TITANIUM SANDS LIMITED — Annual Report 2007

Sep 26, 2007

27 September 2007 ABN 65 009 131 533

Company Announcements Office Australian Stock Exchange Limited Exchange Plaza Sherwood Court PERTH WA 6000

Dear Sir / Madam

Annual Financial Statements for Year Ended 30 June 2007

Please find attached the audited Annual Financial Statements of Precious Metals Australia Limited and its controlled entities for the year ended 30 June 2007.

Yours faithfully PRECIOUS METALS AUSTRALIA LIMITED

MATTHEW LILLY Company Secretary

Level 4, 76 Kings Park Road West Perth Western Australia 6005 PO Box 620 West Perth Western Australia 6872 Telephone: +61 8 9423 1900 Facsimile: +61 8 9423 1999

ABN 65 009 131 533

PRECIOUS METALS AUSTRALIA LIMITED AND ITS CONTROLLED ENTITIES

Annual Financial Statements For the year ended 30 June 2007

Contents

		Page
•	Directors' report	3 - 25
•	Income statements	26
•	Statements of recognised income and expense	27
•	Balance sheets	28
•	Statements of cash flows	29
•	Notes to the consolidated financial statements	30 – 57
•	Directors' declaration	58
•	Audit report	59 – 60
•	Lead auditor's independence declaration	61

For the year ended 30 June 2007

The directors present their report together with the financial report of Precious Metals Australia Limited ('the Company') and of the consolidated entity, being the Company and its subsidiaries, for the financial year ended 30 June 2007 and the auditor's report thereon.

	Contents of directors' report	Page
1. Directors		4
	2. Company secretary	6
	3. Officers who were previously partners of the audit firm	6
	4. Directors' meetings	6
	5. Corporate governance statement	7
	5.1 Explanations for departures from Best Practice Recommendations	7
	5.2 Term of office of each director	9
5.3	Identification of independent directors	9
	5.4 Statement concerning availability of independent professional advice	9
	5.5 Board of directors	9
	5.6 Board processes	9
	5.7 Remuneration committee	10
	5.8 Audit committee	10
	5.9 Project expenditure committee	10
	5.10 Environmental committee	10
	5.11 Remuneration report	10 – 19
	5.12 Environmental regulation	19
	5.13 Ethical Standards	19 - 20
	5.14 Communication with shareholders	20
	6. Principal activities	20
	7. Operating and financial review	20 – 21
8. Dividends		22
	9. Events subsequent to reporting date	22
	10. Likely developments	22
	11. Directors' interests	22
	12. Share options	22 – 24
	13. Indemnification and insurance of officers and auditors	24
	14. Non-audit services	25
	15. Lead auditor's independence declaration	25

For the year ended 30 June 2007

1. Directors
	The directors of the Company at any time during or since the end of the financial year are:
Name,	Experience, special responsibilities and other directorships
Qualifications
Michael Kiernan B.Bus Chairman	Appointed as a Non-Executive Director on 7 August 2006 and Chairman on 19 April 2007. Mr Kiernan has more than 30 years experience in transport, mining, contracting and resources industries, including the development and operation of mining projects.
Non-Executive Director	He has a track record in management and leadership of resources based business having held executive positions with Australia's major mining and transport contractors. He holds current positions with Territory Resources Limited (carbon steel commodity supplier), Monarch Gold Mining Company Limited (gold developer), Mineral Resources Limited (contracting group), India Resources Limited (copper, diamonds and coal) and Director Matilda Minerals Limited (mineral sands). He was founding Managing Director of the diversified minerals producer Consolidated Minerals.
	Mr Kiernan has become a known and respected identity within the resources industry, both in Australia and internationally and attributes to having "started at the bottom". He began his career in the transport industry as a management cadet and has since worked at all levels.
Iain Scott PhD Min. Processing B.Sc Met (Hons) Managing Director and Executive Director	Appointed as an Executive Director on 19 April 2007 and appointed as Managing Director on 20 June 2007. Dr Scott holds a PhD in Mineral Processing and first class honours degree in metallurgy. A highly credentialed mining executive with over 25 years experience in the minerals processing industry. Dr Scott is the former General Manager of Operations for copper, gold and bulk commodities producer, Straits Resources Ltd.
Roderick Smith B.Comm, CA, FSIA Non-Executive Director	Mr Smith was Managing Director of the Company from 1985 to 2000 and 6 April 2004 to 20 June 2007. Mr Smith graduated from the University of Western Australia with a Bachelor of Commerce in 1977. He is a Chartered Accountant and a fellow of the Financial Services Institute of Australasia. He holds a Diploma in Mining Investment Analysis and has studied geology. Mr Smith has been involved at board level with several listed public companies, and has been instrumental in the development of four mines in Western Australia. Mr Smith holds no other public company directorships.
Earl of Warwick Non-Executive Director	Appointed as a Non-Executive Director on 14 May 1991. The Earl of Warwick has wide management and property experience in Australia and overseas. Formerly with Selection Trust, a company established by his family. After four years as Chairman the Earl handed over the position to Mr Grey on 1 December 2005. The Earl has not held any other public company directorships over the past three years.
Ricardo Leiman Non-Executive Director	Appointed as a Non-Executive Director on 3 November 2006. Mr Leiman holds Masters of Business Administration from the University of Rochester NY, USA and the University of Nyenrode, the Netherlands as well as an Economics degree from the University of Sao Paulo, Brazil. He started his career with Credit Lyonnais Bank in Brazil followed by management positions with Louis Dreyfus in Brazil, Eximcoop in the Netherlands and Trader Classified Media in London and Paris. In 2002 he rejoined Louis Dreyfus as COO North America, EMEA (Europe, Middle East, Africa) and Asia, later

becoming COO Soft Commodities. Ricardo joined Noble in April 2006.

For the year ended 30 June 2007

Wolf Martinick PhD, BSc Agric Non-Executive	Appointed as a Non-Executive Director on 22 December 2007. Dr Martinick is an environmental scientist with more than 35 years experience in the resources industry and has been involved with mineral exploration and mining projects around the world.
Director	Dr Martinick is Chairman of Weatherly International Limited, an AIM listed mining group with extensive copper mining and smelting interests in Namibia, Executive Chairman of Ezenet Limited, and a Director of Uran Limited.
Andrew Simpson Grad. Dip. Bus (Curtin), MAICD Non-Executive Director	Appointed as a Non-Executive Director on 20 June 2007. Mr Simpson holds a Graduate Diploma in Business and Administration (majoring in Marketing and Finance) from Curtin University and is currently the Managing Director of Resources and Technology Marketing Services Pty Ltd (RTM) in Perth. Mr Simpson is non-executive Chairman of Swick Mining Services and non-executive Director of Wintech International, ABM Resources Limited, India Resources Limited, Vital Metals Limited, Crawley Resources Ltd and Territory Resources Limited. He is a member of the Australian Institute of Company Directors.
Shaun Bunn MSc (Ext Met), Grad Dip Met), MBA Director of Operations Executive Director	Appointed as Director of Operations on 3 February 2006. Mr Bunn has extensive experience in gold and base metal exploration, mining, processing and project development. Familiar with dealing with both State and local government bodies, having represented the community as a shire councillor. Substantial international business exposure, having co-founded a mining company on the London Alternative Investment Market (AIM), and established a new mining venture in North Africa. Mr Bunn also brings recent experience in capital raising, investor relations and marketing. Mr Bunn was a director of GMA Resources plc from 2003 to 2006, a company listed on AIM. Mr Bunn resigned from GMA on 1 February 2006. Resigned as Director on 22 August 2007.
Anthony Grey B.A. Hist (Hons), Juris Doctor Non-Executive Director and Chairman	Appointed as a Non-Executive Director and Chairman on 1 December 2005. Mr Grey graduated with a B.A. in History (Hons) and then a Juris Doctor from the University of Toronto. Thereafter, he practised law with a major law firm, McCarthy Tetrault in Toronto for seven years. He emigrated to Australia in 1972 and founded and built Pancontinental Mining Limited into a publicly listed major diversified mining house with interest in gold, base metals, coal, industrial minerals and uranium, before exiting in1992. Mr Grey has also held roles as Chairman of Kingsgate Consolidated, a gold producing company listed on the ASX, and Polartechnics Limited, an ASX listed biomedical company. Mr Grey has written two books and numerous articles about the mining industry. Resigned as Director and Chairman on 19 April 2007
Michael Fry B. Comm, FSIA Non-Executive Director	Appointed as a Non-Executive Director on 3 March 2004. Mr Fry has extensive experience in capital markets and corporate treasury management. Mr Fry holds a Bachelor of Commerce degree from the University of Western Australia, is a Fellow of the Financial Institute of Australasia and a past member of the Australian Stock Exchange. Resigned as a Director on 20 June 2007.

For the year ended 30 June 2007

2. Company secretary

Mr Matthew Lilly, LLB was appointed to the position of company secretary on 27 February 2006. Mr Lilly gained his legal training post graduation at Parker & Parker and served seven years at Alcoa as corporate solicitor and company secretary. The last three years he served a privately owned group as Commercial Manager and Company Secretary with a wide range of responsibilities including legal counsel, compliance with banking covenants, insurance management, corporate affairs, strategy, business restructure, business acquisition and divestment.

3. Officers who were previously partners of the audit firm

No officer of the Company has held a position of partner of the current audit firm, KPMG, at a time when KPMG undertook an audit of the Company.

4. Directors' meeting

The number of directors' meetings (including meetings of committees of directors) and number of meetings attended by each of the directors of the Company during the financial year are:

Director	Board Meetings			Audit Committee Meetings		Remuneration Committee Meetings		Project Expenditure Committee
	A	B	A	B	A	B	A	B
Anthony Grey	11	11	2	2	1	1	-	-
Earl of Warwick	11	13	-	-	1	1	-	-
Michael Fry	11	12	1	2	1	1	-	-
Roderick Smith	13	13	-	-	-	-	4	4
Shaun Bunn	13	13	-	-	-	-	4	4
Michael Kiernan	10	11	1	1	-	-	4	4
Ricardo Leiman	7	9	-	-	-	-	-	-
Wolf Martinick	4	6	-	-	-	-	-	-
Iain Scott	2	2	-	-	-	-	-	-
Andrew Simpson	0	1	-	-	-	-	-	-

A – Number of meetings attended

B – Number of meetings held during the time the director held office during the year

For the year ended 30 June 2007

5. Corporate governance statement

The consolidated entity has adopted systems of control and accountability as the basis for the administration of Corporate Governance. Some of these policies and procedures are summarised below.

5.1 Explanations for departures from Best Practice Recommendations

During the reporting period the consolidated entity has complied with each of the Ten Essential Corporate Governance Principles and the corresponding Best Practice Recommendations, other than in relation to the matters specified below.

Principle Ref	BPR Ref	Notification of Departure	Explanation for Departure
2	2.1	A majority of the Board are Non-Executive directors but a majority are not independent. Mr M Kiernan, The Earl of Warwick, Dr W Martinick and Mr A Simpson are considered to be independent. During the financial year Mr A Grey (resigned 19 April 2007) and Mr M Fry (resigned 20 June 2007) were also independent directors	The structure of the Board during the reporting period was considered appropriate given the position and activities of the consolidated entity. The company will continue to assess the structure and composition of the Board as the business continues to evolve. As at the date of this report a majority of the Board are independent directors.
2	2.4	There is no nomination committee	The duties usually performed by a nomination committee are carried out by the full board.
3	3.1 and 3.2	There is no written code of conduct or written policy concerning the trade of company securities	A draft written code of conduct and draft written policy concerning the trade of company securities is being prepared by management.
			The primary focus of the board is the re-construction of the Windimurra mine. Once the re-construction has

commenced the board will be in a position to review the draft code and policy prepared by management.

	For the year ended 30 June 2007

4	4.4	The audit committee does not have a charter.	The primary focus of the board is the re-construction of the Windimurra mine. Once the re-construction has commenced the board and the audit committee will be in a position to finalise an audit committee charter.
5	5.1	There are no written procedures to ensure ASX Listing Rule compliance.	The company has well understood processes to ensure ASX Listing Rule compliance, they are not however in the form of written policies.
			The company appointed its first Legal Counsel, Mr M Lilly, during the financial year to, inter alia, enhance such compliance.
			The primary focus of the board is the re-construction of the Windimurra mine. Once the re-construction has commenced the board will be in a position to determine whether the company should adopt such written procedures.
9	9.1	The remuneration committee does not have a charter.	The primary focus of the board is the re-construction of the Windimurra mine. Once the re-construction has commenced the board and the remuneration committee will be in a position to finalise a remuneration committee charter.
10	10.1	There is no written code of conduct to guide compliance with legal and other obligations to legitimate stakeholders.	The company has well understood processes to ensure compliance with legal and other obligations to legitimate stakeholders, they are not however in the form of a written code
			The company appointed its first Legal Counsel, Mr M Lilly, during the financial year to, inter alia, enhance such compliance.
			The primary focus of the board is the re-construction of the Windimurra mine. Once the re-construction has commenced the board will be in a position to determine whether the company should adopt such a written code of conduct.

5.2 Term of office of each director

Directors Name	Date of Appointment	Date of Resignation
The Earl of Warwick	14 May 1991	A current director
Michael Fry	3 March 2004	20 June 2007
Roderick Smith	6 April 2004	A current director
Anthony Grey	1 December 2005	19 April 2007
Shaun Bunn	3 February 2006	22 August 2007
Michael Kiernan	7 August 2006	A current director
Ricardo Leiman	3 November 2006	A current director
Wolf Martinick	22 December 2006	A current director
Iain Scott	19 April 2007	A current director
Andrew Simpson	20 June 2007	A current director

5.3 Identification of independent directors

The independent directors of the Company are Mr Michael Kiernan, The Earl of Warwick, Dr Wolf Martinick and Mr Andrew Simpson. Mr Anthony Grey (resigned 19 April 2007) and Mr Michael Fry (resigned 20 June 2007) were deemed independent directors during their terms. Mr Roderick Smith is not considered independent as he is the Company's former Managing Director. Mr Ricardo Leiman is not considered independent as he is a senior executive of a major contracting party. Dr Iain Scott is an executive of the Company and is therefore not independent. Mr Shaun Bunn (resigned 22 August) was an executive of the Company and was therefore not independent during his term.

5.4 Statement concerning availability of independent professional advice

If a director considers it necessary to obtain independent professional advice to properly discharge the responsibility of his office as a director then, provided the director first obtains approval for incurring such expense form the Chairman, the Company will pay the reasonable expenses associated with obtaining such advice.

5.5 Board of directors

The board's primary role is the protection and enhancement of long-term shareholder value.

To fulfil this role, the board is responsible for the overall corporate governance of the Consolidated entity including formulating its strategic direction, approving and monitoring capital expenditure, setting remuneration, appointing, removing and creating succession policies for directors and senior executives, establishing and monitoring the achievement of management's goals and ensuring the integrity of internal control and management information systems.

It is also responsible for approving and monitoring financial and other reporting.

5.6 Board processes

To assist in the execution of its responsibilities, the board has established a number of board committees including a remuneration committee, an audit committee, a project expenditure committee and an environmental committee. The board has also established a framework for the management of the Consolidated entity including a system of internal control, a business risk management process and the establishment of appropriate ethical standards, including a visions and values statement which sets the framework for all of its dealings.

The full board regularly holds scheduled meetings during the year, plus strategy meetings and any extraordinary meetings at such other times as may be necessary to address any specific significant matters that may arise. The agenda for meetings is prepared in conjunction with the chairperson, managing director and company secretary. Submissions are circulated in advance. Executives are regularly involved in board discussions and directors have other opportunities, including visits to business operations, for contact with a wider group of employees.

