TIVAN LIMITED — Annual Report 2007

Sep 27, 2007

TNGLIMITED

ABN 12 000 817 023

ANNUAL FINANCIAL REPORT 2007

DIRECTORS

John W Barr (Chairman) Neil G Biddle (Managing Director) Michael P Bowen (Non-Executive Director) Edward J Fry (Non-Executive Director) Terence N Smith (Non-Executive Director)

COMPANY SECRETARY

Damian P Delaney

REGISTERED OFFICE

Level 1, 282 Rokeby Road Subiaco Western Australia 6008

PO Box 1126 Subiaco Western Australia 6904

(08) 9327 0900 Telephone: Facsimile: (08) 9327 0901 Website: www.tngltd.com.au

SHARE REGISTRY

Computershare Investor Services Pty Limited Level 2 45 St Georges Terrace Perth Western Australia 6000

(08) 9323 2000 Telephone: $(08)$ 9323 2033 Facsimile:

AUDITORS

KPMG

HOME STOCK EXCHANGE

Australian Securities Exchange (ASX) Code: TNG

INTERNATIONAL STOCK EXCHANGE

Frankfurt Stock Exchange Code: HJI

Review of Operations	2
Corporate Governance Statement	14
Directors' Report	17
Auditor's Independence Declaration	29
Income Statements	30
Balance Sheets	31
Statements of Cash Flows	32
Statements of Changes in Equity	33
Notes to the Financial Statements	35
Directors' Declaration	72
Independent Audit Report	73
ASX Additional Information	75

OVERVIEW

After laving the foundations for its growth strategy last year, the Company achieved a number of important milestones during the 2007 financial year. To reflect its broader focus as a base metals company, the Company changed its name during the year from Tennant Creek Gold Limited to TNG Limited (TNG).

The Company's initial objective was to position itself to commence a major exploration program at the Manbarrum Zinc-Lead-Silver Project in the Northern Territory, and then to add value to the project by initiating resource drilling programs at the Sandy Creek deposit and testing other prospects in the broader project area.

Key highlights for the year included:

• the commencement of a Phase 1 resource drilling program at Manbarrum in August 2006, resulting in the definition of an initial JORC compliant resource estimate of 10.5 million tonnes @ 3.3% combined Zn-Pb at Sandy Creek;
• the re-commencement of exploration at Manbarrum in May 2007 with a budget of more than $\bullet$ \$8 million to further refine and extend the Sandy Creek resource and test other targets;
• the appointment of experienced geologist and geochemist, Paul Burton, as Exploration Manager to lead the resource drilling programs at Manbarrum and manage TNG's extensive exploration portfolio;
• the appointment of CSA Australia Limited, the Australian arm of global geological and management consultants CSA, as Manbarrum Project Manager. CSA's key staff members, led by Dr Simon Dorling, have excelled during a demanding period;
• exploration expenditure for the 2006/07 financial year of more than \$3.7m. Expenditure spent to the date of this report was \$3.2m with a further \$1.4m to be spent by November 2007;
• the raising of more than \$12.8M from placements and the exercise of options to fund the Company's aggressive exploration programs;
• the distribution of the Company's investments in Thor Mining PLC, Batavia Mining Limited and Western Desert Resources Ltd to TNG shareholders.
• the recent in principle Board approval to proceed with a further restructuring of the Company's non-core assets, including the potential sale of other tenements and the transfer of its nickel assets to a separate, listed nickel-focused Company. This should result in further distributions to shareholders.

The Company remains well placed to focus on the exploration and development of the Manbarrum Project.

This strategic focus is supported by the positive outlook for commodity markets, underpinned by continuing strong levels of demand for both zinc and lead from evolving economies such as China and India.

Most importantly, the year's achievements would not have been possible without the efforts of a highly dedicated consulting and staff group, and the Board thanks everyone involved with the Company for their efforts.

The Board endeavours to be accessible to all shareholders and stakeholders and encourages interested parties to contact the Company directly or via our website at: www.tngltd.com.au

PROJECTS

TNG's main focus is on the Manbarrum Project in the Northern Territory (NT) of Australia, while at the same time maintaining its interest in a number of other prospective tenements in both the NT and Western Australia and managing its Joint Venture interests.

Fig. 1: Tenement Map

MANBARRUM PROJECT: ZINC-LEAD-SILVER.

129'00 129130 $128'30'$ Joseph Bonaparte Gulf $\frac{1}{N}$ MANBARRUM
PROJECT cre SANDY CREEK Zn-Pb-Ag
PROSPECT $15 - 30$ É $20km$ 150km to Argyle Diamond mine

The Manbarrum Project is the Company's flagship exploration project.

Fig. 2: Manbarrum Project Location

Manbarrum is located 82 kilometres north-east of the township of Kununurra in the Northern Territory. The granted Manbarrum tenements comprise three Exploration Licences and an Authority to Prospect (under Section 178) covering a combined area of approximately 550 square kilometres.

The tenements cover a 50 kilometre strike length of the Bonaparte Shelf margin, where widespread Mississippi Valley Type (MVT) Zinc-Lead-Silver mineralisation occurs.

TNG has applied for a further two Exploration Licences on the Western Australia side, which will give TNG comprehensive tenement coverage of the most prospective margins of the Bonaparte Shelf Margin.

The Sandy Creek deposit, located in the south west corner of the Manbarrum Project, has been the core focus of TNG's exploration programs to date. Following completion of the initial drilling program carried out in 2006, a preliminary resource estimate of 10.5 million tonnes @ 3.3% combined Zn/Pb grade was defined for Sandy Creek.

The Company has identified a number of additional geophysical and geochemical targets within its broader tenement area which represent priority exploration targets for further MVT-style mineralisation along strike from Sandy Creek.

GEOLOGY and MINERALISATION

The Manbarrum Project is located on the eastern margin of the Bonaparte Gulf Basin, where Devonian-Carboniferous marine sediments unconformably overlie faulted Proterozoic basement. Three Palaeozoic units are recognised in the area: Devonian Cockatoo Group, Lower Carboniferous Burt Range Formation and Milligans formation.

Milligans Formation black shales and siltstones locally cap the dolomitised Burt Range Formation carbonates and, in conjunction with north-south trending syn-depositional growth faults, provide a prospective setting for MVT base metal sulphide deposits.

EXPLORATION MODEL

TNG's exploration team has confirmed the potential for the Manbarrum Project to host multiple pods of MVT base metal mineralisation of similar scale or larger than the Sandy Creek deposit.

The Sandy Creek deposit is interpreted to be a strata-bound carbonate matrix replacement-type zinclead deposit, with similarities to several global MVT deposits (for example, the SE Missouri MVT district and the Tri State district, both in the USA). MVT-style mineralisation generally occurs in clusters with numerous mineralised bodies normally present.

2006 EXPLORATION PROGRAM

The Phase 1 reverse circulation (RC) drilling program was completed in mid-November 2006 with a total of 9,605 metres drilled in 63 holes. Excellent results were returned from the drilling, with the majority of holes intersecting significant zinc mineralization within the Sandy Creek zone, the initial focus of resource drilling. This successful first phase provided the company with sufficient information to undertake a preliminary resource estimate, which was released in early 2007. The initial JORC compliant resource estimate was 10.5 million tonnes at 3% Zn, 0.74% Pb and 5.5g/t Ag (3.3% Zn $Eq$ ).

Resource Estimation	Category	Tonnes Mt	Zn%	Pb%	Ag $g/t$	$Zn + Pb\%$
Pipes	Indicated	3.3	3.5	0.9	6.4	4.4
	Inferred	2.1	4.6	0.3	4.1	4.9
	Total	5.4	3.9	0.7	5.5	4.6
Stratabound	Indicated	4.0	1.9	0.9	5.7	2.8
	Inferred	1.3	2.0	1.3	6.4	3.3
	Total	5.3	1.9	1.0	5.9	2.9
	Grand Total	10.7	3.0	0.8	5.7	3.8

Table 1: Sandy Creek Resource Estimation, February 2007

2007 EXPLORATION PROGRAM

Fig. 3: 2007 Exploration Prospects

The broader objective of the 2007 exploration program is to confirm potential of the Manbarrum Project to host multiple deposits and to establish a strategically significant inventory of zinc-leadsilver resources. Drilling programs were initially focussed at the Sandy Creek resource, with further exploration taking place over 34km of the tenement area.

The Phase 2 exploration program commenced in late May 2007, at the conclusion of the northern wet season, and was ongoing at the time of preparing this report.

The program is focused on confirming extensions to the current mineralisation at the Sandy Creek deposit and establishing the extent and grade of the expanded resource zone to underpin a revised JORC compliant resource estimate. Additional exploration of other key targets is also being undertaken.

The results received to date indicate that the mineralisation is more extensive and complex than first thought, with a significant quantity of assay results still pending - reflecting slow turnaround times in the assay laboratories.

Once all the results are received, an updated resource estimate will be completed and the current geological model for the Sandy Creek deposit refined.

Exploration has also commenced at two other prospects within the project area, with RC drilling commencing at the North East IP Anomaly (NEIP) in July 2007 and the Djibitgun prospect in September 2007. These targets will continue to be refined during the 2007/08 period.

		$_{\rm RC}$	D
Prospect	holes	metres	holes	metres
Sandy Creek 2006	63	9,605
Sandy Creek 2007	52	10,536	37	7,914
NEIP	26	3,758
DJIBITGUN IN PROGRESS
	141	23,899	37	7,914

The drilling summary for the Manbarrum Project is shown in the table below:

*Figures correct as of 3 September 2007. Drilling is ongoing.

Table 2: Drilling Summary

A detailed high-powered Induced Polarisation (IP) survey was completed during the year over the area from the Sandy Creek to the Landandi prospects. A total of 83 line kilometres were surveyed, with the results highlighting significant anomalies at Browns, Djibitgun and Landandi - which remain high priority targets for the Company's continuing exploration program.

A detailed gravity survey has been planned to supplement the information already gained.

SANDY CREEK DEPOSIT

It is almost The Sandy Creek deposit comprises sphalerite-galena-pyrite type mineralisation. exclusively a primary sulphide deposit, although some secondary zinc mineralisation may be present in the supergene zone. No lead sulphates (anglesite) or carbonates (cerrusite) have been observed.

The mineralisation is predominantly hosted by a quartz-sandy carbonate unit, 100-120m thick. In places, the mineralisation appears to extend into the underlying silty carbonate unit. High-grade galena mineralisation has been intersected in two holes in the saprolitic clays immediately above the main host unit. This zone is also likely to contain zinc oxide mineralisation.

The mineralisation remains open at depth, to the south, west and north.

Figure 4 shows a cross section schematic view of the deposit.

Fig. 4: Cross Section of the Sandy Creek Deposit

NEIP ANOMALY

The NEIP anomaly, which lies 400m to the north-east of the Sandy Creek Main Zone, was defined by a large chargeable IP anomaly which, significantly, is of a similar tenor to the IP response generated by the Sandy Creek deposit itself.

In July 2007, 27 RC holes (3,932m) were completed at the NEIP Anomaly. Sulphides have been intersected however analytical results are pending.

The NEIP anomaly represents a key exploration target for TNG in the context of the geological model for the Manbarrum Project as an emerging MVT province comprising multiple pods of mineralisation.

RESULTS

Significant results were reported during the year at Sandy Creek. These continue to support the mineralisation style and extend the resource. A large number of results are still awaited and a further refinement of the geological model and revision of the resource estimate will be completed once all the results are received.

OTHER PROSPECTS

Significant surface geochemical soil and rock zinc-lead anomalies have been identified from historic data within TNG's tenement portfolio at Manbarrum (Figure 3).

Three of these - Browns, Djibitgun, and Landandi, have coincident IP, gravity and soil zinc anomalism. Interpretations of the gravity and seismic data show that these overlie the prospective sandy dolomite in favourable structural settings.

These remain high priority targets for the company and are considered to represent further MVT-style base metal targets.

Drilling at Djibitgun commenced in September 2007 and results are awaited.

WARRAMUNGA PROJECT NT: Gold - Copper - Bismuth

EXPLORER, ROVER, McLAREN CREEK and GOSSE RIVER

TNG has an interest in several granted mining and exploration tenements in the immediate vicinity of the town of Tennant Creek. These tenements contain first order Tennant Creek-style magnetic ironstone targets with the potential to host gold and gold-copper-bismuth deposits.

All projects are hosted within the Warramunga Formation and have the same magnetic trend and magnitude as some of the world-class gold and gold-copper-bismuth deposits in the Tennant Creek Inlier.

TNG has an additional three Exploration Licence applications in the area surrounding Explorer. This area, particularly the Rover prospect, is considered highly prospective because of its geological setting and proximity to the recent successful drilling by Westgold Resources on an adjacent tenement.

No work was carried out on these tenements during the 2007 financial year due to the Company's focus on the Manbarrum Project. However, field programs are planned for next financial year.

MELVILLE ISLAND: Bauxite

This exploration application covers 1,445 sq km of the northern part of Melville Island, 125km north of Darwin. There is bauxitic laterite development over Tertiary Van Diemen sandstone within the application area. The tenement currently is subject to moratorium by the Tiwi Land Council.

CROKER ISLAND: Bauxite

Two Exploration Licence Applications cover the entire area of Croker Island, located 240km north east of Darwin. Bauxitic laterite development over Cretaceous Bathurst Island Formation sediments has occurred in the application area.

MOUNT PEAKE: Nickel

Mount Peake is located in the Arunta Province, 80 kilometres north east of Alice Springs.

Airborne magnetic surveys have indicated possible ultramafic intrusion hosted nickel targets.

OTHER NORTHERN TERRITORY TENEMENTS

TNG holds several other prospects in the Northern Territory which are at various stages of exploration and have not been specifically mentioned in this report as only minor work was completed during the year.

WESTERN AUSTRALIAN TENEMENTS -

Carlton Shelf Project: Zinc-Lead-Silver Burt Range Shelf Project: Zinc-Lead-Silver

Both of these projects were strategically selected in light of the broader zinc-lead potential of the Bonaparte Basin and potential extensions of the Manbarrum Project. Granting of these Exploration Licences is anticipated in late 2007.

CAWSE EXTENDED JV (80% Norilsk Nickel/20% TNG)

Norilsk Nickel Cawse Ltd. (Norilsk) owns and manages the Cawse Nickel-Cobalt Operation near Kalgoorlie in Western Australia, with Norilsk and TNG jointly owning the adjacent Cawse Extended Project. TNG's interest is 20%, free-carried to production, convertible at TNG's election to a 2% net smelter return.

TNG has also entered into a separate agreement for a wet tonne royalty payment, which replaces the current agreement only for ore mined from the Unicorn Pit and transported to the Cawse ROM pad.

The Cawse Extended Project is located in the Eastern Goldfields region of Western Australia approximately 60 kilometres north west of Kalgoorlie.

Four main types of mineralisation have been identified at Cawse. These are the oxide ores of limonite, talc, and siliceous cobalt and the smectite-saprolite ore (locally termed nontronite).

The commercial success of the Cawse nickel operation is dependent in part upon the ability of the principal ore type to be beneficiated. A simple process of rejecting lower grade material on the basis of particle size achieves this. This process, which is called upgrading, enables sub-grade material to become commercial ore grade and also enables higher ore grades to be processed in the early parts of the operation. The success of the upgrade process is dependent upon the physical and chemical properties of the ore being processed and the nickel grade of the ore.

The upgrade ore type represents >80% of the Cawse nickel resource and is hosted mostly within a limonite unit, represented by goethitic clays in the upper saprolite zone.

The ore is crushed and slurried in the upgrade processing circuit. It is then passed over a series of screens that remove all material over 0.5mm. This ensures that coarse material is removed from the main ore stream. The upgrading process is reliant on selectively rejecting lower grade or barren material, which can include silica, magnesite and relict saprock.

