there been many prosecutions?

A recent successful action brought by ASIC on the criminal standard of proof being beyond a reasonable doubt involved the stockbroker Rene Rivkin. The sentencing judgement which sets out the facts is R v Rivkin (2003) 198 ALR 400.

GUIDELINES FOR DIRECTORS, SENIOR EXECUTIVES AND EMPLOYEES DEALING IN SECURITIES

Directors, senior executives and employees concerned or involved with the control or management of a company are prohibited from using confidential information acquired as a result of their position from benefiting themselves or others.

Directors, senior executives and employees are not totally prohibited by law from trading in the shares of a company because they have an understanding of the affairs and prospects of the company. However, when Directors, senior executives and employees trade in shares of the company it is important to ensure that the transactions do not reflect adversely on either the Directors or the company.

As stated above the Corporations Law prohibits insider trading and tipping.

In order to assist Directors, senior executives and employees of Superior Resources Limited acting prudently in these matters, the following guideline must be followed:

Annual Report 2011

CORPORATE GOVERNANCE STATEMENT (continued)

A Director, senior executive or employee of Superior Resources Limited must inform and receive acknowledgement from the Chairperson or Company Secretary of their intention prior to entering into any dealings in Superior Resources Limited's securities by either himself or herself or by his or her associates.

A Director, senior executive or employee of Superior Resources Limited must not deal in Superior Resources Limited Securities:

on consideration of a short term nature,
when they are in possession of price sensitive information not yet released to the market in which case they are prohibited by law from dealing,
for a period of fourteen (14) days prior to the scheduled (per ASX Listing Rules) release by Superior Resources Limited of Quarterly Operations, Quarterly Cashflow, Annual and Half-Yearly Reports and
any other time, notified by Superior Resources Limited from time to time, when Directors, senior executives and employees are prohibited from trading.

Directors, senior executives and employees will generally be permitted to engage in trading (subject to due notification being given to the Chairperson or Company Secretary) at the following times:

for a period commencing one (1) business day after the release of Quarterly Operations, Quarterly Cashflow, Annual and Half-Yearly Reports to the market,
for a period commencing one (1) business day after the release of price sensitive information to the market which allows a reasonable period of time for the information to be disseminated among members of the public and
where a proposed acquisition of securities is under:
a. a bonus issue made to all shareholders,
b. a dividend reinvestment plan or top up plan available to all shareholders or
c. an employee share plan.

Dealing In exceptional circumstances:

In exceptional circumstances, where it is the only reasonable course of action available, clearance may be given for a Director, senior executive or employee to sell (but not to purchase) securities when he/she would otherwise be prohibited from doing so. An example of the type of circumstance which may be considered exceptional for these purposes would be a pressing financial commitment on the part of the Director, senior executive or employee that cannot otherwise be satisfied. The determination of whether circumstances are exceptional for this purpose will be made by the Chairperson or Company Secretary.

Director's obligation on acquisition or disposal of securites or on ceasing to be a Director of Superior

Resources Limited

Directors must also be aware that pursuant Section 205G of the Corporations Act 2001 (Cwlth) they are obliged to provide the ASX with appropriate notifications of their interests in the company.

Under the ASX Listing Rules, a Director must notify the Company Secretary of the acquisition or disposal of any security and the Company is obliged to notify the ASX (LR 3.19A).

Superior Resources Limited

CORPORATE GOVERNANCE STATEMENT (continued)

Information to be provided concerning security transactions (the information to be provided to Superior Resources Limited) includes:

Appendix 3X – Initial Director's Interest Notice,
Appendix 3Y – Change of Director's Interest Notice and
Appendix 3Z – Final Director's Interest Notice.

This information is to be forwarded to the Company Secretary.

Each Director is required to enter into an agreement with Superior Resources Limited to supply such information in the required form.

y verify and safeguard the integrity of their financial reporting. Principle 4: Safeguard integrity in financial reporting Companies should have a structure to independentl	R
Recommendation 4.1: The Board should establish an audit committee.	R
be structured so that it consists of: · only non-executive directors · a majority of independent directors · an independent chair, who is not chair of the Board · at least three members. Recommendation 4.2: The audit committee should	S
Recommendation 4.3: The audit committee should have a formal charter.	R
Recommendation 4.4: Companies should provide the information indicated in the Guide to reporting on Principle 4.	R

Integrity in Financial Reporting

The Managing Director and the CFO (or equivalent) are required to make the following certifications to the Board:

That the Company's financial reports are complete and present a true and fair view, in all material respects, of the financial condition and operational results of the Company and are in accordance with the relevant accounting standards.
That the above statement is based on a sound system of risk management and internal compliance and control and which implements the policies adopted by the Board and that the Company's risk management and internal compliance and control is operating efficiently and effectively in all material respects.

Annual Report 2011

CORPORATE GOVERNANCE STATEMENT (continued)

Audit Committee

The Board has established an Audit Committee which operates under a charter approved by the Board. It is the Board's responsibility to ensure that an effective internal control framework exists within the entity.

This includes internal controls to deal with both the effectiveness and efficiency of significant business processes such as the safeguarding of assets, maintenance of proper accounting records, the reliability of financial information and non-financial considerations such as the benchmarking of operational key performance indicators. The Audit Committee provides a forum for effective communication between the Board and the external auditor. The Audit Committee also provides the Board with additional assurance regarding the reliability of financial information for inclusion in the financial report.

Taking into account the specific operations of the Company, the Audit Committee meets at least twice a year. Because of the size of the Board, the current Audit Committee comprises only two members (two non-executive directors) and the chairman of the committee is not the Chairman of the Board.

The Audit Committee operates under the following charter approved by the Board:

The Board as a whole is responsible for the accuracy and relevance of the financial statements. However, the Audit Committee provides an additional and more specialised oversight of the financial reporting process.
The Audit Committee shall, if possible, comprise a majority of non-executive directors and an independent chairman who is not the Chairman of the Board. The Audit Committee shall consist of at least two members.
The finance director and other executive directors may be present during Audit Committee deliberations but will not be members of the committee.
The Audit Committee will meet at least two times a year and will meet with the external auditors at least once a year.
The Audit Committee reports to the Board and copies of Audit Committee minutes should be tabled at the first Board meeting at which it is practicable to do so.

The Company has one executive and two non-executive directors. The two non-executive directors are members of the Audit Committee.

The Company will provide an explanation of any departures from best practice recommendations (if any) in its future annual reports.

Principle 5: Make timely and balanced disclosure Companies should promote timely and balanced disclosure of all material matters concerning the company.	R
Recommendation 5.1: Companies should establish written policies designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior executive level for that compliance and disclose those policies or a summaryof thosepolicies.	R
Recommendation 5.2: Companies should provide the information indicated in the Guide to reporting on Principle 5.	R

Superior Resources Limited

CORPORATE GOVERNANCE STATEMENT (continued)

Continuous Disclosure

The Company has a continuous disclosure program in place designed to ensure the factual presentation of the Company's financial position.

The Company will provide an explanation of any departures from best practice recommendations (if any) in its future annual reports.

