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TO: COMPANY ANNOUNCEMENTS OFFICE ASX LIMITED

Market Cap

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DATE: 30 SEPTEMBER 2011

Cash

2011 ANNUAL REPORT

Please find attached the Annual Report for the year ended 30 June 2011 for Botswana Metals Limited and its Controlled Entities.

Issued Capital

Pat Volpe

Substantial shareholders

Chairman

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2. Bell IXL Investments Ltd 7.65%
3. Polarity B Pty Ltd 6.23%
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Directors

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Mr Massimo Cellante
(Non-executive Director)
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Dr Paul Woolrich
(Non-executive Director)
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www.botswanametals.com.au
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Registered Office

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310 Whitehorse Road
Balwyn, Victoria, 3103
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P +61 3 9830 7676
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F +61 3 9836 3056
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Contact

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

ANNUAL REPORT 30 JUNE 2011

CONTENTS

CONTENTS
	PAGE
CORPORATE DIRECTORY	2
CHAIRMAN’S REPORT	3
DIRECTORS’ REPORT	5
AUDITOR’S INDEPENDENCE DECLARATION	31
CORPORATE GOVERNANCE STATEMENT	32
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME	37
CONSOLIDATED STATEMENT OF FINANCIAL POSITION	38
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY	39
CONSOLIDATED STATEMENT OF CASH FLOWS	40
NOTES TO THE FINANCIAL STATEMENTS	41
DIRECTORS’ DECLARATION	74
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS	75
SHAREHOLDER INFORMATION	77
SCHEDULE OF INTERESTS IN MINING TENEMENTS	80

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

CHAIRMAN'S REPORT

CORPORATE DIRECTORY

Directors:	Patrick John Volpe (Executive Chairman)
	Massimo Livio Cellante
	Paul Woolrich
Company Secretary:	Richard Charles Baker
Registered Office:	Suite 5, Level 1
	310 Whitehorse Road
	BALWYN
	VICTORIA 3103
	Telephone (03) 9830 7676
	Facsimile (03) 9836 3056
Share Registry:	Advanced Share Registry Services Limited
	150 Stirling Highway
	NEDLANDS WA 6009
	Telephone (08) 9389 8033
	Facsimile (08) 9389 7871
Banker:	Bank of Melbourne
	Level 8
	530 Collins Street
	MELBOURNE VIC 3000
Auditor:	William Buck Audit (Vic) Pty Ltd
	Level 1, 465 Auburn Road
	HAWTHORN EAST VIC 3123
Lawyers:	Mills Oakley Lawyers
	Level 6
	530 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,

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On behalf of the Board of Directors of Botswana Metals Limited (“BML” or “the Company”), it is with pleasure that I present to you the Annual Report for the year ended 30 June 2011.

During the 2011 financial year, the Company continued to aggressively explore along the Limpopo belt in the North East of Botswana. BML announced two new copper-silver discoveries know as Airstrip and Dibete, to add to its known Maibele North nickel-copper project.

Versatile Time-Domain Electromagnetic (“VTEM”) technology was employed during the year where 3149 line kilometres were flown by helicopter to produce an electromagnetic image of some of our most prospective ground on the Limpopo Belt. At least 46 targets were identified from the VTEM images.

During the year, BML spent approximately $4.8M dollars on exploration and administration and completed approximately 21,000 metres of drilling for a total of 285 holes.

BML has current cash reserves of approximately $2.2M at the time of this report and is continuing its exploration efforts with drilling still in progress.

The Company’s aim is to delineate an inferred resource as soon as it can from these prospects.

Several prospecting licences (“PL’s”) were granted extensions in accordance with Botswana legislation. This will allow the Company time to continue to prove-up these new discoveries until March 2012 and December 2012.

Exploration efforts also went into PL44/2004 Shashe River East and PL 48/2004 Shashe River West, however, based on a lack of encouraging results, the Board decided not to apply for an extension of these PL’s.

In September 2011, a new prospecting licence called Xia 2 (PL126/2011) was granted, totalling 196 sq kms to the north of the existing PL’s.

Drilling continued at Airstrip, Maibele North and Dibete in the 2011 financial year with excellent results achieved which are detailed in the Operations Report.

At Airstrip, exploration confirmed that several Induced Polarisation (“IP”) conductors were mineralised with high grade copper and silver in the primary zone over narrow widths. The Board will be focused on targeting several of these conductors with the objective of proving-up a JORC compliant resource. Drilling recommenced in August 2011, where at least five IP conductors will be tested.

At Dibete an extensive drill program of 6000m was completed in June 2011 following the 5000m drilled in 2010. The drilling confirmed that along IP line 6100E copper mineralisation was encountered along a structure at shallow depth in both the supergene zone (around 35m) below surface and then in the primary zone (at around 45m).

The drilling confirmed a mineralised zone along a 250m strike length that is still open to the north, east and to the west. BML expects to continue drilling into 2012 and work towards establishing a JORC compliant resource.

The recently completed VTEM survey confirmed numerous anomalies including 27 targets that are to the east of Dibete on PL54/94 Takane. To date all VTEM anomalies drilled have resulted in discovering sulphides.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

CHAIRMAN'S REPORT

This area is a high priority for exploration in the coming year.

BML has continued to aggressively explore its most protective PL’s in order to develop these new discoveries. This strategy will continue into 2012 as the Company plans to move these projects into a JORC compliant resource category after additional exploration and drilling have been completed.

If this can be achieved then the Company has the potential to progress from exploration to a feasibility study to assess the economics of mining and processing these resources.

On behalf the Board I wish to thank shareholders for their continued support.

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Pat Volpe Executive Chairman 29[th] September 2011

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 2011.

DIRECTORS

The following persons were Directors of the Company during the whole of the financial year (with the exception of Henry Stacpoole who resigned on 30 November 2010) and up to the date of this report:

Patrick John Volpe (Executive Chairman)

Massimo Cellante

Paul Woolrich

Henry Stacpoole (resigned 30 November 2010)

COMPANY SECRETARY

The Company Secretary is Richard Charles Baker, M.Commercl Law, B.Ec., CPA. Mr Baker has qualifications in both law and economics and has held similar positions with other listed companies over the past 7 years. Previously he worked in accounting positions for many years.

PRINCIPAL ACTIVITIES

The Company’s principal activities during the year have been the continuing exploration of its tenement portfolio in Botswana.

There were no significant changes in the nature of the Company’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 Net loss attributable to members of the Group	2011 2010 $ $ (2,187,448) (672,108)
	(2,187,448) (672,108)

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 Botswana Metals Limited (“BML” or the “Company”) activities during the year follows.

During the year ended 30 June 2011, BML conducted an aggressive exploration program focused on its two new discoveries at Airstrip and at Dibete, whilst planning to further explore the Maibele North NickelCopper deposit to see if additional drilling can update that project to a JORC defined inferred resource.

The Company also conducted exploration at PL44/2004 Shashe River East and PL48/2004 Shashe River West. These tenements expired and were not renewed as no significant mineralisation was discovered from the drill program conducted to test old workings and Induced Polarisation (“IP”) / Versatile Time-Domain Electromagnetic (“VTEM”) anomalies on those Prospecting Licences.

A VTEM geophysical survey was flown over the Magogaphate area and ground IP was also employed to identity drill targets and also confirm the Airstrip and Dibete anomalies. To date, 46 VTEM anomalies have been interpreted which will be prioritised for exploration over the coming year.

This aggressive exploration program conducted in 2011 financial year is expected to continue into the 2012 financial year with the objective of progressing to a JORC compliant resource and thereafter a retention licence over the prospective area.

Details of exploration activities and results follow.

PROSPECT LOCATIONS

BML’s tenements are situated directly between the major nickel producing mines of Selebi Phikwe to the south, and Tati Nickel to the north. BML controls approximately 3,102 square kilometres of highly prospective exploration ground in its Prospecting Licence (“PL”) portfolio.

These PL’s 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

Tenure

PL 110/94 (covering the Airstrip & Maibele North prospects), PL 111/94 (covering the Dibete prospect), PL 14/2003 (covering the Dibete East prospect) and PL 54/98 (with extended anomalies) were granted an extension based on making new discoveries.

PL’s 44/2004 and 48/2004 expired on 30 June 2011 and were not renewed. PL126/2011 was granted in September 2011 and is to the north of PL110/94. Details of the status of all the other tenements in the portfolio are provided in the “Schedule of Interests in Mining Tenements” in this report.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

DIRECTORS' REPORT

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Figure 1. Current BML Tenement status

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

DIRECTORS' REPORT

EXPLORATION REPORT

This exploration report details work completed for the financial year to 30 June 2011 and includes exploration activities up to the date of signing this report.

VTEM SURVEY

A Versatile Time-Domain Electromagnetic (“VTEM”) geophysical survey was conducted over the Company’s Prospecting Licence portfolio covering a total of 3,149 line kilometres. The VTEM survey included the Shashe River East (PL44/2004) and Shashe River West (PL48/2004) blocks for 1,359 kilometres and the Magogaphate block, including detailed surveys over the Airstrip, Maibele North and Dibete prospects for 1,790 kilometres.

The VTEM survey resulting in the identification of at least 46 VTEM anomalies that will be subject to further interpretation.

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12620-a 12660a
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Sekgopye 11035-a 11090-a11110-a11115-a 11340-a 11460-a 11515-a11555-a 11800-a Kudumane
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Figure 2: VTEM anomalies on the Magogaphate block identified by the VTEM survey.

Details of the exploration carried out at each of the Company’s tenements are as follows:

PL110/94 - Magogaphate

Airstrip

The Company’s strategy is to drill out the Induced Polarisation (“IP”) and VTEM conductors to determine if sufficient mineralisation exists to progress to a JORC compliant inferred copper-silver resource.

Following on from the discovery hole ACRC 003 reported in last year’s Annual Report, the Company completed a 1.5km by 1km IP survey.

At total of 16 conductors, totalling 1900 metres, were identified in the IP survey area, including the C6 conductor which hosts the discovery hole. Several of these conductors remain open to the east and west. The VTEM survey carried out during the year also identified several conductors, which along with the IP conductors, will be selectively drilled. At the time of this report drilling is underway to target at least five of these IP conductors with no results yet available.

These conductors appear to host rich copper-silver veinlets.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

DIRECTORS' REPORT

During the year at total of 98 holes for 6500 metres of both Reverse Circulation (“RC”) and Diamond Drilling (“DD”) were completed.

The most significant results are shown in the table below.

