ZOONO GROUP LIMITED — Annual Report 2012

Sep 12, 2012

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13 September 2012

The Manager ASX Market Announcements Australian Securities Exchange Level 4, 20 Bridge Street SYDNEY NSW 2000 Via ASX Online

No. of pages – 58

Dear Sir

Re: Annual financial report

Enclosed for release to the market is the audited annual financial report for Goldsearch Limited for the year ended 30 June 2012

For and on behalf of the directors of Goldsearch Limited

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P S Hewson Secretary

Goldsearch Limited

ABN 73 006 645 754

Annual financial report

for the financial year ended 30 June 2012

CONTENTS	Page(s)
Directors’ report	1-12
- including remuneration report	6-11
Declaration of audit independence	13
Statement of comprehensive income	14
Statement of financial position	15
Statement of changes in equity	16
Statement of cash flows	17
Notes to the financial statements	18-52
Directors’ declaration	53
Independent audit report	54-56

GOLDSEARCH LIMITED ABN 73 006 645 754

DIRECTORS’ REPORT

Your directors have pleasure in submitting the statement of financial position of the Company at 30 June 2012 together with related statement of comprehensive income, statement of cash flows, statement of changes in equity and notes thereto for the year then ended and report as follows:

Directors

The names of the directors in office at the date of this report and throughout the year are:

• Mr J. Landerer, CBE AM Mr R.B. Leece, AM RFD Mr J.M.E. Percival

• Mr T.V. Willsteed

• Mr A.G. Harris (deceased 12 November 2011)

Company secretary

The name of the company secretary in office at the date of this report and throughout the year is:

• Mr P.S. Hewson

Principal activities

The principal activities of the Company during the year were exploration for gold and other minerals and investment.

There were no significant changes in the nature of the activities of the Company that occurred during the year.

Results

The result for the financial year was a loss of $3,861,124(2011: loss of $647,174) after income tax expense of $nil (2011: $nil).

Dividend

No dividends were paid or declared during the year by the Company and no recommendation for payment of dividend has been made.

Review of operations

The following occurred during the year under review:

• The Company spent and capitalised $1,833,874 on exploration expenditure,

• Wrote off $1,424,255 of capitalised exploration expenditure and

• Wrote down to fair value the value of the Company listed investment by $1,377,106.

• In August 2011 the Company raised an additional $1,000,000 of working capital by

• way of a private placement to sophisticated investors of 40,000,000 new shares at an issue price of 2.5 cents per share principally to finance the on-going contributions to exploration costs on the Mary Kathleen joint venture with Chinalco Yunnan Copper Resources Limited (CYU)

• On 8 September 2011 joint venture partner Queensland Mining Corporation Limited announced that the reverse circulation drill program at EPM13336 Duck Creek had been completed and assay results were expected in October 2011.

• On 11 October 2011 joint venture partner CYU provided an update on drilling at the Elaine prospect in the Mary Kathleen joint venture and advised ‘inter alia’ that26 metres grading 7.76 grams per tonne (g/t) gold was intersected within a mineralised system in the first hole of the current resource drilling program, from 508 metres in drill hole MKED009. Includes 5 metres grading 22.78 g/t gold from 508 metres depth and 8 metres grading 10.88 g/t gold from 526 metres depth.

• Partial base metal results collated with 32 metres grading 1.04% copper, 688 parts per million (ppm)cobalt and 0.28 g/t gold, in drill hole MKED009 from 568 metres depth (Open up hole with further assays pending).

• Due to high levels of radiation detected, base metal, rare earth and uranium assaying is incomplete for the interval 470-567 metres in MKED009.

• A second diamond drill rig to commence in order to accelerate prospect extension drilling.

• JORC compliant resource estimate of the copper+gold+REE+cobalt sulphide zone is anticipated by the end of March 2012.

• In the activity report to ASX for the quarter ended 30 September 2011 it was reported that

Mary Kathleen joint venture

• Commencement of 6,000 metre drillout of Elaine copper-cobalt-gold-lightrare earth elements (LREE) discovery.

• Diamond drillhole MKED009 returned 109 metres grading 1.98 g/t gold,

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ABN 73 006 645 754

GOLDSEARCH LIMITED

DIRECTORS’ REPORT

0.50% copper and 482 ppm cobalt from 491 metres including 26 metres grading 7.78 g/t gold, 0.17% copper, 488 ppm cobalt, 834 ppm molybdenum and 2,861 ppm uranium from 508 metres.

Duck Creek project

• Extensive reverse circulation (RC) drilling program completed at numerous prospects on Duck Creek EPM 13336. Encouraging copper-goldcobalt intersections returned from several holes including 13 metres grading 1.49% copper, 0.12 g/t gold and 183 ppm cobalt in DCRC1106.

