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2012 Annual Report

An emerging precious and base metals company

www.laconia.com.au ASX: LCR

Corporate Directory

ABN 29 137 984 297

Solicitors

Directors

Matthew Howison (Non-Executive Chairman) Ian Stuart (Managing Director) Dr Saliba Sassine (Non-Executive Director) Vincent Algar (Non-Executive Director)

Williams & Hughes 1st Floor, 25 Richardson Street WEST PERTH WA 6005

Steinepreis Paganin Level 4, The Read Buildings 16 Milligan Street PERTH WA 6000

Company Secretary

Share Register

Matthew Edmondson

Registered Office and Principal Place of Business

Level 1, 41-43 Ord Street WEST PERTH WA 6005 Telephone: +61 8 9486 1599 Facsimile: +61 8 9486 7899

Postal Address

PO Box 1151 WEST PERTH WA 6872

Security Transfer Registrars Pty Ltd 770 Canning Highway APPLECROSS WA 6153

Auditors

Rothsay Chartered Accountants Level 18, Central Park Building 152-158 St Georges Terrace PERTH WA 6000

Internet Address

www.laconia.com.au

Stock Exchange Listing

Laconia Resources Limited shares are listed on the Australian Securities Exchange (ASX code: LCR).

Cover Page: Project location of Rasuhuilca near-term production asset in Peru – South America

LACONIA ANNUAL REPORT 2012

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Annual Report for the year ending 30 June 2012

Chairman’s Report ..........................................................................................................................................................03 Directors’ Review of Activities .........................................................................................................................................07 Directors’ Report ............................................................................................................................................................31 Auditor’s Independence Declaration ................................................................................................................................38 Corporate Governance Statement ..................................................................................................................................39 Consolidated Statement of Comprehensive Income........................................................................................................45 Consolidated Statement of Financial Position .................................................................................................................46 Consolidated Statement of Changes in Equity ................................................................................................................47 Consolidated Statement of Cash Flows ..........................................................................................................................48 Notes to the Consolidated Financial Statements .............................................................................................................49 Directors’ Declaration .....................................................................................................................................................72 Independent Audit Report ...............................................................................................................................................73 ASX Additional Information .............................................................................................................................................75

CONTENTS 1

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LACONIA ANNUAL REPORT 2012
Western
Australia
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Peru,
South America
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“With funding now secured we will accelerate our exploration activities more vigorously, deliver tangible news in the short term and dramatically increase our market visibility.“

CHAIRMAN’S REPORT

LACONIA ANNUAL REPORT 2012

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Chairman’s Report

Dear Shareholders

It gives me great pleasure to submit the third Annual Report of Laconia Resources Limited. The Report covers a pivotal and exciting twelve month period in the Company’s history marked by continuing exploration success at Lennons Find, our leading West Australian project, and the acquisition of Rasuhuilca, our flagship Peruvian project, finalised in June of this year.

In relation to changes to the Board of Laconia, I would like to take this opportunity to express my sincere gratitude to the retiring Chairman and a founding shareholder, Mr. Michael Sharwood for his contribution to the Company since its successful IPO in October 2009. His stewardship throughout a period of intense activity as well as one of considerable challenge and change is widely appreciated by all his former colleagues and staff at Laconia.

the Board and is consulting to the management team providing additional technical expertise for the increased suite of projects Laconia now holds in Australia and Peru. Both Dr Sassine and Mr Algar have considerable expertise in capital raising for exploration companies. This has already proved to be invaluable to the Company and will continue be so in the future.

My sincere thanks and appreciation must also go to our Managing Director Ian Stuart for his outstanding contributions this year in regard to the on-going development of Laconia’s existing exploration portfolio, his exploration success at Lennons Find and for his tireless work on the identification and acquisition of the Rasuhuilca Project. Rasuhuilca was identified by Ian after an extensive and laborious search under strict investment criteria imposed by the Board. This demanding task was undertaken in difficult market conditions and under tight cash controls while also running the day to day operations of the Company.

It is with great pleasure that I also have the opportunity to welcome two new Board members; Dr Saliba Sassine and Mr Vincent Algar appointed in June and July respectively. Dr Sassine is highly accomplished within Australian business and government circles and has been actively involved as a financier, adviser and manager of numerous companies and enterprises. He has particular knowledge of and expertise in, the Peruvian mining sector. He joins us following our acquisition of Gold Mines of Peru, a company in which he has a major shareholding and the principal asset of which is the Rasuhuilca Project. These connections will be of tremendous value as we pursue the development of the Project and seek to add other acquisitions in Peru as they arise.

The Rasuhuilca Project is an advanced gold and silver project located in one of the world’s most exciting mining precincts in Peru. Peru is a leading minerals producer in South America and is widely recognised today as a mining ‘hot spot’ with favourable mining laws and infrastructure and with vast opportunities still remaining for discoveries. Less than 1 per cent of the country is being mined and only 14 per cent of it has even been staked,

Mr Vincent Algar is a well known and highly regarded exploration geologist with over 20 years experience in Western Australia and South Africa in both technical and senior managerial roles including as a former managing director of an ASX listed company. Mr Algar has joined

CHAIRMAN’S REPORT

LACONIA ANNUAL REPORT 2012

Chairman’s Report (cont’d)

yet it is perhaps not widely known that Peru is already the world’s largest producer of silver, second largest in copper, third in zinc and sixth in gold. Peru ranks the highest of the South America countries for mining investment and the Peruvian government is actively encouraging Australian exploration companies to undertake investment there by offering an attractive fiscal regime.

Rasuhuilca has an existing resource reported in accordance with the JORC Code of 360,000t @1.97g/t gold and 179g/t silver. We are currently undertaking a confirmation study to update an existing feasibility study and are poised to commence a 2,200m drilling campaign. This campaign is aimed at numerous high-grade gold and silver targets that have been identified as well as testing the potential of the Project to host a copper gold porphyry system which from our recent work we believe it has the potential to host. Our objective is to have a producing mining operation at Rasuhuilca by 2014.

The Rasuhuilca Project represents a major strategic move allowing Laconia to enter one of the most sought after mining precincts in the world with an advanced stage project with a clear pathway to production as well as having major exploration potential.

A considerable amount of information on Rasuhuilca is contained in this Annual Report and on our website and I urge all our shareholders to take time to review and understand the exciting potential and value this Project brings to our exploration portfolio.

The Company was very active and productive on our Western Australia projects during the year with our Lennons Find Project and 701 Mile Project in the Pilbara each achieving milestones in resource expansion and exploration success respectively.

Lennons Find is an advanced exploration project in the Pilbara region of WA acquired from Jabiru Metals in March 2011. A 42 hole drill programme was completed in August 2011 targeting infill and deeper mineralisation. Significant intercepts were returned outside the existing Hammerhead Mineral Resource which led to an updated Mineral Resource Estimate, which returned a 117% increase in total tonnes from the previous Resource estimate. The updated figures are 1.80Mt at 82g/t silver, 0.26g/t gold, 5.1% zinc, 0.2% copper and 1.4% lead in Indicated and Inferred Resource categories.

Significant progress was made at the 701 Mile Project with a comprehensive auger and geochemical sampling programme defining silver anomalism and associated lead anomalism extending for a strike length greater than 25km in length and including several silver values +15g/t and continuous zones +0.5g/t silver.

Full particulars of the above-mentioned projects as well as of the Company’s other activities are documented elsewhere in this Annual Report.

As I write this report, Laconia is currently undertaking a fully underwritten 1 for 2 rights offering to raise $1.8m following a successful placement of $457,000 to new investors. Together these capital raising transactions will enable the company to progress the exploration and development of its projects and in particular to immediately commence drilling at Rasuhuilca.

CHAIRMAN’S REPORT

LACONIA ANNUAL REPORT 2012

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As previously noted, market conditions have been extremely adverse for small exploration companies such as Laconia and our raising has been pursued at a time when the market does not currently recognise the value in our projects. On the other hand, the low valuation at which the raising has been conducted has afforded an opportunity for existing shareholders to increase their holding via the rights issue at an highly attractive price ahead of a potential re-rating of the company once we progress the Rasuhuilca gold-silver Project and can make further progress at Lennons Find.

We believe that we have secured high quality exploration projects in the right locations, backed by an experienced and capable team with the necessary mixture of skills to successful transform Laconia into a leading exploration company.

We look forward to bringing you positive news over the coming months and trust that through continued hard work, focus and teamwork we will achieve our exploration and development objectives which will lead to substantial rewards for all of our shareholders.

The time taken to identify and execute the Peruvian acquisition and the consequent lack of exploration news flow while bedding down this opportunity has inevitably taken its toll on our share price.

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We firmly believe, however, that both the Rasuhuilca and Lennons Find Projects offer outstanding potential that the market will soon recognise. With funding now secured we will accelerate our exploration activities more vigorously, deliver tangible news in the short term and dramatically increase our market visibility.

Matthew Howison Chairman

“The Rasuhuilca Project represents a major strategic move allowing Laconia to enter one of the most sought after mining precincts in the world with an advanced stage project with a clear pathway to production as well as having major exploration potential.”

CHAIRMAN’S REPORT

LACONIA ANNUAL REPORT 2012

“The recently acquired Rasuhuilca gold-silver development project in Peru complements the Company’s existing portfolio of precious and base metal projects in Western Australia.“

DIRECTOR’S REVIEW OF ACTIVITY

LACONIA ANNUAL REPORT 2012

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Directors’ Review of Activities

Projects and Exploration Strategy

Laconia Resources Limited (Laconia) is a Perth-based emerging precious and base metals exploration and development Company with a South American focus.

The recently acquired Rasuhuilca gold-silver development project in Peru complements the Company’s existing portfolio of precious and base metal projects in Western Australia. A Feasibility Study was completed at Rasuhuilca 2008 and Laconia aims to bring it into production as a high-grade, small-tonnage operation, and utilise the project’s revenues to unlock its exploration upside.

In Western Australia, the Company has a portfolio of advanced mineral projects in the Murchison and Pilbara regions, across 52 granted tenements covering an approximate 1200km[2] . The company has reported resources in accordance with the JORC code at its projects at Lennons Find, (Cu-Ag-Pb-Zn-Au), and most recently at Rasuhuilca in Peru[1] (Au-Ag). The Company is focused on targeted exploration of its project areas, and further definition and expansion of its Resource base at its advanced projects.

Refer to Table 1 for a summary of activities.

Peru: Rasuhuilca gold-silver Project Acquisition

Laconia announced its intention to acquire the Rasuhuilca project in November 2011[2] and subsequently successfully completed a rigorous due diligence process over the project. Shareholder approval for the acquisition was successfully sought at a shareholder meeting held on 31 May 2012.

The acquisition represents a major milestone for Laconia and establishes the Company as a significant emerging precious and base metals exploration and development Company. It also complements the Company’s existing portfolio of precious and base metals projects in Western Australia.

A Feasibility Study was completed at the Rasuhuilca project in June 2008 and Laconia is currently updating and reaffirming the Feasibility Study with the aim of bringing the project into production as a high-grade, small tonnage gold and silver mining operation in the near-term. The Company’s strategy is to utilise the potential revenues from the project to unlock the major exploration upside of the Rasuhuilca project licences and add additional Resources at the project.

1 Refer ASX Release 1 June 2012

2 Refer ASX Release 29 November 2011

DIRECTOR’S REVIEW OF ACTIVITY 7

LACONIA ANNUAL REPORT 2012

Directors’ Review of Activities (cont’d)

Acquisition Consideration

The Rasuhuilca project was acquired from Perth-based exploration company Gold Mines of Peru Limited. Consideration for the acquisition was:

42.055 million ordinary Laconia shares;
14.5 million performance shares;
$120,000 paid over 6 months to a third party;
$500,000 from production revenue only if production revenue is reached within 5 years; and
Dr Saliba Sassine, the Chairman of Gold Mines of Peru, was invited and joined, the Laconia Board following shareholder approval for the acquisition.

As part of the transaction, Laconia also acquired Gold Mines of Peru’s other Peruvian projects, the Motil and Porcuchia gold-silver tailings projects.

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Projects Drilling Geochemical Geological mapping Geophysics Other
sampling
701 Mile 1221 shallow auger
holes.
Lennons Find Assays received 134 soil samples Geological map and Metallurgical testwork
for 1996m drilling technical review. of oxide material.
programme.
Resource estimation.
Yandicoogina 23 rock chip samples.
Barramine 38 drainage samples.
1415 soil samples.
5505 soil samples
collected (1100 re-
analysed by LCR).
Mooletar Geological mapping. Airborne digital terrain
modelling.
Kookynie 10 rock chip samples. Geological mapping. Open file review
identifies 3 target
areas. Re-splitting of
previously drilled RC
samples.
Rasuhuilca, Peru Confirmation rock Acquisition of
chip sampling in advanced project.
underground workings.
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Table 1: Summary of activities.

8 DIRECTOR’S REVIEW OF ACTIVITY

LACONIA ANNUAL REPORT 2012

Rasuhuilca Project - Precious and Base Metals, Southern Peru (100% Laconia)

Highlights:

Acquisition of the Rasuhuilca Project with an existing Inferred Resource estimate of; 360,000t at 1.97g/t gold and 179g/t silver[3] .
Underground check sampling of the main Rasuhuilca vein system presented in Table 3 validates previous data and includes:
- 12.5m at 5.99g/t gold and 373g/t silver from 4923 Level and;
10.5m at 1.88g/t gold and 61g/t silver from 4890 Level.
New exploration targets[4] identified from historical exploration undertaken at the Marcelita veins and Elsa Breccia, 4.5km southeast of the Rasuhuilca vein system. Historical results include :
1.5m @ 14.76g/t gold and 208g/t silver from Elsa Breccia
1.5m @ 22.80g/t gold and 45.20g/t silver from Elsa Breccia
3.5m @ 6.53g/t gold and 244.66g/t silver from Veta Marcelita 2
2,200m underground diamond drilling program scheduled to commence in Quarter 4, subject to permitting.
High-grade silver values have been revealed to occur outside current resource model limits at Rasuhuilca West.
Ongoing assessment of 2008 Feasibility Study – to be updated following results of underground diamond drilling program.

About the Rasuhuilca Project

The acquisition of the Rasuhuilca Project was completed in June 2012. Rasuhuilca is an advanced, high-grade gold and silver project which contains existing development levels and cross-cuts, and has outstanding near-term development potential. It is the Company’s intention to rapidly bring the underground resource into production.

The project has an Inferred Resource estimate of 360,000t at 1.97g/t gold, and 179g/t silver (at a 2.5g/t AuEq cut-off[5] ) as presented below in Table 2 . The resource statement is based on historical data, which has been verified by check sampling by Laconia. The grade tenor of channel sampling by previous owner Minera Peru Gold SAC (MPG) was confirmed, as presented in Table 3 and Figure 2 .

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Tonnes Au g/t Ag g/t
360,000 1.97 179
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Table 2: Rasuhuilca Project Inferred Resource, at a 2.5g/t AuEQ cut-off, as at January 2011.

3 Refer ASX Release 25 January 2012
4 Refer ASX Release 16 August 2012

5 All cut offs based on an Xg/t Au Eq are conceptual in nature only. There has been insufficient metallurgical test work to date to determine eventual metallurgical recoveries and it is uncertain that the conceptual cut offs used will be appropriate following further metallurgical test work.

DIRECTOR’S REVIEW OF ACTIVITY

LACONIA ANNUAL REPORT 2012

Directors’ Review of Activities (cont’d)

The project is located in the Andean volcanic arc of southern Peru, and comprises four concessions (Patacancha No. 1-4) for a total of 2,765 hectares. These concessions cover a large part of an extensive high-sulphidation alteration system.

The alteration system contains numerous zones of gold-silver mineralization, as veins and more irregular bodies of veining, brecciation and silicification. The best known mineralized body in the project is the Rasuhuilca zone, which has been explored by underground development.

The project is located in the same region as Hochschild Mining Plc’s (Hochschild) major silver and gold operations. Hochschild has reserves and resources exceeding 186Moz Ag and 1.1 Moz Au[6] .

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Figure 1: Rasuhuilca Project location map.