Hole ID	Depth From m	Depth To m	Interval m	Cu %	Ag g/t	Ni %
ACRC0001	0	1	1	0.61	3

ACRC0003	52	60	8 m @	10.39	630
	53	59	inc 6 m @	12.68	759
	53	56	inc 3 m @	22.74	1379

ACRC0006	30	32	2 m @	0.59	14

ACRC0007	1	2	1 m @	1.25	4

ACRC0010	44	46	2 m @	4.77	94
	44	45	inc 1 m @	8.68	169

ACRC0011	37	39	2 m @	1.13	3
	37	38	inc 1 m @	1.96	4

ACRD016	19	21	2 m @	0.77	9.2
	20	21	inc 1 m @	1.07	9.1
	25	26	and 1 m @	0.53	4.0

ACRD017	66	67	1 m @	0.73	8.4

ACRD018	159	167	8 m @	1.71	51.1
	160	162	inc 2 m @	0.44
	163	166	inc 3 m @	2.39	70

ACRD019	22	30	8 m @	1.08	6.2
	22	24	inc 2 m @	1.56	10

ACRD021	60	62	2 m @	0.94	9.9

ACRD022	54	55	1 m @	0.72		1.14

ACRD026	23	24	1 m @	0.89	4.0

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

DIRECTORS' REPORT

Hole ID	Depth From m	Depth To m	Interval m	Cu %	Ag g/t	Ni %
ACRD 029	4	5	1 m @	0.71	4.3
	65.39	66.52	1.13 m @	21.58	1023.3	0.03
	65.67	65.92	inc 0.25 m @	60.98	2833	0.08

ACRD032	55.50	56.40	0.9 m @	20.53	377	0.03
	55.80	56.15	inc 0.35 m @	57.79	1054	0.13

ACRD033	64.94	65.54	0.6 m @	25.27	1283	0.06
	65.30	65.54	inc 0.24 m @	49.06	2493	0.06

ACRD034	63.05	63.25	0.20 m @	8.42	16.8	0.78
	63.05	63.15	inc 0.10 m @	12.61		1.07

ACRD 035	57.64	57.78	0.14 m @	11.1	35.4	1.16

ACRD 036	64.67	64.77	0.10 m @	0.02		0.75
	64.88	64.95	0.07 m @	0.28	0	1.0

ACRD 037	66.55	66.81	0.26 m @	3.96	4.6	0.14
	72.77	73.18	0.41 m @	0.32	6.3	0.01
	76.68	77.77	1.09 m @	1.80	37.2	0.01
	77.18	77.77	inc 0.59 m @	3.06	63.4	0.01
	77.42	77.77	inc 0.35 m @	4.68	96	0.01

ACRD 048	84.44	85.95	1.51 m @	0.41	6.1	0.08

ACRD 051	87.26	87.91	0.65 m @	0.55	7.7	2.0

ACRC 067	68	75	7m@	2.32	63.8	0.006
	68	74	inc. 6m@	2.66	71.9
	69	72	inc. 3m@	3.77	92.6	0.005
	70	71	inc. 1m @	8.83	214	0.005
All holes calculated at 0.3% Cu cut-off

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

DIRECTORS' REPORT

IP Grid showing Conductors

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Figure 3. Plan of Airstrip Copper Prospect showing significant drill intersections, IP conductors and VTEM anomalies over a background resistivity image. The highlighted IP and VTEM targets are planned to be drilled. Location of hole ACRC067 is shown at the end of conductor C12.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

DIRECTORS' REPORT

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Figure 4. Plan showing significant drill intersections at Conductor 6, Airstrip Copper Prospect. The background is a resistivity image.

Maibele North

A geostatistical assessment of the Maibele North deposit was made by Hilmac Pty Ltd with the view to determine the status of the mineralisation in relation to JORC categories.

Geostatistical tests were applied to the data base and continuity in the deposit was able to be demonstrated in the along strike direction but not down dip at the current drilling density. The sampling, drilling and analytical procedures all varied substantially between different explorers who have drilled Maibele North, resulting in a series of data sets that are not readily comparable.

Currently none of the resource estimates above realistic cut off grades of say 0.3% Ni, without considering Cu or PGE, can be classified as inferred, however a realistic exploration target estimate is possible.

An exploration target in the order of 1.1-1.7 million tonnes at a grade of approximately 1% Ni is expected to be present at a cut-off grade of approximately 0.6% Ni or alternately a target of 4-7 million tonnes at a grade of approximately 0.6% Ni using a cut-off grade of 0.3% Ni.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

DIRECTORS' REPORT

A clear indication of how to effectively upgrade the mineralisation to resource status has been defined by this study.

Additional outcomes of the study were the identification of a series of target areas (see Figure 3) within the known mineralisation that with further drilling are likely to upgrade the resource to a JORC compliant status. Specific drill targets have been identified that have significant tonnage potential.

Interpretation of the 3D modelling of the ground magnetic data over the western portion of the Maibele North deposit shows that the Airstrip Copper Shear appears to down fault the western end of the Maibele North magnetic response by approximately 150 metres.

A further minimum of 600 metres of additional strike length with nickel potential has now been identified for further exploration.

Evaluation of the down faulted portion of the Maibele North deposit will be undertaken, using the proposed VTEM data and the detailed magnetic data to design drill holes. This is expected to have the potential to significantly change the scale of the Maibele North resource.

In addition a detailed magnetic survey is in progress over the main Maibele North deposit and probable extensions to the east. This survey may find additional target areas for testing.

Drilling within the area of the known mineralisation is also planned to allow the resource to become classified into JORC compliant category.

PL111/94 - MOKOSWANE

Dibete Prospect

During the year a VTEM survey centred over the Dibete Prospect with the line spacing of 75 metres was conducted.

Interpretation of the preliminary data was undertaken to define targets that were previously known only from the GEOTEM survey and from ground TDEM surveys. A better correlation is now found with modelling between the VTEM and Dipole-Dipole IP data than between the VTEM and the ground TDEM surveys.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

DIRECTORS' REPORT

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Figure 5. Plan showing VTEM anomalies at Dibete with tenement boundaries in yellow.

The IP survey is shown in Figure 7 with initial drilling focussed on IP lines 6100E and 6400E. These two traverses intersected significant Cu-Ag mineralisation in both the supergene and primary zone. More detailed drilling was carried out in 2011 following up these initial results with the aim of defining a JORC compliant resource.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

DIRECTORS' REPORT

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Figure 6. Plan view of the modeled copper mineralisation superimposed over the IP resistivity low anomaly. The IP anomaly trends north east while the mineralisation follows interpreted structures (green lines) that trend north west

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Figure 7. 3D modelling of dipole-dipole Induced Polarisation surveys carried out to assist in target generation.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

DIRECTORS' REPORT

Drilling

A 116-hole RC drilling program was completed at the Dibete (6356m) and Dibete East (150m) prospects. Dibete East is considered to be an eastwards extension of the Dibete prospect (see Figure 5) that extends eastwards from PL111/94, through PL54/98 and into PL47/2004.

The drilling on Dibete prospect was specifically aimed at testing the supergene mineralisation present and to identify controls on the distribution of mineralisation.

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Figure 8. Visible intersections of mineralisation outlined in brown. Note that most outlined areas are not constrained by drilling to date and tend to have a north west trend.

All RC holes were sampled at 1 metre intervals, and analysed for Cu, Pb, Zn, Ni and Ag by ALS Chemex, Johannesburg South Africa. Significant results above a cut-off grade of >3000 ppm Cu (0.3%) are shown in the table below.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

DIRECTORS' REPORT

Significant intersections in this drilling include:-

11m @ 4.5% Cu 229.9g/t Ag from 33m in DBRC028 (includes 3m @ 8.16% Cu 469g/t Ag)
17m @ 2.7% Cu 40.5g/t Ag from 16m in DBRC081 (includes 3m @ 6.7% Cu 44.5g/t Ag from 24m & 3m @4.7% Cu 106.9g/t Ag from 27m)
12m @ 1.8% Cu 42g/t Ag from 33m in DBRC094 (includes 4m @ 4.2% Cu 95g/t Ag from 37m)
6m @ 2.3% Cu 117g/t Ag from 34m in DBRC097 (includes 2m@ 5.7% Cu 322.5g/t Ag from 34m)
9m @ 2.8% Cu 87.3g/t Ag from 33m in DBRC107
10m @ 3.9% Cu 110g/t Ag from 43m in DBRC108 (includes 4m @ 9.2% Cu 268g/t Ag from 43m)

Four types of mineralisation are evident from this drilling and are related to the degree of oxidation. Supergene oxide copper is exposed at surface in outcrops, trenches and old workings, and typically up to 35 metres down hole. Mineralogy consists of malachite, azurite, and chrysocolla. This zone forms a blanket spreading out from the underlying primary mineralisation. RC drill results typically show Cu enrichment concentrated between 18 to 35 metres in this zone.

A supergene sulphide transition zone is typically found from about 35 to 38 metres down hole consisting of chalcocite and pyrite with minor malachite. Laboratory results show Cu values gradually increase through the transitional zone approaching the primary mineralisation.

From approximately 38 to 41 metres is a mixed primary and supergene sulphide zone consisting of chalcocite, pyrite, and bornite vein swarms with traces of malachite seen on fractures. Assay results indicate the primary bornite vein swarms, as well as the supergene mineralisation, have associated silver.

Previously identified satellite imagery linears were found to be the controlling structures on the broad distribution of supergene oxide mineralisation and on the location of supergene sulphide and primary mineralisation at greater depth.

Modelling of the mineralisation has shown that a supergene oxide zone is more extensive than the underlying supergene sulphide and primary zone mineralisation.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

DIRECTORS' REPORT

Significant intersections included:

Hole ID	Depth From m	Depth To m	Interval m	Cu %	Ag g/t
DBRD-006	24	40	17	1.94	31
	26	31	inc.5@	4.19	90.5

DBRD-013	32	40	8	0.78	22.75
	37	39	inc.2@	2.62	40
	40	50	10	1.13	160
	42	45	inc.3@	8.01	192

DBRC-014	16	37	21	1.32	67.7
including	27	37	inc.10@	2.33	126.5
	39	42	3	1.6	27.8
	44	52	8	3.86	364.1
	48	51	inc.3@	9.16	894

DBRC-026	13	16	3	1.29	7

DBRC-028	33	44	11	4.48	229.9
	41	44	inc.3@	8.16	469

DBRC-030	6	8	2	0.40	11.7
	18	25	7	1.39	22.2
	18	19	inc.1@	6.78	114
	37	39	2	2.0	0.5

DBRC-079	30	32	2	1.62	1.6

DBRC-081	16	33	17	2.73	40.5
	24	27	inc.3@	6.69	44.5
	27	33	inc.6@	2.63	57.5
	27	30	inc.3@	4.68	106.9

DBRC-082	15	28	13	0.93	8.4
	23	27	inc.4@	1.32	6.2
	40	41	1	0.52	2.9

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

DIRECTORS' REPORT

Hole ID	Depth From m	Depth To m	Interval m	Cu %	Ag g/t
DBRC-089	18	28	3	1.02	3.97
	18	20	inc.2@	1.89	16.2

DBRC-090	28	29	1	0.39	<0.2
	36	38	inc.2@	6.25	214

DBRC-094	0	2	2	0.49	1.7
	33	45	12	1.78	42
	37	41	inc.4@	4.21	95
	52	54	2	0.53	31.2

DBRC-097	34	40	6	2.27	117
	34	36	Inc. 2@	5.7	322.5

DBRC-098	17	24	7	1.2	14.5
	19	23	inc.4@	1.80	23.6
DBRC-098	31	35	4	1.75	1.1
	32	35	inc.3@	2.18	1.2

DBRC-099	37	46	9	1.82	68.9
	37	43	inc.6@	2.49	95.8

DBRC-100	27	35	8	1.44	66.2
	27	30	inc.3@	3.39	168
DBRC-100	35	40	5	3.58	196
	38	39	inc.1@	10.4	620
DBRC-107	33	42	9	2.78	87.3
	35	40	inc.5@	4.46	183

DBRC-108	43	53	10	3.86	110
	43	47	inc.4@	9.16	268

DBRC-110	15	23	8	1.07	<0.2
	17	21	inc.4@	1.69	<0.2

DBRC-111	44	51	7	2.1	49.7
	45	48	inc.3@	4.08	100

DBRC-113	40	42	2	1.16	0.2

DBRC 114	24	37	13	1.23	36.1
	26	33	inc.7@	1.82	53.5
	40	44	4	2.57	61.7

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

DIRECTORS' REPORT

PL54/98 - TAKANE

VTEM interpretation was completed over the tenement with identification of new targets and better definition of old targets. Twenty seven of the identified 46 targets modelled in the Magogaphate VTEM Block lie within PL 54/98 (Figure 9).