Principle 6: Respect the rights of shareholders Companies should respect the rights of shareholders and facilitate the effective exercise of those rights.	R
Recommendation 6.1: Companies should design a communications policy for promoting effective communication with shareholders and encouraging their participation at general meetings and disclose their policy or a summary of that policy.	R
Recommendation 6.2: Companies should provide the information indicated in the Guide to reporting on Principle 6.	R

Shareholders Information

The Board aims to ensure that shareholders and other stakeholders have equal and timely access to material information concerning the Company. Information is communicated through:

! The annual report which is distributed to the Australian Securities Exchange and to all shareholders who have elected to receive such report.
! Notices of the Annual General Meeting and other meetings of members called as required to obtain approval for Board action.
! Timely announcements through the Australian Securities Exchange company announcements platform, including Quarterly Activity Reports as required for mineral exploration companies.
! The half-year report containing summarised financial information and a review of operations for that period.

The Board encourages full participation of shareholders at the Annual General Meeting and at other general meetings as may be called.

The Company requests the external auditor to attend all annual general meetings of the Company to answer shareholder questions about the conduct of the audit and the preparation and content of the auditors report.

Recognising the Rights of Shareholders

Directors bear individual responsibilities for the performance of their duties before the law, and collective responsibility for the behaviour of the Board.

The code of conduct, as pronounced by the Australian Institute of Company Directors in September 2005, encompasses the legislative and common law requirement of directors, as well as specific behaviour that the Company expects of directors. The Company has adopted this code of conduct, which provides that:

A director must act honestly, in good faith and in the best interests of the Company as a whole.
A director has a duty to use due care and diligence in fulfilling the functions of office and exercising the powers attached to that office.
A director must use the powers of office for a proper purpose, in the best interests of the Company as a whole.
A director must recognise that the primary responsibility is to the Company's shareholders as a whole but should, where appropriate, have regard for the interests of all stakeholders of the Company.

Annual Report 2011

CORPORATE GOVERNANCE STATEMENT (continued)

Recognising the Rights of Shareholders (continued)

A director must not make improper use of information acquired as a director.
A director must not take improper advantage of the position of director.
A director must not allow personal interests, or the interests of any associated person, to conflict with the interests of the Company.
A director has an obligation to be independent in judgment and actions and to take all reasonable steps to be satisfied as to the soundness of all decisions taken by the Board.

The Company will provide an explanation of any departures from best practice recommendations (if any) in its future annual reports.

Principle 7: Recognise and Manage risk

Companies should establish a sound system of risk oversight and management and internal control. R Recommendation 7.1: Companies should establish policies for the oversight and management of material business risks and R disclose a summary of those policies. Recommendation 7.2: The board should require management to design and implement the risk management and internal control system to manage the company's material business risks and report to it on whether those risks are being managed effectively. The Board should disclose that management has reported to it as to the effectiveness R of the company's management of its material business risks. Recommendation 7.3: The Board should disclose whether it has received assurance from the chief executive officer (or equivalent) and the chief financial officer (or equivalent) that the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound system of risk management and internal control and that the R system is operating effectively in all material respects in relation to financial reporting risks.

Recommendation 7.4:

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

Risk Management

The Board has established a Risk Management Committee. The prime purpose of the Risk Management Committee is to identify those areas of risk which are most likely to cause major disruption and damage to the business of the Company and to implement, with Board approval, plans and procedures which will mitigate any damage.

The Risk Management Committee will meet as often as considered necessary but not less than twice per year.

Certifications to the Board

The Managing Director and the CFO (or equivalent) is required to make the following certifications to the Board:

! That the Company's financial reports are complete and present a true and fair view, in all material respects, of the financial condition and operational results of the Company and are in accordance with the relevant accounting standards.
! That the above statement is based on a sound system of risk management and internal compliance and control and which implements the policies adopted by the Board and that the Company's risk management and internal compliance and control is operating efficiently and effectively in all material respects.

The Company will provide an explanation of any departures from best practice recommendations (if any) in its future annual reports.

Superior Resources Limited

CORPORATE GOVERNANCE STATEMENT (continued)

Principle 8: Remunerate fairly and responsibly Companies should ensure that the level and composition of remuneration is sufficient and reasonable and that its relationship to performance is clear.	R
Recommendation 8.1: The Board should establish a remuneration committee.	R
Recommendation 8.2: The remuneration committee should be structured so that it: · consists of a majority of independent directors · is chaired by an independent chair · has at least three members.	R
Recommendation 8.2: Companies should clearly distinguish the structure of non-executive directors’ remuneration from that of executive directors and senior executives.	R
Recommendation 8.3: Companies should provide the information indicated in the Guide to reporting on Principle 8.	R

Enhanced Performance

The Board encourages enhanced performance and has adopted a program that enables directors to gain an understanding of:

! the Company's financial, strategic, operational and risk management position;
! their rights, duties and responsibilities; and
! the role of the Board's committees.

The Board undertakes an annual review of the performance of the Board and the individual directors and examines the appropriate mix of skills to ensue maximum effectiveness and contribution to the results of the Company's business.

Remuneration Policy

The Company has a formal remuneration policy.

The Company will disclose the quantum of remuneration paid to directors and senior executives in its annual reports. Any links between the remuneration paid to directors and key executives and corporate performance will be fully disclosed.

The Board is responsible for determining and reviewing remuneration arrangements for the directors and the executive team. The Board has established a Remuneration Committee consisting of two non-executive directors.

The Company's constitution provides that the total remuneration of all non-executive directors will not be more than the aggregate fixed sum determined by a general meeting. The aggregate remuneration has been set at an amount of $250,000 per annum.

The Company will seek shareholder approval for the future grant of equity based remuneration to directors. The Company currently has in place an Employee and Officers Option Plan (2006), and the directors may allocate options to key employees. Any such grant will be disclosed in future annual reports of the Company.

The Company will provide an explanation of any departures from best practice recommendations (if any) in its future annual reports.

Annual Report 2011

FINANCIAL REPORT For the year ended 30 June 2011

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Superior Resources Limited

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Financial Report
Income Statement	36
Statement of Comprehensive Income	37
Statement of Financial Position	38
Statement of Changes in Equity	39
Statement of Cash Flows	40
Notes to the Financial Statements	41
Directors' Declaration	62
Independent Auditor's Report to the Members	63

Annual Report 2011

INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2011

Note Revenue from continuing operations 5 Accounting and audit fees Depreciation and amortisation Office rent and outgoings Tenement expenditure written off Administration expenses Loss before income tax 6 Income tax (expense) / benefit 7 Loss for the year from continuing operations Earnings per share Basic earnings per share 27 Diluted earnings per share 27	2011 $ 2010 $ 144,916 176,829 (60,340) (71,160) (7,951) (10,310) (32,172) (30,308) (1,287,643) (46,887) (240,969) (199,223)
	(1,484,159) (181,059) 376,040 54,097
	(1,108,119) (126,962)
	Cents Cents (1.40) (0.16) (1.40) (0.16)

The accompanying notes form part of these financial statements.