6 Refer Hochschild Mining PLC Annual Report 2011

DIRECTOR’S REVIEW OF ACTIVITY

LACONIA ANNUAL REPORT 2012

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Mine Laconia MPG Northing Easting RL Length Laconia MPG Laconia MPG
Level Sample Sample (m) (m) (m) (m) Au g/t Au g/t Ag g/t Ag g/t
4923 2901 3091 8,416,703 631,631 4,924 1.00 3.46 3.10 312 321
4923 2903 3093 8,416,702 631,629 4,924 0.90 3.68 3.50 329 314
4923 2904 3094 8,416,701 631,628 4,924 1.50 1.90 2.39 188 182
4923 2905 3095 8,416,700 631,627 4,924 1.05 14.06 11.84 1408 523
4923 2906 3096 8,416,699 631,627 4,924 1.05 10.64 15.89 485 531
4923 2907 3097 8,416,699 631,625 4,924 1.05 8.56 8.34 423 445
4923 2908 3098 8,416,698 631,625 4,924 0.95 8.50 14.24 572 539
4923 2909 3099 8,416,697 631,624 4,924 1.55 10.97 23.24 281 433
4923 2910 2628 8,416,696 631,623 4,924 1.30 0.72 0.35 81 82
4923 2911 2629 8,416,695 631,622 4,924 1.30 0.63 0.30 88 71.9
4923 2912 3100 8,416,694 631,622 4,924 0.90 4.15 9.49 186 255
Comp 1 12.55 5.99 8.50 373 317
4923 2913 2420 8,416,698 631,620 4,924 0.80 1.09 2.00 110 130
4923 2914 2419 8,416,699 631,621 4,924 1.00 1.68 1.70 178 139
4923 2915 2418 8,416,699 631,622 4,924 0.90 1.03 0.35 108 134
Comp2 2.7 1.29 1.34 134 134
4890 2921 2448 8,416,681 631,647 4,892 1.00 0.32 0.30 41 43
4890 2922 2449 8,416,682 631,647 4,892 0.95 15.67 0.60 54 61
4890 2923 2450 8,416,683 631,647 4,892 1.00 0.96 1.55 33 53
4890 2924 2451 8,416,684 631,647 4,892 1.00 0.40 0.40 29 58
4890 2925 2452 8,416,685 631,647 4,892 1.50 0.24 0.25 60 66
4890 2926 2453 8,416,686 631,647 4,892 1.45 0.16 0.30 80 69
4890 2927 2454 8,416,687 631,648 4,892 1.35 0.37 0.35 63 59
4890 2928 2455 8,416,689 631,649 4,892 0.70 0.39 0.75 76 123
4890 2929 2456 8,416,690 631,649 4,892 1.55 1.14 1.45 89 102
Comp3 10.5 1.88 0.65 61 70
4890 2931 2461 8,416,693 631,618 4,892 1.60 2.91 2.20 106 227
4890 2932 2462 8,416,694 631,618 4,893 1.30 3.06 3.30 364 223
4890 2933 2463 8,416,696 631,618 4,893 1.90 2.24 2.70 63 72
Comp4 4.8 2.69 2.70 159 1.9
4890 2934 2472 8,416,695 631,608 4,893 1.30 0.29 0.20 45 50
4890 2935 2473 8,416,696 631,608 4,893 1.40 0.35 0.25 27 94
Comp5 2.7 0.32 0.23 36 73
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Table 3: Underground channel sample validation at Rasuhuilca underground. (Laconia Resources May 2012 channel sample assays compared with previous owner MPG channel sample assays).

Note 1: Laconia samples were assayed at CERTIMIN S.A., in Lima Peru. Au by Fire assay and AAS read, >10ppm Au was re-calculated by gravimetric method. Silver assays by Digest concentrate. HCL + HNO3 in 3:1 mix with Aqua Regia and AAS read, >300ppm Ag was subject to extended digest and AAS read, >1000ppm Ag was re-calculated by gravimetric means.

Note 2: CompX* refers to length weighted composite grade.

DIRECTOR’S REVIEW OF ACTIVITY

LACONIA ANNUAL REPORT 2012

Directors’ Review of Activities (cont’d)

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Figure 2: Length weighted composites comparing Laconia channel sampling results with channel sampling by the previous owner (MPG).

An initial 2,200m underground diamond drilling programme is currently being planned, with environmental applications underway. The drill tendering process has begun. Drilling will test mineralisation between the existing mine levels in order to validate the existing resource model.

Review of existing data revealed the extension of high-grade silver mineralization 110m further west than the main body of mineralisation. Historical results presented in Table 4 include[7] :

1.5m at 11.68g/t gold and 237g/t silver
1.0m at 3.64g/t gold and 330g/t silver
2.0m at 1.14g/t gold and 1622g/t silver at surface.

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Location Easting Northing Elevation Length (m) Au (g/t) Ag (g/t)
Rasuhuilca West 631463.41 8416744.21 4961.85 2 0.6 400.05
Rasuhuilca West 631462.56 8416738.64 4966.72 2 0.41 393.7
Rasuhuilca West 631458.51 8416746.4 4960.36 2 0.6 422.28
Rasuhuilca West 631477.98 8416739.33 4964.78 2 1.14 1622.43
Rasuhuilca West 631522.59 8416704.86 5005.45 6 0.57 260.35
Rasuhuilca West 631517.15 8416723.67 4986.06 7 2.03 196.85
Rasuhuilca West 631493.67 8416729.58 4973.77 6 0.67 247.65
4962 Adit 631483.36 8416744.04 4962 1 5.23 1108.94
4962 Adit 631483.38 8416743.06 4962 1 5.73 616.77
4962 Adit 631482.34 8416738.95 4962 1 3.64 330.19
4962 Adit 631482.22 8416737.9 4962 1 8.72 193.13
4962 Adit 631484.53 8416711.91 4962 1.5 11.68 236.74
4962 Adit 631484.28 8416736.11 4962 1 3.05 190.02
4962 Adit 631485.67 8416716.84 4962 1 2.31 763.18
4962 Adit 631486.39 8416712.9 4962 1 0.78 451.68
4962 Adit 631483.38 8416716.7 4962 1 0.37 513.98
4962 Adit 631484.05 8416712.74 4962 1 9.41 448.56
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Table 4: Significant surface and channel sampling intersections at Rasuhuilca West zone.

Note 1: Sample results are compiled as weighted averages. Sample ID shown is for the first sample in the sequence. Samples were collected by Buenaventura between 1997 and 1999, and assayed at Intertek Bondar Clegg Bolivia. Gold (Au) was analysed by AAS with Fire Assay checks on 50 g aliquots to 2 ppb detection limits and AAS was used for Silver (Ag). All assays are available with original lab certificates from Intertek Bondar Clegg in Bolivia. Normal lab QAQC was done, and shows no issues in quality.

Note 2: Coordinate system used is PSAD56/UTM zone 18S EPSG 24878.

7 Refer ASX Release 16 August 2012

DIRECTOR’S REVIEW OF ACTIVITY

LACONIA ANNUAL REPORT 2012

This Rasuhuilca West zone has been subject to surface sampling and a single underground adit development. Only a small part of this zone has been tested sufficiently for inclusion in the existing Resource model. Abundant silver at surface demonstrates potential for a silver rich body extending to depth.

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Figure 3: Long section of Rasuhuilca resource model with current and planned development.

Marcelita Vein System

The Marcelita vein system and underground development is located 4.5km to the southeast of the Rasuhuilca vein system. Existing data was reviewed, which indicates a vein system of 710m strike length, and a further 480m strike length of veining which remains unsampled to date.

Significant samples available to date are presented in Table 5 .

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Sample ID Prospect Easting Northing Elevation Length Au (g/t) Ag (g/t)
23885 Elsa Breccia 632595.0 8415082.0 4769 1.5 22.80 45.20
23887 Elsa Breccia 632596.0 8415072.0 4769 1.5 14.76 208.00
23865 Veta Marcelita 632467.0 8415045.0 4717 1.4 5.48 117.50
29006 Veta Marcelita 632447.5 8415118.7 4704 0.9 3.49 819.40
23872 Veta Marcelita 1 632547.5 8415259.6 4708 1 4.88 105.50
23903 Veta Marcelita 2 632727.7 8415271.5 4807 3.50 6.53 244.66
23917 Veta Marcelita 2 632747.2 8415125.1 4825 3.60 17.31 7.17
23933 Veta Marcelita 2 632751.4 8415050.8 4820 0.60 0.13 2078.62
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Table 5: Significant surface sampling results from Marcelita Vein System.

Note 2: Coordinate system used is PSAD56/UTM zone 18S EPSG 24878

DIRECTOR’S REVIEW OF ACTIVITY

LACONIA ANNUAL REPORT 2012

Directors’ Review of Activities (cont’d)

WESTERN AUSTRALIAN PROJECTS

Lennons Find Project – Precious And Base Metals, East Pilbara, WA (95% Laconia)

Highlights:

Updated Mineral Resource Estimate at Lennons Find of 1.85 million tonnes at 82g/t silver, 0.26g/t gold, 5.1% zinc, 0.2% copper and 1.4% lead. This represents an increase in tonnage of 117% over previous resource estimates.
The updated Mineral Resource includes a new oxide Mineral Resource of 197,000 tonnes at 89g/t silver, 0.37g/t gold, 1.4% zinc, 0.2% copper and 1.2% lead.
High-grade silver intercepts returned near surface and along strike of existing Bronze Whaler and Tiger prospects.
Significant intercepts returned outside previous resource outline at Hammerhead prospect.
Very encouraging preliminary metallurgical testwork for oxide ore.
Rock chip sampling at the Yandicoogina Project returned high-grade silver-lead-zinc values from gossan outcrops in rock chip sampling.

About the Lennons Find Project

Laconia acquired a 95% interest in the Lennons Find Project (M45/368, a granted pre-Native Title Mining Lease) from Jabiru Metals Limited in March 2011. At the same time it announced the acquisition of the nearby Yandicoogina base metals project from Shaw River Manganese (formerly Shaw River Resources) (ASX: SRR). The two projects are located approximately 40km from Marble Bar on the southern edge of the Mt Edgar Granitoid Complex, in the East Pilbara region of Western Australia.

Base metal resources identified in the Lennons Find area (M45/368) occur in a geological unit termed the Duffer Formation. The Duffer Formation is laterally extensive and continues into the Yandicoogina Project, where base metal gossans also occur (see section on Yandicoogina Project).

DIRECTOR’S REVIEW OF ACTIVITY

LACONIA ANNUAL REPORT 2012

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Figure 4: Laconia’s Western Australian projects location map.

DIRECTOR’S REVIEW OF ACTIVITY

LACONIA ANNUAL REPORT 2012

Directors’ Review of Activities (cont’d)

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Figure 5: Location map for Laconia’s Pilbara projects.

Lennons Find Project (M45/368)

A 42 hole drill program completed in August 2011 targeted infill and deeper drilling at the Hammerhead prospect, and also tested along strike at the Bronze Whaler and Tiger prospects. Significant intercepts were returned outside the existing Hammerhead Mineral Resource which led to an updated Mineral Resource Estimate[8] , as detailed below in Table 6 .

Mining consultants, Optiro Pty Ltd completed an updated Mineral Resource estimation in December 2011 which returned a 117% increase in total tonnes from the previous Resource estimate[9] . The updated figures are 1.80Mt at 82g/t silver, 0.26g/t gold, 5.1% zinc, 0.2% copper and 1.4% lead in Indicated and Inferred Resource categories as tabulated in Table 6 .

8 Refer ASX Release 25 January 2012 9 Refer ASX Release 9 March 2011

DIRECTOR’S REVIEW OF ACTIVITY

LACONIA ANNUAL REPORT 2012

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Deposit Ore Type Tonnes (t) Au (g/t) Ag (g/t) Cu (%) Pb (%) Zn (%)
Bronze Whaler Oxide 30,000 0.29 60 0.3 0.9 0.2
Hammerhead Oxide 140,000 0.41 95 0.2 1.3 1.8
Tiger Oxide 20,000 0.18 93 0.1 0.9 0.8
Total - Indicated Oxide 200,000 0.37 89 0.2 1.2 1.4
Bronze Whaler Sulphide 150,000 0.15 33 0.1 0.7 1.5
Hammerhead Sulphide 1,400,000 0.27 87 0.2 1.6 6.1
Tiger Sulphide 50,000 0.03 36 0.1 0.3 2.8
Total - Inferred Sulphide 1,600,000 0.25 81 0.2 1.5 5.6
Bronze Whaler 180,000 0.18 37 0.1 0.7 1.3
Hammerhead 1,600,000 0.28 88 0.2 1.6 5.7
Tiger 70,000 0.08 55 0.1 0.5 2.2
Total - Lennons Find 1,800,000 0.26 82 0.2 1.4 5.1
Indicated
Inferred
Total
----- End of picture text -----

Table 6: Lennons Find Mineral Resource Estimate as at January 2012.

Note 1: For Oxide resources the Bronze Whaler deposit is reported above 1% Zn Eq, the Hammerhead deposit is reported above 2% Zn Eq and the Tiger deposit is reported above 4% Zn Eq.

Note 2: For Sulphide resources the Bronze Whaler deposit is reported above 1% Zn Eq, the Hammerhead deposit is reported above 2% Zn Eq and the Tiger deposit is reported above 4% Zn Eq.

All cut offs based on an X% Zn Eq are conceptual in nature only. There has been insufficient metallurgical test work to date to determine eventual metallurgical recoveries and it is uncertain that the conceptual cut offs used below will be appropriate following further metallurgical test work.

High-grade silver intersections were also returned near surface and along strike at the Bronze Whaler and Tiger prospects. The drilling was predominantly reverse circulation (1939m) with one drillhole extended by a 57.3m diamond tail in October 2011.

High-grade results from this drilling are listed below and more fully in Table 7 to Table 9.

Hammerhead Prospect

LFRC048 4m @ 174g/t Ag, 0.23g/t Au, 2.35% Zn, 0.08% Cu, 1.04% Pb from 150m LFRC047 2m @ 307g/t Ag, 0.25g/t Au, 1.32% Zn, 0.03% Cu, 0.50% Pb from 89m Inc 1m @ 402g/t Ag, 0.19g/t Au, 0.48% Zn, 0.01% Cu, 0.28% Pb from 89m LFRC045 10m @ 31g/t Ag, 0.15g/t Au, 2.59% Zn, 0.16% Cu, 0.92% Pb from 2m LFRC043 5m @ 15g/t Ag, 0.03g/t Au, 3.60% Zn, 0.08% Cu, 0.64% Pb from 37m

Bronze Whaler Prospect

LFRC014 5m @ 117g/t Ag, 0.66g/t Au, 0.67% Zn, 0.23% Cu, 1.52% Pb from 15m LFRC012 5m @ 93g/t Ag, 0.80g/t Au, 0.33% Zn, 0.23% Cu, 1.00% Pb from 13m LFRC008 2m @ 130g/t Ag, 0.48g/t Au, 0.09% Zn, 0.90% Cu, 2.70 Pb from 10m LFRC010 5m @ 68g/t Ag, 0.35g/t Au, 0.16% Zn, 0.14% Cu, 1.53% Pb from 9m LFRC009 2m @ 128g/t Ag, 0.32g/t Au, 0.07% Zn, 0.90% Cu, 1.39% Pb from 7m

Tiger Prospect

LFRC028 2m @ 232g/t Ag (silver), 0.56g/t Au, 0.07% Zn, 0.08% Cu from 15m LFRC029 2m @ 145g/t Ag, 0.67g/t Au, 0.13% Zn, 0.76% Cu from 6m LFRC032 3m @ 173g/t Ag, 0.47g/t Au, 0.11% Zn, 0.08% Cu from 10m Inc 1m @ 431g/t Ag, 1.29g/t Au, 0.20% Zn, 0.09% Cu from 10m LFRC038 4m @ 124g/t Ag, 0.44g/t Au, 0.21% Zn, 0.05% Cu from 12m Inc 2m @ 190g/t Ag, 0.73g/t Au, 0.29% Zn, 0.05% Cu from 12m

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Directors’ Review of Activities (cont’d)

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Hole ID Easting Northing Azimuth Dip From (m) To (m) Interval Ag g/t Au g/t Zn % Cu % Pb %
(m)
LFRC043 213754 7636003 320 -60 37 42 5 15 0.03 3.60 0.08 0.64
LFRC044 213774 7635974 320 -60 66 67 1 30 0.02 5.51 0.10 0.81
LFRC045 213501 7635799 321 -60 2 12 10 31 0.15 2.59 0.16 0.92
incl 2 4 2 110 0.66 4.94 0.18 3.49
incl 6 12 6 10 0.02 2.30 0.11 0.14
LFRC047 213616 7635746 323 -60 85 86 1 113 0.09 0.49 0.01 0.20
89 91 2 307 0.25 1.32 0.03 0.50
incl 89 90 1 402 0.19 0.48 0.01 0.28
LFRC048 213712 7635741 323 -70 150 154 4 174 0.23 2.35 0.08 1.04
incl 151 152 1 399 0.27 3.49 0.05 1.77
LFRC048 155 156 1 18 0.08 2.68 0.07 2.01
LFRC049 213885 7635713 323 -60 222 223 1 36 0.19 2.65 0.13 0.65
227 229 2 30 0.14 0.13 0.91 0.16
232 233 1 127 1.40 0.35 0.87 2.44
LFRC049 240 241 1 15 0.11 0.15 0.32 0.05
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Table 7: Significant intersections at the Hammerhead Prospect.

Note1: Intersections calculated using cut-off of Ag > 50g/t, or Au > 0.3g/t, or Cu > 0.3%, or Zn > 2%, accepting up to 2m of internal dilution. Note 2: Sampling was conducted as 1m intervals with assays determined by 50g charge Fire Assay (gold) and acid digest ICP determination at Australian Laboratory Services, Perth. Note 3: Projected coordinate system GDA1994, MGA zone51.

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Hole ID Easting Northing Azimuth Dip From (m) To (m) Interval Ag g/t Au g/t Zn % Cu % Pb %
(m)
LFRC004 214867 7637145 304 -60 9 10 1 50 0.36 0.31 0.11 1.08
LFRC005 214861 7637151 310 -60 4 7 3 65 0.13 0.15 0.05 1.34
LFRC006 214882 7637158 313 -60 11 13 2 107 0.48 0.11 0.10 1.05
LFRC007 214878 7637163 312 -60 6 8 2 81 0.38 0.01 0.05 0.48
LFRC008 214892 7637176 310 -60 10 12 2 130 0.48 0.09 0.90 2.70
LFRC009 214890 7637179 310 -60 7 9 2 128 0.32 0.07 0.90 1.39
LFRC010 214903 7637194 310 -60 9 14 5 68 0.35 0.16 0.14 1.53
31 32 1 10 0.05 0.21 0.70 0.01
LFRC011 214898 7637197 310 -60 3 4 1 3 0.01 0.97 1.18 0.09
5 7 2 60 0.28 0.23 0.72 2.78
LFRC012 214921 7637200 310 -60 13 18 5 93 0.80 0.33 0.23 1.00
LFRC013 214918 7637210 310 -60 7 10 3 16 0.10 0.46 1.19 0.95
LFRC014 214935 7637224 302 -90 15 20 5 117 0.66 0.67 0.23 1.52
23 25 2 53 0.16 0.02 0.02 1.05
LFRC018 214839 7637110 310 -60 11 13 2 0 0.01 0.31 0.84 0.01
15 18 3 77 0.05 0.07 1.95 1.08
LFRC019 214832 7637121 310 -60 0 1 1 15 0.03 0.16 0.60 0.21
LFRC020 214823 7637103 310 -60 14 16 2 75 0.17 0.00 0.02 0.24
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Table 8: Significant intersections at the Bronze Whaler Prospect.