An extensive program of ground follow up of the targets within this tenement is now being planned. Some follow up has been carried out previously by BML and will be used to assist in drill hole planning. Grid recovery has been carried out on Makhantlele and Kudumane grids to use the previous geochemical data with the current geo-referenced data sets. Recovery of the Mmatsiane and Jumbo grids was successfully carried out in the past.

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Figure 9. Location of VTEM anomalies and previous prospects on PL54/98 Takane.

Further assessment of this area will be undertaken to determine whether satellite linears recently identified are significant in terms of mineralisation. Linears identified will be followed up by soil sampling and drilling.

In addition a further VTEM anomaly, No. 11340-a, was located at the intersection of NW trending and NNE trending satellite linears. The NW trending linears are along strike from the linear identified on Line 6100E at Dibete prospect which is strongly mineralised. The prospect lies approximately 2km along strike of the satellite linear from DBRC006 at Dibete prospect.

PL46/2004 - SAMPOWANE

Six RC drill holes for a total of 420 metres were drilled on mafic bodies and base metal anomalies defined by soil sampling. The holes intersected amphibolites, serpentinites and probable altered equivalents of amphibolites. Geochemical analyses showed no significant anomalies.

A regional stream sediment follow up survey was completed in the June Quarter. The aim was to test around areas previously found to have anomalous values and to restrict the search area to be tested with additional follow up techniques such as soil sampling, mapping and ground geophysics.

An extension application was made over the tenement which is now subject to determination by the Department of Geological Survey.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

DIRECTORS' REPORT

PL14/2003 - MAJANTE

The VTEM survey covered part of this tenement and the anomalies related to the Mmamanaka prospect were reinterpreted and then reconciled against previous drilling. It was found that only one of the 11 holes previously drilled is likely to have adequately tested its target. The previous IP data when used in conjunction with the new VTEM data gives a more accurate interpretation.

Additional checking of the targets is now required using soil geochemical data to determine ranking of the new target areas.

PL47/2004 – GOBE SHEAR

Dibete East Prospect

One drill hole was drilled into VTEM anomaly 11555-a to test an alternate interpretation of the anomaly. This hole was 150 metres deep and did not intersect any significant mineralisation. Interpretation was also undertaken on VTEM anomaly 11340-a with a very low order response found that did not warrant drilling.

Further work on satellite imagery interpretation is in progress and is expected to assist in further evaluation of the Dibete East prospect area.

PL59/2008 – SHASHE SOUTH

PL360/2008 – MMADINARE

Soil sampling was carried out on a grid that covered potential extensions of a known ultramafic body in the northern block of PL 46/2004 that is thought to be mineralised. Soil sampling was carried out over 6 lines with a total of 844 samples collected. The grid overlapped onto PL 59/2008. Additional soil lines were sampled in the southern part of the tenement to cover potential extensions of a GEOTEM anomaly in the eastern part of PL 46/2004. Some mapping from satellite imagery was also carried out to assist in interpretation of soil anomalies that are anticipated to be present.

PL158/2009 - LEPOKOLE

Drainage sampling on the Lepokole tenement to target the interpreted amphibolite units was completed with a total of 66 samples. Some of the samples were taken to follow up a significant silver anomaly recovered from the previous stream sediment sampling program. Results were recently received and are currently being interpreted.

Additional satellite imagery interpretation to look for structures similar to those controlling mineralisation at Dibete is in progress and may have controlled silver mineralization inferred to be present from the previous stream sediment survey results.

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 $119,014 from 30 June 2010 to $9,385,006 as at 30 June 2011.

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

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

RESIGNATION OF DIRECTOR

On 30 November 2010 the Company announced the resignation of Mr Henry Stacpoole as a NonExecutive Director of the Company.

IMPAIRMENT OF JIM’S LUCK INVESTMENT

The Company accepted advice from its joint venture partner, IAM Gold Corporation, that the deposit at Jim’s Luck was uneconomic. The Company wrote-off the value of its contributions to the joint venture totalling $500,110. Subsequently IAM Gold Corporation relinquished the Prospecting Licence.

IMPAIRMENT OF CAPITALISED EXPLORATION AND EVALUATION EXPENDITURE

Based upon a review of results the Company decided not to pursue applications for the extension of Prospecting Licences 44/2004 Shashe River East and 48/2004 Shashe River West and allowed the PL’s to lapse.

The Capitalised Exploration and Evaluation Expenditure was impaired as at 30 June 2011 to the value of $374,019 for PL44/2004 and $330,189 for PL48/2004.

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.

EXTENSION OF BOTSWANA PROSPECTING LICENCES

On 31 March 2011 the Company applied for an extension to the Prospecting Licences listed below, that expired on 30 June 2011, from the Department of Geological Survey in Botswana under provisions of the Mines and Minerals Act 1999 (Botswana).

PL46/2044 Sampowane, and
PL47/2004 Gobe Shear

At the date of this report, the Department of Geological Survey had not informed the Company as to whether these Prospecting Licences have been extended.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

DIRECTORS' REPORT

RENEWAL OF BOTSWANA PROSPECTING LICENCES

On 30 November 2010 the Company applied for renewal of the Prospecting Licences listed below, that expired on 31 December 2010, from the Department of Geological Survey in Botswana under provisions of the Mines and Minerals Act 1999 (Botswana) :

PL59/2008 Shashe South
PL70/2008 Central.

At the date of this report, the Department of Geological Survey had not informed the Company as to whether these Prospecting Licences have been renewed.

GRANT OF NEW BOTSWANA PROSPECTING LICENCE

On 9 September 2011 the Company received notification from the Department of Geological Survey in Botswana that it had been granted a Prospecting Licence (number 126/2011 titled Xia 2).

FUTURE DEVELOPMENTS

The Group’s main exploration efforts will be focussed on continuing to develop value from exploration across its tenement package in Botswana.

The Group may also:

seek a joint venture partner for its Botswana tenements, and
acquire 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 DIRECT	ORS
Patrick John Volpe	Experience:	Executive Chairman for 5 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:	53
	Special Responsibilities:	Corporate finance and investment.
		Acquisitions and mergers.
		Chairman of the Audit and Compliance
		Committee
	Interest in Shares and
	Options:	23,281,159 Ordinary Shares
		17,500,000 Options
	Directorships held in other
	Listed Entities:	He is currently a Director of Cardia
		Bioplastics Limited (appointed 23 May 1994)
		and a former Director of A-Cap Resources
		Limited (appointed 11 March 2003 and
		resigned 12 January 2010), both ASX-listed
		companies, but has not held any other
		directorships of listed entities over the last 3
		years.
Massimo Livio Cellante
B. Comm (Deakin)	Experience:	Non-Executive Director for 2 years.
		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:	37
	Special Responsibilities:	Member of the Audit and Compliance
		Committee
	Interest in Shares and
	Options:	10,989,709 Ordinary Shares
		7,500,000 Options
	Directorships held in other
	Listed Entities:	He is currently an executive director of Bell
		IXL Investments Limited (appointed 5 April
		2005), an NSX-listed company, and a former
		Director of Blue Capital Limited (appointed
		18 June 2008 and resigned 27 March 2009),
		an ASX-listed company but has not held any
		other directorships of listed entities over the
		last 3 years.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

DIRECTORS' REPORT

Paul Woolrich

BSc (honours), MSc, PhD . Experience:

BSc (honours), MSc, PhD . Experience: Non-executive director for 4 years. Dr Woolrich has over 35 years of experience in the international exploration and mining industry focussed on gold, base 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: 66 Interest in Shares and Options: 977,778 Ordinary Shares 488,888 Options Directorships held in other Listed Entities: He is currently a director of A-Cap Resources Limited (appointed 18 December 2008), an ASX-listed company, but has not held any other directorships of listed entities over the last 3 years. Henry James Stacpoole (resigned 30 November 2010) Experience: Non-Executive Director for 4 ½ years. Age: 76 Directorships held in other Listed Entities: He is currently a director of A-Cap Resources Limited (appointed 30 March 2005), an ASX-listed company, but has not held any other directorships of listed entities over the last 3 years.

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 2011, 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 P Woolrich H Stacpoole (resigned 30 November 2010) M L Cellante	8 8 4 8	8 8 4 8	2 - - 2	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 Directors 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 Group and expensed.

The Board’s 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 a 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 Botswana Metals Limited.

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 Group'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.

Remuneration of Key Management Personnel is based upon the recommendations of external consultants at this stage of the Group’s evolution and not linked to Company performance and shareholders wealth. The Group’s focus is to discover a mineable deposit and generate future revenue from sales and production of resources. The Group is presently in the exploration phase and as such

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

DIRECTORS' REPORT

REMUNERATION REPORT (CONTINUED)

has no revenue from production and has incurred losses. All expenditure directly attributable to prospecting activities on the Group’s tenement portfolio is capitalised and is not expensed in the Statement of Comprehensive Income unless an impairment event occurs. No dividends have been paid to shareholders.

Performance Income as a Proportion of Total Remuneration

No performance based remuneration was paid during the year as there were no options being granted to Directors and executives.

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 Group 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 Botswana Metals Limited for the year ended 30 June 2011 are:

Name	Short-term Benefits	Post-employment Benefits	Total $
	Cash Salary & Fees $	Superannuation $
PJ Volpe (Executive Director) PJ Volpe (Executive Director) – back pay from underpayments from 2009 financial year HJ Stacpoole (resigned 30 November 2010) P Woolrich ML Cellante	302,752 93,395 12,500 30,000 30,000	27,248 8,405 1,125 - 2,700	330,000 101,800 13,625 30,000 32,700
Total	468,647	39,478	508,125

Information in respect of specified executive officers within the consolidated entity receiving the highest emoluments for the year ended 30 June 2011 are:

Name	Short-term Benefits	Post-employment Benefits	Total $
	Cash Salary & Fees $	Superannuation $
R C Baker	150,000	13,500	163,500

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 Botswana Metals Limited for the year ended 30 June 2010 are:

Name	Short-term Benefits	Post-employment Benefits	Total $
	Cash Salary & Fees $	Superannuation $
P J Volpe (Executive Director) H J Stacpoole P Woolrich M Cellante (appointed 4 Sept 2009) A J Tunks(resigned 29 June 2009; payment of accrued annual leave)	302,752 30,000 30,000 25,000 12,304	27,248 2,700 - 2,250 -	330,000 32,700 30,000 27,250 12,304
Total	400,056	32,198	432,254

Information in respect of specified executive officers within the consolidated entity receiving the highest emoluments for the year ended 30 June 2010 are:-

	Short-term Benefits	Post-employment Benefits	Total $
Name	Cash Salary & Fees $	Superannuation $
R C Baker	68,250	6,750	75,000

Options Issued as part of remuneration

No options were issued to Key Management Personnel as part of their remuneration during the year.