			Matal c ontant		Metal Volume
Resource Category	Product	Total Mass (t)	ni (%)	co(%)	ni (t)	co(t)
Measured	Upgrade Ore	2,537,468	0.67	0.03	17,081	858
	Grind Ore	30,775	1.02	0.26	314	80
Indicated	Upgrade Ore	12,112,649	0.70	0.03	84,486	3,544
	Grind Ore	54,993	1.16	0.20	636	111
Inferred	Upgrade Ore	81,550,543	0.70	0.03	566,829	22,985
	Grind Ore	503,850	1.34	0.21	6,756	1,056
Total		96,790,278	0.70	0.03	676,101	28,634

Table 3: Resource Estimate for Cawse Extended as at end 2006, (source: Norilsk Nickel Cawse)

Qualifying statement

• Reserves and resources have been prepared by J. Fitzsimons, a member of the AusIMM, $\mathbf{1}$ . according to the Australasian Code for Reporting of Mineral Resources and Ore Reserves ("JORC Code") developed by the Australasian Joint Ore Reserves Committee ("JORC") formed by the Australian Mining industry Council, The Australasian Institute of Mining and Metallurgy, and The Australian Institute of Geoscientists. The reserves are based on the detailed 4 to 5 year mine production plan and the conceptual life of mine plan where economically viable pits have been identified.
• Approximate drill spacing used to classify the ore reserves is 20m x 20m for proved and 40m $2.$ x 40m for probable.
• Upgrade ore is laterite ore that is put through a beneficiation circuit prior to treatment 3. through a hydrometallurgical process. A cut-off grade of 0.5% Ni was used with additional modifying factors based on the beneficiation process to determine the reserves.
• Grind ore is a siliceous ore with elevated cobalt that is ground in a ball mill prior to treatment 4. through a hydrometallurgical process. Cut-off grade used is 0.8% Ni.
• The measured and indicated mineral resources are additional to the ore reserves. 5.
• Metallurgical recovery from the hydrometallurgical process is 92% for Ni and 89% for Co. 6. Overall plant recovery cannot be directly related to the metal contained in the reserve due to the beneficiation process prior to hydrometallurgical processing.
• Based on historical performance, an 8% mining loss factor has been incorporated into the 7. reserve numbers. Production performance shows mining dilution to be insignificant.

OTHER WESTERN AUSTRALIAN TENEMENTS

TNG holds an interest in two other tenement groups, however, in each case, the Company does not contribute towards exploration expenditure as the projects are subject to joint venture or options for sale. These projects include Kintore East and McTavish.

ENVIRONMENTAL POLICY

As part of TNG environmental policy, the company has contracted GHD (Darwin) to undertake a baseline and monitoring survey of flora, fauna and water quality of the Manbarrum project area. The baseline and initial monitoring surveys have been completed and no issues have arisen.

TRADITIONAL OWNER POLICY

The Company's Traditional Owner Policy has been a prime focus of all exploration work undertaken. At Manbarrum this has led to employment of elders, sponsorship of the local community and ongoing training and assistance. The Company enjoys a very good working relationship with the local community.

CORPORATE ACTIVITIES

THOR MINING PLC & BATAVIA MINING LIMITED

TNG owned shares in both Thor and Batavia at the end of 2006. During the 2007 financial year, these shares were returned to TNG shareholders via an in specie distribution.

CHANGE OF NAME

The Company's shareholders approved a change of name to TNG Limited at a general meeting of shareholders.

PLACEMENT AND UNDERWRITING

In March 2007 TNG placed 6 million shares with CBH Resources Ltd (ASX:CBH) at a price of \$0.39. CBH has subsequently increased its holding to almost 16.2 million shares.

The Company also successfully underwrote the outstanding 2007 options which resulted in an additional raising of \$9.18m.

The proceeds of the share placement and option exercise underpins the exploration programs at the Manbarrum Project.

SALE OF NON-CORE ASSETS

In February 2007 the Company reached agreement with Western Desert Resources for the sale of a portfolio of non-core mineral assets including the Spring Hill project for 10 million shares in the newly listed Western Desert Resources Ltd.

These shares were distributed to TNG shareholders via an in specie distribution in September 2007.

The rationalisation of other assets will be considered by the Board should suitable transactions be presented.

SALE OF NICKEL ASSETS

The Directors have now announced their intention that TNG's nickel assets, primarily being the Cawse Extended Project and Mount Peake Project, form the basis of a new company, to be listed on the ASX via an IPO in early 2008.

The Board also proposes, subject to obtaining the required approvals, to distribute shares in this company to the shareholders of TNG.

A meeting will be called to place this matter before Shareholders for their consideration.

This transaction will add to the \$15m that has been returned to shareholders by TNG over the past few years, maintaining the Company's commitment to maximise the value of its assets while at the same time maintaining a vigorous exploration program, and ensuring that adequate liquidity levels are maintained.

INTRODUCTION

TNG Limited ("Company") has adopted a philosophy which is a commitment to the highest standards of corporate governance. The Company is committed to the pursuit of achieving the best value for their shareholders through their efforts in exploration and exploitation of the Company's tenement assets. Detailed information of the Company's corporate governance practices is set out on the Company's website at www.tngltd.com.au.

CORPORATE GOVERNANCE DISCLOSURE

The Code on Corporate Governance requires that every public company disclose its compliance with each principle of the Code. During the financial year 2006/07 ("Reporting Period") the Company has complied with each of the Ten Essential Corporate Governance Principles and Best Practice Recommendations as published by the ASX Corporate Governance Council, other than in relation to the matters specified below.

Recommendation 2.1, 2.2

Majority of the Board should be Independent Directors. $2.1$

The Board considers that Mr Terence N Smith is an Independent Director in accordance with Recommendation 2.1. Whilst the remainder of the Board are not independent, the Board believes that all the individuals on the Board can make, and do make, quality and independent judgements in the best interests of the Company and possess the skills and experience suitable for building the Company. Directors having a conflict of interest in relation to a particular item of business must absent themselves from the Board meeting before commencement of discussion on the topic.

The Board considers that its structure has been, and continues to be, appropriate in the context of the Company's history and the size and scale of operations. The Board intends to reconsider its composition as the Company's operations evolve, and appoint further Independent Directors as appropriate.

The Chairman should be an Independent Director. $2.2$

Mr John W Barr is the Chairman and is not considered to be independent in respect of the ASX Corporate Governance Council's definition of independence. The Board considers that the expertise and dedication of Mr John W Barr gives constructiveness and organisation to the Board and its functions.

Recommendation 2.4

A separate Nomination Committee has not been formed.

The Board considers that the Company is not currently of a size to justify the formation of a Nomination Committee. The Board as a whole undertakes the process of reviewing the skill base and experience of existing Directors to enable identification of attributes required in new Directors. Where appropriate, independent consultants are engaged to identify possible new candidates for the Board.

Recommendation 4.3

The Audit Committee does not comprise a majority of Independent Directors.

The role of the Audit Committee is carried out by Mr John W.Barr, Mr Neil G Biddle, Mr Michael P Bowen, Mr Edward J Fry and Mr Terence N Smith of which only one member is an Independent Director. The Board considers that given the financial expertise of the members of the Audit Committee, the Company is well serviced by their expertise.

Recommendation 8.1

Non-disclosure of the process of evaluating the Board

The process for evaluation of the Board, individual Directors and key executives was not disclosed. However, an evaluation of the Board, Directors and key executives does occur on an informal basis by the Chairman at least annually.

Recommendation 9.2

There was no separate Remuneration Committee

The full Board carried out the functions of the Remuneration Committee. All matters of remuneration were determined by the Board in accordance with Corporations Act requirements, especially in respect of related party transactions. That is, no Directors participated in any deliberation regarding their own remuneration or related issues.

Skills, experience, expertise and term of office of each Director

A profile of each director containing the applicable information is set out in the Directors' Report.

Identification of Independent Directors

Mr Terence N Smith is independent in accordance with the criteria set out in Box 2.1 of the ASX Principles and Recommendations.

Statement concerning availability of independent professional advice

Subject to the approval of the Chairman, an individual director may engage an outside adviser at the expense of TNG for the purposes of seeking independent advice in appropriate circumstances.

Names of Nomination Committee members and their attendance at committee meetings

The full Board carries out the functions of the Nomination Committee. The Board did not convene formally as the Nomination Committee during the Reporting Period, but rather, discussed relevant issues on an as-required basis.

Names and qualifications of Audit Committee members

The Audit Committee comprises Mr John W Barr, Mr Neil G Biddle, Mr Michael P Bowen, Mr Edward J Fry and Mr Terence N Smith. This Committee is financially literate and possesses financial expertise by virtue of their academic qualifications. Mr Edward J Fry has extensive experience in the Australian Resource Sector.

Number of Audit Committee meetings and names of attendees

During the Reporting Period the Audit Committee met with the external auditors in respect of the half year and full year financial reports.

Company's remuneration policies

All of the Directors receive a separate Directors' fee of \$40,000 per annum, plus statutory superannuation.

In addition:

• Kensington Consulting Pty Ltd of which Mr John W Barr is a director, receives a consulting fee for Mr Barr's services under a service agreement approved at the 2006 Annual General Meeting;
• Hatched Creek Pty Ltd of which Mr Neil G Biddle is a director, receives consulting fees for Mr Biddle's services under a service agreement approved at the 2006 Annual General Meeting; and
• Hardy Bowen, of which Mr Michael P Bowen is a partner, receives legal fees for services provided to TNG; and
• Gimbulki Services of which Mr Edward J Fry is the sole proprietor, receives consulting fees, currently set at a retainer of \$10,000 a month, for Mr Fry's services.

The service agreement for Kensington Consulting Pty Ltd and Hatched Creek Pty Ltd contain a termination clause of a maximum of 12 months (\$240,000).

There is no direct link between remuneration paid to any of the Directors and corporate performance such as bonus payments for achievements of key performance indicators.

Remuneration of Directors and key executives is competitively set with the assistance of externally prepared surveys and reports, taking into account the experience and qualifications of each individual.

Names of Remuneration Committee members and their attendance at committee meetings

The full Board carried out the function of the Remuneration Committee. During the Reporting Period, the Board did not convene formally as the Remuneration Committee, but rather, dealt with remuneration-related issues on an as-required basis during regular meetings of the Board.

Existence and terms of any schemes for retirement benefits for non-executive Directors

There are no retirement benefits for non-executive Directors.

The Directors present their report for the year ended 30 June 2007.

DIRECTORS

The Directors of the Company at any time during or since the end of the financial year are:

John W Barr CA, FAICD Chairman

Mr John W Barr was appointed in 1998. He has extensive Australian and international experience with exposure to manufacturing, mining and mineral exploration and development.

Mr Barr has managed his own consultancy business since 1987 which specialises in the management of public companies including advice on capital raisings, mergers and acquisitions, negotiating onshore and offshore acquisitions and joint ventures, negotiating commodity based funding, and compliance with corporate and stock exchange requirements.

During the last four years Mr Barr has served as a director of the following listed companies:

• Batavia Mining Limited (2003 to 2005); and
• Thor Mining PLC (2005 to date).

Neil G Biddle B.App.Sc(Geology), M.Aus.IMM Managing Director

Mr Neil G Biddle was appointed in 1998. He has over 18 years professional and management experience in listed public companies involved in mining and exploration.

During the last four years Mr Biddle has served as a director of Batavia Mining Limited since 2005 and previously from 2003 to 2004.

Michael P Bowen B.Juris, LLB, B.Com Non-Executive director

Mr Michael P Bowen was appointed in 2004. Mr Bowen is a partner of the law firm Hardy Bowen, practising primarily corporate, and securities, commercial and mining law.

During the last four years Mr Bowen has served as a director of the following listed companies:

• IMF (Australia) Ltd since 2001; $\bullet$
• Medical Corporation Australasia Limited since 2004;
• Vietnam Industrial Investments Limited since 2004.

Edward J Fry Non-Executive Director

Mr Edward J Fry was appointed in 2006. Mr Fry is the proprietor of a Land Access/Management consulting company primarily focusing on Native Title and Exploration and Mine Development Agreements. His past experience includes various positions in the Australian Resources sector including Corporate Officer - Native Title and Investor Relations analyst for Normandy Mining Ltd, Senior Officer for Aboriginal & Torres Strait Islander Commission and Aboriginal Development Commission.

Terence N Smith Dip.Bus Non-Executive Director

Mr Terence N Smith was appointed in 2004. He was one of the founding partners of the Smith Coffey Group which has provided taxation, accounting and financial advice to clients in Perth for over 34 years prior to his retirement. He has a wide range of business skills in the areas of financial planning and corporate management. Mr Smith holds a number of Directorships in a number of companies in the wine industry.

Mr Smith has served on the Board of Batavia Mining Limited since 2005.

Damian P Delanev Chief Financial Officer and Company Secretary

Mr Damian P Delaney is a Chartered Accountant with many years experience working with international listed companies.

Mr Delaney commenced his career in South Africa, before taking up a series of positions in the United Kingdom. He has held a number of senior CFO and Finance Director positions in the UK.

Mr Delaney manages all aspects of the Company's financial, ASX reporting, regulatory and IT operations. He is also CFO and Company Secretary for Batavia Mining Limited and Thor Mining PLC.

Mr Delaney also serves on the Board of Batavia Mining Limited since 2006.

DIRECTORS MEETINGS

The number of Directors' meetings and number of meetings attended by each of the Directors of the Company during the financial year are:

Director	Number of meetings held during the time the Director held office	Number of meetings attended
John W Barr	12	12
Neil G Biddle	12	12
Michael P Bowen	12	12
Edward J Fry	5	5
Terence N Smith	12	12

PRINCIPAL ACTIVITIES

The principal activities of the Group during the course of the financial year were the significant exploration of its Manbarrum Project; the review of advanced exploration projects for acquisition; the management of its other exploration properties and management of its interest in the Cawse Extended Project.

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

REVIEW AND RESULTS OF OPERATIONS

The operating loss of the Group after income tax for the year was \$5,652,091 (2006: profit \$620,323). A review of the operations during the financial year is set out on pages 2 to 13.

DIVIDENDS

No dividends were paid during the year and the Directors do not recommend payment of a dividend.

STATE OF AFFAIRS

There were no significant changes in the state of affairs of the Group during the financial year or to the date of this report, although the Directors would like to draw shareholders attention to some matters.

In February 2007 TNG acquired a property to be used as the Kununurra logistics base.

In June 2007 TNG distributed its investment holdings in Batavia Mining Limited and Thor Mining PLC representing a strategic move to return value to shareholders and focus on the Manbarrum Project. This continued in September 2007 with the distribution of Western Desert Resources Ltd shares received in return for the disposal of some non-core tenements in February 2007.

REMUNERATION REPORT

Principles of Remuneration $\mathbf{I}$ .

This report details the amount and nature of remuneration of each director of the Company and the executives receiving the highest remuneration.

Key management personnel have authority and responsibility for planning and controlling the activities of the Company and the Group, 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 Group.

Remuneration Policy - audited

The remuneration policy is to provide a fixed remuneration component and a specific equity related component. The Board believes that this remuneration policy is appropriate given the stage of development of the Company and the activities which it undertakes and is appropriate in aligning director and executive objectives with shareholder and business objectives.

The remuneration policy, setting the terms and conditions for the executive Directors and other executives has been developed by the Board after seeking professional advice and taking into account market conditions and comparable salary levels for companies of a similar size and operating in similar sectors.

Directors receive a base fee of \$40,000 per annum. Shareholders have approved Directors fees of an amount of up to \$200,000 cash in aggregate per annum. Superannuation contributions of 9% are paid on these fees as required by law.

Directors and executives receive either a salary plus superannuation guarantee contributions as required by law, currently set at 9%, or provide their services via a consultancy arrangement. Directors and executives do not receive any retirement benefits. Individuals may, however, choose to sacrifice part of their salary to increase payments towards superannuation.

All remuneration paid to Directors and executives is valued at cost to the Company and expensed. Options are valued using the Black-Scholes methodology.