For the year ended 30 June 2007

5.7 Remuneration committee

The remuneration committee reviews and makes recommendations to the board on remuneration packages and policies applicable to the executive officers and directors themselves of the consolidated entity. Subject to approval from the full board and where applicable the shareholders, the remuneration committee are responsible for share option schemes. It is also responsible for incentive performance packages, superannuation entitlements, fringe benefits policies and professional indemnity and liability insurance policies.

The members of the remuneration committee during the year were:

• Mr A Grey Independent Non-Executive Director (Resigned as a director on 19 April 2007)
• Mr M Fry Independent Non-Executive Director (Resigned as a director on 20 June 2007)
• Earl of Warwick Independent Non-Executive Director
• Mr M Kiernan Independent Non-Executive Director

The remuneration committee comprises only of non-executive directors. The Managing Director and Chief Financial Officer are invited to remuneration committee meetings, as required, to discuss senior executives' performance and remuneration packages but do not attend meetings involving matters pertaining to them.

The remuneration committee currently meets as required. The committee met one time during the financial year and committee members' attendance record is disclosed in the table of directors' meetings on page 6.

5.8 Audit committee

The members of the audit committee during the year were:

• Mr A Simpson Independent Non-Executive Director
• Mr M Kiernan Independent Non-Executive Director
• Mr R Smith Non-Executive Director
• Mr A Grey Independent Non-Executive Director (Resigned as a director on 19 April 2007)

The audit committee currently meets as required. The committee met twice during the financial year and committee members' attendance record is disclosed in the table of directors' meetings on page 6.

5.9 Project expenditure committee

The members of the project expenditure committee during the year were:

• Mr R Smith Non-Executive Director
• Mr M Kiernan Independent Non-Executive Director
• Mr S Bunn Executive Director (Resigned as a director on 22 August 2007)

The project expenditure committee currently meets as required. The committee met four times during the financial year and committee members' attendance record is disclosed in the table of directors meetings on page 6.

5.10 Environmental committee

The environmental committee was established in July 2007. The environmental committee reviews and makes recommendations to the board on environmental issues and policies.

The members of the environmental committee during the year were:

• Dr W Martinick Independent Non-Executive Director
• Dr I Scott Executive Director
• Mr S Bunn Executive Director (Resigned as a director on 22 August 2007)

The environmental committee currently meets as required.

5.11 Remuneration report

.

5.11.1 Principles of compensation – audited

Remuneration is referred to as compensation throughout this report.

Precious Metals Australia Limited and its controlled entities

Directors' report (continued)

For the year ended 30 June 2007

5.11 Remuneration report (continued)

5.11.1 Principles of compensation – audited (continued)

Key management personnel have authority and responsibility for planning, directing and controlling the activities of the Company and the consolidated entity, including directors of the Company and other executives. Key management personnel includes the five most highly remunerated S300A directors and executives for the Company and the consolidated entity.

Compensation levels for key management personnel and secretaries of the Company, and relevant key management personnel of the consolidated entity are competitively set to attract and retain appropriately qualified and experienced directors and executives. Where required the remuneration committee obtains independent advice on the appropriateness of compensation packages of both the Company and consolidated entity given trends in comparative companies both locally and internationally and the objectives of the Company's compensation strategy.

The compensation structures explained below are designed to attract suitably qualified candidates, reward the achievement of strategic objectives, and achieve the broader outcome of creation of value for shareholders. The compensation structures take into account:

• the capability and experience of the key management personnel;
• the key management personnel's ability to control the relevant segment/s' performance;
• the consolidated entity's performance ; and
• the amount of incentives within each key management person's compensation.

Compensation packages include a mix of fixed and variable compensation and short-term and long-term performance-based incentives. In addition to their salaries, the consolidated entity also provides non-cash benefits to its key management personnel, and contributes to a post-employment defined benefit superannuation plan on their behalf.

Fixed compensation

Fixed compensation consists of base compensation (which is calculated on a total cost basis and includes any FBT charges related to employee benefits including motor vehicles), as well as employer contributions to superannuation funds.

Compensation levels are reviewed at least annually by the remuneration committee through a process that considers individual, segment and overall performance of the consolidated entity. Where necessary, external consultants provide analysis and advice to ensure the directors' and senior executives' compensation is competitive in the market place. A senior executive's compensation is also reviewed on promotion.

Performance-linked compensation

Other short-term incentive bonuses or cash bonuses are determined by the Remuneration Committee and approved by the Board. Bonuses are based on the individual's performance, which is based on agreed individual performance hurdles and/or performance indicators, as well as the performance or outcomes achieved by the consolidated entity. During the 2007 financial year, the Director of Operations, Mr Shaun Bunn was entitled to a cash bonus of up to 50% of the Base Salary at the conclusion of 12 months service. Mr Bunn was paid a bonus of \$80,000 as a performance bonus for the year.

Other benefits

Key management personnel can receive additional benefits as non-cash benefits, as part of the terms and conditions of their appointment. Non-cash benefits typically include payment of school fees, club memberships, costs of spouses accompanying them on business trips, car parking and motor vehicles, and the Company pays fringe benefits tax on these benefits.

The company has not established a policy for lending of funds to key management personnel. No loans were made during the current or prior financial periods and no loans are currently outstanding.

Non-executive directors

Mr Michael Fry, Dr Wolf Martinick and Mr Andrew Simpson, as non-executive directors, received a fixed director's fee of \$35,000 each per annum. Mr Fry resigned on 20 June 2007 and was paid only for the period he was a director. He received no retirement or termination benefits.

Mr Roderick Smith resigned as an executive director on 20 June 2007, and having regard to the 18 years of service to the company and in recognition of his outstanding personal efforts on the company's behalf, the Board approved the payment of a retirement benefit in the sum of \$1 million. During the period that Mr Smith was an executive director, a salary sacrifice arrangement was entered into with the company for part of the remuneration package to be payable as superannuation benefits. Mr Smith remains as non-executive director, and receives a fixed director's fee of \$35,000 per annum.

The Earl of Warwick's employment conditions are formalised in contracts of employment to which he is entitled to \$100,000 per year in fees. The Earl is employed under a fixed three year contract which expires on 30 April 2008. The contract can be terminated with three months notice from either party, however, if the Company terminates the contract prior to the three years expiring it is liable for the fees that would have been paid on the unexpired term of the contract.

Mr Anthony Grey, the previous Chairman and a non-executive director was entitled to receive a directors' fee of \$75,000 per annum. Mr Grey resigned on 19 April 2007. Mr Grey was given 3 months' directors fees and the early vesting of remaining options as a retirement benefit.

Mr Michael Kiernan, a non-executive director was appointed Chairman on 19 April 2007 and is entitled to receive a directors' fee of \$75,000 per annum.

Ricardo Leiman, a non-executive director, receives no directors' fees.

For the year ended 30 June 2007

5.11 Remuneration report (continued)

5.11.2 Directors' and executive officers' remuneration (Company and Consolidated) - audited

Details of the nature and amount of each major element of remuneration of each director of the Company and each of the five named Company executives, relevant group executives who receive the highest remuneration and other key management personnel are:

					Sh ort- term	Pos t loy nt em p me	Oth er lon term g		Sha ed pay bas re- nts me		S3 ( 1) (e ) ( i) 00A Pro tion of por	S3 00A ( 1) (e ) (v i) Val ue
D ire tor c s		Sa lary & fee s \$	ST I ca sh bon us \$( A)	No n net mo ary ben efit s \$	al S Tot hor t term	Sup er uat ion ann ben efit s \$	\$	Ter min atio n efit ben s	Op nd rig tion s a hts ( B) \$	Tot al \$	rati rem une on form per anc e rela ted %	of o tion p s a s tion of pro por rati rem une on %
No ive d ire t tor n- ex ec c s u
Mr Mic hae l Ki Ch airp (ap inte d ern an, ers on po
7 A st 2 006 No n-E utiv e D irec tor, ugu xec ,
oin ted Ch airp Ap ril 2 ) 19 007 app ers on,	200 7	32, 729	-	-	32, 729	2,9 46	-	-	430 ,15 5	465 ,83 0	-	92%
Mr An tho Gre (res ign ed 19 A il) ny y pr	200 7	66, 250	-	-	66, 250	-	-	27, 500	167 ,25 7	26 1,0 07	-	64%
(ap d C 05) inte hai n 1 De ber 20 po rpe rso cem	200 6	43, 750	-	-	43, 750	-	-	-	-	43, 750	-	-
The Ea rl o f W ick, No n-E utiv arw xec e
Dir ect or	200 7	100 ,00 0	-	-	100 ,00 0	9,0 00	-	-	-	109 ,00 0	-	-
	200 6	99, 996	-	-	99, 996	9,0 00	-	-	-	108 ,99 6	-	-
Mr Mic hae l Fr No n-E utiv e D irec tor y, xec
(res ign ed Jun ) 20 e 2 007	200 7	25, 024	-	-	25, 024	2,2 52	-	-	-	27, 276	-	-
	200 6	15, 000	-	-	15, 000	1,3 50	-	-	-	16, 350	-	-
Mr Ric ard o L eim No n-E utiv e D irec tor an, xec
(ap inte d 3 No ber 06) 20 po vem	200 7	-	-	-	-	-	-	-	-	-	-	-
Dr Wo lf M arti nic k, No n-E utiv e D irec tor xec
(ap inte d 2 2 D mb ) er 2 006 po ece	200 7	-	-	-	-	18, 443	-	-	-	18, 443	-	-
Mr An dre w S imp No n-E utiv son xec e ,
Dir or ( oin ted Ju 7) ect 20 200 app ne	200 7	-	-	-	-	-	-	-	-	-	-	-
Mr Ian Ma her (re sig ned 3 F ebr cp son uar y
6) 200	200 6	8,7 50	-	-	8,7 50	-	-	-	-	8,7 50	-	-

			Sh	ort- term		Pos t loy nt em p me	Oth er lon term g		Sha ed pay bas re- nts me		S3 00A ( 1) (e ) ( i) Pro tion of por	S3 00A ( 1) (e ) (v i) Val ue
		Sa lary & fee s \$	ST I ca sh bon us \$( A)	No n net mo ary ben efit s \$	Tot al S hor t term	Sup er ion uat ann ben efit s \$	\$	Ter min atio n ben efit s	Op nd rig tion s a hts ( B) \$	Tot al \$	rati rem une on form per anc e rela ted %	of o tion p s a s of tion pro por rati rem une on %
D ire tor c s ive ire Ex D
t tor ec u c s
Dr Iain Sc Ma ing Di (ap inte d ott, tor nag rec po (1) Jun 20 e 2 007	200 7			25 1	25 1	731			158	133 0		46%
) Mr Ro der ick Sm for r M		-	-			71,	-	-	61,	,14	-
ith, ing me ana g Dir or & Ex tive Di ed ect tor 20
(res ign ecu rec Jun e 2 007 ins a N Exe ive cut
) re ma on- Dir ect or	200 7	100 ,01 8		1,5 05	101 ,52 3	567 ,84 8		1,0 00, 000		1,6 69, 37 1
	200 6	316 ,66 5	-	1,3 49	318 ,01 4	28, 500	-		-	346 ,51 4	-	-
Mr Sha Bu Di of O atio tor un rec ns			-				-	-	-		-	-
nn, per (ap inte d 3 Fe bru sig ned 20 06, 22 po ary re
07) Au t 20 gus	200 7	22 1,6 67	80, 000	1,5 05	303 ,17 2	19, 950	-	-	167 ,04 5	490 ,16 7	-	34%
	200 6	66, 667	-	127	66, 794	6,0 00	-	-	-	72, 794	-	-
Ex ive t ec u s
Mr Ga Ko Ch ief Fin ial Off ice rte, rry anc r
(ap inte d 2 2 F ebr 200 7) po uar y	200 7	70, 513	-	627	71, 140	6,3 46	-	-	47, 196	124 ,68 2	-	38%
Mr Mic hae l Ta mli Ge al M n, ner ana ger
Ma rke ting Win dim Va nad ium Pt Ltd urra y ,
(ap inte d 5 Ju 200 6) po ne	200 7	200 ,00 0	-	10, 048	210 ,04 8	18, 000	-	-	272 ,98 5	50 1,0 33	-	54%
	200 6	15, 128	-		15, 128	1,3 62	-	-	-	16, 490	-	-
Co Se Mr Ma tthe w L illy, tary mp any cre
(ap inte d 1 9 F ebr 200 7) po uar y	200 7	65, 354	-	627	65, 98 1	6,5 53	-	-	43, 076	115 ,61 0	-	37%
l C Mr Les Fo rd, Pri nci ulta nt, pa ons
Win dim Va nad ium Pt Ltd (ap inte d urra y po
6) 10 Jul 200 y	200 7	190 ,94 9	-	-	190 ,94 9	12, 325	-	-	186 ,25 0	389 ,52 4	-	48%
Fo Ex ive t rm er ec s u
Mr Mic hae l D Ch ief Fin ial Off ice rew anc r ,
(ap inte d 2 9 A st 2 005 sig ned 2 po ugu , re
Ma rch 20 07)	200 7	127 ,51 8	-	1,0 03	128 ,52 1	28, 209	-	-	-	156 ,73 0	-	-
	200 6	127 ,10 5	-	152	127 ,25 7	10, 450	-	-	219 ,76 0	357 ,46 7	-	61%
Op Mr Bre tt F ost Ma tion er, nag er era s
(ap inte d 1 5 A st 2 005 sig ned 8 po ugu , re
) Jun e 2 006	200 6	97, 882	-	966	98, 848	8,8 09	-	-	208 ,96 9	316 ,62 6	-	66%
Tot al c ion : ke sat ent om pen y m ana gem
nel (co d c olid d) ate per son mp any an ons	200 7 200 6	1, 200 022 , 790 943	80, 000	15, 566 594	1, 295 588 , 793 537	763 603 , 47 1	-	1, 027 500 ,	1, 375 122 , 428 729	4, 46 1, 813 28 737	-	-
		,	-	2,	,	65,	-	-	,	1, 7,	-	-

(1) Remuneration paid to Dr I Scott relates to the period of service commencing 7 May 07 to 30 June 07. Dr Scott was appointed managing director on 20 June 2007, and is entitled to an annual base salary of \$435,000 plus statutory superannuation, and a cash bonus of up to 20% of the base salary at the conclusion of 12 months service based on a reasonable measure of performance, determined at the discretion of the Board.

5.11 Remuneration report (continued)

Notes in relation to the table of directors' and executive officers remuneration - audited

• A. During the 2007 financial year, the Director of Operations, Mr Shaun Bunn was entitled to a cash bonus up to 50% of the base salary at the conclusion of 12 months service. Mr Bunn was paid a bonus of \$80,000 as a performance bonus for the year.
• B. The fair value of the options is calculated at the date of grant using the Black-Scholes option-pricing model and allocated to the reporting period in which they were granted. The options issued under the Executive and Employee share option plan are exercisable at any time from grant date until expiration of the options. In valuing the options, market conditions have been taken into account.