Shares Issued on Exercise of Options

Options exercised by Directors and Key Management Personnel during the financial year are listed below.

Name	Options Exercised	Exercise Price	Shares Issued	Value at exercise date $
P J Volpe H Stacpoole (resigned 30 November 2010) P Woolrich R C Baker(CompanySecretary)	1,000,000 333,334 333,334 33,334	10 cents 10 cents 10 cents 10 cents	1,000,000 333,334 333,334 33,334	100,000 33,334 33,334 3,334
Total	1,366,668		1,366,668	170,002

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

DIRECTORS' REPORT

REMUNERATION REPORT (CONTINUED)

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 paid 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 Botswana Metals Limited under option are as follows:

Grant Date Date of Expiry Exercise Price	Number of Options for Ordinary Shares
16/02/2011 30/06/2013 $0.10 Total	71,857,670
	71,857,670

Option holders do not have any rights to participate in any issues of shares or other interests in the Company or any other entity.

During the year ended 30 June 2011, 832 ordinary shares were issued on the exercise of the above class of options granted. No further shares have been issued since year end. No amounts are unpaid on any of the shares.

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 2011.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

DIRECTORS' REPORT

AUDITOR'S INDEPENDENCE DECLARATION

The lead Auditor's Independence Declaration for the year ended 30 June 2011 has been received and can be found on page 31 of this Report.

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

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P J Volpe Director Dated this 29[th] day of September 2011 Balwyn, Victoria

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

AUDITOR'S INDEPENDENCE DECLARATION

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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 2011 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 Executive Chairman and senior management who implement the Board’s strategies and compliance activities. The Board constantly monitors the performance of the Executive Chairman 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 contained in the Directors’ Report on pages 24 - 25 along with the term of office held by each.

At present there are no Directors on the Board that could be classified as ‘Independent’. Independent Directors are likely to be appointed as the Company develops and the Board believes that it can attract appropriate independent directors with the necessary industry experience.

When determining whether a Non-executive Director is independent, the Director must not fail any of the following materiality thresholds:

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

CORPORATE GOVERNANCE STATEMENT

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

less than 5% of Botswana Metals Limited shares are held by the Director and any entity or individual directly or indirectly associated with the Director;
no sales are made to or purchases made from any entity or individual directly or indirectly associated with the Director; and
none of the Directors’ income or the income of an individual or entity directly or indirectly associated with the Director is derived from a contract with any member of the Group other than income derived as a Director of the entity.

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.

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 to assist them to carry out their responsibilities. Written approval must be obtained from the Chair prior to incurring any expense on behalf of the Company. 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. In maintaining the highest standards of corporate governance and ethical conduct Directors and employees are required to:

act honestly and in good faith;
exercise due care and diligence in fulfilling the functions of office;
avoid conflicts and make full disclosure of any possible conflict of interest;
comply with the law;
encourage the reporting and investigating of unlawful and unethical behaviour; and
comply with the Securities Trading Policy.

Directors are obliged to be independent in judgment and ensure all reasonable steps are taken to ensure due care is taken by the Board in making sound decisions.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

CORPORATE GOVERNANCE STATEMENT

PRINCIPLE 3: PROMOTE ETHICAL AND RESPONSIBLE DECISION-MAKING (CONTINUED)

The Company has a Securities Trading Policy that regulates the dealings by directors, officers and employees, in shares, options and other securities issued by the Company.

Under the Botswana Metals Limited 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 Botswana Metals Limited at any time when they are in possession of unpublished price sensitive information in relation to those securities or the Group’s operations.

Before commencing to trade, an executive or any other specified party 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 Executive Chairman and Chief Financial Officer provide written declarations to the Board confirming that the Company's financial statements 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 three 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.

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 Massimo Cellante (Non-executive Director). 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.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

CORPORATE GOVERNANCE STATEMENT

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;
Providing annual and interim financial statements;
Making it easy for shareholders to participate in general meetings of the Company and providing appropriate notice periods and disclosure for general meetings, the ability to appoint proxies and lodge questions to by the Board and / or the Executive Chairman; 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.

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 considers identification and management of key risks associated with the business as vital to maximise shareholder wealth. A yearly assessment of the Groups risk profile is undertaken by the Board as a whole, covering all aspects of the Group’s activities from the operational level through to strategic level risks.

The Board has delegated the responsibility of designing risk management and internal control systems to the Executive Chairman and senior management who manage the Company’s material business risks and report to the Board on the effectiveness of those systems. The effectiveness of these controls is reviewed and assessed regularly.

The Board seeks assurance from the Executive Chairman 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. Botswana Metals Limited presently has three 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.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

CORPORATE GOVERNANCE STATEMENT

PRINCIPLE 8: REMUNERATE FAIRLY AND RESPONSIBLY (CONTINUED)

The Board as a whole reviews executive packages annually by reference to the Group’s performance in meeting its objectives, executive performance, comparable information from industry sectors and other listed companies and independent advice.

Current remuneration details are disclosed in the Directors’ Report.

Further information regarding the Company’s corporate governance practices and policies has been made publicly available on the Company’s website at www.botswanametals.com.au.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30 June 2011	Consolidated Group
Notes	2011 2010
	$ $
Revenue from Ordinary Activities 2	252,878 213,111

Administration 3	(382,386) (191,586)
Corporate Expenses	(123,108) (86,709)
Employment & Consultancy	(681,229) (606,924)
Net Foreign Exchange Loss	(49,285) -
Impairment ofCapitalisedExploration Expenditure	(1,204,318) -

Loss before Income Tax Expense	(2,187,448) (672,108)
IncomeTax Expense 4	- -
Loss for the year attributable to owners of Botswana Metals
Limited	(2,187,448) (672,108)
Other Comprehensive Income for the year
Exchange differences on translating foreign controlled entity	(770,031) (222,103)
Total Comprehensive Loss attributable to owners of
Botswana Metals Limited	(2,957,479) (894,211)


Basic Earnings (Loss) per Share(centsper share) 7	(1.82) (0.63)

Diluted Earnings (Loss) per Share (cents per share) 7	(1.82) (0.63)

The accompanying notes form part of these financial statements.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 30 June 2011
	Consolidated Group
Notes	2011 2010
	$ $
Current Assets
Cash and cash equivalents 8	3,265,791 5,305,240
Trade and other receivables 9	166,731 48,296
Total Current Assets	3,432,522 5,353,536
Non-Current Assets
Plant and equipment 12	324,416 166,508
Capitalised explorationand evaluation 13	6,089,251 4,221,291
Total Non-Current Assets	6,413,667 4,387,799
TOTAL ASSETS	9,846,189 9,741,335
Current Liabilities
Trade & Other Payables 14	461,183 237,315
Total Current Liabilities	461,183 237,315
Non-Current Liabilities	- -
Total Non-Current Liabilities	- -
TOTAL LIABILITIES	461,183 237,315
Net Assets	9,385,006 9,504,020
Equity
Issued Capital 15	12,417,267 9,578,802
Reserves 16	1,043,999 1,814,030
AccumulatedLosses	(4,076,260) (1,888,812)
TOTAL EQUITY	9,385,006 9,504,020

The accompanying notes form part of these financial statements.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For year ended 30 June 2011

Consolidated Group

	*Balance at 1 July 2009* Loss for the year Other Comprehensive Income Options granted during the period *Balance at30 June 2010* Balance at 1 July 2010 Loss for the year Other Comprehensive Income Transactions with owners in their capacity as owners Shares issued during the period Share issue costs Balance at 30 June 2011**	Issued Share Capital Share Options Reserve Accumulated Losses Reserves Total Equity $ $ $ $ $ 9,487,986 90,061 (1,216,704) 2,036,133 10,397,476 - - (672,108) - (672,108) - - - (222,103) (222,103)
		9,487,986 90,061 (1,888,812) 1,814,030 9,503,265 - 755 - - 755
		9,487,986 90,816 (1,888,812) 1,814,030 9,504,020
		$ $ $ $ $ 9,487,986 90,816 (1,888,812) 1,814,030 9,504,020 - - (2,187,448) - (2,187,448) - - - (770,031) (770,031)
		9,487,986 90,816 (4,076,260) (770,031) 6,546,541 3,042,886 - - - 3,042,886 (204,421) - - - (204,421)
		12,326,451 90,816 (4,076,260) 1,043,999 9,385,006

The accompanying notes form part of these financial statements.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

CONSOLIDATED STATEMENT OF CASH FLOWS

CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2011
	Consolidated Group
Notes	2011 2010
	$ $
Cash Flows from Operating Activities
Receipts from customers (inclusive of goods and services tax)	37,678 104,379
Payments to suppliers and employees (inclusive of goods and
services tax)	(1,273,898) (839,112)
Interestreceived	198,272 124,705
Net Cash Used In Operating Activities 20b	(1,037,948) (610,028)

Exploration Expenditure	(3,538,680) (368,113)
Purchase of plant and equipment	(277,500) (43,150)
Proceedsfromsale ofplant and equipment	25,499 6,012
Net Cash Used In Investing Activities	(3,790,681) (405,251)

Cash Flows from Financing Activities
Issue of share capital	3,042,886 -
Payments ofshare capital issue costs	(204,421) -
Net Cash Used In Financing Activities	2,838,465 -

Net Increase/(Decrease) in Cash and cash equivalents held	(1,990,164) (1,015,279)
Cash and cash equivalents at the Beginning of the Financial Year	5,305,240 6,320,519
Foreign currency effect on cash held	(49,285) -
Cash and cash equivalents at the End of the Financial Year 20a	3,265,791 5,305,240

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 statements include the consolidated financial statements and notes of Botswana Metals Limited and controlled entities (‘Group’).

The separate financial statements of the parent entity have not been presented within this financial report, as permitted by amendments made to the Corporations Act 2001 on 28 June 2010.

Basis of Preparation

The financial statements are general purpose financial statements that have been prepared in accordance with Australian Accounting Standards, including Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board (‘AASB’) and the Corporations Act 2001 .

Australian Accounting Standards set out accounting policies that the AASB has concluded would result in financial statements containing relevant and reliable information about transactions, events and conditions. 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 these financial statements are presented below. They have been consistently applied unless otherwise stated.

The financial statements have been prepared on an accruals basis and are based on historical costs modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities.

Accounting Policies

(a) Principles of Consolidation

The consolidated financial statements incorporate the assets, liabilities and results of entities controlled by Botswana Metals Limited at the end of reporting period. 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 the entity’s activities. Control will generally exist when the parent owns, directly or indirectly through subsidiaries, more than half of the voting power of an entity. In assessing the power to govern, the existence and effect of holdings of actual and potential voting rights are also considered.

Where controlled entities have entered or left the group during the year, the financial performance of those entities is included only for the period of the year that they were controlled. A list of controlled entities is contained in Note 11 to the financial statements.

In preparing the consolidated financial statements, all inter-group balances and transactions between entities in the group have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with those adopted by the parent entity.

(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 on taxable income calculated using applicable income tax rates enacted, or substantially enacted, as at the end of the reporting period. Current tax liabilities (assets) are therefore measured at the amounts expected to be paid to (recovered from) the relevant taxation authority.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(b) Income Tax (continued)

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 and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates enacted of substantially enacted at the end of the reporting period. Their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability.

Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profits 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)

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (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 Statement of Comprehensive Income 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	15%- 25%

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

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 Statement of Comprehensive Income. 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.

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.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(d) Exploration and Development Expenditure (continued)

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

Initial recognition and measurement

Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions to the instrument. For financial assets, this is equivalent to the date that the company commits itself to either the purchase or sale of the asset (i.e. trade date accounting is adopted).

Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is classified ‘at fair value through profit or loss’, in which case transaction costs are expensed to profit or loss immediately.

Classification and subsequent measurement

Financial instruments are subsequently measured at either of fair value, amortised cost using the effective interest rate method, or cost. Fair value represents the amount for which an asset could be exchanged or a liability settled, between knowledgeable, willing parties. Where available, quoted prices in an active market are used to determine fair value. In other circumstances, valuation techniques are adopted.

Amortised cost is calculated as:

a. the amount at which the financial asset or financial liability is measured at initial recognition;
b. less principal repayments;
c. plus or minus the cumulative amortisation of the difference, if any, between the amount initially recognised and the maturity amount calculated using the effective interest method ; and
d. less any reduction for impairment.

The effective interest method is used to allocate interest income or interest expense over the relevant period and is equivalent to the rate that exactly discounts estimated future cash payments or receipts (including fees, transaction costs and other premiums or discounts) through the expected life (or when this cannot be reliably predicted, the contractual term) of the financial instrument to the net carrying amount of the financial asset or financial liability. Revisions to expected future net cash flows will necessitate an adjustment to the carrying value with a consequential recognition of an income or expense in profit or loss.

The group does not designate any interests in subsidiaries, associates or joint venture entities as being subject to the requirements of accounting standards specifically applicable to financial instruments.

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. Financial Liabilities

Non-derivative financial liabilities (excluding financial guarantees) 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)

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(e) Financial Instruments (continued)

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 the end of each reporting period, 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 significant or prolonged decline in the value of the instrument is considered to determine whether impairment has arisen. Impairment losses are recognised in the Statement of Comprehensive Income.

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 expired. 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.

(f) Impairment of Assets

At the end of each reporting period, the group assesses whether there is any indication that an asset may be impaired. The assessment will include the consideration of external and internal sources of information including dividends received from subsidiaries, associates or jointly controlled entities deemed to be out of pre-acquisition profits. If such an indication exists, an impairment test is carried out on the asset by comparing the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the Statement of Comprehensive Income.

Impairment testing is performed annually for goodwill and intangible assets with indefinite lives, or more frequently if facts or circumstances indicate an impairment may have occurred.

Where it is not possible to estimate the recoverable amount of an individual asset, the group 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)

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (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.

Transactions 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 Statement of Comprehensive Income, 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 Statement of Comprehensive Income.

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 the end of the reporting period.
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 Statement of Changes in Equity. These differences are recognised in the Statement of Comprehensive Income in the period in which the operation is disposed.

(i) Employee Benefits

Provision is made for the Group’s liability for employee benefits arising from services rendered by employees to the end of the reporting period. 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. In determining the liability, consideration is given to employee wage increases and the probability that the employee may satisfy vesting requirements. Those benefits are discounted using market yields on national government bonds with terms to maturity that match the expected timing of cash flows.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(i) Employee Benefits (continued)

Equity-settled compensation

The group operates equity-settled share-based payment employee share and option schemes. The fair value of the options granted is recognised as an expense over the vesting period, with a corresponding increase to an equity account. The fair value of shares is ascertained as the market bid price. The fair value of options is ascertained using a Black-Scholes pricing model which incorporates all market vesting conditions. The number of shares and options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognised for services received as consideration for the equity instruments granted shall be based on the number of equity instruments that eventually vest.

(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.

(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 Statement of Financial Position.

(l) Trade and Other Payables

Trade and other payables represent the liability outstanding at the end of the reporting period for goods and services received by the group during the reporting period which remains unpaid. The balance is recognised as a current liability with the amount being normally paid within 30 days of recognition of the liability.

(m) Revenue and Other Income

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).

(n) Goods and Services Tax (GST) and Value-Added Tax (VAT)

Revenues, expenses and assets are recognised net of the amount of GST / VAT, except where the amount of GST / VAT incurred is not recoverable from the relevant taxation authority. In these circumstances the GST / VAT is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the Statement of Financial Position are shown inclusive of GST / VAT.

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

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(o) Earnings per Share

Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude any cost of servicing equity (other than dividends), divided by the weighted average number of ordinary shares.

Diluted earnings per share is calculated as net profit attributable to members of the parent, adjusted for:

Cost of servicing equity other than dividends and preference share dividends;
The after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and
Other non-discretionary changes in revenue or expenses during the period that would result from the dilution of potential ordinary shares, divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.

(p) Comparative Figures

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

(q) Critical Accounting Estimates and Judgements

The Directors evaluate estimates and judgements incorporated into the financial statement 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 Estimate – Impairment

The Group assess impairment at the end of each reporting period by evaluating conditions specific to the group that may lead to impairment of assets. Where an impairment indicator exists, the recoverable amount of the assets 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 impaired accordingly.

The Group’s right to tenure is subject to ongoing renewal of its Prospecting Licences.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(q) Critical Accounting Estimates and Judgements (continued)

Key Judgements - Exploration and Evaluation Expenditure

The group capitalises expenditure relating to exploration and evaluation where it is considered likely to be recoverable or where the activities have not reached a stage which permits a reasonable assessment of the existence of reserves. While there are certain areas of interest from which no reserves have been extracted, the Directors are of the continued belief that such expenditure should not be written off since feasibility studies in such areas have not yet concluded. Such capitalised expenditure is carried at the end of the reporting period at $6,089,251 (2010:$4,221,291).

(r) New Accounting Standards for Application in Future Periods

The AASB has issued new and amended Accounting Standards and Interpretations that have mandatory application dates for future reporting periods and which the Group has decided not to early adopt. A discussion of those future requirements and their impact on the Group is as follows:

AASB 9: Financial Instruments (December 2010) (applicable for annual reporting periods commencing on or after 1 January 2013).

This standard is applicable retrospectively and includes revised requirements for the classification and measurement of financial instruments, as well as recognition and derecognition requirements for financial instruments. The Group has not yet determined any potential impact on the financial statements.

The key changes made to accounting requirements include:
simplifying the classifications of financial assets into those carried at amortised cost and those carried at fair value;
simplifying the requirements for embedded derivatives;
removing the tainting rules associated with held-to-maturity assets;
removing the requirements to separate and fair value embedded derivatives for financial assets carried at amortised cost;
allowing an irrevocable election on initial recognition to present gains and losses on investments in equity instruments that are not held for trading in other comprehensive income. Dividends in respect of these investments that are a return on investment can be recognised in profit or loss and there is no impairment or recycling on disposal of the instrument;
requiring financial assets to be reclassified where there is a change in an entity’s business model as they are initially classified based on: (a) the objective of the entity’s business model for managing the financial assets; and (b) the characteristics of the contractual cash flows; and
requiring an entity that chooses to measure a financial liability at fair value to present the portion of the change in its fair value due to changes in the entity’s own credit risk in other comprehensive income, except when that would create an accounting mismatch. If such a mismatch would be created or enlarged, the entity is required to present all changes in fair value (including the effects of changes in the credit risk of the liability) in profit or loss.

- AASB 124: Related Party Disclosures (applicable for annual reporting periods commencing on or after 1 January 2011).

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 1 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(r) New Accounting Standards for Application in Future Periods (continued)

This Standard removes the requirement for government-related entities to disclose details of all transactions with the government and other government-related entities and clarifies the definition of a “related party” to remove inconsistencies and simplify the structure of the Standard. No changes are expected to materially affect the Group.

AASB 2009-12: Amendments to Australian Accounting Standards [AASBs 5, 8, 108, 110, 112, 119, 133, 137, 139, 1023 & 1031 and Interpretations 2, 4, 16, 1039 & 1052] (applicable for annual reporting periods commencing on or after 1 January 2011).

This Standard makes a number of editorial amendments to a range of Australian Accounting Standards and Interpretations, including amendments to reflect changes made to the text of IFRSs by the IASB. The Standard also amends AASB 8 to require entities to exercise judgment in assessing whether a government and entities known to be under the control of that government are considered a single customer for the purposes of certain operating segment disclosures. The amendments are not expected to impact the Group.

AASB 2010-4: Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project [AASB 1, AASB 7, AASB 101 & AASB 134 and Interpretation 13] (applicable for annual reporting periods commencing on or after 1 January 2011).

This Standard details numerous non-urgent but necessary changes to Accounting Standards arising from the IASB’s annual improvements project. Key changes include:

clarifying the application of AASB 108 prior to an entity’s first Australian-AccountingStandards financial statements;
adding an explicit statement to AASB 7 that qualitative disclosures should be made in the context of the quantitative disclosures to better enable users to evaluate an entity’s exposure to risks arising from financial instruments;
amending AASB 101 to the effect that disaggregation of changes in each component of equity arising from transactions recognised in other comprehensive income is required to be presented, but is permitted to be presented in the statement of changes in equity or in the notes;
adding a number of examples to the list of events or transactions that require disclosure under AASB 134; and
making sundry editorial amendments to various Standards and Interpretations.

This Standard is not expected to impact the Group.

AASB 2010-5: Amendments to Australian Accounting Standards [AASB 1, 3, 4, 5, 101, 107, 112, 118, 119, 121, 132, 133, 134, 137, 139, 140, 1023 & 1038 and Interpretations 112, 115, 127, 132 & 1042] (applicable for annual reporting periods beginning on or after 1 January 2011).

This Standard makes numerous editorial amendments to a range of Australian Accounting Standards and Interpretations, including amendments to reflect changes made to the text of IFRSs by the IASB. However, these editorial amendments have no major impact on the requirements of the respective amended pronouncements.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 1 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(r) New Accounting Standards for Application in Future Periods (continued)

AASB 2010-6: Amendments to Australian Accounting Standards – Disclosures on Transfers of Financial Assets [AASB 1 & AASB 7] (applicable for annual reporting periods beginning on or after 1 July 2011).

This Standard adds and amends disclosure requirements about transfers of financial assets, especially those in respect of the nature of the financial assets involved and the risks associated with them. Accordingly, this Standard makes amendments to AASB 1: First-time Adoption of Australian Accounting Standards, and AASB 7: Financial Instruments: Disclosures, establishing additional disclosure requirements in relation to transfers of financial assets.

This Standard is not expected to impact the Group.

AASB 2010-7: AASB 2010–7: Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) [AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 120, 121, 127, 128, 131, 132, 136, 137, 139, 1023 & 1038 and Interpretations 2, 5, 10, 12, 19 & 127] (applies to periods beginning on or after 1 January 2013).

This Standard makes amendments to a range of Australian Accounting Standards and Interpretations as a consequence of the issuance of AASB 9: Financial Instruments in December 2010. Accordingly, these amendments will only apply when the entity adopts AASB 9.

As noted above, the Group has not yet determined any potential impact on the financial statements from adopting AASB 9.