Superior Resources Limited

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2011

Note Loss for the year Other comprehensive income Fair value adjustment to available-for-sale financial assets Income tax relating to components of other comprehensive income Other comprehensive income / (loss ) for the year, net of tax Total comprehensive income / (loss) for the year	2011 $ 2010 $ (1,108,119) (126,962) 140,000 (1,470,000) (42,000) 441,000
	98,000 (1,029,000)
	(1,010,119) (1,155,962)

The accompanying notes form part of these financial statements.

Annual Report 2011

STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2010

Note ASSETS Current Assets Cash and cash equivalents 8 Trade and other receivables 9 Total Current Assets Non-Current Assets Property, plant and equipment 10 Available-for-sale financial assets 11 Exploration expenditure 12 Deferred tax assets 13 Other 14 Total Non-Current Assets Total Assets LIABILITIES Current Liabilities Payables 15 Income tax payable 16 Total Current Liabilities Non-Current Liabilities Deferred tax liabilities 17 Total Non-Current Liabilities Total Liabilities Net Assets Equity Contributed equity 18 Reserves 19 Retained profits 20 Total Equity	2011 $ 2010 $ 2,158,920 3,189,308 65,750 93,578
	2,224,670 3,282,886
	29,666 37,051 1,050,000 910,000 3,327,597 3,863,198 - - 32,500 30,000
	4,439,763 4,840,249
	6,664,433 8,123,135
	115,704 230,247 - -
	115,704 230,247
	- 334,040
	- 334,040
	115,704 564,287
	6,548,729 7,558,848
	5,889,272 5,889,272 147,000 49,000 512,457 1,620,576
	6,548,729 7,558,848

The accompanying notes form part of these financial statements.

Superior Resources Limited

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2011

Balance at 1 July 2009 Loss for the year Other comprehensive income / (loss) Total comprehensive income for the year as reported in the 2010 financial statements Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs Balance at 30 June 2010 Loss for the year Other comprehensive income / (loss) Total comprehensive income for the year Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs Balance at 30 June 2011	Contributed equity $ Reserves $ Retained Earnings $ Total $ 5,889,272 1,078,000 1,747,538 8,714,810 - - (126,962) (126,962) - (1,029,000) - (1,029,000)
	- (1,029,000) (126,962) (1,155,962) - - - -
	5,889,272 49,000 1,620,576 7,558,848
	- - (1,108,119) (1,108,119) - 98,000 - 98,000
	- 98,000 (1,108,119) (1,010,119) - - - -
	5,889,272 147,000 512,457 6,548,729

The accompanying notes form part of these financial statements.

Annual Report 2011

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2010

Note Cash flows from operating activities Receipts from customers (GST inclusive) Interest received Payments to suppliers (GST inclusive) Income taxes paid Net cash inflow(outflow) from operating activities 26 Cash flows from investing activities Payments for exploration expenditure Proceeds from sale of available-for-sale financial assets Payments for security deposits Refund of security deposits Proceeds from government grants Payments for property, plant and equipment Net cash inflow(outflow) from investing activities Cash flows from financing activities Proceeds on issue of shares Payment of capital raising costs Dividends paid Net cash inflow(outflow) from financing activities Net increase (decrease) in cash held Cash at beginning of financial year Cash at the end of financial year 8	2011 $ 2010 $ Inflows / (Outflows) Inflows / (Outflows) 73,743 117,767 164,093 322,278 (400,859) (400,891) - -
	(163,023) 39,154 (884,605) (1,106,426) - - (5,000) - 2,500 2,500 20,305 169,700 (565) -
	(867,365) (934,226) - - - - - -
	- -
	(1,030,388) (895,072) 3,189,308 4,084,380
	2,158,920 3,189,308

The accompanying notes form part of these financial statements.

Superior Resources Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010

1. Summary of Significant Accounting Policies

(a) Basis of preparation

These general purpose financial statements have been prepared in accordance with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Interpretations and the Corporations Act 2001.

Compliance with IFRSs

The financial statements of the Superior Resources Limited also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

New and amended standards adopted by the group

The following new standards and amendments to standards are mandatory for the first time for the financial year beginning 1 July 2010:

AASB 2009-5 Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project
AASB 2009-8 Amendments to Austrailan Accounting Standards – Group Cash-settled Share-based Payment Transactions
AASB 2009-10 Amendments to Australian Accounting Standards – Classification of Rights Issues
AASB Interpretation 19 Extinguishing Financial Liabilities with Equity Instruments and AASB 2009-13 Amendments to Australian Accounting Standards arising from Interpretation 19, and
AASB 2010-3 Amendments to Australian Accounting Standards arising from the Annual Improvements Project.

The adoption of these standards did not have any impact on the current period or any prior period and is not likely to affect future periods.

Early adoption of standards

The company has elected to apply the following pronouncements to the annual reporting period beginning 1 July 2010:

· AASB 2010-4 Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project This includes applying the revised pronouncement to the comparatives in accordance with AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors. None of the items in the financial statements had to be restated as a result of applying this standard.

Historical cost convention

These financial statements have been prepared on an accruals basis and are based on historical costs, as modified by the revaluation of availablefor-sale financial assets, financial assets and liabilities (including derivative instruments) at fair value through profit or loss, certain classes of property, plant and equipment and investment property.

Critical accounting estimates

The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 3.

(b) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable when it is probable that the economic benefits will flow to the company and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:

Interest – Interest revenue is recognised using the effective interest rate method.

All revenue is stated net of the amount of goods and services tax (GST).

Annual Report 2011

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010

1. Summary of Significant Accounting Policies (continued)

(c) Income Tax

The income tax expense or revenue for the period is the tax payable on the current period's taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the reporting date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income. In this case, the tax is also recognised in other comprehensive income.

(d) Cash and cash equivalents

For the statement of cash flows presentation purposes, cash and cash equivalents includes cash on hand and deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts.

(e) Investments and other financial assets

Available for sale

Available-for-sale financial assets, comprising principally marketable equity securities, are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the balance date.

When securities classified as available-for-sale are sold, the accumulated fair value adjustments recognised in other comprehensive income are included in the income statement as gains and losses from investment securities.

Subsequent measurement

Available-for-sale financial assets are subsequently carried at fair value. Gains or losses arising from changes in the fair value of the monetary and non-monetary securities classified as available-for-sale are recognised in other comprehensive income.

Fair value

The fair values of quoted investments are based on current bid prices.

Impairment

The company assesses at each balance date whether there is objective evidence that a financial asset or group of financial assets is impaired. In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of a security below its cost is considered as an indicator that the securities are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss – is recognised in the income statement. Impairment losses recognised in the income statement on equity instruments classified as available-for-sale are not reversed through the income statement.

Superior Resources Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010

1. Summary of Significant Accounting Policies (continued)

(f) Fair value estimation

The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.

The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and available-for-sale securities) is based on quoted market prices at the balance date. The quoted market price used for financial assets is the current bid price.