The following factors and assumptions were used in determining the fair value of options on grant date:

							Probability of
Grant Date	Expiry Date	Fair value per option	Exercise price	Price of shares on grant date	Expected volatility1	Risk free interest rate	early exercise of options	Dividend yield
01-Jul-06	03 Sep 2009	\$0.66	\$2.60	\$1.75	50.0%	5.75%	10.0%	-
01-Jul-06	03 Dec 2009	\$0.65	\$2.80	\$1.75	50.0%	5.75%	10.0%	-
01-Jul-06	03 Mar 2010	\$0.63	\$3.00	\$1.75	50.0%	5.75%	10.0%	-
01-Jul-06	03 Jun 2010	\$0.61	\$3.30	\$1.75	50.0%	5.75%	10.0%	-
01-Jul-06	26 Sep 2011	\$0.77	\$1.50	\$1.75	50.0%	5.50%	10.0%	-
01-Jul-06	26 Sep 2011	\$0.77	\$1.50	\$1.75	50.0%	5.50%	10.0%	-
01-Jul-06	30 Nov 2011	\$0.78	\$1.50	\$1.75	50.0%	5.50%	10.0%	-
01-Jul-06	17 Jun 2007	\$0.39	\$1.50	\$1.75	50.0%	5.50%	10.0%	-
01-Jul-06	28 Aug 2011	\$0.23	\$2.00	\$1.75	50.0%	5.50%	10.0%	-
01-Jul-06	26 Sep 2009	\$0.69	\$1.50	\$1.75	50.0%	5.50%	60.0%	-
01-Jul-06	26 Sep 2009	\$0.65	\$1.70	\$1.75	50.0%	5.50%	50.0%	-
01-Jul-06	30 Nov 2009	\$0.56	\$1.95	\$1.75	50.0%	5.50%	50.0%	-
01-Jul-06	28 Feb 2010	\$0.67	\$2.20	\$1.75	50.0%	5.50%	20.0%	-
10-Jul-06	13 Sep 2009	\$0.47	\$2.60	\$1.80	50.0%	5.75%	10.0%	-
10-Jul-06	13 Jan 2010	\$0.47	\$2.80	\$1.80	50.0%	5.75%	10.0%	-
10-Jul-06	13 May 2010	\$0.47	\$3.00	\$1.80	50.0%	5.75%	10.0%	-
10-Jul-06	13 Sep 2010	\$0.46	\$3.30	\$1.80	50.0%	5.75%	10.0%	-
07-Aug-06	26 Sep 2011	\$0.81	\$2.20	\$2.00	50.0%	6.00%	30.0%	-
07-Aug-06	26 Mar 2012	\$0.91	\$2.20	\$2.00	50.0%	6.00%	20.0%	-
19-Feb-07	18 Feb 2011	\$0.65	\$2.60	\$1.91	50.0%	6.25%	10.0%	-
19-Feb-07	18 Feb 2012	\$0.62	\$3.30	\$1.91	50.0%	6.25%	10.0%	-
22-Feb-07	20 Feb 2011	\$0.73	\$2.60	\$2.03	50.0%	6.25%	10.0%	-
22-Feb-07	20 Feb 2012	\$0.70	\$3.30	\$2.03	50.0%	6.25%	10.0%	-
07-May-07 07-May-07	06 May 2013 06 May 2014	\$1.08 \$1.16	\$2.20 \$2.20	\$2.08 \$2.08	50.0% 50.0%	6.25% 6.25%	10.0% 10.0%	- -

1 Expected volatilities are based on the share price performance of the Company from 9 August 2005, being the date the agreement with Xstrata was finalised. Management believe this period of time is the most appropriate given the change in the activities of the business, which are now focussed on the re-development of the Windimurra mine.

5.11.3 Equity instruments

All options refer to options over ordinary shares of Precious Metals Australia Limited, which are exercisable on a one-forone basis under the Executive and Employee Share Option Plan.

5.11.3.1 Options and rights over equity instruments granted as compensation – audited

Details on options over ordinary shares in the Company that were granted as compensation to each key management person during the reporting period and details on options that were vested during the reporting period are as follows:

			Number
			of options
			vested
	Number of		during
	options granted		the	Fair value per
	during financial		financial	option at	Exercise price
	year	Grant date	year	grant date	per option	Expiry date
2007
Directors
Mr M Kiernan	250,000 250,000	07 Aug 2006 07 Aug 2006	250,000 250,000	\$0.81 \$0.91	\$2.20 \$2.20	26 Sep 2011 26 Mar 2012
Dr I Scott	250,000	07 May 2007	-	\$1.08	\$2.20	06 May 2013
	250,000	07 May 2007	-	\$1.16	\$2.20	06 May 2014
Mr A Grey	162,500	01 Jul 2006	162,500	\$0.77	\$1.50	26 Sep 2011
	162,500	01 Jul 2006	162,500	\$0.77	\$1.50	26 Sep 2011
	162,500	01 Jul 2006	162,500	\$0.78	\$1.50	30 Nov 2011
	162,500	01 Jul 2006	162,500	\$0.39	\$1.50	17 Jun 2007
Mr S Bunn	125,000	01 Jul 2006	125,000	\$0.69	\$1.50	26 Sep 2009
	125,000	01 Jul 2006	125,000	\$0.65	\$1.70	26 Sep 2009
	125,000	01 Jul 2006	125,000	\$0.56	\$1.95	30 Nov 2009
	125,000	01 Jul 2006	125,000	\$0.67	\$2.20	28 Feb2010
Executives
Mr L Ford	100,000	10 Jul 2006	100,000	\$0.47	\$2.60	13 Sep 2009
	100,000	10 Jul 2006	100,000	\$0.47	\$2.80	13 Jan 2010
	100,000	10 Jul 2006	100,000	\$0.47	\$3.00	13 May 2010
	100,000	10 Jul 2006	-	\$0.46	\$3.30	13 Sep 2010
Mr M Lilly	125,000	19 Feb 2007	-	\$0.65	\$2.60	18 Feb 2011
	125,000	19 Feb 2007	-	\$0.62	\$3.30	18 Feb 2012
Mr G Korte	125,000	22 Feb 2007	-	\$0.73	\$2.60	20 Feb 2011
	125,000	22 Feb 2007	-	\$0.70	\$3.30	20 Feb 2012
Mr M Tamlin	125,000	01 Jul 2006	125,000	\$0.66	\$2.60	03 Sep 2009
	125,000	01 Jul 2006	125,000	\$0.65	\$2.80	03 Dec 2009
	125,000	01 Jul 2006	125,000	\$0.63	\$3.00	03 Mar 2010
	125,000	01 Jul 2006	125,000	\$0.61	\$3.30	03 Jun 2010
Mr M Drew	100,000	01 Jul 2006	100,000	\$0.23	\$2.00	28 Aug 2011
2006 Directors
	No options were granted or vested to directors during the 2006 financial year.
Executives
Mr M Drew	100,000	28 Nov 2005	100,000	0.57	\$1.30	28 Nov 2010
	100,000	13 Mar 2006	100,000	1.04	\$1.40	28 Feb 2011

On 13 July 2007 the company issued 125,000 options to Mr M Tamlin following the vesting conditions being met during the reporting period. The options have an exercise price of \$3.30 and expire on 3 June 2010.

100,000 15 Jun 2006 100,000 0.58 \$1.75 28 May 2011 Mr B Foster 100,000 03 Nov 2005 100,000 0.47 \$1.30 30 Nov 2006

100,000 13 Mar 2006 100,000 1.04 \$1.40 30 Nov 2006 100,000 15 Jun 2006 100,000 0.58 \$1.75 30 Nov 2006

All options expire on the earlier of their expiry date or one month after termination of the individual's employment, unless otherwise agreed by the Board. The options are exercisable at any time from the grant date to the expiry date upon receipt by the board of a written notice to exercise. The options were provided at no cost to the recipients.

5.11.3.2 Modification of terms of equity-settled share-based payment transactions – unaudited

No terms of equity-settled share-based payment transactions (including options and rights granted as compensation to a key management person) have been altered or modified by the issuing entity during the reporting period or the prior period, that require adjustment.

5.11.3.3 Exercise of options granted as compensation – audited

During the reporting period, the following shares were issued on the exercise of options previously granted as compensation:

	Number of shares	Amount paid \$/share
2007
Directors
Mr A Grey	650,000	\$1.50
Mr M Fry	500,000	\$0.15
Executives
Mr M Drew	100,000	\$1.30
	100,000	\$1.40
Mr B Foster	100,000	\$1.30
	100,000	\$1.40
	100,000	\$1.75
2006
Directors
Mr I Macpherson	500,000	\$0.15
Executives
No options were exercised by executives of the Company, during the 2006 financial year

There are no amounts unpaid on the shares issued as a result of the exercise of the options in 2006 or 2007.

For the year ended 30 June 2007

5.11.3.4 Analysis of options and rights over equity instruments granted as compensation - unaudited

Details of vesting profile of the options granted as remuneration to each director of the Company and each of the five named Company executives and relevant group executives is detailed below

	Options granted					Value yet to vest \$
	Number	Date	% vested in year	Forfeited in year 1	Financial years in which grant vests	Min2	Max3
2007 Director
Mr A Grey	162,500	01 Jul 2006	100%	-	2007	-	-
	162,500	01 Jul 2006	100%	-	2007	-	-
	162,500	01 Jul 2006	100%	-	2007	-	-
	162,500	01 Jul 2006	100%	-	2007	-	-
Mr S Bunn	125,000	01 Jul 2006	100%	-	2007	-	-
	125,000	01 Jul 2006	100%	-	2007	-	-
	125,000	01 Jul 2006	100%	-	2007	-	-
	125,000	01 Jul 2006	100%	-	2007	-	-
Mr M Kiernan	250,000	07 Aug 2006	100%	-	2007	-	-
	250,000	07 Aug 2006	100%	-	2007	-	-
Dr I Scott	250,000	07 May 2007	-	-	2008	-	\$229,451
	250,000	07 May 2007	-	-	2009	-	\$268,862
Executive
Mr M Tamlin	125,000	01 Jul 2006	100%	-	2007	-	-
	125,000	01 Jul 2006	100%	-	2007	-	-
	125,000	01 Jul 2006	100%	-	2007	-	-
	125,000	01 Jul 2006	100%	-	2007	-	-
Mr M Drew	100,000	01 Jul 2006	100%	200,000	2007	-	-
Mr L Ford	100,000	10 Jul 2006	100%	-	2007	-	-
	100,000	10 Jul 2006	100%	-	2007	-	-
	100,000	10 Jul 2006	100%	-	2007	-	-
	100,000	10 Jul 2006	-	-	2008	-	\$1,263
Mr M Lilly	125,000	19 Feb 2007	-	-	2008	-	\$51,728
	125,000	19 Feb 2007	-	-	2009	-	\$63,983
Mr G Korte	125,000	22 Feb 2007	-	-	2008	-	\$58,808
	125,000	22 Feb 2007	-	-	2009	-	\$71,957
2006
Executive
Mr B Foster	100,000	15 Aug 2005	100%	-	2006	-	-
	100,000	15 Aug 2005	100%	-	2006	-	-
	100,000	15 Aug 2005	100%	-	2006	-	-
Mr M Drew	100,000	29 Aug 2005	100%	-	2006	-	-
	100,000	29 Aug 2005	100%	-	2006	-	-
	100,000	29 Aug 2005	100%	-	2006	-	-

1 The % forfeited in the year represents the reduction from the maximum number of options available to vest. 2

The minimum value of options yet to vest is \$nil as the service criteria may not be me and consequently the option may not vest. 3 The maximum value of options yet to vest is not determinable as it depends on the market price of shares of the

Company on the Australian Securities Exchange at the date the option is exercised. The maximum values presented above are based on the assumptions that the share price on the date the option is exercised does not exceed \$2.88 for grants issued during the year. This price represents the maximum price included in the volatility assumptions within the valuation of the options.

For the year ended 30 June 2007

5.11.3 Equity instruments (continued)

5.11.3.5 Analysis of movements in options - unaudited

The movement during the reporting period, by value, of options over ordinary shares in the Company held by each Company director and each of the five named Company executives and relevant group executives is detailed below.

	Value of Options
	Granted in year \$ (A)	Exercised in year \$ (B)	Lapsed in year \$ (C)	Total option value in year \$
Directors
Mr M Fry	-	825,000	-	825,000
Mr A Grey	441,787	591,500	-	1,033,287
Mr M Kiernan	430,155	-	-	430,155
Dr I Scott	559,471	-	-	559,471
Executives
Mr M Drew	22,863	185,000	(181,546)	26,317
Mr B Foster	-	230,000	-	230,000
Mr S Bunn	322,833	-	-	322,833
Mr M Tamlin	319,032	-	-	319,032
Mr L Ford	187,513	-	-	187,513
Mr G Korte	177,961	-	-	177,961
Mr M Lilly	158,788	-	-	158,788
	2,620,403	1,831,500	(181,546)	4,270,357

(A) The value of options granted in the year is the fair value of the options calculated at grant date using the Black-Scholes option-pricing model. The total value of the options granted is included in the table above. This amount is allocated to remuneration over the vesting period (i.e. in years 1 July 2006 to 7 May 2009).

• (B) The value of options exercised during the year is calculated as the market price of shares of the Company on the Australian Stock Exchange as at close of trading on the date the options were exercised after deducting the price paid to exercise the option.
• (C) The value of the options that lapsed during the year represents the benefit forgone and is calculated at the date that option lapsed using the Black-Scholes option-pricing model with no adjustments for whether the performance criteria had been achieved.

5.12 Environmental regulation

The consolidated entity's operations are subject to significant environmental regulation under both Commonwealth and State legislation in relation to its exploration and mining activities.

The consolidated entity is committed to achieving a high standard of environmental performance. It has engaged an Environmental Superintendent to focus on this area to ensure appropriate monitoring of environmental exposures and compliance with environmental regulations.

Based on the results of enquiries made, the board is not aware of any significant breaches during the period covered by this report.

5.13 Ethical standards

All directors, managers and employees are expected to act with the utmost integrity and objectivity, striving at all times to enhance the reputation and performance of the consolidated entity. Every employee has a nominated supervisor to whom they may refer any issues arising from their employment.

Precious Metals Australia Limited and its controlled entities

Directors' report (continued)

For the year ended 30 June 2007 5.13 Ethical standards (continued) Conflict of interest

Directors must keep the board advised, on an ongoing basis, of any interest that could potentially conflict with those of the Company. The board has developed procedures to assist directors to disclose potential conflicts of interest.

Where the board believes that a significant conflict exists for a director on a board matter, the director concerned does not receive the relevant board papers and is not present at the meeting whilst the item is considered

5.14 Communication with shareholders

The board provides shareholders with information in accordance with its legal obligations which includes identifying matters that may have a material effect on the price of the Company's securities, notifying them to the ASX, posting them on the Company's website, and issuing media releases.

In summary, this process operates as follows:

• the Chairman, managing director, director of operations, the chief financial officer and the company secretary are responsible for compliance with the company's legal obligations and where necessary informing the board. The company secretary is responsible for all communications with the ASX.
• The full annual financial report is distributed to all shareholders and made available on the company's website.
• the half-yearly report contains summarised financial information and a review of the operations of the consolidated entity during the period. The half-year reviewed financial report is lodged with the Australian Securities and Investments Commission and the ASX, and sent to any shareholder who requests it. The half-year report is also posted on the company's website.
• proposed major changes in the consolidated entity which may impact on share ownership rights are submitted to a vote of shareholders.
• all announcements made to the market, and related information (including information provided to analysts or the media during briefings), are placed on the Company's website after they are released to the ASX.
• the external auditor attends the annual general meetings to answer questions concerning the conduct of the audit, the preparation and content of the auditor's report, accounting policies adopted by the Company and the independence of the auditor in relation to the conduct of the audit.

The board encourages full participation of shareholders at the Annual General Meeting, to ensure a high level of accountability and identification with the consolidated entity's strategy and goals. Important issues are presented to the shareholders as single resolutions.

6. Principal activities

The principal commercial activity of the consolidated entity during the year was the exploration and commercial development of the Windimurra Vanadium mine site.

There were no other significant changes in the nature of the activities of the consolidated entity during the year.

7. Operating and financial review

Overview of the consolidated entity

The net profit after the provision for income tax for the consolidated entity for the financial year ended 30 June 2007 amounted to \$6,473,634 (2006: loss of \$962,092). Included in the current year's net profit is a gain on dilution of interest in subsidiary of \$12,332,101.