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Hole ID Easting Northing Azimuth Dip From (m) To (m) Interval Ag (ppm) Au (ppm) Zn % Cu % Pb %
(m)
LFRC022 212650 7635372 0 -90 7 10 3 71 0.25 0.92 0.15 0.57
LFRC023 212650 7635379 0 -90 4 7 3 46 0.17 0.80 0.05 1.21
LFRC023 26 28 2 1 0.00 2.87 0.02 0.00
LFRC024 212686 7635369 0 -90 6 14 8 19 0.03 3.15 0.20 0.34
incl 9 13 4 21 0.06 4.00 0.30 0.58
LFRC024 25 26 1 10 -0.01 2.00 0.02 0.02
LFRC025 212679 7635372 0 -90 0 5 5 20 0.17 2.12 0.12 0.27
LFRC026 212670 7635376 0 -90 6 10 4 32 0.08 1.60 0.04 0.59
LFRC026 13 14 1 17 0.02 3.46 0.05 0.03
LFRC027 212669 7635385 0 -90 14 15 1 10 0.01 2.54 0.03 0.01
LFRC028 212703 7635371 0 -90 15 17 2 232 0.56 0.07 0.08 2.86
LFRC028 20 21 1 15 0.06 0.18 0.72 0.08
LFRC029 212693 7635379 0 -90 6 8 2 145 0.67 0.13 0.76 1.76
LFRC031 212713 7635383 0 -90 16 17 1 3 0.02 0.08 0.89 0.01
LFRC031 18 19 1 153 0.05 0.06 0.25 0.02
LFRC032 212722 7635386 0 -90 10 13 3 173 0.47 0.11 0.08 0.15
incl 10 11 1 431 1.29 0.20 0.09 0.29
LFRC035 212749 7635406 0 -90 10 12 2 108 0.02 0.03 0.06 0.15
LFRC036 212765 7635406 0 -90 12 14 2 87 0.38 0.05 0.04 2.05
LFRC037 212766 7635412 0 -90 7 13 6 76 0.17 0.14 0.05 0.99
incl 8 10 2 127 0.24 0.09 0.04 1.54
LFRC038 212784 7635412 0 -90 12 16 4 124 0.44 0.21 0.05 1.79
incl 12 14 2 190 0.73 0.29 0.05 2.97
LFRC038 22 23 1 5 0.02 0.06 0.30 0.01
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Table 9: Significant intersections at the Tiger Prospect.

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Directors’ Review of Activities (cont’d)

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Figure 6: Lennons Find Project Mineral Resources summary.

In March 2012, a composite sample of reverse circulation drill chips from the Hammerhead, Bronze Whaler and Tiger prospects were submitted to P.R. Hunt and Associates Pty Ltd, Perth for preliminary metallurgical testwork. Testwork indicated that the oxide material is amenable to acid leaching for the extraction of copper and zinc, with 75% of the copper and 87% of the zinc recovered in a sulphuric acid leach, and 87% of the gold and 94% of the silver extracted in a subsequent cyanide leach. Lead extraction was low in both the acid extraction and the cyanide leach[10] .

Metallurgical test work has tested the Lennons Find Oxide Resource for its amenability to acid leaching for the extraction of copper and zinc followed by cyanidation for extraction of gold and silver. No definitive metallurgical test work defining recovery grades has been conducted on the project at this stage of its development.

The regional framework, lithostratigraphy and geochemistry of the Lennons Find deposits were reviewed by Dr Belford, in order to better understand the mineralization and also to determine future exploration models in the area. Following this review, a soil geochemistry programme was completed, comprising 134 soil samples collected on a 200m grid over the majority of the licence area. Soil geochemistry was generally subdued away from the main mineralized horizon, but two new targets were identified. One target ties in with previous geological mapping which indicated a pronounced system of ring faults and radial faults occurring around the Mt Edgar granitoid complex. In addition, extensive alteration has been observed proximal to the faults within banded chert horizons, which suggests that alteration fluids have migrated from depth along the fault system. A discrete zinc-copper and minor bismuth anomaly occurs coincident with one of the mapped cross faults transecting the Tiger deposit.

A second target generated by soil sampling comprises a broad area of elevated copper-gold values, the distribution of which seems to be controlled by a magnetic linear which trends through the eastern part of M45/368, and a regional bounding structure as mapped by Geological Survey of Western Australia (Williams and Bagas, 2007. Mount Edgar, WA sheet 2955, 1:100,000 geological map). This target is entirely untested by drilling.

10 Refer ASX Release 15 March 2012

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Figure 7: Lennons Find Project Soil anomalism and prospect location.

Yandicoogina Project (E45/3293)

Mapping and sampling was completed at the Yandicoogina project, approximately 6km southwest of the Lennons Find project. Elevated silver-lead-zinc values were returned from gossanous outcrop within the prospective Duffer Formation[11] .

==> picture [365 x 248] intentionally omitted <==

Figure 8: Yandicoogina and Lennons Find geological setting with rock chip samples highlighted.

11 Refer ASX Release 28 July 2011

DIRECTOR’S REVIEW OF ACTIVITY

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Directors’ Review of Activities (cont’d)

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Sample Easting Northing Description Au ppb Ag ppm Cu ppm Pb ppm Zn ppm
663001 204418 7627295 Quartz <1 <0.5 44 5 58
663002 204471 7627249 schist 1 <0.5 26 20 78
663003 204463 7627275 schist 1 <0.5 42 35 62
663004 204453 7627284 schist 11 0.5 42 32 392
663005 204448 7627300 schist 1 <0.5 50 24 114
663006 204445 7627319 schist 3 <0.5 22 56 58
663007 201057 7626552 gossan 201 83.5 206 16600 1860
663008 200948 7626522 barite 21 <0.5 206 82 1990
663009 199787 7626515 gossan 19 1.5 80 171 284
663010 199662 7626530 gossan 77 5 184 119 1160
663011 199592 7626522 gossan 364 17 452 440 764
663012 199528 7626525 gossan 20 2 158 35 342
663013 199491 7626530 gossan 19 <0.5 46 33 126
663014 199460 7626551 gossan 12 2 60 307 288
663015 199494 7626548 gossan 61 6 62 902 532
663016 199379 7626526 gossan 3 <0.5 42 25 56
663017 199326 7626544 gossan 6 <0.5 40 51 112
663018 199919 7626516 gossan 8 <0.5 58 23 94
663019 199991 7626513 gossan 369 5.5 62 27 860
663020 200017 7626509 gossan 73 4.5 30 59 1940
663021 200182 7626519 quartz 12 1.5 150 79 122
663022 200215 7626486 gossan 17 1.5 44 226 136
663023 200256 7626481 gossan 12 16.5 42 146 394
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Table 10: Assays from sampling of gossan outcrop at Yandicoogina Project.

Note 1: Assaying was completed at Ultratrace Mineral Laboratories, Perth. Silver, gold and base metals assays determined by 50g charge, four acid digest and ICP determination. Note 2: Projected coordinate system GDA1994, MGA zone 51.

701 Mile Project – Precious And Base Metals, Northern Gascoyne, WA (80% Laconia excluding manganese and iron ore)

Highlights:

Extensive geochemical sampling by Laconia to date has seen 381 soil samples and 1964 shallow auger samples collected and analysed at the 701 Mile Project.
Highlight results include several silver values +15g/t and continuous zones +0.5g/t from surface auger samples.
Silver anomalism and associated lead anomalism extends for a strike length greater than 25km in length.
Project lies adjacent to a large crustal lineament interpreted to be a continuation of the Tangadee Lineament and aeromagnetic interpretation suggests the anomalism may be related to the regional fault system.
The region hosts a number of significant discoveries which include base metals deposits at ‘Kumarina’ and ‘Abra’, as well as basement-hosted gold at ‘Karlawinda Bore’.
Laconia was granted $150,000 in funding from the WA State Government Exploration Incentive Scheme, to be matched dollar-for-dollar by Laconia on drill testing these anomalies in the 2012-13 period.

22 DIRECTOR’S REVIEW OF ACTIVITY

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The 701 Mile Project comprises two licences (E52/2232 and E52/2688-I) covering 343km[2] . Laconia holds 80% interest in all minerals other than iron ore and manganese. The 701 Mile Project lies approximately 80km southeast of Newman in WA, within the north eastern portion of the Collier Basin (a division of the former Bangemall Basin). The area is transected by a regionally significant structure termed the Tangadee Lineament which is reflected in much of the local structural fabric.

==> picture [362 x 251] intentionally omitted <==

Figure 9: 701 Mile Project geological setting.

Activities during 2011-12 focused on results from the initial geochemical programme completed in September 2011[12] (381 soil samples and 743 auger samples). Anomalous silver values (>= 0.5ppm Ag) were returned from 39 auger samples, distributed over a 15km strike length, and located in various sample medium types. Nineteen of these anomalous values were greater than 1ppm Ag. Several anomalies were from isolated sample points, and many were from clusters of samples.

During March 2012, anomalous areas were followed up with 1221 shallow auger samples. Portions of the tenements not previously sampled were also covered. These programmes have provided extensive geochemical coverage over the tenements with a 400m grid and more favourable zones covered by a 200m grid. Recent cover is prevalent, including alluvial wash, calcrete and sand. Shallow auger sampling technique is therefore considered to have provided a meaningful sample below transported material.

Follow up sampling[13] has further confirmed anomalous silver, and associated lead, over a 25km strike length. The Webkce anomaly is particularly interesting as a 5km long, +25ppm lead anomaly, surrounding a 2.5km long +0.25ppm silver anomaly with peak values of 17ppm and 20ppm silver.

12 Refer ASX Release 3 November 2011

13 Refer ASX Release 10 July 2012

DIRECTOR’S REVIEW OF ACTIVITY

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Directors’ Review of Activities (cont’d)

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Figure 10: 701 Mile Project silver and lead anomalism after second phase of geochemical sampling.

Further work is planned to gain a better understanding of silver mobility in the regolith and to define drill targets for 2012-13. Laconia is pleased to have been the successful recipient of $150,000 in funding from the WA State Government Exploration Incentive Scheme, to be matched dollar-for-dollar by Laconia at this Project.

Barramine Project – Gold and Base Metals, East Pilbara, WA (100% Laconia excluding manganese and iron ore)

The main thrust of exploration at Barramine was completion of geochemical programmes, which occurred in three phases:

Firstly, 1889 conventional soil samples were collected in the southern portion of licence E45/3312 during SeptemberOctober 2011. This sampling campaign was designed to firm up and better define existing targets derived from geochemical programmes completed in 2010.

Secondly, thirty-eight drainage samples were collected in an area of steep, well-defined hills on the southwestern flank of the Barramine Syncline. Conventional soil sampling would not have been effective in this area.

Thirdly, in April 2012, 627 conventional soil samples were collected to complete and extend sampling from 2011, when recurrent wet weather and associated access problems had disrupted the programme.

Results from this sampling[14] have highlighted several target areas of interest. The Howlett Anomaly hosts high base metal (zinc, lead) and pathfinder element (cerium, arsenic, barium, strontium) responses associated with faulting. A latetime EM anomaly also coincides with a folded siltstone and dolomite unit. The arrangement of faulting and the type of sediment units present suggests that this area represents a Mississippi Valley type base metal target.

The McCaw Anomaly occurs adjacent to mapped interbedded chert and siltstone lithologies, apparently drag folded into a bounding northwesterly trending structure, interpreted to be a thrust fault. Follow up soil sampling on a 100m by 40m grid has confirmed the geochemical anomalism, with an 800m by 300m zone identified, coincident with mapped chert, at a 10ppb gold contour. Elevated elements include gold, lead, arsenic, antimony, cerium and molybdenum.

14 Refer ASX Release 30 April 2012

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Figure 11: Barramine Project defined geochemical target locations.

About the Barramine Project

The Barramine Project, located in the East Pilbara region of northern WA comprises three exploration licences with a combined area of 430km[2] . Modern exploration has been undertaken since the mid 1960’s, however the area has not been extensively explored.

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LACONIA ANNUAL REPORT 2012

Directors’ Review of Activities (cont’d)

The Barramine Project is located along the southern edge of the Canning Basin, and is mainly underlain by the Gregory Range Inlier which is largely composed of upper Archaean Fortescue Group, Carawine Dolomite, Pinjian Chert Breccia and underlying Gregory Granitic Complex. The Inlier has been mined historically for lead and minor copper showings are located at Camel Hump and Barramine South. Manganese is currently produced at the Woodie Woodie mine, 80km southeast of the Barramine Project.

The following deposit types are considered valid conceptual exploration targets:

Volcanic-related base metal sulphide horizons within sediments similar to Wonmunna, or in andesitic/rhyolitic volcanics.
Mississippi Valley type lead-zinc- barite deposits on the southern flank of the Canning Basin.
Structurally controlled gold mineralisation possibly associated with NNW trending structures.

Mooletar Project – Iron Ore, Mid West/Southern Pilbara,

WA (100% Laconia)

During May 2012, a digital terrain model (DTM) was surveyed using LiDAR remote sensing technique. The DTM provides an accurate topographic surface over 278km[2] contoured at 0.5m vertical resolution. Geological mapping was completed in May 2012, by consultant geologist John Crossing of Compass Geological. The focus of mapping was the 5km strike length of BIF units, in order to get an understanding of their extent, composition and structural deformation. The mapping identified structural complexity in the area with the two main horizons varying in width from 15m to 120m, joining together into a single wide unit for a portion of their length. It was noted that generally surface weathering is relatively superficial, with unoxidised rocks outcropping at surface. The primary magnetite content was noted to be fairly consistent along the main BIF horizons mapped.

About the Mooletar Project

The Mooletar Project has an Exploration Target[15] of 220-260 million tonnes of iron at 30-35% Fe[16] . The Exploration Target was confirmed as a result of two drill programs at the project and a detailed mapping program completed over the project area. It was confirmed by independent consultants, BM Geological Services Pty Ltd.

Two distinct high-grade Banded Iron Formation (BIF) units have been identified over a 5km portion at the project. In addition to the Exploration Target, positive results from initial metallurgical testwork have confirmed the potential for the project to produce a high-grade magnetite concentrate. Results from Davis Tube Recovery (DTR) test work indicated that a high-grade magnetite product may be achieved with grades up to 70.4% Fe and low levels of phosphorus and silica. The Company has completed a scoping study to evaluate its exploration and development potential.

The Mooletar Project lies approximately 330km east of Geraldton and approximately 125km from the proposed rail line in the mid-west infrastructure corridor that would access the Oakajee port infrastructure. The Project area is also accessible by sealed roads. The Project is 100% owned by Laconia and comprises an area of 90km[2] covering the eastern limb of the Mount Magnet greenstone belt.

15 Refer ASX Release 18 November 2010
16 The potential quantity and grade of the Mooletar Project is conceptual in nature and there has been insufficient drilling to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a mineral resource.

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Figure 12: Mooletar Project location and regional infrastructure (present and proposed).

Kookynie Project – Gold and Base Metals, Eastern Goldfields, WA (100% Laconia)

Geological overview reveals base metal potential

Open file and literature review along with field investigations have identified three base metal targets in the Kookynie tenements. Previous workers in the area for base metals were Western Mining Corporation and Asarco Australia Pty Ltd, who identified six gossanous trends at the Barton Project, which lies partially in the south part of tenement E40/260. More recently Rubicon Resources has explored for base metals (2010), to the west in tenement E40/200 that has since been surrendered. Consequently the target generation has been broadened to include base metal mineralisation.

The GSWA Explanatory Notes for the Melita 1:100,000 geological map sheet (W.K. Witt, 1994) discuss prospectivity of the area for base metals, due to the type and arrangement of volcanic units. The Teutonic Bore deposit north of Leonora (1.4 Mt @ 4.16% Cu, 16.4% Zn and 1.22% Pb) was hosted by basalt and shale about 100m above a rhyolite that is closely comparable to the rhyolites on the Melita Sheet.

The first target is base metal VMS mineralisation in the southern part of the tenements at the Barton Prospect. Six gossans were identified by previous workers at Barton, and previous drilling by WMC returned 0.7m at 4.6% copper.

The second target identified through the open file data review is a gold project in the north west of tenement E40/260. Three anomalous zones have been identified from soil sample programmes by previous workers. The anomalies were drill tested, but drillholes were typically quite short, and there remains scope for mineralisation at depth.

The third target is in the north east of tenement E40/260, and is an area of rhyolite (interpreted by previous workers from aero-magnetics) that is under an extensive sheet of recent sand deposits up to 20m thick. This ground has not been successfully tested for base metal mineralisation due to the thickness of cover. The third target is the most conceptual in nature.

Various parties have been approached to gauge their interest in purchasing the 162 km[2] tenement package, which is prospective for epithermal and alluvial gold and VMS type base metals.

DIRECTOR’S REVIEW OF ACTIVITY

LACONIA ANNUAL REPORT 2012

Directors’ Review of Activities (cont’d)

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Figure 13: Kookynie Project target locations.