The financial statement was authorised for issue on 29[th] September 2011 by the Board of Directors.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 2 REVENUE

Revenue from Ordinary Activities Other income Interest Recoveries Rent Gain on disposal of assets Revenue from ordinary activities NOTE 3 EXPENDITURE Administration Office expenses Depreciation expense Rental expense Travel expenses Other expenses	Consolidated Group 2011 2010 $ $ 198,273 124,705 8,511 88,406 29,167 - 16,927 -
	252,878 213,111
	Consolidated Group 2011 2010 $ $ 93,063 44,786 12,129 10,161 57,089 14,369 110,767 69,425 109,338 52,845
	382,386 191,586

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% (2010: 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 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 2011 2010 $ $ - - - -
	- -
	(2,187,448) (672,108) (656,234) (201,632) 37,523 8,257
	(618,711) (193,375)
	(526,839) (333,464)
	(1,145,550) (526,839) 1,145,550 526,839
	- -

NOTE 5 KEY MANAGEMENT PERSONNEL

(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

Mr P Volpe Mr M Cellante Dr P Woolrich Mr H Stacpoole (resigned 30 November 2010) Mr R Baker

Position

Chairman - Executive Director - Non-executive Director - Non-executive Director – Non-executive Company Secretary

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 5 KEY MANAGEMENT PERSONNEL (CONTINUED)

(b) Number of Options Held by Key Management Personnel

2011	Balance 1.7.2010		Exercised	Expired	Net Change	Balance 30.6.2011	Vested and exercisable	Vested and Unexercisable
					Other*
Mr P Volpe	3,000,000	-	(1,000,000)	(2,000,000)	17,500,000	17,500,000	17,500,000	-
Mr M Cellante	-	-	-	-	7,500,000	7,500,000	7,500,000
Mr H Stacpoole (resigned
30 November 2010)	1,000,000	-	(333,334)	(666,666)	-,	-	-	-
Dr P Woolrich	1,000,000	-	(333,334)	(666,666)	488,888	488,888	488,888	-
Mr R Baker	100,000	-	(33,334)	(66,666)	272,488	272,488	272,488	-
Total	5,100,000		(1,700,002)	(3,399,998)	25,761,376	25,761,376	25,761,376	-

* Net Change Other refers to obtains obtained by participation in the Rights Issue on 18 February 2011.

2010	Balance 1.7.2009				Balance 30.6.2010		Vested and exercisable
Mr P Volpe	3,000,000	-	-	-	3,000,000	-	3,000,000	-
Mr H Stacpoole	1,000,000	-	-	-	1,000,000	-	1,000,000	-
Dr P Woolrich	1,000,000	-	-	-	1,000,000	-	1,000,000	-
Mr R Baker	100,000	-			100,000	-	100,000	-
Total	5,100,000	-	-	-	5,100,000	-	5,100,000	-

(c) Number of Shares held by Key Management Personnel

2011 Holder	Balance 1.7.2010		Issued on Exercise of Option	Net Change Other*	Balance 30.6.2011
Mr P Volpe	13,531,159	-	1,000,000	8,750,000	23,281,159
Mr M Cellante	7,239,709	-	-	3,750,000	10,989,709
Dr P Woolrich	400,000	-	333,334	244,444	977,778
Mr R Baker	400	-	33,334	136,244	169,978
Total	22,606,128	-	1,366,668	12,880,688	35,418,624

2010 Holder	Balance 1.7.2009			Net Change Other*	Balance 30.6.2010
Mr P Volpe	13,481,159	-	-	50,000	13,531,159
Mr M Cellante (appointed 4 September 2009)	5,887,035	-	-	1,352,674	7,239,709
Mr H Stacpoole	1,434,860	-	-	-	1,434,860
Dr P Woolrich	400,000	-	-	-	400,000
Mr R Baker	400	-	-	-	400
Total	21,203,454	-	-	1,402,674	22,606,128

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 5 KEY MANAGEMENT PERSONNEL (CONTINUED)

(d) Remuneration paid to Key Management Personnel

Short-term employee benefits Post-employment benefits Total NOTE 6 REMUNERATION OF AUDITORS Remuneration of the auditor of the entity for : Audit or review of the financial statements NOTE 7 EARNINGS PER SHARE a) Reconciliation of losses to profit or loss Loss used to calculate basic EPS Loss used to calculate diluted 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 basic earnings per share Weighted average number of dilutive options Weighted average number of ordinary shares used in the calculation of dilutive earnings per share d) Anti-dilutive options on issue not used in dilutive EPS calculation	Consolidated Group 2011 $ 2010 $ 618,647 468,306 52,978 38,948
	671,625 507,254
	Consolidated Group 2011 2010 $ $ 24,500 33,061
	Consolidated Group 2011 2010 $ $ (2,187,448) (672,108) (2,187,448) (672,108) No. No. 119,904,134 106,087,760 119,904,134 106,087,760 - -
	119,904,134 106,087,760
	71,857,670 5,150,000

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 8 CASH AND CASH EQUIVALENTS

	Consolidated Group 2011 2010 $ $
Cash at bank and in hand
	340,566 805,240
Call deposit	1,021,484 -
Term deposit	1,903,741 4,500,000
	3,265,791 5,305,240
NOTE 9 TRADE AND OTHER RECEIVABLES	Consolidated Group 2011 2010 $ $
Current
Trade & Other Receivables	166,731 48,296
	166,731 48,296
NOTE 10 JOINT VENTURES Interest in Joint Venture Operations BOTSWANA Jim’s Luck Prospect Botswana Metals Limited had 20% interest in Jim’s Luck, however the Company accepted advice from its joint venture partner IAMGold Corporation that the deposit at Jim’s Luck was uneconomic and consequently impaired the value of its contributions to the joint venture totaling $500,110.	Consolidated Group 2011 2010 $ $

The economic entity’s share of assets employed in the joint venture is : Non –Current Assets Capitalised exploration and evaluation - 500,110

There are no known contingent liabilities and commitments in relation to the Jim’s Luck Prospect.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 11 CONTROLLED ENTITIES

		Country of	Class of Share	Equity Holding	Equity Holding
		Incorporation
				2011	2010
				%	%
African Metals (Pty) Limited		Botswana	Ordinary	100	100
NOTE 12	PLANT AND EQUIPMENT
				Consolidated Group
				2011	2010
				$	$
Plant and equipment
At cost				485,013	274,261
Accumulated Depreciation				(160,597)	(107,753)
				324,416	166,508
Movements	in Carrying Amounts
				Consolidated Group
				2011	2010
				$	$
Balance at 1	July			166,508	197,175
Additions				210,752	18,684
Depreciation	expense			(52,844)	(49,351)
Balance at 30 June				324,416	166,508

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 13 CAPITALISED EXPLORATION AND EVALUATION

The exploration and evaluation expenditure relates to the consolidated entity’s projects in Botswana.

	Consolidated Group 2011 2010 $ $


At cost	6,089,251 4,221,291

Expenditure impaired during the year	1,204,318 -

Movements in carrying values
Balance at beginning of year	4,221,291 4,017,637
Expenditure during the year	3,598,104 415,917
Expenditure impaired during the year	(1,204,318) -
Foreign currency translation	(525,826) (212,263)
Balance at year end	6,089,251 4,221,291

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 2011 is the accumulated depreciation of Plant and Equipment for the financial year amounting to $154,403 (2010: $99,334).

Capital costs amounting to$3,538,680(2010: $368,113) have been included in cash flows from investing activities in the Statement of Cash Flows.

NOTE 14 TRADE AND OTHER PAYABLES

Current	Consolidated Group 2011 2010 $ $
Unsecured liabilities

Trade Payables	197,840 35,390
Sundry payables and accrued expenses	261,516 85,372
Amounts payable to
- Related parties	- -
- Amount owing to Directors	- 96,557
- Amountpayable to Director related Entity	1,827 19,996
	461,183 237,315

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 15 ISSUED CAPITAL

143,717,845 (2010: 106,087,760) fully paid ordinary shares 71,857,670 options expiring 30 June 2013; (2010: 5,150,000 options expiring 30 June 2011)	Consolidated Group 2011 2010 $ $ 12,326,451 9,487,986 90,816 90,816
	12,417,267 9,578,802

(a) Ordinary Shares

	Date	Number of Shares	Number of Shares	Issue Price ($)	Issue Price ($)	$	$
		2011	2010	2011	2010	2011	2010
At the beginning of the reporting period Shares issued during the year - exercise of options - exercise of options - rights issue - exercise of options Costs associated with capital raising	30/11/2010 13/01/2011 18/02/2011 03/05/2011	106,087,760 333,334 1,366,668 35,929,251 832	106,087,760 - - - -	0.10 0.10 0.08 0.10	- - - - -	9,487,986 33,334 136,667 2,874,340 83 (205,959)	9,487,986 - - - - -
At reporting date		143,717,845	106,087,760			12,326,451	9,487,986

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.

At shareholders’ meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands.

The company’s ordinary shares have no par value, and the company does not have a limited amount of authorised capital.

(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.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 15 ISSUED CAPITAL (CONTINUED)

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 ratios for the year ended 30 June 2011 and 30 June 2010 are as follows:

Note Total borrowings 14 Less cash and cash equivalents 8 Net debt Total equity Total capital Gearingratio	Consolidated Group
	2011 $ 2010 $
	461,183 237,315 (3,265,791) (5,305,240)
	(2,804,608) (5,067,925) 9,385,006 9,504,020
	6,580,398 4,436,095
	(43%) (114%)

(c) Options

Information relating to employee share option plan is set out in Note 21: Share-based Payments.

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).

Movements in Carrying Amounts

Balance at 1 July Movement in foreign exchange Balance at 30 June	Consolidated Group 2011 2010 $ $ (608,089) (385,986) (770,031) (222,103)
	(1,378,120) (608,089)

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.

Movements in Carrying Amounts

Balance at 1 July Movement in demerger reserve Balance at 30 June	Consolidated Group 2011 2010 $ $ 2,422,119 2,422,119 - -
	2,422,119 2,422,119

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 17 CAPITAL AND LEASING COMMITMENTS

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 Group 2011 2010 $ $ 8,419,908 1,528,651 11,389,053 1,738,814 - -
	19,808,961 3,267,465

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

The Group anticipates future expenditure on its current rights of tenure to exploration and mining tenements up until the expiry of its current Prospecting Licences and on tenements that have been applied for but not yet granted, which are included in the above table. In the event the Group does not meet the minimum exploration expenditure the licences may be cancelled or not renewed. These obligations are subject to renegotiation upon expiry of the licences 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 in 2007, Mineral Holdings Botswana (Pty) Ltd has retained a right to a 5% net profits share. The Group therefore, has a contingent liability to Mineral Holdings Botswana (Pty) Ltd should it establish a profitable mining operation on those tenements.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTE 19 SEGMENT INFORMATION

Segment Information

Identification of reportable segments

The group has identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors (chief operating decision makers) in assessing performance and determining the allocation of resources.

The group only operates within one business segment being that of mineral exploration. In addition, the management considers the consolidated group’s operation from a geographic perspective being that of Australia and Africa, and monitor the performance in those regions separately.

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.

Basis of accounting for the purposes of reporting by operating segment

(a) 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. Unless stated otherwise, all amounts reported to the Board of Directors in relation to operating segments are determined in accordance with the accounting policies consistent with those adopted in the annual financial statements of the Group.