For the year ended 30 June 2007 Review of operations (continued)

Precious Metals Australia (PMA) owns the Windimurra Vanadium Mine (Mine), located some 600km north east of Perth and 80km south east of Mt Magnet in Western Australia. The Windimurra Vanadium Mine hosts one of the largest proven reserves of vanadium in the world.

During 2007, the Company conducted a dedicated engineering review, which included a major re-evaluation of the capital costs for the Windimurra Vanadium Project. Following this, a new capital cost estimate has been developed for the project of \$296 million, of which the company has already invested \$27 million. The Company is looking at proposals which could significantly reduce the capital cost by approximately one-third. The completion of the front end engineering design (FEED) has significantly increased the level of accuracy and certainty of the capital cost estimate. The review process also delivered a 15% increase in the contained vanadium for sale, while at the same time improving the flexibility of the beneficiation circuit to treat a greater proportion of the higher magnetically susceptible ore.

PMA announced a significant upgrade in its JORC consistent reserve during the year, from 50.4 million tonnes, to 98 million tonnes at 0.40% V2O5. PMA's total vanadium resources (measured, indicated and inferred) now stand at 148 million tonnes, with an average grade of 0.46% V2O5. Previous mining operations at Windimurra achieved an average grade of 0.504% V205 with a positive grade and tonnage reconciliation to the Resource Model.

Additional infrastructure works have been completed on site and the engineering team responsible for construction is in place. With the construction camp ready, the earth works are expected to commence in October. Critical long lead items have been purchased.

PMA commissioned a market study, through independent analyst CRU, which indicates a strong medium term world price outlook for vanadium. The CRU study showed that between 2001 and 2006, the average compound rate of annual growth in vanadium consumption was 7.1%, and it estimates that this growth rate is likely to be maintained into the near future. The forecast growth in demand is expected to be driven by growth in steel consumption world wide, coupled with an expected increase in intensity of vanadium use in developing economies and increased use of vanadium-titanium alloy in aerospace applications. With world vanadium producers generally operating at close to capacity, PMA believes the additional supply from Windimurra is unlikely to exceed the growth in demand over the next five years.

During the twelve months period the Company announced a number of important corporate milestones including:

• Entering a vanadium marketing and logistics agreement with Noble Resources Limited (Noble) whereby Noble has agreed to purchase 100% of the Mine's production for the life of the Mine at market price, with a guaranteed floor price for the first seven years of no less than the cash cost of production;
• Completion of Noble's \$13.5 million direct investment in the Windimurra Vanadium Mine by taking a 9.999% interest in, PMA's subsidiary, Windimurra Vanadium Pty Ltd;
• Finalisation of key financing requirements for the Mine, with the completion of a \$48.5 million equity placement with a further \$2.7 million raised through a Share Purchase Plan from existing shareholders.

For the year ended 30 June 2007

PMA has also made a number of changes to strengthen its Board and Management, with the addition of specialist skills and experience to take the Windimurra project to the next stage of development. This most notably included the appointments of senior mining executive Dr Iain Scott as Managing Director, and prominent Australian mining executive Michael Kiernan as non-executive Chairman. Dr Scott has replaced long-serving PMA Managing Director and founder, Roderick Smith, who decided to step down from the role following 20 years at the helm of the Company. Mr Smith remains on the Board as a non-executive Director, and remains a major shareholder in PMA. Mr Ricardo Leiman, from Noble Resources Limited, was also appointed as a non-executive director.

PMA remains committed to finalising the construction of the new plant and re-opening the Mine. To reach this goal, the Company's immediate focus is on finalising engineering designs, obtaining all relevant regulatory approvals and securing the remaining project finance, with a target of commencing production in the second half of 2008.

8. Dividends

No dividends have been paid or declared by the Company to members during the 2007 or 2006 financial years.

9. Events subsequent to reporting date

There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely in the opinion of the directors of the company, to affect significantly the operations of the consolidated entity, the results of those operations or the sate of affairs of the consolidated entity, in future financial years.

10. Likely developments

The consolidated entity intends to finalise regulatory approvals and project finance late in the 2007 calendar year. It is currently proposed that construction will commence around December 2007 and be completed at the end of 2008.

Further information about likely developments in the operations of the consolidated entity and the expected results of those operations in future financial years has not been included in this report because disclosure of the information would be likely to result in unreasonable prejudice to the consolidated entity.

11. Directors' interests

The relevant interest of each director in the shares, debentures, interests in registered schemes and rights or options over such instruments issued by the companies within the consolidated entity and other related bodies corporate, as notified by the directors to the Australian Stock Exchange in accordance with S205G(1) of the Corporations Act 2001, at the date of this report is as follows:

		Precious Metals Australia Limited
	Ordinary shares	Options over ordinary shares
Mr R Smith	11,430,041	-
The Earl of Warwick	6,078,331	-
Mr M Kiernan	50,000	500,000
Dr I Scott	-	500,000

12. Share options

Options granted to directors and officers of the Company

During or since the end of the financial year, the Company granted options for no consideration over unissued ordinary shares in the Company to the following directors and to the following of the five most highly remunerated officers of the Company as part of their remuneration:

Precious Metals Australia Limited and its controlled entities Directors' report (continued) For the year ended 30 June 2007 12. Share options (continued)

	Number of options
	granted	Exercise price	Expiry date
Directors
Mr M Kiernan	250,000	\$2.20	26 Sep 2011
	250,000	\$2.20	26 Mar 2012
Dr I Scott	250,000	\$2.20	06 May 2013
	250,000	\$2.20	06 May 2014
Mr S Bunn	125,000	\$1.50	26 Sep 2009
	125,000	\$1.70	26 Sep 2009
	125,000	\$1.95	30 Nov 2009
	125,000	\$2.20	28 Feb 2010
Mr A Grey	162,500	\$1.50	26 Sep 2011
	162,500	\$1.50	26 Sep 2011
	162,500	\$1.50	30 Nov 2011
	162,500	\$1.50	17 Jun 2007
Officers
Mr M Drew	100,000	\$2.00	28 Aug 2011
Mr M Lilly	125,000	\$2.60	18 Feb 2011
	125,000	\$3.30	18 Feb 2012
Mr G Korte	125,000	\$2.60	20 Feb 2011
	125,000	\$3.30	20 Feb 2012

Unissued shares under options

At the date of this report unissued ordinary shares of the Company under option are:

Expiry date	Exercise price	Number of shares
03 Sep 2009	2.60	125,000
13 Sep 2009	2.60	100,000
26 Sep 2009	1.50	125,000
26 Sep 2009	1.70	125,000
30 Nov 2009	1.95	125,000
03 Dec 2009	2.80	125,000
13 Jan 2010	2.80	100,000
28 Feb 2010	2.20	125,000
03 Mar 2010	3.00	125,000
13 May 2010	3.00	100,000
26 Sep 2011	2.20	250,000
26 Mar 2012	2.20	250,000
		1,675,000

All options expire on the earlier of their expiry date or one month after termination of the employee's employment, unless agreed and authorised by the board. These options do not entitle the holder to participate in any share issue of the Company or any other body corporate.

For the year ended 30 June 2007

12. Share options (continued)

Shares issued on exercise of options

During or since the end of the financial year, the Company issued ordinary shares as a result of the exercise of options as follows (there were no amounts unpaid on the shares issued):

Number of shares	Amount paid on each share
650,000	\$1.50	Unlisted directors options
500,000	\$0.15	Unlisted directors options
100,000	\$1.30	Unlisted employee options
100,000	\$1.40	Unlisted employee options
100,000	\$1.30	Unlisted employee options
100,000	\$1.40	Unlisted employee options
100,000	\$1.75	Unlisted employee options

13. Indemnification and insurance of officers and auditors Indemnification

The Company has agreed to indemnify the following current directors of the Company: Mr Ricardo Leiman, Dr Wolf Martinick, Dr Iain Scott, Mr Roderick Smith, The Earl of Warwick, Mr Shaun Bunn, Mr Andrew Simpson and Mr Michael Kiernan and the following former directors: Mr Anthony Grey and Mr Michael Fry, against all liabilities to another person (other than the Company or a related body corporate) that may arise from their position as directors of the company and its controlled entities, except where the liability arises out of conduct involving a lack of good faith.

The Company has also agreed to indemnify the current directors of its controlled entities for all liabilities to another person (other than the company or a related body corporate) that may arise from their position, except where the liability arises out of conduct involving a lack of good faith.

For the year ended 30 June 2007

14. Non-audit services

During the year KPMG, the Company's auditor, has performed certain other services in addition to their statutory duties.

The board has considered the non-audit services provided during the year by the auditor and in accordance with written advice provided by resolution of the audit committee, is satisfied that the provision of those non-audit services during the year by the auditor is compatible with, and did not compromise, the auditor independence requirements of the Corporations Act 2001. The non-audit services provided do not undermine the general principles relating to auditor independence as set out in Professional Statement F1Professional independence, as they did not involve reviewing or auditing the auditor's own work, acting in a management or decision making capacity for the Company, acting as an advocate for the Company or jointly sharing risks and rewards.

Details of the amounts paid to the auditor of the Company, KPMG, and its related practices for audit and non-audit services provided during the year are set out below.

	Consolidated
	2007 \$	2006 \$
Audit services:
Auditors of the Company
audit and review of financial reports (KPMG Australia)	149,886	58,809
	149,886	58,809
Services other than statutory audit:
Other services
Corporate Finance fees (KPMG Australia)	339,955	107,100
	339,955	107,100

15. Lead auditor's independence declaration

The Lead auditor's independence declaration is set out on page 61 and forms part of the directors' report for financial year ended 30 June 2007.

This report is made with a resolution of the directors:

__________________________

Dr Iain Scott Managing Director

Dated at Perth this 21st day of September 2007

Precious Metals Australia Limited and its controlled entities

Income statements

For the year ended 30 June 2007
		Consolidated		The Company
	Note	2007 \$	2006 \$	2007 \$	2006 \$
Other income	5	12,469,781	6,719	2,142,212	406,719
Administrative expenses		(3,907,125)	(976,995)	(3,286,500)	(817,155)
Care and maintenance costs		(393,290)	(336,054)	-	-
Marketing costs		(885,165)	(212,178)	-	-
Other expenses	6	(3,880,743)	(1,322,714)	(3,119,839)	(1,091,367)
Profit/(loss) before financing costs		3,403,458	(2,841,222)	(4,264,127)	(1,501,803)
Financial income	7	3,755,033	1,926,617	3,221,466	1,775,855
Financial expenses	7	(684,857)	(47,487)	(521)	(18,399)
Net financing income		3,070,176	1,879,130	3,220,945	1,757,456
Profit/(loss) before tax		6,473,634	(962,092)	(1,043,182)	255,653
Income tax expense	10	-	-	-	-
Profit/(loss) for the period		6,473,634	(962,092)	(1,043,182)	255,653
Attributable to:
Equity holders of the Company		6,779,356	(962,092)	(1,043,182)	255,653
Minority interest		(305,722)	-	-	-
Profit/(loss) for the period		6,473,634	(962,092)	(1,043,182)	255,653
Earnings per share
Basic earnings/(loss) per share	11	\$0.07	\$(0.01)
Diluted earnings/(loss) per share	11	\$0.07	\$(0.01)

The income statements are to be read in conjunction with the notes of the financial statements set out on pages 30 to 57.

Precious Metals Australia Limited and its controlled entities Statements of recognised income and expense

For the year ended 30 June 2007

		Consolidated	The Company
	2007 \$	2006 \$	2007 \$	2006 \$
Income and expense recognised directly in equity	58,274	-	58,274	-
Profit/(loss) for the period	6,473,634	(962,092)	(1,043,182)	255,653
Total recognised income and expense for the period	6,531,908	(962,092)	(984,908)	255,653
Attributable to: Equity holders of the Company	6,837,630	(962,092)	(984,908)	255,653
Minority interest	(305,722)	-	-	-
Total recognised income and expense for the period	6,531,908	(962,092)	(984,908)	255,653

The statements of recognised income and expense are to be read in conjunction with the notes to the financial statements set out on pages 30 to 57.

Precious Metals Australia Limited and its controlled entities

Balance sheets

As at 30 June 2007

			Consolidated	The Company
	Note	2007 \$	2006 \$	2007 \$	2006 \$
Assets
Cash and cash equivalents	12	63,406,677	40,419,552	61,029,129	36,872,815
Trade and other receivables	13	424,662	295,828	764,211	491,877
Inventories	14	68,638	13,501	-	-
Investments	15	-	3,500	-	3,500
Total current assets		63,899,977	40,732,381	61,793,340	37,368,192
Cash and cash equivalents	12	3,857,362	-	200,000	-
Trade and other receivables	13	-	-	26,750,749	-
Investments	15	-	-	202	202
Property, plant and equipment	16	51,571,541	1,958,521	246,996	130,732
Intangible assets	17	-	6,502,757	-	-
Total non-current assets		55,428,903	8,461,278	27,197,947	130,934
Total assets		119,328,880	49,193,659	88,991,287	37,499,126
Liabilities
Trade and other payables	18	5,492,612	1,022,205	287,097	217,117
Employee benefits	19	133,050	71,480	57,265	71,480
Loans and borrowings	20	372,498	-	-	-
Total current liabilities		5,998,160	1,093,685	344,362	288,597
Employee benefits	19	25,307	-	8,515	-
Loans and borrowings	20	5,092,841	-	-	-
Provisions	21	12,107,392	12,107,392	-	-
Total non-current liabilities		17,225,540	12,107,392	8,515	-
Total liabilities		23,223,700	13,201,077	352,877	288,597
Net assets		96,105,180	35,992,582	88,638,410	37,210,529
Equity
Issued capital	22	128,321,465	76,889,566	128,321,465	76,889,566
Reserves	22	5,375,391	4,394,501	5,375,391	4,394,501
Accumulated losses	22	(38,453,853)	(45,291,485)	(45,058,446)	(44,073,538)
Total equity attributable to equity holders of the company		95,243,003	35,992,582	88,638,410	37,210,529
Minority interest		862,177	-	-	-
Total equity	22	96,105,180	35,992,582	88,638,410	37,210,529

The balance sheets are to be read in conjunction with the notes to the financial statements set out on pages 30 to 57.

Precious Metals Australia Limited and its controlled entities Statements of cash flows

For the year ended 30 June 2007

			Consolidated	The Company
	Note	2007	2006	2007	2006
Cash flows from operating activities		\$	\$	\$	\$
Cash receipts from related parties		-	-	1,423,083	-
Cash paid to suppliers and employees		(7,714,142)	(2,943,920)	(4,656,751)	(1,754,377)
Interest received		3,942,905	1,685,659	3,409,338	1,535,008
Interest paid		(60,482)	-	(521)	-
Net cash from operating activities	28	(3,831,719)	(1,258,261)	175,149	(219,369)
Cash flows from investing activities
Net proceeds on Xstrata Settlement/Agreement		-	10,356,193	-	10,356,193
Proceeds from sales of property, plant and equipment		3,000	-	-	-
Acquisition of property, plant and equipment		(33,761,439)	(1,230,160)	(179,592)	(131,062)
Exploration and evaluation expenditure		(2,759,662)	(4,922,598)	-	-
Funds repaid by controlled entities		-	-	-	729,492
Funds loaned to controlled entities		-	-	-	(11,336,817)
Proceeds from sale of investments		-	6,000	-	6,000
Net cash from investing activities		(36,518,101)	4,209,435	(179,592)	(376,194)
Cash flows from financing activities
Loans to related party		-	-	(26,499,617)	-
Proceeds from the issue of share capital		51,204,199	27,321,373	51,204,199	27,321,373
Payment of transaction costs		(2,108,825)	(867,978)	(2,108,825)	(867,978)
Proceeds from the issue of shares to minorities		13,500,001	-	-	-
Proceeds from the exercise of options		1,765,000	-	1,765,000	-
Proceeds from borrowings – related parties		2,971,976	-	-	-
Repayments of borrowings		(138,044)	-	-	-
Net cash from financing activities		67,194,307	26,453,395	24,360,757	26,453,395
Net increase in cash and cash equivalents		26,844,487	29,404,569	24,356,314	25,857,832
Cash and cash equivalents at 1 July		40,419,552	11,014,983	36,872,815	11,014,983
Cash and cash equivalents at 30 June	12	67,264,039	40,419,552	61,229,129	36,872,815

The statements of cash flows are to be read in conjunction with the notes to the financial statements set out on pages 30 to 57.

