Annual Report 2012 ABN 12 000 817 023

Directors

Jianrong Xu	(Chairman)
Paul Burton	(Managing Director)
Neil Biddle	(Non-Executive Director)
Geoffrey Crow	(Non-Executive Director)
Rex Turkington	(Non-Executive Director)
Wang Zhigang	(Non-Executive Director)

COMPANY SECRETARY

Simon Robertson

REGISTERED OFFICE

Level 1, 282 Rokeby Road Subiaco Western Australia 6008

PO Box 1126 Subiaco Western Australia 6904

Telephone: (08) 9327 0900 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

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

AUDITORS

KPMG

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Australian Securities Exchange (ASX) Code: TNG

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German Stock Exchanges Code: HJI

ABN 12 000 817 023

Annual Report 2012

Review of Operations	2
Corporate Governance Statement	22
Directors' Report	30
Auditor's Independence Declaration	39
Consolidated Statement of Comprehensive Income	40
Consolidated Statement of Financial Position	41
Consolidated Statement of Cash Flows	42
Consolidated Statement of Changes in Equity	43
Notes to the Financial Statements	44
Directors' Declaration	81
Independent Audit Report	82
ASX Additional Information	84

Review of Operations

HIGHLIGHTS & ACHIEVEMENTS

Mount Peake Iron-Vanadium-Titanium Project, NT

• The Mount Peake Pre-Feasibility Study (PFS) confirmed the potential to develop a robust mining operation capable of generating revenues of A\$12 billion and operating cash flows of over A\$5 billion over an initial 20-year life, with forecast production of 15,300tpa of high purity vanadium pentoxide (V2O5), 375,000tpa of titanium dioxide (TiO2) concentrate and 1.13Mtpa of high grade iron oxide (Fe2O3).
• TNG's Board is now reviewing the PFS results with a view to commencing a Definitive Feasibility Study (DFS) during Q4 of 2012. This is likely to be managed by a major global engineering firm with offices in China, with input from the Company's Chinese partners.
• RC drilling confirmed the potential to further increase the resource inventory in the Mount Peake region, indicating the presence of two large magnetite-gabbro structures which host the iron-vanadium-titanium mineralisation at Mount Peake. This work supports the broader Exploration Target¹ for the Mount Peake area of 500-700Mt.
• Initial metallurgical testwork was completed on graphite mineralisation intersected in drilling undertaken at Mount Peake during 2011, including a 40m graphite intersection achieved from drilling targeting base metal mineralisation. Testwork is continuing to establish the potential to produce an economic product.

TIVAN™ Hydrometallurgical Process

• The PFS confirmed that TNG's proprietary TIVAN™ metallurgical process will provide a commercial processing solution for the Mount Peake operation, with the ability to extract all three valuable metals from the ore.
• Extensive pilot plant testwork was completed, delivering outstanding analytical results including recoveries of over 80% for V2O5, which was extracted to a purity of 99%, and over 90% recovery for Fe2O3 which was extracted to a purity of 99.9% (69.2% Fe). Final grades for the TiO² are currently being assessed through additional analytical testwork.
• An Australian Trade Mark Registration Certificate was received, protecting the use of the name "TIVAN™" for a period of 10 years: 100% owned by TNG.

Other Projects

• TNG's Northern Territory copper exploration portfolio was expanded to over 10,000 sq km with the acquisition of a key new tenement in the Mount Hardy region, representing the main portion of the historic Mount Hardy Copper Field, and the signing of a Joint Venture with Toro Energy to explore the tenements located immediately west of Mount Peake.
• A major HELITEM® survey was completed over key copper exploration tenements. HELITEM® is the world's most powerful helicopter time-domain electromagnetic (EM) system for detecting magnetic targets, with demonstrated success in locating buried sulphide mineralisation.
• The HELITEM® results revealed a cluster of anomalies that are coincident with existing copper prospects. Follow-up ground EM work has commenced, and drill testing of key targets will commence in Q4 of 2012.
• A Farm-in and Joint Venture agreement was agreed with Rio Tinto Exploration Pty Ltd to explore for bauxite on TNG's Melville Island licence. Rio to spend \$5 million over four years to earn an 80 per cent interest.

Corporate

• A key strategic partnership was established with the leading Chinese State-owned enterprise Jiangsu Eastern China Non-Ferrous Metal Investment Holding Co Ltd., ("ECE"), to underpin development of Mount Peake Project and pursue other resource sector opportunities.
• A \$13.4M share placement was completed with ECE, comprising a \$6.8M placement to ECE subsidiary Ao-Zhong International Mineral Resources Pty Ltd, and a \$6.6M placement to a privately-owned Chinese high technology and industrial company, Aosu Investment & Development Co Pty Ltd, both at 11 cents per share, giving these groups a combined shareholding of 30 per cent in TNG.
• Appointment of Mr Jianrong Xu, Deputy Director-General of the East China Mineral Exploration & Development Bureau ("ECMED"), as Chairman of TNG, and Mr Zhigang Wang, Chairman of Aosu, as a non-executive Director. Experienced corporate adviser and corporate finance executive, Mr Rex Turkington, was also appointed to the Board during the year as a nonexecutive Director.
¹ The potential quantity and grade is conceptual in nature, there has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resource.

Dear Shareholder,

I am pleased to present TNG's 2012 Annual Report and to reflect on what has been a watershed year for the Company, with the completion of a \$13.4 million investment and strategic alliance with the Jiangsu Eastern China Non-Ferrous Metals Investment Holding Co. Ltd ("ECE") and Aosu Investment and Development Co Pty Ltd plus the delivery of the Pre-Feasibility Study on TNG's flagship Mount Peake Iron-Vanadium-Titanium Project.

These twin milestones have considerable significance for the future the Company – the former because it has resulted in the introduction of two key strategic Chinese companies to TNG's share register, creating an alliance that will underpin the Company's development as a diversified resources group delivering strategic metals to global markets; the latter because it has confirmed the quality and robustness of TNG's principal asset, and provided a clear development pathway to bring it into production.

I was delighted to accept an invitation during the year to join the Board of TNG as Chairman following the completion of the strategic transaction between TNG and ECE. This saw Ao-Zhong International Mineral Resources Pty Ltd, a subsidiary of ECE, and privately owned industrial and hightechnology company Aosu Investment and Development Co Pty Ltd (part of the Wanlong Group) inject a total of \$13.4 million into the Company at 11 cents per share resulting in the acquisition of a combined 30 per cent stake.

In addition to the immediate funding injection and strategic cooperation on the development of the Mount Peake Project, the establishment of this strategic alliance gives TNG access to high-quality Chinese technical, engineering and construction expertise, as well as the ability to access competitive project finance to underpin the progression of the project through the feasibility and development phase.

The introduction of the high-technology Wanlong Group to the TNG register also introduces a key end-user and potential customer for the strategic metals to be produced by Mount Peake.

Beyond Mount Peake, ECE and TNG have agreed to work together to identify and secure additional quality resource project opportunities in Australia and elsewhere, as part of a broader umbrella strategic alliance arrangement. This is a tremendous opportunity for both of our organisations, and we are very much looking forward to developing it further in the months and years ahead.

The Mount Peake Pre-Feasibility Study (PFS), which was completed in July 2012, confirmed the potential to develop a robust mining operation capable of generating revenues of A\$12 billion and operating cash flows of over A\$5 billion over its initial 20-year life.

Pleasingly, the PFS has also confirmed that our proprietary TIVAN™ metallurgical process, which has been jointly developed and patented with our metallurgical consultants, METS Pty Ltd, is reaching commercial viability and will provide a suitable processing solution for the Mount Peake mining operation. Extensive pilot plant testwork completed during the year returned outstanding analytical results, yielding recoveries of 80 per cent for vanadium pentoxide, which was extracted to a very high purity of 99 per cent.

Exploration at Mount Peake has also continued to yield encouraging results, confirming the potential to further increase the resource inventory in the region. Two large magnetite-gabbro structures were identified from RC drilling conducted during the year.

While further drilling is required, confirmation of additional magnetite-gabbro structures could significantly expand the resource potential in the Mount Peake Project Area, where TNG holds over 2,000 sq km of prospective ground. We are also conducting metallurgical testwork to assess the economic potential of some graphite mineralisation intersected in drilling on the tenements. Graphite is currently in high demand globally, and a successful outcome would add considerable value to the portfolio of strategic metals being developed at Mount Peake.

Outside of Mount Peake, 2012 has delivered a number of exciting outcomes for TNG's copper exploration initiatives, including the acquisition of an important new tenement covering much of the historic Mount Hardy Copper Field in the Northern Territory, and the signing of a Heads of Agreement with Australian uranium exploration and project development company, Toro Energy Limited (ASX: TOE), providing TNG with the right to explore for all minerals except uranium within Toro Energy's EL 27115, EL 26848 and EL 27876 tenements.

These transactions have significantly expanded and enhanced TNG's copper exploration portfolio in the Northern Territory to some 10,000 sq km, which will be a key focus of the Company's exploration initiatives over the forthcoming financial year. This now represents one of the largest copper exploration packages in the Northern Territory. A major HELITEM® survey has recently been completed over both of these project areas to identify initial drill targets, and preliminary results from the Mount Hardy survey area have proved very positive.

In keeping with our growing focus on the development of Mount Peake and on our copper exploration portfolio, TNG's intention is to seek development partners to progress the remaining projects within our portfolio.

To this end, the Company was pleased to agree a Letter of Intent with Rio Tinto Exploration to establish a Joint Venture for the Company's Melville Island licence, which is

prospective for bauxite, with strong progress also made by our Joint Venture partners at the Manbarrum Zinc-Lead-Silver Project and the Rover Gold Project during the year. Our joint venture partner at Manbarrum, KBL Mining, is moving towards production at its nearby Sorby Hills Project, a development which will see Manbarrum developed as a satellite ore source.

With the exceptionally strong foundations established by the Company over the past 12 months, 2013 is set to be another active and productive year.

TNG now has a clear development pathway in place for the Mount Peake Project, leveraging off its key relationships and alliances in China, and the Company is well and truly moving into the "project realisation" phase – making the allimportant transition from explorer to producer.

Our key objectives over the coming 12 months include the commencement of a Definitive Feasibility Study for Mount Peake, the commencement of an Environmental Impact Statement (EIS) and other statutory approvals, the appointment of a partner for Engineering, Procurement & Construction Management (EPCM), and securing long-term sales contracts for Mount Peake ore.

All of these objectives will be pursued in parallel with our planned aggressive exploration campaigns both at Mount Peake and across our copper exploration assets in the Northern Territory, which have the potential to deliver significant returns to the Company in the event of a new discovery.

In conclusion, I would like to thank my fellow Directors for their support and input and express my appreciation to TNG's Managing Director, Paul Burton, for his strong leadership and hard work during the year.

I would also like thank TNG's team of dedicated employees and consultants, who have worked tirelessly during the year. While I have only been involved with the Company for a short time, I have been extremely impressed by the drive and commitment of the TNG team, and I am very much looking forward to working with them to deliver further value to you, our shareholders.

I look forward to sharing our continued growth with you.

Jianrong Xu

Chairman

TNG has outlined a clear development pathway, leveraging off its key relationships and alliances in China.

MAP OF OPERATIONS

The company has maintained and increased its significant presence in the key mineral fields of the Northern Territory in addition to its significant assets in Western Australia.

5 TNG LIMITED Annual Report 2012

IRON-VANADIUM-TITANIUM

Mount Peake Project: TNG 100%

The Mount Peake Project is located 235km northnorthwest of Alice Springs in the highly prospective Arunta Province of the Northern Territory.

The Project is strategically located close to existing power and transport infrastructure, including the Alice Springs-Darwin Railway, the Stuart Highway and the new LPG pipeline, 20km to the east. Mount Peake currently has a JORC Inferred Resource estimate

of 160Mt @ 0.27% vanadium (V205), 5% titanium (TiO2) and 22% iron (Fe), with an Exploration Target1 of 500 - 700Mt with a grade range of 0.2 - 0.4% V205, 5 - 8% TiO2 and 25 - 35% Fe.

The Project comprises Exploration Licences covering a total area of more than 2,000 square kilometres in a highly prospective but poorly explored area of the Western Arunta province.

¹ The potential quantity and grade is conceptual in nature, there has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resource.

Mount Peake Pre-Feasibility Study

In July 2012, TNG announced the results of the Pre-Feasibility Study for the Mount Peake Project, outlining a robust project capable of generating revenues of A\$12 billion and operating cash flows of over A\$5 billion over its initial 20-year life. On the strength of these results, the Board of TNG remains committed to continuing to evaluate the potential development of a substantial and financially robust strategic metals business at Mount Peake incorporating its new TIVAN™ hydrometallurgical process.

The 2012 Pre-Feasibility Study was prepared by key consulting companies Snowden Mining Industry Consultants Pty Ltd ("Snowden"), Mineral Engineering Technical Services ("METS") and Sinclair Knight Mertz ("SKM") to an accuracy level of ±25 per cent, required for PFS.

Key Physicals

Total material mined:	147.9Mt
Total waste movement:	72Mt
Total ore mined:	75.9Mt
Strip ratio:	0.95
Mine life:	20 years
Processing rate:	2.5Mtpa, increasing to 5Mtpa in year 4
Average head grade:	0.39% V2O5, 27.09% Fe, 7.02% TiO2
Average recoveries:	80% V2O5, 66% Fe, 55%TiO2
Total metal production:	236kt V2O5, 17.4Mt Fe, 5,822kt TiO2

Key Financial Incomes

Total revenue (LOM):	A\$11.8 billion
Operating cash flow (LOM):	A\$5.8 billion
Net cash flow (LOM):	A\$5.05 billion
Pre-production capital:	A\$563M*
Total operating costs:	A\$75.50/tonne of plant feed**
Net annual cash flow:	A\$294M
IRR pre-tax:	31.8%
Exchange rate:	1USD to 1AUD

* Including all infrastructure

** Including mining, processing, transport & royalties

The Pre-Feasibility Study (PFS) was based on the updated JORC Indicated and Inferred Resource for Mount Peake published on 12 October 2011 of 160Mt @ 0.3% V2O5, 5%TiO² and 23% Fe (Indicated 110Mt @ 0.29% V2O5, 5.3%TiO² and 23% Fe; Inferred 48Mt @ 0.24% V2O5, 4.5%TiO² and 21% Fe). In addition to this resource, TNG has published an Exploration Target¹ of 500-700Mt grading 0.2-0.4% V2O⁵ and 25-35% Fe.

The updated resource model compiled by Snowden Mining Consultants revealed that the Mount Peake deposit itself remains open to the east. In addition, recent regional drilling has highlighted the potential to further increase the Company's resource inventory in the region.

Key assumptions at commencement of operations include:

• Operating costs and pit slope angles related to mining estimated to a Pre-Feasibility Study level (±25%)
• V2O⁵ price of US\$19,841/tonne (>99% grade)²
• TiO² price of US\$400/tonne (> 64% grade)²
• Fe2O3 price of US\$200/tonne (>99.9% grade)²
• Royalty rate of 2.5% per tonne of plant feed
• Discount rate of 8%
• A\$/US\$ exchange rate of 1 US\$ = 1A\$
• Nett annual cash flow is defined as the average discounted cash flow per annum after all CAPEX (pre-strip CAPEX, initial CAPEX, and expansion CAPEX) has been deducted, but ignores cost or source of capital, hedging, tax, depreciation, rehabilitation and salvage.
¹ The potential quantity and grade is conceptual in nature, there has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resource.
² Commodity pricing based on independent commodity trader valuations based on the high purity products produced by the TIVANTM process.

	Estimate of capital costs (CAPEX) including direct, indirect and infrastructure costs		(±25% accuracy)
Area		Plant throughput basis	PFS Revised Total 2.5Mt/a	PFS Revised Total 5.0 Mt/a
100	Crushing Circuit		\$28,671,591	\$28,671,561
200	Grinding Circuit		\$35,825,064	\$35,825,064
300	Beneficiation & Leaching		\$57,298,646	\$79,160,587
400	Solvent Extraction		\$16,754,261	\$23,701,009
500	Vanadium Precipitation & Packaging		\$13,190,986	\$18,944,223
600	Acid Regeneration		\$181,914,654	\$261,256,571
700	Tailings Filtration		\$24,238,940	\$33,692,662
800	Reagents		\$3,872,378	\$5,169,422
900	Plant Utilities		\$2,414,058	\$3,305,699
		Direct Costs Total	\$364,180,578	\$489,726,828
Field Indirects (China supply)		2.0%	\$7,283,612	\$9,794,567
EPCM (China supply)		4.0%	\$14,567,223	\$19,589,073
Vendor Reps		1.5%	\$1,502,570	\$1,863,847
Capital Spares		4.0%	\$4,006,855	\$4,970,260
Commissioning Spares		0.5%	\$500,857	\$621,282
First Fills			\$2,200,000	\$2,200,000
Insurance		3.0%	\$3,005,141	\$3,727,695
		Indirect Costs Total	\$33,066,258	\$42,766,694
	Infrastructure & Other Fixed Assets (Non-Factored Costs)
000	Road		\$58,100,000	\$58,100,000
000	Rail		\$47,900,000	\$47,900,000
000	Power Station		\$22,519,750	\$33,779,625
000	Water Supply		\$797,805	\$997,256.56
000	Buildings		\$7,403,031	\$7,403,031
000	Mobile Equipment		\$8,898,255	\$8,898,255
000	Accommodation Village		\$15,587,137	\$20,677,842
000	Laboratory		\$1,584,767	\$1,584,767
		Non-Factored Cost Total	\$162,790,745	\$179,340,777
		GRAND TOTALS	\$560,037,580	\$711,834,299

Estimate of Total Operating Cost (OPEX) supplied by Snowden and METS
(±25% accuracy)	A\$/t
Waste	2.60
Ore	2.77
Grade control on ore	0.20
Administration	1.60
Total mining cost per tonne of ore	7.03
Total mining cost per tonne of ore moved	3.61
TOTAL MINING COST	A\$533M
Processing
Rehandle Stockpiles	10.7
Labour	7.20
Power	3.18
Consumables	1.49
Maintenance	5.28
Reagents at 2.5 Mtpa	34.12
Reagents at 5.0 Mtpa	34.12
Administration
Average cost per tonne of ore processed - Years 1 to 3	58.77
Average cost per tonne of ore processed - Year 4 onwards	51.24
Product Transport
V2O5	168.4
TiO2	48.4
Fe2O3	48.4
Total transport cost per tonne of concentrate	57.6

The current results are based on the original scenario of locating the plant adjacent to the mine site. The study also highlighted a number of other optimisation opportunities for the Mount Peake Project which include consideration to identifying potentially suitable offshore locations for the plant, which could bring both strategic and financial benefits to the Mount Peake Project. TNG will consider this option as part of any further evaluation of the project including moving to a decision on a Definitive Feasibility Study.

Total transport cost per tonne of ore 17.77

The Board is now reviewing the results of the PFS and expects to make a decision on proceeding to a full Definitive Feasibility Study in the fourth quarter of 2012.

Any DFS will consider all commercial options for product value-add and plant location options, which, following recent discussions with Chinese EPCM and financing companies, indicate that the option of building a plant

offshore in Asia is a potential advantage. This could result in lower Capex and Opex, a simpler mining operation where magnetite concentrate is transported from site to the plant, and other strategic benefits.

"TIVAN™" Hydrometallurgical Process – TNG's competitive advantage

TNG's competitive advantage, the TIVAN™ process has proven to be technically and commercially suitable for the Mount Peake Project.

Following the completion of detailed and exhaustive bench scale and optimisation testwork, TNG commenced a programme of pilot plant test work in March 2012 to test the proprietary TIVAN™ solvent extraction (SX) process. The pilot plant was assembled at a laboratory in Perth using existing SX equipment, under supervision by TNG's metallurgical consultants, METS Pty Ltd.

The aim of this testwork was to provide a definitive test of the commercial potential of the TIVAN™ process to produce a high-purity aqueous vanadium solution leading to production of vanadium pentoxide of commercial grade.

The pilot plant testwork was completed in early April and returned outstanding analytical results which are summarised in the following table.

"TIVAN™" Hydrometallurgical Process – TNG's competitive advantage (continued)

TIVANTM Pilot Plant Analytical Results (source: METS)
Product	Purity %	Recovery %
Final V2O5 product	99	89-90
Final TiO2 product1	55-78	67-80
Final Fe2O3 product	99.9	63-80

¹ Subject to final verification testwork

The grade and purity of V205 and Fe2O3 have been verified, the final grade of the Ti0² is currently being assessed via additional analytical testwork.

Total Metal Production	Tonnes
V2O5	236,000
TiO2	5,822,000
Fe2O3	17,400,000

Average Concentrate Grade
V2O5	1.2%
TiO2	18%
Fe	55%

Metal Purity
V2O5	99%
TiO2	55%
Fe2O3	99.9%

The pilot plant run was the culmination of an extensive pilot plant testwork program for the TIVANTM process, and these final analytical grades represented a key input for the Mount Peake Pre-Feasibility Study detailed above.

All testwork conducted to date has provided sufficient confidence that the TIVAN™ process is both economically scalable and feasible at this level of study and stage of the project.

Consequently, TNG and its metallurgical consultants METS are satisfied that TIVANTM will provide a commercial process for the Mount Peake operation.

In addition, the results allow progression to larger throughput confirmatory testwork which will be undertaken with the Australian Commonwealth Scientific Industrial Research Organisation (CSIRO) prior to commissioning.

Patent and Trade mark

During the year, the international patent applications have progressed and the Australian Trade Mark Registration Certificate was issued for the name TIVANTM. The trade mark registration protects the use of the name "TIVANTM" for a period of 10 years (to 9 June 2021) and may be renewed for successive periods of 10 years thereafter. The trade mark name is owned 100% by TNG.

Resource Upgrade

In October 2011, TNG announced a substantial upgrade in the Mineral Resource estimate for the Mount Peake deposits incorporating the results of the 2011 drilling programs. The updated Indicated and Inferred Resource comprises:

Mount Peake Mineral Resource Estimate as at 12 October 2011
Category	Oxidation State	Volume	Tonnes	V2O5%	TiO2%	Fe%	Al2O3%	SiO2%
Indicated	Oxide	880,000	2,100,000	0.28	5.7	21	8.4	36
	Transitional	3,600,000	12,000,000	0.32	6.2	23	7.8	33
	Fresh	29,000,000	98,000,000	0.28	5.2	23	8.2	34
	Sub-total	33,000,000	110,000,000	0.29	5.3	23	8.1	34
Inferred	Oxide	310,000	730,000	0.25	4.9	18	9.6	39
	Transitional	1,500,000	5,100,000	0.28	5.2	20	9.2	36
	Fresh	13,000,0	43,000,000	0.23	4.4	21	8.7	35
	Sub-total	14,000,000	48,000,000	0.24	4.5	21	8.8	35
	Total	48,000,000	160,000,000	0.27	5.0	22	8.3	34

Mount Peake Deposit Schematic

This updated resource represents a significant increase from the previous Inferred Resource estimate of 139Mt grading 0.29% V2O5, 5.3%TiO2, 23.6% Fe. Significantly, approximately 70 per cent of the resource, or 112 million tonnes, is now confirmed in the Indicated category, and available for conversion to Ore Reserves.

The estimate has been completed by Snowden Mining Industry Consultants Pty Ltd (Snowden) and is reported in accordance with the JORC Code (2004), using a V2O⁵ cut-off of 0.1%.

Snowden also noted that the deposit is horizontally zoned, with a higher-grade zone running through the length of the deposit, which includes the highest grades seen to date of 0.7% V2O5, 38% Fe and 12%TiO² as shown below:

Mount Peake - High Grade Zone
Zone	Results	V2O5%	TiO2%	Fe%	Al2O3%	SiO2%
Zone 1 (0.1% - 0.3% V2O5)	Maximum	0.289	6.91	23.00	14.4	5.5
Zone 2 (>=0.3% V2O5)	Maximum	0.707	12.11	38.00	16.3	54.7
Zone 3 (0.1% - 0.3% V2O5)	Maximum	0.373	6.41	30.10	26.1	50.4

In addition, the drilling has revealed that the deposit remains open to the east, with a number of new targets identified in this area. This is a very positive development, as TNG previously believed that the resource was closed off in this direction.

The results provide strong support for TNG's previously published Exploration Target¹ of 500-700Mt with a grade range of 0.2-0.4% V2O⁵ for the Mount Peake Project.

This confirms Mount Peake as one of the largest vanadium deposits in Australia, with significant potential to increase further with ongoing exploration.

Commodity Outlook

The companies TIVANTM process produces high purity products which will attract premium prices.

The outlook for vanadium and titanium prices is strong, with continued growth in demand from high tech steels and new opportunities emerging in medical products, industrial and vehicle battery markets. Vanadium is a critical element in the manufacture of:

• Steel rebar and structured beams as well as high speed tools and surgical steels;
• Aerospace and defence titanium vanadium alloys for all high-technology metals aircraft, missiles, personnel transports, etc;
• Chemicals and Pollution Control production of synthetic rubber, polyester, fibreglass, sulfuric acid etc and a critical component of catalytic converters to remove sulphur dioxide and other pollutants; and
• Energy Store the grid scale Vanadium Flow Battery and Lithium Vanadium Batteries for electric vehicles

Leading international metals and minerals research group, Roskill, recently published the following forecasts for vanadium prices and titanium production and prices:

Vanadium Price Forecast

Titanium Production & Price Forecasts

Regional Exploration

During the year the company completed extensive geophysics and fieldwork programs over the Mount Peake project area (MPPA) and successfully identified three large magnetic zones and one isolated magnetic anomaly at Mount Peake, which have the potential to emerge as new vanadium and titanium-bearing magnetite zones.

A Reverse Circulation (RC) drilling programme commenced in April 2012 to test these targets, aimed at confirming the presence of additional magnetite-gabbro – the host to the iron-vanadium-titanium mineralisation at the Mount Peake deposit.

Two of these magnetic zones were confirmed by drilling as large magnetite-rich gabbro bodies while one drill hole intersected a large granitic body in the southern anomaly. The northern anomaly drill holes intersected gneissic. Four drill holes intersected significant true widths of magnetite-rich gabbro.

Significant intersections of magnetite-gabbro

Hole No.	From (m)	To (m)	Intersection (m)	Dip	Azimuth
12MPBFRC001	2	206	204	-60°	060°
12MPBFRC002	50	198	148	-60°	060°
12MPBFRC003	23	198	175	-60°	060°
12MPBBERC001	64	180	116	-55°	180°

Regional Exploration (continued)

Drillhole 12MPBBERC001 is of particular interest as this anomaly formed part of a relatively subdued magnetic feature. The presence of magnetite gabbro in this region significantly enhances the Company's understanding of the geology of the area and the potential for large magnetic gabbro bodies to be present even in relatively low magnetic areas.

Assay results from these holes have produced grades consistent with those noted at the Mount Peake deposit and provide further encouragement that higher mineralised grades may exist within the magnetic features. Further drilling will be required to substantiate this but as mineralisation has been identified in this preliminary phase the potential is encouraging. It also provides encouragement to further assess untested magnetic features in the MPPA.

Significant analytical results (XRF)

Hole No.	From (m)	To (m)	Length (m)	Grade Fe2O3 (%)	Grade V2O5 (%)	Grade TiO2 (%)
12MPNRC003	48	72	24	23.36	0.20	3.00
	104	108	4	23.82	0.17	3.16
12MPBBERC001	130	164	34	21.94	0.20	4.63
Incl.	145	152	7		0.25	5.36
Incl.	159	164	5		0.30	4.60

The Company concludes that these results open up the potential in the MMPA for a substantial increase to the current Mount Peake JORC Indicated and Inferred Resource.

The updated resource model compiled by Snowden Mining Consultants (published on 12th October 2011) revealed that the Mount Peake deposit itself remains open to the east. This, together with the latest encouraging drilling results, provides further support for the Company's Exploration Target¹ for the Mount Peake Project Area (MPPA) of 500- 700Mt with a grade range of 0.2-0.4% V2O5, 20-40% Fe203, 4-6%Ti02.

Further drilling to substantiate the resource potential in the MPPA leading to additional JORC estimates will be carried out during the next diamond drilling programme.

Graphite Potential

During the year TNG also commenced metallurgical testwork on graphite mineralisation intersected in a previous regional diamond drilling program at Mount Peake.

TNG decided to initiate the testwork program after inspecting drill core from a 2011 drilling program targeting a large 500m by 200m electromagnetic (EM) anomaly, BGC1, on the Mount Peake tenements.

While this hole failed to intersect base metal mineralisation, subsequent visual inspection indicates that it intersected approximately 40m of graphite mineralisation.

The mineralised intercept was located 100m south of an historic drill hole, ARD01, drilled by Discovery Nickel in 2006. Inspection of the ARD01 drill core has shown that it also intersected >80m of graphite, providing significant support that the EM anomaly is composed of the conductive graphite, not base metals as previously thought.

Metallurgical testwork is now underway to assess the ability to upgrade the graphite to an economic grade using simple beneficiation (froth flotation). Further assessment of the economic potential of the graphite mineralisation is also underway.

COPPER

The company has compiled an extensive portfolio of highly prospective copper exploration licences and is now the largest holder of prospective copper tenements with over 10,000km2 held.

MOUNT HARDY COPPER PROJECT: TNG 100%

Mount Hardy – ELA 29219, EL 27892

The Mount Hardy Copper Project is located within the historical Mount Hardy Copper Field, approximately 300km north-west of Alice Springs. The project area is situated on the Mount Doreen (SF52-12) and Mount Theo (SF52-08) 1:250,000-scale sheets. Access to the Mount Hardy tenement is via the Tanami Highway.

During the year, TNG successfully negotiated an agreement to acquire a key new tenement, EL 27892, in the Mount Hardy region. The acquisition agreement was with public unlisted company, Walla Mines Ltd, and the tenement covers 101.76km² representing the main portion of the historic Mount Hardy Copper Field, which is located adjacent and immediately south of TNG's existing tenement ELA 29219, covering the northern extension of the known copper field.

The acquisition was completed on 10 July 2012, with TNG paying \$200,000 cash as consideration for the tenement.

The Mount Hardy copper mines and prospects were discovered in 1935 and are within the Lander Group geological formation, which is the dominant host rock for copper and gold mineralisation in the area. The Lander Group is interpreted to be stratigraphically equivalent to the Tanami Group, which hosts the significant gold discoveries at The Granites, Dead Bullock Soak and Coyote.

Historical rock chip sampling in the Mount Hardy area by White Industries (early 1990's) and Tanami Gold NL (2002) returned numerous anomalous copper results, with peak grades of up to 19% copper, 18% lead, 1.52% zinc, 2.66 g/t gold, and 170 g/t silver.

TNG has established that these results may indicate additional potential for Volcanogenic Massive Sulphide mineralisation at depth.

Previous work has been focused on near surface gold exploration, with only limited drilling to shallow depths of less than 50m and no modern geophysical surveys have been completed over the area.

In July 2012 TNG commenced an extensive HELITEM® survey, flown by Fugro Airborne Surveys Pty Ltd, over the Mount Hardy Project area to identify targets for copper mineralisation.

Fugro's HELITEM® system is the world's most powerful helicopter time-domain electromagnetic system and provides multiple coil measurements, allowing for more complete identification and interpretation of conductive features which represent potential accumulations of sulphide mineralisation.

Results from the Mount Hardy Project show a cluster of five high priority Electro-Magnetic (EM) targets identified from the 900 line km HELITEM® survey completed over this project area.

These represent discrete anomalies with a strike length of approximately 250m and indicate the presence of localised bedrock conductors at depths less than 100m from surface. All five are located close to or above existing copper prospects.

A further eight discrete anomalies and several broader regions have been identified within the survey area. These represent medium priority targets and will be the checked in future field programs.

Following these results, a high-powered ground-EM survey has been mobilised for each target to confirm and improve the resolution of the HELITEM® anomalies prior to future drill testing.

The ground-based system also has the potential to penetrate deeper than the HELITEM® survey and detect stronger conductors below the existing anomalies. These surveys are scheduled to start in mid-August with results expected by early September.

A drill rig has been secured to commence testing of the priority targets in late September 2012.

WALABANBA HILLS PROJECT: TNG EARNING UP TO 80%

EL 27115, EL 26848, EL 27876

During the year TNG signed a Heads of Agreement (HOA) with Australian uranium exploration and project development company, Toro Energy Limited (ASX: TOE), providing TNG with the right to explore for all minerals except uranium within Toro Energy's EL 27115, EL 26848 and EL 27876 tenements.

The tenements lie immediately west of TNG's flagship Mount Peake Strategic Metals Project in the Northern Territory, and are considered to be highly prospective for copper and nickel mineralisation based on previous exploration results. The HOA will be known as the Walabanba Hills Project.

Under the terms of the HOA, TNG must spend a total of A\$500,000 on exploration activities within the first two years to earn a 51% interest in each of granted Exploration Licences (EL's) 27115, 26848 and 27876, at which point a formal Joint Venture agreement between TNG and Toro will be signed, subject to meeting conditions precedent.

TNG then has the right to increase its stake to 80% by spending a further A\$1.5 million over the next five years. Toro can then elect to retain, assign or convert its remaining 20% interest to a 2% Net Smelter Royalty (NSR).

The EL's 27115, 26848 and 27876 tenements were previously held by Western Mining Corporation (WMC) in the mid-1990s and Anglo American Corporation between 2003 – 2004, who conducted aeromagnetic surveys over the region and focused on magnetic and Electro-Magnetic (EM) anomalies. These surveys identified numerous targets anomalous in nickel, copper and Platinum Group Elements (PGM), suggesting the presence of sulphide-bearing intrusive rocks.

Based on available data, six areas have been identified as highly prospective for immediate follow up using a combination of soil geochemistry, magnetic and electro-magnetic geophysics to rapidly advance targets for drilling.

In July 2012 TNG conducted a HELITEM® survey over portions of the Walabanba Hills Project area to identify targets for copper mineralisation. HELITEM® technology has already proved successful in identifying EM anomalies in the Mount Hardy Project area (see above). Results from the Walabanba Hills survey were being processed at the time of finalising this report.

SANDOVER COPPER PROJECT: TNG 100%

ELA 29252, ELA 29253 and ELA 29254

The Sandover Copper Project tenements are located approximately 100km north-east of Alice Springs just north of the Plenty Highway. The project area is situated on the Alcoota (SF53-10) 1:250,000 scale map sheet.

The area is highly prospective for copper and volcanogenic massive sulphides.

MCARTHUR RIVER PROJECT: TNG 100%

During the year, negotiations with Traditional Owners regarding access to McArthur, Yah Yah and Black Springs exploration licences were progressed, and preparations for a detailed exploration programme are in progress.

McArthur – EL 27711

The McArthur River tenement, which is located approximately 50km south of McArthur township along the Tablelands Highway, covers part of the prospective McArthur Basin geology, 65km south-west of the McArthur Zinc mine. The licence has two major copper targets – Kilgour Crossing and Donkey Yard, both of which have been explored intermittently over the past 50 years and have recorded rock chip grades up to 2% copper.

Mineralisation at McArthur River is hosted by the Mallapunyah Formation, in two dolomitic and variably bituminous intervals informally termed the 'upper' and 'lower' copper beds, which are 1m to 150mm thick, respectively. Chalcocite and chalcopyrite are present in the 'lower copper bed' along its strike length of 500m. Copper mineralisation in the lower copper bed 5km north of the Kilgour Crossing prospect comprised approximately equal quantities of chalcocite and bornite.

TNG plans to complete a thorough rock chip sampling program over the region in order to confirm the scope and tenor of mineralisation, and will potentially also conduct a VTEM survey to map the host rock.

Yah Yah – EL 28509

The Yah Yah tenement, located approximately 50km south-west of the McArthur township, contains the historical Yah Yah copper mine, which produced some 40 tonnes of hand-picked, high-grade copper (20-30% Cu) ore prior to 1912. A grab sample collected from a Yah Yah waste dump by CRA Exploration assayed 30.4% Cu. In addition, BHP completed a soil survey which returned best results of up to 562ppm Cu from a 300m wide zone over the old structure.

Yah Yah – EL 28509 (continued)

TNG plans to complete a thorough rock chip sampling programme over the region in order to confirm the scope and tenor of mineralisation, and will potentially also conduct a VTEM survey to map the host rock.

Access by TNG to the Yah Yah tenement was declined by the traditional owners during the June 2012 Quarter, and at the end of the reporting period a second meeting with the traditional owners was being sought.

Black Springs – EL 28503

The Black Springs tenement is located 4km south of McArthur EL 27711 covering southern extensions of the prospective McArthur stratigraphy.

During the year, negotiations with Traditional Owners regarding access to Black Springs were progressed.

JOINT VENTURE PROJECTS

Manbarrum Joint Venture: TNG 100% (Sorby Hills JV earning 51% with scope to earn up to 80%)

The Manbarrum Project remains a significant asset in a highly prospective region, in which the Company maintains a strategic ground holding.

Two deposits totalling in excess of 35Mt of combined zinc-lead-silver mineralisation has been discovered to date, with a number of untested targets, generating a significant Exploration Target of 80-100Mt with a grade range of 1.5%- 2% Zn¹ .

Located 82 kilometres north east of the township of Kununurra in the Northern Territory, The Manbarrum Project comprises three Exploration Licenses and two Authority to Prospect licenses (under section 178) covering a combined area of 407 square kilometres.

Sandy Creek Zinc Mineral Resource, as at March 2010 at a 1.0% Zn cut-off.

Material	Classification	Tonnes	Zn	Pb	Ag
Oxide	Indicated	575,000	1.45	0.43	5.14
	Inferred	877,000	1.26	0.28	3.24
	Total	1,452,000	1.34	0.34	3.99
Primary	Indicated	12,906,000	2.07	0.57	4.77
	Inferred	10,023,000	1.54	0.30	4.40
	Total	22,929,000	1.84	0.45	4.61
Total		24,381,000	1.81	0.45	4.57

Djibitgun Total Ag Mineral Resource

Classification	Resource	Commodity	Tonnes	Zn %	Pb %	Ag g/t
Inferred	Oxide	Silver	19,930,000	0.5	0.2	16.4

Note: This resource includes 9.5Mt @ 0.6% Zn, 0.2% Pb, 20.2g/t Ag at a lower cut-off grade of +15g/t Ag

¹ The potential quantity and grade is conceptual in nature, and there has been insufficient exploration to define a Mineral Resource. It is uncertain if further exploration will result in the determination of a Mineral Resource.

Manbarrum Joint Venture: TNG 100% (continued)

Djibitgun Zn Mineral Resource

Classification	Resource	Commodity	Tonnes	Zn %	Pb %	Ag g/t
Inferred	Oxide	Zinc	6,720,000	1.8	0.6	14.0

Note: This resource is reported above a 1% Zn lower cut-off grade, and includes 3.8Mt @ 2.2% Zn, 0.5% Pb, 15.3g/t Ag above a lower cut-off grade of 1.5% Zn.

Sorby Hills Joint Venture

In February 2011, TNG signed a Joint Venture Heads of Agreement on its Manbarrum Zinc-Lead-Silver Project in the Northern Territory with the Sorby Hills Joint Venture ("SHJV"), a joint venture between ASX-listed KBL Mining Limited (ASX: KBL) and Yuguang (Australia) Pty Ltd, a subsidiary of China's largest lead producer, Hunan Yuguang Gold & Lead Co.

Under the terms of the agreement, TNG will receive a cash payment of \$2.5 million, comprising an initial payment of \$0.5 million upon the signing of a definitive sales agreement (this payment was received on 17 February 2011) with a final payment of \$2 million due by December 2013. In addition, the SHJV must spend a further \$2 million on exploration at Manbarrum over the next three field seasons. On completion of SHJV's total earn-in expenditure of \$4.5 million, a formal Joint Venture will be formed between TNG and SHJV for the ongoing development of the Manbarrum Project, with TNG retaining a 49% stake.

The SHJV can elect to increase its stake in the Manbarrum Project to 80% by sole funding all exploration and development activities through to a Decision to Mine, and will have first right to purchase a further 10% stake in the Manbarrum Joint Venture from TNG by making a further payment of \$3 million.

The transaction is consistent with TNG's focus on the continued evaluation and development of its flagship Mount Peake Project.

It has been structured so that TNG will retain a 49% interest in the Manbarrum Project, giving it continued exposure to the substantial exploration upside of the Project and the potential for significant synergies to be unlocked by the SHJV through a coordinated exploration and development effort focused on the two projects.

During the 2012 financial year, KBL completed negotiations with the traditional owners and commenced a review of data received from the Manbarrum Project to date.

Field work commenced at Manbarrum in the March Quarter of 2012, focusing on the evaluation of the Sandy Creek Deposit. KBL sees excellent potential for a shallow

high grade Pb-Zn-Ag resource within the larger lower grade deposit.

KBL has progressed with their development plans for their Sorby Hills Project, which will have direct implications for the future development of Manbarrum.

The Sandy Creek deposit is currently under MLA application and all statutory reports have been prepared and submitted.

Melville Island Joint Venture: TNG 100% (Rio Tinto Exploration earning 80%)

During the year, TNG agreed in-principle terms for a farm-in and joint venture agreement on its 100% owned Melville Island licence ELA 28617 in the Northern Territory with Rio Tinto Exploration Pty Ltd (RTX).

Under the in-principle terms, TNG will receive an initial cash payment of \$50,000, and RTX will progress negotiations and grant of the licence application for bauxite exploration. Following the grant of the licence RTX must spend \$5M within 4 years to earn 80% equity in the project with TNG retaining 20% equity at which point TNG may elect to contribute, sell or convert its equity to a 2% Net Smelter Royalty (NSR).

The Melville Island Exploration licence application has been a strategic licence for TNG being located in a prospective area for bauxite and other minerals. The licence area covers approximately 1400km.

The transaction is consistent with TNG's focus on the continued evaluation and development of its flagship Mount Peake Project. It has been structured so that TNG will retain either a 20% interest or 2% NSR giving it continued exposure to the potential exploration upside of the project.

McTavish Project Joint Venure: TNG 3% Royalty, Crucible 100%

TNG retains a 3% gold royalty in these prospective tenements.

Kintore East Joint Venture: TNG 2% Gold Royalty, La Mancha

TNG retains a 2% gold royalty in these prospective tenements.

Rover Project Joint Venture: TNG 100% (Western Desert Resources earning 51% with scope to earn up to 80%)

The Rover Project Joint Venture area comprises two granted exploration licences in the lucrative Tennant Creek goldfields - EL24471 and EL25581.

During the year, WDR completed a reinterpretation of the airborne EM data flown in 2011, which identified defined conductive responses adjacent to the Rover 1 ore deposit. A total of 14 "Priority 1" conductive responses have been observed. A ground IP survey commenced in July to pinpoint drilling targets based on their conductive responses and gravity signatures. Drilling of these targets is expected later in 2012.

Approvals have been obtained to commence a four-hole diamond drilling program at BIF Hill. This is a Tennant Creek-style target, which has seen minimal past exploration, but has strongly elevated gold in the near surface (including 15m@ 1.03 g/t from 3m depth).

Nickel Cawse Extended Joint Venture: TNG 20%, Norilsk 80%

The Cawse laterite nickel operation has been placed on indefinite care and maintenance by Norilsk Nickel Australia.

The 2008 Cawse Mineral Resource, which was estimated using Vulcan block modelling techniques, based on a 0.5% Ni cut-off grade (for Upgrade ore) and 0.8% Ni cut-off grade (for Grind ore) within a grade defined mineralisation envelope and in accordance with the Australian JORC Code, is summarised in the following table (source: Norilsk Nickel Cawse):

Material			Indicated
	Tonnes	Grade	Grade	Metal	Metal
	kt	Ni%	Co%	Ni t	Co t
Cawse Extended 80% NNAu - Upg	16,045	0.75	0.03	120,158	5,108
Cawse Extended 80% NNAu - Grd	232	1.19	0.19	2,756	437
Total	16,276	0.76	0.03	122,914	5,545
			Measured
	Tonnes	Grade	Grade	Metal	Metal
	kt	Ni%	Co%	Ni t	Co t
Cawse Extended 80% NNAu - Upg	3,041	0.69	0.04	20,941	1,079
Cawse Extended 80% NNAu - Grd	51	1.07	0.27	541	138
Total	3,092	0.69	0.04	21,482	1,217
			Total
	Tonnes	Grade	Grade	Metal	Metal
	kt	Ni%	Co%	Ni t	Co t
Cawse Extended 80% NNAu - Upg	19,086	0.74	0.03	141,098	6,187
Cawse Extended 80% NNAu - Grd	283	1.17	0.2	3,298	575
Total	19,368	0.75	0.03	144,396	6,763
		Inferred
	Tonnes	Grade	Grade
	kt	Ni%	Co%
Cawse Extended 80% NNAu - Upg	62,469	0.69	0.03
Cawse Extended 80% NNAu - Grd	134	1.24	0.21
Total	62,603	0.69	0.03

CORPORATE

Transaction with ECE

In May 2012, TNG completed the \$13.4 million transaction with two key strategic Chinese companies, cementing the strategic alliance outlined in last year's Annual Report with Jiangsu Eastern China Non-Ferrous Metals Investment Holding Company Ltd., (ECE), a leading Chinese State-owned enterprise part of the East China Mineral Exploration & Development Bureau.

The overall transaction has resulted in the introduction to the Company's register of Ao-Zhong International Mineral Resources Pty Ltd ("Ao-Zhong"), a subsidiary of ECE, and a privately owned Chinese industrial and high-technology company, Aosu Investment and Development Co Pty Ltd ("Aosu") – with a combined cornerstone holding of approximately 30 per cent.

The first stage of the transaction was completed on 18 January 2012, under which Aosu subscribed for 59,808,643 shares at 11 cents per share, resulting in a cash injection of \$6.6 million (before costs).

The second and final stage of the transaction was completed on 25 May 2012, with AoZhong subscribing for 62,249,812 TNG shares at 11 cents per share raising a total of \$6.8 million (before costs).

The Ao-Zhong investment followed approval from Australia's Foreign Investment Review Board ("FIRB") for the transaction and Ao-Zhong obtaining all necessary waivers, consents and approvals from the Department of Commerce of Jiangsu Province, Jiangsu Development & Reform Commission and the State Administration of Foreign Exchange Jiangsu Branch.

TNG shareholders approved the overall \$13.4 million transaction with ECE at a general meeting held on 21 December 2011.

Completion of ECE transaction provides continued funding to enable progression of TNG's flagship Mount Peake Iron-Vanadium-Titanium Project and commercialisation of the TIVAN™ hydrometallurgical process; the funds will also underpin continued activity at the Company's other projects.

Board Changes

Under the terms of the ECE Subscription Agreement outlined above, during the year TNG appointed Mr Jianrong Xu as Chairman of the Company. Mr Xu is Deputy Director General of East China Mineral Exploration & Development Bureau ("ECMED").

Mr Xu obtained his BA in Geophysics from Central South University in 1983, and has worked with ECMED since

graduating. He has successively held the posts of Head of Geophysics Prospecting Team, Project Manager, Deputy Director and Director. In January 2007, he was appointed Deputy Director General of ECMED.

Mr Xu is also the current General Manager of ECE, Deputy Managing Director of Jiangsu Geophysical Society, the Chairman of HK ECE, Hong Kong East China Non-Ferrous International, Mineral Development Co Ltd, Namibia East China Non-ferrous Investment Pty Ltd and other ECMED wholly owned subsidiaries. Mr Xu is also a director of AIM-listed company, China Africa Resources Plc.

In addition, during the year TNG appointed Mr Rex Turkington and Mr Zhigang Wang as Non-Executive Directors.

Mr Turkington is a highly experienced corporate advisor and economist who has worked extensively in the financial services industry in Australia, specializing in the exploration and mining sectors.

Mr Wang is Chairman of Aosu, part of the Wanlong Group of companies which comprises Suzhou Wanlong Electric Group Co. Ltd (Wanlong) and Suzhou Beijia Investment Co Ltd. (Beijia). Wanlong holds 51% of the issued capital of Aosu and Beijia holds the remaining 49%.

Cash and Investments

At year-end, the Company had cash and current investments totalling \$10,229,0000.

Davis Samuel

TNG is a party to proceedings instituted by the Commonwealth of Australia (Commonwealth) in the Supreme Court of the Australian Capital Territory in which the Commonwealth claims that it is entitled to a constructive trust over shares held by TNG in Kanowna Lights NL (now Peninsula Minerals Limited). The Commonwealth has claimed that as constructive trustee, TNG is liable to account for the highest market value at which the shares could have been sold; and interest on that market value.

The Commonwealth claims that it is entitled to an amount of \$1,274,400 for the value of the Kanowna Lights NL shares and interest thereon since early 2000, bringing the theoretical liability to an expanded maximum of \$3,400,000

TNG has issued cross-claims against Davis Samuel including Messrs Allan Endresz, Peter Cain, William Forge, David Muir and Peter Clark.

TNG is also vigorously defending the Commonwealth claims. The court hearing commenced in June 2008 and concluded in the last quarter of 2008. The court has reserved its decision.

CORPORATE (continued)

Davis Samuel (continued)

In November 2009 TNG advised that certain of the other defendants had sought to have the case re-opened. The submissions to re-open were heard on 9 November 2009 and 5 February 2010. The Commonwealth and TNG opposed the application to reopen. The court also reserved its decision on that application.

TNG has been advised by the court that the decisions were anticipated to be handed down on various dates which have since passed and has through its lawyers and the ACT Law Society sought further information as to when the decisions will be given. The latest information in 2012 was that a decision was likely to be given toward the end of the calendar year 2012. TNG through its lawyers has made further enquiries recently and is awaiting a reply.

Any adverse finding made against TNG which cannot be successfully recovered from cross claims made against other parties may result in TNG being liable to pay up to the amount claimed by the Commonwealth. TNG may also be liable for costs of the proceedings if awarded against it, as well as its own legal cost.

Presentations

During the year the company presented at several international and national conferences.

Appointment of Institutional Broker

TNG appointed UK-based institutional stockbroker Old Park Lane Capital Plc to provide corporate advisory, fundraising and strategic investor relations assistance in the London and European markets.

The appointment, which includes research consultancy services, follows recent investor roadshows by TNG to Europe and the UK during which there was a high level of interest in the Mount Peake Project.

Competent Person's Statement

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

Mr Damian Connelly, MAAusIMM, Chartered Processional (MET), MMICA, MSME, MSAIMM was responsible for the preparation of the metallurgical test work results reported herein. Mr Connelly has sufficient experience to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the "Australasian Code for Reporting of the Exploration Results, Mineral Resources and Ore Reserves. Mr Connelly consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

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

Corporate Governance Statement

The Board of Directors of TNG Ltd (the "Company") is responsible for the corporate governance of the Company. The Board guides and monitors the business and affairs of the Company on behalf of the shareholders by whom they are elected and to whom they are accountable.

Since the introduction of the ASX Principles of Good Corporate Governance and Best Practice Recommendations ("ASX Guidelines"), the Company has made it a priority to adopt systems of control and accountability as the basis for the administration of corporate governance. Some of these policies and procedures are summarised in this report.

Commensurate with the spirit of the ASX Guidelines, the Company has followed each Recommendation where the Board has considered the Recommendation to be appropriate. Where, after due consideration, the Company's corporate governance practices depart from the Recommendations, the Board has offered full disclosure of the nature of, and reason for, the adoption of its own practice.

The table below summarises the Company's compliance with the Corporate Governance Council's Recommendations.

	Recommendation	Comply Yes / No	Reference / Explanation
1.1	Companies should establish the functions reserved to the board and those delegated to senior executives and disclose those functions.	Yes	Page 24
1.2	Companies should disclose the process for evaluation of the performance of senior executives.	Yes	Page 28
2.1	A majority of the Board should be independent directors.	No	Page 24/29
2.2	The chairperson should be an independent director.	No	Page 29
2.3	The roles of chairperson and Managing Director should not be exercised by the same individual.	Yes
2.4	The Board should establish a nomination committee.	No	Page 29
2.5	Companies should disclose the process for evaluating the performance of the board, its committees and individual directors.	Yes	Page 28
3.1	Establish a code of conduct to guide the directors, the Managing Director, the chief financial officer (or equivalent) and any other key executives as to: - the practices necessary to maintain confidence in the Company's integrity; - the practices necessary to take into account their legal obligations and the reasonable expectations of their stakeholders; - the responsibility and accountability of individuals for reporting and investigating reports of unethical practices.	Yes	Page 26
3.2	Companies should establish a policy concerning diversity and disclose the policy or a summary of the policy. The policy should include requirements for the board to establish measureable objectives for achieving gender diversity for the board to assess annually both the objectives and progress in achieving them.	Yes	Page 28
3.3	Companies should disclose in each annual report the measurable objectives for achieving gender diversity for the Board in accordance with the diversity policy and progress to achieving them.	No	Page 28
3.4	Companies should disclose in each annual report the proportion of women employees in the whole organisation, women in senior executive positions and women on the board.	Yes	Page 28

	Recommendation	Comply Yes / No	Reference / Explanation
4.1	The Board should establish an audit committee.	Yes	Page 25
4.2	Structure the audit committee so that it consists of: - only non-executive directors; - a majority of independent directors; - an independent chairperson, who is not chairperson of the Board; - at least three members.	No	Page 29
4.3	The audit committee should have a formal charter.	Yes	Website
5.1	Establish written policies and procedures designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior executive level for that compliance and disclose those policies or a summary of those policies.	Yes	Website
6.1	Design and disclose a communications strategy to promote effective communications with shareholders and encourage effective participation at general meetings and disclose their policy or a summary of that policy.	Yes	Website
7.1	The Board or appropriate Board committee should establish policies on risk oversight and management.	Yes	Page 27
7.2	The Board should require management to design and implement the risk management and internal control system to manage the Company's material business risks and report to it on whether those risks are being managed effectively. The Board should disclose that management has reported to it as to the effectiveness of the Company's management of its material business risks.	Yes	Page 27
7.3	Disclose whether the Board has received assurance from the CEO or equivalent and CFO that the declaration provided in accordance with CA section 295A is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks.	Yes	Page 27
8.1	The Board should establish a remuneration committee.	No	Page 28
8.2	The remuneration committee should be structured so that it: - consists of a majority of independent directors; - is chaired by an independent chair; and - has at least 3 directors.	No	Page 28
8.3	Clearly distinguish the structure of non-executive directors' remuneration from that of executives.	Yes	Page 24

The Company's corporate governance practices were in place throughout the year ended 30 June 2012.

Further information about the Company's corporate governance practices is set out on the Company's website at www.tngltd.com.au. In accordance with the recommendations of the ASX, information published on the Company's website includes charters (for the Board and its sub-committees), codes of conduct and other policies and procedures relating to the Board and its responsibilities.

Board of Directors

Role of the Board and Management

The Board's primary role is the protection and enhancement of medium to long term shareholder value. To fulfil this role, the Board is responsible for the overall Corporate Governance of the consolidated entity including its strategic direction, establishing goals for management and monitoring the achievement of these goals. The Managing Director is responsible to the Board for the day to day management of the Company.

The Board has sole responsibility for the following:

• Appointing and removing the Managing Director and any other executive director and approving their remuneration;
• Appointing and removing the Company Secretary and approving their remuneration;
• Determining the strategic direction of the Company and measuring performance of management against approved strategies;
• Reviewing the adequacy of resources for management to properly carry out approved strategies and business plans;
• Adopting operating and capital expenditure budgets at the commencement of each financial year and monitoring the progress by both financial and nonfinancial key performance indicators;
• Monitoring the Company's medium term capital and cash flow requirements;
• Approving and monitoring financial and other reporting to regulatory bodies, shareholders and other organisations;
• Determining that satisfactory arrangements are in place for auditing the Company's financial affairs;
• Reviewing and ratifying systems of risk management and internal compliance and control, codes of conduct and compliance with legislative requirements; and
• Ensuring that policies and compliance systems consistent with the Company's objectives and best practice are in place and that the Company and its officers act legally, ethically and responsibly on all matters.

The Board's role and the Company's corporate governance practices are being continually reviewed and improved as the Company's business develops.

Composition of the Board

The Company currently has the following Board members:

Jianrong Xu	(Chairman)
Paul Burton	(Managing Director)
Neil Biddle	(Non-Executive Director)
Geoffrey Crow	(Non-Executive Director)
Rex Turkington	(Non-Executive Director)
Wang Zhigang	(Non-Executive Director)

The Company's Constitution provides that the number of Directors shall not be less than three and not more than ten. There is no requirement for any share holding qualification.

The Board composition comprises of 3 non-independent directors. 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. As the Company's activities increase in size, nature and scope, the size of the Board will be reviewed and the optimum number of Directors required for the Board to properly perform its responsibilities and functions assigned.

The membership of the Board, its activities and composition is subject to periodic review. The criteria for determining the identification and appointment of a suitable candidate for the Board shall include quality of the individual, background of experience and achievement, compatibility with other Board members, credibility within the Company's scope of activities, intellectual ability to contribute to Board duties and physical ability to undertake Board duties and responsibilities.

Directors are initially appointed by the full Board subject to election by shareholders at the next annual general meeting. Under the Company's Constitution the tenure of Directors (other than Managing Director) is subject to reappointment by shareholders not later than the third anniversary following his last appointment. Subject to the requirements of the Corporations Act 2001, the Board does not subscribe to the principle of retirement age and there is no maximum period of service as a Director.

Composition of the Board (continued)

A Managing Director may be appointed for any period and on any terms the Directors think fit and, subject to the terms of any agreement entered into, the Board may revoke any appointment.

Committees of the Board

To assist the Board in carrying out its responsibilities, the Board has established the following committees:

• Audit Committee

The Audit Committee operates under a charter approved by the Board. It is the Board's responsibility to ensure that an effective internal control framework exists within the entity. This includes internal controls to deal with both the effectiveness and efficiency of significant business processes, the safeguarding of assets, the maintenance of proper accounting records, and the reliability of financial information as well as non-financial considerations

The Committee also provides the Board with additional assurance regarding the reliability of financial information for inclusion in the financial reports.

The Full Board were members of the Audit Committee.

Qualifications of audit committee members

For details of the qualifications of the audit committee members, the number of Audit Committee meetings held during the year and the attendees at those meetings, refer to the Directors' Report.

Conflicts of Interest

In accordance with the Corporations Act 2001 and the Company's Constitution, Directors must keep the Board advised, on an ongoing basis, of any interest that could potentially conflict with those of the Company. Where the Board believes that a significant conflict exists the Director concerned is not present at the meeting whilst the item is considered.

Independent Professional Advice

The Board has determined that individual Directors have the right in connection with their duties and responsibilities as Directors, to seek independent professional advice at the Company's expense. The engagement of an outside adviser is subject to prior approval of the Chairman and this will not be withheld unreasonably. If appropriate, any advice so received will be made available to all Board members.

Ethical Standards

The Board acknowledges the need for continued maintenance of the highest standard of corporate governance practice and ethical conduct by all Directors and employees of the Company.

Code of Conduct for Directors

The Board has adopted a Code of Conduct for Directors to promote ethical and responsible decision-making by the Directors. The code is based on a code of conduct for Directors prepared by the Australian Institute of Company Directors.

The principles of the code are:

• A Director must act honestly, in good faith and in the best interests of the Company as a whole.
• A Director has a duty to use due care and diligence in fulfilling the functions of office and exercising the powers attached to that office.
• A Director must use the powers of office for a proper purpose, in the best interests of the Company as a whole.
• A Director must recognise that the primary responsibility is to the Company's shareholders as a whole but should, where appropriate, have regard for the interest of all stakeholders of the Company.
• A Director must not make improper use of information acquired as a director.
• A Director must not take improper advantage of the position of director.
• A Director must not allow personal interests, or the interests of any associated person, to conflict with the interests of the Company.
• A Director has an obligation to be independent in judgment and actions and to take all reasonable steps to be satisfied as to the soundness of all decisions taken as a Board.
• Confidential information received by a director in the course of the exercise of directorial duties remains the property of the Company and it is improper to disclose it, or allow it to be disclosed, unless that disclosure has been authorised by the Company, or the person from whom the information is provided, or is required by law.
• A Director should not engage in conduct likely to bring discredit upon the Company.
• A Director has an obligation at all times, to comply with the spirit, as well as the letter of the law and with the principles of the Code.

Code of Conduct for Directors (continued)

The principles are supported by guidelines as set out by the Australian Institute of Company Directors for their interpretation. Directors are also obliged to comply with the Company's Code of Ethics and Conduct, as outlined below.

Code of Ethics and Conduct

The Company has implemented a Code of Ethics and Conduct, which provides guidelines aimed at maintaining high ethical standards, corporate behaviour and accountability within the Company.

All employees and Directors are expected to:

• respect the law and act in accordance with it;
• respect confidentiality and not misuse Company information, assets or facilities;
• value and maintain professionalism;
• avoid real or perceived conflicts of interest;
• act in the best interests of shareholders;
• by their actions contribute to the Company's reputation as a good corporate citizen which seeks the respect of the community and environment in which it operates;
• perform their duties in ways that minimise environmental impacts and maximise workplace safety;
• exercise fairness, courtesy, respect, consideration and sensitivity in all dealings within their workplace and with customers, suppliers and the public generally; and
• act with honesty, integrity, decency and responsibility at all times.

An employee that breaches the Code of Ethics and Conduct may face disciplinary action. If an employee suspects that a breach of the Code of Ethics and Conduct has occurred or will occur, he or she must report that breach to management. No employee will be disadvantaged or prejudiced if he or she reports in good faith a suspected breach. All reports will be acted upon and kept confidential.

Dealings in Company Securities

The Company's share trading policy imposes basic trading restrictions on all employees of the Company with 'inside information', and additional trading restrictions on the Directors, Officers, Employees and Consultants of the Company.

'Inside information' is information that:

• is not generally available; and
• if it were generally available, it would, or would be likely to influence investors in deciding whether to buy or sell the Company's securities.

If an employee possesses inside information, the person must not:

• trade in the Company's securities;
• advise others or procure others to trade in the Company's securities; or
• pass on the inside information to others including colleagues, family or friends – knowing (or where the employee or Director should have reasonably known) that the other persons will use that information to trade in, or procure someone else to trade in, the Company's securities.

This prohibition applies regardless of how the employee or Director learns the information. The securities trading policy provides prescribed closed periods during which Employees are prohibited from dealing in the Company's securities (subject to certain limited exceptions).

In addition to the above, Directors must notify the Company Secretary as soon as practicable, but not later than 5 business days, after they have bought or sold the Company's securities or exercised options. In accordance with the provisions of the Corporations Act and the Listing rules of the ASX, the Company on behalf of the Directors must advise the ASX of any transactions conducted by them in the securities of the Company.

Breaches of this policy will be subject to disciplinary action, which may include termination of employment.

Interests of Other Stakeholders

The Company's objective is to develop and commercialise its exploration tenements to create wealth for shareholders and add value for other stakeholders.

To assist in meeting its objective, the Company conducts its business within the Code of Ethics and Conduct, as above.

Disclosure of Information Continuous Disclosure to ASX

The continuous disclosure policy requires all executives and Directors to inform the Chairman, Managing Director or the Company Secretary, of any potentially material information as soon as practicable after they become aware of that information.

Disclosure of Information Continuous Disclosure to ASX (continued)

The Company must immediately notify the market (via an announcement to ASX) of any information concerning the Company which a reasonable person with experience in the minerals industry would expect to have a material effect on the price or value of the Company's securities.

Information need not be disclosed if:

(i) A reasonable person would not expect the information to be disclosed; and
(ii) The information is confidential; and
(iii) One or more of the following applies:
(iv) It would breach a law or regulation to disclose the information;
(v) The information concerns an incomplete proposal or negotiation;
(vi) The information comprises matters of supposition or is insufficiently definite to warrant disclosure;
(vii) The information is generated for internal management purposes; and
(viii) The information is a trade secret.

The Chairman and Managing Director are responsible for interpreting and monitoring the Company's disclosure policy and where necessary informing the Board. The Company Secretary is responsible for all communications with ASX.

Communication with Shareholders

The Company places considerable importance on effective communications with shareholders.

The Company's communication strategy requires communication with shareholders and other stakeholders in an open, regular and timely manner so that the market has sufficient information to make informed investment decisions on the operations and results of the Company. The strategy provides for the use of systems that ensure a regular and timely release of information about the Company is provided to shareholders. Mechanisms employed include:

• Announcements lodged with ASX;
• ASX Quarterly Cash Flow Reports;
• Half Yearly Report;
• Annual Report.
• Presentations at the Annual General Meeting/General Meetings; and
• Periodic presentations to investors.

The Board encourages full participation of shareholders at the Annual General Meeting to ensure a high level of accountability and understanding of the Company's strategy and goals.

The Company also posts all reports, ASX and media releases and copies of significant business presentations on the Company's website.

Risk Management Identification of Risk

The Board is responsible for the oversight of the Company's risk management and control framework. Responsibility for control and risk management is delegated to the appropriate level of management within the Company with the Managing Director and Chief Financial Officer (or equivalent) having ultimate responsibility to the Board for the risk management and control framework.

Areas of significant business risk to the Company are highlighted in the Key Risk Analysis presented to the Board each year.

Arrangements put in place by the Board to monitor risk management include:

• regular reporting to the Board in respect of operations and the financial position of the Company; and
• where appropriate the appointment of appropriately skilled consultants to provide independent assessment of operational results and proposals.

Integrity of Financial Reporting

The Company's Managing Director and Chief Financial Officer (or equivalent) report in writing to the Board that:

• the consolidated financial statements of the Company and its controlled entity for each half and full year present a true and fair view, in all material aspects, of the Company's financial condition and operational results and are in accordance with accounting standards;
• the above statement is founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the Board; and
• the Company's risk management and internal compliance and control framework is operating efficiently and effectively in all material respects.

Role of Auditor

The Company's practice is to invite the auditor to attend the annual general meeting and be available to answer shareholder questions about the conduct of the audit and the preparation and content of the auditor's report.

Remuneration Arrangements

The Board has not established a Remuneration Committee responsible for making recommendations to the Board on remuneration arrangements for Directors and executives of the Company.

All of the Directors with the exception of the Managing Director receive a separate Directors' fee of \$60,000 per annum, plus statutory superannuation.

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.

The aggregate amount payable to the Company's Non-Executive Directors for undertaking their duties as Directors must not exceed the maximum annual amount approved by the Company's shareholders (currently \$300,000).

For a full discussion of the Company's remuneration philosophy and framework, and the remuneration received by directors and executives in the current period, please refer to the Remuneration Report, which is contained within the Directors' Report.

Performance Review

The Board has adopted a self-evaluation process to measure its own performance and the performance of its committee during each financial year. Also, an annual review is undertaken in relation to the composition and skills mix of the Directors of the Company.

Arrangements put in place by the Board to monitor the performance of the Company's executives include:

• a review by the Board of the Company's financial performance; and
• annual performance appraisal meetings incorporating analysis of key performance indicators with each individual.

Diversity

The Company recognizes the value contributed to the organization by employing people with varying skills, cultural backgrounds, ethnicity and experience.

In line with the Corporate Governance recommendations, the Company has implemented a Diversity Policy.

The Managing Director is responsible for the ongoing implementation of the diversity policy.

As at 30 June 2012, the Company does not have any female Board Members or senior managers (2011: Nil). Of the balance of the Company's employees, 50% are female (2011: 57%).

Compliance with ASX Corporate Governance Recommendations

During the Company's 2011/2012 financial year, the Company complied with the ASX Principles and Recommendations other than in relation to the matters specified below.

Principle Reference	Recommendation Reference	Notification of Departure	Explanation for Departure
2	2.1	The Board does not comprise a majority of independent Directors	Whilst only three members of the Board are considered 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.
	2.1	A majority of the Board are not independent directors	Given the present size of the Company, the composition of the Board and its Chairperson is considered appropriate. The Board will consider the appointment of further independent
	2.2	The Chairperson is not an independent director.	directors as the Company increases in its size and complexity.
	2.4	The Board has not established a separate Nomination Committee.	The full Board carries out the role of a Nomination Committee in accordance with its Charter (which is disclosed on the Company's website). The Board considers that at this stage, no efficiencies or other benefits would be gained by establishing a separate Nomination Committee.
3	3.1, 3.2	The Diversity Policy does not include measureable objectives for achieving gender diversity.	The Board considers that, due to the size, nature and stage of development of the Company, setting measurable objectives for the Diversity Policy at this time is not appropriate. The Board will consider setting measurable objectives as the Company increases in size and complexity.
4	4.2	The Audit Committee does not comprise a majority of Independent Directors.	The role of the Audit Committee is carried out by the full Board. Only three members of the Board are considered Independent Directors.
8	8.1	The Board has not established a separate Remuneration Committee.	The full Board carries out the role of a Remuneration Committee in accordance with its Charter (which is disclosed on the Company's website). Due to the relatively small size of the Board, the Board considers that a separate Remuneration Committee would not add efficiency to the process of determining the level of remuneration for the directors and key executives.

Directors' Report

The Directors present their report together with the financial report of TNG Limited (the company) and of the Group, being the company and subsidiaries for the financial year ended 30 June 2012 and the auditors report thereon.

DIRECTORS

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

Mr Jianrong Xu

Chairman

Mr Xu is Deputy Director-General of the East China Mineral Exploration and Development Bureau (ECMED).

Mr Xu is the current General Manager of ECE, Deputy Managing Director of Jiangsu Geophysical Society, the Chairman of HK ECE, Hong Kong East China Non-Ferrous International, Mineral Development Co Ltd, Namibia East China Non-ferrous Investments Pty Ltd and other OCMED wholly owned subsidiaries.

Mr Xu is also a director of AIM-listed Company, China Africa Resources Plc.

Mr Xu joined the board on 24 May 2012 and was appointed as Chairman on 26 June 2012.

Mr Paul Burton B.Sc (Hons) Geology (UK), M.Sc Mineral Exploration (Canada), MAusImm, FAEG, MAICD

Managing Director

Mr Burton is an Exploration Geologist/Geochemist with over 20 years experience in Exploration and Mining.

Mr Burton is experienced in running successful exploration programs for a variety of commodities. He has held consulting and senior management roles with major exploration companies.

Mr Burton has held no other directorships.

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

Non-Executive director

Mr Biddle was appointed in 1998. He has over 20 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 Sherwin Iron Limited and Marenica Energy Ltd.

Mr Biddle is currently a director of Sturt Resources Ltd.

Geoffrey Crow

Non-Executive Director

Mr Crow has more than 25 years experience in all aspects of corporate finance and investor relations in Australia and international markets, and has owned and operated his own businesses in these areas for the last twelve years.

Mr Crow has held no other public directorships.

Rex Turkington B.Com (Hons). BCA. AAFSI. ADA1(ASX).

Non-Executive Director

Mr Turkington is a highly experienced corporate advisor and economist who has worked extensively in the financial services in Australia, specializing in the exploration and mining sectors. He has extensive experience with equities, derivatives, foreign exchange and commodities, and has participated in numerous corporate initial public offerings and capital raisings for listed exploration and mining companies.

Mr Turkington is currently a Director of an Australian corporate advisory company, offering corporate finance and investor relations advice to listed companies. He holds a first class Honors Degree in economics, and is an Associate of the Securities Institute of Australia.

Mr Turkington was appointed director on 29 November 2011.

Zhigang Wang

Non-Executive Director

Mr Wang is Chairman of Aosu which is part of the Wanlong Group of companies (Wanlong Group) comprising Suzhou Wanlong Electric Group Co. Ltd (Wanlong) and Suzhou Beijia Investment Co Ltd. (Beijia). Wanlong holds 51% of the issued capital of Aosu and Beijia holds the remaining 49%. Mr Wang also holds appointments as Director of Technology Management Department of Wanlong, and is a Director of Beijia. Mr Wang completed his Bachelor degree in Electrical engineering and automation from Shanghai Electric Power University in 2007, and has gained significant professional experience with major industrial groups in China prior to joining Wanlong and Beijjia.

Mr Wang was appointed director on 18 January 2012.

Directors' Report continued

Simon Robertson B.Bus, CA, M Appl. Fin.

Company Secretary

Mr Robertson gained a Bachelor of Business from Curtin University in Western Australia and Master of Applied Finance from Macquarie University in New South Wales.

He is a member of the Institute of Chartered Accountants and the Chartered Secretaries of Australia. Mr Robertson currently holds the position of Company Secretary for a number of publically listed companies and has experience in corporate finance, accounting and administration, capital raisings and ASX compliance and regulatory requirements.

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 board meetings held during the time the Director held office	Number of board meetings attended	Number of audit meetings held during the time the Director held office	Number of audit meetings attended
Jianrong Xu	1	1	-	-
Paul Burton	8	8	1	1
Neil Biddle	8	7	1	1
Geoffrey Crow	8	8	1	1
Rex Turkington	4	4	-	-
Zhigang Wang	4	4	-	-

PRINCIPAL ACTIVITIES

The principal activities of the Group during the course of the financial year were the exploration and evaluation of its Mount Peake project; the review of projects for potential acquisition; the management of its other exploration properties and management of its interest in the Manbarrum and Cawse Extended Projects.

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 \$3,430,360 (2011: loss \$2,147,523). A review of the operations during the financial year is set out on pages 2 to 21.

DIVIDENDS

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

REMUNERATION REPORT - Audited

1. Principles of Remuneration

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

Key management personnel have authority and responsibility for planning, directing and controlling the activities of the Group, including directors of the company and other executives. Key management personnel comprise the directors of the Company and senior executives for the Group.

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.

REMUNERATION REPORT (continued)

The Board policy is to remunerate Directors at market rates for comparable companies for time, commitment and responsibilities. The full Board performing the role of the Remuneration Committee which 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 Directors fees 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 if approved by shareholders.

There is no policy currently in place for the KMP to limit their exposure to risk in relation to the shares held and share options granted as part of their remuneration. All remuneration paid to Directors and executives is valued at cost to the Company and expensed.

Fixed Remuneration

Fixed compensation consists of base compensation being a flat per month director's fee as well as employer contributions to superannuation funds. Compensation levels are reviewed annually by the board through a process that considers individual, segment and overall performance of the group. A senior executives compensation is also reviewed on promotion.

Performance linked compensation

Performance linked compensation includes long-term incentives designed to reward key management personnel for meeting or exceeding specific objectives or as

recognition for strong individual performance. The longterm incentives are provided as options over ordinary shares of the Company under the rules of the Executive Share Option Plan. The board did not exercise any discretion on the payment of bonuses and options as the plans provide for no such discretion.

Short-term incentive bonus

There were no short term incentive bonuses offered or paid during the year ended 30 June 2012.

Long-term incentive

Long term incentives comprise of share options which are granted from time to time to encourage exceptional performance in the realisation of strategic outcomes and growth in shareholders wealth. Options are granted for no consideration and do not carry voting rights or dividend entitlements. Options are valued using the Black-Scholes methodology.

Option exercise prices are determined based on a premium over and above weighted average share price at grant date. Both the number and exercise price of options issued are at the board's discretion.

Consequence of performance on shareholder wealth

In considering the consolidated entity's performance and benefit for shareholder wealth the Board believe that at this stage of development there is no relevant direct link between revenue & profitability and the advancement of shareholders wealth. For this reason, the group does not currently link revenue and profitability against shareholder wealth.

	2012	2011	2010	2009	2008
Profit/(loss) attributable to owners of the company	(\$3,430,360)	(\$2,147,523)	(\$3,550,378)	(\$10,028,995)	(\$2,421,829)
Dividends paid	-	-	-	-	-
Share price at 30 June	\$0.08	\$0.07	\$0.04	\$0.04	\$0.09
Return on capital employed	(13%)	(12%)	(34%)	(101%)	(14%)

Directors' Report continued

REMUNERATION REPORT (continued)

Non-executive directors

Fixed remuneration consists of base remuneration being a flat per month director's fee. Non-executive Directors receive a Directors fee of \$60,000 per annum. Shareholders have approved Director's fees of an amount of up to \$300,000 cash in aggregate per annum. Superannuation contributions of 9% are paid on these fees as required by law.

Directors and executives may also 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 except as stated. Individuals may, however, choose to sacrifice part of their salary to increase payments towards superannuation.

Service Contracts

Jianrong Xu – Chairman

• Term of Agreement May 2012 until terminated by either party.
• Directors fees \$60,000 per annum excluding super plus any expense incurred.
• Early termination Not applicable.

Paul Burton – Managing Director

• Term of Agreement April 2010 until terminated by either party.
• Salary \$310,000 per annum excluding super plus any expense incurred.
• Early Termination The Company to give 6 months written notice or make a payment of 6 months salary in lieu. The employee to provide 6 months written notice. This applies to any reason other than gross misconduct.
• Entitlement to an offer of either 6 million performance rights or 6 million shares funded via company loan funded share plan. Terms, performance hurdles and the vesting period of these arrangements are yet to be finalised and as such any expense is unable to be measured. These arrangements when finalised by Paul Burton and the board will also be required to be approved by shareholders at a general meeting.

Neil Biddle – Non-Executive Director

• Term of Agreement December 1998 until terminated by either party.
• Directors fees \$60,000 per annum excluding super plus any expense incurred.
• Additional monies are paid to Hatched Creek Pty Ltd a related entity of Mr Biddle, for consulting services as approved by shareholders. As consideration for making available the services, the company shall pay the contractor a daily rate up to a total maximum of \$25,000 per month.
• Early termination (Consultancy services) The company to give 12 months written notice or make a payment of 12 months fees in lieu. The consultant to provide 12 months written notice. On 28 June 2012 the Company agreed to make a payment of 12 months fees in lieu.

Geoffrey Crow – Non-Executive Director

• Term of Agreement February 2011 until terminated by either party.
• Directors fees \$60,000 per annum excluding super plus any expense incurred.
• During the year additional monies were paid to Ballyhoo Pty Ltd a related entity of Mr Crow, for consulting services based on a daily rate. The agreement was cancelled in January 2012.
• Early termination Not applicable.

Rex Turkington – Non-Executive Director

• Term of Agreement November 2011 until terminated by either party.
• Directors fees \$60,000 per annum excluding super plus any expense incurred.
• Additional monies are paid to Katarina Corporation Pty Ltd a related entity of Mr Turkington, for consulting services based on a daily rate.
• Early termination Not applicable.

Zhigang Wang – Non-Executive Director

• Term of Agreement January 2012 until terminated by either party.
• Directors fees \$60,000 per annum excluding super plus any expense incurred.
• Early termination Not applicable.

Directors' Report continued

REMUNERATION REPORT (continued)

Scott Rauschenberger – Chief Financial Officer

• Term of Agreement November 2007 until terminated by either party.
• Salary \$168,000 per annum excluding super plus any expense incurred.
• Early Termination 2 months written notice or making a payment of 2 month salary in lieu. This applies to any reason other than gross misconduct.
• Scott Rauschenberger is remunerated by TNG Ltd at a current annual salary of \$168,000 excluding superannuation. During the year Mr Rauschenbergers salary was recharged to Sherwin Iron Ltd and Sturt Resources Ltd on a pro rata basis for financial services rendered.

Simon Robertson – Company Secretary

• Term of Agreement August 2009 until terminated by either party.
• Consultancy fee \$5,000 per month excluding GST is paid to SLR consulting Pty Ltd a related entity of Mr Robertson.
• Early Termination 3 months written notice by either party.

2. Directors and Executives officers remuneration

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:

Directors Remuneration for the year ended 30 June 2012

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
		\$	\$	\$	\$	\$	%
Jianrong Xu1	2012	6,385	-	-	-	6,385	-
Chairman	2011	-	-	-	-	-	-
Paul Burton	2012	333,846	-	32,673	-	366,519	-
Managing Director	2011	305,124	-	24,400	-	329,524	-
Neil Biddle	2012	540,0002	-	-	-	540,000	-
Non-executive	2011	150,000	-	1,800	-	151,800	-
Geoffrey Crow	2012	78,000	-	-	-	78,000	-
Non-executive	2011	18,795	-	-	54,435	73,230	74%
Rex Turkington3	2012	90,697	-	-	-	90,697	-
Non-executive	2011	-	-	-	-	-	-
Zhigang Wang4	2012	27,308	-	-	-	27,308	-
Non-executive	2011	-	-	-	-	-	-
John Barr	2012	-	-	-	-	-	-
Chairman	2011	337,012	-	2,349	-	339,361	-
Edward Fry	2012	-	-	-	-	-	-
Non-executive	2011	32,684	-	2,349	-	35,033	-
Total	2012	1,076,236	-	32,673	-	1,108,909	-
	2011	843,615	-	30,898	54,435	928,948	6%

¹ Jianrong Xu joined the board as a director on 24 May 2012 and was appointed chairman on 26 June 2012.

² On 28 June 2012 the board resolved to terminate Mr Biddles service agreement crystallising a payment of 12 months fees in lieu (\$300,000). ³ Rex Turkington was appointed as a director on 29 November 2011.

⁴ Zhigang Wang was appointed as a director on 18 January 2012.

34 TNG LIMITED Annual Report 2012

REMUNERATION REPORT (continued)

Remuneration of executives who received the highest remuneration for the year ended 30 June 2012.

Consolidated		Short Term		Post Employment	Long Term
Executives		Salary & Fees	Other	Super	Share-based Payment Options	Total	Value of options as a proportion of remuneration
		\$	\$	\$	\$	\$	%
Scott L Rauschenberger5	2012	121,354	-	10,440	-	131,794	-
Chief Financial Officer	2011	72,058	-	6,988	-	79,046	-
Simon L Robertson	2012	60,000	-	-	-	60,000	-
Company Secretary	2011	57,500	-	-	-	57,500	-
Total	2012	181,354	-	10,440	-	191,794	-
	2011	129,558	-	6,988	-	136,546	-

5 Scott Rauschenberger is remunerated by TNG Ltd at a current annual salary of \$168,000 excluding superannuation. Mr Rauschenbergers salary was recharged to Sherwin Iron Ltd and Sturt Resources Ltd on a pro rata basis for services rendered.

3. Options granted as part of remuneration

No options were granted during or since the end of the financial year.

4. Exercise of options granted as compensation

During the reporting period, no shares were issued on the exercise of options previously granted as compensation.

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

No options were granted during or since the end of the financial year.

6. Analysis of movements in options

No options were granted, exercised or lapsed during the year. 2,000,000 options expired due to the share price being lower than exercise price at the option expiry date.

7. Modification of terms of equity-settled share-based payment transactions

No terms of equity-settled share-based payment transactions (including options and rights granted as compensation to a key management person) have been altered or modified by the issuing entity during the reporting period or the prior period. The audited remuneration report ends here.

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:

Director	Ordinary Shares	Options over Ordinary Shares
Jianrong Xu	-	-
Paul Burton	750,000	6,000,000
Neil Biddle	6,633,340	2,000,000
Geoffrey Crow	402,205	4,000,000
Rex Turkington	1,388,000	-
Zhigang Wang	59,808,643	-

Options granted to Directors and Officers of the company

During or since the end of the financial year the company did not grant any options to Directors or executives other than those set out at section 5 of the remuneration Report.

Unissued shares under option

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

Expiry date	Exercise price	Number of options
15 December 2012	\$0.15	21,100,000

Shares issued on exercise of options

During or since the end of the financial year, the Company hasn't issued any ordinary shares as a result of the exercise of options.

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 Group 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 Group.

Responsibilities to Shareholders and the Financial Community generally

The Group aims:

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

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

Responsibilities to Clients, Customers and Consumers

The Group 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 Chief Executive Officer (or equivalent) as soon as a person becomes aware of such a transgression.

Employment Practices

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

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

Directors' Report continued

ETHICAL STANDARDS (continued)

Responsibility to the Community

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

Responsibility to the Individual

The Group 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 Group 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 Group. Where a real or apparent conflict of interest arises the matter should be brought to the attention of the Chairman in the case of a Board member or the CEO, the CEO 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 Chief Executive Officer (or equivalent) or Chairperson, as appropriate.

Periodic Review of Code

The Group 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 Chief Executive Officer (or equivalent).

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 Group.
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 Group.
1. Respect confidentiality of all information of a confidential nature which is acquired in the course of the Group'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 Group'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 Group operates.
1. Protect the assets of the Group to ensure availability for legitimate business purposes and ensure all corporate opportunities are enjoyed by the Group and that no property, information or position belonging to the Group or opportunity arising from these are used for personal gain or to compete with the Group.
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.

LIKELY DEVELOPMENTS

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

Additional comments on likely developments of the Group are included under the review of operations and activities and subsequent events of this report.

INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS

The Group has agreed to indemnify current and former Directors and officers against all liabilities to another person (other than the Group or a related body corporate), including legal expenses that may arise from their position as Directors and officers of the Group 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 consolidated entity holds various exploration licences to regulate its exploration activities in Australia. These licences include conditions and regulation with respect to the rehabilitation of areas disturbed during the course of its exploration activities. 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

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

NON AUDIT SERVICES

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

AUDITOR INDEPENDENCE DECLARATION

The auditor's independence declaration is included on page 39 of the financial report and forms part of the Directors' report for the financial year ended 30 June 2012.

Signed in accordance with a resolution of the Directors.

Paul Burton Managing Director

26 September 2012

Auditor's Independence Declaration

Consolidated Statement of Comprehensive Income

For the year ended 30 June 2012

	Note	2012 \$	2011 \$
Other income	6(a)	129,188	3,836
Total income		129,188	3,836
Corporate and administration expenses	6(c)	(2,419,760)	(1,704,401)
Employment expenses	6(d)	(581,578)	(1,132,674)
Depreciation and amortisation expenses	6(e)	(65,096)	(40,499)
Impairment loss on exploration	15	(1,304,973)	-
Results from operating activities		(4,242,219)	(2,873,738)
Financial income		210,307	113,480
Financial expenses		(82,298)	-
Net financing income	6(b)	128,009	113,480
Loss before income tax		(4,114,210)	(2,760,258)
Income tax benefit	8	683,850	612,735
Net Loss for the year		(3,430,360)	(2,147,523)
Other comprehensive income
Net change in the value of available for sale financial assets		(204,891)	(202,272)
Tax effect on other comprehensive income		12,137	60,682
Other comprehensive income for the year		(192,754)	(141,590)
Total comprehensive income for the year		(3,623,114)	(2,289,113)
Loss per share (cents per share)
Basic loss per share (cents)	9	(1.078)	(0.807)
Diluted loss per share (cents)	9	(1.078)	(0.807)

The Consolidated Statement of Comprehensive Income is to be read in conjunction with the notes to the financial statements.

Consolidated Statement of Financial Position

As at 30 June 2012

	Note	2012 \$	2011 \$
Current assets
Cash and cash equivalents	11	10,230,274	3,210,387
Other receivables	12	353,818	351,097
Prepayments		88,523	99,070
Other investments	13	100,000	535,113
Total current assets		10,772,615	4,195,667
Non-current assets
Plant and equipment	14	228,733	98,195
Exploration and evaluation expenditure	15	13,396,389	10,401,797
Total non-current assets		13,625,122	10,499,992
Total assets		24,397,737	14,695,659
Current liabilities
Trade and other payables	16	1,206,554	1,148,983
Provisions	17	76,840	108,520
Total current liabilities		1,283,394	1,257,503
Total liabilities		1,283,394	1,257,503
Net assets		23,114,343	13,438,156
Equity
Issued capital	18	40,434,578	27,135,277
Reserves		-	192,754
Accumulated losses		(17,320,235)	(13,889,875)
Total equity		23,114,343	13,438,156

The Consolidated Statement of Financial Position is to be read in conjunction with the notes to the financial statements.

Consolidated Statement of Cash Flows

For the year ended 30 June 2012

	Note	2012 \$	2011 \$
Cash flows from operating activities
Cash payments in the course of operations		(2,702,586)	(2,188,831)
Interest received		173,405	134,765
Interest paid		(73,094)	-
Research and development rebate		695,987	673,416
Net cash used in operating activities	23	(1,906,288)	(1,380,650)
Cash flows from investing activities
Proceeds from sale of shares	13	330,129	-
Joint venture – Initial payment		-	500,000
Payments for investments	13	(100,000)	-
Payments for plant and equipment		(195,633)	(79,678)
Payments for exploration and evaluation expenditure		(4,405,847)	(1,550,424)
Security deposits paid		(1,775)	(13,080)
Net cash used in investing activities		(4,373,126)	(1,143,182)
Cash flows from financing activities
Net proceeds on issue of shares and exercise of options		13,299,301	2,826,790
Proceeds from loans and borrowings		2,000,000	-
Repayment of loans and borrowings		(2,000,000)	-
Net cash received from financing activities		13,299,301	2,826,790
Net increase in cash and cash equivalents		7,019,887	302,958
Cash at the beginning of the financial year		3,210,387	2,907,429
Cash and cash equivalents at the end of the financial year	11	10,230,274	3,210,387

The Consolidated Statement of Cash Flows is to be read in conjunction with the notes to the financial statements.

Consolidated Statement of Changes in Equity

For the year ended 30 June 2012

	Issued Capital \$	Retained Earnings \$	Fair value reserve \$	Total \$
At 1 July 2010	24,308,487	(12,360,111)	334,344	12,282,720
Profit for the period	-	(2,147,523)	-	(2,147,523)
Other comprehensive income	-	-	(141,590)	(141,590)
Total comprehensive income	-	(2,147,524)	(141,590)	(2,289,113)
Transactions with owners recorded directly in equity
Share placement	2,777,280	-	-	2,777,280
Options exercised	225,000	-	-	225,000
Share issue costs	(175,490)	-	-	(175,490)
Share based payments expense	-	617,684	-	617,684
Prior year adjustment	-	75	-	75
At 30 June 2011	27,135,277	(13,889,875)	192,754	13,438,156

At 1 July 2011	27,135,277	(13,889,875)	192,754	13,438,156
Profit for the period	-	(3,430,360)	-	(3,430,360)
Other comprehensive income	-	-	(192,754)	(192,754)
Total comprehensive income	-	(3,430,360)	(192,754)	(3,623,114)
Transactions with owners recorded directly in equity
Share placement	13,426,430	-	-	13,426,430
Share issue costs	(127,129)	-	-	(127,129)
At 30 June 2012	40,434,578	(17,320,235)	-	23,114,343

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

The Consolidated Statement of Changes in Equity is to read in conjunction with the notes to the financial statements.

Notes to the Financial Statements

For the year ended 30 June 2012

1 REPORTING ENTITY

TNG Limited (the 'Company') is a company domiciled in Australia. The address of the Company's registered office is Level 1, 282 Rokeby Road Subiaco, Western Australia 6008. The consolidated financial report of the Company as at and for the year ended 30 June 2012 comprise the Company and its subsidiaries (together referred to as the 'Group'). The Group is a for profit and primarily is involved in the exploration of minerals within Australia.

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) adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The consolidated financial report of the Group complies with International Financial Reporting Standards and Interpretations adopted by the International Accounting Standards Board.

(b) Basis of measurement

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

• financial instruments at fair value through profit or loss are measured at fair value;
• available-for-sale financial assets are measured at fair value;
• share based payments 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.

(d) Use of estimates and judgements

Set out below is information about.

• Critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements; and
• Assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year.

Critical Judgements

Estimates and assumption

i. Exploration and evaluation assets

The ultimate recoupment of the value of exploration and evaluation assets is dependent on successful development and commercial exploitation; or alternatively, sale, of the underlying mineral exploration properties.

The Group undertakes at each balance date, a review for indicators of impairment of these assets. Should an indicator of impairment exist, there is significant estimation and judgement in determining the inputs and assumptions used in determining the recoverable amounts.

The key areas of estimation and judgement that are considered in this review included:

• Recent drilling results and reserves/resource estimates;
• Environmental issues that may impact the underlying tenements;
• The estimated market value of assets at the review date;
• Independent valuations of underlying assets that may be available;
• Fundamental economic factors such as mineral prices, exchange rates and current and anticipated operating cost in the industry;
• The group's market capitalisation compared to its net assets.

Information used in the review process is rigorously tested to externally available information as appropriate.

For the year ended 30 June 2012

2 BASIS OF PREPARATION (CONTINUED)

Changes in these estimates and assumptions as new information about the presence or recoverability of an ore reserve becomes available, may impact the assessment of the recoverable amount of exploration and evaluation assets. If, after having capitalised the expenditure under accounting policy 3(g), a judgement is made that recovery of the expenditure is unlikely, an impairment loss is recorded in the income statement in accordance with accounting policy 3(h). The carrying amounts of exploration and evaluation assets are set out in note 15 .

(e) Going Concern

The financial report has been prepared on a going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and settlement of liabilities in the normal course of business.

3 SIGNIFICANT ACCOUNTING POLICIES

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.

(a) Basis of consolidation

(i) Subsidiaries

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

(ii) Transactions eliminated on consolidation

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 liabilities are recognised for all taxable temporary differences except where the deferred income tax liability arises from the initial recognition of 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. In respect of taxable temporary differences associated with investments in subsidiaries 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 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. When the deductible temporary difference is associated with investments in 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 and 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.

For the year ended 30 June 2012

3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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 Statement of Comprehensive Income.

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.

Research and Development rebates refunded from the Australian Tax Office are offset against Income Tax Benefit in the Statement of Comprehensive Income.

(c) Goods and services tax

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

(i) Where the GST incurred on a purchase of goods and services is not recoverable from 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;
(ii) Receivables and payables are stated with the amount of GST included;
(iii) The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet;
(iv) Cash flows are included in the Cash Flow Statement on a gross basis and the GST 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
(v) Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

(d) Plant and equipment

(i) Recognition and measurement

Items of plant and equipment are stated at cost or deemed cost less accumulated depreciation and impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset.

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

(ii) 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(m).

(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 Statement of Comprehensive Income 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	4 years
Plant and equipment	3 to 8 years
Fixtures and fittings	3 to 8 years

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

(e) Foreign currency translation

Transactions in foreign currencies are translated to the functional currency of the Group 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.

For the year ended 30 June 2012

3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(e) Foreign currency translation (continued)

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.

(f) Financial instruments

(i) Non-derivative financial instruments

Non-derivative financial instruments comprise investments in equity 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 non-derivative 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(l).

Available-for-sale financial assets

The Group's investments in equity 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.

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 effective interest method.

Other

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

For the year ended 30 June 2012

3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(f) Financial instruments (continued)

(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.

(g) Intangible assets

Exploration and evaluation assets

Exploration for and evaluation of mineral resources is the search for mineral resources after the entity has obtained legal rights to explore in a specific area, as well as the determination of the technical feasibility and commercial viability of extracting the mineral resource. Accordingly, exploration and evaluation expenditure are those expenditures by the Group in connection with the exploration for and evaluation of minerals resources before the technical feasibility and commercial viability of extracting a mineral resources are demonstrable.

Accounting for exploration and evaluation expenditures is assessed separately for each 'area of interest'. An 'area of interest' is an individual geological area which is considered to constitute a favourable environment for the presence of a mineral deposit or has been proved to contain such a deposit.

Expenditure incurred on activities that precede exploration and evaluation of mineral resources, including all expenditure incurred prior to securing legal rights to explore an area, is expensed as incurred. For each area of interest the expenditure is recognised as an exploration and evaluation asset where the following conditions are satisfied:

a) The rights to tenure of the area of interest are current; and
b) At least one of the following conditions is also met:
(i) The expenditure is expected to be recouped through successful development and commercial exploitation of an area of interest, or alternatively by its sale; or

(ii) Exploration and evaluation activities in the area of interest have not, at reporting date, reached a stage which permits a reasonable assessment of the existence or otherwise of 'economically recoverable reserves' and active and significant operations in, or in relation to, the area of interest are continuing. Economically recoverable reserves are the estimated quantity of product in an area of interest that can be expected to be profitably extracted, processed and sold under current and foreseeable conditions.

Exploration and evaluation assets include:

• Acquisition of rights to explore;
• Topographical, geological, geochemical and geophysical studies;
• Exploratory drilling, trenching, and sampling; and
• Activities in relation to evaluating the technical feasibility and commercial viability of extracting the mineral resource.

General and administrative costs are allocated to, and included in, the cost of exploration and evaluation assets only to the extent that those costs can be related directly to the operational activities in the area of interest to which the exploration and evaluation assets relate. In all other instances, costs are expensed as incurred.

Exploration and evaluation assets are transferred to Development Assets once technical feasibility and commercial viability of an area of interest is demonstrable. Exploration and evaluation assets are assessed for impairment, and any impairment loss is recognised, prior to being reclassified.

The carrying amount of the exploration and evaluation assets is dependent on successful development and commercial exploitation, or alternatively, sale of the respective area of interest.

Impairment testing of exploration and evaluation assets

Exploration and evaluation assets are assessed for impairment if sufficient data exists to determine technical feasibility and commercial viability or facts and circumstances suggest that the carrying amount exceeds the recoverable amount.

For the year ended 30 June 2012

3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(g) Intangible assets (continued)

Exploration and evaluation assets are tested for impairment when any of the following facts and circumstances exist:

• The term of exploration licence in the specific area of interest has expired during the reporting period or will expire in the near future, and is not expected to be renewed;
• Substantive expenditure on further exploration for and evaluation of mineral resources in the specific area are not budgeted nor planned;
• Exploration for and evaluation of mineral resources in the specific area have not led to the discovery of commercially viable quantities on mineral resources and the decision was made to discontinue such activities in the specified area; or
• Sufficient data exist to indicate that, although a development in the specific area is likely to proceed, the carrying amount of the exploration asset is unlikely to be recovered in full from successful development or by sale.

Where a potential impairment is indicated, an assessment is performed for each CGU which is no larger than the area of interest. The company performs impairment testing in accordance with accounting policy 3(h)(ii).

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

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

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

For the year ended 30 June 2012

3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(h) Impairment (continued)

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) Employee benefits

(i) Share based payments

The grant date fair value of share-based payment awards granted to employees is recognised as an employee expense, with a corresponding increase in equity, over the period that the employees unconditionally become entitled to the awards. The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market vesting conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number of awards that do meet the related service and non-market performance conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant date fair value of the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.

(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.

(iii) Defined contribution funds

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

(j) 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 Group 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.

(k) Provisions

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.

(l) Income and 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) Finance income and expenses

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.

For the year ended 30 June 2012

3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(l) Income and Expenses (continued)

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.

(iv) Sale of goods

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.

(m)Leased assets

Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Other leases are operating leases which are not recognised on the Group's Statement of Financial Performance.

(n) Segment reporting

Segment results that are reported to the CEO include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

The Group operated predominately in one business segment and in one geographical location.

(o) New standards and interpretations not yet adopted

The following standards, amendments to standards and interpretations have been identified as those which may impact the entity in the period of initial application. They are available for early adoption at 30 June 2012, but have not been applied in preparing this financial report.

(i) AASB 9 Financial Instruments includes requirements for the classification and measurement of financial assets resulting from the first part of Phase 1 of the project to replace AASB 139 Financial Instruments: Recognition and Measurement. AASB 9 will become mandatory for the Group's 30 June 2016 financial statements. Retrospective application is generally required, although there are exceptions, particularly if the entity adopts the standard for the year ended 30 June 2012 or earlier. The Group has not yet determined the potential effect of the standard.
(ii) AASB 2009-5 Further amendments to Australian Accounting Standards arising from the Annual Improvements Process affect various AASBs resulting in minor changes for presentation, disclosure, recognition and measurement purposes. The amendments, which become mandatory for the Group's 30 June 2012 financial statements, are not expected to have significant impact on the financial statements.
(iii) AASB 11 Joint Arrangements, which becomes mandatory for the Group's 30 June 2014 financial statements and could change the classification and measurement of investments in jointly controlled entities. The Group does not plan to adopt this standard early and the extent of the impact has not been determined.
(iv) Amended AASB 119 Employee Benefits, which becomes mandatory for the Group's 30 June 2014 financial statements and could change the definition of short-term and other long-term employee benefits and some disclosure requirements. The Group does not plan to adopt this standard early and the extent of the impact has not been determined.
(v) AASB 2011-9 Amendments to Australian Accounting Standards – Presentation of Items of Other Comprehensive Income makes a number of changes to the presentation of other comprehensive income including presenting separately those Items that would be reclassified to profit or loss in the future and those that would never be reclassified to profit or loss and the impact of tax on those items. The amendments, which become mandatory for the Group's 30 June 2013 financial statements are not expected to have a significant impact on the financial statements.

For the year ended 30 June 2012

4 DETERMINATION OF FAIR VALUES

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.

(i) Equity investments

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

(ii) Other receivables, trade and other payables

Other receivables, trade and other payables are short term in nature. As a result, the fair value of these instruments is considered to approximate its fair value.

(iii) Share-based payment transactions

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.

5 FINANCIAL RISK MANAGEMENT

Overview

This note presents information about the Group's exposure to credit, liquidity and market risks, their objectives, policies and processes for measuring and managing risk, and the management of capital.

The Group does not use any form of derivatives as it is not at a level of exposure that requires the use of derivatives to hedge its exposure. Exposure limits are reviewed by management on a continuous basis. The group does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework. Management monitors and manages the financial risks relating to the operations of the group through regular reviews of the risks.

Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group's receivables from customers and investment securities. For the Company it arises from receivables due from subsidiaries.

Presently, the Group undertakes exploration and evaluation activities exclusively in Australia. At the balance sheet date there were no significant concentrations of credit risk for the Group other than cash.

Cash and cash equivalent

The Group limits its exposure to credit risk by only investing in liquid securities and only with counterparties that have an acceptable credit rating. The Group also has its term deposits spread between a number of approved deposit taking institutions so the consolidated balance is covered under the Commonwealth governments Bank deposit Guarantee scheme.

Trade and other receivables

As the Group operates primarily in exploration activities it does not carry a material balance of trade receivables and therefore is not exposed to credit risk in relation to trade receivables.

The Group has established an allowance for impairment that represents its estimate of incurred losses in respect of loans to subsidiaries and investments. The management does not expect any counterparty to fail to meet its obligations. Other receivables mainly comprise of GST receivables.

5 FINANCIAL RISK MANAGEMENT (CONTINUED)

Credit risk (continued)

Exposure to credit risk

The carrying amount of the Group's financial assets represents the maximum credit exposure. The Group's maximum exposure to credit risk at the reporting date was:

		Consolidated Carrying amount
	Note	2012 \$	2011 \$
Trade and other receivables	12	353,818	351,097
Cash and cash equivalents	11	10,230,274	3,210,387
		10,584,092	3,561,484

Impairment losses

None of the Group's other receivables are past due (2011: nil).

Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation.

The Group manages liquidity risk by maintaining adequate cash reserves from funds raised in the market and by monitoring forecast and actual cash flows.

The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements:

Consolidated

30 June 2012

	Carrying amount	Contractual cash flows	<3 months	3-6 mths	6-24 mths	>2 years
Trade and other payables	1,206,554	(1,206,554)	(1,206,554)	-	-	-
	1,206,554	(1,206,554)	(1,206,554)	-	-	-

30 June 2011

	Carrying amount	Contractual cash flows	<3 months	3-6 mths	6-24 mths	>2 years
Trade and other payables	1,148,983	(1,148,983)	(1,148,983)	-	-	-
	1,148,983	(1,148,983)	(1,148,983)	-	-	-

For the year ended 30 June 2012

5 FINANCIAL RISK MANAGEMENT (CONTINUED)

Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group's income or the value of its holdings of financial instruments.

The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

Currency risk

The Group is not exposed to currency risk and at balance sheet date the Group holds no financial assets or liabilities which are exposed to foreign currency risk.

Interest rate risk

The Group is exposed to interest rate risk (primarily on its cash and cash equivalents and loans and borrowings), which is the risk that a financial instrument's value will fluctuate as a result of changes in the market interest rates on interestbearing financial instruments. The Group does not use derivatives to mitigate these exposures.

The Group adopts a policy of ensuring that as far as possible it maintains excess cash and cash equivalents in high interest bearing accounts.

Profile

At the reporting date the interest rate profile of the Group's interest-bearing financial instruments was:

		Consolidated Carrying amount
	Note	2012 \$	2011 \$
Variable rate instruments
Cash and cash equivalents	11	2,230,274	1,210,387
Fixed rate instruments
Cash and cash equivalents	11	8,000,000	2,000,000
Security deposits	12	139,132	137,357
		8,139,132	2,137,357

Fair value sensitivity analysis for fixed rate instruments

The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss. Therefore a change in interest rates at the reporting date would not affect profit or loss.

Cash flow sensitivity analysis for variable rate instruments

A change of 100 basis points in interest rates at the reporting date would have increased or decreased the Group's equity and profit or loss by \$22,302 (2011: \$12,103).

For the year ended 30 June 2012

5 FINANCIAL RISK MANAGEMENT (CONTINUED)

Market risk (continued)

Other Market Price Risk

Other Equity price risk is the risk that the value of the instrument will fluctuate as a result of changes in market prices (other than those arising from interest rate risk or currency risk), whether caused by factors specific to an individual investment, its issuer or all factors affecting all instruments traded in the market.

Investments are managed on an individual basis and material buy and sell decisions are approved by the Board of Directors. The primary goal of the Group's investment strategy is to maximise investment returns.

The Group's investments are solely in listed equity instruments and options. Equity instruments are classified as available-for-sale and are carried at fair value with fair value changes recognised directly in equity until derecognised. Options are classified as held for trading and are carried at fair value with fair value changes recognized in statement of comprehensive income.

The following table details the breakdown of the investment assets and liabilities held by the Group:

30 June 2012	Note	Valuation technique Quoted market price (Level 1) \$	Valuation technique Market observable inputs (Level 2) \$	Non market observable inputs (Level 3) \$
Available for sale assets	13	-	-	100,0001
Held for trading	13	-	-	-
Total equity investments		-	-	100,000

1 During the year the company purchased 2,000,00 shares in the unlisted Australian company Sturt Resources Ltd.

30 June 2011	Note	Valuation technique Quoted market price (Level 1) \$	Valuation technique Market observable inputs (Level 2) \$	Non market observable inputs (Level 3) \$
Available for sale assets	13	525,909	-	-
Held for trading	13	9,204	-	-
Total equity investments		535,113	-	-

Quoted market price represents the fair value determined based on quoted prices on active markets as at the reporting date without any deduction for transaction costs. The fair value of the listed equity investments are based on quoted market prices (Level 1) or recorded at cost when no market exists (Level 3).

5 FINANCIAL RISK MANAGEMENT (CONTINUED)

Market risk (continued)

		Level 1		Level 3
Reconciliation of fair value movements	2012 \$	2011 \$	2012 \$	2011 \$
Opening balance	535,113	769,601	-	-
Other comprehensive income	(204,891)	(202,272)	-	-
Sales of investments	(330,129)	-	-	-
Purchase of investments	-	-	(100,000)1	-
Financial expense	(93)	(32,216)	-	-
Closing balance	-	535,113	-	-
Total loss stated in the table above for assets held at the end of the period	(93)	(32,216)	-	-

1 Level 3 investments consist of unlisted Australian shares held at cost in accordance with AASB 139.

Sensitivity analysis

The Group's available for sale equity investments are held in unlisted Australian companies.

The Group operates primarily in the exploration and evaluation phase and accordingly the Group's financial assets and liabilities are subject to minimal commodity price risk.

Capital Management

The group has defined its capital as paid up share capital net of accumulated losses.

The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern, so as to maintain a strong capital base sufficient to maintain future exploration and development of its projects. In order to maintain or adjust the capital structure, the Group may return capital to shareholders, issue new shares or sell assets or reduce debt. The Group's focus has been to raise sufficient funds through equity to fund exploration and evaluation activities.

There were no changes in the Group's approach to capital management during the year. Risk management policies and procedures are established with regular monitoring and reporting.

Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements.

6 INCOME AND EXPENSES

			Consolidated
	Note	2012 \$	2011 \$

(a) Other income
Other income		129,188	3,836
Total Income		129,188	3,836
(b) Net financial income
Interest income		201,196	145,696
Change in fair value of investments held-for-trading		-	(32,216)
Gain on sale of Available for sale investments		9,111	-
Finance Income		210,307	113,480
Interest expense		(73,094)	-
Loss on Held for Trading investments		(9,204)	-
Finance expense		82,298	-
Net finance income/(expense)		128,009	113,480
(c) Corporate and Administration expenses
Travel and accommodation		356,088	148,720
Directors fees		199,385	146,000
Legal fees		303,769	228,475
Promotional		478,755	278,631
Office on-charges		(247,724)	(389,885)
Contractors and consultancy		613,115	514,029
Occupancy		265,128	255,802
Other		451,244	522,629
Total Corporate and Administration		2,419,760	1,704,401
The Group invoiced another party \$247,724 (2011: \$389,885) for the reimbursement of office and administration costs during the year and incurred \$192,814 in operating lease expenses.
(d) Employment expenses
Wages and salaries		511,162	444,259
Other associated personnel expenses		30,851	15,197
Contributions to defined contribution plans		39,565	55,534
Equity settled share- based payment transaction	24	-	617,684
Total Employment expenses		581,578	1,132,674

6 INCOME AND EXPENSES (CONTINUED)

			Consolidated
	Note	2012 \$	2011 \$
(e) Depreciation and amortisation
Depreciation of:
Leasehold improvements	14	25,147	2,304
Plant and equipment	14	21,926	26,927
Software	14	8,624	7,275
Motor vehicles	14	4,564	-
Furniture and fixtures	14	4,835	3,993
Total depreciation		65,096	40,499

7 AUDITORS' REMUNERATION

	Consolidated
	2012 \$	2011 \$
Auditors of the Group
KPMG Australia:
Audit and review of financial reports	50,500	50,049
	50,500	50,049

For the year ended 30 June 2012

8 INCOME TAX

		Consolidated
	2012 \$	2011 \$
A reconciliation between tax expense and pre-tax loss:
Accouting loss before income tax	(4,114,210)	(2,760,258)
At the domestic interest tax rate of 30% (2011: 30%)	(1,234,263)	(828,077)
Expenditure not deducted for income tax purposes
Share-based payments	-	185,305
Other non-deductible	(99,157)	94,471
Tax losses and temporary differences not brought to account	1,345,557	608,983
Other tax offsets
Research and Development rebate	(695,987)	(673,417)
Income tax benefit reported in the income statement	(683,850)	(612,735)
Unused tax losses	25,711,057	21,169,883
Potential tax benefit @ 30%	7,713,317	6,350,965
Tax losses offset against tax liabilities	(3,289,901)	(2,726,748)
Unrecognised tax benefit	4,423,416	3,624,217
Reconciliation of income tax benefit Current tax expense
Research and development rebate	(695,987)	(673,417)
Other comprehensive income	12,137	60,682
	(683,850)	(612,735)

All unused tax losses were incurred by Australian entities.

Potential future income tax benefits net of deferred tax liabilities attributable to tax losses (both consolidated and Parent Entity) have not been brought to account because the Directors do not believe it is appropriate to regard realisation of the future income tax benefits as probable.

The benefits of these tax losses will only be obtained if:

(i) future assessable income is derived of a nature and of an amount sufficient to enable the benefit to be realised;

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

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

For the year ended 30 June 2012

8 INCOME TAX

Deferred income tax

		Consolidated
Balance Sheet	2012 \$	2011 \$
Deferred income tax relates to the following:
Deferred Tax Liabilities
Exploration and evaluation assets	3,305,383	2,726,748
Other	8,337	-
Deferred Tax Assets – tax losses
Other	(23,819)	-
Other deferred tax assets used to offset deferred tax liabilities	(3,289,901)	(2,726,748)
	-	-

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 3(b).

The entities have not entered into a tax funding agreement.

9 EARNINGS PER SHARE

The calculation of basic earnings per share for the year ended 30 June 2012 was based on the loss attributable to ordinary shareholders of \$3,430,360 (2011: loss \$2,147,523) and a weighted average number of ordinary shares on issue during the year ended 30 June 2012 of 318,320,648 (2011: 266,262,678).

Loss attributable to ordinary shareholders

	2012 \$	2011 \$
Loss for the period	(3,430,360)	(2,147,523)
Loss attributable to ordinary shareholders	(3,430,360)	(2,147,523)

Weighted average number of ordinary shares

	2012 Numbers	2011 Numbers
Number of ordinary shares at 1 July	284,803,061	258,055,077
Effect of shares issued	33,517,587	8,207,601
Weighted average number of ordinary shares at 30 June	318,320,648	266,262,678

At balance sheet date the Group has options which were not yet exercised as per note 18.

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

For the year ended 30 June 2012

10 SEGMENT INFORMATION

The Board has determined that the Group has one reportable segment, being mineral exploration in Australia. As the Group is focused on mineral exploration, the Board monitors the Group based on actual versus budgeted consolidated results. This internal reporting framework is the most relevant to assist the Board in making decisions regarding the Group and its ongoing exploration activities, while also taking into consideration the results of exploration work that has been performed to date. The financial results from this segment are equivalent to the financial statements of the Group as a whole.

11 CASH AND CASH EQUIVALENTS

		Consolidated
	2012 \$	2011 \$
Cash	10,230,274	3,210,387

12 OTHER RECEIVABLES

	Consolidated
	2012 \$	2011 \$
Current
Trade receivables	29,861	54,445
Other receivables	42,039	12,424
Bank short term security deposits	139,132	137,357
GST receivables	142,786	146,871
	353,818	351,097

Bank short term deposits maturing between 30 - 90 days are paying interest at a weighted average interest rate of 5.21% (30 - 90 day deposits 2011: 5.52%).

For the year ended 30 June 2012

13 OTHER INVESTMENTS

	Consolidated
	2012 \$	2011 \$
Current investments
Financial assets held for trading	-	9,204
Available-for-sale investments	100,000	525,909
	100,000	535,113

Available-for-sale investments

Available-for-sale investments consist of shares in unlisted Australian companies operating in mineral exploration.

	Note	Consolidated
		2012 \$	2011 \$
Balance at 1 July		525,909	728,181
Change in fair value		(204,891)	(202,272)
Purchases		100,000	-
Sales		(330,129)	-
Profit on sale	6(b)	9,111	-
Balance at 30 June		100,000	525,909

Financial assets held for trading

	Note	Consolidated
		2012 \$	2011 \$
Balance at 1 July		9,204	41,420
Change in fair value	6(b)	(9,204)	(32,216)
		-	9,204

For the year ended 30 June 2012

14 PLANT & EQUIPMENT

		Consolidated
	2012 \$	2011 \$
Cost
Furniture and fittings
Balance at 1 July	69,703	69,703
Additions	11,827	-
Balance at 30 June	81,530	69,703
Leasehold improvements
Balance at 1 July	279,034	250,379
Additions	86,244	28,655
Balance at 30 June	365,278	279,034
Motor vehicles
Balance at 1 July	-	-
Additions	57,677	-
Balance at 30 June	57,677	-
Plant and equipment
Balance at 1 July	395,478	372,376
Additions	17,785	27,764
Disposal	-	(4,662)
Balance at 30 June	413,263	395,478
Software
Balance at 1 July	106,226	102,747
Additions	22,100	3,479
Balance at 30 June	128,326	106,226
Accumulated Depreciation
Furniture and fittings
Balance at 1 July	57,734	53,741
Depreciation charge for the year	4,835	3,993
Balance at 30 June	62,569	57,734
Leasehold improvements
Balance at 1 July	251,059	248,755
Depreciation charge for the year	25,147	2,304
Balance at 30 June	276,206	251,059

For the year ended 30 June 2012

14 PLANT & EQUIPMENT

		Consolidated
	2012 \$	2011 \$
Accumulated Depreciation (continued)
Motor vehicles
Balance at 1 July	-	-
Depreciation charge for the year	4,564	-
Balance at 30 June	4,564	-
Plant and equipment
Balance at 1 July	340,892	317,514
Depreciation charge for the year	21,926	28,040
Disposal	-	(4,662)
Balance at 30 June	362,818	340,892
Software
Balance at 1 July	102,560	95,285
Depreciation charge for the year	8,624	7,275
Balance at 30 June	111,184	102,560
Carrying amounts
Furniture and fittings
At 1 July	11,969	15,962
At 30 June	18,961	11,969
Leasehold improvements
At 1 July	27,975	1,624
At 30 June	89,072	27,975
Motor vehicles
At 1 July	-	-
At 30 June	53,113	-
Plant and equipment
At 1 July	54,862	54,862
At 30 June	50,445	54,586
Software
At 1 July	3,666	7,462
At 30 June	17,142	3,666
Total	228,733	98,195

15 EXPLORATION AND EVALUATION EXPENDITURE

	Consolidated
	2012 \$	2011 \$
Cost
Balance at 1 July	10,401,797	8,814,265
Exploration expenditure	4,299,565	2,087,532
Joint venture – Initial payment	-	(500,000)
Impairment1	(1,304,973)	-
Balance at 30 June	13,396,389	10,401,797

Drilling and exploration	1,461,593	1,190,619
Feasibility and evaluation	2,837,972	896,913
Total exploration expenditure	4,299,566	2,087,532

¹ \$1,162,254 relates to the impairment of the Cawse extended project, the balance is attributed to expired exploration programs.

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 \$13,396,389 of which \$5,248,847 is attributable to the entity's Manbarrum project, \$7,469,140 attributable to Mount Peake project and the balance relating to Cawse Extended and other current exploration programs.

Manbarrum

On 9 February 2011 TNG signed a Joint venture Agreement on the Manbarrum project with the Sorby Hills Joint Venture ("SHJV"). The SHJV is a Joint Venture between ASX listed Kimberley Metals Limited (ASX: KBL) and Yuguang (Australia) Pty Ltd.

Under the terms of the agreement the SHJV must spend \$4,500,000 to earn a 51% interest in the project. TNG will receive a cash payment of \$2,500,000, comprising an initial payment of \$500,000 received in 2011 and a final payment of \$2,000,000 due by December 2013. In addition, the SHJV must spend a further \$2,000,000 on exploration at Manbarrum over the next three field seasons. The final payment of \$2,000,000 is contingent upon SHJV electing to participate in the Joint Venture.

On completion of earn-in a formal Joint Venture will be formed between TNG and SHJV for the ongoing development of the Manbarrum Project, with TNG retaining a 49% stake.

The SHJV can elect to increase its stake in the Manbarrum Project to 80% by sole funding all exploration and development activities through to a Decision to Mine. On SHJV earning 80% interest, TNG may maintain its 20% interest or sell a 20% interest to SHJV for \$3,000,000 (CPI indexed) with a 2% NSR or convert it 20% interest to a 3% NSR.

Cawse Extended

Norilsk Nickel Australia ("Norilsk') has placed the Cawse Nickel operations (100% Norilsk) on indefinite care and maintenance which will delay any recommencement of mining operations at Cawse Extended.

The tenements in relation to the Cawse extended project have been tested for impairment using a royalty valuation method resulting in a estimated value of \$5,012,000. Given the current economic climate and state of operations, a more conservative valuation of \$100,000 has been placed on the tenements resulting in a \$1,162,254 impairment expense.

65 TNG LIMITED Annual Report 2012

16 TRADE AND OTHER PAYABLES

		Consolidated
	2012 \$	2011 \$
Current
Trade payables	732,512	843,963
Other	474,042	305,020
	1,206,554	1,148,983

17 PROVISIONS

	Consolidated
	2012 \$	2011 \$
Employee provisions
Current
Balance at 1 July	108,520	67,325
Provisions made/used during the year	(31,680)	41,195
Balance at 30 June	76,840	108,520

18 CAPITAL

		Consolidated
	2012 \$	2011 \$
Issued and paid-up share capital	40,434,578	27,135,277

(a) Movements in shares on issue

	2012		2011
	Number	\$	Number	\$

Balance at the beginning of year	284,803,061	27,135,277	258,055,077	24,308,487
Share placement	122,058,456	13,426,430	25,247,984	2,777,280
Options exercised	-	-	1,500,000	225,000
Share issue costs	-	(127,129)	-	(175,490)
Balance at end of year	406,861,517	40,434,578	284,803,061	27,135,277

In November 2011 the general meeting of shareholders decided on the issuance of 122,058,456 ordinary shares at an exercise price of \$0.11 per share (2011: 25,247,985). All issued shares are fully paid.

For the year ended 30 June 2012

18 CAPITAL (continued)

(a) Movements in shares on issue (continued)

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.

(b) Options on issue

Exercise Price	2012	2011
\$0.38	-	1,800,000
\$0.15	-	500,000
\$0.15	21,100,000	21,100,000
		Number at end of year

Please refer to note 24 for the details of options on issue.

Terms and conditions of options

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

(c) Dividends

No dividends were declared or paid during the 2012 financial year.

		Consolidated
Dividend franking account	2012 \$	2011 \$
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.

For the year ended 30 June 2012

19 COMMITMENTS

Exploration expenditure commitments

In order to maintain current rights of tenure to exploration tenements, the Group is required to perform minimum exploration work to meet the minimum expenditure requirements specified by various State governments. These requirements 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
	2012 \$	2011 \$
Exploration commitments payable not provided for in the financial report:
Within one year	3,178,250	411,685
Operating lease commitments
Operating lease commitments comprise premises and office equipment and are payable as follows:
Within one year	202,341	185,052
Between one year and 5 years	594,872	786,092
	797,214	971,144

20 CONTINGENT LIABILITIES

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
	2012 \$	2011 \$
Litigation
Constructive trust claim over the Kanowna Securities. Refer below.	2,546,6871	2,146,687
Guarantees
A guarantee has been provided to support unconditional environmental performance bonds	137,357	137,357
Total estimated contingent liabilities	2,684,044	2,284,044

1 The Commonwealth claims that it is entitled to \$1,274,000 for the value of the Kanowna Lights shares plus interest since early 2000. If TNG is unsuccessful in the proceedings, it may also be liable to pay the Commonwealth costs, bringing the total liability to an expected maximum of approximately \$3,400,000.

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 2012.

For the year ended 30 June 2012

20 CONTINGENT LIABILITIES (continued)

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 Stock 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, TNG is liable to account for the highest 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.

The Commonwealth claims that it is entitled to \$1,274,000 for the value of the Kanowna Lights shares plus interest since early 2000. If TNG is unsuccessful in the proceedings, it may also be liable to pay the Commonwealth costs, bringing the total liability to an expected maximum of approximately \$3,400,000.

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.

TNG is also vigorously defending the Commonwealth claims. The court hearing commenced in June 2008 and concluded in the last quarter of 2008. The court has reserved its decision and indications are that it may be delivered in the next few months.

Subscription agreement

On 7 November 2011, TNG signed the subscription agreement with the East China Mineral Exploration & Development Bureau ("ECE"), formalising the previously announced strategic partnership.

In summary, the Subscription Agreement provided that:

the Subscribers agreed to subscribe for and the Company agrees to issue 122,058,455 Shares as follows:

(i) 62,249,812 Shares to Ao-Zhong; and
(ii) 59,808,643 Shares to Aosu.

For the year ended 30 June 2012

20 CONTINGENT LIABILITIES (continued)

Subscription agreement (continued)

The Company also represents and warrants to the Subscribers that any liability which any court may order the Company to pay in respect of legal proceedings known as The Commonwealth v TNG Limited (Davis Samuel Claim) will not exceed a value of \$500,000. If this representation and warranty is found to be incorrect (following the final determination of the Davis Samuel Claim after any avenues of appeal which any party to the Davis Samuel Claim elects to pursue have been exhausted), the Company will be liable to pay as liquidated damages to the Subscribers an amount that is the lesser of:

(a) \$1,500,000; or
(b) court ordered liability (including for damages and costs other than the Company's own legal costs incurred before the date of the Subscription Agreement) x 29.999%.

The Subscribers were unwilling to enter into the Subscription Agreement unless the Company included this clause to compensate the Subscribers (up to a cap of \$1,500,000) in respect of any liability incurred as a result of the Davis Samuel Claim (if the Company's liability exceeds \$500,000). Whilst the company is anticipating it will continue to incur legal costs, as identified above, it is vigorously defending the claim. The Company does not anticipate that its liability (as defined in the Subscription Agreement) in respect of the Davis Samuel Claim will exceed \$500,000.

21 DEED OF CROSS GUARANTEE

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.

2012 \$	2011 \$
(3,433,703)	(2,147,523)
-	617,684
(3,433,703)	(1,529,839)

(13,889,950)	(12,360,111)
(17,323,653)	(13,389,950)
	Consolidated

21 DEED OF CROSS GUARANTEE (continued)

		Consolidated
Statement of Financial Position	2012 \$	2011 \$
Cash assets	10,336,038	3,195,220
Trade and other receivables	212,965	318,482
Prepayments	88,523	99,070
Other investments	100,000	535,113
Total current assets	10,737,526	4,147,885
Plant and equipment	228,733	97,598
Intercompany loan	7,235,713	5,482,830
Exploration and evaluation expenditure	7,893,480	4,965,145
Total non-current assets	15,357,926	10,545,573
Total assets	26,095,452	14,693,458
Trade and other payables	1,207,734	1,146,782
Provision	76,840	108,520
Total current liabilities	1,284,574	1,255,302
Total liabilities	1,284,574	1,255,302
Net assets	24,810,878	13,438,156
Issued capital	41,427,199	27,135,277
Reserves	-	192,754
Retained earnings	(16,616,321)	(13,889,875)
Total equity	24,810,878	13,438,156

22 CONSOLIDATED ENTITIES

Subsidiaries	Country of Incorporation	2012 % of Ownership	2011 % of Ownership
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 Ltd¹	Australia	100	100

¹ Direct subsidiary of Enigma Limited

71 TNG LIMITED Annual Report 2012

23 NOTES TO THE STATEMENTS OF CASH FLOWS

Reconciliation of cash flows from operating activities

		Consolidated
	2012 \$	2011 \$
Net loss for the period	(3,430,360)	(2,147,492)
Add/(less) non-cash items:
Depreciation and amortisation	65,096	40,499
Share based payments	-	617,684
Gain/(loss) on Held for trading investments	9,204	32,216
Gain on Available for sale investments	(9,111)	-
Impairment of exploration costs	1,304,973	-
Tax effect on other comprehensive income	12,137	60,681
	(2,048,061)	(1,396,412)
Change in assets and liabilities:
Increase/(decrease) in current payables, borrowing and provisions	136,257	66,989
Increase/(decrease) in current receivables	5,516	(51,227)
Net cash used in operating activities	(1,906,288)	(1,380,650)

24 EMPLOYEE BENEFITS

	Note	Consolidated
		2012 \$	2011 \$
Aggregate liability for employee benefits, including on-costs
Current Employee benefits provision	17	76,840	108,520

Defined contribution superannuation funds

The Group made contributions to the employees nominated superannuation funds. The amount recognised as an expense was \$39,565 for the financial year ended 30 June 2012 (2011: \$55,534).

For the year ended 30 June 2012

24 EMPLOYEE BENEFITS (CONTINUED)

Share-based payments

Summary of options over unissued ordinary shares granted.

There were no new options issues during the financial year.

The following share-based payment arrangements are in existence:

Options series	Number	Not vested	Grant date	Expiry date	Exercise price \$	Fair Value at grant date \$	Vesting date
8	11,500,000	-	24 Nov 2009	15 Dec 2012	\$0.150	\$0.033	24 Nov 2009
9	600,000	-	24 Dec 2009	15 Dec 2012	\$0.150	\$0.037	24 Dec 2009
10	2,000,000	-	3 Jun 2010	15 Dec 2012	\$0.150	\$0.015	3 June 2010
11	5,000,000	-	8 Feb 2011	15 Dec 2012	\$0.150	\$0.107	8 Feb 2011
12	2,000,000	-	8 Jun 2011	15 Dec 2012	\$0.150	\$0.027	8 June 2011

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 2012.

Grant date	24 Nov 2009	24 Dec 2009	3 June 20101	8 Feb 2011	8 June 11
Dividend yield	-	-	-	-	-
Underlying security spot price	\$0.07	\$0.08	\$0.05	\$0.15	\$0.08
Exercise price	\$0.15	\$0.15	\$0.15	\$0.15	\$0.15
Standard deviation of returns	88.74%	88.74%	88.74%	151.60%	98.99%
Risk free rate	5.10%	5.10%	5.04%	5.12%	5.12%
Expiration period	3.1 years	2.9 years	2.5 years	1.85 years	1.52 years
Black Scholes valuation	\$0.033	\$0.036	\$0.014	\$0.106	\$0.027
Vesting Period	Immediately	Immediately	12 months	Immediately	Immediately

Employee expenses

	Note	Consolidated
		2012 \$	2011 \$
Share options granted in 2012 equity settled			-
Share options granted in 2011 equity settled		-	617,684
Total expense/(income) recognised as employee expenses	6(d)	-	617,684

24 EMPLOYEE BENEFITS (CONTINUED)

Employee expenses (continued)

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

	Consolidated
	Weighted average exercise price	Number of options	Weighted average exercise price	Number of options
	2012	2012	2011	2011
Outstanding at 1 July	0.16	23,400,000	0.28	15,900,000
Expired during the period	0.33	(2,300,000)	-	-
Exercised during the year	-	-	0.15	(1,500,000)
Granted during the period	-	-	0.15	9,000,000
Outstanding during the period	0.15	21,100,000	0.16	23,400,000
Exercisable at 30 June	0.15	21,100,000	0.16	23,400,000

The options outstanding at 30 June 2012 have an exercise of \$0.15 a weighted average contractual life of 0.46 years. Options granted to Directors are disclosed under Note 25.

25 KEY MANAGEMENT PERSONNEL DISCLOSURES

(a) Details of key management personnel

Directors
Jianrong Xu1	(Chairman)
Paul Burton	(Managing Director)
Neil Biddle	(Non-executive Director)
Geoffrey Crow	(Non-executive Director)
Rex Turkington2	(Non-executive Director)
Zhigang Wang3	(Non-executive Director)

Executives
Scott Rauschenberger	(Chief Financial Officer)

Simon Robertson (Company Secretary) 1 Jianrong Xu was appointed director on 24 May 2012

2 Rex Turkington was appointed as director on 29 November 2011

3 Edward J Fry resigned as director on 24 February 2011

25 KEY MANAGEMENT PERSONNEL DISCLOSURES (continued)

(b) Compensation of key management personnel

		Consolidated
Compensation by category	2012 \$	2011 \$
Key Management Personnel
Short-term	957,589	973,173
Post-employment	43,113	37,886
Termination benefits	300,0001	-
Share-based payments		- 54,435
	1,300,702	1,065,494

1 On 28 June 2012 the board resolved to terminate Mr Biddles service agreement crystallising a payment of 12 months fees in lieu (\$300,000).

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.

(c) Equity instruments

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 personally-related entities, is as follows:

For the year ended 30 June 2012

25 KEY MANAGEMENT PERSONNEL DISCLOSURES (continued)

(c) Equity instruments (continued)

Movements in Options

	Held at 1 July 2011	Granted as remun eration	Expired	Exercised	Other	Held at 30 June 2012	Vested during the year	Vested and exercisable at 30 June 2012
Directors
Jianrong Xu1	-	-	-	-	-	-	-	-
Paul Burton	7,500,000	-	(1,500,000)	-	-	6,000,000	-	6,000,000
Neil Biddle	2,000,000	-	-	-	-	2,000,000	-	2,000,000
Geoffrey Crow	4,000,000	-	-	-	-	4,000,000	-	4,000,000
Rex Turkington2	-	-	-	-	-	-	-	-
Zhigang Wang3	-	-	-	-	-	-	-	-
Executives
Scott Rauschenberger	500,000	-	-	-	-	500,000	-	500,000
Simon Robertson	1,000,000	-	(500,000)	-	-	500,000	-	500,000

¹ Jianrong Xu joined the board as a director on 24 May 2012 and was appointed chairman on 26 June 2012

² Rex Turkington was appointed as a director on 29 November 2011

³ Zhigang Wang was appointed as a director on 18 January 2012

	Held at 1 July 2010	Granted as remun eration	Expired	Exercised	Other	Held at 30 June 2012	Vested during the year	Vested and exercisable at 30 June 2011
Directors
Neil Biddle	2,000,000	-	-	-	-	2,000,000	-	2,000,000
Paul Burton	7,500,000	-	-	-	-	7,500,000	-	7,500,000
Geoffrey Crow	-	2,000,000	-	-	2,000,000	4,000,000	2,000,000	4,000,000
John Barr	2,000,000	-	-	-	(2,000,000)	-	-	-
Edward Fry	2,000,000	-	-	-	(2,000,000)	-	-	-
Executives
Scott Rauschenberger	500,000	-	-	-	-	500,000	-	500,000
Simon Robertson	1,000,000	-	-	-	-	1,000,000	-	1,000,000

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

76 TNG LIMITED Annual Report 2012

For the year ended 30 June 2012

25 KEY MANAGEMENT PERSONNEL DISCLOSURES (continued)

(c) Equity instruments (continued)

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 2011	Purchases	Received on exercise of options	Sales	Other	Held at 30 June 2012
Directors
Jianrong Xu1	-	-	-	-	-	-
Paul Burton	750,000	-	-	-	-	750,000
Neil Biddle	6,633,340	-	-	-	-	6,633,340
Geoffrey Crow	402,205	-	-	-	-	402,205
Rex Turkington2	-	-	-	-	1,388,0002	1,288,000
Zhigang Wang3	-	-	-	-	59,808,6433	59,808,643
Executives
Scott Rauschenberger	400,000	-	-	-	-	400,000

¹ Jianrong Xu joined the board as a director on 24 May 2012 and was appointed chairman on 26 June 2012

² Rex Turkington was appointed as a director on 29 November 2011, balance relates to shareholding at date of appointment

³ Zhigang Wang was appointed as a director on 18 January 2012, balance relates to shareholding at date of appointment

	Held at 1 July 2010	Purchases	Received on exercise of options	Sales	Other	Held at 30 June 2011
Directors
Neil Biddle	7,033,340	-	-	(400,000)	-	6,633,340
Paul Burton	750,000	-	-	-	-	750,000
Geoffrey Crow	-	-	-	-	402,205	402,205
John Barr	9,730,000	-	-	-	(9,730,000)	-
Edward Fry	2,297,892	-	-	-	(2,297,892)	-
Executives
Scott Rauschenberger	400,000	-	-	-	-	400,000

No shares were granted to key management personnel during the reporting period in 2011 and 2012. No shares were held by related parties of key management personnel.

For the year ended 30 June 2012

25 KEY MANAGEMENT PERSONNEL DISCLOSURES (CONTINUED)

(d) Other transactions with key management personnel

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.

Consulting fees are paid to Ballyhoo Pty Ltd, Hatched Creek Pty Ltd and Katarina Corporation Pty Ltd of which Stuart Crow, Neil Biddle and Rex Turkington are related parties of respectively.

On 7 November 2011 TNG entered into a subscription agreement with Aosu Investment and Development Co Pty Ltd (Aosu), to subscribe for 59,808,643 shares (\$6,578,950) as part of a capital raising. Completion with Aosu occurred on 18 of January 2012, Aosu now have a 17.36% ownership interest in TNG Ltd.

	Transaction value
	twelve months ended		Balance outstanding
	30 June 2012	30 June 2011	30 June 2012	30 June 2011
Expenses
Ballyhoo Pty Ltd - consulting services	21,089	35,993	-	-
Hatched Creek Pty Ltd - consulting services	480,000	105,000	322,000	-
Hannan Street Corporate Charters	1,500	12,500	-	-
Katarina Corporation Pty Ltd - consulting services	50,004	-	21,184	-
Aosu Investment and Development Co Pty - interest	73,087	-	-	-
Loans and borrowings
Aosu Investment and Development Co Pty - loan	(2,000,000)	-	-	-
Aosu Investment and Development Co Pty - loan repayment	2,000,000	-	-	-
Provision of services
Sherwin Iron Limited - administrative services	NA(1)	389,885	NA(1)	-

(1) As of 30 June 2011, Sherwin Iron Ltd ceased to be a director related entity

A contingent liability has been recognised between the company and Aosu Investment and Development Co Pty and Ao-Zhong who are related parties in relation to the subscription agreement and the Davis Samuel case as disclosed in note 20.

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

26 INTEREST IN JOINT VENTURE OPERATIONS

			Consolidated
				Interest		Exploration expenditure
Joint venture party	Joint venture	Principal activities	2012 \$	2011 \$	2012 \$	2011 \$
Norilsk Nickel Cawse Ltd	Cawse Extended	Nickel/Cobalt	20.00	20.00	-	-
Other interests in operations
La Mancha Pty Ltd	Kintore East	Gold	N/A – 2% Gold return interest	N/A – 2% Gold return interest	-	-
Crucible	McTavish	Gold	N/A - 3% Gross royalty	N/A - 3% Gross royalty	-	-

Exploration expenditure represents direct expenditure incurred by the Group.

TNG Limited has seperate Joint Venture agreements with both Western Desert Resources Ltd ("WDR") and the Sorby Hills Joint Venture ("SHJV") with respect to its non-core mineral exploration projects in the Northern Territory. Formal joint ventures will be formed betwen TNG and these parties upon completion of successful earn-ins.

Sorby Hills Joint Venture ("SHJV")

On 9 February 2011 TNG signed a Joint venture agreement on the Manbarrum project with the Sorby Hills Joint Venture ("SHJV"). The SHJV is a Joint Venture between ASX listed Kimberley Metals Limited (ASX: KBL) and Yuguang (Australia) Pty Ltd.

Under the terms of the agreement, TNG will receive a cash payment of \$2,500,000, comprising an initial payment of \$500,000 and a final payment of \$2,000,000 due by December 2013. In addition, the SHJV must spend a further \$2,000,000 on exploration at Manbarrum over the next three field seasons.

On completion of earn-in a formal Joint Venture will be formed between TNG and SHJV for the ongoing development of the Manbarrum Project, with TNG retaining a 49% stake.

The SHJV can elect to increase its stake in the Manbarrum Project to 80% by sole funding all exploration and development activities through to a Decision to Mine on SHJV earning 80% interest, TNG may maintain its 20% interest or sell a 20% interest to SHJV for \$3,000,000 (CPI indexed) with a 2% NSR or convert it 20% interest to a 3% NSR.

For the year ended 30 June 2012

27 PARENT ENTITY INFORMATION

As at, and throughout, the financial year ending 30 June 2012 the parent entity of the Group was TNG Ltd.

	2012 \$	2011 \$
Current assets	10,523,128	3,486,280
Total assets	25,329,137	14,262,692
Current liabilities	931,146	849,481
Total liabilities	931,146	849,481
Issued capital	40,434,578	27,135,277
Retained earnings	(16,036,587)	(13,914,820)
Option reserve	-	192,754
Total shareholders' equity	24,397,991	13,413,211
Profit or loss of the parent entity	(3,430,360)	(2,147,523)
Total comprehensive income of the parent entity	(3,623,114)	(2,289,113)

Tax consolidation

TNG and its 100% owned Australian subsidiaries formed a tax consolidated group with effect from 1 July 2003. TNG is the head entity of the tax consolidated group. Members of the group have not entered into a tax sharing agreement. The parent entity has entered into a Deed of Cross Guarantee with its subsidiaries. Refer note 21 for details.

Operating lease commitments

	2012 \$	2011 \$
Operating lease commitments are payable as follows:
Within one year	202,341	185,052
Between one year and 5 years	594,872	786,092
	797,213	971,144

For contingent liabilities in relation to the parent entity, please refer to note 20.

28 EVENTS SUBSEQUENT TO BALANCE DATE

Directors Declaration

1. In the opinion of the directors of TNG Limited (the "Company"):
(a) the financial statements and notes, and the Remuneration report in the Director's report, set out on pages 28 to 33, are in accordance with the Corporations Act 2001, including:
- (i) giving a true and fair view of the Group's financial position as at 30 June 2012 and of its performance, for the financial year ended on that date; and
- (ii) complying with Accounting Standards (including the Australian Accounting Interpretations) and Corporation Regulations 2001;
(b) the financial report also complies with International Financial Reporting standards as disclosed in note 2 (a)
(c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
1. There are reasonable grounds to believe that the Company and the group entities identified in note 21 will be able to meet any obligation 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.
1. The directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Chief Executive Officer (or equivalent) and chief financial officer for the financial year ended 30 June 2012

Signed in accordance with the resolution of the directors:

Paul Burton Managing Director Dated at Perth 26 September 2012

Independent Auditor's Report

Independent Auditor's Report continued

ASX Additional Information

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

Shareholdings (as at 24 September 2012)

Substantial shareholders

Substantial holders in the Company are set out below:

Shareholder	Number	Percentage
Ao-Zhong International Mineral Resources Pty Ltd	62,249,812	15.30%
Aosu Investment and Development Co. Pty Ltd	59,808,643	14.70%
Mr Warren William Brown + Mrs Marilyn Helena Brown	26,505,000	6.51%
CBH Resources Ltd	16,194,065	3.98%

Class of shares and voting rights

(a) at meetings of members or classes of members each member entitled to vote may vote in person or by proxy or attorney; and
(b) on a show of hands every person present who is a member has one vote, and on a poll every 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 31 August 2012

Category	Ordinary Shares
1 – 1,000	52,789
1,001 – 5,000	1,250,706
5,001 – 10,000	2,978,112
10,001 – 100,000	39,182,193
100,001 and over	363,397,716
	406,861,516

The number of shareholders holding less than a marketable parcel is 592.

ASX Additional Information continued

Twenty largest shareholders as at 24 September 2012

Rank	Name	Units	% of Units
1.	Ao-Zhong International Mineral Resources Pty Ltd	62,249,812	15.30
2.	Aosu Investment and Development Co. Pty Ltd	59,808,643	14.70
3.	Wwb Investments P/L S/F A/C	13,148,124	3.23
4.	Cbh Resources Limited	10,000,000	2.46
5.	Jp Morgan Nominees Australia Limited	9,353,353	2.30
6.	Mr Warren William Brown + Mrs Marilyn Helena Brown	6,104,999	1.50
7.	Kensington Consulting Pty Ltd	6,097,688	1.50
8.	Biddle Partners Pty Ltd	5,869,903	1.44
9.	Mr Warren William Brown + Mrs Marilyn Helena Brown	5,000,000	1.23
10.	Mr John Campbell Smyth	4,500,000	1.11
11.	Cbh Resources Limited	4,194,065	1.03
12.	Mrs Megan Brouwer	4,057,645	1.00
13.	Centre Corporation Pty Limited	3,971,695	0.98
14.	Mr Alistair Wansbone Mackie	3,695,500	0.91
15.	Bonos Pty Ltd	3,030,000	0.74
16.	Teas Nominees Pty Ltd	2,965,887	0.73
17.	Mr Benjamin Sloan Butcher	2,816,303	0.69
18.	Ashton Drilling Services Pty Ltd	2,500,000	0.61
19.	Teas Nominees Pty Ltd	2,500,000	0.61
20.	Mr Warren Brown + Mrs Marilyn Brown <wwb Investments P/L S/F A/C></wwb	2,251,877	0.55
	Totals: Top 20 holders of FULLY PAID SHARES (GROUPED)	214,115,494	52.63
	Total Remaining Holders Balance	192,746,022	47.37

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

ASX Additional Information continued

Project	Tenements	Equity
Mount Peake	EL23271, EL23074, EL27069, EL27070, EL27706, EL27787, EL27941, EL28941, MLA28341	100%
McArthur River	EL27711, EL28503	100%
Melville Island	ELA28617	100%
Croker Island	ELA29164	100%
East Arnhem Land	EL28218, EL28219	100%
Mount Hardy	EL27892, ELA29219	100%
Manbarrum JV	A24518, A26581, EL24395, EL25646, EL25470, E80/3772, E80/3816	100%
Walabanba Hills	EL26848, EL27115, EL27876	Joint Venture
Warramunga/Rover JV	EL24471, EL25581, ELA25582, ELA25587, MLC647
Joint Venture
Peterman Ranges	ELA26383, ELA25564, ELA26384, ELA25562, ELA26382	Joint Venture
Goddard's	ELA24260	Joint Venture
Cawse Extended	M24/547, M24/548, M24/549, M24/550	20% free carried to production, or can be converted to a 2% net smelter return on ore mined. Unicorn Pit is now excised and a wet tonne royalty applies.
Kintore East	P16/2370, P16/2371, P16/2372, P16/2373, P16/2374, P16/2459	Diluting from 49% to 2% gold return interest on production. Current percentage interest is 23.75%.
McTavish	M40/77, M40/119, M40/157, P40/1193, P40/1194	3% gross royalty (third party retains a 25% interest in TNG's interest)

Legend

A: Authorisation (equivalent or Exploration Licence)
E: Exploration Licence (W.A)
EL: Exploration Licence (N.T)
ELA: Exploration Licence Application
M: Mining Lease (W.A)
MLC: Mineral Lease Central (N.T)
MLA Mineral Lease Application (N.T)
P: Prospecting Licence (W.A)

Unlisted Options

Unlisted options exercisable @ \$0.15 expiring 15 December 2012

Total on issue	21,100,000
Number of holders	7
Holder with 20% or more:
Paul E Burton	6,000,000
Advides Global Investments Ltd	5,000,000

AI assistant

TIVAN LIMITED — Regulatory Filings 2012

65967_rns_2012-10-15_3b389aaa-d053-4a12-93a8-dd82ca06b5a7.pdf

Annual Report 2012 ABN 12 000 817 023

Directors

COMPANY SECRETARY

REGISTERED OFFICE

SHARE REGISTRY

AUDITORS

HOME STOCK EXCHANGE

INTERNATIONAL STOCK EXCHANGE

ABN 12 000 817 023

Annual Report 2012

Review of Operations

HIGHLIGHTS & ACHIEVEMENTS

Mount Peake Iron-Vanadium-Titanium Project, NT

TIVAN™ Hydrometallurgical Process

Other Projects

Corporate

Dear Shareholder,

Jianrong Xu

MAP OF OPERATIONS

IRON-VANADIUM-TITANIUM

Mount Peake Pre-Feasibility Study

Key Financial Incomes

"TIVAN™" Hydrometallurgical Process – TNG's competitive advantage

"TIVAN™" Hydrometallurgical Process – TNG's competitive advantage (continued)

Patent and Trade mark

Resource Upgrade

Mount Peake Deposit Schematic

Commodity Outlook

Vanadium Price Forecast

Titanium Production & Price Forecasts

Regional Exploration

Significant intersections of magnetite-gabbro

Regional Exploration (continued)

Significant analytical results (XRF)

Graphite Potential

COPPER

MOUNT HARDY COPPER PROJECT: TNG 100%

Mount Hardy – ELA 29219, EL 27892

WALABANBA HILLS PROJECT: TNG EARNING UP TO 80%

EL 27115, EL 26848, EL 27876

SANDOVER COPPER PROJECT: TNG 100%

ELA 29252, ELA 29253 and ELA 29254

MCARTHUR RIVER PROJECT: TNG 100%

McArthur – EL 27711

Yah Yah – EL 28509

Yah Yah – EL 28509 (continued)

Black Springs – EL 28503

JOINT VENTURE PROJECTS

Manbarrum Joint Venture: TNG 100% (Sorby Hills JV earning 51% with scope to earn up to 80%)

Sandy Creek Zinc Mineral Resource, as at March 2010 at a 1.0% Zn cut-off.

Djibitgun Total Ag Mineral Resource

Manbarrum Joint Venture: TNG 100% (continued)

Djibitgun Zn Mineral Resource

Sorby Hills Joint Venture

Melville Island Joint Venture: TNG 100% (Rio Tinto Exploration earning 80%)

McTavish Project Joint Venure: TNG 3% Royalty, Crucible 100%

Kintore East Joint Venture: TNG 2% Gold Royalty, La Mancha

Rover Project Joint Venture: TNG 100% (Western Desert Resources earning 51% with scope to earn up to 80%)

Nickel Cawse Extended Joint Venture: TNG 20%, Norilsk 80%

CORPORATE

Transaction with ECE

Board Changes

Cash and Investments

Davis Samuel

CORPORATE (continued)

Davis Samuel (continued)

Presentations

Appointment of Institutional Broker

Competent Person's Statement

Corporate Governance Statement

Board of Directors

Role of the Board and Management

Composition of the Board

Composition of the Board (continued)

Committees of the Board

Qualifications of audit committee members

Conflicts of Interest

TIVAN LIMITED Regulatory Filings 2012