The Board policy is to remunerate non-executive Directors at market rates for comparable companies for time, commitment and responsibilities. The Board performing the role of the Remuneration Committee determines payments to the non-executive Directors and reviews their remuneration annually, based on market practice, duties and accountability. Independent external advice is sought when required. The maximum aggregate amount of fees that can be paid to Directors is subject to approval by shareholders at a General Meeting. Fees for non-executive Directors are not linked to the performance of the economic entity. However, to align Directors' interests with shareholder interests, the Directors are encouraged to hold shares in the Company and may receive options.

Directors and Executives officers remuneration (Company and Consolidated) - audited $2.$

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

Options

Movement in Options

MOVEMENT IN ADUANS					Held at	Vested and exercisable
	Held at 1 July 2006	Granted as remuneration	Other Changes $3$	Exercised	30 June 2007	at 30 June 2007
Directors
John W Barr	5.099.999	3,000,000	(1,830,999)	(3,269,000)	3,000,000	3,000,000
Neil G Biddle	7,669,642	3,000,000	(1,140,000)	(6,529,642)	3,000,000	3,000,000
Michael P Bowen	2,185,088	2,000,000		(2, 185, 088)	2,000,000	2,000,000
Edward J Fry 1	$\blacksquare$	1,500,000			1,500,000	1,500,000
Terence N Smith	3,510,087	2,000,000	(260, 087)	(3,250,000)	2,000,000	2,000,000
Executives
Damian P
Delaney	1,400,000	1,500,000	۰	(1,400,000)	1,500,000
Paul Burton 2		1,500,000	$\overline{\phantom{0}}$	$\overline{\phantom{a}}$	1.500.000	500,000

¹ Appointed 28 November 2006
² Appointed Exploration Manager 22 January 2007
³ All other changes during the year were disposals off market at published market rates at the date of the transaction

Directors Remuneration for the year ended 30 June 2007

Company and Consolidated		Short Term		Post Employment	Long Term
Directors		Salary & Fees	Other	Super	Share-based Payment Options	Total	Value of options as a proportion of remuneration
		\$	\$	\$	\$	\$	$\%$
John W Barr	2007	148,833		3,225	1,182,000 1	1.334.058	89%
Chairman	2006	113,000		2,700		115,700
Neil G Biddle	2007	331,633		3,225	1,182,000 1	1,516,858	78%
Managing Director	2006	132,820		2,700		135,520
Michael P Bowen	2007	98,091			788,0001	886,091	89%
Non-executive	2006	111,602				111,602
Edward Fry	2007	93,333		2,100	421.500 2	516,933	82%
Non-executive	2006
Terence N Smith	2007	35,833		3,225	788,000	827,058	95%
Non-executive	2006	30,000		2,700		32,700
Total	2007	707,723		11,775	4,361,500	5,080,998
	2006	387,422		8,100		395,522

¹ Options have been valued at \$0.394 per option using the Black-Scholes calculation for June 2007
² Options have been valued at \$0.281 per option using the Black-Scholes calculation for December 2006

Remuneration of the 2 named executives who received the highest remuneration for the year ended 30 June 2007

Company and Consolidated			Short Term		Long Term Share-based		Value of options
Executives		Salary & Fees	Other	Super	Payment Options	Total	as a proportion of remuneration
		\$	\$	\$	\$	\$	%
Damian P Delaney 1	2007	55.162		4,992	94,2675	154,421	61%
CFO and Company Secretary	2006	26,766		2,409	47,1335	76,308	62%
Chris Bath	2007		$\blacksquare$
Company Secetary 2	2006	20,490	5,3074	1,844		27,641	0%
Paul Burton	2007	79,615		7,165	144.500 6	231,280	62%
Exploration Manager	2006
Pedro Kastellorizos	2007
Exploration Manager3	2006	22,920		2,063		24,983	0%
Total	2007	134.777		12,157	238,767	385,701
	2006	70,176	5,307	6,316	47,133	128,932

Damian P Delaney is remunerated by TNG Ltd at a current annual salary of \$180,000 and recharged on a pro rata basis to Batavia Mining Ltd and Thor Mining PLC
Resigned 30 September 2005

Resigned 30 September 2005
Resigned 3 January 2006
Includes the provision of a motor vehicle

Options have been valued at \$0.101 per option using the Black-Scholes calculation for the May 2006 issue
Options have been valued at \$0.289 per option using the Black-Scholes calculation for the April 2007 issue

$\mathfrak s$

The fair value of the options are calculated at the date of grant using the Black-Scholes model and are allocated to each reporting period evenly over the period from grant date to vesting date. The value disclosed above is a portion of the fair value of the options allocated to this reporting period. The terms 'director' and 'executive' have been treated as mutually exclusive for the purposes of this disclosure.

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

Grant Date	Expiry Date	Fair Value per Option	Exercise Price	Price of Shares on Grant Date	Expected Volatility	Risk free interest rate	Dividend vield
19 June 2007	31 Mar 2010	\$0.394	\$0.50	\$0.760	80.00%	6.48%	Nil
30 Nov 2006	31 Nov 2007	\$0,281	\$0.23	\$0.515	60.00%	6.02%	Nil
5 Apr 2007	31 Dec 2011	\$0.289	\$0.38	\$0.420	80.00%	6.09%	Nil

Options granted as part of remuneration - audited 3.

During the year, the Company granted options for no consideration over unissued ordinary shares in the Company to the following Directors and Executives:

Director/Officer	Number оf options granted during 2007	Grant Date	Number of options vested during 2007	Fair value of option at Grant Date	Exercise price per option at Grant Date	Expiry date of options
John W Barr *1	3,000,000	19 Jun 2007	3.000.000	\$0.394	\$0.50	31 Mar 2010
Neil G Biddle *1	3,000,000	19 Jun 2007	3,000,000	\$0.394	\$0.50	31 Mar 2010
Michael P Bowen *1	2,000,000	19 Jun 2007	2,000,000	\$0.394	\$0.50	31 Mar 2010
Edward $J$ Fry $*2$	1,500,000	30 Nov 2006	1,500,000	\$0.281	\$0.23	30 Nov 2007
Terence N Smith *1	2,000,000	19 Jun 2007	2.000.000	\$0.394	\$0.50	31 Mar 2010
Damian Delaney *3	1,500,000	5 Apr 2007	۰	\$0.289	\$0.38	31 Dec 2011
Paul Burton *4	1,500,000	5 Apr 2007	500,000	\$0.289	\$0.38	31 Dec 2011

*1 Options granted approved by shareholders at a General Meeting held 17 May 2007.
*2 Options granted approved by shareholders at an Annual General Meeting held 28 November 2007.
*3 Options granted vest one third 31 Decemb

All option valuations have been calculated using the Black-Scholes calculation.

No options have been granted since the end of the financial year. The options were provided at no cost to the recipients.

Director/Officer	Number of options granted during $2006^2$	Grant Date	Number of options vested during 2006 2	Fair value of option at Grant Date 3	Exercise price per option	Expiry date of options
Damian P Delaney 1 CFO/Company Secretary	1,400,000	25 May 2006	466,667	\$0.101	\$0.15	31 May 2007

Appointed Company Secretary 4 November 2005

466,667 options were exercisable at 30 June 2006. Balance vested October 2006 and January 2007.

$\overline{\mathbf{3}}$ Options have been valued at \$0.101 per option using the Black-Scholes calculation.

Options granted in the financial year ended 30 June 2006 were approved by shareholders at a General Meeting held 1 March 2006. The options were provided at no cost to the recipients.

All of these options were exercised by the recipients on 31 May 2007.

Exercise of options granted as compensation - audited 4.

During the year the following shares were issued on the exercise of options previously granted as remuneration:

2007	Number of shares	Amount Paid \$/share
Directors John W Barr	3,269,000	\$0.15
Neil G Biddle	6,529,642	\$0.15
Michael P Bowen Edward J Fry	2,185,088	\$0.15
Terence N Smith	3,250,000	\$0.15
Executives Damian P Delaney 3 Paul Burton	1,400,000	\$0.15

		Amount Paid
2006	Number of shares	\$/share
Directors
John W Barr	1,700,000	\$0.15
Neil G Biddle	1,500,000	\$0.15
Michael P Bowen	650,000	\$0.15
Terence N Smith
Executives
Damian P Delaney 3
Chris Bath 1	1,200,000	\$0.15
Pedro Kastellorizos 2	200,000	\$0.15

Resigned 30 September 2005

$\overline{ }$ Resigned 3 January 2006

$\mathbf 3$ Appointed Company Secretary 4 November 2005

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

Analysis of options and rights over equity instruments granted as compensation -5. unaudited.

Details of the vesting profile of the options granted as remuneration to each director of the Company and relevant group executive who receive the highest remuneration is detailed below:

		Options Granted					Value vet to Vest
	Number	Date 1	$\mathbf{O}_{\mathbf{O}}$ vested in year	Forfeited in Year (a)	Financial years in which grant vests	Min (b)	Max (c)
Directors
Terence N Smith	1,500,000	2 June 2006	100%	٠	2005
Executives
Damian P Delaney	466,667	25 May 2006	33.3%	-	2006
	933,333	25 May 2006	66.7%	$\blacksquare$	2007		141,399

The percentage forfeited in the year represents the reduction from the maximum number of $(a)$ options available to vest due to the highest level performance criteria not being achieved.

The minimum value of options yet to vest is \$nil as the performance criteria may not be met $(b)$ and consequently the option may not vest.

The maximum value of options yet to vest is not determinable as it depends on the market $(c)$ price of shares of the Company on the ASX at the date the option is exercised. These share prices represent a maximum price included in the volatility assumptions within the valuation of the options.

Analysis of movements in options - unaudited 6.

The movement during the reporting period, by value, of options over ordinary shares held by each Company Director and each relevant group executive is detailed below:

	Granted in year(a) \$	Exercised in year (b) \$	Forfeited in year(c) \$	Total option value in year
Directors
John W Barr	1,182,000	964,940		2.146,940
Neil G Biddle	1,182,000	2.042,873		3,224,873
Michael P Bowen	788.000	710,154		1,498,154
Edward J Fry	421,500			421,500
Terence N Smith	788,000	1,041,750		1.829,750
Executives
Damian P Delaney	433,500	462,000		895,500
Paul Burton	433.500			433,500

• The value of the options granted in the year is the fair value of the options calculated at the $(a)$ grant date using the Black-Scholes model. The total value of the options granted is included in the table above. This amount is allocated to remuneration over the vesting period.
• The value of the options exercised during the year is calculated as the market price of shares $(b)$ of the Company on the ASX as at close of trading on the date the options were exercised after deducting the price paid to exercise the option.
• The value of the options that lapsed during the year represents the benefit forgone and is $(c)$ calculated at the date the option lapsed using the Black-Scholes model with no adjustments for whether the performance criteria have or have not been achieved.

DIRECTORS' INTERESTS

The relevant interest of each Director in the shares and options over such instruments issued by the companies within the Group and other related body corporates, as notified by the Directors to the ASX in accordance with S205G(1) of the Corporations Act 2001, at the date of this report is as follows:

Options over Ordinary Shares
3,000,000
3,000,000
2,000,000
1,400,000
2,000,000

Unissued shares under option

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

Expiry date	Exercise price 1	Number of options
30 November 2007	\$0.23	1,400,000
31 December 2011	\$0.38	$5.100,000^2$
31 March 2010	\$0.50	12,500,000

¹ Subsequent to the balance sheet date the exercise prices have been adjusted in accordance with ASX Listing Rule 7.22.3 due to the capital reduction as a result of the distribution of the investments in Batavia Mining Ltd, Thor Mining PLC and Western Desert Resources Ltd. $\overline{2}$

Includes 4,600,000 options not yet vested.

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 Group. Every employee has a nominated supervisor to whom they may refer any issues arising from their employment.

Code of Conduct

This code of conduct sets out the standard which the Board, management and employees of the Company are encouraged to comply with when dealing with each other, shareholders and the broader community.

Commitment of the Board and Management to Corporate Code of Conduct

The Board and management approve and endorse this code of conduct and support the code and all it strives to achieve.

The Board and management encourage all staff to consider the principles of the code and use them as a guide to determining how to respond when acting on behalf of the Company.

Responsibilities to Shareholders and the Financial Community generally

The Company aims:

To increase shareholder value within an appropriate framework which safeguards the rights and interests of the Company's shareholders and the financial community; and

To comply with systems of control and accountability which the Company has in place as part of its corporate governance with openness and integrity.

Responsibilities to Clients, Customers and Consumers

The Company is to comply with all legislative and common law requirements which affect its business. in particular those in respect of occupational health and safety, the environment, native title and cultural heritage. Any transgression from the applicable legal rules is to be reported to the managing director as soon as a person becomes aware of such a transgression.

Employment Practices

The Company will employ the best available staff and consultants with skills required to carry out vacant positions.

The Company will ensure a safe work place and maintain proper occupational health and safety practices commensurate with the nature of the Company's business and activities.

Responsibility to the Community

The Company will recognise, consider and respect environmental issues which arise in relation to the Company's activities and comply with all applicable legal requirements.

Responsibility to the Individual

The Company recognises and respects the rights of individuals and to the best of its ability will comply with the applicable legal rules regarding privacy, privileges, private and confidential information.

Obligations Relative to Fair Trading and Dealing

The Company will deal with others in a way that is fair and will not engage in deceptive practices.

Conflicts of Interest

The Board, management and employees must not involve themselves in situations where there is a real or apparent conflict of interest between them as individuals and the interests of the Company. Where a real or apparent conflict of interest arises the matter should be brought to the attention of the Chairperson in the case of a Board member or the Managing Director, the Managing Director in the case of a member of management and a supervisor in the case of an employee, so that it may be considered and dealt with in an appropriate manner for all concerned.

Compliance with the Code

Any breach of compliance with this code is to be reported directly to the Managing Director or Chairperson, as appropriate.

Periodic Review of Code

The Company will monitor compliance with the code periodically by liaising with the Board, management and staff especially in relation to any areas of difficulty which arise from the code and any other ideas or suggestions for improvement of the code. Suggestions for improvements or amendments to the code can be made at any time by providing a written note to the Managing Director.

Incorporation of Code of Conduct for executives

The Code of Conduct for executives forms part of this Corporate Code of Conduct. It provides as follows:

All executives will:

• 1. Actively promote the highest standards of ethics and integrity in carrying out their duties for the Company.
• 1. Disclose any actual or perceived conflicts of interest of a direct or indirect nature of which they become aware and which they believe could compromise in any way the reputation or performance of the Company.
• 1. Respect confidentiality of all information of a confidential nature which is acquired in the course of the Company's business and not disclose or make improper use of such confidential information to any person unless specific authorisation is given for disclosure or disclosure is legally mandated.
• 1. Deal with the Company's customers, suppliers, competitors and each other with the highest level of honesty, fairness and integrity and to observe the rule and spirit of the legal and regulatory environment in which the Company operates.
• 1. Protect the assets of the Company to ensure availability for legitimate business purposes and ensure all corporate opportunities are enjoyed by the Company and that no property, information or position belonging to the Company or opportunity arising from these are used for personal gain or to compete with the Company.
• 1. Report any breach of this code of conduct to the chairperson, who will treat reports made in good faith of such violations with respect and in confidence.

Indigenous Policy

TNG recognises the traditional attachment and customary requirements and preservation of culture and customs by Indigenous people in relation to land.

It is our desire to develop long term relationships with Indigenous people and communities where we conduct exploration and mine development and operations.

The Company's Indigenous Policy can be found on our website www.tngltd.com.au.

LIKELY DEVELOPMENTS

The Group will continue to develop its Northern Territory exploration projects and manage its interest in Cawse Extended.

Additional comments on likely developments of the Group are included under the review of operations and activities on pages 2 to 13. of this report.

INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS

The Company has agreed to indemnify current and former Directors and officers against all liabilities to another person (other than the Company or a related body corporate), including legal expenses that may arise from their position as Directors and officers of the Company and its controlled entities, except where the liability arises out of conduct involving a lack of good faith or for a pecuniary penalty under section 1317G or a compensation order under section 1317H of the Corporations Act 2001.

INSURANCE PREMIUMS

The Directors have not included details of the amount of the premium paid in respect of the Directors' and Officers' liability insurance contracts, as such disclosure is prohibited under the terms of the contract.