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LACONIA ANNUAL REPORT 2012

Competent Persons Statements

Information in this report relating to the Lennons Find, Barramine, 701 Mile and Kookynie Projects has been compiled by Mr Vincent Algar. Mr Vincent Algar, who is a member of the Australasian Institute of Mining and Metallurgy has compiled the information within this presentation that relates to Exploration Results. Mr Algar is a Non-Executive Director and consultant to Laconia Resources Limited and has sufficient experience relevant to the style of mineralisation and type of deposits under consideration and to the activity currently being undertaken to qualify as a Competent Person as defined in the 2004 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves and consents to the inclusion of this information in the form and context in which it appears in this report.

Lennons Find Resource Estimate

Mr Michael Andrew, who is a member of the Australasian Institute of Mining and Metallurgy has compiled the information within this presentation that relates to Mineral Resources or Ore Reserves. Mr Andrew is a full time employee of Optiro Pty Ltd and has sufficient experience relevant to the style of mineralisation and type of deposits under consideration and to the activity currently being undertaken to qualify as a Competent Person as defined in the 2004 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves and consents to the inclusion of this information in the form and context in which it appears in this report.

Mooletar Project

Mr Darryl Mapleson, who is a member of the Australasian Institute of Mining and Metallurgy has compiled the information within this presentation that relates to Exploration Results, Mineral Resources or Ore Reserves for the Mooletar Project. Mr Mapleson is a principal of BM Geological Services Pty Ltd and has sufficient experience relevant to the style of mineralisation and type of deposits under consideration and to the activity currently being undertaken to qualify as a Competent Person as defined in the 2004 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves and consents to the inclusion of this information in the form and context in which it appears in this presentation. “Note: The potential quantity and grade of the Mooletar Project is conceptual in nature and there has been insufficient drilling to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a mineral resource.”

Peru

A review of available data was conducted by Mr Michael Andrew, a Principal of Optiro Pty Ltd. Mr Michael Andrew who is a member of the Australasian Institute of Mining and Metallurgy has compiled the information within this presentation that relates to Mineral Resources or Ore Reserves in Peru. Mr Andrew is a full time employee of Optiro Pty Ltd and has sufficient experience relevant to the style of mineralisation and type of deposits under consideration and to the activity currently being undertaken to qualify as a Competent Person as defined in the 2004 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves and consents to the inclusion of this information in the form and context in which it appears in this report.

A review of available data was conducted by Mr Vincent Algar, a Non-Executive Director and consultant for Laconia Resources Limited. Mr Vincent Algar, who is a member of the Australasian Institute of Mining and Metallurgy, has compiled the information within this presentation that relates to Exploration Results. Mr Algar has sufficient experience relevant to the style of mineralisation and type of deposits under consideration and to the activity currently being undertaken to qualify as a Competent Person as defined in the 2004 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves and consents to the inclusion of this information in the form and context in which it appears in this report.

DIRECTOR’S REVIEW OF ACTIVITY

LACONIA ANNUAL REPORT 2012

Making the transition from explorer to producer

Rasuhuilca - Near-term production asset in Peru, South America DIRECTOR’S REVIEW OF ACTIVITY

LACONIA ANNUAL REPORT 2012

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Directors’ Report

Your Directors submit their report on the consolidated entity (referred to hereafter as the Group) consisting of Laconia Resources Limited and the entities it controlled at the end of, or during, the year ended 30 June 2012.

Directors

The names and details of the Company’s Directors in office during the period and until the date of this report are as follows. Directors were in office for this entire period unless otherwise stated.

Names, qualifications, experience and special responsibilities

Matthew Howison , (Non-Executive Chairman, appointed 1 August 2012, previously Non-Executive Director, appointed 29 June 2009 Member of the Audit Committee)

Mr Howison is a lawyer and investment banker who has held senior positions at NM Rothschild & Sons (Australia) Limited, Turnbulll & Partners, Goldman Sachs Australia and Salomon Smith Barney before establishing the private merchant banking firm Emerald Partners. In these roles he has been involved in advising on mergers and acquisitions and capital raising transactions for major Australian and international corporations and has extensive experience in contested public company takeovers. He has particular expertise in the metals and mining, energy, renewable energy, media and technology industries. He is an active investor in and adviser to a wide range of exploration companies.

Mr Howison is also a Director of Raisama Limited. Mr Howison has not held any other directorships in the last 3 years.

Ian Stuart , B.Sc (Geology) F.Fin, MAICD (Managing Director, appointed 29 June 2009)

Mr Stuart has experience in both the finance industry and mining. Mr Stuart holds an Honours degree in Geology and is a Fellow of the Financial Services Institute of Australasia. As a stockbroker, Mr Stuart has worked in the finance industry over the last eight years, most recently with Macquarie Private Wealth. Mr Stuart has extensive experience with capital raisings within the junior resource sector. Prior to this Mr Stuart was a Senior Geologist with experience throughout Australia and Africa, exploring for both gold and base metals including feasibility studies and project development.

Mr Stuart has not held any former directorships in the last 3 years.

Dr Saliba Sassine , (Executive Director, appointed 22 June 2012)

Dr Sassine has a strong depth of experience and expertise at Chairman and CEO level in a number of listed and privately held companies, and has directed and advised on the activities of a number of start-up and early stage enterprises at pre and post- IPO. He is Managing Director of Blue Mount Capital (WA) Pty Ltd, a member company of an international corporate capital group, and is Chairman of S&A Capital Pty Ltd, a commodities mercantile group. Dr Sassine has also worked as a senior ministerial and government adviser in Australia and represented the Western Australian Government on a number of state and national advisory boards and committees. Dr Sassine is a Senior Associate Member of the Securities Institute of Australia. He is also Chairman of the Perth Theatre Trust, Chairman of the POWA Institute, and Chairman of the Board of the WA Academy of Performing Arts.

Dr Sassine is also a Director of Red October Resources Ltd.

DIRECTOR’S REVIEW OF ACTIVITY

LACONIA ANNUAL REPORT 2012

Directors’ Report (cont’d)

Vincent Algar , B.Sc (Geology), MAUSIMM (Non-Executive Director, appointed 1 July 2012, Chairman of the Audit Committee)

Mr Algar is a geologist by profession with over 20 years experience in the mining industry spanning underground and open cut mining operations, green fields exploration, project development and mining services in Western Australia and Southern Africa. He has significant experience in the management of publicly listed companies, which includes the entire compliance, marketing and management process and encompasses the development of internal geological and administrative systems, exploration planning and execution, plus project acquisition and deal completion. As founding managing director of Shaw River Manganese Limited formerly Shaw River Resources Limited (December 2006 – March 2012) he was responsible for successful capital raisings, which raised more than $40 million for the Company’s exploration and acquisition programs, and was also directly involved in the $20 million acquisition of a 75.5% stake in the Otjo Project in Namibia, in 2011.

Mr Algar has not held any former directorships in the last 3 years apart from Shaw River Manganese Limited.

COMPANY SECRETARY

Matthew Edmondson B.Comm. CA, ACIS, (Member of the Audit Committee)

Mr Edmondson holds a Bachelor of Commerce degree from the University of Western Australia and is a member of the Institute of Chartered Accountants in Australia. Mr Edmondson is also an Associate member of the Institute of Chartered Secretaries in Australia. He has more than 20 years of experience in a variety of roles and industries involving accounting and corporate administration in the United Kingdom and Australia. Mr Edmondson is now primarily focused on providing company secretarial services to ASX listed companies.

Interests in the shares and options of the Company and related bodies corporate.

As at the date of this report, the interests of the Directors in the shares and options of Laconia Resources Limited were:

	Ordinary Shares	Options over
		OrdinaryShares
Ian Stuart	7,050,000	2,500,000
Dr Saliba Sassine	26,505,000	-
Vincent Algar	16,000	-
Matthew Howison	2,575,000	1,250,000

PRINCIPAL ACTIVITIES

The principal activities of the Group during the period were the acquisition of mining tenements, and the exploration of these tenements with the objective of identifying economic mineral deposits.

DIVIDENDS

No dividends were paid or declared during the period. No recommendation for payment of dividends has been made.

OPERATING AND FINANCIAL REVIEW

Finance Review

The Group commenced the financial year with cash assets of $2,254,218. During January 2012 the Group completed a placement of 33,650,000 ordinary shares, raising $1,346,000.

During the period total exploration expenditure incurred by the Group amounted to $2,450,563 (2011: $933,189). In line with the Group’s accounting policies, all exploration expenditure, other than acquisition costs, are written off as they are incurred. Net administration expenditure incurred amounted to $1,067,601 (2011: $776,149). This has resulted in an operating loss after income tax for the period ended 30 June 2012 of $3,219,995 (2011: $1,709,338). At 30 June 2012 cash assets available totalled $926,590.

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LACONIA ANNUAL REPORT 2012

Operating Results for the Period

Summarised operating results are as follows:

	2012 Revenues Results $ $
Revenues and loss from ordinary activities before income tax expense Shareholder Returns	135,336 (3,219,995)
	2012 2011
Basic loss per share (cents) Risk Management	(3.3) (2.4)

The Board is responsible for ensuring that risks, and also opportunities, are identified on a timely basis and that activities are aligned with the risks and opportunities identified by the Board.

The Group believes that it is crucial for all Board members to be a part of this process, and as such the Board has not established a separate risk management committee.

The Board has a number of mechanisms in place to ensure that management’s objectives and activities are aligned with the risks identified by the Board. These include the following:

Board approval of a strategic plan, which encompasses strategy statements designed to meet stakeholders needs and manage business risk.
Implementation of Board approved operating plans and budgets and Board monitoring of progress against these budgets.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

Other than as disclosed in this Annual Report, no significant changes in the state of affairs of the Group occurred during the financial year.

SIGNIFICANT EVENTS AFTER THE BALANCE DATE

No matters or circumstances, besides those disclosed at note 21, have arisen since the end of the period which significantly affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years.

LIKELY DEVELOPMENTS AND EXPECTED RESULTS

The Group expects to maintain the present status and level of operations and hence there are no likely developments in the entity’s operations.

ENVIRONMENTAL REGULATION AND PERFORMANCE

The Group is subject to significant environmental regulation in respect to its exploration activities.

The Group aims to ensure the appropriate standard of environmental care is achieved, and in doing so, that it is aware of and is in compliance with all environmental legislation. The Directors of the Group are not aware of any breach of environmental legislation for the period under review.

The Directors have considered the National Greenhouse and Energy Reporting Act 2007 (the NGER Act) which introduces a single national reporting framework for the reporting and dissemination of information about greenhouse gas emissions, greenhouse gas projects, and energy use and production of corporations. At the current stage of development, the directors have determined that the NGER Act will have no effect on the Group for the current, nor subsequent, financial year. The directors will reassess this position as and when the need arises.

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LACONIA ANNUAL REPORT 2012

Directors’ Report (cont’d)

REMUNERATION REPORT

The information provided in this remuneration report has been audited as required by section 308(3C) of the Corporations Act 2001.

Principles used to determine the nature and amount of remuneration

Remuneration Policy

The remuneration policy of Laconia Resources 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. The Board of Laconia Resources 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 Group.

The remuneration policy, setting the terms and conditions for the Executive Directors and other Senior Executives, was developed by the Board. 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 the Group’s performance, executive performance and comparable information from industry sectors and other listed companies in similar industries.

The Board may exercise discretion in relation to approving incentives, bonuses and options. The policy is designed to attract the highest calibre of Executives and reward them for performance that results in long term growth in shareholder wealth.

Executives are also entitled to participate in the employee share and option arrangements.

The Executive 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. Options are valued using the Black Scholes methodology.

The Board policy is to remunerate Non-Executive Directors at market rates for comparable companies for time, commitment and responsibilities. The Board determines payments to the Non-Executive Directors and reviews their remuneration annually, based on market practice, duties and accountability. Independent external advice is sought when required. The maximum aggregate amount of fees that can be paid to Non-Executive Directors is subject to approval by shareholders at the Annual General Meeting (currently $300,000). Fees for Non-Executive Directors are not linked to the performance of the Group. However, to align Directors’ interests with shareholder interests, the directors are encouraged to hold shares in the Company and are able to participate in the employee option plan.

Performance based remuneration

The Group currently has no performance based remuneration component built into Director and Executive remuneration packages.

Company performance, shareholder wealth and Directors’ and Executives’ remuneration

No relationship exists between shareholder wealth, Director and Executive remuneration and Group performance.

Use of remuneration consultants

The Group did not employ the services of any remuneration consultants during the financial year ended 30 June 2012.

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LACONIA ANNUAL REPORT 2012

Voting and comments made at the Company’s 2011 Annual General Meeting

The Company received approximately 97% of “yes” votes on its remuneration report for the 2011 financial year. The Company did not receive any specific feedback at the AGM or throughout the year on its remuneration practices.

Details of remuneration

Details of the remuneration of the Directors and the key management personnel of the Group are set out in the following table.

The key management personnel of the Group include the Directors and Company Secretary as per page 3 above and the following executive officer who has authority and responsibility for planning, directing and controlling activities within the Group:

Ernie Poole – Exploration Manager

Given the size and nature of operations of the Group, there are no other employees who are required to have their remuneration disclosed in accordance with the Corporations Act 2001.

KEY MANAGEMENT PERSONNEL OF THE GROUP

	Short-Term	Short-Term	Post Employment	Post Employment	Share-based	Total
	Salary	Non	Superannuation	Retirement	Payments
	& Fees	Monetary		benefts
	$	$	$	$	$	$
Directors
Michael Sharwood
2012	55,459	6,624	4,541	-	-	66,624
2011	50,459	3,430	4,541	-	-	58,430
Ian Stuart
2012	265,000	6,624	-	-	-	265,000
2011	220,000	3,430	-	-	-	223,430
Matthew Howison
2012	56,110	6,624	2,890	-	-	59,000
2011	32,110	3,430	2,890	-	-	38,430
Other key management personnel
Graeme Smith
2012	-	-	-	-	-	-
2011	-	-	-	-	-	-
Ernie Poole
2012	180,000	-	16,200	-	-	196,200
2011	58,154	-	5,234	-	15,046	78,434
Total key management personnel compensation
2012	551,569	19,872	23,631	-	-	575,200
2011	360,723	10,290	12,665	-	15,046	398,724

DIRECTOR’S REVIEW OF ACTIVITY

LACONIA ANNUAL REPORT 2012

Director’s Report (cont’d)

Service agreements

On 17 August 2009 the Company entered into an Executive Service Agreement with Mr Ian Stuart.

Under the Agreement, Mr Ian Stuart is engaged by the Company to provide services to the Company in the capacity of Managing Director and CEO.

Mr Stuart is to be paid an annual salary of $220,000 (inclusive of superannuation entitlement).

The Agreement was effective from 1 July 2009 and continues until terminated by either Mr Stuart or the Company. Mr Stuart is entitled to a minimum notice period of six months from the Company and the Company is entitled to a minimum notice period of six months from Mr Stuart.

On 17 August 2011, Mr Stuart’s annual salary increased to $250,000 (inclusive of superannuation entitlement).

Share-based compensation

There were no options granted to or vesting with key management personnel during the year, and there were no options forfeited during the year.

DIRECTORS’ MEETINGS

During the period the Company held meetings of Directors. The attendance of Directors at meetings of the Board were:

	Directors’	Meetings
	A	B
Michael Sharwood	4	4
Ian Stuart	4	4
Matthew Howison	4	4
Saliba Sassine	-	-

Notes

A – Number of meetings attended.

B – Number of meetings held during the time the Director held office during the period.

SHARES UNDER OPTION

At the date of this report there are 24,100,000 unissued ordinary shares in respect of which options are outstanding.

	Number of options
Balance at the beginning of the year Movements of share options during the period Total number of options outstanding as at 30 June 2012 and the date of this report The balance is comprised of the following: Expirydate Exerciseprice(cents)	24,100,000 -
	24,100,000
	Number of options
16 May 2014 8 31 August 2013 15 31 March 2013 20 30 September 2014 20 Total number of options outstanding at the date of this report	400,000 200,000 3,000,000 20,500,000
	24,100,000

No person entitled to exercise any option referred to above has or had, by virtue of the option, a right to participate in any share issue of any other body corporate.

DIRECTOR’S REVIEW OF ACTIVITY

LACONIA ANNUAL REPORT 2012

INSURANCE OF DIRECTORS AND OFFICERS

During or since the financial year, the Company has paid premiums insuring all the directors of Laconia Resources Limited against costs incurred in defending proceedings for conduct involving:

(a) a wilful breach of duty; or
(b) a contravention of sections 182 or 183 of the Corporations Act 2001 ,

as permitted by section 199B of the Corporations Act 2001 .

The total amount of insurance contract premiums paid is $8,434.

PROCEEDINGS ON BEHALF OF THE COMPANY

No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to 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.

No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of the Corporations Act 2001 .

AUDITOR’S INDEPENDENCE DECLARATION

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 38.

Signed in accordance with a resolution of the Directors.

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Ian Stuart

Managing Director

Perth, 28 September 2012

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LACONIA ANNUAL REPORT 2012

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LACONIA ANNUAL REPORT 2012

Corporate Governance Statement

The Board of Directors

The Company’s constitution provides that the number of Directors shall not be less than three and not more than nine. There is no requirement for any shareholding qualification.

As and if the Company’s activities increase in size, nature and scope the size of the Board will be reviewed periodically, and as circumstances demand. The optimum number of Directors required to adequately supervise the Company’s constitution will be determined within the limitations imposed by the constitution.

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

Directors are initially appointed by the full Board subject to election by shareholders at the next general meeting. Under the Company’s constitution the tenure of a Director (other than Managing Director, and only one Managing Director where the position is jointly held) is subject to reappointment by shareholders not later than the third anniversary following his or her last appointment. Subject to the requirements of the Corporations Act 2001 , the Board does not subscribe to the principle of retirement age and there is no maximum period of service as a director. A Managing Director may be appointed for any period and on any terms the Directors think fit and, subject to the terms of any agreement entered into, may revoke any appointment.