• On 14 November 2011 the directors regretfully advised of the passing of fellow director Mr A G Harris after a long period of ill health.

• At the annual general meeting held on 24 November 2011 shareholders approved the issue of options to directors and associates under the Company’s Employee and Directors Option Plan. In accordance with this approval diectors issued 22,250,000 options on 2 December such options being exercisable at 5 cents per option at any time prior to their expiry on 1 December 2014.

• In the activity report to ASX for the quarter ended 31 December 2011 it was reported that

• Determination of a maiden JORC inferred resource for the Elaine sulphide discovery had commenced and was expected by the end of March 2012;

• Completion of a reverse circulation (RC) drill program at Mount Dorothy; and

• New targets defined on the Sweden properties.

• In February 2012 the Company raised an additional $1,200,000 of working capital by way of a private placement to sophisticated investors of 60,512,000 new shares at an issue price of 2 cents per share principally to continue to finance the contributions to exploration costs on the Mary Kathleen joint venture with CYU.

• In the activity report to ASX for the quarter ended 31 March 2012 it was reported that

• Elaine hole MKED019 returned 59 metres grading 0.73% copper and 218 ppm cobalt including 47 metres averaging 0.89% copper and 255 ppm cobalt from 306 metres.

• From Elaine to Mary Kathleen there are 6 kilometres of untested strike of probable skarn replacement mineralisation.

Significant changes

There were no significant changes to the state of affairs of the Company which occurred during the financial year ended 30 June 2012.

Financial position

At 30 June 2012 the Company held cash and receivables totalling $296,332 (2011: $266,926). The Company also held listed securities and other available for sale securities with a market value at 30 June 2012 of $884,372 (2011: $1,992,556).

Subsequent to year end the Company has raised $650,000 additional working capital by way of a private share placement to a syndicate of sophisticated investors.

The directors will consider raising further working capital in the short term should the opportunity arise.

Events subsequent to reporting date

Other than the matters described in Note 30 to the attached financial statements, no matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations, the result of those operations, or the state of affairs of the Company in financial years subsequent to the financial year ended 30 June 2012.

Likely developments

The directors intend the Company to continue to explore the Company’s mineral tenements both by direct exploration and by joint venture and to seek new exploration or development projects. They also intend to continue to invest a proportion of the Company’s surplus funds in investments in selected listed mining and exploration companies with compatible interests. Otherwise there are no known likely developments in the operations of the Company.

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GOLDSEARCH LIMITED

ABN 73 006 645 754

DIRECTORS’ REPORT

Information on directors

John LANDERER, CBE AM

(non-executive chairman of directors and member of the audit committee)

• Appointed as director and non-executive chairman on 11 October, 1995.

• A qualified lawyer – LL.B., Sydney University.

• Senior partner of Sydney lawyers, Landerer & Company.

• A director of a number of prominent private family companies.

• Beneficially holds 5,725,872 fully paid ordinary shares and has an indirect interest in a further 5,643,129 fully paid ordinary shares and 4,250,000 unquoted options in the capital of the Company.

• During the past three years has not acted as director of any other Australian listed public company.

Robert B. LEECE, AM RFD

BE(Civil), M.Eng Sc., MBA

(non-executive director and member of the audit committee)

• Appointed a director on 7 August 2002.

• Robert has been involved with the development, construction and financing of over $50bn of infrastructure in Australia. He has held many senior executive and director roles in both public and private organisations. His most notable appointments were as Chair of the NSW Nation Building and Jobs Plan Taskforce and the Infrastructure Coordinator General of NSW responsible for $7.2bn Federal government stimulus for social housing and education building program following the GFC; Chief Operating Officer of Tenix, one of Australia’s largest diverse defence and engineering services contracting contractors with over 4,000 employees and various Olympic Games executive director and CEO roles.

• He is currently, Chair of Health Infrastructure responsible for the development and construction of all hospital facilities in NSW, Fellow of the Senate of Sydney University and Chair of its Building and Estates Committee, and a Trustee of the Sydney Opera House and Chair of its Building Committee.

• Indirectly holds 11,996,465 fully paid ordinary shares and 3,250,000 unquoted options in the capital of the Company.

• During the past three years has not acted as director of any other Australian listed public company.

John M.E. PERCIVAL

(executive director – ‘Director-Operations’ and attends audit committee meetings)

• Appointed a director on 11 October 1995.

• Has been involved in investment and merchant banking for over 25 years including 15 years as investment manager of Barclays Bank New Zealand Limited.

• Has had extensive experience in stockbroking, corporate finance and investment management.

• Beneficially holds 4,000 fully paid ordinary shares in the capital of the Company and has an indirect interest in a further 7,481,709 fully paid ordinary shares and 4,000,000 unquoted options in the capital of the Company.