1. Reporting entity

Precious Metals Australia Limited (the 'Company') is a company domiciled in Australia. The consolidated financial report of the Company for the financial year ended 30 June 2007 comprises the Company and its subsidiaries (together referred to as the 'consolidated entity').

2. Basis of preparation

(a) Statement of compliance

The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards ('AASBs') (including Australian Interpretations) adopted by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001. The financial reports of the consolidated entity and the Company also comply with IFRSs and interpretations adopted by the International Accounting Standards Board.

The financial report was authorised for issue by the directors on 21 September 2007.

(b) Basis of measurement

The consolidated financial reports have been prepared on the historical cost basis except for the following:

• derivative financial instruments are measured at fair value
• financial instruments fair value through profit or loss are measured at fair value
• available-for-sale financial assets are measured at fair value

The methods used to measure fair values are discussed further in note 3.

(c) Functional and presentation currency

These consolidated financial reports are presented in Australian dollars, which is the Company's functional currency and the functional currency of its subsidiaries.

(d) Use of estimates and judgements

The preparation of financial reports requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

In particular, information about significant areas of estimate uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial reports are described in the following notes:

Note 10 – utilisation of tax losses

Note 3(c) – valuation of financial instruments

Note 3(h) – measurement of the recoverable amount of cash-generating units

Note 19 – measurement of share-based payments

Note 21 & 26 – provisions and contingencies

3. Significant accounting policies

The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial report, and have been applies consistently by its subsidiaries.

Certain comparative amounts have been reclassified to conform with the current year's presentation.

(a) Basis of consolidation

Subsidiaries

Subsidiaries are entities controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable or convertible are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

In the Company's financial statements, investments in subsidiaries are carried at their cost.

Transactions eliminated on consolidation

Intragroup balances, and any unrealised income and expenses arising from intragroup transactions, are eliminated in preparing the consolidated financial statements.

Minority Interests

The consolidated entity applies a policy of treating transactions with minority interests as transactions with parties external to the consolidated entity. Gains and losses that arise as a change in ownership interest through dilution are recognised in the income statement.

(b) Foreign currency

Foreign currency transactions

Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to Australian dollars at the foreign exchange rate at that date. Foreign exchange differences arising on translation are recognised in the income statement. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated to Australian dollars at the exchange rates at the date the fair value was determined.

(c) Financial instruments

Non-derivative financial instruments

Non-derivative financial instruments comprise investments in equity and debt securities, trade and other receivables, cash and cash equivalents, loans and borrowings, and trade and other payables.

Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit and loss, and directly attributable transaction costs, except as described below. Subsequent to initial recognition non-derivative financial instrument are measured as described below.

A financial instrument is recognised if the consolidated entity becomes a party to the contractual provisions of the instrument. Financial assets are derecognised if the consolidated entity's contraction rights to the cash flows from the financial assets expire or if the consolidated entity transfers the financial asset to another party without retaining control or substantially all risks and rewards of the asset. Regular way purchases and sales of financial assets are accounted for at trade date, i.e., the date that the consolidated entity commits itself to purchase or sell the asset. Financial liabilities are derecognised if the consolidated entity's obligations specified in the contract expire or are discharged or cancelled.

Cash and cash equivalents comprise cash balances and call deposits.

Precious Metals Australia Limited and its controlled entities

Notes to the consolidated financial statements (continued)

Accounting for financial income and expenses is discussed in note 3(k).

Investments at fair value through profit or loss

An instrument is classified as at fair value through profit or loss if it is held for trading or is designated as such upon initial recognition. Financial instruments are designated at fair value through profit or loss if the consolidated entity manages such investments and makes purchase and sale decisions based on their fair value in accordance with the Consolidated entity's documented risk management or investment strategy. Upon initial recognition, attributable transaction costs are recognised in profit or loss when incurred. Financial instruments at fair value through profit or loss are measured at fair value, and changes therein are recognised in profit or loss.

Other

Other non-derivative financial instruments are measured at amortised cost using the effective interest method, less any impairment losses.

Share capital

Ordinary shares

Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity, net of any related income tax benefit.

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.

(d) Property, plant and equipment

Recognition and measurement

Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended use, and the costs of dismantling and removing items and restoring the site on which they are located. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Subsequent costs

The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probably that the future economic benefits embodied within the part will flow to the consolidated entity and its costs can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.

Depreciation

Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives. Land is not depreciated.

The estimated useful lives for the current and comparative periods are as follows:

- Site buildings	4 years
- Site plant and equipment	4-5 years
- Office equipment	2-5 years
- Motor vehicles	4 years

Depreciation methods, useful lives and residual values are reassessed at the reporting date.

Mine development

Once a development decision has been taken, expenditure for the establishment of access to mineral reserves, together with capitalised exploration, evaluation and commissioning expenditure, including an appropriate portion of related overhead expenditure having a specific nexus with the development property are capitalised and classified under non-current assets as "Mine development".

No amortisation is provided in respect of development properties until commercial production is declared by the consolidated entity (for new operations), or in which mining of a mineral resource has commenced, and they are reclassified as "Mine properties".

Mine properties

Mine properties represent the accumulation of all development expenditure in relation to areas of interest. When further development expenditure is incurred in respect of a mine property after the commencement of production, such expenditure is carried forward as part of the mine property only when substantial future economic benefits are thereby established, otherwise such expenditure is classified as part of the cost of production on the income statement.

Amortisation of costs are provided on the unit-of-production method with separate calculations being made for each mineral resource. The unit-of-production basis results in an amortisation charge proportional to the depletion of the economically recoverable mineral reserves within the proven and probable category.

(e) Leased assets

Leases in terms of which the consolidated entity assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

Other leases are operating leases.

Operating lease payments

Payments made under operating leases are recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives received are recognised in the income statement as an integral part of the total lease expense and spread over the lease term.

(f) Intangible assets

Exploration and evaluation assets

Exploration and evaluation costs, comprising net direct costs (including the costs of acquiring licences) and an appropriate portion of related overhead expenditure having a specific nexus with the exploration property, relating to current areas of interest are capitalised as exploration and evaluation assets on an area of interest basis. Costs incurred before the consolidated entity has obtained the legal rights to explore an area are recognised in the income statement.

Exploration and evaluation assets are only recognised if the rights of the area of interest are current and either:

• (i) the expenditures are expected to be recouped through successful development and exploitation of the area of interest; or
• (ii) activities in the area of interest have not at the reporting date, reached a stage which permits a reasonable assessment of the existence or other wise of economically recoverable reserves and active and significant operations in, or in relation to, the area of interest are continuing.

Exploration and evaluation assets are assessed for impairment if:

• (i) sufficient data exists to determine technical feasibility and commercial viability, and
• (ii) facts and circumstances suggest that the carrying amount exceeds the recoverable amount (see impairment accounting policy (h)).

For the purposes of impairment testing, exploration and evaluation assets are allocated to cash-generating units to which the exploration activity relates. The cash generating unit shall not be larger than the area of interest.

Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are demonstrable, exploration and evaluation assets attributable to that area of interest are first tested for impairment and then reclassified from intangible assets to mining property and development assets.

In the event that an area of interest is abandoned, accumulated costs carried forward are written off to the income statement in the year in which that assessment is made. Expenditure is not carried forward in respect of any area of interest, unless the consolidated entity's right of tenure to that area of interest are current.

(g) Inventories

Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on the firstin first-out principle and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition.

(h) Impairment

Financial assets

A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. An impairment loss in respect of an available-for-sale financial asset is calculated by reference to its current fair value.

Individually significant financial assets are tested for impairment on a individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics.

All impairment losses are recognised in profit or loss. Any cumulative loss in respect of an available-for-sale financial asset recognised previously in equity is transferred profit or loss.

An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost and available-for-sale financial assets that are debt securities, the reversal is recognised in profit or loss. For available-for-sale financial assets that are equity securities, the reversal is recognised directly in equity.

Non-financial assets

The carrying amounts of the consolidated entities non-financial assets, inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the asset's recoverable amount is estimated. For goodwill and intangible assets that have indefinite lives or that are not yet available for use, recoverable amount is estimated at each reporting date.

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that largely are independent from other assets and groups. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

(i) Employee benefits

Wages, salaries, annual leave, sick leave and non-monetary benefits

Liabilities for employee benefits for wages, salaries, annual leave and sick leave that are expected to be settled within 12 months of the reporting date represent present obligations resulting from employees' services provided to reporting date, are calculated at undiscounted amounts based on remuneration wage and salary rates that the consolidated entity expects to pay as at reporting date including related on-costs, such as workers compensation insurance and payroll tax. Non-accumulating non-monetary benefits, such as medical care, housing, cars and free or subsidised goods and services, are expensed based on the net marginal cost to the consolidated entity as the benefits are taken by the employees.

Share-based payment transactions

The share option program allows consolidated entity employees to acquire shares of the Company. The fair value of options granted is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and spread over the period during which the employees become unconditionally entitled to the options. The fair value of the options granted is measured using the Black-Scholes pricing model, taking into account the terms and conditions upon which the options were granted.

(j) Provisions

A provision is recognised in the balance sheet when the consolidated entity has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

Site restoration

In accordance with applicable legal requirements, a provision for site restoration in respect of mining projects is recognised where the mining or exploration activity undertaken, requires rehabilitation in the future, usually upon final and permanent closure of the relevant mine.

The provision is the best estimate of the present value of the expenditure required to settle the restoration obligation at the reporting date, based on current legal requirements and technology. Future restoration costs are reviewed annually and any changes are reflected in the present value of the restoration provision at the end of the reporting period.

The amount of the provision for future restoration costs is capitalised and is depreciated in accordance with the policy set out in policy (d). The unwinding of the effect of discounting on the provision is recognised as a finance cost.

(k) Finance income and expenses

Finance income comprises interest income on funds invested, gains on the disposal of available-for-sale financial assets, changes in the fair value of financial assets at fair value through profit or loss, foreign currency gains, and gains on hedging instruments that are recognised in profit or loss. Interest income is recognised as it accrues, using the effective interest method.

Finance expenses comprise interest expense on borrowings, unwinding of the discount on provisions, foreign currency losses, changes in the fair value of financial assets at fair value through profit or loss, impairment losses recognised on financial assets, and losses on hedging instruments that are recognised in profit or loss. All borrowing costs are recognised in profit or loss using the effective interest method.

(l) Income tax

Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: initial recognition of goodwill, the initial recognition of assets or liabilities that affect neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

(m) Segment reporting

A segment is a distinguishable component of the consolidated entity that is engaged either in providing products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments.

(n) Goods and services tax

Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the taxation authority. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the balance sheet.

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

(o) New standards and interpretations not yet adopted:

The following standards, amendments to standards and interpretations have been identified as those which may impact the entity in the period of initial application. They are available for early adoption at 30 June 2007, but have not been applied in preparing this financial report:

• AASB 7 Financial Instruments: Disclosures (August 2005) replaces the presentation requirements of financial instruments in AASB 132. AASB 7 is applicable for annual reporting periods beginning on or after 1 January 2007.
• AASB 2005-10 Amendments to Australian Accounting Standards (September 2005) makes consequential amendments to AASB 132 Financial Instruments: Disclosures and Presentation, AASB 101 Presentation of Financial Statements, AASB 114 Segment Reporting, AASB 117 Leases, AASB 133 Earnings per Share, AASB 139 Financial Instruments: Recognition and Measurement, AASB 1 First-time Adoption of Australian Equivalents to International Financial Reporting Standards, AASB 4 Insurance Contracts, AASB 1023 General Insurance Contracts and AASB 1038 Life Insurance Contracts, arising from the release of AASB 7. AASB 2005-10 is applicable for annual reporting periods beginning on or after 1 January 2007.
• AASB 8 Operating Segments replaces the presentation requirements of segment reporting in AASB 114 Segment Reporting. AASB 8 is applicable for annual reporting periods beginning on or after 1 January 2009 and is not expected to have an impact on the financial results of the Company and the consolidated entity as the standard is only concerned with disclosures.
• AASB 2007-3 Amendments to Australian Accounting Standards arising from AASB 8 makes amendments to AASB 5 Non-current Assets Held for Sale and Discontinued Operations, AASB 6 Exploration for and Evaluation of Mineral Resources, AASB 102 Inventories, AASB 107 Cash Flow Statements, AASB 119 Employee Benefits, AASB 127 Consolidated and Separate Financial Statements, AASB 134 Interim Financial Reporting, AASB 136 Impairment Assets, AASB 1023 General Insurance Contracts and AASB 1038 Life Insurance Contacts. AASB 2007-3 is applicable for annual reporting periods beginning on or after 1 January 2009 and must be adopted in conjunction with AASB 8 Operating Segments. This standard is only expected to impact disclosures contained within the financial report.
• Interpretation 10 Interim Financial Reporting and Impairment prohibits the reversal of an impairment loss recognised in a previous interim period in respect of goodwill, an investment in an equity instrument or a financial asset carried at cost. Interpretation 10 will become mandatory for the consolidated entities 2008 financial statements, and will apply to goodwill, investments in equity instruments, and financial assets carried at cost prospectively from the date that the consolidated entity first applied the measurement criteria of AASB 136 and AASB 139 respectively (i.e. 1 July 2004 and 1 July 2005, respectively).

• Interpretation 11 AASB 2 Share-based Payment Group and Treasury Share Transactions addresses the classification of a share-based payment transaction 9as equity or cash settled), in which equity instruments of the parent or another group entity are transferred, in the financial statements of the entity receiving the services. Interpretation 11 will become mandatory for the consolidated entity's 2008 financial report. Interpretation 11 is not expected to have any impact on the financial report. The potential effect of the Interpretation on the Company's financial report has not yet been determined.

• AASB 2007-1 Amendments to Australian accounting Standards arising from AASB Interpretation II amends AASB 2 Share-based Payments to insert the transitional provisions of IFRS 2, previously contained in AASB 1 First-time Adoption of Australian Equivalents to International Financial Reporting Standards. AASB 2007-1 is applicable for annual reporting periods beginning on or after 1 March 2007 and is not expected to have any impact on the consolidated financial report. The potential impact on the Company has not yet been determined.

• Interpretation 12 Service Concession Arrangements addresses the accounting for service concession operations, but not grantors, for public to private service concession arrangements. Interpretation 12 will apply for the Consolidated entity's 2009 financial report. The potential effect of the interpretation on the financial report has not yet been determined. At this time an entity must adopt the revised Interpretation 4 Determining when an arrangement contains a lease and Interpretation 129 Service Concession Arrangements; Disclosures.
• AASB 2007-2 Amendments to Australian Accounting Standards arising from AASB Interpretation 12 makes amendments to AASB 1 First-time Adoption of Australian Equivalents to International Financial Reporting Standards, AAS 117 Leases, AASB 118 Revenue, AASB 120 Accounting for Government Grants and Disclosure of Government Assistance, AASB 121 The Effects of Changes in Foreign Exchange Rates, AASB 127 Consolidated and Separate Financial Statement, AASB 131 Interest in Joint Ventures, and AAB 139 Financial Instruments; Recognition and Measurement. AASB 2007-2 applicable for annual reporting periods beginning on or after 1 January 2008 and must be applied at the same time as Interpretation 12 Service Concession Arrangements.
• AASB 2007-2 Amendments to Australian Accounting Standards also amends references to "UIG Interpretation" to interpretations. This amending standard is applicable to annual reporting periods ending on or after 28 February 2007.