ENVIRONMENTAL REGULATIONS

The Group's operations are not subject to any significant environmental regulations under either Commonwealth or State legislation. However, the Board believes that the Group has adequate systems in place for the management of its environmental requirements and is not aware of any breach of those environmental requirements as they apply to the Group.

EVENTS SUBSEQUENT TO REPORTING DATE

Western Desert Resources Pty Ltd Distribution

On February 2007, TNG undertook an agreement with Western Desert Resources Pty Ltd (WDR) to dispose of TNG's non-core tenements for a consideration of 10 million WDR shares upon a successful listing. On 19 July 2007, WDR was successfully listed on the ASX and the sale was completed.

At a General meeting held on 3 September 2007 the shareholders voted to distribute these shares as a return of capital on the basis of 1 WDR share for every 18.22 TNG shares held on the record date of 13 September 2007.

Proposed IPO of Subsidiary

The Board has approved to proceed with a further restructuring of the Company's non-core assets, including the potential sale of other tenements and the transfer of its nickel assets in Western Australia This should result in further distributions to to a separate, nickel-focused listed Company. shareholders.

Major Expenditure

Exploration expenditure since 1 July to 30 September is \$3.2m with a commitment of \$1.4m to Novemebr 2007.

Capital Changes

Since 1 July 2007 a director, Mr Edward J Fry has exercised 100,000 options.

NON AUDIT SERVICES

KPMG, the Company's auditor did not perform any other services in addition to their statutory duties.

AUDITOR INDEPENDENCE DELCARATION

The auditor's independence declaration is included on page 29 of the financial report and forms part of the Directors' report for the financial year ended 30 June 2007.

Signed in accordance with a resolution of the Directors.

Jøhn W Barr

Chairman

25 September 2007

Lead Auditor's Independence Declaration under Section 307C of the Corporations Act 2001

To: the directors of TNG Limited

I declare that, to the best of my knowledge and belief, in relation to the audit for the financial year ended 30 June 2007 there have been:

×

• no contraventions of the auditor independence requirements as set out in the Corporations Act $(i)$ 2001 in relation to the audit; and
• no contraventions of any applicable code of professional conduct in relation to the audit. $(ii)$

KPMG $\Omega$

KPMG

Phoberson

J G Robinson Partner

Perth 28 September 2007

Income statements For the year ended 30 June 2007

	Note	Consolidated 2007 \$	2006 \$ Restated	The Company 2007 \$	2006 \$ Restated
Gain on sale of tenements Other income Total income	5(a) 5(a)	109,759 109,759	648,072 122,450 770,522	9,759 9,759	63,846 63,846
Occupancy expenses Administrative expenses Corporate expenses Employment expenses Depreciation and amortisation		(62, 850) (190, 590) (1, 108, 816) (231, 103)	(41,390) (54, 842) (963, 166) (180, 479)	(62, 850) (160, 627) (821.675) (222, 840)	(41, 390) (50, 496) (798, 063) (178, 800)
expenses Reversal of impairment loss of investment in associates Impairment loss of investment in associates	5(c) 27	(263, 490) (2,965,091)	(44, 115) 1,103,347	(113, 366) (1,981,926)	(42, 851) 1,103,347
Share based payments expense for directors/consultants/employees Shares issued to consultants Share of profit/(loss) in associates Other expenses	29 18(a) 27	(7,064,073) (1,440,000) 498,660 (211, 683)	(549, 317) (650, 682) (14, 618)	(7,064,073) (1,440,000) (106, 780)	(549, 317)
(Loss) before net finance income and tax Financial income Financial expenses Net financing income	5(b)	(12, 929, 277) 7,288,789 (11, 603) 7,277,186	(624, 740) 1,247,613 (2, 550) 1,245,063	(11, 964, 378) 6,289,590 6,289,590	(493, 724) 823,859 (2,550) 821,309
(Loss)/profit before income tax Income tax expense (Loss)/profit attributable to members of TNG	7	(5,652,091) (5,652,091)	620,323 620,323	(5,674,788) (5,674,788)	327,585 327,585
Basic earnings per share Diluted earnings per share	8 8	(4.819) (4.819)	0.689 0.689

The income statements are to be read in conjunction with the notes to the financial statements.

Balance Sheets As at 30 June 2007

		Consolidated		The Company
	Note	2007	2006	2007	2006
		\$	\$	\$	\$
			Restated		Restated
Current assets
Cash and cash equivalents	10	9,880,637	3,327,132	9,773,339	3,323,556
Trade and other receivables	11	281,381	144,462	125,292	114,999
Financial assets held for trading	33		370,950		319,800
Prepayments		26,486	40,598	23,645	39,740
Total current assets		10,188,504	3,883,142	9,922,276	3,798,095
Non-current assets	11		14,451	4,559,064
Trade and other receivables Other financial assets	12(a)			1,656,323	1,656,323
Available-for-sale investments	12(a)	617,527		617,527	4,631,857
Investments accounted for using
equity method	12(b)		4,285,546
Plant and equipment	13	1,436,806	126,168	327,078	122,315
Exploration and evaluation
expenditure	14	9,433,453	5,098,914
Total non-current assets		11,487,786	9,525,079	7,159,992	6,410,495
Total assets		21,676,290	13,408,221	17,082,268	10,208,590
Current liabilities
Trade and other payables	15	1,051,150	159,287	279,592	85,363 6.846
Loans and borrowings	16 17	32,850	6,846 22,013	32,850	22,013
Provisions		1,084,000	188,146	312,442	114,222
Total current liabilities
Non-current liabilities
Loans and borrowings	16	480,000	22,652	456,876	652,732
Total non-current liabilities		480,000	22,652	456,876	652,732
Total liabilities		1,564,000	210,798	769,318	766,954
Net assets		20,112,290	13,197,423	16,312,950	9,441.636
Equity Issued capital	18	15,490,639	9,346,022	15,490,639	9,346,022
Reserves	20		1,037,584		1,003,370
Retained earnings		4,621,651	2,813,817	822,311	(907, 756)
Total equity		20,112,290	13,197,423	16,312,950	9,441,636

The balance sheets are to be read in conjunction with the notes to the financial statements.

Statements of Cash Flows For the year ended 30 June 2007

	Note	Consolidated 2007 \$	2006 \$	The Company 2007 \$	2006 \$
Cash flows from operating
activities
Cash payments in the course of			(1,318,867)	(1,051,585)	(1,329,721)
operations		(1,439,476) 159,457	92,856	161,113	92,762
Interest received		48,853
Sale of tenements		9,877	58,604
Proceeds from royalties
Net cash used in operating activities	28	(1, 221, 289)	(1, 167, 407)	(890, 472)	(1, 236, 959)
Cash flows from investing activities
Payments for land and buildings		(715, 958)
Proceeds from sale of investments			1,184,094		557,938
Proceeds from sub underwriting			63,846		63,846
Loan to controlled entities				(4,923,067)	67,401
Payments for plant and equipment		(872, 155)	(57, 075)	(332, 114)	(57, 075)
Payments for investments in			(1,303,106)	(173, 476)	(1, 141, 852)
associates		(173, 476)
Payments for exploration and development expenditure		(3, 712, 529)	(705, 541)
Net cash used in investing
activities		(5,474,118)	(817, 782)	(5,428,657)	(509, 742)
Cash flows from financing activities
Net proceeds on issue of shares
and options		12,777,840	3,767,998	12,777,840	3,767,998
Proceeds from loan		480,000
Finance lease payments		(8,928)	(6, 379)	(8,928)	(6, 379)
Net cash received from					3,761,619
financing activities		13,248,912	3,761,619	12,768,912
Net increase in cash held		6,553,505	1,776,430	6,449,783	2,014,918
Cash at the beginning of the financial year		3,327,132	1,550,702	3,323,556	1,308,638
Cash at the end of the financial	10
vear		9,880,637	3,327,132	9,773,339	3,323,556

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

$\omega$

Statements of Changes in Equity For the year ended 30 June 2007

	Note	Issued Capital \$	Retained Earnings \$	Foreign currency translation Reserves \$	Option Reserve	Total \$
Consolidated At 1 July 2005		6,581,394	1,576,879			8,158,273
Correction of error	33		67,298			67,298
At 1 July 2005 (restated)		6,581,394	1,644,177			8,225,571
Profit for the period	33
(restated)			620,323			620,323
Foreign currency translation
reserve				34,214		34,214
Share based payments
expense			549,317			549,317 2,852,606
Shares issued		2,852,606			1,003,370	1,003,370
Pro rata option issue Share issue costs		(87.978)				(87,978)
At 30 June 2006
(restated)		9,346,022	2,813,817	34,214	1,003,370	13,197,423
At 1 July 2006 (restated)		9,346,022	2,813,817	34,214	1,003,370	13,197,423
Loss for the period			(5,652,091)			(5,652,091)
Foreign currency translation
reserve				(34, 214)		(34, 214)
Share based payments						7,064,073
expense			7,064,073
Net change in available-for-			395,852			395,852
sale financial assets Shares issued		12,179,513				12,179,513
Share placement		2,340,000				2,340,000
In specie distribution		(9,076,593)				(9,076,593)
Options exercised		1,003,370			(1,003,370)
Share issue costs		(301,673)				(301, 673)
At 30 June 2007		15,490,639	4,621,651	$\ddot{\phantom{1}}$		20,112,290

The amounts recognised directly in equity are disclosed net of tax.

The statements of changes in equity are to read in conjunction with the notes to the financial statements.

Statements of Changes in Equity
For the year ended 30 June 2007 (continued)

	Note	Issued Capital \$	Retained Earnings \$	Foreign currency translation Reserves Ś	Option Reserve	Total \$
Company
As at 1 July 2005		6,581,394	(2,104,458)			4,476,936 319,800
Correction of error	33		319,800			4,796,736
As at July 2005 (restated)		6,581,394	(1,784,658)			327.585
Profit for the period (restated)	33		327,585
Share based payments			549,317			549.317
expense Share issued		2,852,606				2,852,606
Pro rata option issue					1,003.370	1,003,370
Share issue costs		(87,978)				(87,978)
At 30 June 2006 (restated)		9,346,022	(907,756)	۰	1,003,370	9,441,636
Company
At 1 July 2006 (restated)		9,346,022	(907, 756)		1,003,370	9,441,636
Loss for the period			(5,674,788)			(5,674,788)
Share based payments
expense			7.064.073			7.064.073
Net change in available-for-						340.782
sale financial assets		12,179,513	340,782			12,179,513
Shares issued		2,340,000				2,340,000
Share placement In specie distribution		(9,076,593)				(9,076,593)
Options exercised		1,003,370			(1,003,370)
Share issue costs		(301,673)				(301, 673)
At 30 June 2007		15,490,639	822,311	$\overline{a}$		16,312,950

The amounts recognised directly in equity are disclosed net of tax.

The statements of changes in equity are to read in conjunction with the notes to the financial statements.

REPORTING ENTITY $\mathbf{1}$

TNG Limited (the 'Company') is a company domiciled in Australia. The consolidated financial report of the Company as at and for the year ended 30 June 2007 comprise the Company and its subsidiaries (together referred to as the 'Group') and the Group's interest in associates. The financial report was authorised for issue by the Directors on 25 September 2007.

The Group is primarily involved in the significant exploration of its Manbarrum Project; the review of advanced exploration projects for acquisition; the management of its other exploration properties and management of its interest in the Cawse Extended Project.

$\overline{2}$ 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 consolidated financial report of the Group also complies with the IFRSs and interpretations adopted by the International Accounting Standards Board. The Company's financial report does not comply with IFRSs as the Company has elected to apply the relief provided to parent entities by AASB 132 Financial Instruments: Presentation and Disclosure in respect of certain disclosure requirements.

$(b)$ Basis of measurement

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

• derivative financial instruments are measured at fair value
• financial instruments at 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 4.

$(c)$ Functional and presentation currency

These consolidated financial statements are presented in Australian dollars, which is the Company's functional currency and the functional currency of all entities in the Group.

Use of estimates and judgements $(d)$

The preparation of financial statements 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.

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 estimation, uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements are described in the following notes:

• Note 16 lease classification
• Notes 17 & 24 provisions and contingencies $\bullet$
• Note 22 valuation of financial instruments $\bullet$
• Note 29 measurement of share-based payments

SIGNIFICANT ACCOUNTING POLICIES $\overline{\mathbf{3}}$

The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements, and have been applied consistently by Group entities.

The entity has elected to early adopt the following accounting standards and amendments.

AASB 101 Presentation of Financial Statements (October 2006)

Basis of consolidation $(a)$

Subsidiaries $(i)$

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 report from the date that control commences until the date that control ceases. Investments in subsidiaries are carried at their cost of acquisition in the Company's financial statements less impairment losses.

$(ii)$ Associates

Associates are those entities over which the Group has significant influence, but not control, over the financial and operating policies. Associates are accounted for using the equity method. The consolidated financial statements include the Group's share of income and expenses of associates, from the date that significant influence commences until the date that significant influence ceases.

When the Group's share of losses exceeds its interest in an associate, the Group's carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of an associate.

In the Company's financial statements investment in associates are carried at cost of acquisition.

Transactions eliminated on consolidation $(iii)$

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

Unrealised gains arising from transactions with associates are eliminated against the investment to the extent of the Group's interest in the entity.

Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

Gains and losses are recognised as the contributed assets are consumed or sold by the associates, if not consumed or sold by the associate, when the Group's interest in such entities is disposed of.

$(b)$ Income tax

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amounts are those that are enacted or substantively enacted at the balance sheet date.

Deferred income tax is provided on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognised for all taxable temporary differences:

• Except where the deferred income tax liability arises from the initial recognition of $(i)$ goodwill or of an asset or liability in a transaction that is not a business combination and at the time of transaction, affects neither the accounting profit nor taxable profit or loss: and
• In respect of taxable temporary differences associated with investments in subsidiaries $(ii)$ and associates except where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised;

• When the deferred income tax asset relating to the deductible temporary difference $(iii)$ arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or
• When the deductible temporary difference is associated with investments in $(iv)$ subsidiaries and associates in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised.

The carrying amount of deferred income tax assets is reviewed at each balance sheet date reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.

Income taxes relating to items recognised directly in equity are recognised in equity and not in the income statement.

Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.

$(c)$ Other taxes

Revenues, expenses and assets are recognised net of the amount of GST except:

• Where the GST incurred on a purchase of goods and services is not recoverable from $(i)$ the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable;
• Receivables and payables are stated with the amount of GST included; $(ii)$
• The net amount of GST recoverable from, or payable to, the taxation authority is $(iii)$ included as part of receivables or payables in the balance sheet;
• Cash flows are included in the Cash Flow Statement on a gross basis and the GST $(iv)$ component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority, are classified as operating cash flows; and

Commitments and contingencies are disclosed net of the amount of GST recoverable $(v)$ from, or payable to, the taxation authority.

Plant and equipment $(d)$

Recognition and measurement $(i)$

Items of plant and equipment are stated at cost or deemed cost less accumulated depreciation and impairment losses. The cost of self-constructed assets includes the cost of materials, direct labour, and an appropriate proportion of production overheads. The cost of self-constructed assets and acquired assets includes (i) the initial estimate at the time of installation and during the period of use, when relevant, of the costs of dismantling and removing the items and restoring the site on which they are located, and (ii) changes in the measurement of existing liabilities recognised for these costs resulting from changes in the timing or outflow of resources required to settle the obligation or from changes in the discount rate.

Where parts of an item of plant and equipment have different useful lives, they are accounted for as separate items of plant and equipment.

$(i)$ Leased assets

Leases in terms of which the Group assumes substantially all of the risks and rewards of ownership are classified as finance leases. Lease payments are accounted for as described in note 3(n).

$(iii)$ Subsequent costs

The Group recognises in the carrying amount of an item of plant and equipment the cost of replacing part of such an item when that cost is incurred if it is probable that the future economic benefits embodied within the item will flow to the Group and the cost of the item can be measured reliably. All other costs are recognised in the income statement as an expense as incurred.