The Board considers that the Company is not currently of a size, nor are its affairs of such complexity to justify the formation of separate or special committees (other than an Audit Committee) at this time. The Board as a whole is able to address the governance aspects of the full scope of the Company’s activities and to ensure that it adheres to appropriate ethical standards.

Role of the Board

The Board’s primary role is the protection and enhancement of long term shareholder value.

To fulfil this role, the board is responsible for oversight of management and the overall corporate governance of the Company including its strategic direction, establishing goals for management and monitoring the achievement of these goals.

Appointments to Other Boards

Directors are required to take into consideration any potential conflicts of interest when accepting appointments to other boards.

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LACONIA ANNUAL REPORT 2012

Corporate Governance Statement (cont’d)

Independent Professional Advice

The Board has determined that individual Directors have the right in connection with their duties and responsibilities as directors, to seek independent professional advice at the Company’s expense. With the exception of expenses for legal advice in relation to Director’s rights and duties, the engagement of an outside adviser is subject to prior approval of the Chairman and this will not be unreasonably withheld.

Continuous Review of Corporate Governance

Directors consider, on an ongoing basis, how management information is presented to them and whether such information is sufficient to enable them to discharge their duties as Directors of the Company. Such information must be sufficient to enable the directors to determine appropriate operating and financial strategies from time to time in light of changing circumstances and economic conditions. The directors recognise that mining exploration is an inherently risky business and that operational strategies adopted should, notwithstanding, be directed towards improving or maintaining the net worth of the Company.

ASX Principles of Good Corporate Governance

To the extent that they are relevant to the organisation, the Company has adopted the Eight Corporate Governance Principles and Best Practice Recommendations as published by the ASX Corporate Governance Council.

As the company’s activities develop in size, nature and scope, the size of the Board and the implementation of any additional formal corporate governance committees will be given further consideration.

The following table sets out the company’s present position in relation to each of the Principles.

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ASX Principle Status Reference/comment
Principle 1: Lay solid foundations for management
and oversight
1.1 Companies should establish the functions A Matters reserved for the Board are included
reserved for the Board and those delegated on the Company website in the Corporate
to Senior Executives and disclose those Governance Section.
functions
1.2 Companies should disclose the process A The remuneration of Executive and Non-
for evaluating the performance of senior Executive Directors is reviewed by the Board
executives with the exclusion of the Director concerned.
The remuneration of management and
employees is reviewed by the Board and
approved by the Chairman.
Acting in its ordinary capacity, the Board
from time to time carries out the process of
considering and determining performance issues
including the identification of matters that may
have a material effect on the price of company
securities. Whenever relevant, any such matters
are reported to ASX.
1.3 Companies should provide the information A
indicated in the Guide to reporting on
Principle 1
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A = Adopted N/A = Not adopted

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ASX Principle Status Reference/comment
Principle 2: Structure the Board to add value
2.1 A majority of the Board should be N/A Given the Company’s background, the nature
independent Directors and size of its business and the current stage
of its development the board compromises
three Directors, two of whom are Non-Executive
(including the independent Chairman). The
Board believes that this is both appropriate
and acceptable at this stage of the Company’s
development.
2.2 The chair should be an independent director A
2.3 The roles of Chair and Chief Executive A The position of Chairman and Managing Director
Officer should not be exercised by the same are held by separate persons.
individual
2.4 The Board should establish a nomination A The full Board is the Nomination Committee.
committee Acting in its ordinary capacity from time to time
as required, the Board carries out the process
of determining the need for screening and
appointing new Directors. In view of the size
and resources available to the Company it is
not considered that a separate Nomination
Committee would add any substance to this
process.
2.5 Companies should disclose the process for N/A Given the size and nature of the Company a
evaluating the performance of the Board, its formal process for performance evaluation has
committees and individual directors not been developed.
2.6 Companies should provide the information A The skills and experience of the Directors are set
indicated in the Guide to reporting on out in the Company’s Annual Report (Directors’
Principle 2 Report) and on the website.
Principle 3: Promote ethical and responsible decision
making
3.1 Companies should establish a code of A The Company has established a Code of
conduct and disclose the code or a summary Conduct which can be viewed on its website.
of the code as to:
• the practices necessary to maintain
confidence in the company’s integrity
• the practices necessary to take into
account their legal obligations and the
reasonable expectations of their stakeholders
• the responsibility and accountability of
individuals for reporting and investigating
reports of unethical practices
3.2 Companies should establish a policy N/A The Company has adopted a diversity policy
concerning diversity and disclose the policy which can be viewed on its website. The
or a summary of that policy. The policy Company recognises that a diverse and
should include requirements for the Board to talented workforce is a competitive advantage
establish measurable objectives for achieving and encourages a culture that embraces
gender diversity and for the Board to assess diversity. The Company does not think that it is
annually both the objectives and progress in appropriate to state measurable objectives for
achieving them. achieving gender diversity due to its size and
stage of development.
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A = Adopted N/A = Not adopted

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Corporate Governance Statement (cont’d)

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ASX Principle Status Reference/comment
Companies should disclose in each annual N/A The Company has adopted a diversity policy
report the measurable objectives for which can be viewed on its website. The
achieving gender diversity set by the Board Company recognises that a diverse and talented
in accordance with the diversity policy and workforce is a competitive advantage and
progress towards achieving them. encourages a culture that embraces diversity.
However, given the Company’s size and stage
of development as an exploration company,
the Board does not think it is yet appropriate
to include measurable objectives in relation to
gender. As the Company grows and requires
more employees, the Company will review this
policy and amend as appropriate.
Companies should disclose in each annual A The proportion of women employees in
report the proportion of women employees the whole organisation is 44%.
in the whole organisation, women in senior There are currently 2 women in senior
executive positions and women on the executive positions.
Board. There are currently no women on the Board.
3.3 Companies should provide the information A
indicated in the Guide to reporting on
Principle 3
Principle 4: Safeguard integrity in financial reporting
4.1 The Board should establish an audit A
committee
4.2 The audit committee should be structured so
that it:
• consists only of Non-Executive Directors A The Audit committee consists of Matthew
Howison (Non-Executive Chairman) Vincent
Algar (Non-Executive Director) and Matthew
Edmondson (Company Secretary).
• consists of a majority of independent N/A The Company only has two independent
Directors Directors. Sourcing alternative Directors to
strictly comply with this Principle is considered
expensive with costs out weighing potential
benefits.
• is chaired by an independent Chair, who A Mr Algar, an independent Director, is Chair
is not Chair of the Board of the Audit Committee. Sourcing alternative
Directors to strictly comply with this Principle is
considered expensive with costs out weighing
potential benefits.
• has at least three members A
4.3 The audit committee should have a formal A
charter
4.4 Companies should provide the information A The committee is to meet at least annually and
indicated in the Guide to reporting on otherwise as required.
Principle 4
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N/A = Not adopted

A = Adopted

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ASX Principle Status Reference/comment
Principle 5: Make timely and balanced disclosure
5.1 Companies should establish written policies A The Company has instigated internal procedures
designed to ensure compliance with ASX designed to provide reasonable assurance as to
Listing Rule disclosure requirements and to the effectiveness and efficiency of operations,
ensure accountability at a senior executive the reliability of financial reporting and
level for that compliance and disclose those compliance with relevant laws and regulations.
policies or a summary of those policies The Board is acutely aware of the continuous
disclosure regime and a copy of the Company’s
Continuous Disclosure Policy is available on the
Company’s website.
5.2 Companies should provide the information A The Board receives monthly reports on the
indicated in the Guide to reporting on status of the Company’s activities and any new
Principle 5 proposed activities. Disclosure is reviewed as a
routine agenda item at each Board Meeting.
Principle 6: Respect the rights of shareholders
6.1 Companies should design a communications A In line with adherence to continuous disclosure
policy for promoting effective communication requirements of the ASX all shareholders are
with shareholders and encouraging their kept informed of major developments affecting
participation at general meetings and the Company. This disclosure is through regular
disclose their policy or a summary of shareholder communications including the
that policy Annual Report, Quarterly Reports, the Company
Website and the distributions of specific releases
covering major transactions and events.
6.2 Companies should provide the information A The Company has formulated a Communication
indicated in the Guide to reporting on Policy which is included in its Corporate
Principle 6 Governance Statement on the Company
Website.
Principle 7: Recognise and manage risk
7.1 Companies should establish policies for A The Company has formulated a Risk
the oversight and management of material Management Charter which is included in
business risks and disclose a summary of its Corporate Governance Statement on the
those policies Company Website.
7.2 The Board should require management to A The Company’s Risk Management Policy can be
design and implement the risk management found in the Corporate Governance section of
and internal control system to manage the the Company’s website.
company’s material business risks and
report to it on whether those risks are being
managed effectively. The Board should
disclose that management has reported to
it as to the effectiveness of the company’s
management of its material business risks
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A = Adopted N/A = Not adopted

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Corporate Governance Statement (cont’d)

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ASX Principle Status Reference/comment
7.3 The Board should disclose whether it has A Assurances received from CEO and CFO (or
received assurance from the chief executive equivalent) each year.
officer (or equivalent) and the chief financial
officer (or equivalent) 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 respects in relation to
financial reporting risks
7.4 Companies should provide the information A
indicated in the Guide to reporting on
Principle 7
Principle 8: Remunerate fairly and responsibly
8.1 The Board should establish a remuneration A The full Board carries out the duties that would
committee normally fall to the Remuneration Committee.
The remuneration of an Executive Director will
be decided by the Board, without the affected
Executive Director participating in that decision-
making process.
8.2 The remuneration committee should be
structured so that it:
• consists of a majority of independent N/A The Company only has two independent
Directors Directors. Sourcing alternative directors to
strictly comply with this Principle is considered
expensive with costs out weighing potential
benefits.
• is chaired by an independent Chair N/A Sourcing alternative Directors to strictly comply
with this Principle is considered expensive with
costs out weighing potential benefits.
• has at least three members. A
8.3 Companies should clearly distinguish A Refer to the Remuneration Report in the
the structure of non-executive directors’ Company’s Annual Report.
remuneration from that of executive directors
and senior executives
8.4 Companies should provide the information A The Executive Directors and Executives receive a
indicated in the Guide to reporting on superannuation guarantee contribution required
Principle 8 by the government, which is currently 9%, and
do not receive any other retirement benefits.
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N/A = Not adopted

A = Adopted

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LACONIA ANNUAL REPORT 2012

Consolidated Statement of Comprehensive Income

YEAR ENDED 30 JUNE 2012 Notes	Consolidated 2012 2011 $ $ 135,336 165,579 (18,879) (22,588) (150,970) (290,196) (2,450,563) (933,189) (1,067,601) (599,218) - (29,726) (3,552,677) (1,709,338) 332,682 -
REVENUE 4 EXPENDITURE Depreciation expense Employee benefts expense Exploration expenses Administration expenses Share-based payments expense LOSS BEFORE INCOME TAX INCOME TAX BENEFIT / (EXPENSE) 6 TOTAL COMPREHENSIVE LOSS FOR THE YEAR ATTRIBUTABLE TO OWNERS OF LACONIA RESOURCES LIMITED Basic and diluted loss per share for loss attributable to the ordinary equity holders of the Company (cents per share) 23
	(3,219,995) (1,709,338) (3.3) (2.4)

YEAR ENDED 30 JUNE 2012
Notes

Consolidated
2012
2011
$ $ 135,336
165,579
(18,879)
(22,588)
(150,970)
(290,196)
(2,450,563)
(933,189)
(1,067,601)
(599,218)
-
(29,726)
(3,552,677)
(1,709,338)
332,682
-

REVENUE
4
EXPENDITURE
Depreciation expense
Employee benefts expense
Exploration expenses
Administration expenses
Share-based payments expense
LOSS BEFORE INCOME TAX
INCOME TAX BENEFIT / (EXPENSE)
6
TOTAL COMPREHENSIVE LOSS FOR THE YEAR ATTRIBUTABLE
TO OWNERS OF LACONIA RESOURCES LIMITED
Basic and diluted loss per share for loss attributable to the ordinary
equity holders of the Company (cents per share)
23

(3,219,995)
(1,709,338)
(3.3)
(2.4)

The above Consolidated Statement of Comprehensive Income should be read in conjunction with the Notes to the Consolidated Financial Statements.

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Consolidated Statement of Financial Position

AT 30 JUNE 2012 Notes	Consolidated 2012 2011 $ $
CURRENT ASSETS Cash and cash equivalents 7 Trade and other receivables 8 TOTAL CURRENT ASSETS NON CURRENT ASSETS Plant and equipment 9 Mining properties 10 TOTAL NON CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables 11 TOTAL CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital 12 Reserves 13(a) Convertible Notes 12(f) Accumulated Losses 13(b) TOTAL EQUITY	926,590 2,254,218 78,012 28,175
	1,004,602 2,282,393
	169,066 91,700 5,960,380 3,882,500
	6,129,446 3,974,200
	7,134,048 6,256,593
	542,140 173,163
	542,140 173,163
	542,140 173,163
	6,591,908 6,083,430 11,975,022 8,895,639 223,826 223,826 649,090 -
	(6,256,030) (3,036,035)
	6,591,908 6,083,430

The above Consolidated Statement of Financial Position should be read in conjunction with the Notes to the Consolidated Financial Statements.

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Consolidated Statement of Changes in Equity

YEAR ENDED 30 JUNE 2012 Notes Consolidated	Contributed Equity Convertible Note Share-based Payments Reserve Accumulated Losses Total $ $ $ $ $
BALANCE AT 1 JULY 2010 Loss for the year 13(b) TOTAL COMPREHENSIVE LOSS TRANSACTIONS WITH OWNERS IN THEIR CAPACITY AS OWNERS Shares issued during the year 12 Options issued to employees 12 BALANCE AT 30 JUNE 2011 Loss for the year 13(b) TOTAL COMPREHENSIVE LOSS TRANSACTIONS WITH OWNERS IN THEIR CAPACITY AS OWNERS Shares issued during the year 12 Convertible notes issued 12(f) BALANCE AT 30 JUNE 2012	7,993,139 - 194,100 (1,326,697) 6,860,542 - - - (1,709,338) (1,709,338)
	- - - (1,709,338) (1,709,338) 902,500 - - - 902,500 - - 29,726 - 29,726
	8,895,639 - 223,826 (3,036,035) 6,083,430
	- - - (3,219,995) (3,219,995)
	(3,219,995) (3,219,995) 3,079,383 - - - 3,079,383 - 649,090 - - 649,090
	11,975,022 649,090 223,826 (6,256,030) 6,591,908

The above Consolidated Statement of Changes in Equity should be read in conjunction with the Notes to the Consolidated Financial Statements.

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Consolidated Statement of Cash Flows

AT 30 JUNE 2012 Notes	Consolidated 2012 2011 $ $
CASH FLOWS FROM OPERATING ACTIVITIES Payments to suppliers and employees Expenditure on mining interests Research & Development Refund Interest received NET CASH OUTFLOW FROM OPERATING ACTIVITIES 22(a) CASH FLOWS FROM INVESTING ACTIVITIES Payments for plant and equipment Payments for mining properties Non refundable deposit received NET CASH OUTFLOW FROM INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issues of ordinary shares net of share issue cost NET CASH INFLOW FROM FINANCING ACTIVITIES NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS Cash and cash equivalents at the beginning of the fnancial year CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR 7	(1,047,085) (889,580) (1,821,249) (839,179) 332,682 - 85,111 164,890
	(2,450,541) (1,563,869)
	(113,995) (84,053) - (80,000) 50,000 -
	(63,995) (164,053)
	1,186,908 -
	1,186,908 -
	(1,327,628) (1,727,922) 2,254,218 3,982,140
	926,590 2,254,218

The above Consolidated Statement of Cash Flows should be read in conjunction with the Notes to the Consolidated Financial Statements.

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Notes to the Consolidated Financial Statements

30 JUNE 2012

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements are for the consolidated entity consisting of Laconia Resources Limited and its subsidiaries. The financial statements are presented in the Australian currency. Laconia Resources Limited is a company limited by shares, domiciled and incorporated in Australia. The financial statements were authorised for issue by the directors on 28 September 2012. The Directors have the power to amend and reissue the financial statements.

(a) Basis of preparation

These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001 . Laconia Resources Limited is a for-profit entity for the purpose of preparing the financial statements.

(i) Compliance with IFRS

The consolidated financial statements of the Laconia Resources Limited Group also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

(ii) New and amended standards adopted by the Group

None of the new standards and amendments to standards that are mandatory for the first time for the financial year beginning 1 July 2011 affected any of the amounts recognised in the current period or any prior period and are not likely to affect future periods.

(iii) Early adoption of standards

The Group has not elected to apply any pronouncements before their operative date in the annual reporting period beginning 1 July 2011.

(iv) Historical cost convention

These financial statements have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale financial assets, which have been measured at fair value.

(b) Principles of consolidation

(i) Subsidiaries

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Laconia Resources Limited (“company” or “parent entity”) as at 30 June 2012 and the results of all subsidiaries for the year then ended. Laconia Resources Limited and its subsidiaries together are referred to in this financial report as the Group or the consolidated entity.

Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

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Notes to the Consolidated Financial Statements 30 JUNE 2012 (cont’d)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

The acquisition method of accounting is used to account for business combinations by the Group.

Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of comprehensive income, statement of changes in equity and statement of financial position respectively.

Investments in subsidiaries are accounted for at cost in the separate financial statements of Laconia Resources Limited.

(ii) Changes in ownership interests

The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of the Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised in a separate reserve within equity attributable to owners of Laconia Resources Limited.

When the Group ceases to have control, joint control or significant influence, any retained interest in the entity is remeasured to its fair value with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, jointly controlled entity or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

If the ownership interest in a jointly controlled entity or associate is reduced but joint control or significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income are reclassified to profit or loss where appropriate.

(c) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating decision maker. The Chief Operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the full Board of Directors.

(d) Foreign currency translation

(i) Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in Australian dollars, which is Laconia Resources Limited’s functional and presentation currency.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.

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(iii) Group companies

The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position;
income and expenses for each statement of comprehensive income are translated at average exchange rates (unless that is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and
all resulting exchange differences are recognised in other comprehensive income.

On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings and other financial instruments designated as hedges of such investments, are recognised in other comprehensive income. When a foreign operation is sold or any borrowings forming part of the net investment are repaid, the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale.

(e) Revenue recognition

Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial assets.

(f) Income tax

The income tax expense or revenue for the year is the tax payable on the current year’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Company’s subsidiaries and associated operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the reporting date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

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Notes to the Consolidated Financial Statements 30 JUNE 2012 (cont’d)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)

Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

(g) Leases

Leases of property, plant and equipment where the Group, as lessee, has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease’s inception at the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in other short-term and long-term payables. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases is depreciated over the shorter of the asset’s useful life and the lease term.

Leases where a significant portion of the risks and rewards of ownership are not transferred to the Group as lessee are classified as operating leases (note 18). Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease.

(h) Impairment of assets

Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

(i) Cash and cash equivalents

For statement of cash flows presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short term highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the statement of financial position.

(j) Trade and other receivables

Receivables are recognised and carried at original invoice amount less a provision for any uncollectible debts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written-off as incurred.

(k) Investments and other financial assets

The Group classifies its investments in the following categories: financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments and available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and, in the case of assets classified as held-to-maturity, re-evaluates this designation at each reporting date.

(i) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are classified as held for trading unless they are designated as hedges. Assets in this category are classified as current assets.

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(ii) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those with maturities greater than 12 months after the reporting date which are classified as non-current assets. Loans and receivables are included in trade and other receivables in the statement of financial position.

(iii) Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Group’s management has the positive intention and ability to hold to maturity. If the Group were to sell other than an insignificant amount of held-to-maturity financial assets, the whole category would be tainted and reclassified as available-for-sale. Held-to-maturity financial assets are included in non-current assets, except for those with maturities less than 12 months from the reporting date, which are classified as current assets.

(iv) Available-for-sale financial assets

Available-for-sale financial assets, comprising principally marketable equity securities, are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the reporting date. Investments are designated available-for-sale if they do not have fixed maturities and fixed or determinable payments and management intends to hold them for the medium to long term.

Financial assets - reclassification

The Group may choose to reclassify a non-derivative trading financial asset out of the held-for-trading category if the financial asset is no longer held for the purpose of selling it in the near-term. Financial assets other than loans and receivables are permitted to be reclassified out of the held-for-trading category only in rare circumstances arising from a single event that is unusual and highly unlikely to recur in the near-term. In addition, the Group may choose to reclassify financial assets that would meet the definition of loans and receivables out of the held-for-trading or available-for-sale categories if the Group has the intention and ability to hold these financial assets for the foreseeable future or until maturity at the date of reclassification.

Reclassifications are made at fair value as of the reclassification date. Fair value becomes the new cost or amortised cost as applicable, and no reversals of fair value gains or losses recorded before reclassification date are subsequently made. Effective interest rates for financial assets reclassified to loans and receivables and held-to-maturity categories are determined at the reclassification date. Further increases in estimates of cash flows adjust effective interest rates prospectively.

Recognition and derecognition

Regular purchases and sales of financial assets are recognised on trade-date – the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value and transaction costs are expensed to the statement of comprehensive income. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.

When securities classified as available-for-sale are sold, the accumulated fair value adjustments recognised in equity are included in the statement of comprehensive income as gains and losses from investment securities.

Measurement

At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transactions costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.

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Notes to the Consolidated Financial Statements 30 JUNE 2012 (cont’d)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)

Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective interest method.

Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Gains or losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are presented in the statement of comprehensive income within other income or other expenses in the period in which they arise. Dividend income from financial assets at fair value through profit or loss is recognised in the statement of comprehensive income as part of revenue from continuing operations when the Group’s right to receive payments is established.

Changes in the fair value of monetary securities denominated in a foreign currency and classified as available-for-sale are analysed between translation differences resulting from changes in amortised cost of the security and other changes in the carrying amount of the security. The translation differences related to changes in the amortised cost are recognised in profit or loss, and other changes in carrying amount are recognised in equity. Changes in the fair value of other monetary and non-monetary securities classified as available-for-sale are recognised in equity.

Details on how the fair value of financial investments is determined are disclosed in note 2.

Impairment

The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. In the case of equity investments classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is considered an indicator that the assets are impaired.

(i) Assets carried at amortised cost

For loans and receivables, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in profit or loss. If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the Group may measure impairment on the basis of an instrument’s fair value using an observable market price.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in profit or loss.

(ii) Assets classified as available-for-sale

If there is objective evidence of impairment for available-for-sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss – is removed from equity and recognised in profit or loss.

Impairment losses on equity instruments that were recognised in profit or loss are not reversed through profit or loss in a subsequent period.

If the fair value of a debt instrument classified as available-for-sale increases in a subsequent period and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed through profit or loss.

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(l) Plant and equipment

All plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

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. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to the statement of comprehensive income during the reporting period in which they are incurred.

Depreciation of plant and equipment is calculated using the reducing balance method to allocate their cost or revalued amounts, net of their residual values, over their estimated useful lives or, in the case of leasehold improvements and certain leased plant and equipment, the shorter lease term. The rates vary between 20% and 40% per annum.

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (note 1(h)).

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the statement of comprehensive income. When re-valued assets are sold, it is Group policy to transfer the amounts included in other reserves in respect of those assets to retained earnings.

(m) Exploration and evaluation costs

Exploration and evaluation costs are written off in the year they are incurred apart from acquisition costs which are carried forward where right of tenure of the area of interest is current and they are expected to be recouped through the sale or successful development and exploitation of the area of interest or, where exploration and evaluation activities in the area of interest have not reached a stage that permits reasonable assessment of the existence of economically recoverable reserves. Where an area of interest is abandoned or the directors decide that it is not commercial, any accumulated acquisition costs in respect of that area are written off in the financial year the decision is made. Each area of interest is reviewed at the end of each accounting period and accumulated costs are written off to the extent that they will not be recoverable in the future.

(n) Trade and other payables

These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year which are unpaid. The amounts are unsecured, non-interest bearing and are paid on normal commercial terms.

(o) Employee benefits

Wages and salaries and annual leave

Liabilities for wages and salaries, including non-monetary benefits, and annual leave expected to be settled within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled. All shortterm employee benefit obligations are presented as payables.

(p) Share-based payments

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

The cost of these equity-settled transactions with employees is measured by reference to the fair value at the date at which they are granted. The fair value is determined by an internal valuation using a Black-Scholes option pricing model.

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (‘vesting date’).

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Notes to the Consolidated Financial Statements 30 JUNE 2012 (cont’d)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)

The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which the vesting period has expired and (ii) the number of options that, in the opinion of the directors of the Group, will ultimately vest. This opinion is formed based on the best available information at balance date. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date.

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

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

Options over ordinary shares have also been issued as consideration for the acquisition of interests in tenements and other services. These options have been treated in the same manner as employee options described above, with the expense being included as part of exploration expenditure.

(q) Issued capital

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Incremental costs directly attributable to the issue of new shares or options for the acquisition of a business are not included in the cost of the acquisition as part of the purchase consideration.

(r) Earnings per share

(i) Basic earnings per share

Basic earnings per share is calculated by dividing the profit attributable to owners of the company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year.

(ii) Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

(s) Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the statement of financial position.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows.

(t) New accounting standards and interpretations

Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2012 reporting periods. The Group’s assessment of the impact of these new standards and interpretations is set out below. New standards and interpretations not mentioned are considered unlikely to impact on the financial reporting of the Group.

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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 1053: Application of Tiers of Australian Accounting Standards and AASB 2010–2: Amendments to Australian Accounting Standards arising from Reduced Disclosure Requirements [AASB 1, 2, 3, 5, 7, 8, 101, 102, 107, 108, 110, 111, 112, 116, 117, 119, 121, 123, 124, 127, 128, 131, 133, 134, 136, 137, 138, 140, 141, 1050 & 1052 and Interpretations 2, 4, 5, 15, 17, 127, 129 & 1052] (applicable for annual reporting periods commencing on or after 1 July 2013).

AASB 1053 establishes a revised differential financial reporting framework consisting of two tiers of financial reporting requirements for those entities preparing general purpose financial statements:

Tier 1: Australian Accounting Standards; and
Tier 2: Australian Accounting Standards – Reduced Disclosure Requirements.

Tier 2 of the framework comprises the recognition, measurement and presentation requirements of Tier 1, but contains significantly fewer disclosure requirements.

The following entities are required to apply Tier 1 reporting requirements (ie full IFRS):

for-profit private sector entities that have public accountability; and
the Australian Government and state, territory and local governments.

Since the Group is a for-profit private sector entity that has public accountability, it does not qualify for the reduced disclosure requirements for Tier 2 entities.

AASB 2011–2 makes amendments to Australian Accounting Standards and Interpretations to give effect to the reduced disclosure requirements for Tier 2 entities. It achieves this by specifying the disclosure paragraphs that a Tier 2 entity need not comply with as well as adding specific “RDR” disclosures.

DIRECTOR’S REVIEW OF ACTIVITY

LACONIA ANNUAL REPORT 2012

Notes to the Consolidated Financial Statements 30 JUNE 2012 (cont’d)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)

AASB 2010–7: Amendments to Australian Accounting Standards arising from AASB 9 (December 2011) [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.

AASB 2010–8: Amendments to Australian Accounting Standards – Deferred Tax: Recovery of Underlying Assets [AASB 112] (applies to periods beginning on or after 1 January 2012).

This Standard makes amendments to AASB 112: Income Taxes.

The amendments brought in by this Standard introduce a more practical approach for measuring deferred tax liabilities and deferred tax assets when investment property is measured using the fair value model under AASB 140: Investment Property.

Under the current AASB 112, the measurement of deferred tax liabilities and deferred tax assets depends on whether an entity expects to recover an asset by using it or by selling it. The amendments introduce a presumption that an investment property is recovered entirely through sale. This presumption is rebutted if the investment property is held within a business model whose objective is to consume substantially all of the economic benefits embodied in the investment property over time, rather than through sale.

The amendments brought in by this Standard also incorporate Interpretation 121 into AASB 112.

The amendments are not expected to impact the Group.

AASB 2010–9: Amendments to Australian Accounting Standards – Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters [AASB 1] (applies to periods beginning on or after 1 July 2011/1 January 2013).

This Standard makes amendments to AASB 1: First-time Adoption of Australian Accounting Standards.

The amendments brought in by this Standard provide relief for first-time adopters of Australian Accounting Standards from having to reconstruct transactions that occurred before their date of transition to Australian Accounting Standards.

Furthermore, the amendments brought in by this Standard also provide guidance for entities emerging from severe hyperinflation either to resume presenting Australian-Accounting-Standards financial statements or to present AustralianAccounting-Standards financial statements for the first time.

This Standard is not expected to impact the Group.

AASB 2010–10: Further Amendments to Australian Accounting Standards – Removal of Fixed Dates for First-time Adopters [AASB 2009–11 & AASB 2011–7] (applies to periods beginning on or after 1 January 2013).

This Standard makes amendments to AASB 2009–11: Amendments to Australian Accounting Standards arising from AASB 9, and AASB 2011–7: Amendments to Australian Accounting Standards arising from AASB 9 (December 2010).

The amendments brought in by this Standard ultimately affect AASB 1: First-time Adoption of Australian Accounting Standards and provide relief for first-time adopters from having to reconstruct transactions that occurred before their transition date.

[The amendments to AASB 2009–11 will only affect early adopters of AASB 2009–11 (and AASB 9: Financial Instruments that was issued in December 2009) as it has been superseded by AASB 2010–7.

This Standard is not expected to impact the Group.

AASB 1054: Australian Additional Disclosures (applies to periods beginning on or after 1 January 2013).

This Standard is as a consequence of phase 1 of the joint Trans-Tasman Convergence project of the AASB and FRSB.

DIRECTOR’S REVIEW OF ACTIVITY

LACONIA ANNUAL REPORT 2012

This Standard relocates all Australian specific disclosures from other standards to one place and revises disclosures in the following areas:

compliance with Australian Accounting Standards;
the statutory basis or reporting framework for financial statements;
whether the financial statements are general purpose or special purpose;
audit fees; and
imputation credits.

This Standard is not expected to impact the Group.

AASB 2011-2: Amendments to Australian Accounting Standards arising from the Trans-Tasman Convergence project – Reduced disclosure regime [AASB 101 & AASB 1054] (applies to periods beginning on or after 1 July 2013).

This Standard makes amendments to the application of the revised disclosures to Tier 2 entities that are applying AASB 1053.

This Standard is not expected to impact the Group.

AASB 10: Consolidated Financial Statements (applies to periods beginning on or after 1 January 2013)

This Standard establishes a new control model that applies to all entities. It replaces parts of AASB 127 Consolidated and Separate Financial Statements dealing with the accounting for consolidated financial statements and Interpretation 112 Consolidation – Special Purpose Entities .

The new control model broadens the situations when an entity is considered to be controlled by another entity and includes new guidance for applying the model to specific situations, including when acting as a manager may give control, the impact of potential voting rights and when holding less than a majority voting rights may give control. This Standard is not expected to impact the Group.

AASB 11: Joint Arrangements (applies to periods beginning on or after 1 January 2013).

This Standard replaces AASB 131 Interests in Joint Ventures and Interpretation 113 Jointly-Controlled Entities – Nonmonetary Contributions by Ventures . AASB 11 uses the principle of control in AASB 10 to define joint control, and therefore the determination of whether joint control exists may change. In addition, AASB 11 removes the option to account for jointly controlled entities (JCEs) using proportionate consolidation. Instead, accounting for a joint arrangement is dependent on the nature of the rights and obligations arising from the arrangement. Joint operations that give the venturers a right to the underlying assets and obligations themselves is accounted for by recognising the share of those assets and obligations. Joint ventures that give the venturers a right to the net assets is accounted for using the equity method. This may result in a change in the accounting for the joint arrangements held by the Group.

AASB 12: Disclosures of Interests in Other Entities (applies to periods beginning on or after 1 January 2013).

This Standard includes all disclosures relating to an entity’s interests in subsidiaries, joint arrangements, associates and structures entities. New disclosures have been introduced about the judgements made by management to determine whether control exists, and to require summarised information about joint arrangements, associates and structured entities and subsidiaries with non-controlling interests. The Group has not yet determined any potential impact on the financial statements.

AASB 13: Fair Value Measurement (applies to periods beginning on or after 1 January 2013)

This Standard establishes a single source of guidance under AASB for determining the fair value of assets and liabilities. AASB 13 does not change when an entity is required to use fair value, but rather, provides guidance on how to determine fair value under AASB when fair value is required or permitted by AASB. Application of this definition may result in different fair values being determined for the relevant assets.

DIRECTOR’S REVIEW OF ACTIVITY

LACONIA ANNUAL REPORT 2012

Notes to the Consolidated Financial Statements 30 JUNE 2012 (cont’d)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)

AASB 13 also expands the disclosure requirements for all assets or liabilities carried at fair value. This includes information about the assumptions made and the qualitative impact of those assumptions on the fair value determined. The Group has not yet determined any potential impact on the financial statements.

AASB 119: Employee Benefits (applicable for annual reporting periods commencing on or after 1 January 2013).

The main change introduced by this standard is to revise the accounting for defined benefit plans. The amendment removes the options for accounting for the liability, and requires that the liabilities arising from such plans is recognized in full with actuarial gains and losses being recognized in other comprehensive income. It also revised the method of calculating the return on plan assets. The definition of short-term benefits has been revised, meaning some annual leave entitlements may become long-term in nature with a revised measurement. Similarly the timing for recognising a provision for termination benefits has been revised, such that provisions can only be recognised when the offer cannot be withdrawn.

Consequential amendments were also made to other standards via AASB 2011-10.

Interpretation 20: Stripping Costs in the Production Phase of a Surface Mine (applicable for annual reporting periods commencing on or after 1 January 2013).

This interpretation applies to stripping costs incurred during the production phase of a surface mine. Production stripping costs are to be capitalised as part of an asset, if an entity can demonstrate that it is probable future economic benefits will be realised, the costs can be reliably measured and the entity can identify the component of an ore body for which access has been improved. This asset is to be called the “stripping activity asset”.

The stripping activity asset shall be depreciated or amortised on a systematic basis, over the expected useful life of the identified component of the ore body that becomes more accessible as a result of the stripping activity. The units of production method shall be applied unless another method is more appropriate.

(u) Critical accounting judgements, estimates and assumptions

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

2. FINANCIAL RISK MANAGEMENT

The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group.

Risk management is carried out by the full Board of Directors as the Group believes that it is crucial for all Board members to be involved in this process. The Managing Director, with the assistance of senior management as required, has responsibility for identifying, assessing, treating and monitoring risks and reporting to the Board on risk management.

(a) Market risk

(i) Foreign exchange risk

The Group has operations internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the Peruvian Nuevo Sol.

Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the entity’s functional currency and net investments in foreign operations. The Group has not formalised a foreign currency risk management policy however, it monitors its foreign currency expenditure in light of exchange rate movements.

DIRECTOR’S REVIEW OF ACTIVITY

LACONIA ANNUAL REPORT 2012

2. FINANCIAL RISK MANAGEMENT (cont’d)

The functional currency of the Group’s foreign subsidiary companies is the Peruvian Nuevo Sol. All parent entity and Australian subsidiary entity balances are in Australian dollars and all Group balances are in either Australian dollars or Peruvian Nuevo Sol, so the Group has only minimal exposure to foreign currency risk at the reporting date.

(ii) Price risk

Given the current level of operations the Group is not exposed to price risk.

(iii) Interest rate risk

The Group is exposed to movements in market interest rates on cash and cash equivalents. The Group policy is to monitor the interest rate yield curve out to six months to ensure a balance is maintained between the liquidity of cash assets and the interest rate return. The entire balance of cash and cash equivalents for the Group $926,590 (2011: $2,254,218) is subject to interest rate risk. The proportional mix of floating interest rates and fixed rates to a maximum of six months fluctuate during the period depending on current working capital requirements. The weighted average interest rate received on cash and cash equivalents by the Group was 3.3% (2011: 5.3%).

Sensitivity analysis

At 30 June 2012, if interest rates had changed by +/- 100 basis points from the weighted average rate for the period with all other variables held constant, post-tax loss for the Group would have been $22,542 (2011: $31,500) lower/higher as a result of lower/higher interest income from cash and cash equivalents.

(b) Credit risk

The Group has no significant concentrations of credit risk. The maximum exposure to credit risk at balance date is the carrying amount (net of provision for impairment) of those assets as disclosed in the statement of financial position and notes to the financial statements.

As the Group does not presently have any debtors, lending, significant stock levels or any other credit risk, a formal credit risk management policy is not maintained.

(c) Liquidity risk

The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and ensuring sufficient cash and marketable securities are available to meet the current and future commitments of the Group. Due to the nature of the Group’s activities, being mineral exploration, the Group does not have ready access to credit facilities, with the primary source of funding being equity raisings. The Board of Directors constantly monitor the state of equity markets in conjunction with the Group’s current and future funding requirements, with a view to initiating appropriate capital raisings as required.

The financial liabilities of the Group are confined to trade and other payables as disclosed in the statement of financial position. All trade and other payables are non-interest bearing and due within 12 months of the reporting date.

(d) Fair value estimation

The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. All financial assets and financial liabilities of the Group at the balance date are recorded at amounts approximating their carrying amount.

The fair value of financial instruments traded in active markets is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Group is the current bid price.

The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to their short-term nature.

DIRECTOR’S REVIEW OF ACTIVITY

LACONIA ANNUAL REPORT 2012

Notes to the Consolidated Financial Statements 30 JUNE 2012 (cont’d)

3. SEGMENT INFORMATION

Management has determined the operating segments based on the reports reviewed by the Board of Directors that are used to make strategic decisions. For management purposes, the Group has identified two reportable segments being exploration activities undertaken in Australia and Peru. These segments include the activities associated with the determination and assessment of the existence of commercial economic reserves, from the Group’s mineral assets in these geographic locations.

Segment performance is evaluated based on the operating profit and loss and cash flows and is measured in accordance with the Group’s accounting policies.

	Australia Peru 2012 2011 2012 2011 $ $ $ $	Australia Peru 2012 2011 2012 2011 $ $ $ $	Consolidated Total 2012 2011 $ $
Segment revenue - - - - - - Reconciliation of segment revenue to total revenue before tax: Interest revenue 85,336 165,579 - - 85,336 165,579 Other revenue 50,000 - - - 50,000 - Total revenue 135,336 165,579 - - 135,336 165,579 Segment results (1,256,670) (933,189) (1,058,557) - (2,315,227) (933,189) Reconciliation of segment result to net loss before tax: Other corporate and administration (1,237,450) (776,149) - - (1,237,450) (776,149) Net loss before tax (2,494,121) (1,709,338) (1,058,557) - (3,552,677) (1,709,338) Income Tax Beneft 332,682 - - - 332,682 Net loss after tax (2,161,438) (1,709,338) (1,058,557) - (3,219,995) Segment operating assets 4,068,859 3,909,925 393,304 - 4,462,163 3,909,925 Reconciliation of segment operating assets to total assets: Other corporate and administration assets 922,889 2,346,668 1,748,997 - 2,671,885 2,346,668 Total assets 4,991,748 6,256,593 2,142,300 - 7,134,048 6,256,593 Segment operating liabilties (448,169) (149,329) (45,236) - (493,405) 149,329 Reconciliation of segment operating liabilities to total liabilities: Other corporate and administration liabilities (48,735) (23,834) - - (48,735) 30,589 Total liabilities (496,904) (173,163) (45,236) - (542,140) 173,163 Consolidated 2012 2011 $ $	- - - -		- - 85,336 165,579 50,000 -
	85,336 165,579 - - 50,000 - - - 135,336 165,579 - - (1,256,670) (933,189) (1,058,557) -
			135,336 165,579
			(2,315,227) (933,189) (1,237,450) (776,149)
	(1,237,450) (776,149) - - (2,494,121) (1,709,338) (1,058,557) - 332,682 - - - (2,161,438) (1,709,338) (1,058,557) - 4,068,859 3,909,925 393,304 -
			(3,552,677) (1,709,338)
			332,682 (3,219,995) 4,462,163 3,909,925 2,671,885 2,346,668
	922,889 2,346,668 1,748,997 - 4,991,748 6,256,593 2,142,300 - (448,169) (149,329) (45,236) -
			7,134,048 6,256,593
			(493,405) 149,329 (48,735) 30,589
			(542,140) 173,163
4. REVENUE From continuing operations Interest Other Income		85,336 165,579 50,000 -
		135,336 165,579

62 DIRECTOR’S REVIEW OF ACTIVITY

LACONIA ANNUAL REPORT 2012

	Consolidated 2012 2011 $ $
5. EXPENSES Loss before income tax includes the following specifc expenses: Defned contribution superannuation expense Minimum lease payments relating to operating leases 6. INCOME TAX (a) Income tax expense Current tax Deferred tax (b) Numerical reconciliation of income tax expense to prima facie tax payable Loss from continuing operations before income tax expense Prima facie tax beneft at the Australian tax rate of 30% Tax effect of amounts which are not deductible (taxable) in calculating taxable income: Share-based payments Sundry items Movements in unrecognised temporary differences Tax effect of current year tax losses for which no deferred tax asset has been recognised Income tax expense (c) Unrecognised temporary differences Deferred Tax Assets (at 30%) On Income Tax Account Capital raising costs Investments Sundry items Carry forward tax losses Deferred Tax Liabilities (at 30%) Sundry items Capitalised tenement acquisition costs	12,816 16,578 19,423 19,423 (332,682) - - -
	(332,682) -
	(3,552,676) (1,709,338) (1,065,803) (512,801) - 8,918 794 668
	(1,065,009) (503,215) (276,030) (329,515) 1,008,357 832,730
	(332,682) -
	102,841 107,624 73,737 - 44,423 - 8,967 2,708,922 1,850,994
	2,929,923 1,967,585
	293 6,341 1,164,750 1,164,750
	1,164,750 1,171,091

Net deferred tax assets have not been brought to account as it is not probable within the immediate future that tax profits will be available against which deductible temporary differences and tax losses can be utilised. The Group’s ability to use losses in the future is subject to the Group satisfying the relevant tax authority’s criteria for using these losses.

The income tax benefit represents a refund of Research & Development expenditure for the year ended 30 June 2010 that was received from the Australian Tax Office during the current year.

DIRECTOR’S REVIEW OF ACTIVITY

LACONIA ANNUAL REPORT 2012

Notes to the Consolidated Financial Statements 30 JUNE 2012 (cont’d)

	Consolidated	Consolidated
	2012	2011
	$	$
7. CURRENT ASSETS - CASH AND CASH EQUIVALENTS
Cash at bank and in hand	365,805	364,125
Short-term deposits	560,785	1,890,093
Cash and cash equivalents as shown in the statement of fnancial position and
the statement of cash fows	926,590	2,254,218

Cash at bank and in hand earns interest at floating rates based on daily bank deposit rates.

Short-term deposits are made for varying periods of between one day and three months depending on the immediate cash requirements of the Group, and earn interest at the respective short-term deposit rates.

8. CURRENT ASSETS - TRADE AND OTHER RECEIVABLES

Sundry receivables


Sundry receivables	78,012	28,175
9. NON-CURRENT ASSETS - PLANT AND EQUIPMENT
Plant and equipment
Cost	233,352	119,358
Accumulated depreciation	(64,286)	(27,658)
Net book amount	169,066	91,700
Plant and equipment
Opening net book amount	91,700	30,235
Additions	113,994	84,053
Depreciation charge	(36,628)	(22,588)
Closing net book amount	169,066	91,700
10. NON-CURRENT ASSETS – MINING PROPERTIES
Tenement acquisition costs carried forward in respect of mining areas of interest
Opening net book amount	3,882,500	2,900,000
Capitalised tenement acquisition costs	2,077,880	982,500
Closing net book amount	5,960,380	3,882,500

The ultimate recoupment of costs carried forward for tenement acquisition is dependent on the successful development and commercial exploitation or sale of the respective mining areas. Amortisation of the costs carried forward for the development phase is not being charged pending the commencement of production.

11. CURRENT LIABILITIES - TRADE AND OTHER PAYABLES

Trade payables Other payables and accruals	131,281 149,329 410,859 23,834
	542,140 173,163

64 DIRECTOR’S REVIEW OF ACTIVITY

LACONIA ANNUAL REPORT 2012

12. ISSUED CAPITAL

(a) Share capital

		2012		2011
	Notes	Number of	$	Number of	$
		shares		shares
Ordinary shares fully paid	12(b), 12(d)	157,625,010	11,975,022	81,920,010	8,895,639
Total issued capital		157,625,010	11,975,022	81,920,010	8,895,639
(b) Movements in ordinary share capital
Beginning of the fnancial year		81,920,010	8,895,639	69,270,010	7,993,139
Issued during the year:
− Issued as consideration for tenement		-	-	12,650,000	902,500
acquisitions
− Issued as consideration for subsidiary		42,055,000	1,892,475	-	-
acquisition
− Issued for cash at 4 cents per share		33,650,000	1,346,000	-	-
Less: Transaction costs		-	(159,092)	-	-
End of the fnancial year		157,625,010	11,975,022	81,920,010	8,895,639

(c) Movements in options on issue

(c) Movements in options on issue
	Number of options 2012 2011
Beginning of the fnancial year Issued, exercisable at 8 cents, on or before 16 May 2014 Issued, exercisable at 15 cents, on or before 31 August 2013 End of the fnancial year	24,100,000 23,500,000 - 400,000 - 200,000
	24,100,000 24,100,000

(d) Ordinary shares

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

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

Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.

(e) Performance Shares

As part of the acquisition of the Peruvian Companies 14,500,000 Performance Shares were issued to GMP. Nil value has been ascribed to the Performance Shares as it is not definitively known whether the Rasuchuilca Project will reach production stage.

(f) Convertible Note

During the year a convertible note was issued to Dr Sassine giving him the option of buying up to 7,800,000 ordinary shares in the Company at a price of 10 cents each on or before 20 June 2014. The value of the convertible notes is $649,090.

ASX Limited has agreed to grant the Company a waiver from ASX Listing Rule 14.7 to the extent necessary to enable the the Company to issue these shares.

(g) Capital risk management

The Group’s objectives when managing capital is to safeguard its ability to continue as a going concern, so that it may continue to provide returns for shareholders and benefits for other stakeholders.

DIRECTOR’S REVIEW OF ACTIVITY

LACONIA ANNUAL REPORT 2012

Notes to the Consolidated Financial Statements 30 JUNE 2012 (cont’d)

12. ISSUED CAPITAL (cont’d)

Due to the nature of the Group’s activities, being mineral exploration, the Group does not have ready access to credit facilities, with the primary source of funding being equity raisings. Therefore, the focus of the Group’s capital risk management is the current working capital position against the requirements of the Group to meet exploration programmes and corporate overheads. The Group’s strategy is to ensure appropriate liquidity is maintained to meet anticipated operating requirements, with a view to initiating appropriate capital raisings as required. The working capital position of the Group at 30 June 2012 and 30 June 2011 is as follows:

	Consolidated 2012 2011 $ $
Cash and cash equivalents Trade and other receivables Trade and other payables Working capital position	926,590 2,254,218 411,680 28,175 (496,904) (173,163)
	841,366 2,109,230

13. RESERVES AND ACCUMULATED LOSSES

(a) Reserves

(a) Reserves
Share-based payments reserve Foreign currency translation reserve Movements: Share-based payments reserve Balance at beginning of fnancial year Option expense Balance at end of fnancial year Foreign currency translation reserve Balance at beginning of year Exchange differences on translation of foreign operation Balance at end of year (b) Accumulated Losses Balance at beginning of fnancial year Net loss for the year Balance at end of fnancial year	233,826 223,826 - -
	233,826 223,826
	223,826 194,100 - 29,726
	223,826 223,826
	- - - -
	- -
	(3,036,035) (1,326,697) (3,219,995) (1,709,338)
	(6,256,030) (3,036,035)

(c) Nature and purpose of reserves

(i) Share-based payments reserve

The share-based payments reserve is used to recognise the fair value of options issued.

(ii) Foreign currency translation reserve

Exchange differences arising on translation of the foreign controlled entities are taken to the foreign currency translation reserve, as described in note 1(d). The reserve is recognised in profit and loss when the net investment is disposed of.

14. DIVIDENDS

No dividends were paid during the financial year. No recommendation for payment of dividends has been made.

DIRECTOR’S REVIEW OF ACTIVITY

LACONIA ANNUAL REPORT 2012

15. KEY MANAGEMENT PERSONNEL DISCLOSURES

15. KEY MANAGEMENT PERSONNEL DISCLOSURES	15. KEY MANAGEMENT PERSONNEL DISCLOSURES
Consolidated 2012 2011 $ $
(a) Key management personnel compensation Short-term benefts 551,569 Post employment benefts 23,631 Other long-term benefts - Termination benefts - Share-based payments - 575,200	371,013 12,665 - - 15,046
	398,724

Detailed remuneration disclosures are provided in the remuneration report on pages 34 - 36, 40.

(b) Equity instrument disclosures relating to key management personnel

(i) Options provided as remuneration and shares issued on exercise of such options

Details of options provided as remuneration, together with terms and conditions of the options, can be found in the remuneration report on page 36.

(ii) Option holdings

The numbers of options over ordinary shares in the Company held during the financial year by each director of

Laconia Resources Limited and other key management personnel of the Company, including their personally related parties, are set out below:

2012	Balance at	Granted as	Exercised	Other	Balance at	Vested and	Unvested
	start of the	compensation		changes	end of the	exercisable
	year				year
Directors of Laconia Resources Limited
Michael Sharwood	-	-	-	-	-	-	-
Ian Stuart	2,500,000	-	-	-	2,500,000	2,500,000	-
Matthew Howison	1,250,000	-	-	-	1,250,000	1,250,000	-
Other key management	personnel of the Group
Graeme Smith	-	-	-	-	-	-	-
Ernie Poole	400,000	-	-	-	400,000	400,000	-
2011	Balance at	Granted as	Exercised	Other	Balance at	Vested and	Unvested
	start of the	compensation		changes	end of the	exercisable
	year				year
Directors of Laconia Resources Limited
Michael Sharwood	-	-	-	-	-	-	-
Ian Stuart	2,500,000	-	-	-	2,500,000	2,500,000	-
Matthew Howison	1,250,000	-	-	-	1,250,000	1,250,000	-
Other key management	personnel of the Group
Graeme Smith	-	-	-	-	-	-	-
Ernie Poole (appointed	-	400,000	-	-	400,000	400,000	-
15 March 2011)

All vested options are exercisable at the end of the year.

(iii) Share holdings

The numbers of shares in the Company held during the financial year by each director of Laconia Resources Limited and other key management personnel of the Company, including their personally related parties, are set out below. There were no shares granted during the reporting period as compensation.

DIRECTOR’S REVIEW OF ACTIVITY

LACONIA ANNUAL REPORT 2012

Notes to the Consolidated Financial Statements 30 JUNE 2012 (cont’d)

15. KEY MANAGEMENT PERSONNEL DISCLOSURES (cont’d)

2012	Balance at start	Received during	Other changes	Balance at end
	of the year	the year on the	during the year	of the year
		exercise of options
Directors of Laconia Resources
Limited
Ordinary shares
Michael Sharwood	1,000,000	-	-	1,000,000
Ian Stuart	5,600,000	-	-	7,050,000
Matthew Howison	2,500,000	-	75,000	2,575,000
Other key management personnel of	the Group
Ordinary shares
Graeme Smith	-	-	-	-
Ernie Poole	-	-	-	-
2011	Balance at start	Received during	Other changes	Balance at end
	of the year	the year on the	during the year	of the year
		exercise of options
Directors of Laconia Resources
Limited
Ordinary shares
Michael Sharwood	1,000,000	-	-	1,000,000
Ian Stuart	5,180,000	-	420,000	5,600,000
Matthew Howison	2,500,000	-	-	2,500,000
Other key management personnel of	the Group
Ordinary shares
Graeme Smith	-	-	-	-
Ernie Poole (appointed 15 March 2011)	-	-	-	-

(c) Loans to key management personnel

There were no loans to key management personnel during the year.

(d) Other transactions with key management personnel

Services

Eclectricity Pty Ltd, a company of which Mr Stuart is a director and shareholder, provided contract geological services to the Group during the financial year to the value of $67,860 (2011: $20,121). The amounts paid were on arms length commercial terms.

Emerald Partners Pty Ltd, a company of which Mr Howison is a director and shareholder, provided corporate advisory services to the Company during the 2012 financial year for total fees of $36,412. The amounts paid were on arm’s length commercial terms. No services were provided during 2011.