(b) 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 19 SEGMENT INFORMATION (CONTINUED)

(i) Segment Performance

SEGMENT REVENUE

Interest revenue Other income Total segment revenue

SEGMENT NET PROFIT Loss before income tax

2011		2010
Australia	Africa	Australia	Africa
$	$	$	$
198,238	34	124,705	-
29,396	25,210	-	88,406
227,634	25,244	124,705	88,406
2011		2010
Australia	Africa	Australia	Africa
1,355,427	832,021	616,916	55,192

SEGMENT ASSETS

Cash and cash equivalents Plant and equipment Capitalised exploration and evaluation Trade & other receivables Total segment assets

SEGMENT LIABILITIES

Trade & other payables Total segment liabilities

2011	2011		2010
Australia	Africa	Australia	Africa
$	$	$	$
3,230,364	35,427	5,293,163	12,077
49,725	274,691	11,612	154,896
-	6,089,251	500,110	3,721,181
50,741	115,990	13,271	35,026
3,330,830	6,515,359	5,818,156	3,923,180
2011			2010
Australia	Africa	Australia	Africa
$	$	$	$
180,617	280,566	208,652	28,663
180,617	280,566	208,652	28,663

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 20 CASH FLOW INFORMATION

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 Term 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 - (Profit) / loss on sale of assets - Net (gain) / loss on foreign exchange - Impairment of capitalised exploration expenditure 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 - Increase/(decrease) in provisions Net cash (outflow) from operating activities	Consolidated Group 2011 2010 $ $ 340,566 805,240 1,021,484 - 1,903,741 4,500,000
	3,265,791 5,305,240
	(2,187,448) (672,108) 12,129 10,161 - 755 (16,927) - (155,454) - 1,204,318 - (118,435) 15,973 173,849 43,836 50,020 (8,645)
	(1,037,948) (610,028)

Non-Cash Financing and Investing Activities Share-based remuneration Capitalised depreciation for Plant and Equipment	Consolidated Group 2011 2010 $ $ - 755 61,064 46,416
	61,064 47,171

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 21 SHARE-BASED PAYMENTS

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.

The options are issued for no consideration and carry no entitlements to voting rights or dividends of the group.

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.

On 30 November 2010, 333,334 options were exercised at an exercise price of $0.10 per option. 333,334 shares were issued.

On 30 November 2010, 333,333 options exercisable at $0.15 expired. On 30 November 2010, 333,333 options exercisable at $0.20 expired.

On 13 January 2011, 1,366,668 options were exercised at an exercise price of $0.10 per option. 1,366,668 shares were issued.

On 30 June 2011, 1,366,666 options exercisable at $0.15 expired. Also on 30 June 2011, 1,366,666 options exercisable at $0.20 expired.

A summary of the movements of all company options issued is as follows:

Outstanding at the beginning of the year Granted Forfeited Exercised Expired Outstanding at year-end Exercisable at year-end	2011 2010 Number of Options Weighted Average Exercise Price Number of Options Weighted Average Exercise Price $ $ 5,150,000 0.15 5,100,000 0.15 - - 50,000 0.10 - - - - 1,700,002 0.10 - - 3,449,998 0.174 - -
	- 5,150,000
	- 5,150,000

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 22 EVENTS AFTER THE END OF THE REPORTING PERIOD

EXTENSION OF BOTSWANA PROSPECTING LICENCES

PL 46/2044 Sampowane
PL 47/2004 Gobe Shear

At the date of this report, the Department of Geological Survey had not informed the Company as to whether these Prospecting Licences have been extended.

RENEWAL OF BOTSWANA PROSPECTING LICENCES

PL 59/2008 Shashe South
PL 70/2008 Central.

At the date of this report, the Department of Geological Survey had not informed the Company as to whether these Prospecting Licences have been renewed.

GRANT OF NEW BOTSWANA PROSPECTING LICENCE

On 9 September 2011 the Company received notification from the Department of Geological Survey in Botswana that it had been granted a Prospecting Licence (number 126/2011 titled Xia 2).

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, H Stacpoole and P Woolrich are directors and shareholders. Mr Volpe resigned as a Director of A-Cap Resources Limited on 12 January 2010 and Mr Stacpoole resigned as a Director of Botswana Metals Limited on 30 November 2010. Underwriting fees paid to Trayburn Pty Ltd, a company of which Mr Volpe is a Director and shareholder. Underwriting fees paid to Bell IXL Investments Limited, a listed company of which Mr Cellante is a Director and shareholder. Underwriting fees paid to Mrs Anne Woolrich, the spouse of Mr Paul Woolrich. Consulting fees paid to Woolrich& Associates Pty Ltd, a company of which Dr P Woolrich is a Director and shareholder. Consulting fees paid to Mr H Stacpoole. Administrative fees paid to Cardia Bioplastics Limited, a listed public company of which Mr P Volpe is a Director and shareholder. Rent received from Cam Bow Limited, a company of which Messrs Volpe and Baker are Directors and shareholders. Rent received from Cardia Bioplastics Limited, a listed public company of which Mr Volpe is a Director and shareholder. Rent receivable from P-Fuel Limited, a company of which Messrs Volpe and Baker were Directors (both resigned 28 January 2011) and shareholders. Contracting fees received by African Metals (Pty) Ltd from Cam Bow Holdings (Pty) Ltd, a wholly-owned subsidiary of Cam Bow Limited. Administrative fees paid by African Metals (Pty) Limited to Cardia Mining Botswana (Pty) Limited, a wholly owned subsidiary of A-Cap Resources Limited of which Messrs P Volpe, H Stacpoole and P Woolrich are directors and shareholders. Mr Volpe resigned as a Director of A-Cap Resources Limited on 12 January 2010. Administrative fees and vehicle hire received by African Metals (Pty) Limited, from Cardia Mining Botswana (Pty) Limited, a wholly owned subsidiary of A-Cap Resources Limited of which Messrs P Volpe, H Stacpoole and P Woolrich are directors and shareholders. Mr Volpe resigned as a Director of A-Cap Resources Limited on 12 January 2010.	Consolidated Group 2011 2010 $ $ - 26,325 130,653 - 15,000 - 1,250 - 25,187 16,375 10,500 - 7,177 5,734 (7,778) - (13,634) - (8,168) - 23,725 - - 45,611 (8,282) (90,000)
	175,630 4,045

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, H Stacpoole and P Woolrich are
directors and shareholders. Mr Volpe resigned as a Director of A-Cap
Resources Limited on 12 January 2010 and Mr Stacpoole resigned as
a Director of Botswana Metals Limited on 30 November 2010.
Underwriting fees paid to Trayburn Pty Ltd, a company of which Mr
Volpe is a Director and shareholder.
Underwriting fees paid to Bell IXL Investments Limited, a listed
company of which Mr Cellante is a Director and shareholder.
Underwriting fees paid to Mrs Anne Woolrich, the spouse of Mr Paul
Woolrich.
Consulting fees paid to Woolrich& Associates Pty Ltd, a company of
which Dr P Woolrich is a Director and shareholder.
Consulting fees paid to Mr H Stacpoole.
Administrative fees paid to Cardia Bioplastics Limited, a listed public
company of which Mr P Volpe is a Director and shareholder.
Rent received from Cam Bow Limited, a company of which Messrs
Volpe and Baker are Directors and shareholders.
Rent
received
from
Cardia
Bioplastics
Limited,
a
listed
public
company of which Mr Volpe is a Director and shareholder.
Rent receivable from P-Fuel Limited, a company of which Messrs
Volpe and Baker were Directors (both resigned 28 January 2011) and
shareholders.
Contracting fees received by African Metals (Pty) Ltd from Cam Bow
Holdings (Pty) Ltd, a wholly-owned subsidiary of Cam Bow Limited.
Administrative fees paid by African Metals (Pty) Limited to Cardia
Mining Botswana (Pty) Limited, a wholly owned subsidiary of A-Cap
Resources Limited of which Messrs P Volpe, H Stacpoole and P
Woolrich are directors and shareholders. Mr Volpe resigned as a
Director of A-Cap Resources Limited on 12 January 2010.
Administrative fees and vehicle hire received by African Metals (Pty)
Limited, from Cardia Mining Botswana (Pty) Limited, a wholly owned
subsidiary of A-Cap Resources Limited of which Messrs P Volpe, H
Stacpoole and P Woolrich are directors and shareholders. Mr Volpe
resigned as a Director of A-Cap Resources Limited on 12 January
2010.

Consolidated Group
2011
2010
$
$ -
26,325
130,653
-
15,000
-
1,250
-
25,187
16,375
10,500
-
7,177
5,734
(7,778)
-
(13,634)
-
(8,168)
-
23,725
-
-
45,611
(8,282)
(90,000)

175,630
4,045

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)

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 (resigned 30 November 2010), Dr P Woolrich and Mr M L Cellante. During the year ended 30 June 2010 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 Mr M L Cellante (appointed4 September 2009).

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 and Note 5 to the financial statements.

Other Transactions with Directors and Director-Related Entities

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 2011 2010 $ $ 72,500 85,000 396,147 315,056 35,687 16,750
	504,334 416,806

Aggregate amounts payable by Botswana Metals Limited to related-party entities at the end of the reporting period 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

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 meets 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

Exposure to interest rate risk arises on financial assets and financial liabilities recognised at the end of the reporting period whereby future changes in interest rates will affect future cash flows or the fair value of fixed rate financial instruments. The group is exposed to earnings volatility on floating rate instruments.

The group is exposed to interest rate risk on its cash deposits. The group manages the risk by monitoring the interest rate movements and transfers or invests the funds into financial institutions which offer the better rate or invest the funds in other financial instruments that generate better return for the group.

The group is not presently exposed to any interest bearing debt and as such has no 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 functional currency.

The group is not significantly exposed to the foreign currency risk as the group buys foreign currency at spot rates only to fund short-term cash requirements.

Liquidity Risk

Liquidity risk arises from the possibility that the group might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities. The group manages liquidity risk by monitoring forecast cash flows and only investing surplus cash with major financial institutions.

The group is not significantly exposed to the liquidity risk as the group has sufficient funds to meet its obligations when they fall due and is investing surplus cash with major financial institutions.

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)

(ii) Financial Risk Exposures and Management (Continued)

Credit risk

Credit risk arises from the financial assets of the group which comprise cash and cash equivalents and trade and other receivables. The credit risk on cash and cash equivalents are minimised through investing funds in financial institutions that maintain high credit ratings. Furthermore, receivable balances are monitored by the group on an ongoing basis, thus, the group is not significantly exposed to credit risk.

(b) Financial Liability and Financial Asset Maturity Analysis

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 Statement of Financial Position.

Consolidated Group

Consolidated Group
2011 From 1 July 2010 to 30 June 2011 Assets: Cash and Bank Balances Term Deposits Receivables Total financial assets Liabilities: Trade and other creditors Total financial liabilities Net financial assets (liabilities)	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 $
	2.90 6.00	1,127,143 - - - 234,907 1,362,050 - 1,903,741 - - - 1,903,741 - - - - 166,731 166,731
		1,127,143 1,903,741 - - 401,638 3,432,522
		- - - - (461,183) (461,183)
		(461,183) (461,183)
		1,127,143 1,903,741 - - (59,545) 2,971,339

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)

Consolidated Group 2010 From 1 July 2009 to 30 June 2010 Assets: Cash and Bank Balances Term Deposits Receivables Total financial assets Liabilities: Trade and other creditors Total financial liabilities Net financial assets (liabilities)	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 $
	2.35 5.70 -	792,159 - - - 13,081 805,240 4,500,000 - - - - 4,500,000 - - - - 48,296 48,296
		5,292,159 - - - 61,377 5,353,536

		- - - - (237,315) (237,315)
		- - - - (237,315) (237,315)
		5,292,159 - - - (175,938) 5,116,221

Trade and other payables are expected to be paid as follows

Trade and other payables are expected to be paid as follows
Less than 6 months	Consolidated Group 2011 2010 $ $ 461,183 237,315
	461,183 237,315

(c) Net Fair Values

The net fair values of financial assets and liabilities approximate their carrying values due to their shortterm nature.

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)

(d) Sensitivity Analysis

The following table illustrates sensitivities to the consolidated group’s exposures to changes in interest rates and exchange rates. The table indicates the impact on how profit and equity values reported at the end of the reporting period would have been affected by changes in relevant risk variable that management considers to be reasonably possible. These sensitivities assume that the movement in a particular variable is independent of other variables.

	Consolidated Group	Consolidated Group
	2011	2010
Foreign exchange rate sensitivity analysis	$	$
Change in profit
- Increase in AUD to BWP by 5%	5,998	2,759
- Decrease in AUD to BWP by 5%	(5,998)	(2,759)
Change in equity
- Increase in AUD to BWP by 5%	5,998	2,759
- Decrease in AUD to BWP by 5%	(5,998)	(2,759)
Interest rate sensitivity analysis
Change in profit
- Increase in interest rate by 1%	23,874	53,052
- Decrease in interest rate by 1%	(23,874)	(53,052)
Change in equity
- Increase in interest rate by 1%	23,874	53,052
- Decrease in interest rate by 1%	(23,874)	(53,052)

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 25 PARENT ENTITY DISCLOSURES

Financial Position

Assets Current assets Non-current assets Total assets Liabilities Current liabilities Non-current liabilities Total liabilities Equity Issued capital Demerger reserve Accumulated losses Total equity Financial Performance Loss for the year Other comprehensive income Total comprehensive income	2011 2010 $ $ 3,281,104 5,306,434 8,803,236 5,322,902
	12,084,340 10,629,336
	180,617 208,652 - -
	180,617 208,652
	12,417,267 9,578,802 2,422,119 2,422,119 (2,935,663) (1,580,236)
	11,903,723 10,420,685
	2011 2010 $ $ (1,355,427) (616,915) - -
	(1,355,427) (616,915)

Guarantees, contingent liabilities and contractual commitments

The subsidiary company has expenditure commitments to maintain its current rights of tenure to exploration and mining tenements up until the expiry of the leases including its joint venture commitments. These obligations are subject to renegotiation upon expiry of the leases and are not provided for in the financial statements. The parent entity has committed to providing funds to ensure the subsidiary company can fulfil these commitments as well as any other operating commitments.

NOTE 26 COMPANY DETAILS

The principal place of business and registered office is: Suite 5, Level 1, 310 Whitehorse Road, Balwyn, Victoria, Australia 3103

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 37 to 73 are in accordance with the Corporations Act 2001 and:

a. comply with International Financial Reporting Standards, as stated in Note 1 to the financial statements;
b. comply with Accounting Standards, the Corporations Regulations 2001; and
c. give a true and fair view of the financial position as at 30 June 2011 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.

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P J Volpe Director

Balwyn Dated this 29[th] day of September 2011

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

INDEPENDENT AUDIT REPORT

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BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

INDEPENDENT AUDIT REPORT

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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 28[th] September 2009.

(A) NUMBER OF HOLDERS OF EACH CLASS OF

Ordinary Shares

1,827 holders

Options over Ordinary Shares

681 holders

(B) DISTRIBUTION OF EQUITY SECURITIES

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

Ordinary Shares

1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over	Holders Units Percentage 287 146,717 0.10 410 1,209,514 0.84 279 2,262,751 1.57 629 23,189,803 16.14 222 116,909,059 81.35
	1,827 143,717,844 100.00

There were 840 holders of less than a marketable parcel of ordinary shares.

Options over Ordinary Shares

1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over	Holders Units Percentage 45 25,976 0.036 144 437,543 0.609 134 989,993 1.378 263 9,718,124 13.524 95 60,686,034 84.453
	681 71,857,670 100.00

There were 429 holders of less than a marketable parcel of options over ordinary shares.

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

SHAREHOLDER INFORMATION

SHAREHOLDER INFORMATION (CONTINUED)

(C) EQUITY SECURITY HOLDERS

The names of the twenty largest holders of quoted Ordinary Shares are listed below:

Vermar Pty Ltd
Bell IXL Investments Limited
Polarity B Pty Ltd
J P Morgan Nominees Australia Limited
Baystreet Pty Ltd
Riotek Pty Ltd
Mr Peter & Mrs Marie Young
Sandhurst Trustees Ltd
Mr Timothy Larcombe
Claric 182 Pty Ltd
Mrs Judith & Mr Graeme Robertson
Stacpoole Enterprises Pty Ltd
Hampshire Grange Pty Ltd
CBN Enterprises Pty Ltd
Rabinov Holdings Pty Ltd
Thornton (NSW) Pty Ltd
Mr Peter Hayes
Duffus Investments Pty Ltd
Mr Barrie & Mrs Merrilyn Laws
Rupert Clark & Company Pty Limited

Ordinary Shares
Number
Held
Percentage of
Issued Shares
23,281,159
16.200
10,989,709
7.647
8,957,292
6.233
3,301,138
2.297
3,030,000
2.109
2,643,813
1.840
2,000,000
1.392
2,000,000
1.392
1,600,000
1.113
1,416,853
0.986
1,264,659
0.880
1,040,815
0.724
1,000,000
0.696
1,000,000
0.696
972,686
0.677
952,000
0.662
947,463
0.659
800,000
0.557
800,000
0.557
700,000
0.487

68,697,587
47.800

The names of the twenty largest holders of quoted Options over Ordinary Shares are listed below:

Vermar Pty Ltd
Bell IXL Investments Limited
Polarity B Pty Ltd
Sandhurst Trustees Ltd
ABN AMRO Clearing Sydney Nominees Pty Ltd
Mr Paul McKee
Mr Jason Sourasis
JP Morgan Nominees Australia Limited
Mr John & Mrs Rita Friedrich
Riotek Pty Ltd
Comp-World Limited
Mr Brett Mitchinson
Duffus Investments Pty Ltd
Clodene Pty Ltd
Mrs Judith & Mr Graeme Robertson
Mr Peter & Mrs Marie Young
Stacpoole Enterprises Pty Ltd
Mrs Anne Woolrich
Mr Timothy Larcombe
Jannarn Pty Ltd

Ordinary Shares
Number
Held
Percentage of
Issued Shares
17,500,000
24,354
7,500,000
10.437
4,896,500
6.814
1,640,000
2.282
1,605,918
2.235
1,600,000
2.227
1,539,470
2.142
1,394,968
1.941
1,050,000
1.461
1,021,908
1.422
1,000,000
1.392
938,578
1.306
700,000
0.974
689,063
0.959
620,000
0.863
600,000
0.835
570,406
0.794
500,000
0.696
500,000
0.696
469,372
0.653

46,336,183
64.483

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

SHAREHOLDER INFORMATION

SHAREHOLDER INFORMATION (CONTINUED)

(D) SUBSTANTIAL SHAREHOLDERS

Substantial shareholders in the Company are:

	Ordinary	Shares
	Number	Percentage
	Held	of Issued
		Shares
Vermar Pty Ltd	23,281,159	16.200
Bell IXL Investments Limited	10,989,709	7.647
Polarity B Pty Ltd	8,957,292	6.233

(E) 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 INTERESTS	IN MINING T	ENEMENTS
Tenement	Renewal / Expiry Date	Percentage Holding	Title Holder	Comment
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
Letlhakane PL45/2004	30/06/2011	-	Cardia Mining Botswana (Pty) Ltd	African Metals (Pty) Ltd has an interest in exploration for Base and Precious Metals but excludingRadioactive Metals.
Sampowane PL 46/2004	30/6/2011	100	African Metals (Pty) Ltd	Application for extension submitted 31 March 2011 Mineral Holdings (Botswana) Pty Ltd Holds 5%net profits share
Gobe Shear PL 47/2004	30/6/2011	100	African Metals (Pty) Ltd	Application for extension submitted 31 March 2011 Mineral Holdings (Botswana) Pty Ltd Holds 5% net profits share
Shashe South PL 059/2008	31/12/2010	100	African Metals (Pty) Ltd	Application for renewal submitted 30 November 2011
PL 070/2008	31/12/2010	100	African Metals (Pty) Ltd	Application for renewal submitted 30 November 2011
Lepokole PL158/2009	31/12/2011	100	African Metals (Pty) Ltd	-
Mmadinare PL360/2008	30/09/2011	100	African Metals (Pty) Ltd	-
Central Sampa PL 111/2011	30/06/2014	100	African Metals (Pty) Ltd	-
Xia2 PL126/2011	30/09/2014	100	African Metals (Pty) Ltd	-

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

AI assistant

VERITY RESOURCES LIMITED — Annual Report 2011

66020_rns_2011-09-29_41ec9fc5-2ebc-42ee-b659-18def9b8948d.pdf

TO: COMPANY ANNOUNCEMENTS OFFICE ASX LIMITED

Market Cap

DATE: 30 SEPTEMBER 2011

Cash

2011 ANNUAL REPORT

Issued Capital

Pat Volpe

Substantial shareholders

Chairman

Directors

Registered Office

Contact

BOTSWANA METALS LIMITED AND ITS CONTROLLED ENTITIES ACN 122 995 073

CORPORATE DIRECTORY

CHAIRMAN’S REPORT

DIRECTORS’ REPORT

DIRECTORS

Massimo Cellante

Paul Woolrich

COMPANY SECRETARY

PRINCIPAL ACTIVITIES

OPERATING RESULTS

DIVIDENDS

REVIEW OF OPERATIONS

PROSPECT LOCATIONS

Tenure

EXPLORATION REPORT

VTEM SURVEY

PL110/94 - Magogaphate

Airstrip

IP Grid showing Conductors

Maibele North

PL111/94 - MOKOSWANE

Dibete Prospect

Drilling

PL54/98 - TAKANE

PL46/2004 - SAMPOWANE

PL14/2003 - MAJANTE

PL47/2004 – GOBE SHEAR

Dibete East Prospect

PL59/2008 – SHASHE SOUTH

PL360/2008 – MMADINARE

PL158/2009 - LEPOKOLE

CORPORATE ACTIVITY

FINANCIAL POSITION

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

RESIGNATION OF DIRECTOR

IMPAIRMENT OF JIM’S LUCK INVESTMENT

IMPAIRMENT OF CAPITALISED EXPLORATION AND EVALUATION EXPENDITURE

AFTER BALANCE DATE EVENTS

EXTENSION OF BOTSWANA PROSPECTING LICENCES

RENEWAL OF BOTSWANA PROSPECTING LICENCES

GRANT OF NEW BOTSWANA PROSPECTING LICENCE

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

Shares Issued on Exercise of Options

REMUNERATION REPORT (CONTINUED)

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

CORPORATE GOVERNANCE STATEMENT

PRINCIPLE 1: LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT

PRINCIPLE 2: STRUCTURE THE BOARD TO ADD VALUE

VERITY RESOURCES LIMITED Annual Report 2011