(g) Plant and equipment

Plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Depreciation is calculated using the straight-line method to allocate their cost, net of their residual values, over their estimated useful lives, as follows:

Equipment / Software

3 – 5 years

The assets residual values and useful lives are reviewed, and adjusted if appropriate, at each balance date.

An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the income statement. When revalued assets are sold, it is company policy to transfer the amounts included in other reserves in respect of those assets to retained earnings.

(h) Trade and other payables

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

(i) Exploration expenditure

Expenditure is accumulated separately for each area of interest until such time as the area is abandoned or sold. The realisation of the value of the expenditure carried forward depends on any commercial results that may be obtained through successful development and exploitation of the area of interest or alternatively by its sale. If an area of interest is abandoned or is considered to be of no further commercial interest the accumulated exploration costs relating to the area are written off against income in the year of abandonment. Some exploration expenditure may also be written off where areas of interest are partly relinquished. In cases where uncertainty exists as to the value, provisions for possible diminution in value are established.

(j) Contributed equity

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

(k) Dividends

Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the financial year but not distributed at balance date.

Annual Report 2011

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010

1. Summary of Significant Accounting Policies (continued)

(l) Earnings per share

(i) Basic earnings per share

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year.

(ii) Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

(m) Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the statement of financial position.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flow.

(n) New accounting standards and interpretations

Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2011 reporting periods. The company's assessment of the impact of these new standards and interpretations is set out below.

(i) AASB 9 Financial Instruments, AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9 and AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) (effective from 1 January 2013) AASB 9 Financial Instruments addresses the classification, measurement and derecognition of financial assets and financial liabilities. The standard is not applicable until 1 January 2013 but is available for early adoption. When adopted, this standard will have no impact on the Company's financial statements.
(ii) AASB 1053 Application of Tiers of Australian Accounting Standards and AASB 2010-2 Amendments to Australian Accounting Standards arising from Reduced Disclosure Requirements (effective from 1 July 2013)
On 30 June 2010 the AASB officially introduced a revised differential reporting framework in Australia. Under this framework, a two-tier differential reporting regime applies to all entities that prepare general purpose financial statements. Superior Resources Limited is listed on the ASX and is not elilgible to adopt the new Australian Accounting Standards – Reduced Disclosure Requirements. The two standards will therefore have no impact on the financial statements of the entity.

Superior Resources Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010

2. Financial risk management

The company's overall risk management plan seeks to minimize potential adverse effects due to the unpredictability of financial markets.

The company does not actively engage in the trading of financial assets for speculative purposes nor does it write options. The most significant financial risks to which the company is exposed are credit risk, liquidity risk, market risk and cash flow interest rate risk.

The company holds the following financial instruments:

Financial assets Cash and cash equivalents Trade and other receivables Financial liabilities Trade and other payables	2011 $’000 2010 $’000 2,158,920 3,189,308 65,750 93,578
	2,224,670 3,282,886
	115,704 230,247
	115,704 230,247

Risk management is carried out by the Company's finance function under policies and objectives which have been approved by the Board of Directors. The Managing Director has been delegated the authority for designing and implementing processes which follow the objectives and policies.

The Board receives monthly reports which provide details of the effectiveness of the processes and policies in place.

Credit risk

Credit risk is the risk of loss from a counter-party failing to meet its financial obligations to the Company.

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

Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions. For bank and financial institutions, only independently rated parties with a minimum rating of 'A' are accepted.

Annual Report 2011

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010

2. Financial risk management (continued)

The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings (if available).

Cash at bank and short-term bank deposits AAA A	2011 $’000 2010 $’000 1,127,164 1,046,487 1,031,756 2,142,821
	2,158,920 3,189,308

Other than cash and cash equivalents, the most significant other financial assets are trade and other receivables. The Company does not have any material credit risk exposure to any single debtor or group of debtors under financial instruments entered into by the company. There were no past due debts at balance date requiring consideration of impairment provisions.

Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities to meet obligations when due. At the end of the reporting period the company held deposits at call of $2,137,790 that are expected to readily generate cash inflows for managing liquidity risk.

The company manages liquidity risk by continuously monitoring forecast and actual cash flows. No finance facilities were available to the group at the end of the reporting period.

Maturities of financial liabilities

The table below analyses the group's financial liabilities into relevant maturity groupings.

Contractual maturities of financial liabilities At 30 June 2011 Trade and other payables At 30 June 2010 Trade and other payables	Less then 6 months 6 – 12 months Between 1 and 2 years Between 2 and 5 years Over 5 years Total contractual cash flows Carrying amount $’000 $’000 $’000 $’000 $’000 $’000 $’000 115,704 - - - - 115,704 115,704
	115,704 - - - - 115,704 115,704
	230,247 - - - - 230,247 230,247
	230,247 - - - - 230,247 230,247

Superior Resources Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010

2. Financial risk management (continued)

Market risk

The company is exposed to equity securities price risk. This arises from investments held by the company in Deep Yellow Limited and classified on the statement of financial position as available-for-sale financial assets. The company is not exposed to commodity price risk.

The table below summaries the impact of increases/decreases in the Deep Yellow Limited share price on the company's total comprehensive income / (loss) for the year and on equity. The analysis is based on the assumption that the share price had increased/decreased by 25% (2010 – 25%) from balance date fair value with all other variables held constant.

Investment in Deep Yellow Limited	Impact on post-tax profit Impact on reserves 2011 $ 2010 $ 2011 $ 2010 $
	+25% -25% +25% -25% +25% -25% +25% -25% - (52,500) - (110,250) 183,750 (147,000) 159,250 (49,000)

Cash flow and fair value interest rate risk

As the company has no significant interest-bearing assets or borrowings, the company's income and operating cash flows are not materially exposed to changes in market interest rates.

At 30 June 2011, if interest rates had changed by -/+ 100 basis points from the year-end rates with all other variables held constant, post-tax profit for the year would have been $21,589 lower/higher (2010 – change of 100 bps: $31,893 higher/lower), as a result of higher/lower interest income from cash and cash equivalents.

Fair value measurements

The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. The net fair value of financial assets and financial liabilities approximates their carrying values as disclosed in the balance sheet and notes to the financial statements.

Annual Report 2011

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010

3. Critical accounting estimates and judgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.

Critical judgements in applying the entity's accounting policies

The company has capitalised exploration expenditure of $3,327,597 (2010 : $3,863,198). This amount includes costs directly associated with exploration. These costs are capitalised as an intangible asset until assessment and/or drilling of the permit is complete and the results have been evaluated. These costs include employee remuneration, materials, rig costs, delay rentals and payments to contractors. The expenditure is carried forward until such a time as the area moves into the development phase, is abandoned or sold. Given exploration activities have not yet reached a stage which permits a reasonable assessment of the existence or otherwise of recoverable resources and the difficulty in forecasting cash flows to assess the fair value of exploration expenditure there is uncertainty as to the carrying value of exploration expenditure. The ultimate recovery of the carrying value of exploration expenditure is dependent upon the successful development and commercial exploitation or, alternatively, sale of the interest in the tenements.