DIRECTOR’S REVIEW OF ACTIVITY

LACONIA ANNUAL REPORT 2012

2012 2011 $ $

16. REMUNERATION OF AUDITORS

During the year the following fees were paid or payable for services provided by the auditor of the Company, its related practices and non-related audit firms:

(a) Audit services

Rothsay Chartered Accountants – audit and review of fnancial reports Total remuneration for audit services (b) Non-audit services Rothsay Chartered Accountants – independent accountants report Total remuneration for other services	33,500 29,500
	33,500 29,500
	- -
	- -

17. CONTINGENCIES

There are no material contingent liabilities or contingent assets of the Group at balance date.

18. COMMITMENTS

(a) Exploration commitments

The Group has certain commitments to meet minimum expenditure requirements on the mining exploration assets it has an interest in. Outstanding exploration commitments are as follows:

within one year later than one year but not later than fve years (b) Lease commitments: Group as lessee Operating leases (non cancellable): Minimum lease payments within one year later than one year but not later than fve years Aggregate lease expenditure contracted for at reporting date but not recognised as liabilities	963,926 677,400 3,855,702 2,709,600
	4,819,628 3,387,000
	60,360 57,791 232,480 84,372
	292,840 142,163

The Group has a property lease that is a non-cancellable lease with a three-year term, with rent payable monthly in advance. Contingent rental provisions within the lease agreement require the minimum lease payments to increase by CPI annually, with a market rent review to occur after two years. There are two option periods to renew the lease at the end of the three-year term, each for an additional term of two years. The lease allows for subletting of all lease areas.

The Group also has a non-cancellable operating lease for an item of office equipment expiring within four years, with rent payable monthly. The item is subject to a per unit usage charge, but there are no provisions for escalation or renewal within the lease agreement.

DIRECTOR’S REVIEW OF ACTIVITY

LACONIA ANNUAL REPORT 2012

Notes to the Consolidated Financial Statements 30 JUNE 2012 (cont’d)

19. RELATED PARTY TRANSACTIONS

(a) Parent entity

The ultimate parent entity within the Group is Laconia Resources Limited.

(b) Subsidiaries

Interests in subsidiaries are set out in note 20.

(c) Key management personnel

Disclosures relating to key management personnel are set out in note 15.

(d) Loans to related parties

Laconia Resources Limited has provided unsecured, interest free loans to its wholly owned subsidiaries totalling $2,296,420 (2011: n/a). An impairment assessment is undertaken each financial year by examining the financial position of each subsidiary and the market in which the respective subsidiary operates to determine whether there is objective evidence that the subsidiary is impaired. When such objective evidence exists, the Company recognises an allowance for the impairment loss.

20. SUBSIDIARIES

The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note 1(b):

Name	Country of incorporation	Class of shares	Equity	Holding(1)
			2012	2011
			%	%
Laconia South America Pty Ltd(2)	Australia	Ordinary	100	-
Mooletar Magnetite Pty Ltd(3)	Australia	Ordinary	100	-
Gold Mines of Peru SAC(4)	Peru	Ordinary	100	-
Minera Peru Gold SAC(4)	Peru	Ordinary	100	-
Compania Minera Sucre SA(4)	Peru	Ordinary	100	-

(1) The proportion of ownership interest is equal to the proportion of voting power held.

(2) This entity was incorporated on 1 November 2011 with Laconia Resources Limited as the sole shareholder.

(3) This entity was incorporated on 14 June 2012 with Laconia Resources Limited as the sole shareholder.

(4) Not audited by Rothsay.

21. EVENTS OCCURRING AFTER THE BALANCE SHEET DATE

Capital raising

On 3 September 2012 the Company announced that it had completed a placement of 23,643,751 million fully paid ordinary shares in the Company at an issue price of 2 cents per share to raise approximately $0.47 million. At the same time, the Company announced a fully underwritten non-renounceable Rights Issue of one new share for every two existing shares held by shareholders at an issue price of $0.02 per share to raise approximately A$1.81 million (before costs of the Issue) and result in the issue of 90,634,380 new shares. At the time of this report the rights offer is still open for applications. The money is being raised to enable the Company to complete its next phase of exploration, including it’s recently announced 2,200m underground diamond drilling program at its Peru Rasuhuilca Project as well as provide additional working capital. No other matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years.

DIRECTOR’S REVIEW OF ACTIVITY

LACONIA ANNUAL REPORT 2012

22. STATEMENT OF CASH FLOWS

22. STATEMENT OF CASH FLOWS
	Consolidated
	2012	2011
	$	$
(a) Reconciliation of net loss after income tax to net cash outfow from operating activities
Net loss for the year	(3,219,995)	(1,709,338)
Non Cash Items
Depreciation of non current assets	36,628	22,588
Share-based payments expense	-	29,726
Acquisition of mining assets	536,726	-
Proft on sale of mining assets	(50,000)	-
Change in operating assets and liabilities
(Increase) in trade and other receivables	(383,282)	(15,015)
Increase in trade and other payables	629,382	108,170
Net cash outfow from operating activities	(2,450,541)	(1,563,869)

(b) Non-cash investing and financing activities

During the financial year ended 30 June 2012 a total of 42,055,000 (2011: 12,650,000) ordinary shares were issued at a deemed cost of $1,892,475 (2011: $902,500) as consideration for tenement acquisitions and have been included as part of ‘Mining properties’ on the statement of financial position.

23. LOSS PER SHARE

(a) Reconciliation of earnings used in calculating loss per share

(a) Reconciliation of earnings used in calculating loss per share
Loss attributable to the owners of the Company used in calculating basic and diluted loss per share	(3,219,994) (1,709,338)
	Number of shares 2012 2011
(b) Weighted average number of shares used as the denominator Weighted average number of ordinary shares used as the denominator in calculating basic and diluted loss per share	96,929,013 72,334,531

(c) Information on the classification of options

As the Group has made a loss for the year ended 30 June 2012, all options on issue are considered antidilutive and have not been included in the calculation of diluted earnings per share. These options could potentially dilute basic earnings per share in the future.

24. PARENT ENTITY INFORMATION

The following information relates to the parent entity, Laconia Resources Limited, at 30 June 2012. The information presented here has been prepared using accounting policies consistent with those presented in Note 1.

Current assets Non-current assets Total assets Current liabilities Total liabilities Issued capital Share-based payments reserve Accumulated losses Total equity Loss for the year Total comprehensive loss for the year	2012 2011 $ $
	999,615 2,282,393 7,147,751 3,974,200
	8,147,367 6,256,593
	496,904 173,163
	496,904 173,163
	11,975,022 8,895,639 872,916 223,826 (5,197,474) (3,036,035)
	7,650,464 6,083,430
	(2,161,438) (1,709,338)
	(2,161,438) (1,709,338)

DIRECTOR’S REVIEW OF ACTIVITY

LACONIA ANNUAL REPORT 2012

DIRECTORS’ DECLARATION

In the Directors’ opinion:

(a) the financial statements and notes set out on pages 49 to 71 are in accordance with the Corporations Act 2001 , including:
(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
(ii) giving a true and fair view of the company’s and the consolidated entity’s financial position as at 30 June 2012 and of their performance for the financial year ended on that date;
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; and
(c) a statement that the attached financial statements are in compliance with International Financial Reporting Standards has been included in the notes to the financial statements.

The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by section 295A of the Corporations Act 2001 .

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

Ian Stuart

Managing Director

Perth, 28 September 2012

DIRECTOR’S REVIEW OF ACTIVITY

LACONIA ANNUAL REPORT 2012

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DIRECTOR’S REVIEW OF ACTIVITY

LACONIA ANNUAL REPORT 2012

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DIRECTOR’S REVIEW OF ACTIVITY

LACONIA ANNUAL REPORT 2012

ASX ADDITIONAL INFORMATION

Additional information required by Australian Securities Exchange Ltd and not shown elsewhere in this report is as follows. The information is current as at 20 September 2012.

(a) Distribution of equity securities

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

1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 - and over The number of shareholders holding less than a marketable parcel of shares are:	Ordinary shares Number of holders Number of shares 6 337 25 88,898 65 628,729 279 14,173,837 176 166,376,960
	551 181,268,761
	152 1,726,816

(b) Twenty largest shareholders

The names of the twenty largest holders of quoted ordinary shares are:

1 Gold Mines of Peru Ltd 2 Jabiru Metals Ltd 3 Pandell Pty Ltd 4 Ian Stuart 5 Oakover Gold Ltd 6 Josephine Patoir 7 Perizia Inv Pty Ltd 8 Joseph Burton Michael 9 Cambridge Minerals Res Plc 10 D B B Pty Ltd 11 Kslcorp Pty Ltd 12 Laconia Holdings Pty Ltd 13 Veblen Group Pty Ltd 14 Slade Technologies Pty Ltd 15 Far Super Pty Ltd 16 Goldfre Enterprises Pty Ltd 17 Mark Barry Slater 18 Fionnuala Edmondson 19 Eric Coppin 20 Richsham Nominees Pty Ltd	Listed ordinary shares Number of shares Percentage of ordinary shares 2,6505,000 14.62% 9,850,000 5.43% 9,522,304 5.25% 7,178,800 3.96% 5,000,000 2.76% 4,393,751 2.42% 4,000,000 2.21% 3,500,000 1.93% 3,275,000 1.81% 3,000,000 1.66% 3,000,000 1.66% 2,500,000 1.38% 2,500,000 1.38% 2,500,000 1.38% 2,500,000 1.38% 2,500,000 1.38% 2,500,000 1.38% 2,250,000 1.38% 1,500,000 0.83% 1,500,000 0.83%
	99,474,855 54.89%

1
Gold Mines of Peru Ltd
2
Jabiru Metals Ltd
3
Pandell Pty Ltd
4
Ian Stuart
5
Oakover Gold Ltd
6
Josephine Patoir
7
Perizia Inv Pty Ltd
8
Joseph Burton Michael
9
Cambridge Minerals Res Plc
10
D B B Pty Ltd
11
Kslcorp Pty Ltd
12
Laconia Holdings Pty Ltd
13
Veblen Group Pty Ltd
14
Slade Technologies Pty Ltd
15
Far Super Pty Ltd
16
Goldfre Enterprises Pty Ltd
17
Mark Barry Slater
18
Fionnuala Edmondson
19
Eric Coppin
20
Richsham Nominees Pty Ltd

Listed ordinary shares
Number of
shares
Percentage of
ordinary shares
2,6505,000
14.62%
9,850,000
5.43%
9,522,304
5.25%
7,178,800
3.96%
5,000,000
2.76%
4,393,751
2.42%
4,000,000
2.21%
3,500,000
1.93%
3,275,000
1.81%
3,000,000
1.66%
3,000,000
1.66%
2,500,000
1.38%
2,500,000
1.38%
2,500,000
1.38%
2,500,000
1.38%
2,500,000
1.38%
2,500,000
1.38%
2,250,000
1.38%
1,500,000
0.83%
1,500,000
0.83%

99,474,855
54.89%

DIRECTOR’S REVIEW OF ACTIVITY

LACONIA ANNUAL REPORT 2012

ASX ADDITIONAL INFORMATION (cont’d)

(c) Substantial shareholders

The names of substantial shareholders in accordance with section 671B of the Corporations Act 2001 are:

	Number of Shares
Gold Mines of Peru Ltd	2,6505,000
Jabiru Metals Ltd	9,850,000
Pandell Pty Ltd	9,522,304

(d) Voting rights

All ordinary shares (whether fully paid or not) carry one vote per share without restriction.

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----- Start of picture text -----

Schedule of interest in mining tenements
Location Tenement Percentage held/earning
Western Australia E26/120 80
Western Australia E40/260 100
Western Australia P40/1255 to 1256 100
Western Australia E45/3233 to 3234 100
Western Australia E45/3293 100
Western Australia M45/368 95
Western Australia E45/3312-I 100
Western Australia E45/3763 application 100
Western Australia P45/2821 application 100
Western Australia E45/3904 100
Western Australia E45/4014 application 100
Western Australia E52/2232 80
Western Australia E52/2688-I 80
Western Australia E58/384-I 100
Western Australia M58/110-I 100
Western Australia M58/266 application 100
Western Australia M58/349 application 100
Western Australia P58/1054-I to 1056-I 100
Western Australia P58/1129-I 100
Western Australia P58/865 100
Western Australia P58/1383-I to 1388-I 100
Western Australia P58/1408-I to 1415-I 100
Western Australia P58/1476-I to 1485-I 100
Western Australia P58/1495-I to 1501-I 100
Western Australia P58/1511 100
Western Australia P58/1583 100
Peru Patacancha N° 1 100
Peru Patacancha N° 2 100
Peru Patacancha N° 3 100
Peru Patacancha N° 4 100
Peru Jess Gold 1 100
Peru Jess Gold ii 100
Peru Jess Iron 1 100
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Table 11: Schedule of interests in mining tenements.

Note 1: Tenements with an “I” suffix have iron ore endorsement.

Mineral rights held by Laconia Resources Ltd (100%). Manganese and iron ore rights held by Shaw River Manganese Ltd (70%) and Pandell Pty Ltd (30%).

** Mineral rights held by Laconia Resources Ltd (80%) and Pandell Pty Ltd (20%). Manganese and iron ore rights held by Shaw River Manganese Ltd (70%) and Pandell Pty Ltd (30%).

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

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“Laconia has a portfolio of high-grade precious and base metals projects in Peru and Western Australia and we remain focused on continuing to advance and develop these assets to build value for our shareholders.” Ian Stuart, Managing Director.

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Laconia Investment Highlights Progressive precious and base metals Company with a diverse portfolio of advanced, high-grade Projects Rasuhuilca high-grade gold-silver project in Peru is an outstanding near-term development asset with significant exploration upside Objective to bring the Rasuhuilca project into production in the near term and use revenues generated to unlock its major exploration upside and expand the resource base

Early mover advantage in Peru allows for access to additional strategic project acquisition opportunities

Significant high-grade precious and base metals position in the Pilbara region of WA, with a focus on increasing Resources through systematic exploration

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ASX Code: LCR

Board of Directors

	Board of Directors
	Matthew Howison Non Exec Chairman
	Ian Stuart Managing Director
	Dr. Saliba Sassine Non Exec Director
	Vincent Algar Non Exec Director
	Top 5 Shareholders % share
	Gold Mines of Peru Ltd 14.62
	Jabiru Metals Ltd 5.43
	Pandell Pty Ltd 5.25
	Ian Stuart 3.96
	Oakover Gold Ltd 2.76

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Scan this barcode to view Laconia’s latest Investor Presentation online or visit www.laconia.com.au

www.laconia.com. ASX: LCR

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Unlocking shareholder value on the path to production

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Head Office - Australia Level 1, 41-43 Ord Street West Perth WA 6005 Australia

Postal Address PO Box 1151 West Perth WA 6872 Australia

Laconia Resources Limited Phone Number: +61 8 9486 1599 Fax Number: +61 8 9486 7899 Email: [email protected]

ACN: 137 984 297

www.laconia.com.au

ASX: LCR

AI assistant

ZEOTECH LIMITED — Annual Report 2012

66115_rns_2012-10-29_f4eb9f81-64b7-471b-ad8d-703faa197861.pdf

Corporate Directory

ABN 29 137 984 297

Solicitors

Directors

Company Secretary

Share Register

Matthew Edmondson

Registered Office and Principal Place of Business

Postal Address

Auditors

Internet Address

Stock Exchange Listing

Contents

Annual Report for the year ending 30 June 2012

Chairman’s Report

Dear Shareholders

Chairman’s Report (cont’d)

Directors’ Review of Activities

Projects and Exploration Strategy

Peru: Rasuhuilca gold-silver Project Acquisition

Acquisition Consideration

Highlights:

Directors’ Review of Activities (cont’d)

Marcelita Vein System

WESTERN AUSTRALIAN PROJECTS

Highlights:

About the Lennons Find Project

Lennons Find Project (M45/368)

Hammerhead Prospect

Bronze Whaler Prospect

Tiger Prospect

Directors’ Review of Activities (cont’d)

Table 9: Significant intersections at the Tiger Prospect.

Yandicoogina Project (E45/3293)

Highlights:

Barramine Project – Gold and Base Metals, East Pilbara, WA (100% Laconia excluding manganese and iron ore)

About the Barramine Project

Directors’ Review of Activities (cont’d)

Mooletar Project – Iron Ore, Mid West/Southern Pilbara,

WA (100% Laconia)

About the Mooletar Project

Geological overview reveals base metal potential

Competent Persons Statements

Lennons Find Resource Estimate

Mooletar Project

Peru

Making the transition from explorer to producer

Directors’ Report

Directors

Names, qualifications, experience and special responsibilities

Directors’ Report (cont’d)

COMPANY SECRETARY

PRINCIPAL ACTIVITIES

DIVIDENDS

OPERATING AND FINANCIAL REVIEW

Finance Review

Operating Results for the Period

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

SIGNIFICANT EVENTS AFTER THE BALANCE DATE

LIKELY DEVELOPMENTS AND EXPECTED RESULTS

ENVIRONMENTAL REGULATION AND PERFORMANCE

REMUNERATION REPORT

Principles used to determine the nature and amount of remuneration

Remuneration Policy

Performance based remuneration

Company performance, shareholder wealth and Directors’ and Executives’ remuneration

Use of remuneration consultants

Voting and comments made at the Company’s 2011 Annual General Meeting

Details of remuneration

KEY MANAGEMENT PERSONNEL OF THE GROUP

Service agreements

Share-based compensation

DIRECTORS’ MEETINGS

Notes

SHARES UNDER OPTION

INSURANCE OF DIRECTORS AND OFFICERS

PROCEEDINGS ON BEHALF OF THE COMPANY

ZEOTECH LIMITED Annual Report 2012