The potential impact of the above standards and interpretations has not yet been determined.

4. Segment reporting

The Company and the consolidated entity operate in one industry being mining and mineral exploration and in the one geographical segment, Australia.

5. Other income

		Consolidated	The Company
	2007	2006	2007	2006
	\$	\$	\$	\$
Gain on dilution of interest in
subsidiary (1)	12,332,101	-	-	-
Management fees charged to
controlled entities	-	-	2,137,943	400,000
Sundry revenue	137,680	6,719	4,269	6,719
	12,469,781	6,719	2,142,212	406,719

(1) During the financial period, the consolidated entity issued 9.999% of the share capital of its wholly owned subsidiary, Windimurra Vanadium Pty Ltd (WVPL) to Noble Resources Limited for \$13,500,000 in cash, resulting in a gain of \$12,332,101. The consolidated entity has retained the remaining 90.001% of the share capital of WVPL.

6.	Other expenses
	Depreciation and amortisation
	expense	16	(249,619)	(36,306)	(63,328)	(14,758)
	Directors fees and related costs		(1,439,836)	(224,387)	(1,439,836)	(224,387)
	Executive and Employee option
	costs		(1,375,122)	(428,729)	(1,375,122)	(428,729)
	Stamp duty		(26,272)	-	(26,226)	-
	Tenement, geology & exploration
	costs		(176,438)	(72,099)	(1,843)	-
	Consultants costs		(369,347)	(361,816)	(35,739)	(224,116)
	Legal costs		(244,109)	(199,377)	(177,745)	(199,377)
			(3,880,743)	(1,322,714)	(3,119,839)	(1,091,367)

		Consolidated		The Company
		2007	2006	2007	2006
		\$	\$	\$	\$
7.	Finance income and expense
	Interest received from external
	parties	3,755,033	1,926,617	3,221,466	1,775,855
	Total finance income	3,755,033	1,926,617	3,221,466	1,775,855
	Interest expense – external	(521)	(213)	(521)	(102)
	Finance expenses	(59,961)	(47,274)	-	(18,297)
	Borrowing costs	(624,375)	-	-	-
	Total finance expense	(684,857)	(47,487)	(521)	(18,399)
	Net finance income and expense	3,070,176	1,879,130	3,220,945	1,757,456
8.	Personnel expenses
	Wages, salaries and director fees (2) Other associated personnel	1,244,400	459,025	733,815	323,145
	expenses Contributions to superannuation	462,344	42,065	392,473	23,840
	funds Increase (decrease) in liability for	90,587	44,033	50,816	33,133
	annual leave	75,785	14,813	(14,215)	8,708
	Equity-settled transactions	1,375,122	428,729	1,375,122	428,729
		3,248,238	988,665	2,538,011	817,555

(2) A portion of the wages, salaries and executive directors salaries have been capitalised to mining, property and development assets (exploration and evaluation assets prior to 1 December 2006) in accordance with the consolidated entity's accounting policies

9. Auditors' Remuneration

Audit services

Auditors of the Company KPMG Australia:

Other services

Audit and review of financial reports	149,886	58,809	48,586	58,809
	149,886	58,809	48,586	58,809
Other services Corporate Finance fees (KPMG Australia)	339,955	107,100	246,450	107,100
	339,955	107,100	246,450	107,100

			Consolidated	The Company
		2007	2006	2007	2006
		\$	\$	\$	\$
10.	Income tax
	Recognised in the income statement
	Current tax expense/(benefit)
	Current tax expense/(benefit)	(2,782,231)	(269,459)	112,445	351,235
		(2,782,231)	(269,459)	112,445	351,235
	Deferred tax expense/(benefit)
	Origination and reversal of
	temporary differences	393,530	-	158,308	89,516
	Tax losses not recognised	2,501,146	269,459	(158,308)	-
	Benefit of tax losses recognised	(112,445)	-	(112,445)	(440,751)
	Total income tax expense in income
	statement	-	-	-	-

Numerical reconciliation between tax expense and pre-tax net profit

(Loss)/profit before tax	6,473,634	(962,092)	(1,043,182)	255,653
Income tax (benefit)/expense using the domestic corporation tax rate of
30% (2006: 30%)	1,942,090	(288,628)	(312,955)	76,696
Increase in income tax expense due to:
Non-deductible expenses	492,705	19,169	485,239	18,886
	2,434,795	(269,459)	172,284	95,582
Utilisation of prior years tax losses		-	-	(95,582)
Non-assessable gain	(3,699,630)	-	-	-
Temporary differences/tax losses
not recognised	1,264,835	269,459	(172,284)	-
Income tax expense on pre-tax net
profit	-	-	-	-

Tax losses

Unused tax losses for which no
deferred tax asset has been
recognised	14,979,724	6,013,380	4,101,066	4,795,603
Potential tax benefit at 30%	4,493,917	1,804,014	1,230,320	1,438,681

Deferred tax assets and deferred tax liabilities

Deferred tax assets and liabilities are attributable to the following:

	Assets Liabilities				Net
		2007	2006	2007	2006	2007	2006
Consolidated entity		\$	\$	\$	\$	\$	\$
Property, plant and
equipment		(24,819)	(1,634)	-	-	(24,819)	(1,634)
Black-hole
expenditure		(506,118)	-	-	-	(506,118)	-
Other receivables		-	-	15,862	72,224	15,862	72,224
Other assets		-	-	-	23,631	-	23,631
Intangible assets		-	-	2,159,529	1,644,054	2,159,529	1,644,054
Other payables		(35,277)	(71,025)	-	-	(35,277)	(71,025)
Provisions		(61,427)	(15,675)	-	-	(61,427)	(15,675)
Rehabilitation
provision		(3,632,218)	(3,362,218)	-	-	(3,632,218)	(3,362,218)
Total
(assets)/liabilities		(4,259,859)	(3,450,522)	2,175,391	1,739,909	(2,084,468)	(1,710,643)
Set off of tax		2,175,391	1,739,909	(2,175,391)	(1,739,909)	-	-
Unrecognised
deferred tax (assets)		2,084,468	1,710,613	-	-	2,084,468	1,710,643
Net tax
asset/liabilities		-	-	-	-	-	-
Company
Property, plant and equipment		(10,262)	(664)	-	-	(10,262)	(664)
Black-hole
expenditure		(506,118)	-	-	-	(506,118)	-
Other receivables		-	-	15,862	72,224	15,862	72,224
Other assets		-	-	-	40,156	-	40,156
Other payables		(21,998)	(6,525)	-	-	(21,998)	(6,525)
Provisions		(33,654)	(15,675)	-	-	(33,654)	(15,675)
Tax losses
recognised		-	(89,516)	-	-	-	(89,516)
Total
(assets)/liabilities		(572,032)	(112,380)	15,862	112,380	(556,170)	-
Set off of tax		15,862	112,380	(15,862)	(112,380)	-	-
Unrecognised
deferred tax (assets)		556,170	-	-	-	556,170	-
Net tax
assets/liabilities		-	-	-	-	-	-

Unrecognised deferred tax assets

Deferred tax assets have not been recognised in respect of the following items:

	Consolidated
	2007	2006 2007		2006
	\$	\$	\$	\$
Deductible temporary differences	2,084,468	1,710,643	556,171	-
Tax losses	4,493,917	1,804,013	1,230,320	1,438,681
Potential unrecognised tax benefit at
30%	6,578,386	3,514,656	1,786,491	1,438,681

The deductible temporary differences and tax losses do not expire under current tax legislation. Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profit will be available against which the consolidated entity can utilise the benefits from.

11. Earnings per share

Basic earnings per share

The calculation of basic earnings per share at 30 June 2007 was based on the profit attributable to ordinary shareholders of \$6,473,634 (2006: loss of \$962,092) and a weighted average number of ordinary shares outstanding during the financial year ended 30 June 2007 of 87,603,769 (2006: 65,163,739).

	Consolidated
Weighted average number of ordinary shares	2007	2006
Issued ordinary shares at 1 July	74,720,430	45,538,844
Effect of rights issue in November 2005	-	14,210,959
Effect of listed options conversion in December 2005	-	2,073
Effect of unlisted options conversion in November 2005	-	321,918
Effect of share placement in December 2005	-	5,091,945
Effect of unlisted options conversion in October 2006	361,644	-
Effect of unlisted options conversion in December 2006	173,425	-
Effect of unlisted options conversion in January 2007	92,877	-
Effect of share placement in January 2007	12,248,271	-
Effect of unlisted options conversion in June 2007	7,122	-
Weighted average number of ordinary share at 30 June	87,603,769	65,165,739

Diluted earnings per share

The calculation of diluted earnings per share at 30 June 2007 was based on the profit attributable to ordinary shareholders of \$6,473,634 (2006: loss of \$962,092) and a weighted average number of ordinary shares outstanding during the financial year ended 30 June 2007 of 88,677,639 (2006: 66,027,027), calculated as follows:

Weighted average number of ordinary shares (diluted)	2007	2006
Weighted average number of ordinary shares at 30 June	87,603,769	65,163,739
Effect of unlisted share options on issue	1,073,870	863,288
Weighted average number of ordinary shares (diluted)
at 30 June	88,677,639	66,027,027

Profit attributable to ordinary shareholders (diluted)

No adjustments were made to the profit attributable to members of the parent entity as disclosed in the Income Statements.

12. Cash and cash equivalents

	Consolidated			The Company
	2007	2006	2007	2006
	\$	\$	\$	\$
Current
Bank balances	13,187,981	2,242,052	10,810,433	2,292,315
At call deposits	50,218,696	38,177,500	50,218,696	34,580,500
	63,406,677	40,419,552	61,029,129	36,872,815
Non-current
Restricted cash on deposit	3,857,362	-	200,000	-
	67,264,039	40,419,552	61,229,129	36,872,815

Restricted cash on deposit relates to cash backed unconditional performance bonds, guaranteed by a financial institution, and cash backed bank guarantees for the operation of corporate credit cards, and other facilities.

The financial institution has taken security, by way of right of offset, against the term deposit \$3,857,362 (2006: \$nil (refer note 26).

13. Trade and other receivables

Current
Other receivables and prepayments	424,662	295,828	764,211	240,745
Loans to controlled entities	-	-	-	251,132
	424,662	295,828	764,211	491,877
Non-current
Loans to controlled entities	-	-	26,750,749	-
	424,662	295,828	27,514,960	491,877

14. Inventories

Stores and consumable supplies –
at cost	68,638	13,501	-	-

15. Investments

Current Listed equity securities	-	3,500	-	3,500
Non-current
Investments in controlled entities
at cost	-	-	202	202

16. Property, Plant and equipment

				Co olid ate ns	d			Th Co e mp	an y
	Sit lan t & e p	Lea sed As set s	Off ice	Mo tor	Un de r	Min e
No	te uip nt eq me	(1)	uip nt eq me	Ve hic les	nst tio co ruc n	(2) De lop nt ve me	To tal	Off ice uip nt eq me	To tal
Co t s
Ba lan Ju ly t 1 2 0 0 5 ce a	-	-	3 8, 5 6 3	-	-	-	3 8, 5 6 3	3 8, 5 6 3	3 8, 5 6 3
Ac is i ion lem t t t t q s o n s e en u
i h Xs t tra ta w	7 1 0, 6 1 2	-	-	1 8, 0 0 0	-	-	7 2 8, 6 1 2	-	-
O he d d i ion t t r a s	1, 0 4 2, 3 4 5	-	1 3 1, 0 6 2	5 6, 7 5 5	2 1, 6 2 5	-	1, 2 5 1, 7 8 7	1 3 1, 0 6 2	1 3 1, 0 6 2
D isp ls os a	-	-	( 1 8, 2 9 4 )	-	-	-	( 1 8, 2 9 4 )	( 1 8, 2 9 4 )	( 1 8, 2 9 4 )
Ba lan 3 0 Ju 2 0 0 6 t ce a ne	1, 7 5 2, 9 5 7	-	1 5 1, 3 3 1	7 4, 7 5 5	2 1, 6 2 5	-	2, 0 0 0, 6 6 8	1 5 1, 3 3 1	1 5 1, 3 3 1
Ba lan Ju ly t 1 2 0 0 6 ce a	1, 7 5 2, 9 5 7	-	1 5 1, 3 3 1	7 4, 7 5 5	2 1, 6 2 5	-	2, 0 0 0, 6 6 8	1 5 1, 3 3 1	1 5 1, 3 3 1
Tr fer in an s s	-	-	-	-	-	9, 2 6 2, 4 1 9	9, 2 6 2, 4 1 9	-	-
O he d d i ion t t r a s	4 9 1, 1 3 3	2, 5 1 3, 9 4 7	1 8 0, 1 6 7	7 3, 8 0 7	3 3, 2 1 0, 4 0 9	4, 1 3 1, 3 3 2	4 0, 6 0 0, 7 9 5	1 8 0, 1 6 7	1 8 0, 1 6 7
D isp ls os a	-	-	( ) 1, 4 9 5	-	-	-	( ) 1, 4 9 5	( ) 1, 4 9 5	( ) 1, 4 9 5
Ba lan Ju t 3 0 2 0 0 7 ce a ne	2, 2 4 4, 0 9 0	2, 5 1 3, 9 4 7	3 3 0, 0 0 3	1 4 8, 5 6 2	3 3, 2 3 2, 0 3 4	1 3, 3 9 3, 7 5 1	5 1, 8 6 2, 3 8 7	3 3 0, 0 0 3	3 3 0, 0 0 3
De ia io t p re c n
Ba lan 1 Ju ly 2 0 0 5 t ce a	-	-	2 0, 4 3 1	-	-	-	2 0, 4 3 1	2 0, 4 3 1	2 0, 4 3 1
De ia ion ha for he t t p rec c rg e
y ea r	8, 3 3 1	-	1 4, 7 5 8	1 3, 2 1 7	-	-	3 6, 3 0 6	1 4, 7 5 8	1 4, 7 5 8
D isp ls os a	-	-	( 1 4, 9 0 ) 5	-	-	-	( 1 4, 9 0 ) 5	( 1 4, 9 0 ) 5	( 1 4, 9 0 ) 5
Ba lan 3 0 Ju 2 0 0 6 t ce a ne	8, 3 3 1	-	2 0, 9 9 5	1 3, 2 1 7	-	-	4 2, 1 4 7	2 0, 9 9 5	2 0, 9 9 5
Ba lan Ju ly t 1 2 0 0 6 ce a	8, 3 3 1	-	2 0, 5 9 9	1 3, 2 1 7	-	-	4 2, 1 4 7	2 0, 5 9 9	2 0, 5 9 9
De ia ion ha for he t t p rec c rg e y ea r	7 7, 6 1 6	8 2, 5 2 8	6 3, 3 2 8	2 6, 1 4 7	-	-	2 4 9, 6 1 9	6 3, 3 2 8	6 3, 3 2 8
D isp ls os a	-	-	( 9 2 0 )	-	-	-	( 9 2 0 )	( 9 2 0 )	( 9 2 0 )
Ba lan 3 0 Ju 2 0 0 7 t ce a ne	8 5, 9 4 7	8 2, 5 2 8	8 3, 0 0 7	3 9, 3 6 4	-	-	2 9 0, 8 4 6	8 3, 0 0 7	8 3, 0 0 7
Ca ing ts rry am ou n
A 1 Ju ly 2 0 0 t 5	-	-	1 8, 1 3 2	-	-	-	1 8, 1 3 2	1 8, 1 3 2	1 8, 1 3 2
A 3 0 Ju 2 0 0 6 t ne	1, 7 4 4, 6 2 6	-	1 3 0, 7 3 2	6 1, 5 3 8	2 1, 6 2 5	-	1, 9 5 8, 5 2 1	1 3 0, 7 3 2	1 3 0, 7 3 2
A 3 0 Ju 2 0 0 t 7 ne	2, 1 8, 1 4 3 5	2, 4 3 1, 4 1 9	2 4 6, 9 9 6	1 0 9, 1 9 8	3 3, 2 3 2, 0 3 4	1 3, 3 9 3, 1 7 5	1, 1, 4 1 5 5 7 5	2 4 6, 9 9 6	2 4 6, 9 9 6

1Leased assets are subject to a charge by the lessor (refer note 20) (2) Transfers from intangible assets (refer note 17).