4. Segment information

The company operates solely within one segment, being the mineral exploration industry in Australia.

5. Revenue Other revenue Interest 6. Expenses Profit before income tax includes the following specific expenses: Depreciation Plant and equipment Exploration expenditure written off	2011 $ 2010 $ 144,916 176,829
	7,951 10,310 1,287,643 46,887

Superior Resources Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010

7. Income tax expense (a) Numerical reconciliation of income tax expense / (income) to prima facie tax payable Profit (loss) from continuing operations before income tax expense Tax at the Australian tax rate of 30% (2010 – 30%) Adjustment to deferred tax assets and liabilities for tax losses and temporary differences not recognised Under (over) provision in prior years Income tax expense / (benefit) (b) The components of income tax expense / (income): Current tax Deferred tax Under (over) provision in prior years Deferred income tax (income) expense included in income tax expense comprises: Decrease / (increase) in deferred tax assets (Note 13) (Decrease) / increase in deferred tax liabilities (Note 17) (c) Tax expense (income) relating to items of other comprehensive income: Available-for-sale financial assets (d) Franking credits Franking credits available for use in subsequent financial years	2011 $ 2010 $ (1,484,159) (181,059)
	(445,247) (54,318) 69,207 - - 221
	(376,040) (54,097)
	- - (376,040) (54,097) - -
	(376,040) (54,097)
	(219,696) (296,948) (156,344) 242,851
	(376,040) (54,097)
	42,000 (441,000)
	251,146 251,146

Annual Report 2011

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010

8. Current assets - Cash and cash equivalents Cash at bank and on hand 9. Current assets - Trade and other receivables Other receivables Prepayments Other receivables These amounts generally arise from transactions outside the usu ctivities of the company. al operating 10. Non-current assets – Property, plant and equipment Equipment / software – at cost Accumulated depreciation Year ended 30 June 2010 Opening net book amount Additions Depreciation charge Closing net book amount At 30 June 2010 Cost Accumulated depreciation Net book amount Year ended 30 June 2011 Opening net book amount Additions Depreciation charge Closing net book amount At 30 June 2011 Cost Accumulated depreciation Net book amount	2011 $ 2010 $ 2,158,920 3,189,308
	20,288 51,390 45,462 42,188
	65,750 93,578
	2011 $ 2010 $ 71,793 71,227 (42,127) (34,176)
	29,666 37,051
	Equipment / Software $ 47,361 - (10,310) 37,051 71,227 (34,176) 37,051 37,051 566 (7,951) 29,666 71,793 (42,127) 29,666

Superior Resources Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010

11. Non-current assets – Available-for-sale financial assets Listed securities Equity securities At beginning of year Impairment through profit or loss Fair value adjustment in other comprehensive income / (loss) 12. Non-current assets – Exploration expenditure Exploration phase property costs Deferred geological, geophysical, drilling and other expenditure – at cost The capitalised exploration expenditure carried forward above has been determined as follows: Opening balance Expenditure incurred during the year Exploration abandoned 13. Non-current assets – Deferred tax assets Deferred tax assets The balance comprises temporary differences attributable to: Amounts recognised in profit or loss Accruals Employee entitlements Business capital costs Tax losses Other Amounts recognised in equity Capital raising costs Total deferred tax assets Set-off of deferred tax assets/liabilities pursuant to set-off provisions Net adjustment to deferred tax assets for tax losses not recognised (Note 7) Net deferred tax assets Deferred tax assets expected to be settled within 12 months Deferred tax assets expected to settled after more than 12 months	2011 $ 2010 $ 1,050,000 910,000
	910,000 2,380,000 - - 140,000 (1,470,000)
	1,050,000 910,000
	3,327,597 3,863,198
	3,863,198 752,042 (1,287,643) 2,873,532 1,036,553 (46,887)
	3,327,597 3,863,198
	- -
	9,699 8,808 - 1,348,942 383 10,591 8,555 64 1,034,537 - 22,970 48,152
	1,390,802 (1,321,595) (69,207) 1,101,899 (1,101,899) -
	- -
	41,860 44,392 1,348,942 1,057,507
	1,390,802 1,101,899

Annual Report 2011

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010

13. Non-current assets – Deferred tax assets (continued)

Movements in deferred tax assets:

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||||||||
|---|---|---|---|---|---|---|
|Employee|Business|Tax losses|
|Accruals|entitlements|caiptal costs|incurred|Other|Total|
|$|$|$|$|$|$|
|At 30 June 2009|12,400|7,548|74,370|710,633|-|804,951|
|(Charged)/credited to profit|
|-|
|or loss (Note 7)|(1,809)|1,007|(26,154)|323,904|296,948|
|At 30 June 2010|10,591|8,555|48,216|1,034,537|-|1,101,899|
|(Charged)/credited to profit|
|or loss (Note 7)|(892)|253|(25,246)|314,405|383|288,903|
|At 30 June 2011|9,699|8,808|22,970|1,348,942|383|1,390,802|

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||||
|---|---|---|
|2011|2010|
|$|$|
|14. Non-current assets – Other|
|Security deposits|32,500|30,000|
|15. Current liabilities - Payables|
|Trade payables|53,600|132,954|
|Other payables|62,104|97,293|
|115,704|230,247|
|16. Current liabilities – Income tax payable|
|-|-|

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14. Non-current assets – Other

15. Current liabilities - Payables

16. Current liabilities – Income tax payable

Income tax payable

Superior Resources Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010

17. Non-current liabilities – Deferred tax liabilities Deferred tax liabilities The balance comprises temporary differences attributable to: Amounts recognised in profit or loss Exploration expenditure Investment Prepayments Property, plant and equipment Interest receivable Amounts recognised directly in equity Asset revaluation reserve Set-off of deferred tax assets/liabilities pursuant to set-off provisions Net deferred tax liabilities Deferred tax liabilities expected to be settled within 12 months Deferred tax liabilities expected to settled after more than 12 months	2011 $ 2010 $ - 334,040
	998,279 241,228 9,639 7,964 1,485 1,149,013 241,228 10,806 6,653 7,239 63,000 21,000
	1,321,595 (1,321,595) 1,435,939 (1,101,899)
	- 334,040
	19,088 18,045 1,302,507 1,417,894
	1,321,595 1,435,939

Movements in deferred tax liabilities:

At 30 June 2009 (Charged)/credited to profit or loss (Note 7) Charged /(credited) to other comprehensive income At 30 June 2010 (Charged)/credited to profit or loss (Note 7) Charged /(credited) to other comprehensive income At 30 June 2011	Exploration expenditure $ Available-for- sale financial assets $ Prepayments $ Property, plant and equipment $ Interest receivable $ Total $ 862,060 703,228 15,140 2,787 50,873 1,634,088 286,953 - (4,334) 3,866 (43,634) 242,851 - (441,000) - - - (441,000)
	1,149,013 262,228 10,806 6,653 7,239 1,435,939 (150,734) - (1,167) 1,311 (5,754) (156,344) - 42,000 - - - 42,000
	998,279 304,228 9,639 7,964 1,485 1,321,595

Annual Report 2011

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010

8. Contributed equity 76,993,688 (2010 : 76,993,688) ordinary shares fully paid	2011 $ 2010 $ 5,889,272 5,889,272

18. Contributed equity

(a) Movements in ordinary share capital:

Date Details	Number of shares Issue Price $ $
1 July 2009 Balance Movement 30 June 2010 Balance Movement 30 June 2011 Balance	76,993,688 5,889,272 - - 76,993,688 5,889,272 - - 76,993,688 5,889,272

(b) Ordinary shares:

Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the company in proportion to the number of and amounts paid on the shares held.