• During the past three years has acted as a non-executive director of the following Australian listed public companies: - Musgrave Minerals Limited – (appointed May 2010)

Terence V. WILLSTEED

(non-executive director and member of the audit committee)

• Appointed a director on 20 July 2004.

• A qualified mining engineer - BE (Mining) Queensland University and a Fellow of the Australian Institute of Mining and Metallurgy with over 45 years experience in mining operations, mineral processing, corporate management and consulting practice.

• Substantial activities have been involved in gold, uranium, base metal, PGM, oil shale and coal resource projects. Gained operational and management experience with Zinc Corporation Limited, Mount Isa Mines Limited and Consolidated Goldfields Australia Limited.

• Principal of Terence Willsteed & Associates, Consulting Mining Engineers since 1973.

• As a member of the Mineral Industry Consultants Association Board of Management has participated in the

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GOLDSEARCH LIMITED

ABN 73 006 645 754

DIRECTORS’ REPORT

formation of the Joint Ore Reserves Committee and the formulation of the Australian Code for the Reporting of Resources and Ore Reserves.

• Indirectly holds 3,308,000 and fully paid ordinary shares and 3,250,000 unquoted options in the capital of the Company.

• Over the past three years has acted as a non-executive director of other Australian listed public companies as follows:

• European Gas Limited (resigned September 2009)

• International Ferro Metals Limited (current since September 2005)

• Citygold Limited (resigned 9 August 2010)

• Vantage Gold Limited (current since October 2010)

• South American Ferro Metals Limited (current since 11 November 2010)

• Timpetra Resources Limited(current since January 2011)

• Niuminco Group Limited (current since May 2011)

• Takoradi Gold Limited (current since July 2011)

Albert G. HARRIS (deceased)

(non-executive director and member of the audit committee)

• Appointed a director on 11 October 1995, ceased 12 November 2011.

• Member of the Institute of Measurement and Control.

• Was involved in the international petroleum and mineral resources industries for over 50 years.

• Had senior management responsibility for exploration operations and the development of petroleum and mineral projects in Australia, the Middle East, West Africa and the USA.

• Beneficially held 220,000 fully paid ordinary shares.

• Over the past three years acted as a nonexecutive director of other Australian listed public companies as follows:

• Takoradi Limited (director since 1992)

• Pepinnini Minerals Limited - (director from 31 January 2005 to 15 August 2011)

Information on company secretary

Paul S HEWSON, BEc CPA FFin

• Appointed secretary of the Company on 11 October 1995 on an outsourced basis.

• An economics graduate from Sydney University, a qualified accountant and a fellow of the Financial Services Institute of Australia.

• Has over 30 years experience in administration of listed public companies and has variously held the positions of executive director, non-executive director and company secretary of a number of Australian listed public companies both in the mining and industrial sectors.

Directors’ meetings

Attendance of individual directors at board meetings held during the year ended 30 June 2012 was as follows:

2012 was as follows:
Director	Meetings	Meetings
	held	attended
J. Landerer, CBE AM	11	11
A.G. Harris	3	0
R.B. Leece, AM RFD	11	11
J.M.E. Percival	11	11
T.V. Willsteed	11	11

In addition meetings of the audit subcommittee were attended by directors as follows:

follows:
Director	Meetings	Meetings
	held	attended
T.V. Willsteed	2	2
J. Landerer, CBE AM	2	2
A.G. Harris	1	0
R.B. Leece, AM RFD	2	2
J.M.E. Percival	2	2

Directors’ and auditors’ indemnification

• During or since the end of the financial year the Company has given an indemnity or entered into agreement to indemnify, or paid or agreed to pay insurance premiums as follows:  Under the provisions of the constitution of the Company every officer (and former officer) of the Company is indemnified, to the extent permitted by law, against all costs expenses and liabilities incurred as such an officer providing it is in respect of a liability to

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GOLDSEARCH LIMITED ABN 73 006 645 754

DIRECTORS’ REPORT

• another person (other than the Company or a related body corporate) where such liability does not arise out of conduct involving a lack of good faith and it is in respect of a liability for costs and expenses incurred in defending proceedings in which judgement is given in favour of the officer or in which the officer is acquitted or is granted relief under the Law.

• During the year the Company paid a premium on a policy to insure each of the directors and executives of the Company against liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in the capacity of director or executive of the Company, other than conduct involving a wilful breach of duty in relation to the Company. Total liability covered under the policy is $5 million for an annual premium of $10,825.

Non-audit services

incurred by Chinalco Yunnan Copper Resources Limited.

Auditor’s independence declaration

The Company’s independent auditor has provided an independence declaration to the Company for the year ended 30 June 2012. A copy of the declaration is attached to and forms part of this directors’ report.

Options

On 2 December 2011 the Company issued a total of 22,250,000 unquoted options under the Company Employee and Director Option Plan.