Consolidated Exploration and evaluation	The Company Exploration and evaluation \$
1,022,587	-
5,480,170	-
6,502,757	-
6,502,757 2,759,662 (9,262,419) -	- -
	\$

For the period up to 30 June 2006, the consolidated entity had capitalised \$6,502,757 of exploration and evaluation expenditure that had been incurred on the Windimurra Vanadium Mine Re-Development Project as an intangible asset. For the period 1 July 2006 to 30 November 2006, the consolidated entity capitalised a further \$2,759,662 of exploration and evaluation expenditure to Intangible assets.

In December 2006 the board determined that the Windimurra Vanadium Mine Re-Development Project was both technically and commercially viable. Thus, in accordance with the company's accounting policies, the capitalised exploration and evaluation expenditure totalling \$9,262,419 was transferred form Intangible assets to Mine Development assets (refer note 16).

18. Trade and other payables

	Consolidated		The Company
	2007 2006		2007	2006
	\$	\$	\$	\$
Trade payables	5,158,124	1,022,205	32,003	217,117
Sundry creditors and accrued expenses	334,488	-	255,094	-
Accrued expenses	5,492,612	1,022,205	287,097	217,117

19. Employee benefits

Current
Liability for annual leave	133,050	71,480	57,265	71,480
Non-current
Liability for long service leave	25,307	-	8,515	-
	158,357	71,480	65,780	71,480

(a) Share based payments

On 15 October 2005, the consolidated entity established an Executive and Employee Share Option Plan that entitles eligible executives and employees to purchase shares in the entity.

Under the plan the options have a vesting period and can be exercised at any time during the period commencing on the issue date and ending on the expiry date. The options lapse if the employee ceases to be an eligible employee, e.g. leaves the service of the consolidated entity, unless otherwise agreed and authorised by the board. The vesting period and exercise price is to be determined by the board. The expense attributable to the options are recognised in the income statement over the vesting period (refer note 3(i)).

The terms and conditions of the grants are all options are settled by physical delivery of shares. The following tranches of options were granted during the financial year:

(a) Share based payments (continued)

Grant date / employee entitled	Number of instruments	Exercise Price	Option Expiry Date
Option grant to directors on 1 July 2006	125,000	\$1.50	26 Sep 2009
	125,000	\$1.70	26 Sep 2009
	125,000	\$1.95	30 Nov 2009
	125,000	\$2.20	28 Feb 2010
	162,500	\$1.50	26 Sep 2011
	162,500	\$1.50	26 Sep 2011
	162,500	\$1.50	30 Nov 2011
	162,500	\$1.50	17 Jun 2007
Option grant to key management on 1 July 2006	100,000	\$2.00	28 Aug 2011
	125,000	\$2.60	03 Sep 2009
	125,000	\$2.80	03 Dec 2009
	125,000	\$3.00	03 Mar 2010
	125,000	\$3.30	03 Jun 2010
Option grant to key management on 10 July 2006	100,000	\$2.60	13 Sep 2009
	100,000	\$2.80	13 Jan 2010
	100,000	\$3.00	13 May 2010
	100,000	\$3.30	13 Sep 2010
Option grant to directors on 7 August 2006	250,000	\$2.20	26 Sep 2011
	250,000	\$2.20	26 Mar 2012
Option grant to key management on 19 February 2007	125,000	\$2.60	18 Feb 2011
	125,000	\$3.30	18 Feb 2012
Option grant to key management on 22 February 2007	125,000	\$2.60	20 Feb 2011
	125,000	\$3.30	20 Feb 2012
Option grant to directors on 7 May 2007	250,000	\$2.20	06 May 2013
	250,000	\$2.20	06 May 2014
	3,650,000

The number and weighted average exercise prices of share options is as follows:

	Weighted average exercise price	Number of options	Weighted average exercise price	Number of options
	2007	2007	2006	2006
Outstanding at the beginning of the period	\$0.88	1,100,000	\$0.15	1,000,000
Forfeited during the period	(\$1.88)	(200,000)	-	-
Exercised during the period	(\$1.07)	(1,650,000)	(\$0.15)	(500,000)
Granted during the period	\$2.30	3,650,000	\$1.48	600,000
Outstanding at the end of the period	\$2.49	2,900,000	\$0.88	1,100,000
Exercisable at the end of the period	\$2.33	1,675,000	\$0.88	1,100,000

The options issued pursuant to the Executive and Employee share option plan and outstanding at 30 June 2007 have an exercise price in the range of \$1.50 to \$3.30 and a weighted average remaining contractual life of 4.5 years.

During the financial year, 1,650,000 share options were exercised (2006: 500,000). The weighted average share price at the dates of exercise was \$1.07.

The fair value of services received in return for share options granted are measured by reference to the fair value of share options granted. The estimate of the fair value of the services received is measured based on the Black-Scholes option-pricing model. The contractual life of the option is used as an input into this model. Expectations of early exercise are incorporated into the Black-Scholes option-pricing model.

19. Employee benefits (continued)

	Key mgmt personnel	Key mgmt personnel
Fair value of share options and assumptions	2007	2006
Fair value at measurement date	\$0.72	\$0.71
Assumptions
Share price	\$1.86	\$1.85
Exercise price	\$2.30	\$1.48
Expected volatility (expressed as weighted average volatility used in
the modelling under the Black-Scholes option-pricing model)	50%	39%
Option life (expressed as weighted average life used in the modelling
under the Black-Scholes pricing model)	4.5	2.5 yrs
Expected dividends	Nil	Nil
Risk-free interest rate (based on national government bonds)	5.8%	5.5%

The expected volatility is based on the historic volatility (calculated based on the weighted average remaining life of the share options), adjusted for any expected changes to future volatility due to publicly available information.

	Note		Consolidated	The Company
		2007	2006	2007	2006
		\$	\$	\$	\$
Share options granted during the financial year under
Executive and Employee Share Option Plan
Directors and key management personnel	6	1,375,122	428,729	1,375,122	428,729
Other		235,568	-	235,568	-
		1,610,690	428,729	1,610,690	428,729

20. Loans and borrowings

	2007	2006	2007	2006
	\$	\$	\$	\$
Current
Finance lease liabilities (1)	372,498	-	-	-
Non-current
Finance lease liabilities (1)	2,120,865	-	-	-
Loans from related parties (2)	2,971,976	-	-	-
	5,092,841	-	-	-
	5,465,339	-	-	-

20. Loans and borrowings (Continued)

Finance leases liabilities

Finance lease liabilities of the consolidated entity are payable as follows:

Consolidated	2007	2007	2007	2006	2006	2006
	\$	\$	\$	\$	\$	\$
	Minimum			Minimum
	lease			lease
	payments	Interest	Principal	payments	Interest	Principal
Less than one year	577,263	200,266	376,996	-	-	-
Between one and five years	2,544,843	428,476	2,116,367	-	-	-
	3,122,106	628,742	2,493,363	-	-	-

The Company has no finance leases.

• (1) Finance lease liabilities are denominated in AUD, incur a nominal interest rate of 8.5%. Finance lease liabilities are effectively secured as the rights to the leased assets recognised in the financial statements revert to the lessor in the event of default.
• (2) Loan from Noble Resources Limited (being the minority interest holder) advanced under the Shareholder Agreement date 4 October 2006. The loan is denominated in AUD, is unsecured and non-interest bearing, callable only when permitted by project loan covenants.

Convertible notes

During the period the consolidated entity finalised a Heads of Agreement (HOA) with Noble Resources Limited. Included in the HOA was a convertible note facility, with a face value of \$8,202,207 and convertible to 3,728,549 ordinary shares in the company (which is subject to shareholder approval). Under the HOA, Noble Resources Limited can not convert the note into equity until the consolidated entity has drawn upon the note. The consolidated entity is not obliged to draw upon the note at any time. As a result, the consolidated entity does not currently consider the convertible note to be dilutive to its current shareholders.

21. Provisions

	Consolidated			The Company
	2007	2006	2007	2006
	\$	\$	\$	\$
Provision for site restoration	12,107,392	12,107,392	-	-

A provision of \$12,107,392 was recognised during the 2006 financial year as a result of the settlement with Xstrata. In determining the quantum of the provision the directors have had regard to the best estimate of the rehabilitation and remediation costs based on current values should the Windimurra mine site be rehabilitated from its current state.

22. Capital and reserves

Reconciliation of movement in capital and reserves attributable to equity holders of the parent

				Co oli da ted ns					Th	Co e mp an y
	Sh are ita l ca p \$	Em loy p ee tio op n res erv e \$	Op tio n ium p rem res erv e \$	Ac late d cu mu Lo ss es \$	To tal \$	Mi rity no Int st ere \$	To tal Eq uit y \$	Sh are ita l ca p \$	Em loy p ee tio op n res erv e \$	Op tio n ium p rem res erv e \$	Ac late d cu mu Lo ss es \$	To tal Eq uit y \$
Ba lan 1 Ju ly 2 0 0 5 at ce	5 0, 4 3 6, 17 1	-	3, 9 6 5, 77 2	( ) 4 4, 3 2 9, 3 9 3	1 0, 0 7 2, 5 5 0	-	1 0, 0 7 2, 5 5 0	5 0, 4 3 6, 17 1	-	3, 9 6 5, 77 2	( ) 4 4, 3 2 9, 1 9 1	1 0, 0 7 2, 7 5 2
To l re ise d inc ta co g n om e
d e an xp en se	-	-	-	( 9 6 2, 0 9 2 )	( ) 9 6 2, 0 9 2	-	( ) 9 6 2, 0 9 2	-	-	-	25 5, 6 5 3	2 5 5, 6 5 3
Em loy ha ion t p ee s re op s	-	4 2 8, 7 2 9	-	-	4 2 8, 7 2 9	-	4 2 8, 7 2 9	-	4 2 8, 7 2 9	-	-	4 2 8, 7 2 9
L iste d s ha ion t re op s
ise d ex erc	7, 17 2	-	-	-	7, 17 2	-	7, 17 2	7, 17 2	-	-	-	7, 17 2
S ha ion ise d by t re op s e xe rc
d ire cto rs	0 0 0 75 ,	-	-	-	7 5, 0 0 0	-	7 5, 0 0 0	0 0 0 75 ,	-	-	-	7 5, 0 0 0
S ha iss d res ue	2 6, 3 7 1, 2 2 3	-	-	-	2 6, 3 7 1, 2 2 3	-	2 6, 3 7 1, 2 2 3	2 6, 3 7 1, 2 2 3	-	-	-	2 6, 3 7 1, 2 2 3
Ba lan 3 0 Ju 2 0 0 6 at ce ne	6, 8 8 9, 5 6 6 7	4 2 8, 2 9 7	3, 9 6 5, 2 77	( 4 5, 2 9 1, 4 8 5 )	3 5, 9 9 2, 5 8 2	-	3 5, 9 9 2, 5 8 2	6, 8 8 9, 5 6 6 7	4 2 8, 2 9 7	3, 9 6 5, 2 77	( 4 4, 0 3, 5 3 8 ) 7	3 2 1 0, 5 2 9 7,
Ba lan 1 Ju ly 2 0 0 6 at ce	7 6, 8 8 9, 5 6 6	4 2 8, 7 2 9	3, 9 6 5, 77 2	( 45 2 9 1, 4 8 5 ) ,	3 5, 9 9 2, 5 8 2	-	3 5, 9 9 2, 5 8 2	7 6, 8 8 9, 5 6 6	4 2 8, 7 2 9	3, 9 6 5, 77 2	( 4 4, 0 7 3, 5 3 8 )	3 7, 2 1 0, 5 2 9
To l re ise d inc ta co g n om e
d e an xp en se	-	-	-	6, 8 3 6 3 0 7,	6, 8 3 7, 6 3 0	( 3 0 2 2 ) 5, 7	6, 5 3 1, 9 0 8	-	-	-	( 9 8 4, 9 0 8 )	( 9 8 4, 9 0 8 )
Em loy ha ion t p ee s re op s	-	1, 5 5 2, 4 1 6	-	-	1, 5 5 2, 4 1 6	-	1, 5 5 2, 4 1 6	-	1, 5 5 2, 4 1 6	-	-	1, 5 5 2, 4 1 6
S ha ion ise d by t re op s e xe rc
d ire cto rs	1, 4 9 1, 8 8 7	( 4 4 1, 8 8 ) 7	-	-	1, 0 5 0, 0 0 0	-	1, 0 5 0, 0 0 0	1, 4 9 1, 8 8 7	( 4 4 1, 8 8 ) 7	-	-	1, 0 5 0, 0 0 0
S ha t ion ise d by re op s e xe rc
loy em p ee s	8 4 4, 3 8 7	( 1 2 9, 3 8 ) 7	-	-	7 1 5, 0 0 0	-	7 1 5, 0 0 0	8 4 4, 3 8 7	( 1 2 9, 3 8 ) 7	-	-	7 1 5, 0 0 0
Inc in ino ity int st rea se m r ere	-	-	-	-	-	1, 1 6 7, 8 9 9	1, 1 6 7, 8 9 9	-	-	-	-	-
S ha iss d res ue	4 9, 0 9 5, 3 7 3	-	-	-	5, 4 9, 0 9 3 7 3	-	5, 4 9, 0 9 3 7 3	4 9, 0 9 5, 3 7 3	-	-	-	5, 4 9, 0 9 3 7 3
Ba lan 3 0 Ju 2 0 0 7 at ce ne	1 2 8, 3 2 1, 4 6 5	1, 4 0 9, 6 1 9	3, 9 6 5, 2 77	( 3 8, 4 5 3, 8 5 3 )	9 5, 2 4 3, 0 0 3	8 6 2, 17 7	9 6, 1 0 5, 1 8 0	1 2 8, 5 6 5, 8 0 4	1, 4 0 9, 6 1 9	3, 9 6 5, 2 77	( 4 5, 0 5 8, 4 4 6 )	8 8, 6 3 8, 4 1 0

22. Capital and reserves (continued)

Share capital	The Company
	Ordinary
	shares
	2007
On issue at 1 July	74,720,430	45,536,844
Listed options exercised	-	3,586
Unlisted options exercised	1,650,000	500,000
Share Issued for cash	26,254,665	28,680,000
On issue at 30 June – fully paid	102,625,095	74,720,430

The consolidated entity has also issued share options under the Executive and Employee Share Option Plan (see note 19).

Effective 1 July 1998, the Company Law Review Act abolished the concept of par value shares and the concept of authorised capital. Accordingly, the Company does not have authorised capital or par value in respect of its issued shares.

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company.