On a show of hands every holder of ordinary shares present at a meeting, in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.

(c) Capital risk management

The company's objectives when managing capital are to safeguard its ability to continue as a going concern, so that they can continue to provide returns for shareholders, benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

The capital structure of the company includes cash and cash equivalents, equity attributable to equity holders, comprising of contributed equity, reserves and accumulated losses. In order to maintain or adjust the capital structure, the company may issue new shares, sell assets to reduce debt or adjust the level of activities undertaken by the company.

The company monitor capital on the basis of cash flow requirements for operational, and exploration and evaluation expenditure. The company's exposure to borrowings as at 30 June 2011 totals $nil (2010 : $nil). The company will continue to use capital market issues and joint venture participant funding contributions to satisfy anticipated funding requirements.

The company's strategy to capital risk management is unchanged from prior years.

Superior Resources Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010

19. Reserves Available-for-sale investments revaluation reserve Movements: Balance 1 July Revaluation – gross (Note 11) Deferred tax (Note 17) Balance 30 June Nature and purpose of reserves	2011 $ 2010 $ 147,000 49,000
	49,000 140,000 (42,000) 1,078,000 (1,470,000) 441,000
	147,000 49,000

Available-for-sale investments revaluation reserve

Changes in the fair value of investments, such as equities, classified as available-for-sale financial assets, are taken to the available-for-sale investments revaluation reserve, as described in Note 1(e). Amounts are recognised in profit and loss when the associated assets are sold or impaired.

20. Retained profits Retained profits Movements: Balance 1 July Profit / (loss) for the year Dividend paid Balance 30 June	2011 $ 2010 $ 512,457 1,620,576
	1,620,576 1,747,538 (1,108,119) (126,962) - -
	512,457 1,620,576

Annual Report 2011

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010

21. Key Management Personnel disclosures

(a) Key management personnel compensation

Short-term employee benefits Post-employment benefits Share-based payments	2011 $ 2010 $ 274,030 272,000 19,263 18,000 - -
	293,293 290,000

Detailed remuneration disclosures are provided in the remuneration report on pages 17 to 19.

(b) Equity instrument disclosures relating to key management personnel

(i) Options provided as remuneration and shares issued on exercise of such options Details of options provided as remuneration and shares issued on the exercise of such options, together with terms and conditions of the options, can be found in the remuneration report on page 19.

(ii) Option holdings

The numbers of options over ordinary shares in the company held during the financial year by each director of Superior Resources Limited and other key management personnel of the company, including their personally related parties, are set out below.

2011	Balance at the start	Granted as			Balance at the end
	of the year	compensation	Exercised	Other changes	of the year
Name
*Directors of Superior Resources Limited*
L J Litzow	2,000,000	-	-	(2,000,000)	-
K J Harvey	4,000,000	-	-	(4,000,000)	-
D J Horton	2,000,000	-	-	(2,000,000)	-
*Other key management personnel of the company*
C A Fernicola	-	-	-	-	-
There were no options on issue at 30 June 2011.
2010	Balance at the start	Granted as			Balance at the end
	of the year	compensation	Exercised	Other changes	of the year
Name
*Directors of Superior Resources Limited*
L J Litzow	2,000,000	-	-	-	2,000,000
K J Harvey	4,000,000	-	-	-	4,000,000
D J Horton	2,000,000	-	-	-	2,000,000

Superior Resources Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010

21. Key Management Personnel disclosures (continued)

(iii) Share holdings

The number of ordinary shares in the company held during the financial year by each Director and their personally related entities is set out below:

2011	Balance at the start	Received on
	of the year	exercising options	Net purchased /		Other changes	Balance at the end
Name			(sold)			of the year
*Directors of*	*Superior Resources Limited*
L J Litzow	2,520,002	-		-	(2,520,002)	-
P H Hwang	-	-		-	-	-
K J Harvey	5,469,964	-	125,000		-	5,594,964
D J Horton	2,695,000	-		-	-	2,695,000
*Other key management personnel of the*		*company*
C AFernicola	-	-		-	2,787,975	2,787,975
2010	Balance at the start	Received on
	of the year	exercising options	Net purchased /		Other changes	Balance at the end
Name			(sold)			of theyear
*Directors of*	*Superior Resources Limited*
L J Litzow	2,520,002	-		-	-	2,520,002
K J Harvey	5,179,964	-	290,000		-	5,469,964
D J Horton	2,695,000	-		-	-	2,695,000

(c) Other transactions with key management personnel

A former director, Mr L J Litzow, was a director and shareholder of Diatreme Resources Limited to which the company paid rent of $25,496 (2010: $24,032) and outgoings of $6,676 (2010: $6,276). The amounts were paid on normal commercial terms and conditions.

A director, Mr D J Horton, is a director and shareholder of Opal Horizon Limited to which the company paid bookkeeping fees of $12,570 (2010: $9,324). The amounts were paid on normal commercial terms and conditions.

There are no other related party transactions.

Annual Report 2011

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010

2. Remuneration of auditors During the year the following fees were paid or payable for services provided by the auditor, its related practises and non-related audit firms: Lawler Hacketts Audit - Audit or review of financial report Other assurance services Taxation compliance services	2011 $ 2010 $ 22,000 23,500 - - - -
	22,000 23,500

22. Remuneration of auditors

23. Contingencies

The possibility of native title claim applications at some future time, under the provisions of the Native Title Act (1993), may impact on exploration tenements under application. Any substantiated claim may have an effect on the value of the tenement application affected by the claim.

24. Commitments

(a) Exploration commitments

So as to maintain current rights to tenure of various exploration and mining tenements, the company will be required to outlay amounts in respect of tenement rent to the relevant governing authorities and to meet certain annual exploration expenditure commitments. These outlays (exploration expenditure and rent), which arise in relation to granted tenements, inclusive of tenement applications granted subsequent to 30 June 2011, are as follows:

Exploration expenditure commitments payable: - within one year - later than one year but not later than five years - later than five years	2011 $ 2010 $ 338,763 718,807 1,956,378 628,263 - -
	2,295,141 1,347,070

Outlays may be varied from time to time, subject to approval of the relevant government departments, and may be relieved if a tenement is relinquished. Cash security bonds totalling $32,500 (2010: $30,000) are currently held by the relevant governing authorities to ensure compliance with granted tenement conditions.