$(iv)$ Depreciation

Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of each part of an item of plant and equipment. The estimated useful lives in the current and comparative periods are as follows:

Leasehold improvements	Over the leased term
Plant and equipment	3 to 8 years
Fixtures and fittings	3 to 8 years
Buildings	40 years

The residual value, the useful life and the depreciation method applied to an asset are reassessed annually.

Foreign currency translation $(e)$

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 balance sheet date are translated to Australian dollars at the foreign exchange rate ruling 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. Nonmonetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated to Australian dollars at foreign exchange rates ruling at the dates the fair value was determined.

Financial instruments $(f)$

Non-derivative financial instruments $(i)$

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 or loss, any directly attributable transaction costs, except as described below. Subsequent to initial recognition nonderivative financial instruments are measured as described below.

A financial instrument is recognised if the Group becomes a party to the contractual provisions of the instrument. Financial assets are derecognised if the Group's contractual rights to the cash flows from the financial assets expire or if the Group transfers the financial assets 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 dates, i.e. the date that the Group commits itself to purchase or sell the asset. Financial liabilities are derecognised if the Group's obligations specified in the contract expire or are discharged or cancelled.

Cash and cash equivalents comprise cash balances and call deposits.

Accounting for finance income and expense is discussed in note 3(n).

Available-for-sale financial assets

The Group's investments in equity securities and certain debt securities are classified as available-for-sale financial assets. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses (see note 3(h) and foreign exchange gains and losses on available-for-sale monetary items (see note 3(e)), are recognised as a separate component of equity. When an investment is derecognised, the cumulative gain or loss in equity is transferred to profit and loss.

Investments at fair value through profit and 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 Group manages such investments and makes purchase and sale decisions based on their fair value in accordance with the Group'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 loss.

$(ii)$ Share capital

Ordinary shares

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

Exploration and evaluation expenditure $(a)$

Exploration and evaluation expenditure is stated at cost and is accumulated in respect of each identifiable area of interest.

Mining tenements that had been revalued to fair value on or prior to 1 July 2004, the date of transition to Australian Accounting Standards - AIFRS, are measured on the basis of deemed cost, being the revalued amount at the date of that revaluation.

Such costs are only carried forward when the rights to tenure of that area of interest are current and either such expenditure is expected to be recouped through the successful development and commercial exploitation of the area of interest (or alternatively by its sale), or where activities in the area have not yet reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations are continuing.

Accumulated costs in relation to an abandoned area are written off to the income statement in the period in which the decision to abandon the area is made.

The Directors review the carrying value of each area of interest at balance date and exploration expenditure which no longer satisfies the above policy is written off.

AASB 6 Exploration for and Evaluation of Mineral Resources has been applied effective 1 July 2004.

$(h)$ Impairment

$(i)$ 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 an 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 to 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.

$(ii)$ Non-financial assets

The carrying amounts of the Group's non-financial assets, other than biological assets, investment property, 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.

Impairment (continued) $(h)$

An impairment loss is recognised if the carrying amount of an asset or its cashgenerating 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 Impairment losses recognised in respect of cash-generating units are or loss. 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 of amortisation, if no impairment loss had been recognised.

$(i)$ Issued capital

Transaction costs of an equity transaction are accounted for as a deduction from equity, net of any related income tax benefit.

$(i)$ Loans and borrowings

All loans and borrowings are initially recognised at the fair value of the consideration received net of issue costs associated with the borrowing.

After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. Amortised cost is calculated by taking into account any issue costs, and any discount or premium on settlement.

Gains and losses are recognised in the income statement when the liabilities are derecognised as well as through the amortisation process.

$(k)$ Employee benefits

Share based payments $(i)$

The Group provides benefits to employees (including Directors) of the Group in the form of share-based payment transactions, whereby employees render services in exchange for share's or rights over shares ('equity-settled transactions').

The fair value of these equity-settled transactions with employees is measured by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by an external valuer using a Black-Scholes model.

In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of TNG 'market conditions' if applicable.

The fair value of equity-settled transactions are recognised, together with a corresponding increase in equity over the period, ending on the date on which the relevant employees become fully entitled to the award (the 'vesting date').

Employee benefits (continued) $(k)$

The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which the vesting period has expired and (ii) TNG's best estimate of the number of equity instruments that will ultimately vest. No adjustment is made for the likelihood of market conditions being met as the effect of these conditions is included in the determination of fair value at grant date. The income statement charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of the period.

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is only conditional upon a market condition.

If the terms of an equity-settled award are modified, as a minimum, an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any modification that increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee as measured at the date of modification.

If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph.

The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per share.

$(ii)$ Short term benefit

Liabilities for employee benefits for wages, salaries, annual leave and sick leave represent present obligations resulting from employees' services provided to reporting date, calculated at undiscounted amounts based on remuneration wage and salary rates that the Group expects to pay as at reporting date including related on-costs, such as, workers compensation insurance and payroll tax.

Defined contribution funds $(iii)$

Obligations for contributions to defined contribution superannuation funds are recognised as an expense in the income statement as incurred.

Provisions $(1)$

A provision is recognised in the balance sheet when the Group 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. If the effect is material, 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, when appropriate, the risks specific to the liability.

$(m)$ Revenue

Revenue is recognised to the extent that it is probable that economic benefits will flow to the Group and the revenue can be reliably measured.

Sale of goods $(i)$

Income from the sale of tenements and assets held for trading are recognised when significant risk and rewards of ownership of the goods passes to the customer provided that the amount of revenue and the costs incurred or to be incurred can be measured reliably.

$(ii)$ Interest revenue

Interest revenue is recognised as it accrues using the effective interest rate method.

$(iii)$ Dividends

Revenue from dividends from controlled entities is recognised by the Company when they are declared by the controlled entities.

Revenue from dividends from associates and other investments is recognised when the Group's right to receive the dividend is established.

$(n)$ Expenses

$(i)$ 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 term of lease.

$(ii)$ Finance lease payments

Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

$(iii)$ Net financing costs

Interest income is recognised in the income statement as it accrues, using the effective interest method.

Finance income and expenses $(iv)$

Finance income comprises interest income on funds invested, dividend income, 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. Dividend income is recognised on the date that the Group's right to receive payment is established, which in the case of quoted securities is the ex-dividend date.

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.

Segment reporting $(o)$

A segment is a distinguishable component of the Group 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.

$(p)$ Earnings per share

The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all diluted potential ordinary shares, which comprise convertible notes and share options granted to employees.

New standards and interpretations not yet adopted $(q)$

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, and will require extensive additional disclosures with respect to the Group's financial instruments and share capital.
• AASB 2005-10 Amendments to Australian Accounting Standards (September 2005) makes consequential amendments to AASB 132 Financial Instruments: Disclosure 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 and is expected to only impact disclosures contained within the consolidated financial report.
• 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 Group 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 Consolidated and Separate Financial 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 Contracts. 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 $\bullet$ 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 Group's 2008 financial statements, and will apply to goodwill, investments in equity instruments, and financial assets carried at cost prospectively from the date that the Group first applied the measurement criteria of AASB 136 and AASB 139 respectively (i.e. 1 July 2004 and 1 July 2005, respectively)

New standards and interpretations not yet adopted (continued) $(q)$

• Interpretation 11 AASB 2 Share-based Payment Group and Treasury Share Transactions addresses the classification of a share-based payment transaction (as 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 Group'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 operators, but not grantors, for public to private service concession arrangements. Interpretation 12 will apply for the Group's 2009 financial report. The potential effect of the interpretation on the financial report has not 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, AASB 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 Statements, AASB 131 Interest in Joint Ventures, and AASB 139 Financial Instruments: Recognition and Measurement. AASB 2007-2 is 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.

DETERMINATION OF FAIR VALUES $\boldsymbol{A}$

A number of the Group's accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. Where applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

Property, plant and equipment $(i)$

The market value of property is the estimated amount for which a property could be exchanged on the date of valuation between a willing buyer and a willing seller in an arm's length transaction after proper marketing where in the parties had each acted knowledgably, prudently and without compulsion. The market value of items of plant, equipment, fixtures and fittings is based on the quoted market prices for similar items.

$(ii)$ Investments in equity

The fair value of financial assets at fair value through profit or loss and available-forsale financial assets is determined by reference to their quoted bid price at the reporting date.

$(iii)$ Trade and other receivables

The fair value of trade and other receivables estimated as the present value of future cash flows, discounted at the market rate of interest at the reporting date.

Share-based payment transactions $(iv)$

The fair value of employee options is measured using the Black-Scholes formula. Measurement inputs include share price on measurement date, exercise price of the instrument, expected volatility (based on weighted average historic volatility adjusted for changes expected due to publicly available information), weighted average expected life of the instruments (based on historical experience and general option holder behaviour), expected dividends, and the risk-free interest rate (based on government bonds). Service and non-market performance conditions attached to the transactions are not taken into account in determining fair value.

INCOME AND EXPENSES 5

		Consolidated		The Company
	Note	2007	2006	2007	2006
		\$	\$	\$	\$
(a) Income
Gain on sale of tenements			648,072
Royalties			58,604
Other income		109,759	63,846	9,759	63,846
Total Income		109,759	770,522	9,759	63,846
	Note		Consolidated	The Company
		2007	2006	2007	2006
		\$	\$	\$	\$
Financial income (b)
Gain on sale of investments	27	5,365,674	305,349	4,363,672	264,166
Interest income		160,615	92,856	163,418	92,762
Change in fair value of investments	33
held-for-trading	27	1,762,500	849,408	1,762,500	466,931
Total Financial income		7.288,789	1,247,613	6,289,590	823,859
	Note		Consolidated	The Company
		2007	2006	2007	2006
		\$	\$	\$	\$
Depreciation and amortisation (c)
Depreciation of: District and acceptance and	12.	177050	34 771	47.296	33. 50Z

Total depreciation		263.490	44.115	113.366	42,851
Buildings		14.152	$\sim$	$\overline{\phantom{a}}$
Leasehold improvements		61.154	2.170	61.154	2,170
Motor vehicle	13	60.326	7.174	4.916	7.174
Plant and equipment		エムノラウンツ	-----	-	------

AUDITORS' REMUNERATION 6

Consolidated
2007	2006	2007	2006
			S
79.472	65,310	79.472	65,310
			The Company

$\overline{z}$ INCOME TAX

ţ

	2007 \$'000	Consolidated 2006 \$'000	2007 \$'000	The Company 2006 \$'000
The major components of income tax expense are: Income statement
Current income tax (credit)/expense Deferred tax Tax losses not brought to account	(799, 092) 1,411,433 (612, 341)	(363, 285) 217,678 145,607	439,561 5,865 (445,426)	(530, 106) (2,400) 532,506
Income tax expense reported in the income statement
A reconciliation between tax expense and pre-tax loss:
Accounting loss before income tax	(5,652,091)	620,323	(5,674,788)	327,585
At the Group's statutory income rate of 30% $(2006:30\%)$	(1,695,627)	186,097	(1,702,436)	98,276
Expenditure not allowable for income tax purposes:
Share-based payments	2,119,222	164,795	2,119,222	164,795
Gain on distribution and sale of assets Exploration, evaluation and development	(156, 207)	(705, 902)	13,697	(589, 112)
expenditure	329,165	32,416	20	(211, 662)
Sundry expenses	15,788 (612, 341)	176,987 145,607	14,923 (445,426)	5,197 532,506
Tax losses not brought to account Income tax expense reported in the
income statement
Tax losses
Unused tax losses for which no deferred tax asset has been recognized	7,458,189	4,794,550	3,993,983	5,459,185
	2,237,457	1,438,365	1,198,195	1,637,756
Potential tax benefit @ 30% future assessable income is derived of a nature and of an amount sufficient to enable the (i) benefit to be realised;

the conditions for deductibility imposed by tax legislation continue to be complied with; $(ii)$ and

no changes in tax legislation adversely affect the Company in realising the benefit. $(iii)$

INCOME TAX (continued) $\overline{z}$

Deferred income tax

Balance Sheet		Consolidated		Company
	2007	2006	2007	2006
Deferred income tax relates to the following:	\$	\$	s	\$
Deferred Tax Liabilities Exploration and evaluation assets Available-for-sale financial assets	2,062,666	656,982	117
Accelerated depreciation for tax purposes
Deferred tax assets used to offset deferred tax lialbilities	$(2,062,666)$ $(656,982)$		(117)
Deferred Tax Assets Tax losses presumed from wholly- consolidated entities			(1,039,262)	(1,877,926)
owned tax Accrued expenditure		(9,000)		(9,000)
Employee benefits Deferred tax liabilities used to offset	(9,855)	(6,604)	(9,855)	(6,604)
deferred tax assets	2,062,666	656,982	117
Future income tax benefit not brought to account			1,049,000	1,893,530
Tax losses not brought to account	(2,052,811)	(641, 378)	$\overline{\phantom{a}}$
Income Statement		Consolidated		Company
	2007 \$	2006 \$	2007 \$	2006 \$
Deferred income tax relates to the following:
Deferred Tax Liabilities
Exploration and evaluation assets	1,405,685 1,405,685	220,078 220,078	117 117
Deferred Tax Assets Accrued expenditure Other	9,000	(750) (218)	9,000	(750) (218)
Employee benefits	(3, 252)	(1, 432)	(3, 252)	(1, 432)
	5,748	(2,400)	5,748	(2,400)
Deferred tax expense	1.411,433	217,678	5,865	(2,400)

Tax Consolidation Legislation

TNG Limited and its wholly-owned Australian controlled entities implemented the tax consolidation legislation from 1 July 2003. The accounting policy in relation to this legislation is set out in note 2(b).

The entities have not entered into a fax funding agreement

EARNINGS PER SHARE 8

The calculation of basic earnings per share for the year ended 30 June 2007 was based on the loss attributable to ordinary shareholders of \$5,652,091 (2006: profit \$620,323) and a weighted average number of ordinary shares on issue during the year ended 30 June 2007 of 117,287,857 (2006: 89,998,277).

Loss attributable to ordinary shareholders

	2007	2006
(Loss)/profit for the period	(5,652,091)	620.323
(Loss)/profit attributable to ordinary shareholders	(5,652,091)	620,323

Weighted average number of ordinary shares

	2007 Numbers	2006 Numbers
Number of ordinary shares at 1 July	100.628,983 16.658.874	82.978.270 7.020.007
Effect of shares issued Weighted average number of ordinary shares at 30 June	117,287,857	89.998,277

At balance sheet date the following options were not yet exercised:

Options	Exercise Date	Exercise Price 1
1,500,000 (unlisted)	30 Nov 2007	\$0.23
5,100,000 (unlisted)	31 Dec 2011	\$0.38
12,500,000 (unlisted)	31 Mar 2010	\$0.50

¹ Subsequent to the balance sheet date the exercise prices have been adjusted in accordance with ASX Listing Rule 7.22.3 due to the capital reduction as a result of the distribution of the investments in Batavia Mining Ltd, Thor Mining PLC and Western Desert Resources Ltd.

Potential ordinary shares are not considered dilutive as their conversion does not show an inferior view of the earnings performance of the Company. Accordingly diluted earnings per share is the same as the basic earnings per share.

SEGMENT REPORTING $\mathbf{9}$

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items mainly comprise corporate assets and expenses.

Business segments

The Group comprises the following main business segments, based on the Group's management reporting system.

Exploration	Exploration and development of tenements.
Investments	Investments in publicly listed and other companies.

Geographical segments

The Group's business segments all operate in Australia.