The options are exercisable at 5 cents each at any time prior to their expiry on 1 December 2014 as approved at the annual general meeting of shareholders held on 24 November 2011.

Further particulars on options are set out in Note 16 to the attached financial statements.

The Company during the financial year ended 30 June 2012, engaged the services of Grant Thornton to provide their independent assessment of the exploration expense

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GOLDSEARCH LIMITED ABN 73 006 645 754

DIRECTORS’ REPORT

REMUNERATION REPORT (Audited)

This remuneration report is set out under the following main headings:

1. Principles used to determine the nature and amount of remuneration

2. Details of remuneration

3. Share-based compensation

1. Principles used to determine the nature and amount of remuneration

The performance of the Company depends upon the quality of the directors and executives. The philosophy of the directors in determining remuneration levels is to set competitive remuneration packages to attract and retain high calibre employees.

The board has not established a separate remuneration committee due to the small size of the Company. The board itself sets the remuneration policies and undertakes regular reviews of the performance and remuneration of Company executives.

In accordance with ASX Corporate Governance best practice (Recommendation 8.2), the structure of non-executive director and executive remuneration is separate and distinct as follows.

a. Non-executive directors’ remuneration

Fixed remuneration:

The board seeks to set aggregate remuneration at a level that provides the Company with the ability to attract and retain directors of a high calibre, whilst incurring a cost that is acceptable to shareholders.

The ASX Listing Rules specify that the maximum aggregate remuneration of non-executive directors shall be determined from time to time by shareholders. The constitution of the Company further provides that the remuneration of non-executive directors will not be more than the aggregate fixed sum determined by a general meeting of shareholders.

The maximum aggregate remuneration sought to be approved by shareholders and the manner in which it is to be apportioned amongst the non-executive directors is reviewed from time to time by the board and takes into account the fees paid to non-executive directors of comparable companies, when undertaking such reviews.

Directors’ fixed fee remuneration is inclusive of committee fees and superannuation.

At the 2007 annual general meeting held on 22 November 2007 shareholders approved a maximum annual aggregate remuneration for non-executive directors of $250,000 per annum.

The aggregate amount which the directors agreed to draw from this for the financial year ended 30 June 2012 was $148,000 per annum which was apportioned between themselves as follows:

ollows:
Fixed fees	Year ended	Year ended
	30 June	30 June
	2012	2011
	$	$
Base fee:
- Chairman	40,000	40,000
- Other non-
executive	36,000	36,000
directors	each	each

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GOLDSEARCH LIMITED ABN 73 006 645 754

DIRECTORS’ REPORT

The directors have agreed that, subject to the Law, non-executive directors are to be entitled to a payment of one year’s directors fees upon their retirement from office.

Variable remuneration:

The Company provides directors with incentives designed to align their remuneration with the interests of shareholders. This is done through the issue of options to acquire ordinary shares in the Company. All such issues require the approval of shareholders in a general meeting of members. The number and the terms of the options for which shareholder approval is sought is determined by the directors based on advice from remuneration consultants and a review of variable remuneration paid to directors of comparable companies.

b. Company executive and executive director remuneration

Remuneration of Company executives and executive directors consists of fixed remuneration and variable remuneration by way of a share option scheme.

Fixed remuneration:

Fixed remuneration of senior executives is reviewed annually by the directors. The process consists of a review of relevant comparative remuneration in the employment market for the industry and within the Company and, where appropriate external independent advice will be obtained from remuneration consultants, during the financial report or to the date of signing this report the Company has not engage the services or a remuneration consultant.

Senior executives are given the opportunity to receive their fixed (primary) remuneration in a variety of forms and are offered the opportunity to enter into “salary sacrifice” arrangements with the Company where appropriate. It is intended that the manner of payment chosen will be optimal for the recipient without creating additional cost for the Company.

There is no relationship between executive remuneration and the performance of the Company.

Variable remuneration:

Long-term incentives

The Company provides long-term incentives to executives in a manner that aligns this element of remuneration with the creation of shareholder wealth. This is done under the terms of the Company’s Employee and Director Share Option Plan (“EDSOP”) which was approved by shareholders at the 2006 annual general meeting of members and ratified at the 2011 annual general meeting for the purposes of ASX Listing Rule 7.1.

The Company’s EDSOP provides for executives and other employees to be issued with options to acquire shares in the Company. The number and the terms of the options issued are determined by the directors after consideration of the employee’s performance and his or her ability to contribute to the achievement of the Company’s objectives.

As the options confer a right, but not an obligation on the recipient of the options, the directors do not consider it necessary to establish a policy in relation to the executive limiting his or her exposure to risk as a consequence of holding such options.

c. Share-based compensation

i) Options to acquire shares

As stated above, options are issued to directors and executives under the Company’s EDSOP as part of their remuneration. Such options are not issued based on performance criteria, but are issued to the majority of directors and executives to increase goal congruence between executives, directors and shareholders.