Employee option reserve

The employee option reserve represents the fair value of share options issued to employees under the Executive and Employee Share Option Plan issued on 15 October 2005. The fair value has been calculated as at the grant date of each option granted and is recognised over the vesting period.

Option premium reserve

The option premium reserve represents the net cash received from the issue of 108,016,033 options on 8 August 2000 at 4c per option less the expenses incurred to place the options.

Dividends

No dividends were proposed or paid during the financial year.

23. Financial instruments

Exposure to credit, interest rate and currency risks arises in the normal course of the consolidated entity's business.

Credit risk

The consolidated entity does not currently earn revenue from operating assets, thus there is currently no credit risk on trade receivables.

Investments are allowed only in liquid listed securities. The consolidated entity is not currently exposed to any other credit risk.

Interest rate risk

The consolidated entity's interest rate risk arises from borrowings which are principally issued at fixed rates.

Hedging risk

The consolidated entity has not entered into any hedge transactions and is therefore not exposed to any hedging risk.

23.Financial instruments (continued)

Effective interest rates and repricing analysis

In respect of income-earning financial assets and interest bearing financial liabilities, the following table indicates their effective interest rates at the reporting date and the periods in which they mature or, if earlier, reprice.

Consolidated

	Note	Effective interest rate %	Total \$	Less than 1 year \$	1 to 5 years \$	More than 5 years \$
2007
Fixed rate instruments
Cash and cash equivalents	12	6.1%	67,264,039	63,406,677	3,857,362	-
Finance lease liabilities	20	8.5%	(2,493,363)	(376,996)	(2,116,367)	-
Loan from minority interest	20	-	(2,971,975)	-	(2,971,975)	-
			61,798,701	63,029,681	(1,230,980)	-
2006
Fixed rate instruments
Cash and cash equivalents	12	5.7%	40,419,552	40,419,552	-	-
			40,419,552	40,419,552	-	-

Foreign currency risk

Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is not the entity's functional currency. The consolidated entity is exposed to foreign exchange risk arising from foreign denominated purchases relating to the development and construction of the Windimurra Vanadium mine.

Corporate Treasury is responsible for managing exposures in each foreign currency and may use external forward currency and put option contracts.

Fair values

The fair values of the consolidated entity's financial assets and liabilities are not significantly different from their carrying amounts shown in the balance sheet.

Estimation of fair values

The methods used in determining the fair values of financial instruments are discussed in note 3.

24. Operating leases

Leases as lessee

Non-cancellable operating lease rentals are payable as follows:

		Consolidated	The Company
	2007 2006		2007	2006
	\$	\$	\$	\$
Less than one year	140,514	80,587	-	80,587
Between one and five years	568,588	307,010	530,432	307,010
More than five years	-	-	-	-
	709,102	387,597	530,432	387,597

The consolidated entity leases office space in West Perth, from which it conducts its corporate activities.

25. Capital and other commitments Capital commitments

	Consolidated		The Company
	2007	2006	2007	2006
	\$	\$	\$	\$
Within one year	6,892,644	-	-	-
One year or later and no later than five years	-	-	-	-
More than five years	-	-	-	-
	6,892,644	-	-	-

Capital commitments entered into by the consolidated entity relate to items of plant which are considered to be longlead time orders that are critical to the timing of the re-development of the Windimurra Vanadium mine.

Exploration expenditure commitments

In order to maintain current rights of tenure to exploration tenements, the consolidated entity is required to perform minimum exploration work to meet the minimum expenditure requirements specified by various State governments. These obligations are subject to renegotiation when application for a mining lease is made and at other times. These obligations are not provided for in the financial report and are payable:

Within one year	537,452	418,081	-	418,081
One year or later and no later than five years	1,215,249	1,011,569	-	1,011,569
Later than five years	1,414,083	1,323,001	-	1,323,001
	3,166,784	2,752,651	-	2,752,651

These obligations are expected to be fulfilled in the normal course of operations. Commitments beyond 2007 are dependent upon whether existing rights of tenure are renewed or new rights of tenure are acquired. If the consolidated entity decides to relinquish certain leases and/or does not meet these obligations, assets recognised on the balance sheet may require review to determine the appropriateness of carrying values.

Employee compensation commitments

Key management personnel (consolidated and the Company) Commitments under non-cancellable employment contracts not provided for in the financial statements and payable:

Within one year	-	350,000	-	350,000
One year or later and no later than five years	-	291,667	-	291,667
	-	641,667	-	641,667

26. Contingencies

The consolidated entity had contingent liabilities at 30 June 2007 in respect of:

Performance bonds

The consolidated entity has provided unconditional performance bonds, guaranteed by a financial institution, amounting to \$3,657,362 (2006: nil) to the Department of Industry and Resources in respect of compliance with environmental conditions in relation to certain tenements.

The financial institution has taken security, by way of right of offset, against the term deposit (\$3,657,362) invested with it (refer note 12). A provision for site rehabilitation has been established based on current values should Windimurra mine site be rehabilitated from its current state, as set out in note 21.

Bank guarantee

The Company has provided bank guarantees for the operation of corporate credit cards, and other facilities

A financial institution has taken security, by way of right of offset, against the term deposit (\$200,000) invested with it.

27. Consolidated entities

	Country of incorporation		Ownership interest
Parent entity Precious Metals Australia Limited		2007	2006
Subsidiaries
Windimurra Vanadium Pty Ltd 1	Australia	90%	100%
Midwest Coal Pty Ltd	Australia	100%	100%
PMAL Investments Pty Ltd 2	Australia	100%	100%

1 Formerly PMA (Windimurra) Pty Ltd until 18 August 2006, formerly Impart Investments Pty Ltd until 19 April 2005. 2 Formerly Use It or Lose It (WA) Pty Ltd until 28 June 2007, formerly Victory Street Pty Ltd until 4 September 2006.

28. Reconciliation of cash flows from operating activities

		Consolidated		The Company
	Note	2007	2006	2007	2006
		\$	\$	\$	\$
Cash flows from operating activities
Profit/(loss) for the period		6,473,634	(962,092)	(1,043,182)	255,653
Adjustments for:
Depreciation		249,619	36,306	63,328	14,758
(Gain)/loss on property, plant and equipment		(3,000)	3,705	-	3,705
Loss on sale of investments		264	-	264	-
Gain on dilution of interest in subsidiary	5	(12,332,101)	-	-	-
Equity-settled share-based payment expenses	19	1,610,690	428,729	1,610,690	428,729
Operating profit/(loss) before changes in
working capital and provisions		(4,000,894)	(493,352)	631,100	702,845
Decrease/(increase) in other receivables		8,134	(161,975)	(502,661)	(106,892)
(Increase)/decrease in inventories		(55,138)	(13,501)	-	-
Increase/(decrease) in trade and other payables		129,303	(641,683)	52,410	(867,572)
Increase/(decrease) in provisions and employee
benefits		86,877	52,250	(5,700)	52,250
Net cash from operating activities		(3,831,717)	(1,258,261)	175,149	(219,369)

28. Reconciliation of cash flows from operating activities (continued) Non-cash investing and financing activities

Transactions and other events that do not result in any cash flows during the period but affect assets and liabilities that have been recognised in the financial statements were as follows:

		Consolidated	The Company
	2007 2006		2007	2006
	\$	\$	\$	\$
Acquisitions of plant and equipment by means
of:
Finance lease	2,513,946	-	-	-

29. Related Parties

The following were key management personnel of the consolidated entity at any time during the reporting period and unless otherwise indicated were key management personnel for the entire period:

Executive directors Executives

Mr Roderick Smith (Managing Director) (commenced 6 April 2004 to 20 June 2007) Mr Shaun Bunn (Director of Operations) (commenced 3 February 2006, resigned 22 August 2007) Dr Iain Scott (Managing Director) (commenced 19 April 2007 as an Executive Director and 20 June 2007 as Managing Director)

Non-executive directors

Mr Anthony Grey (Chairman) (commenced 1 December 2005, resigned 19 April 2007) The Earl of Warwick (commenced 14 May 1989) Mr Michael Fry (commenced 3 March 2004 resigned 20 June 2007)) Mr Michael Kiernan (Chairman) (commenced 7 August 2006 as a Non Executive Director and as Chairman 19 April 2007) Mr Roderick Smith (commenced 21 June 2007) Mr Ricardo Leiman (commenced 3 November 2006) Dr Wolf Martinick (commence 22 December 2006) Mr Andrew Simpson (commenced 20 June 2007)

Mr Michael Drew (Chief Financial Officer) (commenced 29 August 2005 and resigned 2 March 2007) Mr Michael Tamlin (General Manager, Marketing) (commenced 5 June 2006)

Mr Garry Korte (Chief Financial Officer) (commenced 22 February 2007)

Mr Matthew Lilly (Legal Counsel and Company Secretary) (commenced 19 February 2007) Mr Les Ford (Principal Consultant) (commenced 10 June 2006)

The key management personnel compensation included in 'personnel expenses' or capitalised as exploration and development expenditure are as follows:

		Consolidated	The Company
	2007	2006		2006
	\$	\$	\$	\$
Short-term employee benefits	1,295,588	793,538	894,591	243,323
Other long term benefits	-	-	-	-
Post-employment benefits	763,603	65,471	733,278	16,792
Termination benefits	1,027,500	-	1,027,500	-
Equity settled share based payments	1,375,122	428,729	915,887	428,729
	4,461,813	1,287,738	3,571,256	688,844

Individual directors and executives compensation disclosures

Information regarding individual directors and executives compensation and some equity instruments disclosures as permitted by Corporation Regulations 2M.3.03 and 2M.6.04 is provided in the Remuneration Report section of the Directors' report on pages 10 to 19.

Apart from the details disclosed in this note, no director has entered into a material contract with the Company or the consolidated entity since the end of the previous financial year and there were no material contracts involving directors' interests existing at year-end.

Loans to key management personnel and their related parties (consolidated)

There are no loans to key management personnel or their related parties as at the end of the current or prior financial years.

Other key management personnel transactions with the Company or its controlled entities Related parties of key management personnel did not transact with the Company or its controlled entities during the current or prior financial years.

Options and rights over equity instruments

The movement during the reporting period in the number of options over ordinary shares in Precious Metals Australia Limited held, directly, indirectly or beneficially, by each key management person, including their related parties, is as follows:

	Held at	Granted as		Other	Held at	Vested during the	Vested and exercisable
2007	1 July	compensation	Exercised	changes	30 June	year	at 30 June
Executives
Mr M Drew	300,000	100,000	(200,000)	(200,000)	-	100,000	-
Mr B Foster	300,000		(300,000)		-		-
Mr S Bunn	-	500,000	-	-	500,000	500,000	500,000
Mr M Tamlin	-	500,000	-	-	500,000	375,000	375,000
Mr L Ford	-	400,000	-	-	400,000	300,000	300,000
Mr G Korte	-	250,000	-	-	250,000	-	-
Mr M Lilly	-	250,000	-	-	250,000	-	-
Directors
Mr M Fry	500,000	-	(500,000)	-	-	-	-
Mr A Grey	-	650,000	(650,000)	-	-	650,000	-
Mr M Kiernan	-	500,000	-	-	500,000	500,000	500,000
Dr I Scott	-	500,000	-	-	500,000	-	-
2006
Executives
Mr M Drew	-	300,000	-	-	300,000	300,000	300,000
Mr B Foster	-	300,000	-	-	300,000	300,000	300,000
Directors
Mr M Fry	500,000	-	-	-	500,000	-	500,000
Mr I Macpherson	500,000	-	(500,000)	-	-	-	-

29. Related Parties (continued)

No options held by key management personnel are vested but not exercisable at 30 June 2007 or 2006.

Movements in shares

The movement during the reporting period in the number of ordinary shares in Precious Metals Australia Limited held, directly, indirectly or beneficially, by each key management person, including their related parties, is as follows:

	Held at		Rights	Exercise		Held at
2007	1 July	Purchases	Issue	of Options	Sales	30 June
Directors
Mr R Smith	11,791,709	50,000	-	-	(416,668)	11,425,041
The Earl of Warwick	6,305,331	23,000	-	-	(250,000)	6,078,331
Mr M Fry	2,200,000	-	-	500,000	(1,500,000)	1,200,000
Mr M Kiernan	-	250,000			(200,000)	50,000
2006
Directors
Mr R Smith	11,009,763	1,021,447	2,344,499	-	-	14,375,709
The Earl of Warwick	9,123,490	-	1,824,698	-	-	10,948,188
Mr M Fry	100,000	1,503,188	596,812	-	-	2,200,000
Mr I Macpherson	-	-	282,812	-	-	282,812

No shares were granted to key management personnel during the reporting period as compensation.

Changes in key management personnel in the period after the reporting date and prior to the date when the financial report is authorised for issue

Mr S Bunn, an Executive Director, resigned on 22 August 2007. There has been no other changes in key management personnel in the period after the reporting date and prior to the date when the financial report is authorised for issue.

Transactions with minority interest

During the financial year, the consolidated entity issued 9.999% of the share capital in its subsidiary, Windimurra Vanadium Pty Ltd, to Noble Resources Limited for \$13,500,000.

29. Related Parties (continued)

Identity of related parties

The consolidated entity has a related party relationship with its subsidiaries (see note 27) and with its key management personnel.

Other related party transactions

Subsidiaries – transactions with Windimurra Vanadium Pty Ltd (WVPL)

During the financial period the company lent funds to its 90.001% owned subsidiary WVPL to fund the purchase of capital equipment, exploration and evaluation activities and for other general expenditure associated with the Windimurra mine site. The funds are non-interest bearing and repayable on demand. Noble Resources Limited, which owns the remaining 9.999% of WVPL, also lent funds in the equivalent portion to its equity holding and on the same terms as the company.

At 30 June 2007 WVPL owed the following to the respective entities:	2007	2006
	\$	\$
Loan from Precious Metals Australia Limited to WVPL Loan from Noble Resources Limited to WVPL	26,750,749	251,152
	2,971,975 29,722,724	- 251,152

Transactions with directors

On 10 May 2007, the Company entered into a non-competition deed with Mr R Smith for nil consideration. The deed restricts Mr Smith and any of his associates from competing with any business the same, or substantially the same, as the Company's business for a period of 5 years.

Transactions with key management personnel

There was no transactions with key management personnel in the current financial year.

30. Subsequent events

There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely in the opinion of the directors of the company, to affect significantly the operations of the consolidated entity, the results of those operations or the sate of affairs of the consolidated entity, in future financial years.

Precious Metals Australia Limited and its controlled entities Directors' declaration

• 1. In the opinion of the directors of Precious Metals Australia Limited ('the Company'):
• (a) the financial statements, notes and the remuneration disclosures that are contained in sections 5.11.1, 5.11.2, 5.11.3.1 and 5.11.3.3 of the Remuneration report in the Directors' report, set out on pages 26 to 57, are in accordance with the Corporations Act 2001, including:
  • (i) giving a true and fair view of the financial position of the Company and the consolidated entity as at 30 June 2007 and of their performance, as represented by the results of their operations and their cash flows, for the financial year ended on that date; and
  • (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
• (b) the remuneration disclosures that are contained in sections 5.11.1, 5.11.2, 5.11.3.1 and 5.11.3.3 of the Remuneration report in the Directors' report comply with Australian Accounting Standard AASB 124 Related Party Disclosures.
• (c) there are reasonable grounds to believe that the Company and consolidated entity will be able to pay its debts as and when they become due and payable.
• (d) the financial report also complies with International Financial Reporting Standards as disclosed in note 2(a).
• 1. The directors have been given the declarations required by Section 295A of the Corporations Act 2001 from by the chief executive officer and chief financial officer for the financial year ended 30 June 2007.

Dated at Perth this 21st day of September 2007.

Signed in accordance with a resolution of the directors:

_______________________

Dr Iain Scott Director