Superior Resources Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010

24. Commitments (continued)

(b) Remuneration commitments Commitments for the payment of salaries and other remuneration under long-term employment contracts in existence at balance date but not recognised as liabilities, payable: Within one year Later than one year but not later than 5 years Later than 5 years	2011 2010 $ $ 176,077 159,307 - - - -
	176,077 159,307

Amounts disclosed as remuneration commitments include commitments arising from the service contracts of specified directors and specified executives referred to in Note 21 that are not recognised as liabilities and are not included in the directors' or executives' remuneration.

25. Events occurring after the balance date

Subsequent to the end of the financial year the market value of the company's investment in financial assets available-for-sale has decreased by $70,000.

No other matter or circumstance has arisen since the end of the financial year that has significantly affected or may significantly affect the operations of the company, the results of the operations or the state of affairs of the company in financial years subsequent to 30 June 2010.

	2011	2010
	$	$
26. Reconciliation of profit / (loss) after income tax to net cash flows from operating activities
Profit / (loss) for the year	(1,108,119)	(126,962)
Depreciation and amortisation	7,951	10,310
Exploration abandoned	1,287,643	46,887
Tax related balances recognised directly in equity	-	-
Impairment of available-for-sale financial assets	-	-
Changes in operating assets and liabilities:
(Increase) / decrease in other receivables	31,102	172,756
(Increase) / decrease in prepayments	(5,235)	(1,591)
(Increase) / decrease in deferred tax assets	-	-
Increase / (decrease) in income tax payable	-	-
Increase / (decrease) in deferred tax liabilities	(376,040)	(63,941)
Increase / (decrease) in payables	(325)	1,695
Net cash outflow from operating activities	(163,023)	39,154

Annual Report 2011

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010

27. Earnings per share (a) Basic earnings per share Profit attributable to the ordinary equity holders of the company (b) Diluted earnings per share Profit attributable to the ordinary equity holders of the company (c) Reconciliations of earnings used in calculating earnings per share Basic earnings per share Profit attributable to ordinary equity holders of the company used in calculating basic earnings per share Diluted earnings per share Profit attributable to ordinary equity holders of the company used in calculating diluted earnings per share (d) Weighted average number of shares used as the denominator Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share Adjustments for calculation of diluted earnings per share: Options Weighted average number of ordinary shares and potential ordinary shares used as the denominator in calculating diluted earnings per share	2011 2010 Cents Cents (1.40) (0.16)
	(1.40) (0.16)
	2011 $ 2010 $ (1,108,119) (126,962)
	(1,108,119) (126,962)
	2011 Number 2010 Number 76,993,688 76,993,688 - -
	76,993,688 76,993,688

(e) Information concerning the classification of securities

Options

Options on issue that are considered to be potential ordinary shares and have been included in the determination of diluted earnings per share to the extent to which they are dilutive. The options have not been included in the determination of basic earnings per share.

Superior Resources Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010

28. Related party transactions

(a) Transactions with related parties

The following transactions occurred with related parties:

Payments for office rent and administration services from other related parties (b) Outstanding balances arising from sales / purchases of goods and services The following balances are outstanding at the reporting date in relation to transactions with related parties: Current payables Other related parties 30. Employee benefits Employee entitlements Current – Payable (Note 15) Number of employees : 1 (2010: 1)	2011 $ 2010 $ 44,742 39,632
	4,949 7,658
	2011 $ 2010 $ 29,360 28,518

Payments for office rent and administration services from other related parties
(b) Outstanding balances arising from sales / purchases of goods and services
The following balances are outstanding at the reporting date in relation to transactions
with related parties:
Current payables
Other related parties
30. Employee benefits
Employee entitlements
Current – Payable (Note 15)
Number of employees : 1 (2010: 1)

2011
$
2010
$
44,742
39,632

4,949
7,658

2011
$
2010
$
29,360
28,518

31. Entity details

The registered office of the company is:

Level 2, 87 Wickham Terrace Spring Hill QLD 4000 Ph (07) 3839 5099

The principal place of business of the company is:

Level 2, 87 Wickham Terrac e Spring Hill QLD 4000 Ph (07) 3839 5099

Annual Report 2011

Directors’ Declaration

The Directors of the Company declare that:

the financial statements and notes set out on pages 35 to 61, are in accordance with the Corporations Act 2001; and
(a) comply with Accounting Standards; and
(b) give a true and fair view of the company's financial position as at 30 June 2011 and of its performance for the year ended on that date.
the Chief Executive Officer has declared that:
(a) the financial records of the Company for the financial year have been properly maintained in accordance with section 286 of the Corporations Act 2001;
(b) the financial statement and notes for the financial year comply with the Accounting Standards; and
(c) the financial statements and notes for the financial year give a true and fair view;
in the Directors' opinions there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

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

D J Horton

Chairman

Brisbane, 16 September 2011

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Independent Auditor’s Report to the members of Superior Resources Limited

Report on the Financial Report

We have audited the accompanying financial report of Superior Resources Limited (“the Company”) which comprises the statement of financial position as at 30 June 2011, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the Directors' declaration of the Company.

Directors' Responsibility for the Financial Report

The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the Directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

In Note 1, the Directors also state, in accordance with Accounting Standard AASB 101: Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards.

Auditor's Responsibility

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

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

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

Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001 .

Opinion

In our opinion:

a) the financial report of Superior Resources Limited is in accordance with the Corporations Act 2001 , including:
i. giving a true and fair view of the Company's financial position as at 30 June 2011 and of its performance for the year ended on that date; and
ii. complying with Australian Accounting Standards and the Corporations Regulations 2001 ; and
b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.

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Annual Report 2011

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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SUPERIOR RESOURCES LIMITED (continued)

Inherent Uncertainty regarding capitalised Exploration Expenditure

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

As a result of the matter described in Note 3 to the financial statements, there is uncertainty as to whether the company will be able to recover the carrying value of exploration expenditure for the amount recorded in the financial report. The ultimate recovery of the carrying value of exploration expenditure, and future exploration expenditure, is dependent upon the successful development and commercial exploitation or, alternatively, sale of the interest in the tenements.”

Report on the Remuneration Report

We have audited the Remuneration Report included in pages 17 to 19 of the Directors' Report for the year ended 30 June 2011. The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with Section 300A of the Corporations Act 2001 . Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

Opinion

In our opinion the Remuneration Report of Superior Resources Limited for the year ended 30 June 2011, complies with section 300A of the Corporations Act 2001 .

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Lawler Hacketts Audit

L J Murphy Partner

Brisbane, 16 September 2011

Superior Resources Limited

Shareholder Information

The information set out below was applicable at 5 September 2011.

A. DISTRIBUTION OF EQUITY SECURITIES

Analysis of numbers of equity security holders by size of holding:

Class of security - ordinary shares

Class of security - ordinary shares
Range	Number of holders
1 - 1,000	5
1,001 - 5,000	11
5,001 - 10,000	146
10,001 - 100,000	242
100,001 and over	71
	475

The number of holders holding less than a marketable parcel of 7,353 ordinary shares was 24 and they held 92,371 securities.