Participation in the EDSOP is at the sole discretion of the board. For each option issued, the board specifies the vesting period, exercise price and exercise period in accordance with the

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GOLDSEARCH LIMITED ABN 73 006 645 754

DIRECTORS’ REPORT

provisions of the EDSOP. The exercise price must not be less than the market price at the date of the issue of option. The exercise period cannot exceed five years.

Each option initially entitles the holder to subscribe for one fully paid ordinary share in the Company at the issue price specified, at any time from the issue date until the expiry of the options subject to any vesting requirements. The option holders are not entitled as a matter of course to participate in any share issues of the Company. Options granted under the EDSOP carry no dividend rights or voting rights and are issued for nil consideration.

Options issued to non-executive directors are issued under the terms of the EDSOP but also require separate specific approval by shareholders in a general meeting of members and the information set out in the notice of meeting must comply with relevant ASX Listing Rules.

A total of 15,750,000 options have been issued to Key Management Personnel, including directors, as remuneration during the financial year as detailed in Table 2. Further information on the options is set out in Note 18 to the annual financial statements.

The number of options held by all Key Management Personnel is detailed in Table 2.

ii) Shares issued on exercise of remuneration options

No shares were issued pursuant to exercise of remuneration options during the year ended 30 June 2012 (2011: Nil) or to the date of this report.

iii) The Company had the following share-based payment arrangements, granted as remuneration or were in existence during the during the financial year ended 30 June 2012:

2012:
Options series Number Grant date	Expiry date Exercise price (cents) Fair value at grant date (cents)
(1) Issued 2 December 2011 15,750,000 02/12/11	01/12/14 5.0 1.57

The Company had no share-based payment arrangements, granted as remuneration or were in existence during the financial year ended 30 June 2011.

The weighted average fair value of the share options granted during the financial year is 1.57 cents (2011: Nil cents). The options fair value was valued using a Black Scholes option pricing model. Expected volatility is based on the historical share price volatility of the Company.

		Options
Inputs into the model		series
		(1)
Grant date share price	Cents	2.5
Exercise price	Cents	5.0
Expected volatility	%	122.40
Option life	Months	36
Dividend yield	%	Nil
Risk-free interest rate	%	4.75

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GOLDSEARCH LIMITED ABN 73 006 645 754

DIRECTORS’ REPORT

2. Details of remuneration

Details of the remuneration paid during the year to Key Management Personnel (as defined in AASB 124 Related Party Disclosures) are set out in Table 1 which follows.

The Key Management Personnel of Goldsearch Limited, including the directors and the following executives, have authority and responsibility for planning, directing and controlling the activities of the Company.

J.M.E. Percival - Director Operations

E Conaghan – Senior Geologist resigned 6 March 2012.

These executives comprise the Company executives who make or participate in making decisions that affect the whole, or a substantial part, of the business or who have the capacity to affect significantly the Company’s financial standing.

3. Executive contractual arrangements

The terms and conditions of the appointment and retirement of both non-executive and executive directors are set out in a letter of appointment which covers remuneration, expectations, terms, the procedures for dealing with conflicts of interest and the availability of independent professional advice.

Executive Directors and Key Management Personnel

J.M.E. Percival – Chief Executive Officer and Chief Financial Officer.

Commenced 1 July 2008 for a term of 5 years and thereafter rolling at 12 months periods.

A base salary inclusive of superannuation as of 1 July 2012 is $250,000 per annum (2011: $250,000), reviewed annually. This agreement may be terminated without cause at any time by the Company giving no less than 6 months prior written notice of termination or employee giving notice not less than 4 weeks.

E. Conaghan – Senior Geologist

Commenced 28 February 2011 and resigned 6 March 2012.

A base salary inclusive of superannuation of $141,700, reviewed annually.

4. Voting and comments made at the company’s 2011 Annual General Meeting

The Company received more than 90% of “yes” votes on its remuneration report for the 2011 financial year. The company did not receive any specific feedback at the AGM on its remuneration report.