Primary Reporting Business Segments	Exploration \$	Investments \$	Total \$
2007 Revenue External segment revenue Total revenue	97,197	5,538,851	5,636,048 5,636,048
Result Segment result	(631, 305)	(2,967,862)	(3,599.167)
Gain of associates Unallocated corporate expenses Loss from ordinary activities before income tax Income tax expense Net profit/(loss)			498,660 (2,551,584) (5,652,091) (5,652,091)
Depreciation and amortisation Depreciation Corporate depreciation	150,124		150,124 113,366 263,490
Assets Segment assets Corporate assets Consolidated total assets	11,566,052	617,527	12,183,579 9,492,711 21,676,290
Liabilities Segment liabilities Corporate liabilities Consolidated total liabilities	(6,060,187)		(6,060,187) 4,496,187 (1, 564, 000)

SEGMENT REPORTING (continued) $\mathbf{9}$

	Exploration	Investments	Total
Primary Reporting	\$	\$	\$
Business Segments
2006
Revenue
External segment revenue	688,704	323,415	1,012,119
Total segment revenue	688,704	323,415	1,012,119
Other unallocated revenue			156,608 1,168,727
Total revenue
Result
Segment result	631,430	80,083	711,513
			(650, 682)
Loss of associate Unallocated corporate expenses			559,492
Loss from ordinary activities before income tax			620,323
Income tax expense
Net profit/(loss)			620, 323
Depreciation and amortisation
Unallocated corporate depreciation and
amortisation			44,115
Reversal of loss of associate		1,103,347	1,103,347
Assets
Segment assets	5,694,168	4,164,864	9,859,032
Unallocated corporate assets			3,549,189
Consolidated total assets			13,408,221
Liabilities
Segment liabilities	313,027	(1,674,930)	(1,361,903)
Unallocated corporate liabilities			1,151,105
Consolidated total liabilities			(210, 798)

CASH AND CASH EQUIVALENTS 10

		Consolidated		The Company
	Note	2007	2006	2007	2006
Cash		9.763,637	3.257.132	9.688.339	3,253,556
Bank short term deposits		117,000	70.000	85.000	70,000
		9.880.637		9.773.339	3.323.556

The bank short term deposits, maturing within 90 days and paying interest at a weighted average interest rate of 6.4% at 30 June 2007 (2006: 5.40%).

TRADE AND OTHER RECEIVABLES $11$

		Consolidated			The Company
	Note	2007	2006	2007	2006
		\$	\$	\$	\$
Current
Trade and other receivables		84,413	81.598	70.022	71,721
GST receivables		196,968	62,864	55,270	43,278
		281,381	144,462	125,292	114,999
Non-current
Trade and other receivables		$\blacksquare$	14,451	4,559,064
Loans to controlled entities		$\bullet$		1,626,203	1,626,203
Impairment loss				(1,626,203)	(1,626,203)
			14,451	4,559,064

OTHER FINANCIAL ASSETS $12$

			Consolidated		The Company
	Note	2007 \$	2006 Restated	2007 \$	2006 S Restated
(a) Non-current Investments in controlled entities Unlisted shares at cost	26			2.492,261 (835,938)	2,492,261 (835,938)
Less: impairment				1,656,323	1,656,323
Investments in other entities Investments available for sale Associated entities at cost	27 27	617,527 617,527		617,527 617,527	4,631,857 4,631,857
		617,527		2,273,850	6,288,180
(b) Non-current Investments accounted for using the equity method
Batavia Mining Ltd Thor Mining PLC	27 27		3,603,587 681,959 4,285,546

$13$ PLANT & EQUIPMENT

	Consolidated		The Company
	2007	2006	2007	2006
Cost	\$	\$	\$	\$
Leasehold improvements
Balance at 1 July	22,736	22,736	22,736	22,736
Additions	244,617		244,617
Disposals	(22,736)		(22,736 )
Balance at 30 June	244,617	22,736	244,617	22,736
Plant and equipment
Balance at 1 July	286,763	229,688	278,813	221,738
Additions	409,206	57,075	90,806	57,075
Disposals
Balance at 30 June	695,969	286,763	369,619	278,813
Motor vehicle
Balance at 1 July	38,259	38,259	38,259	38,259
Additions	221,641
Disposals	(38, 259)		(38,259)
Balance at 30 June	221,641	38,259		38,259
Land and buildings
Balance at 1 July
Additions	715,958
Disposals
Balance at 30 June	715,958
Accumulated Depreciation
Leasehold improvements				20,566
Balance at 1 July	22,736	20,566 2,170	22,736 61,154	2,170
Depreciation charge for the year	61,154		(22, 736)
Adjusted Depreciation	(22, 736)	22,736	61,154	22,736
Balance at 30 June	61,154
Plant and equipment Balance at 1 July	182,805	148,034	178,708,	145,201
Depreciation charge for the year	127,858	34,771	47,296	33,507
Balance at 30 June	310,663	182,805	226,004	178,708
Motor vehicle
Balance at 1 July	16,049	8,875	16,049	8,875
Depreciation charge for the year	60,326	7,174	4,916	7,174
Adjustment for disposal	(20,96 5)		(20,965)
Balance at 30 June	55,410	16,049		16,049
Buildings
Balance at 1 July Depreciation charge for the year	14,152
Balance at 30 June	14,152

PLANT & EQUIPMENT (continued) 13

		Consolidated		The Company
	2007 \$	2006 \$	2007 \$	2006 \$
Carrying amounts Leasehold improvements
At 1 July		2,170		2,170
At 30 June	183,463		183,463
Plant and equipment
At 1 July	103,958	81,654	100,105	76,537
At 30 June	385,306	103,958	143,615	100,105
Motor vehicle
At 1 July	22,210	29,384	22,210	29,384
At 30 June	166,231	22,210		22,210
Land and buildings
At 1 July		$\overline{\phantom{a}}$
At 30 June	701,806	$\blacksquare$	$\overline{\phantom{0}}$
	1,436,806	126,168	327,078	122,315
Total

EXPLORATION, EVALUATION AND DEVELOPMENT EXPENDITURE 14

	Consolidated		The Company
	2007	2006	2007	2006
	\$	\$	\$
Cost
Balance At 1 July	5,098,914	4,393.373
Exploration expenditure	4,334,539	705.541
Balance at 30 June	9,433,453	5,098,914
Carrying value
At 1 July	5,098,914	4,393,373
At 30 June	9,433,453	5,098,914

The ultimate recoupment of costs carried forward for exploration and evaluation phases is dependent on the successful development and commercial exploitation or sale of the respective areas. At balance date the carrying amount of exploration and evaluation expenditure was \$9,433,453 of which \$5,496,807 is attributable to the significant exploration of the consolidated entities Manbarrum project, the balance of the carrying value is a result of the Cawse Extended project.

Valuation Cawse Extended project

An independent valuation was carried out in January 2000 by Continental Resource Management Pty Ltd ("CRM") using the Prospectivity Enhancement Multiplier method, which is based on previous exploration expenditure. In the case of Cawse Extended this is the yardstick or the comparative deal method. The Cawse Extended valuation was also cross checked against the discounted in situ contained metal value of the tenement. The Directors are of the opinion that this basis provides a reasonable estimate of recoverable amount.

EXPLORATION, EVALUATION AND DEVELOPMENT EXPENDITURE (Continued) 14

In June 2002 CRM provided an updated valuation of Cawse Extended. CRM concluded that the value of Cawse Extended falls within the range of \$4,800,000 to \$8,600,000, with a preferred value of \$7,200,000.

In June 2006 the Company commissioned CRM to provide a further updated valuation report. This updated report takes into consideration the mining that has occurred at Unicorn, additional drilling at Cawse Extended and changes to the price of nickel. The in situ contained metal method has been used to estimate the value of the contained metal within the pit shells and forms the range of values for the valuation. An alternate method of valuation was to calculate the potential royalty due based on the same arrangement as for the Unicorn pit. CRM's preferred value for the Company's 20% interest in Cawse Extended is \$4,200,000, which is in excess of its carrying value of \$3,936,646.

TRADE AND OTHER PAYABLES 15

		Consolidated		The Company
	2007 s	2006 \$.	2007	2006
Current Trade payables Other	600.523 450.627	58.166 101.121	104,820 174.772	55,363 30,000
	1,051,150	159,287	279.592	85,363

LOANS AND BORROWINGS 16

		Consolidated		The Company
		2007	2006	2007	2006
		\$	\$	\$	\$
Current
Lease liability			6,846		6,846
Non-current
Lease liability			22,652		22,652
Interest Bearing Loan		480,000
Other loans - controlled entities	31(a)		$\qquad \qquad \blacksquare$	456,876	630,080
		480,000	22,652	456,876	652,732

Terms and debt repayment schedule

Terms and conditions of outstanding loans were as follows:

			Consolidated
				30 June 2007	30 June 2006
	Nominal Interest Rate	Year of Maturity	Face Value	Carrying Amount	Face Value	Carrying Amount
Interest only loan - Kununurra logistics base	7.35%	2010	480.000	480,000	-	$\overline{\phantom{a}}$

PROVISIONS 17

	Consolidated		The Company
	2007 s	2006 \$	2007	2006 \$
Employee provisions
Current
Balance at 1 July	22,013	17,241	22,013	17,241
Provisions made during the year	10.837	4.772	10,837	4,772
Balance at 30 June	32.850	22.013	32,850	22,013

CAPITAL 18

	Consolidated		The Company
	2007	2006	2007	2006 s.
Issued and paid-up share capital 182,092,405 (2006:100,628,983)	S
ordinary shares, fully paid	15,490,639	9.346.022	15,490,639	9,346,022

Movements in shares on issue $(a)$

	2007		2006
	Number	\$	Number	\$
Balance at the beginning of year	100,628,983	9,346,022	82,978,270	6,581,394
Share placement In specie distribution	6,000,000	2,340,000 (9,076,593)	4,000,000	1,000,000
Options Exercised	72,463,422	11,742,883	13,650,713	1,852,606
Shares issued to consultants Share issue costs	3,000,000	1,440,000 (301.673)		(87,978)
Balance at end of year	182,092,405	15,490,639	100,628,983	9,346,022

Terms and conditions of contributed equity

Holders of ordinary shares are entitled to receive dividends that may be declared from time to time and are entitled to one vote per share at shareholders' meetings.

In the event of winding up of the Company, ordinary shareholders rank after all other shareholders and creditors and are fully entitled to any proceeds from liquidation.

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

In specie distribution

At a general meeting in May 2007 TNG received shareholder approval for a capital reduction in the form of a distribution in specie of its holdings in Batavia Mining Ltd and Thor Mining PLC.

The distribution was to those shareholders on the share register at the record date of 5 July 2007. The shareholders approved the distribution on 17 May 2007. The effective date of the capital reduction was 29 June 2007, as the TNG shares traded ex distribution from that date.

19 OPTIONS

Options on issue

		Number at end of year
Exercise Date	Exercise Price 1	2007	2006
30 November 2007 (unlisted)	\$0.23	1.500,000
31 December 2011 (unlisted)	\$0.38	5.100.000	$\overline{ }$
31 March 2010 (unlisted)	\$0.50	12,500,000	Section

¹ Subsequent to the balance sheet date the exercise prices have been adjusted in accordance with ASX Listing Rule 7.22.3 due to the capital reduction as a result of the distribution of the investments in Batavia Mining Ltd, Thor Mining PLC and Western Desert Resources Ltd.

Terms and conditions of options

Share options carry no rights to dividends and no voting rights.

20 RESERVES

	Consolidated		The Company
	2007	2006	2007	2006
Foreign currency translation reserve	$\overline{\phantom{a}}$	34.214
Option reserve	$\overline{\phantom{a}}$	1,003,370		1,003,370
Balance at 30 June	$\blacksquare$	1,037,584		1.003,370

Foreign currency translation reserve

The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign investments as well as from the translation of liabilities that hedge the Company's net investment in a foreign subsidiary.

Option reserve

The reserve relates to a rights options issue of a pro-rata offer of 2007 Options which expired 31 May 2007 and was exercisable at \$0.15, the options were available at an issue price of \$0.02 per option to eligible shareholders on the basis of one 2007 Option for every two shares held. At 31 May 2007 all options were exercised and this reserve was reversed against share capital.

21 DIVIDENDS

No dividends were declared or paid during the 2007 financial year.

		The Company
Dividend franking account	2007	2006 S
30% franking credits available to shareholders of TNG for subsequent financial years	1.008,568	1.008.568

The above available amounts are based on the balance of the dividend franking account at year end adjusted for franking credits that the entity may be prevented from distributing in subsequent years.

The ability to utilise the franking credits is dependent upon there being sufficient available profits to declare the dividends.

22 FINANCIAL INSTRUMENTS

$(a)$ Significant accounting policies

The Group's principal financial instruments comprise, cash and short-term deposits and a mortgage over a property owned by the Group.

The main purpose of these financial instruments is to fund capital expenditure for the Group's operations. The Group has various other financial assets and liabilities such as trade receivables and

trade payables, which arise directly from its operations. It is, and has been throughout the period under review, the Group's policy that no trading in financial instruments shall be undertaken.

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 2 & 3 to the financial statements.

Interest rate risk $(b)$

Interest rate risk exposures

The Group's exposure to interest rate risk and the effective weighted average interest rate for classes of interest bearing financial assets and financial liabilities is set out below:

30 June 2007			Maturing
CONSOLIDATED	Effective Interest Rate %	$<$ 1 year \$	>1 Year \$	Ś
Financial Assets
Fixed Rate
Term deposits	6.40	117,000		117,000
Floating Rate
Cash	6.10	9,763,637		9,763,637
Financial Liabilities
Fixed Rate Interest bearing liabilities	7.35		(480,000)	(480,000)

30 June 2006		Maturing	Total
CONSOLIDATED	Effective Interest Rate	$<$ 1 year	>1 Year
	%	\$	\$	\$
Financial Assets
Fixed Rate
Term deposits	5.40	70,000		70,000
Floating Rate
Cash	5.40	3,257,132		3,257,132
Financial Liabilities
Fixed Rate
Interest bearing liabilities	7.09	(6, 846)	(22, 652)	(29,498)

Net fair values of financial assets and liabilities $(c)$

		2006
Carrying amount	Fair value	Carrying amount \$	Fair value \$
9,763,637 117,000 281,381	9,763,637 117,000 281,381	3,257,132 70,000 144.462	3,257,132 70,000 144,462
		3,739,790	7,052,808
1,051,150 480,000	1,051,150 480,000	159,285 29,498	159,285 29,498
	\$	2007 \$	Consolidated

Valuation approach

Net fair values of financial assets and liabilities are determined by the Group on the following basis:

Recognised financial instruments

The net fair value of listed shares are determined by valuing them at the current quoted market bid price adjusted for transaction costs necessary to realise the asset.

Interest bearing loan and finance lease liability

The fair value estimated as the present value of future cash flows, discounted at market interest rates for homogeneous loans and lease agreements. The estimated fair value reflects change in interest rates.

Liquidity risk management $(d)$

At the balance sheet date the Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.

$(e)$ Credit risk

At the balance sheet date there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each financial asset, including derivative financial instruments, in the balance sheet.

COMMITMENTS 23

Exploration expenditure commitments

In order to maintain current rights of tenure to exploration tenements, the Company and the Group are 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.

	Consolidated		The Company
	2007 s	2006 \$	2007 \$	2006 \$
Exploration commitments payable not provided for in the financial report: Within one year	3,298,500	52,527
Finance lease commitments
Finance lease commitments are payable as follows:
Within one year		8,719		8,719
One year or later and no later than 5 years		41,461		41,461
Total minimum lease payments		50.180		50,180
Less: future lease financial changes		(20,682)		(20,682)
Present value of minimum lease payments		29,498		29,498
Lease liabilities provided for in the financial statements:
Current		6.846		6,846
Non-current		22,652		22,652
Total lease liability		29,498		29,498

CONTINGENT LIABILITIES 24

The details and estimated maximum amounts of contingent liabilities that may become payable are set out below. The Directors are not aware of any circumstance or information which could lead them to believe that these liabilities will crystallise and consequently no provisions are included in the financial statements in respect of these matters.

	Consolidated		The Company
	2007 \$	2006 \$	2007 \$	2006 \$
Litigation Constructive trust claim over the Kanowna Securities. Refer below.	277,000	277,000	277,000	277,000
Guarantees A quarantee has been provided to support unconditional environmental performance bonds	117,000	70.000	117,000	70,000
Indemnities $^{\rm 1}$
Total estimated contingent liabilities	394,000	347.000	394,000	347,000

Indemnities have been provided to Directors and certain executive officers of the Company in respect of liabilities to third parties arising from their positions, except where the liability arises out of conduct involving a lack of good faith. No monetary limit applies to these agreements and there are no known obligations outstanding at 30 June 2007.

Constructive Trust Claim

Resolution of matters arising from 1998

In the period September to December 1998 management control of TNG was held by interests associated with Davis Samuel Pty Ltd (Davis Samuel). The Davis Samuel nominee Directors committed TNG to a series of transactions involving expenditure totalling \$1,526,000. The Australian Securities Exchange Ltd (ASX) ruled that the transactions required shareholder approval. Shareholders subsequently voted against approving the transactions.

In December 1998, TNG entered into a settlement agreement with Davis Samuel and its Directors which effectively provided for the repayment of the funds expended, and TNG would in turn transfer its shares and options in Kanowna Lights Limited (the Kanowna Securities) to Davis Samuel.

The Commonwealth of Australia (the Commonwealth) in proceedings in the Supreme Court of the Australian Capital Territory claimed that it was entitled to a constructive trust over the Kanowna Securities and obtained an injunction preventing TNG from selling or otherwise disposing of them. The Commonwealth has claimed that as constructive trustee, the Commonwealth claims TNG is liable to account for the market value of the shares at the time they were acquired. The Commonwealth gave an undertaking as to damages.

Subsequently, in September 1999, Davis Samuel purported to rescind the December 1998 Settlement Agreement.

The Commonwealth is on notice that if TNG suffers damages as a result of the Commonwealth's injunction, and the Commonwealth ultimately fails to prove its constructive trust claim, TNG will claim the damages from the Commonwealth.

Legal action against Davis Samuel

TNG, as a party to the proceedings instituted by the Commonwealth, issued cross-claims against Davis Samuel and several other parties including Messrs Allan Endresz, Peter Cain, William Forge, David Muir and Peter Clark.

DEED OF CROSS GUARANTEE 25

Pursuant to ASIC Class Order 98/1418 (as amended) dated 13 August 1998 the wholly owned subsidiaries listed below are relieved from the Corporations Act 2001 requirements for preparation, audit and lodgement of financial reports and Directors reports.

It is a condition of the Class Order that the Company and each of the subsidiaries enter into a Deed of Cross Guarantee. The effect of the Deed is that the Company guarantees to each creditor, payment in full, in the event of winding up of any of the subsidiaries under certain provisions of the Corporations Act 2001. If a winding up occurs under other provisions of the Act 2001, the Company will only be liable in the event that after six months any creditor has not been paid in full. The subsidiaries have also given similar guarantees in the event that the Company is wound up.

The subsidiaries subject to the Deed are Connaught Mining NL and Enigma Mining Limited. In accordance with the terms of the Class Order a consolidated income statement and consolidated balance sheet comprising the entities that are party to the Deed as set out below.

	Consolidated
	2007	2006
	\$	\$
Income Statement
Loss before income tax	(5, 224, 623)	(186, 393)
Income tax benefit
Loss after related income tax expense	(5,224,623)	(186, 393)
Loss	(5, 224, 623)	(186, 393)
Retained earnings at beginning of year	2,022,024	1,659,100
Other reserves	7,730,436	549,317
Retained earnings at end of year	4,527,837	2,022,024
Balance Sheet
Cash assets	9,774,434	3,323,629
Trade and other receivables	125,482	125,376
Other assets	23,645	39,740
Total current assets	9,923,561	3,488,745
	6,381,887	5,608,092
Other financial assets Plant & equipment	327,078	122,315
Exploration and evaluation expenditure	3,997,090	3,677,459
Total non-current assets	10,706,055	9,407,866
Total assets	20,629,616	12,896,611
Trade and other payables	578,290	85,467
Interest-bearing liabilities		6,846
Provisions	32,850	22,013
Total current liabilities	611,140	114,326
Interest-bearing liabilities		22,652 388,217
Amounts owing to controlled entity Total non-current liabilities		410,869
Total liabilities	611,140	525,195
Net assets	20,018,476	12,371,416
Issued capital	15,490,639	9,346,022
Reserves		1,003,370
Retained earnings	4,527,837	2,022,024
Total equity	20,018,476	12,371,416

26 CONSOLIDATED ENTITIES

		Country of Incorporation	2007 $%$ of Ownership	2006 $%$ of Ownership
(a)	Consolidated - TNG Limited
	Subsidiaries
	Connaught Mining NL	Australia	100	100
	Enigma Mining Limited	Australia	100	100
	Tennant Creek Gold (NT) Pty Ltd	Australia	100	100
	Manbarrum Mining Pty Ltd	Australia	100	100
	TNG Energy Pty Ltd 1 1 Direct subsidiary of Enigma Limited	Australia	100
			2007 \$	2006 \$
	Acquisitions of entities
	During the year, the Company incorporated a new 100% owned subsidiary and acquired all the ordinary shares of TNG Energy Pty Ltd. Details of the acquisitions are as follows (in aggregate):
	Consideration (cash)		100
	Consideration (non cash)
	Total consideration		100
	Fair value of assets of entities acquired:
	Loan		100
	Total		100

AVAILABLE-FOR-SALE INVESTMENTS 27

Thor Mining PLC

Available-for-sale investments consist of an investment in Thor, a company listed on the Australian Securities Exchange ("ASX") and the Alternative Investment Market ("AIM") and which operates in mineral exploration.

Prior to 27 September 2006, the company equity accounted for its investment in Thor. A share issue by Thor on this date resulted in dilution of the company's ownership interest and as a result it has been determined that the company no longer exerts significant influence over Thor and that equity accounting for the investment is no longer appropriate.

At 31 December 2006, the company held an 11.63% ownership interest in Thor (15,100,000 shares). On 29 June 2007 TNG distributed its holding in Thor Mining PLC in the form of a capital reduction. At the time of the in specie distribution TNG held 15,100,000 Thor shares and 7,500,000 warrants. The change in the fair value of the warrants up to the in specie distribution was \$1,762,500 recognised as financial income in the income statement. After the distribution of 29 June 2007 TNG held 1,093,817 shares, the listed share price of Thor on this date was \$0.385 per share which equated to a market value of \$421,120. Thor warrants after distribution was 216,445 with a listed warrant price of \$0.235 equating to a value of \$50,865. The total market value of the company's interest in Thor Mining PLC at 29 June 2007 is \$471,984.

Thor is classified as an available-for-sale financial asset. Subsequent to initial recognition Thor was measured at fair value and changes therein is recognised as a component of equity. When the available-for-sale asset is derecognised, the cumulative gain or loss is transferred to profit and loss. For Thor the changes in fair value that has now been recognised in the profit and loss is \$5,365,674.

Batavia Mining Limited

Prior to 29 June 2007 TNG accounted for its investment in Batavia using the equity method. This was a result of two directors of TNG, Messrs Smith and Biddle, were on the Board throughout the period and in addition, the Company Secretary and CFO of TNG, Mr Delaney, and was elected to the Batavia Board on 29 November 2006. As a result it was determined that TNG exercised significant influence over Batavia, accordingly the Company applied the equity method of accounting in accordance with AASB 128.

On 29 June 2007, TNG also distributed its holding in Batavia. At the time of the distribution TNG had 16,293,232 Batavia shares. After the distribution TNG held 1,119,564, the listed price of Batavia on this date was \$0.13 which equated to a total market value of \$145,543.

	Principal Activity	Country of incorporation	Reporting Date		Ownership
				30 June 2007	30 June 2006
Thor Mining PLC	Mining exploration
	and development in Australia	UK	30 June	0.01%	23.48%
Batavia Mining Ltd	Mining exploration and development	Aust	30 June	0.01%	13.04%
			Batavia Mining
2007 Consolidated			Limited \$
	Net book value at 1 July		3,603,587
	Additional investment Share of profit		980,964 498,660
	Impairment In-specie distribution		(2,965,091) (1,972,577)
			145,543
2006		Thor Mining PLC	Batavia Mining Limited		Total
Consolidated		\$	\$ Restated		Ś. Restated
Revenue (100%)				185,017	185,017
Loss (100%)		(1,626,831)		(1,678,940)	(3,305,771)
Share of associate loss		(381,980)		(268, 702)	(650,682)
Total assets (100%)		4,912,324		20,052,543	24,964,867

$(217, 338)$

4,694,986

681,959

Net assets Share of associates net assets-equity accounted

Total liabilities (100%)

$(1, 357, 746)$

23,607,121

4.285,546

$(1, 140, 408)$

18,912,135

3,603,587

NOTES TO THE STATEMENTS OF CASH FLOWS 28

Reconciliation of cash flows from operating activities $(a)$

		Consolidated	The Company
	2007	2006	2007	2006
	\$	s Restated	\$	\$ Restated
(Loss)/profit from ordinary activities after
income tax	(5,652,091)	620,323	(5,674,788)	327,585
Add/(less) items classified as
investing/financing activities:
Gain on sale of tenements		(941,844)		(557, 837)
Gain on sale of investments	(7, 128, 174)	(305, 349)	(6, 126, 172)	(264, 166)
Investing fees received		(63, 846)		(63, 847)
Non-refundable deposit on sale of
tenements	(50,000)
Add/(less) non-cash items:
Depreciation and amortisation	263,489	44,115 690	113,367	42,851 690
Write off of plant and equipment	8,504,073	549,317	8,504,073	549,317
Share based payments Reversal of associate diminution		(1, 103, 347)		(1, 103, 347)
Impairment in investments	2,965,091		1,981,926
Share of (profit)/loss in associates	(498, 660)	650,682
Write down in exploration costs	12,936
Foreign exchanges loss/(gain)		(1, 542)		(1, 542)
Adjustment to investment		(849, 408)		(202,765)
	(1, 583, 336)	(1,400,209)	(1, 201, 594)	(1, 273, 061)
Change in assets and liabilities:
Increase/(decrease) in current payables,
borrowing and provisions	458,622	(110, 535)	299,915	(184, 459)
(Increase)/decrease in current receivables	(96, 575)	343,337	11,207	220,561
Net cash used in operating activities	(1, 221, 289)	(1, 167, 407)	(890,472)	(1, 236, 959)

29 EMPLOYEE BENEFITS

		Consolidated		The Company
	Note	2007 \$	2006 \$	2007 s	2006 \$
Aggregate liability for employee benefits, including on-costs
Current Employee benefits provision	17	32,850	22,013	32,850	22,013

Defined contribution superannuation funds

The Group made contributions to the employees' nominated superannuation funds. The amount recognised as an expense was \$59,182 for the financial year ended 30 June 2007 (2006: \$14,782).

Share-based payments

Summary of options over unissued ordinary shares granted.

The following share-based payment arrangements are in existence:

Options series	Number	Not vested	Grant date	Expiry date	Exercise price \$	Fair value \$	Vesting date
	1.400.000		30 Nov 2006	30 Nov 2007	\$0.230	\$0.281
$\overline{2}$	1,500,000	500,000 500,000	5 April 2007	31 Dec 2011	\$0.380	\$0.289	31 May 2008 31 May 2009
3	3,600,000	1,200,000 1,200,000 1,200,000	5 April 2007	31 Dec 2011	\$0.380	\$0.289	31 Dec 2007 31 Dec 2008 31 Dec 2009
$\overline{4}$	10,000,000	-	19 June 2007	31 May 2010	\$0.500	\$0.394
5	2,500,000	$\overline{\phantom{a}}$	27 June 2007	31 May 2010	\$0.500	\$0.740	$\bullet$

The fair value of equity share options granted is estimated at the issue date using the Black-Scholes model, taking into account the terms and conditions upon which the options are granted. The following table lists the inputs to the model used for the years ended 30 June 2007.

Grant date	30 Nov 2006	5 April 2007	19 June 2007	27 June 2007
Dividend yield	\$0.49	\$0.42	\$0.65	\$1.05
Underlying security spot price Exercise price	\$0.23	\$0.38	\$0.50	\$0.50
Standard deviation of returns Risk free rate	60.00% 6.02%	80.00% 6.09%	80.00% 6.48%	80.00% 6.42%
Expiration period Black Scholes valuation	1 vear \$0.281	4-7 years \$0.289	$2-8$ years \$0.394	$2-8$ years \$0,740
				A - --- -- - --

Share-based payments	Consolidated		Company
	2007	2006	2007	2006
Employee Options granted Consultant Options granted	4,749,871 2,314,202	99,317 450,000	4,749,871 2,314,202	99.317 450,000
Total share-based payment	7.064.073	549,317	7.064.073	549.317

Reconciliation of movement in employee share-based options in issue:

	Consolidated and Company 2007
Options series	Number of options at beginning of vear	Options granted	Options lapsed	Options exercised	Number of options at end of year on issue
	4,250,000			(4,250,000)
2	4,700,000		$\blacksquare$	(4,700,000)
3	2,950,000		$\blacksquare$	(2,950,000)
4	3,000,000		$\overline{\phantom{a}}$	(3,000,000)
5		2,500,000	-	(1,000,000)	1,500,000
6		5,100,000	$\overline{\phantom{0}}$		5,100,000
		10,000,000			10,000,000
8		2,500,000			2,500,000

Options granted to Directors are disclosed under Note 31.

KEY MANAGEMENT PERSONNEL DISCLOSURES 30

Details of key management personnel $(a)$

Directors
John W Barr	(Chairman)
Neil G Biddle	(Managing Director)
Michael P Bowen	(Non-executive Director)
Edward J Fry	(Non-executive Director, appointed 28 November 2006)
Terence N Smith	(Non-executive Director)
Executives
Damian P Delaney	(Company Secretary)
Paul E Burton	(Exploration Manager, appointed 22 January 2007)

Compensation of key management personnel $(b)$

Compensation by category

Compensation by category	Consolidated		The Company
	2007 s.	2006 s	2007 S	2006 S
Key Management Personnel
Short-term	842,500	462,905	842.500	462,905
Post-employment	23,932	14,416	23.932	14,416
Share-based payments	4,600,267	47.133	4,600,267	47,133
	5,466,699	524,454	5,466.699	524,454

Information regarding individual Directors and executives compensation and some equity disclosure as permitted by Corporations Regulation 2M.3.03 and 2M.6.04 is provided in the Remuneration Report section of the Directors Report on pages 17 to 29.

Equity instruments $(c)$

All options refer to options over ordinary shares of TNG, which are exercisable on a one for one basis as approved by shareholders.

Options and rights over equity instruments

During the reporting period, the following options over ordinary shares were granted to Directors and executives and approved by shareholders.

The movement during the reporting period in the number of options over ordinary shares in TNG held, directly, indirectly or beneficially, by each key management personnel, including their personallyrelated entities, is as follows:

Movements in Options

	Held at 1 July 2006	Granted as remuneration	Other Changes 3	Exercised	Held at 30 June 2007	Vested and exercisable at 30 June 2007
Directors
John W Barr	5,099,999	3,000,000	(1,830,999)	(3,269,000)	3,000,000	3,000,000
Neil G Biddle	7,669,642	3,000,000	(1,140,000)	(6,529,642)	3,000.000	3,000,000
Michael P Bowen	2,185,088	2,000,000		(2,185,088)	2,000,000	2,000,000
Edward J Fry +		1,500,000	$\bullet$	$\blacksquare$	1,500,000	1,500,000
Terence N Smith	3.510.087	2,000,000	(260,087)	(3,250,000)	2.000.000	2.000,000
Executives
Damian P Delaney	1,400,000	1,500,000	٠	(1,400,000)	1,500,000
Paul Burton 2		1,500,000	-		1,500,000	500,000

$\mathbf{1}$

$\overline{2}$ $\overline{\mathbf{3}}$

Appointed 28 November 2006
Appointed Exploration Manager 22 January 2007
All other changes during the year were disposals off market at published market rates at the date of the transaction

	Held at 1 July 2005	Granted as remuneration	Other Changes 4	Exercised	Held at 30 June 2006	Vested and exercisable at 30 June 2006
Directors
John W Barr	3,000,000	$\blacksquare$	3,799,999	(1,700,000)	5,099,999	5,099,999
Neil G Biddle	5,000,000	-	4,169,642	(1,500,000)	7.669.642	7,669,642
Michael P Bowen	1,750,000	$\blacksquare$	1,085.088	(650,000)	2.185.088	2,185,088
Terence N Smith	2,000.000	۰	1,510,087	$\overline{\phantom{a}}$	3.510.087	3,510,087
Executives
Damian P Delaney 3		1,400,000			1,400,000	466,667
Chris Bath -	2,000,000	$\overline{\phantom{a}}$	(800,000)	(1,200,000)
Pedro Kastellorizos 2	200,000			(200,000)

Resigned 30 September 2005
Resigned 3 January 2006 $\mathbf{1}$ $\overline{2}$

Appointed Company Secretary 4 November 2005

Acquired as a result of participation in capital raising during the year

2,500,000 options issued April 2007 are held by executives are granted but not vested.

No amounts remain unpaid on the options exercised during the financial year at year end.

Equity holdings and transactions

The movement during the reporting period in the number of ordinary shares of TNG held, directly, indirectly or beneficially, by each key management personnel, including their personally-related entities is as follows:

	Held at 1 July 2006	Purchases	Received on exercise of options	Sales	Other	Held at 30 June 2007
Directors
John W Barr	8,700,000	500,000	3,269,000	(1,469,000)	120,000	11,120,000
Neil G Biddle	5,761,868	2,790,250	6,529,642	(5, 125, 135)	400,000	10,356,625
Michael P Bowen	750.002		2,185,088		330,000	3,265,090
Edward J Fry 1		26.785			400,000	426,785
Terence N Smith	1,600,000	22,710	3,250,000		400.000	5,272,710
Executives
Damian P Delaney			1,400,000		70,000	1,470,000
Paul Burton 2		$\blacksquare$

Appointed 28 November 2006

Appointed Exploration Manager 22 January 2007 $\overline{2}$

	Held at 1 July 2005	Purchases	Received on exercise of options	Sales	Other	Held at 30 June 2006
Directors
John W Barr	9.000.000		1,700,000	(2,000.000)		8,700,000
Neil G Biddle	6.263.372	25,000	1,500,000	(2,026,504)		5,761,868
Michael P Bowen	793.747		650,000	(693.745)		750.002
Terence N Smith	1.647.016			(47.016)		1,600,000
Executives
Damian P Delaney 3
Chris Bath 1	649.985		1,200,000	(852.635)	(997,350)
Pedro Kastellorizos 2			200.000	(200.000)

Resigned 30 September 2005

$\overline{2}$

Resigned 3 January 2006
Appointed Company Secretary 4 November 2005 $\overline{\mathbf{3}}$

Other transactions with key management personnel $(d)$

A number of key management personnel, or their personally-related entities, hold positions in other entities that result in them having control or significant influence over the financial or operating policies of those entities.

A number of these entities transacted with the Company or its subsidiaries in the reporting period. Their terms and conditions of those transactions were no more favourable than those available, or which might reasonably be expected to be available, on similar transactions to unrelated entities on an arm's length basis.

The aggregate amounts recognised during the year relating to specified key management personnel and their personally-related entities, were total revenue of \$Nil and total net expense after reimbursement of office costs of \$93,958 (2006: \$120,892). Details of the transactions are as follows:

Specified Directors	Transaction	Note	2007	2006
Neil G.Biddle	Corporate charters	$\left(1\right)$	31,700	38.820
Michael P.Bowen	Legal fees	(ii)	62.258	81.602

• The Company used the services of Hannan Street Corporate Charters, an entity of which Mr Neil $(i)$ G Biddle is a related party.
• The Company used the legal services of Hardy Bowen Lawyers, a legal firm of which Mr Michael $(iii)$ P Bowen is a partner.

Amounts were billed based on normal market rates for such services and were due and payable under normal payment terms.

NON KEY MANAGEMENT PERSONNEL DISCLOSURES $31$

Wholly owned Group transactions $(a)$

Details of interests in wholly owned controlled entities are set out in Note 25. Details of these dealings are set out below.

Loans

Loans between entities in the wholly owned Group are non-interest bearing, unsecured and are repayable upon reasonable notice having regard to the financial stability of the Company.

Transactions

.	The Company
	2007	2006
Balances with entities in the wholly-owned Group Receivable - non current Provision for non recovery	1,626,203 (1,626,203)	1,626,203 (1,626,203)
Payables $-$ non current	(456.876)	(630.080)

$(b)$ Other related party transactions

Associates

The Company invoiced to associated entities \$759,929 (2006:\$542,452) for the reimbursement of office and administration costs during the year.

Joint venture operations

The joint venture makes the results of its research and development activities available to the Group as well as to one of the other joint venturers. No amount is paid by any of the venturers. From time to time, to support the activities of the joint venture, the venturers increase their investment in the joint venture.

				Consolidated
Joint venture party	Joint venture	Principal activities	Interest		Exploration expenditure
			2007 $\frac{0}{0}$	2006 $\mathbf{O}_{\mathbf{O}}$	2007 \$	2006 \$
Norilsk Nickel	Cawse Extended	Nickel/Cobalt	20%	20%
Mines and Resources Australia Pty Ltd	Kintore East	Gold	23.75%	23.75%

Exploration expenditure represents direct expenditure incurred by the Group.

Events subsequent to balance date 32

WDR Distribution

In February 2007, TNG executed an agreement with WDR Pty Ltd to dispose of a number of TNG's non-core tenements for a consideration of 10 million WDR shares upon a successful listing. On 19 July 2007, WDR was successfully listed on the ASX and the sale was completed.

At a general meeting held on 4 September 2007 the shareholders approved the distribution of these shares as a return of capital. The WDR shares were distributed on the basis of 1 WDR share for every 18.22 TNG shares held on the record date of 13 September 2007.

Proposed IPO of Subsidiary

The Board has approved to proceed with a further restructuring of the Company's non-core assets, including the potential sale of other tenements and the transfer of its nickel assets in Western Australia to a separate, nickel-focused listed Company. This should result in further distributions to shareholders.

Major Expenditure

Exploration expenditure since 1 July 2007 to the date of this report is \$3.2m with a further commitment of \$1.4m to November 2007.

Capital Changes

Since 1 July 2007 a director, Mr Edward J Fry, has exercised 100,000 options.

33 Prior period restatement

The comparative financial information in the half year financial report was restated in order to correctly account for the Company's derivative financial assets, being its investments in listed options in Batavia Mining Limited. These investments were not recognised in the financial reports for the half year ended 31 December 2005 and the year ended 30 June 2006.

This omission had the effect of understating the derivative financial assets by \$144,867 at 31 December 2005 and the derivative financial assets by \$370,950 and the equity accounted investment in Batavia by \$545,756 at 30 June 2006. In addition, the impact of changes in the fair values of the derivative financial assets was not recognised in the income statement in either reporting period.

The prior period comparatives impacted by the omission, including earnings per share, have been restated as shown below:

Consolidated	30 June 2006 \$	Adjustment \$	30 June 2006 (restated) \$
Income Statement Change in fair value of investments held for trading		849,408	849,408
Profit/(loss) after tax	(229,085)	849,408	620,323
Balance Sheet Financial assets held for trading Investments accounted for using the equity method	3,739,790	370,950 545,756	370,950 4,285.546
Opening retained earnings	1,576,881	67,298	1,644.179
Basic earnings per share (cents) Diluted earnings per share (cents)	(0.255) (0.255)	0.944 0.944	0.689 0.689

Company	30 June 2006 \$	Adjustment s	30 June 2006 (restated)
Income Statement
Change in fair value of investments		466.931	466.931
held for trading
Profit/(loss) after tax	(139,346)	466,931	327,585
Balance Sheet
Financial assets held for trading		319,800	319,800
Available-for-sale investment	4.164,864	466.931	4,631,857
Opening retained earnings	(2, 104, 458)	319,800	(1,784,658)

In accordance with a resolution of the Directors of TNG Limited I state that the financial $\mathbf{1}$ statements and notes and the additional disclosures included in the remuneration report in the Directors' report, which are designated as audited remuneration and are in accordance with the Corporations Act 2001, including:

• giving a true and fair view of the Company's and Group's financial position as at 30 June 2007 $(i)$ and of their performance, for the financial year ended on that date; and
• complying with Accounting Standards and the Corporations Regulations 2001; and $(ii)$
• the remuneration disclosures that are contained in sections 1 to 5 of the Remuneration report $(iii)$ in the Directors' report comply with Australian Accounting Standard AASB 124 Related Party Disclosures.

There are reasonable grounds to believe that the Company and the controlled entities $\overline{2}$ identified in note 26 will be able to meet any obligations or liabilities to which they are or may become subject to by virtue of the Deed of Cross Guarantee between the Company and the controlled entities pursuant to ASIC Class Order 98/1418.

This declaration is made after receiving the declarations required to be made to Directors by 3 the chief executive officer and the chief financial officer in accordance with section 295A of the Corporations Act 2001 for the financial year ended 30 June 2007.

On behalf of the Board.

John W Barr Chairman Dated at Perth 25 September 2007

Independent auditor's report to the members of TNG Limited

Report on the financial report and AASB 124 remuneration disclosures contained in the directors' report

We have audited the accompanying financial report of TNG Limited (the Company), which comprises the balance sheets as at 30 June 2007, and the income statements, statements of changes in equity and cash flow statements for the year ended on that date, a summary of significant accounting policies and other explanatory notes 1 to 33 and the directors' declaration of the Group comprising the Company and the entities it controlled at the year's end or from time to time during the financial year.

As permitted by the Corporations Regulations 2001, the Company has disclosed information about the remuneration of directors and executives (remuneration disclosures), required by Australian Accounting Standard AASB 124 Related Party Disclosures, under the heading "Remuneration report" in sections 1 to 4 of the directors' report and not in the financial report. We have audited these remuneration disclosures.

Directors' responsibility for the financial report and the AASB 124 remuneration disclosures contained in the directors' report

The directors of the Company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In note 2, the directors also state, in accordance with Australian Accounting Standard AASB 101 Presentation of Financial Statements, that the financial report of the Group, comprising the financial statements and notes, complies with International Financial Reporting Standards but that the financial report of the Company does not comply.

The directors of the Company are also responsible for the remuneration disclosures contained in the directors' report.

Auditor's responsibility

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

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

We performed the procedures to assess whether in all material respects the financial report presents fairly, in accordance with the Corporations Act 2001 and Australian Accounting Standards (including the Australian Accounting Interpretations), a view which is consistent with our understanding of the Company's and the Group's financial position and of their performance and whether the remuneration disclosures are in accordance with Australian Accounting Standard AASB 124.

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

Statement of continued independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, provided to the directors of TNG Limited on 25 September 2007, would be unchanged if provided to the directors as at the date of this auditor's report.

Auditor's opinion on the financial report

In our opinion:

• (a) the financial report of TNG Limited is in accordance with the Corporations Act 2001, including:
• giving a true and fair view of the Company's and the Group's financial position as at 30 June $(i)$ 2007 and of their performance for the year ended on that date; and
• (ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001.
• (b) the consolidated financial report also complies with International Financial Reporting Standards as disclosed in note 2.

Auditor's opinion on AASB 124 remuneration disclosures contained in the directors' report

In our opinion the remuneration disclosures that are contained in sections 1 to 4 of the Remuneration report of the directors' report comply with Australian Accounting Standard AASB 124 Related Party Disclosures.

KPMG

Phoberson

J G Robinson Partner

Perth 28 September 2007

Additional information required by the Australian Stock Exchange Limited Listing Rules and not disclosed elsewhere in this report is set out below.

Shareholdings (as at 21 September 2007)

Substantial shareholders

Substantial holders in the Company are set out below:

Shareholder	Number	Percentage
RAB Special Situations (Master) Fund Limited	18.370.869	10.08%
CBH Resources Limited	16.194,065	8.89%
Mr J W Barr	11,120,000	6.10%
Mr N Biddle	10.356,625	5.68%

Class of shares and voting rights

• at meetings of members or classes of members each member entitled to vote may vote in $(a)$ person or by proxy or attorney; and
• on a show of hands every person present who is a member has one vote, and on a poll every $(b)$ person present in person or by proxy or attorney has one vote for each ordinary share held.

On-market buy-back

There is no current on-market buy-back.

Distribution of equity securities as at 21 September 2007

Category	Ordinary Shares
$1 - 1,000$ $1,001 - 5,000$ $5,001 - 10,000$ $10,001 - 100,000$ 100,001 and over	116 570 417 709 186 1,998

The number of shareholders holding less than a marketable parcel is 65.

Twenty largest shareholders as at 21 September 2007

Name	Number of shares held	Percentage of shares held
ANZ Nominees Limited	24,426,673	13.41%
HSBC Custody Nominees (Australia) Limited - A/C 3 (RAB SS Master Fund)	18,370,869	10.08%
CBH Resources Limited	16,194,065	8.89%
Biddle Partners Pty Ltd	9,806,625	5.38%
Kensington Consulting Pty Ltd	7,050,000	3.87%
Mr Terry Lillis	3,330,607	1.83%
Kensington Capital Pty Ltd	3,300,000	1.81%
Bouchi Pty Ltd	3,265,090	1.79%
Mr Alistair W Mackie	3,250,000	1.78%
Teas Nominees Pty Ltd	3,022,710	1.66%
Penfold Developments Pty Ltd	3,000,000	1.65%
Ashton Drilling Services Pty Ltd	2,500,000	1.37%
Khumbu Pty Ltd	2.465,000	1.35%
Cornerstone Advisors Pty Ltd	2,000,000	1.10%
Citicorp Nominees Pty Ltd	1,540,173	0.85%
Bonsmith Pty Ltd	1,550,000	0.85%
Willvest Pty Ltd	1,483,500	0.81%
Cape Birchington Pty Ltd	1,400,000	0.77%
Mr Michael K Ashton	1,300,000	0.71%
Megamin Resources Pty Ltd	1,100,000	0.60%

The Group holds an interest in the following tenements or tenement applications:

Prospect	Tenements	Equity
Warramunga Project	ELA25581, ELA25582, ELA25587,	100%
	EL24471, MLC647
Burt Range Shelf	E80/3772 (Application)	100%
Carlton Shelf	E80/3816 (Application)	100%
Cawse Extended	M24/547, M24/548, M24/549,	20% free carried to production, or can be converted to a 2% net smelter
	M24/550	return on ore mined. Unicorn Pit is
		now excised and a wet tonne royalty
		applies.
Croker Island Project	ELA24640, ELA26049	100%
Goddard's Copper		100%
Prospect	ELA24260
Kintore East	M16/281, M16/282	Diluting from 49% to 2% gold return
		interest on production. Current percentage interest is 23.75%.
Manbarrum	A24518, EL24395, EL25646,	100%
	EL25470
McTavish	M40/77, M40/119, M40/157,	3% gross royalty (third party retains a
	M40/194, P40/1001, P40/1002	25% interest in TNG's interest)
Melville Island Bauxite	ELA24628	100%
Project
Mt Peake	EL23271, EL23074	100%
Peterman Ranges	ELA26383, ELA25564, ELA26384, ELA25562, ELA26382	100%
Legend
А.	Authorisation (equivalent or Exploration Licence)
Exploration Е.
Exploration Licence EL: Exploration Licence Application ELA:
Mining м.
Mineral Land Council MLC:
P: Prospecting
Unlisted Options
	Unlisted options exercisable @ \$0.50 expiring 31 March 2010
Total on issue		12,500,000
Number of holders		7
Holders with 20% or more:		3,000,000
Kensington Consulting Pty Ltd Hatched Creek Pty Ltd		3,000,000
	Unlisted options exercisable @ \$0.38 expiring 31 December 2011
Total on issue		5,100,000
Number of holders		5
Holders with 20% or more: Paul E Burton		1,500,000
Cape Birchington Pty Ltd		1,500,000
Simon Dorling		1,500,000
	Unlisted options exercisable @ \$0.23 expiring 30 November 2007
Total on issue		1,400,000 1
Number of holders Holder with 20% or more:
Edward J Fry		1,400,000