B. EQUITY SECURITY HOLDERS

Twenty largest equity security holders

The names of the twenty largest holders of equity securities are listed below:

Twenty largest equity security holders The names of the twenty largest holders of equity securities are listed below:
Name	Ordinary shares Number held Percentage of issued shares
Dr Leon Eugene Pretorius	9,000,000 11.69
Kenneth James Harvey & Elizabeth Ann Harvey	5,594,964 7.27
Terra Search Pty Ltd	3,125,000 4.06
Mrs Wenzhen Zhang	3,110,586 4.04
Miss Zhenteng Wang	3,000,000 3.90
Simon David Beams	2,866,668 3.72
Terry Taylor & Lynda Louise Taylor	2,833,336 3.68
Weir River Consulting Pty Ltd	2,300,002 2.99
Spills Australia Pty Ltd	1,666,668 2.16
David John Horton & Rosalind Denise Horton	1,575,000 2.05
Carlos Alberto Fernicola & Kerrie Alison Fernicola	1,525,000 1.98
Donald Cameron McIntosh	1,223,334 1.59
Locdale Pty Ltd	1,200,000 1.56
Busker's End Pty Limited	1,200,000 1.56
Mr Chris Gibson	1,200,000 1.56
Anthony John Fawdon & Rosemarie Monica Fawdon	1,100,002 1.43
Horton Family Super Pty Ltd	1,075,000 1.40
Palatine Holdings Pty Ltd	1,000,000 1.30
Deerwood Pty Ltd	1,000,000 1.30
Presenter Pty Ltd	1,000,000 1.30
Pinegold Pty Ltd	1,000,000 1.30
	47,595,560 61.82*

Total of Ordinary Shares on Issue 76,993,688

Annual Report 2011

Unquoted equity securities

There are no unlisted equity securities of Superior Resources Limited at the date of this report.

Holders of greater that 20% of the unquoted equity securities

There are no holders of unlisted equity securities of Superior Resources Limited at the date of this report.

C. SUBSTANTIAL HOLDERS

Substantial holders of the company’s securities are set out below:

Shareholder Leon Eugene Pretorius	Ordinary shares Number held Percentage of issued shares
	9,000,000 11.69
Simon David Beams	6,561,668 8.52
Kenneth James Harvey	5,594,964 7.27

D. VOTING RIGHTS

The voting rights attaching to each class of equity securities are set out below

(a) Ordinary shares

On a show of hands each member present at a meeting in person or by proxy shall have one vote and on a poll each share shall have one vote.

(b) Options

No voting rights.

Superior Resources Limited

Tenement Schedule

Current tenements held by Superior Resources Limited as at 6 September 2010. All tenements are located in Queensland. Exploration Permits for Minerals are held for all minerals other than coal. All tenements are held by Superior Resources Limited as the principal and sole holder with 100% unencumbered share.

Identification	Name	Date of Grant	Date of Expiry	Sub Blocks	Area
DAJARRA PROJECT
EPM15040 Sulieman Creek 28 March 2006 27 March 2011* 100 300 km² EPM15046 Smoky Creek 28 February 2006 27 February 2016 29 87 km² EPM15329 West Smoky 30 January 2007 29 January 2012 38 114 km² INCA PROJECT EPM16995 Little Sulieman Application 100 300 km² EPM17012 Wills Creek 29 April 2011 100 300 km² EPM18542 Duncans Creek Application 100 300 km² 28 April 2016
EPM15732 Inca Creek 2 25 September 2007 24 September 2012 50 150 km² EPM16027 Buckley River 100 300 km² NICHOLSON PROJECT 18 September 2013 19 September 2008 EPM18843 Wooroona Creek 240 720 km² Application
EPM15670 Hedleys 2 21 August 2006 20 August 2011* 62 186 km² VICTOR PROJECT EPM18203 Hedleys South Application 100 300 km²
EPM16028 Victor Creek 49 147 km² 16 September 2008 15 September 2013 UNDILLA PROJECT
Harris Creek Application 100 300 km² Tots Creek 118 354 km² Application Scrubby Creek 100 300 km² Application CASSIDY PROJECT EPM18840 EPM19097 EPM19214
EPM19247 Cassidy Creek 100 300 km² Application COCKIE PROJECT
EPM18987 Cockie Creek 100 300 km² Application ML6750 One Mile n/a 128 ha 1 November 1992 31 October 2012

Renewal lodged Abbreviations: EPM - Exploration Permit for Minerals ML - Mining Lease ha - hectare

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Superior Resources Limited ABN 72 112 844 407

Level 2, 87 Wickham Terrace Spring Hill, Queensland, 4000 Telephone: 07 3839 5099 Facsimile: 07 3832 5300 Email: [email protected]

www.superiorresources.com.au

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Superior Resources Limited

ABN 72 112 844 407

AI assistant

SUPERIOR RESOURCES LIMITED — Annual Report 2011

65848_rns_2011-09-19_be7b3dad-37b9-4540-859c-5867d9694f8b.pdf

Superior Resources Limited

Contents

Corporate Directory

Directors

Stock Exchange

Company

Share Registry

Auditor

Chairman’s Review 2011

Corporate Review

COMPANY BACKGROUND

CORPORATE PHILOSOPHY

Operations Report

INTRODUCTION

Proterozoic Copper and Lead-Zinc-Silver

Superior Resources Limited

Cambrian Phosphate

Proterozoic Gold

Palaeozoic Copper-Gold

Directors’ Report

Directors

Principal activities

Dividends

Review of operations

DIRECTORS’ REPORT (continued)

Significant changes in the state of affairs

Matters subsequent to the end of the financial year

Likely Developments and Expected Results from Operations

Environmental regulation

DIRECTORS’ REPORT (continued)

Information on Directors

Experience and expertise

Other current directorships

Former directorships in last 3 years

Special responsibilities

Interests in shares and options

Experience and expertise

Other current directorships

Former directorships in last 3 years

Special responsibilities

Interests in shares and options

DIRECTORS’ REPORT (continued)

Experience and expertise

Other current directorships

Former directorships in last 3 years

Special responsibilities

Interests in shares and options

Company Secretary

Meetings of Directors

DIRECTORS’ REPORT (continued)

Remuneration report

Directors and executives disclosed in this report

Principles used to determine the nature and amount of remuneration

Non-executive directors

Directors' fees

Executive pay

B Details of remuneration

Amounts of remuneration

DIRECTORS’ REPORT (continued)

Key management personnel of Superior Resources Limited

DIRECTORS’ REPORT (continued)

Service agreements

K J Harvey, Managing Director

Share-based compensation

Shares under option

Insurance of officers

Proceedings on behalf of the company

Auditor

Non-audit services

DIRECTORS’ REPORT (continued)

Non-audit services (continued)

Auditor's independence declaration

D J Horton

Auditor's Independence Declaration under Section 307C of the Corporations Act 2001 to the Directors of Superior Resources Limited

Lawler Hacketts Audit

Corporate Governance Statement

CORPORATE GOVERNANCE STATEMENT (continued)

SUPERIOR RESOURCES LIMITED Annual Report 2011