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GOLDSEARCH LIMITED

ABN 73 006 645 754

DIRECTORS’ REPORT

Table 1: Schedule of remuneration of key management personnel, including directors

	Short-term	Post	Share based	Total	Percentage
	benefits -	employment	payments -		share-based
	Salary and	benefits-	Share		payments -
	fees	Superannuation	options		Share options
	$	$	$	$	%
Year ended 30 June 2012
Non-executive directors:
J. Landerer, CBE AM	36,697	3,303	66,725	106,725	62.52%
A.G. Harris	9,000	41,500	-	50,500	-
R.B. Leece, AM RFD	33,028	2,972	51,025	87,025	58.63%
T.V. Willsteed	36,000	-	51,025	87,025	58.63%
Executive directors:
J.M.E. Percival	213,762	19,238	62,800	295,800	21.23%
Other key management personnel:
E. Conaghan1	98,453	8,861	15,700	123,014	12.76%
Total	426,940	75,874	247,275	750,089
Year ended 30 June 2011
Non-executive directors:
J. Landerer, CBE AM	36,697	3,303	-	40,000	-
A.G. Harris	36,000	-	-	36,000	-
R.B. Leece, AM RFD	33,028	2,972	-	36,000	-
T.V. Willsteed	36,000	-	-	36,000	-
Executive directors:
J.M.E. Percival	229,358	20,642	-	250,000	-
Other key management personnel:
E. Conaghan1	43,333	3,900	-	47,233	-
H. Hellewell2	11,955	-	-	11,955	-
Total	426,371	30,817	-	457,188

Notes: 1). Erik Conaghan was appointed on 28 February 2011 and resigned on 6 March 2012. 2). Heath Hellewell resigned on 31 December 2010.

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GOLDSEARCH LIMITED

ABN 73 006 645 754

DIRECTORS’ REPORT

Table 2: Movement in the number of unquoted options held by management personnel, including directors, which were granted as remuneration options:

The following tables show the movement in the options granted as remuneration to key management personnel during the financial year ended 30 June 2012:

	Opening balance Options granted as remuneration Options expired/ lapsed Net other change Closing balance
Year ended 30 June 2012
Non-executive directors
J. Landerer, CBE AM	- 4,250,000 - - 4,250,000
A.G. Harris	- - - - -
R.B. Leece, AM RFD	- 3,250,000 - - 3,250,000
T.V. Willsteed	- 3,250,000 - - 3,250,000
Executive directors
J.M.E. Percival	- 4,000,000 - - 4,000,000
Key management personnel
E. Conaghan	- 1,000,000 (1,000,000) - -
Total	- 15,750,000 (1,000,000) - 14,750,000

The Company had no option issued or movement of option issued to key management personnel for the financial year ended 30 June 2011.

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GOLDSEARCH LIMITED

ABN 73 006 645 754

DIRECTORS’ REPORT

Environmental regulation

The Company’s operations are subject to general environmental regulation under the laws of the states and territories of Australia in which it operates. In addition, the various exploration licences held by the Company impose environmental obligations on it in relation to site remediation following sampling and drilling programs. The board is aware of these requirements and management has been instructed to ensure that they are complied with. The directors are not aware of any breaches of these environmental regulations and licence obligations during the year.

Proceedings on behalf of the Company

No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. The Company was not a party to any such proceedings during the year.

Directors’ benefits

Since the end of the previous financial year no director has received or become entitled to receive a benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by

directors as shown in the annual accounts of the Company, or the fixed salary of a full-time employee of the Company) by reason of a contract made by the Company or a related entity with the director or with a firm of which he is a member, or with a company in which he has a substantial financial interest, other than:

• Mr J. Landerer, CBE AM receives a benefit from fees paid for legal services provided by the Company's solicitors, Landerer & Company, of which he is the senior partner. Fees paid for these services during the year totalled $24,716 (2011: $12,368) and were charged at normal commercial rates.

• The Company employs Ms J Gregan, spouse of Mr J Percival on a casual basis. Ms Gregan's employment agreement is in accordance with normal market terms and conditions.

Signed in accordance with a resolution of the board of directors.

J. Landerer CBE AM

Director Sydney, 13 September 2012

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Grant Thornton Audit Pty Ltd ABN 91 130 913 594 ACN 130 913 594

Level 2 215 Spring Street Melbourne Victoria 3000 GPO Box 4984 Melbourne Victoria 3001

T +61 3 8663 6000 F +61 3 8663 6333 E info.vic@au.gt.com W www.grantthornton.com.au

Auditor’s Independence Declaration To the Directors of Goldsearch Limited

In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Goldsearch Limited for the year ended 30 June 2012, I declare that, to the best of my knowledge and belief, there have been:

• a no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

• b no contraventions of any applicable code of professional conduct in relation to the audit.

GRANT THORNTON AUDIT PTY LTD Chartered Accountants

S. C. Trivett Partner - Audit & Assurance Services

Melbourne, 13 September 2012

Grant Thornton Australia Limited is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and the member firms are not a worldwide partnership. Grant Thornton Australia Limited, together with its subsidiaries and related entities, delivers its services independently in Australia.

Liability limited by a scheme approved under Professional Standards Legislation

GOLDSEARCH LIMITED

ABN 73 006 645 754

STATEMENT OF COMPREHENSIVE INCOME

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012

	Note	2012 2011 $ $
	Continuing operations Other revenue 2 Capitalised exploration expenses written off Impairment Share based payment expenses Salary costs (including directors’ fees) Professional and legal fees Share registry expenses Operating lease expenses (leases) Depreciation and amortisation Other expenses Loss before income tax expense 3 Income tax expense 4 Loss from continuing operations Other comprehensive income Net loss on revaluation of investments 9, 17 Loss attributable to members Total comprehensive loss attributable to members Loss per share attributable to the ordinary equity holders of the company Basic loss per share - cents 24 Diluted loss per share - cents 24	109,057 1,172,153
		(1,424,255) (1,093,228) (1,377,106) - (349,325) - (289,013) (273,238) (252,559) (191,452) (62,043) (41,673) (66,558) (67,578) (9,444) (6,379) (139,878) (145,779)
		(3,861,124) (647,174) - -
		(3,861,124) (647,174) - (797,777) (3,861,124) (1,444,951) (3,861,124) (1,444,951)
		(0.90) (0.18) (0.90) (0.18)

The accompanying notes form part of these financial statements

Page 14

GOLDSEARCH LIMITED

ABN 73 006 645 754

STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2012

Note	2012 2011 $ $
CURRENT ASSETS Cash and cash equivalents 23(a) Trade and other receivables 6 Other assets 7 TOTAL CURRENT ASSETS NON-CURRENT ASSETS Other financial assets 9 Property, plant and equipment 8 Exploration and investment expenditure 10 TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables 14 Provisions 15 TOTAL CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital 16 Reserves 17 Accumulated losses 5 TOTAL EQUITY	235,229 266,926 61,103 - 47,015 51,303
	343,347 318,229
	885,257 1,993,441 32,704 55,358 4,306,810 3,897,191
	5,224,771 5,945,990
	5,568,118 6,264,219
	422,179 95,269 95,830 69,829
	518,009 165,098
	518,009 165,098
	5,050,109 6,099,121
	31,839,816 29,749,593 349,325 (372,564) (27,139,032) (23,277,908)
	5,050,109 6,099,121

The accompanying notes form part of these financial statements

Page 15

GOLDSEARCH LIMITED

ABN 73 006 645 754

STATEMENT OF CHANGES IN EQUITY

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012

Note	Issued capital Reserves Accumulated losses Total
	Ordinary shares Revaluation of available– for-sale assets Share- based payments $ $ $ $ $
Balance at 1 July 2011 29,749,593 (372,564) - (23,277,908) 6,099,121 Shares issued during the period 16(a) 2,210,240 - - - 2,210,240 Share issue cost (120,017) - - - (120,017) Total comprehensive profit/(loss) for the period 5, 9 - (3,861,124) (3,861,124) Share based payment 17, 18 - - 349,325 - 349,325 Loss on available-for- sale instruments 17 372,564 372,564 Sub-total 31,839,816 - 349,325 (27,139,032) 5,050,109 Dividends paid or provided for - - - - - Balance at 30 June 2012 31,839,816 - 349,325 (27,139,032) 5,050,109 Balance at 1 July 2010 29,749,593 913,816 - (22,630,734) 8,032,675 Total comprehensive loss for the period 5, 9 - (797,777) - (647,174) (1,444,951) Gain on available-for- sale instruments 17 - (488,603) - - (488,603) Sub-total 29,749,593 (372,564) - (23,277,908) 6,099,121 Dividends paid or provided for - - - - - Balance at 30 June 2011 29,749,593 (372,564) - (23,277,908) 6,099,121
	31,839,816 - 349,325 (27,139,032) 5,050,109 - - - - -
	31,839,816 - 349,325 (27,139,032) 5,050,109
	29,749,593 913,816 - (22,630,734) 8,032,675 - (797,777) - (647,174) (1,444,951) - (488,603) - - (488,603)
	29,749,593 (372,564) - (23,277,908) 6,099,121 - - - - -
	29,749,593 (372,564) - (23,277,908) 6,099,121

The accompanying notes form part of these financial statements

Page 16

GOLDSEARCH LIMITED

ABN 73 006 645 754

STATEMENT OF CASH FLOWS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012

	Note	2012 2011 $ $
	CASH FLOWS FROM OPERATING ACTIVITIES: Payments to suppliers and employees Payments to related parties Interest paid Dividends received Interest received Other income Net cash used in operating activities 23(b) CASH FLOWS FROM INVESTING ACTIVITIES: Payments for exploration activities Payments to related parties for exploration activities Purchase of available-for-sale investment Proceeds from sale of available-for-sale investment Sale of property, plant and equipment Payments for property, plant and equipment Net cash provided/(used) by investing activities CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issue of shares Share issue cost Payment to related parties for share issue cost Net cash provided by financing activities Net increase/(decrease) in cash and cash equivalents held Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 23(a)	(611,828) (508,839) (204,232) (163,012) (325) - 83 1,567 10,579 2,538 - 48,182
		(805,723) (619,564)
		(1,293,811) (494,864) (233,000) (248,887) (248,033) (393,286) 450,069 1,737,848 10,000 63,000 (1,422) (32,750)
		(1,316,197) 631,061
		2,210,240 - (118,128) - (1,889) -
		2,090,223 -
		(31,697) 11,497 266,926 255,429
		235,229 266,926

The accompanying notes form part of these financial statements

Page 17

GOLDSEARCH LIMITED

ABN 73 006 645 754

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012

1. STATEMENT OF ACCOUNTING POLICIES

(a) General

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

The financial report covers Goldsearch Limited as an individual (the “Company” or “Goldsearch”) for the year ended 30 June 2012, Consolidated account have not been prepared based on the grounds of immateriality as set out in note 27. Goldsearch is a listed public company, incorporated and domiciled in Australia. Goldsearch is a for-profit entity for the purpose of preparing the financial statement. The financial report was authorised for issue by the directors on 13 September 2012.

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

Reporting basis and conventions

These financial statements have been prepared on an accruals basis under the historical cost convention, as modified by the revaluation of available-for-sale financial assets, financial assets and liabilities at fair value.

Critical accounting estimates and judgements

The preparation of a financial report in conformity with Australian Accounting Standards requires management to make estimates, judgements and assumptions 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 Company. Actual results may differ from the estimates.

i) Share based payments

The Company valued share options by reference to the fair value of the equity instruments at the grant date. The fair value is determined using the Black Scholes method which requires significant estimates and judgements over the inputs in respect to the volatility being 122.40% (market volatility of the underlying security) and the risk free rate of 4.75% (RBA government bond rate). Refer to note 18.

ii) Exploration and evaluation expenditure

The Company capitalises expenditure relating to exploration and evaluation where it is considered likely to be recoverable or where the activities have not reached a stage which permits a reasonable assessment of the existence of reserves. While there are certain areas of interest from which no reserves have been extracted, the directors are of the continued belief that such expenditure should not be written off since feasibility studies in such areas have not yet concluded. Such capitalised expenditure is carried at the end of the reporting period at $4,306,810.

iii) Fair value of financial assets

The Company records the fair value of financial assets using the market value of the investments at reporting date. While this represents the best estimate of the fair value as at the reporting date, the current market uncertainty means that, if the financial assets are sold in the future, the price achieved may be higher or lower than the most recent valuation, and higher or lower than the fair value recorded in the financial statements.

Page 18

GOLDSEARCH LIMITED ABN 73 006 645 754

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012

1. STATEMENT OF ACCOUNTING POLICIES (continued)

Critical accounting estimates and judgements (continued)

iv) Impairment

In assessing impairment, management estimates the recoverable amount of each asset or cash generating unit based on expected future cash flows and, where required, uses an interest rate to discount them.

Estimation uncertainty relates to assumptions about future operating results and the determination of a suitable discount rate. In 2012, the Company recognised an impairment loss on available for sale investment.

• v) Useful lives of depreciable assets

Management reviews its estimate of the useful lives of depreciable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical obsolescence that may change the utility of certain plant and equipment.

vi) Going concern

The financial report has been prepared on a going concern basis, which contemplates continuity of normal business activities and realisation of assets and settlement of liabilities in the ordinary course of business. The Company net current liability position at 30 June 2012 was $174,662.

The ability of the Company to continue to pay its debts as and when they fall due is dependent upon successfully raising additional funds and ultimately developing or selling its mineral properties.

The Directors believe it is appropriate to prepare these accounts on a going concern basis because:

• the Directors have an appropriate plan to raise additional funds as and when they are required. In light of the Company current exploration and development projects, the Directors believe that the additional capital required can be raised in the market, and since balance date have raised $650,000. (see Note 30); and

• the Directors can adapt an appropriate plan to contain operating and exploration expenditure if appropriate funding is unavailable.

Should the Company not achieve the matters set out above, there is uncertainty whether it would continue as a going concern and therefore whether it would realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial statements.

The financial statements do not include any adjustment relating to the recoverability or classification of recorded asset amounts or to the amounts or classifications of liabilities that might be necessary should the Company not be able to continue as a going concern.

(b) Consolidation

The accounts are not consolidated as the directors have decided that such application is of no material consequence as the subsidiary companies have no activities other than as holders of exploration rights on certain tenements.

Separate consolidated accounts of the consolidated entity formed by the Company and these wholly owned subsidiaries (refer to Note 27) have not been prepared on the grounds of immateriality.

Page 19

GOLDSEARCH LIMITED ABN 73 006 645 754

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012

1. STATEMENT OF ACCOUNTING POLICIES (continued)

(c) