ABN 96 122 995 073

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TO: COMPANY ANNOUNCEMENTS OFFICE ASX LIMITED

DATE: 29 SEPTEMBER 2009

2009 ANNUAL REPORT

Please find attached the Annual Report for the year ended 30 June 2009 for Botswana Metals Limited and its Controlled Entities.

Pat Volpe Chairman

Botswana Metals Limited

www.botswanametals.com.au

REGISTERED OFFICE Suite 5.10, 737 Burwood Rd, Hawthorn, Australia Telephone +61 3 9813 5888 Facsimile +61 3 9813 2668 Email [email protected]

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

ANNUAL REPORT 30 JUNE 2009

CONTENTS

CONTENTS
	PAGE
CORPORATE DIRECTORY	2
CHAIRMAN’S REPORT	3
DIRECTORS’ REPORT	4
AUDITORS’ INDEPENDENCE DECLARATION	25
CORPORATE GOVERNANCE STATEMENT	26
FINANCIAL REPORT
INCOME STATEMENT	30
BALANCE SHEET	31
STATEMENT OF CHANGES IN EQUITY	32
CASH FLOW STATEMENT	34
NOTES TO THE FINANCIAL STATEMENTS	35
DIRECTORS’ DECLARATION	63
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS	64
SHAREHOLDER INFORMATION	66
SCHEDULE OF INTERESTS IN MINING TENEMENTS	68

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

CHAIRMAN'S REPORT

CORPORATE DIRECTORY

Directors:	Patrick John Volpe (Executive Chairman)
	Henry James Stacpoole
	Paul Woolrich
	Massimo Livio Cellante (appointed 4 September 2009)
Company Secretary:	Richard Charles Baker
Registered Office:	Suite 5.10, Level 5
	737 Burwood Road
	HAWTHORN
	VICTORIA 3122
	Telephone (03) 9813 5888
	Facsimile (03) 9813 2668
Share Registry:	Advanced Share Registry Services Limited
	150 Stirling Highway
	NEDLANDS WA 6009
	Telephone (08) 9389 8033
	Facsimile (08) 9389 7871
Banker:	St George Bank Limited
	Level 8
	530 Collins Street
	MELBOURNE VIC 3000
Auditor:	Webb Audit Pty Ltd
	Corner Toorak & Auburn Roads,
	HAWTHORN EAST VIC 3123
Lawyers:	Menzies and Partners
	Level 9
	356 Collins Street
	MELBOURNE VIC 3000
Stock Exchange:	ASX Limited
	Level 45,
	Rialto South Tower
	525 Collins Street
	MELBOURNE VIC 3000

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

CHAIRMAN'S REPORT

CHAIRMAN’S REPORT

Dear Shareholder,

I present the 2009 Annual Report in a turbulent year where the world has experienced the fear of a global financial crisis and recession.

Botswana Metals Limited major assets remain its cash reserves, currently over $6 million dollars and its exploration portfolio in Botswana.

In the first half of the 2009 year, the Company completed an exploration and drilling program on its most prospective targets, with the second half of the year concentrating on reducing risk and controlling expenditure.

Base metal prices fell sharply, with nickel falling from its peak of approximately USD$40,000 per tonne in 2007/08 to below USD$10,000 per tonne in 2009.

These events coupled with disappointing exploration and drilling results at our prime target, the Mmamanaka Nickel prospect in Botswana, resulted in your Board repositioning the Company’s risk profile.

In order to reduce exploration expenditure and risk, the Board agreed to seek a joint venture partner for its Botswana nickel tenements and at the same time look for other investment opportunities with the potential to increase shareholders’ wealth.

At the time of this report the Company has reduced overheads and exploration expenditure considerably, but has not as yet been able to joint venture out the Botswana tenements.

The Company has assessed several investment opportunities within in its principle business activities of exploration and mining without a successful outcome to date.

Dr Andrew Tunks resigned as Director of the Company during the financial year. Andrew’s effort in assisting in the listing of BML on the ASX and in directing the exploration for nickel in Botswana during 2008-2009 is very much appreciated by the Board.

Mr. Massimo Cellatine was recently appointed to the Board and he brings with him corporate and investment skills, balancing the depth of exploration and mining experience on the Board.

Whilst the Company did not have exploration success in 2009, the Company will peruse its major and strategic objectives of finding a Joint Venture partner and seeking an investment opportunity with the potential to enhance shareholder wealth during the coming year.

I would like to thank shareholders for their patience in difficult times and the Board will continue with its flexible approach in order to protect the Company’s assets and at the same time look to enhance shareholder value.

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Pat Volpe Executive Chairman 29 September 2009

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

DIRECTORS' REPORT

DIRECTORS’ REPORT

The Directors present their report on the consolidated entity consisting of Botswana Metals Limited and its controlled entities (“the Group”) for the year ended 30 June 2009.

DIRECTORS

The following persons were Directors of the Company during the whole of the financial year (with the exception of Andrew Tunks who resigned on 29 June 2009 and Massimo Cellante who was appointed on 4 September 2009) and up to the date of this report:

Patrick John Volpe (Executive Chairman)

Andrew James Tunks (resigned 29 June 2009)

Henry James Stacpoole

Paul Woolrich

Massimo Cellante (appointed 4 September 2009)

COMPANY SECRETARY

The Company Secretary is Richard Charles Baker B.Ec., CPA. Mr Baker has qualifications in both law and economics and has held similar positions with other listed companies over the past 5 years. Previously he worked in accounting positions for many years.

PRINCIPAL ACTIVITIES

The Group’s principal activities during the year have been the continuing exploration of its tenement portfolio (precious metals and diamonds).

There were no significant changes in the nature of the Group’s principal activities during the financial year.

OPERATING RESULTS

The consolidated loss for the year attributable to the members of the Company was:

Operating loss after income tax Outside equity interests Net loss attributable to members of the Group	2009 2008 $ $ (709,523) (497,266) - -
	(709,523) (497,266)

DIVIDENDS

As the Company’s principal activities are minerals exploration it has not as yet paid any dividends and does not see any short –term return to shareholders via dividend payments.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

DIRECTORS' REPORT

REVIEW OF OPERATIONS

A summary of the company’s activities during the year are as follows

PROSPECTIVITY OF NORTH EAST BOTSWANA

Situated directly between the major nickel producing mines of Selebi Phikwe to the south, and Tati Nickel to the north, BML controls just over 2,922 square kilometres of highly prospective exploration tenements.

These tenements cover two important geological domains, each of which hosts major Ni-Cu deposits. To the north the tenements are situated on the southeast edge of the Zimbabwe Craton, an Archean age granite greenstone terrain that hosts the well known Tati Nickel deposits currently being mined by Norilsk Nickel. The Mupane Gold Mine (Iamgold Corporation) also operates in this vicinity.

The southern tenements cover the Northern Limpopo Mobile Belt. This area hosts the well known Selebi Phikwe deposits operated by BCL, which have been in operation since the 1970’s.

The Northern Limpopo Mobile Belt is also prospective for gold mineralisation, with the Renco Gold mine hosted in similar rocks over the border in Zimbabwe.

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Figure 1: Regional geology and major mining operations of northeast Botswana highlighting the location of the BML tenement package

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

DIRECTORS' REPORT

PROSPECT LOCATIONS

The majority of the current BML prospects have been identified as targets from the Government acquired Airborne GEOTEM survey of 1989. Figures 2A and 2B show the imaged data from the GEOTEM survey and the prospect locations. GEOTEM is an airborne geophysical survey method that identifies electrical conductors in the subsurface. The GEOTEM method is particularly suited for the discovery of sulfide nickel-copper deposits.

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2A
2B
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Figure 2: 2A (Eastern Prospects – Magogophate) and 2B (Western Prospects – Magogophate). Summary maps of the main Ni-Cu targets throughout the Magogophate exploration area. The main prospects are indicated along with tenement outlines over the a989 GEOTME image. High priority targets (those with the highest geophysical response) are indicated in red text and secondary targets in black text.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

DIRECTORS' REPORT

EXPLORATION REPORT

The following report details work completed during the 2008-2009 year and also outlines plans for future exploration in the coming months

PL110/94 –MAGOGOPHATE

Maibele North

Maibele North was first investigated in the 1950’s by the Botswana Geological Survey, who investigated the ancient copper workings at site. The Maibele North prospect was later explored in the early1960’s by Rhodesian Selection Trust Exploration. However, their interest in the deposit terminated when they discovered the nearby world-class nickel-copper deposits at Selebi Phikwe, which have been mined continuously since 1972. In the early 1990’s Falconbridge completed 16 diamond holes at the deposit, intersecting substantial grades of massive sulfide nickel copper mineralisation with significant PGE credits.

Eleven kilometres of ground TDEM (Time Domain Electro Magnetic) surveying was completed over the western end of the Maibele North prospect during the year. The survey has revealed a shallow, weak conductor on lines 5400 – 5500E and two moderate conductors at the very western end of the survey in the vicinity of the Airstrip Copper Prospect, where strong secondary copper mineralisation can be observed at surface.

Airstrip Copper

Surface geological mapping of the Airstrip Copper prospect was undertaken during the year. Outcrop is poor in the area but a series of historic trenches are still evident and have provided the basis for the mapping program. The mapping has identified a poorly exposed sequence of dolerites and brecciated quarto-feldspathic gneisses that strike roughly southwest-northeast, sub-parallel with the trenches. Secondary copper mineralization (malachite) can be seen on gneissic surfaces observed in outcrop and in the trenches. Portable XRF analysis has returned highly anomalous values ranging from 0.1% to 15% Cu. Because the trenches are in poor condition and run sub-parallel to the geology, further detailed mapping is required to fully understand the controls on mineralisation at Airstrip Copper. It should also be noted that the portable XRF analysis was conducted on in situ outcrop that had undergone no laboratory-standard sample preparation and, as such, the values obtained can only be considered as indicative of the contained values in the rocks tested. All digital data for the Airstrip Copper project has been compiled and a 3D workspace constructed. This work will assist in identifying potential drill targets at the prospect.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

DIRECTORS' REPORT

PL111/94 MOKOSWANE

Mmamanaka Nickel

Drilling

A total of 11 Reverse Circulation (RC) percussion holes on five sections for 2208m of drilling were completed at the Mmamanaka Prospect during September and early October 2008 (Tables 1 and 2, Figure 3). Mmamanaka is a significant TDEM (Time Domain Electro Magnetic) and geochemical anomaly associated with ultramafic rock types.

Table 1: Drill collars from the Mmamanaka Prospect

HoleID	Depth	East local	North Local	AzimuthLocal	Dip	Type
MMRC0001	225	7200	4910	180	-60	RC
MMRC0002	200	7200	4830	180	-60	RC
MMRC0003	180	7200	4755	180	-60	RC
MMRC0004	159	7300	4755	180	-60	RC
MMRC0005	195	7300	4810	180	-60	RC
MMRC0006	215	7300	4910	180	-60	RC
MMRC0007	183	6930	4785	180	-60	RC
MMRC0008	200	6900	4900	180	-60	RC
MMRC0009	206	6300	4830	180	-60	RC
MMRC0010	225	6300	4945	180	-60	RC
MMRC0011	220	5900	4973	180	-60	RC

Drilling Results

The drilling intersected numerous sections containing heavily disseminated to semi massive sulphides including pyrrhotite, pyrite and minor chalcopyrite within a mafic and ultramafic host rock package over a 1.4km strike length (Figure 3).

The assay results have shown the sulphides to be nickel-poor and have returned no intersections of economic significance (Table 2). Elevated nickel values of between 0.1% – 0.24% have, however, been recorded in broad intersections from the ultramafic host rocks though little or no sulphides are associated with these zones. It is interpreted that the nickel in these intersections is within the rockforming silicate minerals and hasn’t undergone the necessary ore-forming processes to enable concentration of nickel in the sulphide minerals.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

DIRECTORS' REPORT

Table 2: Significant sulphide intersections from the recent Mmamanaka drilling

HoleID	From	To	Lengthm (down hole)	Ni%	Cu%	Comments
MMRC0006	99	102	3m	0.01	0.04	heavilydisseminatedpy+po in amphibolite
MMRC0008	121	125	4m	0.01	0.02	heavily disseminated py +po in amphibolite
MMRC0010 And	112 119	116 121	4m 2m	0.01 0.01	0.04 0.02	semi-massive to massive po+py+cpy in amphibolite semi-massive po+py+cpy in amphibolite
MMRC0011 Incl	102 102	123 104	21m 2m	0.00 0.00	0.01 0.01	heavily disseminated to semi-massive po + py Semi-massivepo +py

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Figure 3: Collar plan of the Mmamanaka drilling showing significant sulphide intersections. The brown areas are the zones of strong EM response.

DISCUSSION

Whilst it is unfortunate that the nickel at Mmamanaka has remained in the ultramafic host rock, it is encouraging to see that all the ‘ingredients’ necessary for the formation of nickel sulphide deposits are present in the Magogophate Shear Zone (MSZ). The MSZ is an 80km long belt of highly deformed and metamorphosed Archean rocks of the Northern Limpopo Mobile Zone and has undergone minimal modern exploration. The area is immediately north of the major Selebi Phikwe Ni-Cu mine (150Mt @ 1% Ni & 0.9% Cu) and is interpreted to contain the sheared equivalents of the Selebi Phikwe host rocks.

Little drilling for massive sulphides has occurred elsewhere in the MSZ and BML is encouraged by the great potential of the area. Many airborne Electro Magnetic conductors (GEOTEM) associated with ultramafic bodies occur in the MSZ (Figures 2A and 2b) and the drilling at Mmamanaka has illustrated the effectiveness of the exploration techniques employed by BML in the search for sulphide-rich mineralisation. The geological and geochemical information gained from the campaign has contributed

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

DIRECTORS' REPORT

enormously to our geological unde r standing of this highly prospective, underex p lored belt and will play a key role in the development of acc u rate target vector and prioritizing tools.

Crescent

A total of 39.6 line km of ground TDEM surveying was completed at Cresc e nt during the year. This program covered the mapped am p hibolite and serpentinite rocks coincident w ith strong geochemical anomalies. The results show a n umber of significant conductors, including a continuous 2km long conductor of moderate conductivity thickness extending across the projec t . Several gossans and elevated soil geochemical respons e s are associated with this conductor. An additional 2 conductors are associated with ultramafic bodies c o incident with strongly elevated Ni-in-soil ge o chemistry.

A program of reconnaissance ma p ping and portable XRF analysis of outcrop p ing ultramafic rocks has been undertaken at Crescent. The portable XRF analysis revealed numerous n ickel values above 0.1% in both gossanous and weathered ultramafic rocks. Anomalous copper valu e s up to 0.2% were also associated with some of these re s ults. Numerous TDEM conductors and hi g hly elevated nickel soil geochemistry are associated with l a rge ultramafic bodies at Crescent.

The presence of gossanous mat e rial and elevated copper associated with high Ni values provides encouragement that Ni-sulphide mineralisation might be present at the Prospe c t. All historical drilling at Crescent has failed to test any of t h e prospective horizons and the recent wor k by BML has highlighted the value in the exploration techni q ues the Company is using in the search f o r Ni-Cu mineralisation in the Magogophate Shear Zone.

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Figure 4: Crescent Prospect - Plan view showing the modeled EM conductors, ultramafic bodies and drill holes proposed for early 2009. Note that EM conductivity thickness values above 5.00 can represent significant sulphide occurrences.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

DIRECTORS' REPORT

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TDEM conductors
IP chargeability
sections Ultramafic
NORTH
Local
grid
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Figure 5: 3D perspective view, looking northwest, showing the coincident ultramafic bodies, chargeability anomalies, modeled conductors and highly anomalous Ni-in-soil geochemistry

PL46/2004 SAMPOWANE

The Sampowane prospect is only 15km from the major Selebi Phikwe Ni-Cu mine and is a high priority nickel exploration target. The only drilling at the prospect are the four diamond drill holes completed in the 1990’s by previous explorer Falconbridge. All four holes intersected massive sulphide intersections containing Ni+Cu+PGE that ranged up to up to 2.8m in thickness (down hole).

Work by BML during the year has included 9.5km of ground TDEM (Time Domain Electro Magnetic) surveying. Models of conductive thickness are extremely encouraging, with numerous high-quality drill targets evident. EM conductive thicknesses are very strong and are at levels normally associated with significant massive sulphide occurrences. There are at least three separate conductors that stretch for a cumulative strike length of over 1km and are open to the east (an airborne EM anomaly extends for a further ~4km east of Sampowane). The modeled TDEM conductors correlate well with the historic drill intersections and show that the strongest sections of the conductors haven’t been effectively tested by drilling to date (Figure 6).

A total of 28.5km of ground magnetic surveying aimed at further delineating structure and geology to aid in the interpretation of the TDEM (Time Domain Electro Magnetic) results and sulphide mineralisation was also undertaken at Sampowane (Figure 7). The survey was conducted as a walking magnetic survey with a cycle time of 1.5s and line spacing of 25m using a G859 mining magnetometer. A G856 magnetometer was used as a base station for diurnal correction. The magnetics has resolved significant geological detail and provides a clear picture of the geological contacts, possible ultramafic bodies and a number of cross-cutting structures. The anomalies present in the data will be modeled in 3D to yield shape, depth to top, plunge, dip and depth extent. The features interpreted as ultramafic rocks will provide significant information about potential target areas for sulphides as well as aid in understanding the TDEM results. This work has demonstrated the great value of the ground magnetometer as a key exploration tool that can be effectively applied to BML’s targets during the current scaled-down exploration program.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

DIRECTORS' REPORT

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TDEM conductor O utcropping
Gossan
TDEM co n ductors
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Figure 6: Sampowane Prospect - plan view showing mapped geology, modeled EM conductors and historic drill holes. Note that EM conductivity thickness values above 5.00 can represent significant sulphide occurrences.

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TDEM conductor
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TDEM conductors
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Figure 7: Preliminary TMI (Total Magnetic Intensity) image from the recent Sampowane survey. Positions of the main TDEM conductors are shown in white.

An application for a 2 year rene w al of the tenement was submitted during March 2009 and during August 2009 the Department of Geology Survey of Botswana (DGS) inform e d the Company that the renewal had been granted, however the formal documentation has not yet been received from the DGS.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

DIRECTORS' REPORT

PL14/2003 – MAJANTE

A total of 36 line km of ground TDEM surveying was completed at the Majante prospect during the year. The survey covered an area of ultramafic rocks coincident with very strong Ni and Cu soil geochemical anomalies and significant airborne EM (GEOTEM) anomalies. Modelling of the TDEM results has shown multiple conductors and at least two major zones of conductivity thickness values indicative of significant sulphide occurrences. A program of geological mapping and soil sampling with a view to defining drill targets will be undertaken in future exploration programs.

PL54/98 – TAKANE

A total of 41 line km of TDEM surveying at 200m line spacing was completed in PL54/98 during the year. The survey was designed to cover numerous strong GEOTEM (airborne EM) anomalies associated with elevated Ni soil geochemistry and some ultramafic bodies. The survey was completed over two prospective blocks. The first showed numerous vertical plate-like conductors containing conductive thickness values consistent with those expected from massive sulphide bodies. Results for the second block produced strong conductive responses that were dissimilar to the pattern that had been established so far on other prospects in the Magogophate Shear Zone, where steeply dipping plate like conductors are encountered. These responses could be a result of conductive lithology or an alternate orientation of a massive sulphide body such as a sill or deformed shoot. The data will be analysed for sub horizontal plates (sill type deposits) and/or blocks during the current quarter. Geological mapping will continue on the prospect and, if results of this and the TDEM modeling warrant, further TDEM surveys employing the moving loop technique will be proposed. The previous airborne GEOTEM survey picked up conductive responses over the same area and this, coupled with the presence of ultramafic rocks in outcrop and highly anomalous soil geochemistry render the PL54 area an exciting exploration area for BML.

PL18/2004 – JIM’S LUCK JOINT VENTURE

A management committee meeting for the Jim’s Luck Joint Venture was held during the March 09 quarter. The Joint Venture is between BML and Iamgold Corporation, who operate the nearby Mupane Gold Mine. Iamgold undertook to review the prospect with a view to assessing the potential for additional gold resources for the Mupane Mine. The review is still ongoing and, at the time of this report, no advice has been received from Iamgold on whether they will progress exploration work on this tenement.

PL44/2004 – SHASHE EAST

No field work was undertaken during the year. however a review of the tenement’s geological potential with a view to generating exploration targets has commenced. An application for a 2 year renewal of the tenement was submitted during March 2009 and during August 2009 the DGS informed the Company that the renewal had been granted, however the formal documentation has not yet been received from the DGS.

PL47/2004 – GOBE SHEAR

No field work was undertaken during the year, however a review of the tenement’s geological potential with a view to generating exploration targets has commenced. An application for a 2 year renewal of the tenement was submitted during March 2009 and during August 2009 the DGS informed the Company that the renewal had been granted, however the formal documentation has not yet been received from the DGS.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

DIRECTORS' REPORT

PL48/2004 – SHASHE WEST

TENEMENT STATUS

Extensions have been granted for Prospecting Licenses PL110/94 - Magogphate , PL111/94 - Mokoswane and PL54/98 - Takane . The 2 year extensions will expire on 30 September, 2010. These licenses are highly prospective for Ni-Cu mineralisation as well as gold and other base metals.

Prospecting License PL360/2008 - Mmadinare was granted during the year. This new tenement lies adjacent to PL46/2004 and covers 459km[2] of highly prospective Limpopo Mobile Belt rocks (Figure 8). The Lepokole Prospecting Licence application was granted as PL158/2009 during the year. This new tenement lies immediately south of the Magogophate Shear zone and covers approximately 400km[2] of highly prospective Limpopo Mobile Belt rocks.

A two year renewal was also granted for PL14/2003 - Majante . This important tenement contains the Majante and Sekgopye prospects and is highly prospective for the discovery of Ni-Cu-PGE mineralisation.

Applications for the final 2 year renewals for PL44/2004 Shashe East, PL46/2004 Sampowane , PL47/2004 Gobe Shear and PL48/2004 Shashe West were submitted to the Department of Geological Survey and have been granted with 100% retention for a further 2 years from 30 June 2009.

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Figure 8: Current BML Tenement status

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

DIRECTORS' REPORT

CORPORATE ACTIVITY

FINANCIAL POSITION

The net assets of the consolidated entity have decreased by $401,424 from 30 June 2008 to $10,397,476 as at 30 June 2009.

The Directors believe the group is in a strong and stable financial position and able to expand and grow its current operations.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

Resignation of Director

On 29 June 2009, the Company announced the resignation of Dr. Andrew Tunks as an Executive Director.

AFTER BALANCE DATE EVENTS

Other than the matters discussed below, there has not arisen in the interval between the end of the financial year and the date of this report, any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company to affect the operations of the consolidated entity, the results of these operations or the state of affairs of the consolidated entity in subsequent years.

Appointment of Director

On 4 September 2009 the Company announced the appointment of Mr Massimo Cellante as a Nonexecutive Director of the Company.

Renewal of Botswana Prospecting Licences

On 4 August 2009 the Company received notification from the Department of Geological Survey in Botswana that the following Prospecting Licences in Botswana, held by its wholly-owned subsidiary African Metals (Pty) Ltd had been renewed in full for a period of two years expiring 30 June 2011:

PL 44/2004 Shashe East
PL 46/2004 Sampowane
PL 47/2004 Gobe Shear
PL 48/2004 Shashe West

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

DIRECTORS' REPORT

FUTURE DEVELOPMENTS

Botswana Metal’s main exploration efforts will be focussed on continuing developing value from exploration across its tenement package and include:

seeking a joint venture partner for its Botswana tenements, and
acquiring new investment opportunities.

ENVIRONMENTAL ISSUES

The consolidated entity holds 100% interest in a number of exploration licences and has participating interests in others. The various authorities granting such licences require the licence holder to comply with directions given to it under the terms of the grant of licence.

There have been no known breaches of the consolidation entity’s licence conditions.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

DIRECTORS' REPORT

INFORMATION ON DIRECTORS

INFORMATION ON DIREC	TORS
Patrick John Volpe	Experience:	Executive Chairman for 3 years
B.Bus(Acc), P.G.(Tax), CPA		Background in mining, media, transport,
		manufacturing, banking and stockbroking
		with a particular emphasis on corporate
		restructuring, business acquisitions,
		investment advising and capital raisings.
	Age:	51
	Special Responsibilities:	Corporate finance and investment.
		Acquisitions and mergers.
		Chairman of the Audit and Compliance
		Committee
	Interest in Shares:	13,481,159 Ordinary Shares
	Directorships held in other
	Listed Entities:	He is currently also a Director of A-Cap
		Resources Limited, Cardia Technologies
		Limited and a former Director of Dia-B Tech
		Limited, all ASX listed companies, but has
		not held any other directorships of listed
		entities over the last 3 years.
Henry James Stacpoole	Experience:	Non-Executive Director for 3 years.
		Managing Director of Stacpoole Enterprises
		Pty Ltd, a civil contracting, drilling and mining
		exploration company based in Launceston in
		Tasmania. He was a founding Director of
		Beaconsfield Gold Mines Ltd in 1987 and
		was closely involved in the development of
		that company’s mine in Tasmania becoming
		Chairman of the restructured Beaconsfield
		Gold N.L. in 1992. He resigned as a Director
		in 2001.
	Age:	74
	Special Responsibilities:	Mining Engineering
	Interest in Shares:	1,434,860 Ordinary Shares
	Directorships held in Other	He is currently a non-executive director
	Listed Entities:	of A-Cap Resources Limited, an ASX listed
		company
Paul Woolrich
BSc (honours), MSc, PhD.	Experience:	Non-executive director for 2 years.
		Dr Woolrich has over 35 years
		experience in the international exploration
		and mining industry focussed on gold, base

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

DIRECTORS' REPORT

		metals and PGEs, with the last 20 years
		spent in senior management positions with
		Western Mining Corporation, Ranger
		Minerals Ltd, Orion Resources, Gallery Gold
		and Platmin Ltd. He was Project Manager in
		charge of the feasibility study of Platmin’s
		Pilanesberg PGE Project in South Africa in
		2004-2006.
		He holds degrees in geology (BSc honours),
		geochemistry (MSc) and metallurgy (PhD).
	Age:	64
	Interest in Shares:	400,000 Ordinary Shares
	Directorships held in Other	He is currently a non-executive director
	Listed Entities:	of A-Cap Resources Limited, an ASX listed
		company
Massimo Livio Cellante	Experience:	Non-Executive Director for 1 month.
B. Comm (Deakin)		Chairman and Managing Director of Bell IXL
		Investments Ltd, a strategic investment
		company where his role includes identifying
		and investing in undervalued publicly-listed
		companies and he is experienced in
		negotiation, investment analysis, capital
		raisings, capital returns and corporate
		acquisitions.
	Age:	35
	Interest in Shares:	6,558,521 Ordinary Shares
	Directorships held in Other	He is currently an executive director of Bell
	Listed Entities:	IXL Investments Limited, an NSX listed
		company
Andrew James Tunks	Experience:	Managing Director for 3 years.
B. Sc (Hons), PhD	Resigned 29 June 2009	Qualifications in economic geology with 20
		years experience in international mining and
		exploration projects.
	Age:	45
	Interest in Shares:	75,000 Ordinary Shares
	Directorships held in Other	He is currently an executive director of A-
	Listed Entities:	Cap Resources Limited, an ASX listed
		company.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

DIRECTORS' REPORT

DIRECTORS' MEETINGS

The number of meetings of the Company’s Board of Directors and the Audit and Compliance Committee held during the year ended 30 June 2009, and the numbers of meetings attended by each director were:

Name	Board	Board	Audit and Compliance Committee	Audit and Compliance Committee
	Number eligible to attend	Number attended	Number eligible to attend	Number attended
P J Volpe H J Stacpoole A J Tunks P Woolrich	7 7 7 7	7 7 6 7	2 - - -	2 - - -
R C Baker (Company Secretary)	-	-	2	2

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

DIRECTORS' REPORT

REMUNERATION REPORT

Remuneration Policy

The remuneration policy of Botswana Metals Limited has been designed to align Director and executive objectives with shareholder and business objectives by providing a fixed remuneration component and offering specific long-term incentives based upon the recommendations of external consultants. The Board of Botswana Metals Limited believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best executives and Directors to run and manage the consolidated group, as well as create goal congruence between directors, executives and shareholders.

The Board’s policy for determining the nature and amount of remuneration for Board members and senior executives of the economic entity is as follows:

The remuneration policy, setting the terms and conditions for the executive directors and other senior executives, was developed by independent external consultants and approved by the Board based on the professional advice of those consultants.
All executives receive a base salary (which is based on factors such as length of service and experience) and superannuation.
The Board reviews executive packages annually by reference to executive performance and the professional advice of independent external consultants.

Executives and employees are entitled to participate in the Executive and Employee Option Plan at the discretion of the Board, however Director’s are not permitted to participate.

The Directors and executives receive a superannuation guarantee contribution required by the government, which is currently 9%, and do not receive any other retirement benefits.

All remuneration paid to Directors and executives is valued at the cost to the Company and expensed. Options are valued using the binomial model.

The Board policy is to remunerate non-executive Directors at market rates for time, commitment and responsibilities. The Board determines payments to the non-executive Directors and reviews their remuneration annually, based on market practice, duties and accountability. Independent external advice is utilised to do this from independent external consultants. The maximum aggregate amount of fees that can be paid to non-executive Directors is subject to approval by shareholders at the Annual General Meeting. Fees for non-executive Directors are not linked to the performance of the consolidated group. However, to align Directors’ interests with shareholder interests, the Directors are encouraged to hold shares in the Company.

Performance-based Remuneration

No performance based remuneration was paid during the year.

Company Performance, Shareholders Wealth and Directors’ and Executives Remuneration

Remuneration of Directors is determined by the Board within the maximum amount approved by the shareholders from time to time, and the Company's broad remuneration policy is to ensure that remuneration packages properly reflect a person's duties and responsibilities and are set at levels that are intended to attract and retain people of the highest quality.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

DIRECTORS' REPORT

REMUNERATION REPORT (CONTINUED)

Performance Income as a Proportion of Total Remuneration

No performance based remuneration was paid during the year.

Key Management Personnel Remuneration Policy

The Board’s policy for determining the nature and amount of remuneration of key management for the Group is as follows:

The remuneration structure for key management personnel is based on a number of factors, including length of service and particular experience of the individual concerned. The contracts for service between the Company and key management personnel are on a continuing basis, the terms of which are not expected to change in the immediate future. Upon retirement key management personnel are paid employee benefit entitlements accrued at the date of retirement. Any options not exercised before or on the date of termination lapse.

Details of the nature and amount of each major element of the remuneration of each Director of the Company for the year ended 30 June 2009 are:-

Name	Short-term Benefits	Post- employment Benefits	Share- based Payment Options $	Total $
	Cash Salary & Fees $	Superannuation $
P J Volpe (Executive Director) H J Stacpoole P Woolrich A J Tunks(resigned 29 June 2009)	219,145 45,000 45,000 79,933	19,723 4,050 - 7,194	37,168 12,390 12,390 37,168	276,036 61,440 57,390 124,295
Total	389,078	30,967	99,116	519,161

Information in respect of specified executive officers within the consolidated entity receiving the highest emoluments for the year ended 30 June 2009 are:-

Name	Cash Salary & Fees $	Share-based Payment Options $	Total $
R C Baker	58,333	1,239	59,572

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

DIRECTORS' REPORT

REMUNERATION REPORT (CONTINUED)

Details of the nature and amount of each major element of the remuneration of each Director of the Company for the year ended 30 June 2008 are:-

Name	Short-term Benefits	Post- employment Benefits	Share- based Payment Options $	Total $
	Cash Salary & Fees $	Superannuation $
P J Volpe (Executive Director) H J Stacpoole P Woolrich (appointed 22 January 2008) A J Tunks	213,720 50,000 22,222 154,800	19,235 4,500 - 13,932	- - - -	232,955 54,500 22,222 168,732
Total	440,742	37,667	-	478,409

Information in respect of specified executive officers within the consolidated entity receiving the highest emoluments for the year ended 30 June 2008 are:-

Name	Cash Salary & Fees $
R C Baker(appointed 3 July2007)	55,904

Options Issued as part of remuneration

On 16 July 2008, 8,000,000 share options were granted to Directors pursuant to the approval of members at the General Meeting held on 2 July 2008. The options are exercisable upon granting and have therefore been fully expensed in the financial period. All options issued expire on 30 June 2011. The options hold no voting or dividends rights and are not transferable. When a Director ceases employment (except by reason of a takeover of the Company) the options are deemed to have lapsed. Since balance date, Dr Andrew Tunks has ceased his employment with the Company and as such his options have lapsed. Details of this option issue are disclosed below:

Director	Vested No.	Granted No.	Grant Date	Value per Option at Grant Date $	Exercise Price $	Last Exercise Date	Lapse Date
PJ Volpe PJ Volpe PJ Volpe HJ Stacpoole HJ Stacpoole HJ Stacpoole P Woolrich P Woolrich P Woolrich AJ Tunks AJ Tunks AJ Tunks	1,000,000 1,000,000 1,000,000 333,333 333,333 333,334 333,333 333,333 333,334 1,000,000 1,000,000 1,000,000	1,000,000 1,000,000 1,000,000 333,333 333,333 333,334 333,333 333,333 333,334 1,000,000 1,000,000 1,000,000	16/07/2008 16/07/2008 16/07/2008 16/07/2008 16/07/2008 16/07/2008 16/07/2008 16/07/2008 16/07/2008 16/07/2008 16/07/2008 16/07/2008	0.0151 0.0122 0.0099 0.0151 0.0122 0.0099 0.0151 0.0122 0.0099 0.0151 0.0122 0.0099	0.10 0.15 0.20 0.10 0.15 0.20 0.10 0.15 0.20 0.10 0.15 0.20	30/06/2011 30/06/2011 30/06/2011 30/06/2011 30/06/2011 30/06/2011 30/06/2011 30/06/2011 30/06/2011 30/06/2011 30/06/2011 30/06/2011	N/A N/A N/A N/A N/A N/A N/A N/A N/A 29/06/2009 29/06/2009 29/06/2009
	8,000,000	8,000,000

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

DIRECTORS' REPORT

REMUNERATION REPORT (CONTINUED)

The Company established the Executive and Employee Option Plan on 2 July 2008. All employees are entitled to participate in the scheme at the discretion of the Directors and upon terms stipulated by the Directors. Details of options issued under the Executive and Employee Option Plan are specified below:

Employee	Vested No.	Granted No.	Grant Date	Value per Option at Grant Date $	Exercise Price $	Last Exercise Date	Lapse Date
RC Baker RC Baker RC Baker	33,334 33,333 33,333	33,334 33,333 33,333	2009 2009 2009	0.0151 0.0122 0.0099	0.10 0.15 0.20	30/06/2011 30/06/2011 30/06/2011	N/A N/A N/A
	100,000	100,000

All options granted to key management personnel are for ordinary shares in Botswana Metals Limited, which confer a right of one ordinary share for every option held.

Shares Issued on Exercise of Options

No options were exercised by Directors during the financial year.

Employment Contracts of Directors and Senior Executives

There are no employment contracts with Directors or executive officers.

INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS

The Company has agreed to indemnify all the current Directors and Officers of the Company and of its controlled entities against all liabilities incurred as an officer except where the liability arises out of conduct involving a lack of good faith. The Indemnity includes costs and expenses in successfully defending any legal proceedings, and applied, from 9 January 2008 when BML ceased to be a controlled entity of A-Cap Resources Ltd.

The Company has not paid or agreed to pay a premium to insure the Directors and Officers against liabilities incurred in their respective capacities.

OPTIONS

At the date of this Report, the unissued ordinary shares of the Company under option are as follows:

Grant Date Date of Expiry Exercise Price	Number under Option
16/08/2008 30/06/2011 $0.10 16/08/2008 30/06/2011 $0.15 16/08/2008 30/06/2011 $0.20 02/02/2009 30/06/2011 $0.10 02/02/2009 30/06/2011 $0.15 02/02/2009 30/06/2011 $0.20	1,666,668 1,666,666 1,666,666 33,334 33,333 33,333
	5,100,000

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

DIRECTORS' REPORT

PROCEEDINGS ON BEHALF OF THE COMPANY

No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings.

The Company was not a party to any such proceedings during the year.

NON-AUDIT SERVICES

There were no fees for non-audit services paid to the external auditors during the year ended 30 June 2009.

AUDITOR'S INDEPENDENCE DECLARATION

The lead Auditor's Independence Declaration for the year ended 30 June 2009 has been received and can be found on page 25 of this Report.

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

==> picture [78 x 54] intentionally omitted <==

P J Volpe Director Dated this 29[th] day of September 2009 Hawthorn, Victoria

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

AUDITOR'S INDEPENDENCE DECLARATION

==> picture [179 x 45] intentionally omitted <==

29 September 2009

The Board of Directors Botswana Metals Limited Suite 5.10, Level 5 737 Burwood Road HAWTHORN VIC 3122

Dear Board Members

AUDITOR’S INDEPENDENCE DECLARATION IN ACCORDANCE WITH SECTION 307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS OF BOTSWANA METALS LIMITED

In accordance with section 307C of the Corporations Act 2001 , I am pleased to provide the following declaration of independence to the directors of Botswana Metals Limited.

As lead audit partner for the audit of the financial report of Botswana Metals Limited for the year ended 30 June 2009, I declare that to the best of my knowledge and belief, there have been no contraventions of:

(i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

(ii) any applicable code of professional conduct in relation to the audit.

Yours sincerely

==> picture [126 x 90] intentionally omitted <==

Jeffrey Luckins Director Webb Audit Pty Ltd

Dated in Melbourne, Australia on this 29[th] day of September 2009

Webb Audit Pty Ltd A member of the Webb Group ABN 59 116 151 136 Cnr Toorak & Auburn Roads Hawthorn East Vic 3123 Australia PO Box 185 Toorak Vic 3142 Australia Telephone +61 3 9822 8686 Facsimile +61 3 9824 8578 [email protected] www.webbgroup.com.au Limited liability by a scheme approved under Professional Standards Legislation

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

CORPORATE GOVERNANCE STATEMENT

CORPORATE GOVERNANCE STATEMENT

This Statement reflects Botswana Metals Limited's corporate governance policies and practices as at 30 June 2008 and which were in place throughout the year.

The Board's philosophy is to adopt practices that are consistent with the best practice recommendations of the ASX Corporate Governance Council and in the best interests of the Company. The governance practices are reviewed regularly.

A description of the Company’s main corporate governance practices is set out below.

PRINCIPLE 1: LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT

The Board’s role is to govern the Company rather than to manage it. In governing the Company, the Directors must act in the best interests of the Company as a whole. It is the role of senior management to manage the Company in accordance with the direction and delegations of the Board and the responsibility of the Board to oversee the activities of management in carrying out these delegated duties.

The Board’s responsibilities include:

Leadership of the organisation
Strategy formulation
Overseeing planning activities
Shareholder liaison
Monitoring compliance and risk management
Company finances
Human resources
Remuneration policy

The Board has delegated the responsibility for management of the Company to the Managing Director and senior management who implement the Board’s strategies and compliance activities. The Board constantly monitors the performance of the Managing Director and senior management in their undertaking of these duties.

PRINCIPLE 2: STRUCTURE THE BOARD TO ADD VALUE

The Board has been formed so that it has an effective mix of personnel who are committed to discharging their responsibilities and duties, and being of value to the Company.

The names of the Directors, and their qualifications and experience are stated on pages 17 - 18 along with the term of office held by each.

There are two Directors on the Board at present that could be classified as ‘Independent’. The number of independent Directors on the Board is likely to increase as the Company develops and the Board believes that it can attract appropriate independent directors with the necessary industry experience.

However, where any Director has material personal interest in a matter and, in accordance with the Corporations Act 2001, the Director will not be permitted to be present during discussion or to vote on the matter. The enforcement of this requirement aims to ensure that the interest of shareholders, as a whole, is pursued and that their interest or the Director’s independence is not adversely affected.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

CORPORATE GOVERNANCE STATEMENT

PRINCIPLE 2: STRUCTURE THE BOARD TO ADD VALUE (CONTINUED)

The Company believes that at this stage in its development, the most appropriate person for the position of Chairman is an Executive Officer of the Company. The Executive Officer’s overall expertise has been crucial to the Company’s development and negates any perceived lack of independence.

The Company does not have a Nomination Committee because the Board considers that selection and appointment of Directors is such an important task that it should be the responsibility of the entire Board to consider the nominations process.

The Board is responsible for evaluating its performance and that of individual Directors and key executives and in doing so may engage independent external advisors if thought appropriate to do so. The Company has not established a formal process to evaluating the performance of the board, its committees and individual directors, however the performance of the board, the directors, officers and employees is monitored on a regular basis by the board, with appropriate feedback and necessary training given to those parties.

Directors collectively or individually have the right to seek independent professional advice at the Company’s expense, up to specified limits, to assist them to carry out their responsibilities. All advice obtained is made available to the full Board.

PRINCIPLE 3: PROMOTE ETHICAL AND RESPONSIBLE DECISION-MAKING

Due to the size of the Company and the resources available to it, the Board does not consider that a formal Code of Conduct for Directors and other key executives is appropriate. Rather, it is agreed by the Board that all officers of the Company will act ethically and in the best interests of the Company.

The Company has a share trading policy that regulates the dealings by directors, officers and employees, in shares, options and other securities issued by the Company.

Under the Company's Securities Trading Policy, an Executive, including a Director, Company Secretary, or employee (and any employee of any subsidiary) must not trade in any securities of the Company at any time when they are in possession of unpublished price sensitive information in relation to those securities or the Company’s operations.

Before commencing to trade, an executive must first obtain the approval of the Board to purchase (including the exercise of any options) or sell any securities of the Company.

The policy has been formulated to ensure that directors, officers, employees and consultants who work on a regular basis for the Company are aware of the legal restrictions on trading in company securities while in possession of unpublished price-sensitive information.

PRINCIPLE 4: SAFEGUARD INTEGRITY IN FINANCIAL REPORTING

The Chief Executive Officer and Chief Financial Officer provide written declarations to the Board confirming that the Company's financial reports present a true and fair view of the Company's financial condition and operational results and in accordance with the relevant accounting standards.

As the Company is small with a Board of four members it has not established a series of committees to address specific areas of corporate governance such as risk management, strategic review, operations and remuneration but has established an Audit and Compliance Committee.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

CORPORATE GOVERNANCE STATEMENT

PRINCIPLE 4: SAFEGUARD INTEGRITY IN FINANCIAL REPORTING (CONTINUED)

The members of the Committee at the date of this report are Patrick Volpe (Chairman), who is also Chairman of the Board of Directors and Richard Baker (Company Secretary). The Audit and Compliance Committee was established by the Board to give additional assurance regarding the quality and reliability of financial information used by the Board and financial information provided by the Company pursuant to its statutory reporting requirements. The members of the committee meet formally twice a year and on an ad hoc basis as required.

The Board selected the members of the Audit and Compliance Committee based upon those members who are considered to have the most expertise in the area and are therefore not necessarily independent or non-executive directors.

PRINCIPLE 5: MAKE TIMELY AND BALANCED DISCLOSURE

The Board has designated the Company Secretary as the person responsible for overseeing and coordinating disclosure of information to the Australian Securities Exchange (“ASX”) as well as communicating with the ASX. In accordance with the ASX’s ‘Listing Rules’ the Company immediately notifies the ASX of information concerning the Company:

That a reasonable person would or may expect to have a material effect on the price or value of the Company’s securities; and
That would, or would be likely to influence persons who commonly invest in securities in deciding whether to acquire or dispose of the Company’s securities.

Due to the size of the Company, it achieves compliance with ASX ‘Listing Rules’ disclosure requirements without the need for formal policies and procedures, however there are specific processes followed by the board and officers with regard to ensuring the Company complies with its disclosure requirements.

PRINCIPLE 6: RESPECT THE RIGHTS OF SHAREHOLDERS

Due to the size of the Company, it does not have a formal policy regarding the promotion of effective communications with shareholders and encouraging their participation at general meeting, the Company respects the rights of its Shareholders, and to facilitate the effective exercise of those rights, the Company is committed to:

Communicating effectively with shareholders through ongoing releases to the market via the ASX, and the general meetings of the Company;
Giving shareholders ready access to balanced and understandable information about the Company and Corporate Proposals;
Making it easy for shareholders to participate in general meetings of the Company and providing appropriate notice periods and disclosure for general meetings; and
Requesting the External Auditor to attend the Annual General Meeting and be available to answer shareholders’ questions about the conduct of the audit, and the preparation and content of the Auditor’s Report.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

CORPORATE GOVERNANCE STATEMENT

PRINCIPLE 7: RECOGNISE AND MANAGE RISK

The Company has not established formal policies for the oversight and management of material business risks. Due to the size of the Company and the size of the Board, the Board monitors all key areas of the Company’s risk management on an ongoing basis and keeps shareholders informed of any changes in the risk profile of the Company.

The Board has delegated the responsibility of designing risk management and internal control systems to the Managing Director and senior management who manage the Company’s material business risks and report to the Board on the effectiveness of those systems.

The Board seeks assurance from the Managing Director and the Chief Financial Officer that the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound system of risk management and internal control and that the system is operating effectively in all material aspects in relation to financial reporting risks and discloses accordingly.

PRINCIPLE 8: REMUNERATE FAIRLY AND RESPONSIBLY

Due to the size of the Company, it has not established a Remuneration Committee and it currently uses independent external consultants to determine the level and components of remuneration for the directors. The Company presently has two employees. The remuneration paid to executive directors and senior executives is distinguished from that paid to non-executive directors.

Non-Executive directors are paid their fees out of the maximum aggregate amount approved by shareholders for the remuneration of non-executive directors. Non-executive directors do not receive performance based bonuses and do not participate in Equity Schemes of the Company without prior shareholder approval.

Current remuneration details are disclosed in the Directors’ Report.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

INCOME STATEMENT

INCOME STATEMENT
For the year ended 30 June 2009	Consolidated Group Parent Entity
Note	2009 2008 2009 2008
s
	$ $ $ $
Revenue from Ordinary Activities 2	355,130 312,430 343,839 312,430

Administration 3	(265,375) (125,431) (152,112) (92,989)
Corporate Expenses	(80,523) (116,930) (59,705) (112,024)
Employment & Consultancy	(718,755) (567,335) (641,450) (551,395)
Loss from Ordinary Activities before Income
Tax Expense	(709,523) (497,266) (509,428) (443,978)
IncomeTax Expense/(Credit) 4	- - - -
Loss from Ordinary Activities after Income
Tax Expense	(709,523) (497,266) (509,428) (443,978)
Basic Earnings (Loss) per Share (cents per
share) 7	(0.67) (0.95)
Diluted Earnings (Loss) per Share (cents per
share) 7	(0.67) (0.95)

The accompanying notes form part of these financial Statements

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

BALANCE SHEET

BALANCE SHEET
At 30 June 2009
	Consolidated Group Parent Entity
Notes	2009 2008 2009 2008
	$ $ $ $
Current Assets
Cash and cash equivalents 8	6,320,519 8,013,577 6,264,112 7,971,631
Trade and other receivables 9	64,269 720 5,002 -
Total Current Assets	6,384,788 8,014,297 6,269,114 7,971,631
Non-Current Assets
Trade and other receivables 9	- - 4,375,391 3,108,809
Investment 11	- - 18 18
Plant and equipment 12	197,175 104,105 5,635 -
Capitalised explorationand evaluation 13	4,017,637 2,820,881 500,110 500,110
Total Non-Current Assets	4,214,812 2,924,986 4,881,154 3,608,937
Total Assets	10,599,600 10,939,283 11,502,268 11,580,568
Current Liabilities
Trade & Other Payables 14	202,124 140,383 113,423 134,199
Total Current Liabilities	202,124 140,383 113,423 134,199
Non-Current Liabilities	- - - -
Total Non-Current Liabilities	- - - -
Total Liabilities	202,124 140,383 113,423 134,199
Net Assets	10,397,476 10,798,900 11,036,845 11,446,369
Equity
Issued Capital 15	9,578,047 9,478,142 9,578,047 9,478,142
Reserves 16	2,036,133 1,827,939 2,422,119 2,422,119
AccumulatedLosses	(1,216,704) (507,181) (963,321) (453,893)
Parent Entity Interest in Equity	10,397,476 10,798,900 11,036,845 11,446,369
MinorityEquityInterest	- - - -
Total Equity	10,397,476 10,798,900 11,036,845 11,446,369

The accompanying notes form part of these financial Statements

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

STATEMENT OF CHANGES IN EQUITY FOR YEAR ENDED 30 JUNE 2009

Consolidated Group

Consolidated Group
	Issued Share Capital	Accumulated Losses	Reserves	Total Equity
	$	$	$	$
*Balance at 1 July 2007*	(14,999)	(9,915)	-	(24,914)
Shares/Options issued during the period	10,208,024	-	-	10,208,024
Cost of Capital	(714,883)	-	-	(714,883)
Movement of Foreign Currency Translation Reserve	-	-	(594,180)	(594,180)
Movement of Demerger Reserve	-	-	2,422,119	2,422,119
Loss attributable to members of Botswana Metals Ltd	-	(497,266)	-	(497,266)
Balance at *30 June 2008*	9,478,142	(507,181)	1,827,939	10,798,900

*Balance at 1July 2008*	9,478,142	(507,181)	1,827,939	10,798,900
Shares/Options issued during the period	100,355	-	-	100,355
Cost ofCapital	(450)	-	-	(450)
Movement of Foreign Currency Translation Reserve	-	-	208,194	208,194
Loss attributable to members of BotswanaMetalsLtd	-	(709,523)	-	(709,523)
*Balance at 30 June 2009*	9,578,047	(1,216,704)	2,036,133	10,397,476

The accompanying notes form part of these financial statements

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

STATEMENT OF CHANGES IN EQUITY FOR YEAR ENDED 30 JUNE 2009

Parent Entity

Parent Entity
	Issued Share Capital	Accumulated Losses	Reserve	Total Equity
	$	$		$
*Balance at 1 July 2007*	(14,999)	(9,915)	-	(24,914)
Shares/Optionsissued during the period	10,208,024	-	-	10,208,024
Cost of Capital	(714,883)	-	-	(714,883)
Movement of Demerger Reserve			2,422,119	2,422,119
Loss attributable to members of A-Cap ResourcesLtd	-	(443,978)	-	(443,978)
*Balance at 30 June 2008*	9,478,142	(453,893)	2,422,119	11,446,368
			-
*Balance at 1July 2008*	9,478,142	(453,893)	2,422,119	11,446,368
Shares/Options issued during the period	100,355	-	-	100,355
Cost ofCapital	(450)	-	-	(450)
Loss attributable to members of BotswanaMetalsLtd	-	(509,428)	-	(509,428)
*Balance at 30 June 2009*	9,578,047	(963,321)	2,422,119	11,036,845

The accompanying notes form part of these financial statements

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

CASH FLOW STATEMENTS

CASH FLOW STATEMENTS	CASH FLOW STATEMENTS
For the Year Ended 30 June 2009 Consolidated Group Parent Entity
Notes 2009 2008 2009 2008
	$ $ $ $
Cash Flows from Operating Activities
Receipts from customers (inclusive of goods
and services tax)	12,420 - - -
Payments to suppliers and employees (inclusive
of goods and services tax)	(916,713) (1,281,247) (778,690) (647,122)
Interestreceived	343,839 312,430 343,839 312,430
Net Cash (Outflow) from Operating Activities 20b	(560,454) (968,817) (434,851) (334,692)

Exploration Expenditure	(988,562) (398,762) - -
Purchase of plant and equipment	(143,592) (111,985) (5,635) -
Loans to related parties	- 911,321 (1,266,583) (1,186,818)
Repayment of loansfrom related parties	- (911,321) - -
Net Cash(Outflow) from Investing Activities	(1,132,154) (510,747) (1,272,218) (1,186,818)

Cash Flows from Financing Activities
Proceeds from issues of ordinary shares	- 10,208,024 - 10,208,024
Payments ofshare capital issue costs	(450) (714,884) (450) (714,884)
Net Cash Inflow from Financing Activities	(450) 9,493,140 (450) 9,493,140

Net Increase/(Decrease) in Cash Held	(1,693,058) 8,013,576 (1,707,519) 7,971,630
Cash at the Beginning of the Financial Year	8,013,577 1 7,971,631 1
Effect of exchange rates on cash holding in
foreign currencies	- - - -
Cash at the End of the Financial Year 20a	6,320,519 8,013,577 6,264,112 7,971,631

The accompanying notes form part of these financial statements.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

The financial report includes the consolidated financial statements and notes of Botswana Metals Limited and controlled entities (‘Group’) and the separate financial statements and notes of Botswana Metals Limited as an individual parent entity (‘Parent Entity’).

Basis of Preparation

The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards, including Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.

Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial report containing relevant and reliable information about transactions, events and conditions to which they apply. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards. Material accounting policies adopted in the preparation of this financial report are presented below. They have been consistently applied unless otherwise stated.

The following is a summary of the material accounting policies adopted by the economic entity in the preparation of the financial report. The accounting policies have been consistently applied, unless otherwise stated.

The financial report has been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected non-current assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied.

Accounting Policies

(a) Principles of Consolidation

A controlled entity is any entity over which Botswana Metals Limited has the power to govern the financial and operating policies so as to obtain benefits from its activities. In assessing the power to govern, the existence and effect of holdings of actual and potential voting rights are considered.

A list of controlled entities is contained in Note 11 to the financial statements.

As at reporting date, the assets and liabilities of all controlled entities have been incorporated into the consolidated financial statements as well as their results for the year then ended. Where controlled entities have entered (left) the consolidated group during the year, their operating results have been included (excluded) from the date control was obtained (ceased).

All inter-company balances and transactions between entities in the economic entity, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistencies with those policies applied by the parent entity.

Minority interests, being that portion of the profit and loss and net assets of subsidiaries attributable to equity interests held by person outside the group, are shown separately within the Equity section of the consolidated Balance Sheet and in the consolidated Income Statement.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

(b) Income Tax

The income tax expense (revenue) for the year comprises current income tax expense (income) and deferred tax expense (income).

Current income tax expense charged to profit or loss is the tax payable to taxable income calculated using applicable income tax rates enacted, or substantially enacted, as at reporting date. Current tax liabilities (assets) are therefore measured at the amounts expected to be paid to (recovered from) the relevant taxation authority.

Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well unused tax losses.

Current and deferred income tax expense (income) is charged or credited directly to equity instead of the profit or loss when tax relates to items that are credited or charged directly to equity.

Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where amounts have been fully expensed but future tax deductions are available. No deferred income tax will be recognised from initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profit will be available against which the benefits of deferred tax assets can be utilised.

When temporary differences exist in relation to investments in subsidiaries, branches, associates and joint ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be controlled and it is not probable that the reversal will occur in the foreseeable future.

Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset where a legally enforceable right of set off exists, the deferred assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.

(c) Plant and Equipment

Each class of property, plant and equipment is carried at cost or fair value as indicated less, where applicable, any accumulated depreciation and impairment losses.

Plant and Equipment

Plant and equipment are measured on the cost basis.

The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the asset’s employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts.

The cost of fixed assets constructed within the consolidated group includes the cost of materials, direct labour, borrowing costs and an appropriate proportion of fixed and variable overheads.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

(c) Plant and Equipment continued

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

Depreciation

The depreciable amount of all fixed assets is depreciated on a straight-line basis over their useful lives to the consolidated group commencing from the time the asset is held ready for use.

The depreciation rates used for each class of depreciable assets are:

Class of Fixed Asset	Depreciation Rate
Plant and equipment- vehicles	25%
Plant and equipment – computer hardware and software	20%
Plant and equipment–furniture and fittings	15%
Plant and equipment–geophysicalequipment	20%
Plant and equipment–containers and sheds	15%

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

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

Gains or losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the income statement. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings

(d) Exploration and Development Expenditure

Exploration, evaluation and development expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves.

Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area is made.

When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves.

A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

(d) Exploration and Development Expenditure continued

Costs of site restoration are provided over the life of the facility from when exploration commences and are included in the costs of that stage. Site restoration costs include the dismantling and removal of mining plant, equipment and building structures, waste removal, and rehabilitation of the site in accordance with clauses of the mining permits. Such costs have been determined using estimates of future costs, current legal requirements and technology on an undiscounted basis.

Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of site restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations and future legislation. Accordingly the costs have been determined on the basis that the restoration will be completed within one year of abandoning the site.

(e) Financial Instruments

Recognition and initial measurement

Financial instruments, incorporating financial assets and financial liabilities, are recognised when the entity becomes a party to the contractual provisions of the instruments. Trade date accounting is adopted for financial assets that are delivered within timeframes established by marketplace convention.

Financial instruments are initially measured at fair value plus transactions costs where the instrument is not classified as at fair value through profit or loss. Transaction costs related to instruments classified as at fair value through profit and loss are expensed to profit and loss immediately. Financial instruments are classified and measured as set out below.

Derecognition

Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is transferred to another party whereby the entity is no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expire. The difference between the carrying value of the financial liability extinguished or transferred to another party and the fair value of consideration paid, including transfer of non-cash assets or liabilities assumed, is recognised in profit or loss.

Financial assets at fair value through profit and loss

Financial assets are classified at fair value through profit or loss when they are held for trading for the purpose of short term profit taking, where they are derivatives not held for hedging purposes, or designated as such to avoid an accounting mismatch or to enable performance evaluation where a group of financial assets is managed by key management personnel on fair value basis in accordance with a documented risk management or investment strategy. Realised and unrealised gains and losses arising from changes in fair value are included in profit or loss in the period in which they arise.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are stated at amortised cost using the effective interest rate method.

Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable payments, and it is the group’s intention to hold these investments to maturity. They are subsequently measured at amortised cost using the effective interest rate method.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

(e) Financial Instruments continued

Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are either designated as such or that are not classified in any other categories. They comprise investments in the equity of other entities where there is neither a fixed maturity nor fixed or determinable payments.

Financial Liabilities

Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost using the effective interest rate method.

Derivative instruments

Derivative instruments are measured at fair value. Gains and losses arising from changes in fair value are taken to the income statement unless they are designated as hedges.

Fair value

Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar instruments and option pricing models.

Impairment

At each reporting date, the group assess whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a prolonged decline in the value of the instrument is considered to determine whether impairment has arisen. Impairment losses are recognised in the income statement.

(f) Impairment of Assets

At each reporting date, the company reviews the carrying values of its tangible and intangibles assets to determine whether there is any indication that those assets have been impaired. If such indication exists, the recoverable amount of asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the income statement.

Impairment testing is performed annually for goodwill and intangible assets with indefinite lives.

Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

(g) Interests in Joint Ventures

The group's share of the assets, liabilities, revenue and expenses of joint venture operations are included in the appropriate items of the consolidated statements of financial performance and financial position.

The group's interests in joint venture entities are brought to account using the equity method of accounting in the consolidated financial statements. The parent entity's interests in joint venture entities are brought to account using the cost method.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

(h) Foreign Currency Transactions and Balances

Functional and presentation currency

The functional currency of each of the group’s entities is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity’s functional and presentation currency.

Transaction and balances

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.

Exchange differences arising on the translation of monetary items are recognised in the income statement, except where deferred in equity as a qualifying cash flow or net investment hedge. Exchange difference arising on the translation of non-monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity, otherwise the exchange difference is recognised in the income statement.

Group companies

The financial results and position of foreign operations whose functional currency is different from the group’s presentation currency are translated as follows:

Assets and liabilities are translated at year-end exchange rates prevailing at that reporting date.
Income and expenses are translated at average exchange rates for the period.
Retained profits are translated at the exchange rates prevailing at the date of the transaction.

Exchange differences arising on translation of foreign operations are transferred directly to the group’s foreign currency translation reserve in the balance sheet. These differences are recognised in the income statement in the period in which the operation is disposed.

(i) Employee Benefits

Provision is made for the company’s liability for employee benefits arising from services rendered by employees to balance date. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits. Those benefits are discounted using market yields on national government bonds with terms to maturity that match the expected timing of cashflows.

(j) Provisions

Provisions are recognised when the group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will results and that outflow can be reliably measured.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

(k) Cash and Cash Equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on the balance sheet.

(l) Revenue

Revenue from the sale of goods is recognised at the point of delivery as this corresponds to the transfer of significant risks and rewards of ownership of the goods and the cessation of all involvement in those goods.

Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets.

Revenue from the rendering of a service is recognised upon the delivery of the service to the customers.

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

(m) Goods and Services Tax (GST)

Revenues, expenses and assets are recognized net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognized as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the balance sheet are shown inclusive of GST.

Cash flows are presented in the cash flow statement on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.

(n) Comparative Figures

When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.

(o) Rounding of Amounts

The amounts in the financial report and director’s report have been rounded off to the nearest $1.

(p) Critical Accounting Estimates and Judgements

The directors evaluate estimates and judgements incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the group.

Key estimates – Impairment

The group assesses impairment at each reporting date by evaluating conditions specific to the group that may lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined. Value-in-use calculations performed in assessing recoverable amounts incorporate a number of key estimates. The directors have evaluated the recoverable amount of Capitalised Exploration and Evaluation expenditure and determined that no impairment trigger exists as at the date of this report.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

(q) New Accounting Standards for Application in Future Periods

The AASB has issued new, revised and amended standards and interpretations that have mandatory application dates for future reporting periods. The Group has decided to adopt these standards with the exception of the following:

AASB 101: Presentation of Financial Statements, AASB 2007-8: Amendments to Australian Accounting Standards arising from AASB 101, and AASB 2007-10:Further Amendments to Australian Accounting Standards arising from 101 (all applicable to annual reporting periods commencing from 1 January 2009). The revised AASB 101 and amendments supersede the previous AASB 101 and redefines the composition of financial statements including the inclusion of a statement of comprehensive income. There will be no measurement or recognition impact on the Group.

The financial report was authorised for issue on 29[th] September 2009 by the Board of Directors.

NOTE 2 REVENUE

Revenue from Ordinary Activities Revenue from outside the operating activities Interest Rental Revenue from ordinary activities	Consolidated Group Parent Entity 2009 2008 2009 2008 $ $ $ $ 343,839 312,430 343,839 312,430 11,291 - - -
	355,130 312,430 343,839 312,430

NOTE 3 EXPENDITURE

Administration Office expenses Non-cash expense Rental expense Travel expenses Other expenses	Consolidated Group Parent Entity 2009 2008 2009 2008 $ $ $ $ 98,665 16,248 57,484 10,382 10,448 194 - - 36,452 6,584 14,243 5,863 63,701 54,054 53,728 33,787 56,109 48,351 26,657 42,957
	265,375 125,431 152,112 92,989

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 4 INCOME TAX EXPENSE

a) The components of tax expense comprise: Current tax Deferred tax assets not brought to account b) The prima facie tax on profit from ordinary activities before income tax is reconciled to the income tax as follows: Profit/(loss) before income tax expense Prima facie tax payable on profit / (loss) from ordinary activities before income tax at 30% (2008: 30%) Add: Tax effect of - Non- deductible expenses Recoupment of prior year tax losses not previously brought to account The Directors estimate that the potential deferred income tax assets at 30 June 2009 in respect of tax losses not brought to account is: Tax benefits not recognised during the year Income Tax Expense for the year	Consolidated Group Parent Entity 2009 2008 2009 2008 $ $ $ $ - - - - - - - -
	- - - -
	(709,523) (497,266) (509,428) (443,978) (212,857) (149,180) (152,828) (133,193) 27,098 4,450 26,653 4,450
	185,759 144,730 126,175 128,743
	147,705 2,975 131,718 2,975
	333,464 147,705 257,893 131,718 (333,464) (147,705) (257,893) (131,718)
	- - - -

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 5 KEY MANAGEMENT PERSONNEL COMPENSATION

(a) Names and positions held of economic and parent entity key management in office at any time during the financial year are:

Key Management Person Position Mr P J Volpe Chairman – Executive Dr A J Tunks Director – Non-executive (resigned 29 June 2009) Mr H J Stacpoole Director – Non-executive Dr P Woolrich Director-Non-executive Mr R C Baker Company Secretary

Key Management Personnel remuneration has been included in the Remuneration Report section of the Director’s Report.

(b) Number of Options Held by Key Management Personnel

	Balance 1.7.2008	Granted as Compensation	Options Exercised	Options Lapsed	Balance 30.6.2009	Total Vested 30.6.2009	Total Exercisable 30.6.2009	Total Unexercisable 30.6.2009
Mr PJ Volpe	-	3,000,000	-	-	3,000,000	3,000,000	3,000,000	-
Dr AJ Tunks	-	3,000,000	-	(3,000,000)	-	-	-	-
Mr HJ
Stacpoole	-	1,000,000	-	-	1,000,000	1,000,000	1,000,000	-
Dr P
Woolrich	-	1,000,000	-	-	1,000,000	1,000,000	1,000,000	-
Mr RCBaker	-	100,000			100,000	100,000	100,000	-
Total	-	8,100,000	-	(3,000,000)	5,100,000	5,100,000	5,100,000	-

(c) Number of Shares held by Key Management Personnel

Director	Balance 1 July 2008		Options Exercised	Net Change Other*	Balance 30 June 2009
Mr PJ Volpe	9,531,159	-	-	3,950,000	13,481,159
Dr AJ Tunks	75,000	-	-	-	75,000
Mr HJ Stacpoole	1,434,860	-	-	-	1,434,860
Dr P Woolrich	200,000	-	-	200,000	400,000
Mr RC Baker	400	-	-	-	400
Total	11,241,419	-	-	4,150,000	15,391,419

*Net Change Other refers to shares purchased or sold during the financial year.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 6 REMUNERATION OF AUDITORS

NOTE 6 REMUNERATION OF AUDITORS
Remuneration of the auditor of the entity for : Audit or review of the financial report - Parent - Subsidiary	Consolidated Group Parent Entity 2009 2008 2009 2008 $ $ $ $ 23,000 20,000 23,000 20,000 19,932 - - -
	42,932 20,000 23,000 20,000

NOTE 7 EARNINGS PER SHARE

TE 7 EARNINGS PER SHARE
a) Reconciliation of losses to profit or loss Loss Profit/Loss attributable to minority equity interest Loss used to calculate basic EPS b) Weighted average number of ordinary shares used in the calculation of basic earnings per share c) Weighted average number of ordinary shares used in the calculation of diluted earnings per share	Consolidated Group 2009 2008 $ $ (709,523) (497,266) -
	(709,523) (497,266)
	No No 106,087,760 52,516,024 106,087,760 52,516,024

NOTE 8 CASH AND CASH EQUIVALENTS

NOTE 8 CASH AND CASH EQUIVALENT	S
	Consolidated Group Parent Entity 2009 2008 2009 2008 $ $ $ $
Cash at bank and in hand	82,146 - 25,739 -
Call deposit	6,238,373 8,013,577 6,238,373 7,971,631
	6,320,519 8,013,577 6,264,112 7,971,631
Reconciliation of cash
Cash at the end of the financial year as shown in the cash flow statement is reconciled to items in the balance sheet as follows:
Cash and cash equivalents	6,320,519 8,013,577 6,264,112 7,971,631
	6,320,519 8,013,577 6,264,112 7,971,631

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 9 TRADE AND OTHER RECEIVABLES

	Consolidated Group Parent Entity 2009 2008 2009 2008 $ $ $ $ 64,269 720 5,002 - 64,269 720 5,002 - - - 4,375,391 3,108,809 - - 4,375,391 3,108,809 Consolidated Group Parent Entity 2009 2008 2009 2008 $ $ $ $ 500,110 500,110 500,110 500,110
Current
Trade & Other Receivables

Non Current
Amount receivable from :
- wholly-owned subsidiaries


NOTE 10 JOINT VENTURES (a) Interest in Joint Venture Operations BOTSWANA Jim’s Luck Prospect Botswana Metals Limited has 20% interest in Jim’s Luck and intends to retain this level by meeting its pro-rata expenditure commitments for the principle activity of exploration for gold within the Jim’s Luck tenement. The economic entity’s share of assets employed in the joint venture is : Non –Current Assets Capitalised exploration and evaluation

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 10 JOINT VENTURES (CONTINUED)

(b) Magogaphate Prospects

Botswana Metals Limited has a 100% interest in the prospects with Mineral Holdings (Botswana) (Pty) Ltd holding a 5% net profits share. The principle activity is mineral exploration.

There is no value of the shared asset held by the consolidated group and the Joint Venture partner, however expenditure on the prospect to date has been capitalised and is reflected in Deferred Exploration and Evaluation expenditure.

(c) Interests in Joint Venture Entities

Botswana Metals Limited incorporated in Australia which is involved in mineral exploration.

NOTE 11 CONTROLLED ENTITIES

Country of Incorporation Class of Share Equity Holding 2009 % 2008 % African Metals (Pty) Limited Botswana Ordinary 100 100	Cost of Parent Entity’s Investment 2009 $ 2008 $ 18 18
	18 18

NOTE 12 PLANT AND EQUIPMENT

Plant and equipment At cost Accumulated Depreciation	Consolidated Group Parent Entity 2009 2008 2009 2008 $ $ $ $ 255,577 111,985 5,635 - (58,402) (7,880) - -
	197,175 104,105 5,635 -

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 12 PLANT AND EQUIPMENT (CONTINUED)

Movements in Carrying Amounts

Balance at 1 July 2008 Additions Depreciation expense Balance at 30 June 2009	Consolidated Group Parent Entity $ $ 104,105 - 143,592 5,635 (50,522) -
	197,175 5,635

NOTE 13 CAPITALISED EXPLORATION AND EVALUATION

	Consolidated Group Parent Entity 2009 2008 2009 2008 $ $ $ $
Non Current

Exploration & Evaluation	4,017,637 2,820,881 500,110 500,110
	4,017,637 2,820,881 500,110 500,110

Recoverability of the carrying amount of exploration assets is dependent on the successful exploration and sale of base and precious metals, and diamonds.

Included in Capitalised Exploration and Evaluation at 30 June 2009 is the depreciation of Plant and Equipment for the financial year amounting to $49,937 (2008: $40,074).

Capital costs amounting to $988,562 (2008: $398,762) have been included in cash flows from investing activities in the cash flow statement.

NOTE 14 TRADE AND OTHER PAYABLES

NOTE 14 TRADE AND OTHER PAYABLE	S
Current	Consolidated Group Parent Entity 2009 2008 2009 2008 $ $ $ $
Unsecured liabilities

Trade Payables	6,081 48,573 2,790 43,708
Sundry payables and accrued expenses	95,816 64,819 48,977 63,500
Amounts payable to
- Related parties	51,792 7,973 13,221 7,973
- Amount owing to Directors	45,600 - 45,600 -
- Amount payable to Director
related Entity	2,835 19,018 2,835 19,018
	202,124 140,383 113,423 134,199

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTE 15 ISSUED CAPITAL

NOTE 15 ISSUED CAPITAL
106,087,760 (2008: 106,087,760) fully paid ordinary shares 5,100,000 (2008: nil) options expiring 30 June 2011	Consolidated Group Parent Entity 2009 2008 2009 2008 $ $ $ $ 9,478,142 9,478,142 9,478,142 9,478,142 99,905 - 99,905 -
	9,578,047 9,478,142 9,578,047 9,478,142

(a) Ordinary Shares

Date	Number of Shares	Issue Price	$
At the beginning of the reporting period Shares issued during the year Costs associated with capital raising	106,087,760 -	- -	9,478,142 - -
At reporting date	106,087,760		9,478,142

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

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

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 15 ISSUED CAPITAL (CONTINUED)

(b) Capital Management

Management controls the capital of the group in order to maintain a good debt to equity ratio, provide the shareholders with adequate returns and ensure that the group can fund its operations and continue as a going concern.

The group’s debt and capital includes ordinary share capital and financial liabilities, supported by financial assets.

There are no externally imposed capital requirements.

Management effectively manages the group’s capital by assessing the group’s financial risks and adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of debt levels and share issues.

There have been no changes in the strategy adopted by management to control the capital of the group since the prior year. The strategy is to ensure that the group’s gearing ratio remains between 100% and 200%. The gearing ratio’s for the year ended 30 June 2009 and 30 June 2008 are as follows:

Note Total borrowings 14 Less cash and cash equivalents 8 Net debt Total equity	Consolidated Group 2009 $ 2008 $	Parent Entity 2009 $ 2008 $
	202,124 140,383 (6,320,519) (8,013,577)	113,423 134,199 (6,264,112) (7,971,631)
	(6,118,395) (7,873,194) 10,397,476 10,798,900	(6,150,689) (7,837,432) 11,036,845 11,446,368
Total capital	4,279,081 2,925,706	4,886,156 3,608,936
Gearing ratio	(143%) (269%)	(126%) (217%)

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 16 RESERVES

Nature and Purpose of Reserves

Foreign Currency Translation Reserve

The foreign currency translation reserve records exchange differences arising on translation of a foreign controlled subsidiary as described in Note 1(h).

Demerger Reserve

The demerger reserve reflects the carrying value of the non-uranium assets transferred from A-Cap Resources Limited under the Scheme of Arrangement.

NOTE 17 CAPITAL AND LEASING COMMITMENTS

Exploration Expenditure Commitments Payable - not later than 12 months - between 12 months and 5 years - greater than 5 years	Consolidated Entity Parent Entity 2009 2008 2009 2008 $ $ $ $ 1,574,630 1,462,113 1,574,630 1,462,113 708,736 1,915,196 708,736 1,915,196 - - - -
	2,283,366 3,377,309 2,283,366 3,377,309

The estimated figures include amounts required to maintain the company’s current rights of tenure to exploration and mining tenements up until the expiry of the leases including the company’s joint venture commitments. These obligations are subject to renegotiation upon expiry of the leases and are not provided for in the financial statements.

NOTE 18 CONTINGENT LIABILITIES

Magogaphate Tenement Acquisition

Although the Company acquired a 100% interest in the Magogaphate group of tenements in Botswana from A-Cap Resources Limited, Mineral Holdings Botswana (Pty) Ltd has retained a 5% net profits share. The Company therefore, has a contingent liability to that Company should it establish a profitable mining operation on those tenements.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 19 SEGMENT INFORMATION

Primary Reporting - Business Segments

The consolidated entity only operates within one business segment being that of mineral exploration.

Secondary Reporting - Geographical Segments

Although the consolidated entity’s divisions are managed on a global basis they operate in two main geographical areas:

Australia

The home country of the parent entity which is also the main operating entity. The area of operation is in the mineral exploration industry.

Africa

Comprises operations carried on in Botswana.

Australia Africa Other/Elimination	Segment revenues Carrying Amount of Segment assets Acquisitions of property, plant and equipment, intangibles and other non-current segment assets 2009 2008 2009 2008 2009 2008 $ $ $ $ $ $ 343,839 312,430 6,774,857 7,971,631 5,635 - 11,291 - 3,824,743 2,967,652 1,126,519 2,924,986 - - - - - -
	355,130 312,430 10,599,600 10,939,283 1,132,154 2,924,986

Accounting Policies

Segment revenues and expenses are those directly attributable to the segments and include any joint revenue and expenses where a reasonable basis of allocation exists. Segment assets include all assets used by a segment and consist principally of cash, receivables, capitalised exploration and evaluation expenditure, plant and equipment, net of allowances and accumulated depreciation. While most such assets can be directly attributed to individual segments, the carrying amount of certain assets used jointly by two or more segments is allocated to the segments on a reasonable basis. Segment liabilities consist principally of payables, employee benefits and accrued expenses. Segment assets and liabilities do not include deferred income taxes.

Intersegment Transfers

Segment revenues, expenses and results include transfers between segments. There are no prices charged on intersegment transactions.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 20 CASH FLOW INFORMATION

(a) Reconciliation of cash For the purposes of the statements of cash flows, cash includes cash on hand and at bank and short term deposits at call, net of outstanding bank overdrafts .Cash as at the end of the financial year as shown in the statements of cash flows is reconciled to the related items in the statement of financial position. Cash at bank and on hand Call Deposit (b) Reconciliation of Cash Flow from Operations with Profit after Income Tax Operating Loss after income tax Non –Cash flows in profit - Depreciation - Share-based remuneration Changes in assets and liabilities net of the effects of purchase and disposal of subsidiaries - (Increase)/decrease in receivables - Increase/(decrease) in trade and other payables Net cash (outflow) from operating activities	Consolidated Group Parent Entity 2009 2008 2009 2008 $ $ $ $ 82,146 - 25,739 - 6,238,373 8,013,577 6,238,373 7,971,631
	6,320,519 8,013,577 6,264,112 7,971,631
	(709,523) (497,266) (509,428) (443,978) 50,522 7,880 - - 100,355 - 100,355 - (63,549) (830) (5,002) - 61,741 (478,601) (20,776) 109,286
	(560,454) (968,817) (434,851) (334.692)

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 20 CASH FLOW INFORMATION (CONTINUED)

Non-Cash Financing and Investing Activities Share-based remuneration Capitalised depreciation for Plant and Equipment Capitalised exploration expenditure Interest in Joint Ventures	Consolidated Group Parent Entity 2009 2008 2009 2008 $ $ $ $ 100,355 - 100,355 - 40,074 - - - - 1,922,009 - - - 500,110 - 500,110
	140,429 2,422,119 100,355 500,110

NOTE 21 SHARE-BASED PAYMENTS

On 16 July 2008, 8,000,000 share options were granted to Directors pursuant to the approval of members at the General Meeting held on 2 July 2008. The options are exercisable upon granting. All options issued expire on 30 June 2011. The options hold no voting or dividend rights and are not transferable. When a director ceases employment (except by reason of a takeover of the Company) the options are deemed to have lapsed. Since balance date, one director (Dr A Tunks) has ceased their employment resulting in a total of 3,000,000 of the abovementioned options lapsing.

The company established the Executive and Employee Option Plan on 2 July 2008. All employees are entitled to participate in the scheme at the discretion of the directors and upon terms stipulated by the directors.

On 2 February 2009, 100,000 options were granted to the Company Secretary pursuant to the Executive and Employee Option Plan.

All options granted to key management personnel are for ordinary shares in Botswana Metals Limited, which confer a right of one ordinary share for every option held.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 21 SHARE-BASED PAYMENTS (CONTINUED)

Outstanding at the beginning of the year Granted Forfeited / Lapsed Exercised Expired Outstanding at year-end Exercisable at year-end	Consolidated Group Parent Entity Number of Options Weighted Average Exercise Price Number of Options Weighted Average Exercise Price $ $ - - - - 8,100,000 0.15 8,100,000 0.15 (3,000,000) 0.15 (3,000,000) 0.15 - - - - - -
	5,100,000 0.15 5,100,000 0.15
	5,100,000 0.15 5,100,000 0.15

The options outstanding at 30 June 2009 had a weighted average exercise price of $0.15 and a weighted average remaining contractual life of 2 years. Exercise prices range from $0.10 to $0.20 in respect of options outstanding at 30 June 2009.

The weighted average fair value of the options granted during the year was $0.012.

This price was calculated using the Black and Scholes model.

NOTE 22 EVENTS AFTER THE BALANCE SHEET DATE

Appointment of Director

On 4 September 2009 the Company announced the appointment of Mr Massimo Cellante as a Nonexecutive Director of the Company.

Renewal of Botswana Prospecting Licences

On 4 August 2009 the Company received notification from the Department of Geological Survey in Botswana that the following Prospecting Licences in Botswana, held by its wholly-owned subsidiary African Metals (Pty) Ltd had been renewed renewed in full for a period of two years expiring 30 June 2011:

PL 44/2004 Shashe East
PL 46/2004 Sampowane
PL 47/2004 Gobe Shear
PL 48/2004 Shashe West

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 23 RELATED PARTY INFORMATION

Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated. Key Management Personnel Administrative fees paid to A-Cap Resources Limited, a listed public company, in which Messrs P Volpe, A Tunks, H Stacpoole and P Woolrich are directors and shareholders. Administrative fees and vehicle hire paid by African Metals (Pty) Limited to Cardia Mining Botswana (Pty) Limited, a wholly owned subsidiary of A-Cap Resources Limited. Administrative fees received by African Metals (Pty) Limited from Cardia Mining Botswana (Pty) Limited, a wholly owned subsidiary of A-Cap Resources Limited.	Consolidated Group Parent Entity 2009 2008 2009 2008 $ $ $ $ 76,370 32,984 76,370 32,984 115,224 10,666 - - (63,418) - - -
	128,176 43,650 76,370 32,984

Transactions between related parties are on
normal commercial terms and conditions no
more favourable than those available to
other parties unless otherwise stated.
Key Management Personnel
Administrative fees paid to A-Cap Resources
Limited, a listed public company, in which
Messrs P Volpe, A Tunks, H Stacpoole and
P Woolrich are directors and shareholders.
Administrative fees and vehicle hire paid by
African Metals (Pty) Limited to Cardia Mining
Botswana (Pty) Limited, a wholly owned
subsidiary of A-Cap Resources Limited.
Administrative
fees
received
by
African
Metals (Pty) Limited from Cardia Mining
Botswana (Pty) Limited, a wholly owned
subsidiary of A-Cap Resources Limited.

Consolidated Group
Parent Entity
2009
2008
2009
2008
$
$
$
$
76,370
32,984
76,370
32,984
115,224
10,666
-
-
(63,418)
-
-
-

128,176
43,650
76,370
32,984

Directors

The names of persons who were Directors of Botswana Metals Limited at any time during the year are as follows: Messrs P J Volpe, H J Stacpoole, Dr P Woolrich and Dr A Tunks (resigned 29 June 2009). The same people were also Directors during the year ended 30 June 2008.

Specified Executives

Mr R Baker was the only Specified Executive in the role as Company Secretary during the year.

Remuneration

Information on remuneration of Directors and the Specified Executive is disclosed in the Remuneration Report.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 23 RELATED PARTY INFORMATION (CONTINUED)

Transactions of Key Management Personnel and Key Management Personnel Related Entities concerning Shares

During the year, aggregate numbers of shares of Botswana Metals Limited acquired or disposed of by Key Management Personnel of the parent entity or the consolidated entity or their Key Management Personnel related entities and their holdings at balance date were:

P. Volpe H. Stacpoole A. Tunks (resigned 29 June 2009) P. Woolrich R. Baker	Balance as at 1/7/08 Acquired Disposed Balance as at 30/6/09
	9,531,159 3,950,000 - 13,481,159 1,434,860 - - 1,434,860 75,000 - - 75,000 200,000 200,000 - 400,000 400 - - 400
	11,241,419 4,150,000 - 15,391,419

Other Transactions with Directors and Director-Related Entities

During the year, Botswana Metals Limited was invoiced $76,370 by A-Cap Resources Limited for the provision of office and administration facilities.

During the year, Botswana Metals Limited was invoiced $1,000 by Woolrich & Associates Pty Ltd for the provision of geological consulting services.

Amounts owing to Director-related entities are disclosed in Note 14

Aggregate amounts of each of the above types of other transactions with Directors and their Directorrelated entities:

Directors’ Fees Wages and Salaries Consulting Fees	Consolidated Group Parent Entity 2009 2008 2009 2008 $ $ $ $ 114,780 72,222 114,780 72,222 373,414 368,520 373,414 368,520 1,000 1,000 1,000 1,000
	489,194 441,742 489,194 441,742

Aggregate amounts payable by Botswana Metals Limited to related-party entities at balance date are disclosed in Note 14.

Ownership Interests in Related Parties

Interests held in the following classes of related parties are set out in the following notes:

(a) Controlled Entities Note 11. (b) Joint Ventures Note 10.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 24 FINANCIAL RISK MANAGEMENT

(a) Financial Risk Management Policies

The consolidated group’s financial instruments consist mainly of deposits with banks, accounts receivable and payable and loans to subsidiaries.

(i) Treasury Risk Management

The Board of Directors meet on a regular basis to analyse financial risk exposure and to evaluate treasury management strategies in the context of the most recent economic conditions and forecasts.

The Board’s overall risk management strategy seeks to assist the consolidated group in meeting its financial targets, whilst minimising potential adverse effects on financial performance.

(ii) Financial Risk Exposures and Management

The main risks the group is exposed to through its financial instruments are interest rate risk, foreign currency risk, liquidity risk and credit risk.

Interest Rate Risk

The group is not presently exposed to any interest bearing debt and as such has not interest rate risk exposure on debt.

Foreign Currency Risk

The group is exposed to fluctuations in foreign currencies arising from the purchase of goods and services in currencies other than the group’s measurement currency.

Liquidity Risk

The group manages liquidity risk by monitoring forecast cash flows.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 24 FINANCIAL RISK MANAGEMENT (CONTINUED)

(b) Financial Instruments

The tables below reflect the undiscounted contractual settlement terms for financial instruments of a fixed period of maturity, as well as management’s expectations of the settlement period for all other financial instruments. As such, the amounts may not reconcile to the balance sheet.

Weighted average effective interest rate %	Floating Fixed interest rate maturing Non interest rate $ 1 year or less $ 1 to 5 years $ over 5 years $ interest bearing $ Total $ 6,238,373 - - - 82,146 6,320,519 - - - - - - - - - - 64,269 64,269 6,238,373 - - - 146,415 6,384,788 - - - - (202,124) (202,124) - - - - (202,124) (202,124) 6,238,373 - - - (55,709) 6,182,664 Floating Fixed interest rate maturing Non interest rate $ 1 year or less $ 1 to 5 years $ over 5 years $ interest bearing $ Total $	Floating Fixed interest rate maturing Non interest rate $ 1 year or less $ 1 to 5 years $ over 5 years $ interest bearing $ Total $ 6,238,373 - - - 82,146 6,320,519 - - - - - - - - - - 64,269 64,269 6,238,373 - - - 146,415 6,384,788 - - - - (202,124) (202,124) - - - - (202,124) (202,124) 6,238,373 - - - (55,709) 6,182,664 Floating Fixed interest rate maturing Non interest rate $ 1 year or less $ 1 to 5 years $ over 5 years $ interest bearing $ Total $
2.95 - - Weighted average effective interest rate %
	Floating interest rate $
7.20 - -	8,013,577 - -	- - - - 8,013,577 - - - - - - - - 720 720
	8,013,577	- - - 720 8,014,297
	-	- - - (140,383) (140,383)
	-	- - - (140,383) (140,383)
	8,013,577	- - - (139,663) 7,873,914

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 24 FINANCIAL RISK MANAGEMENT (CONTINUED)

(b) Financial Instruments continued

Weighted average effective interest rate %	Floating interest rate $	Floating interest rate $
2.95 - - Weighted average effective interest rate %	6,238,373 - -	- - -
	6,238,373	-
	-	-
	-	-
	6,238,373	-
7.20 - -	7,971,631 - - - - 7,971,631 - - - - - - - - - - 3,108,809 3,108,809
	7,971,631 - - - 3,108,809 11,080,440
	- - - - (134,199) (134,199)
	- - - - (134,199) (134,199)
	7,971,631 - - - 2,974,610 10,946,241

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 26 FINANCIAL RISK MANAGEMENT (CONTINUED)

(c) Net Fair Values

The net fair values of:

Term receivables are determined by discounting cash flows, at the market interest rates of similar securities, to their present value.
Other loans and amounts due are determined by discounting the cash flows, at market interest rates of similar borrowings, to their present value.
Other assets and other liabilities approximate their carrying value.

No financial assets and financial liabilities are readily traded on organised markets in standardised form.

Financial Assets Financial Liabilities	2009 2008 Carrying Amount Net Fair Value Carrying Amount Net Fair Value $ $ $ $ 6,384,788 6,384,788 8,014,297 8,014,297
	6,384,788 6,384,788 8,014,297 8,014,297
	202,124 202,124 140,383 140,383
	202,124 202,124 140,383 140,383

(d) Sensitivity Analysis

The group has performed a sensitivity analysis relating to its exposure to interest rate risk and foreign currency risk at balance date.

Foreign Currency Risk Sensitivity Analysis

At 30 June 2009, the effect on profit and equity as a result of changes in the value of the Australian Dollar to the Botswana Pula, with all other variables remaining constant is as follows:

	Consolidated	Group	Parent Entity	Parent Entity
	2009	2008	2009	2008
	$	$	$	$
Change in profit
- Improvement in AUD to BWP by 5%	9,987	2,664		-	-
- Decline in AUD to BWP by 5%	(9,987)	(2,664)		-	-
Change in equity
- Improvement in AUD to BWP by 5%	9,987	2,664		-	-
- Decline in AUD to USD by 5%	(9,987)	(2,664)		-	-

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 27 COMPANY DETAILS

The principal place of business and registered office is: Suite 5.10, Level 5, 737 Burwood Road, Hawthorn, Victoria, Australia 3122

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

DIRECTORS’ DECLARATION

1. The Directors declare that the financial statements and notes set out on pages 30 to 62 are in accordance with the Corporations Act 2001 and:

a. comply with Accounting Standards, the Corporations Regulations 2001; and
b. give a true and fair view of the financial position as at 30 June 2009 and of the performance for the year ended on that date of the company and economic entity.

2. The Executive Chairman and Company Secretary have each declared that:

a. the financial records of the company for the financial year have been properly maintained in accordance with section 286 of the Corporations Act 2001 ;
b. the financial statements and notes for the financial year comply with the Accounting Standards; and
c. the financial statements and notes for the financial year give a true and fair view.

3. In the directors' opinion there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

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

==> picture [78 x 53] intentionally omitted <==

P J Volpe Director

Hawthorn Dated this 29th day of September 2009

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

INDEPENDENT AUDIT REPORT

==> picture [179 x 45] intentionally omitted <==

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES

ABN 96 122 995 073

REPORT ON THE FINANCIAL REPORT

We have audited the accompanying financial report of Botswana Metals Limited Limited (the company) and Botswana Metals Limited and Controlled Entities (the consolidated group), which comprises the balance sheet as at 30 June 2009, and the income statement, statement of changes in equity and cash flow statement for the year ended on that date, a summary of significant accounting policies and other explanatory notes and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the year’s end or from time to time during the financial year.

Directors’ Responsibility for the Financial Report

The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001 . This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101: Presentation of Financial Statements, that compliance with the Australian equivalents to International Financial Reporting Standards (IFRS) ensures that the financial report, comprising the financial statements and notes, complies with IFRS.

AUDITOR’S RESPONSIBILITY

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

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

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

Webb Audit Pty Ltd A member of the Webb Group ABN 59 116 151 136 Cnr Toorak & Auburn Roads Hawthorn East Vic 3123 Australia PO Box 185 Toorak Vic 3142 Australia Telephone +61 3 9822 8686 Facsimile +61 3 9824 8578 [email protected] www.webbgroup.com.au Liability Limited by a scheme approved under Professional Standards Legislation

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

INDEPENDENT AUDIT REPORT

==> picture [33 x 33] intentionally omitted <==

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES

ABN 96 122 995 073

(Continued)

Independence

In conducting our audit, we have complied with applicable independence requirements of Australian professional ethical pronouncements and the Corporations Act 2001 . We have given to the directors of the company a written Auditor’s Independence Declaration, a copy of which is included in the Directors’ Report.

Auditor’s Opinion

In our opinion:

(a) the financial report of Botswana Metals Limited and Botswana Metals Limited and Controlled Entities is in accordance with the Corporations Act 2001 , including:
(i) giving a true and fair view of the company's and consolidated entity’s financial position as at 30 June 2009 and of its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and
(b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.

Report on the Remuneration Report

We have audited the Remuneration Report included the report of the directors for the year ended 30 June 2009. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with s 300A of the Corporations Act 2001 . Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

Auditor’s Opinion

In our opinion the Remuneration Report of Botswana Metals Limited for the year ended 30 June 2009, complies with s 300A of the Corporations Act 2001 .

==> picture [93 x 67] intentionally omitted <==

Jeffrey Luckins

Director Webb Audit Pty Ltd

Dated in Melbourne, Australia on this 29[th] day of September 2009

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

SHAREHOLDER INFORMATION

SHAREHOLDER INFORMATION

The shareholder information set out below was applicable as at 26[th] September 2008.

(A) DISTRIBUTION OF EQUITY SECURITIES

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

1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over	Ordinary Shares 282 504 343 522 152
	1,803

There were 1,153 holders of less than a marketable parcel of ordinary shares.

(B) EQUITY SECURITY HOLDERS

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

VERMAR PTY LTD
BELL IXL INVESTMENTS LIMITED
BOND STREET CUSTODIANS LIMITED
POLARITY B PTY LTD
MR GREGORY PINKUS & MRS LISA PINKUS
RIOTEK PTY LTD
CLARIC 182 PTY LTD
PASO HOLDINGS PTY LTD
ANZ NOMINEES LIMITED
MR H J STACPOOLE
RUPERT CLARKE & COMPANY PTY LTD
MR P YOUNG & MRS M YOUNG
FA & MA CICCONE PTY LTD
MR JOHN FRIEDRICH & MRS RITA FRIEDRICH
CALAMA HOLDINGS PTY LTD
MR W D WHITFIELD, MRS B H WHITFIELD & MR S D GARLICK
RABINOV HOLDINGS PTY LTD
THORNTON (NSW) PTY LTD
MR LUKE CHARLES ANDERSON
MR ANGELOS & MRS ANASTASIA GIANNAKOPOULOS

Ordinary Shares
Number
Held
Percentage
of Issued
Shares
13,481,159
12.71
7,254,654
6.84
5,235,000
4.94
5,189,861
4.89
2,500,000
2.36
2,237,360
2.11
1,962,640
1.85
1,880,000
1.77
1,546,567
1.46
1,434,860
1.35
1,400,000
1.32
1,200,000
1.13
1,146,370
1.08
1,062,500
1.00
1,000,000
0.94
1,000,000
0.94
972,686
0.92
952,000
0.90
850,000
0.80
812,000
0.77

53,117,657
50.08

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

SHAREHOLDER INFORMATION

SHAREHOLDER INFORMATION (CONTINUED)

(C) SUBSTANTIAL SHAREHOLDERS

Substantial shareholders in the Company are:

	Ordinary	Shares
	Number	Percentage
	Held	of Issued
		Shares
Vermar Pty Ltd	13,481,159	12.71
Bell IXL Investments Limited	7,254,654	6.84

(D) VOTING RIGHTS

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

Ordinary Shares

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

Options

No voting rights.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

SHAREHOLDER INFORMATION

SCHEDULE OF INTERESTS IN MINING TENEMENTS

SCHEDULE OF I	NTERESTS IN MIN	ING TENEMEN	TS
Tenement	Expiry Date	Percentage Holding	Title Holder	Comment
Botswana Jim’s Luck PL 18/2004	30/6/2009	20	IAMGold Botswana (Pty) Ltd	IAMGold Botswana (Pty) Ltd (80%)
Magogaphate PL 110/94	30/9/2010	100	African Metals (Pty) Ltd	Mineral Holdings (Botswana) Pty Ltd Holds 5%net profits share
Mokoswane PL 111/94	30/9/2010	100	African Metals (Pty) Ltd	Mineral Holdings (Botswana) Pty Ltd Holds 5% net profits share
Takane PL 54/98	30/9/2010	100	African Metals (Pty) Ltd	Mineral Holdings (Botswana) Pty Ltd Holds 5% net profits share
Majante PL 14/2003	31/3/2010	100	African Metals (Pty) Ltd	Mineral Holdings (Botswana) Pty Ltd Holds 5%net profits share
Shashe River East PL 44/2004	30/6/2011	100	African Metals (Pty) Ltd	Mineral Holdings (Botswana) Pty Ltd Holds 5%net profits share
Sampowane PL 46/2004	30/6/2011	100	African Metals (Pty) Ltd	Mineral Holdings (Botswana) Pty Ltd Holds 5% net profits share
Gobe Shear PL 47/2004	30/6/2011	100	African Metals (Pty) Ltd	Mineral Holdings (Botswana) Pty Ltd Holds 5% net profits share
Shashe River West PL 48/2004	30/6/2011	100	African Metals (Pty) Ltd	Mineral Holdings (Botswana) Pty Ltd Holds 5%net profits share
Shashe South PL 059/2008	31/12/2010	100	African Metals (Pty) Ltd	-
PL 070/2008	31/12/2010	100	African Metals (Pty) Ltd	-
Lepokole PL158/2009	31/12/2011	100	African Metals (Pty) Ltd	-
Mmadinare PL360/2008	30/09/2011	100	African Metals (Pty) Ltd	-

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

AI assistant

VERITY RESOURCES LIMITED — Annual Report 2009

66020_rns_2009-09-28_61135248-1803-40b6-a91a-0aafdf464d91.pdf

TO: COMPANY ANNOUNCEMENTS OFFICE ASX LIMITED

2009 ANNUAL REPORT

Pat Volpe Chairman

Botswana Metals Limited

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

CORPORATE DIRECTORY

CHAIRMAN’S REPORT

DIRECTORS’ REPORT

DIRECTORS

Henry James Stacpoole

Paul Woolrich

COMPANY SECRETARY

PRINCIPAL ACTIVITIES

OPERATING RESULTS

DIVIDENDS

REVIEW OF OPERATIONS

PROSPECTIVITY OF NORTH EAST BOTSWANA

PROSPECT LOCATIONS

EXPLORATION REPORT

PL110/94 –MAGOGOPHATE

Maibele North

Airstrip Copper

PL111/94 MOKOSWANE

Mmamanaka Nickel

Drilling

Drilling Results

DISCUSSION

Crescent

PL46/2004 SAMPOWANE

PL14/2003 – MAJANTE

PL54/98 – TAKANE

PL18/2004 – JIM’S LUCK JOINT VENTURE

PL44/2004 – SHASHE EAST

PL47/2004 – GOBE SHEAR

PL48/2004 – SHASHE WEST

TENEMENT STATUS

CORPORATE ACTIVITY

FINANCIAL POSITION

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

Resignation of Director

AFTER BALANCE DATE EVENTS

Appointment of Director

Renewal of Botswana Prospecting Licences

FUTURE DEVELOPMENTS

ENVIRONMENTAL ISSUES

INFORMATION ON DIRECTORS

DIRECTORS' MEETINGS

REMUNERATION REPORT

Remuneration Policy

Performance-based Remuneration

Company Performance, Shareholders Wealth and Directors’ and Executives Remuneration

REMUNERATION REPORT (CONTINUED)

Performance Income as a Proportion of Total Remuneration

Key Management Personnel Remuneration Policy

REMUNERATION REPORT (CONTINUED)

Options Issued as part of remuneration

REMUNERATION REPORT (CONTINUED)

Shares Issued on Exercise of Options

Employment Contracts of Directors and Senior Executives

INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS

OPTIONS

PROCEEDINGS ON BEHALF OF THE COMPANY

NON-AUDIT SERVICES

AUDITOR'S INDEPENDENCE DECLARATION

AUDITOR’S INDEPENDENCE DECLARATION IN ACCORDANCE WITH SECTION 307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS OF BOTSWANA METALS LIMITED

CORPORATE GOVERNANCE STATEMENT

PRINCIPLE 1: LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT

PRINCIPLE 2: STRUCTURE THE BOARD TO ADD VALUE

PRINCIPLE 2: STRUCTURE THE BOARD TO ADD VALUE (CONTINUED)

PRINCIPLE 3: PROMOTE ETHICAL AND RESPONSIBLE DECISION-MAKING

PRINCIPLE 4: SAFEGUARD INTEGRITY IN FINANCIAL REPORTING

PRINCIPLE 4: SAFEGUARD INTEGRITY IN FINANCIAL REPORTING (CONTINUED)

PRINCIPLE 5: MAKE TIMELY AND BALANCED DISCLOSURE

PRINCIPLE 6: RESPECT THE RIGHTS OF SHAREHOLDERS

PRINCIPLE 7: RECOGNISE AND MANAGE RISK

PRINCIPLE 8: REMUNERATE FAIRLY AND RESPONSIBLY

INCOME STATEMENT

VERITY RESOURCES LIMITED Annual Report 2009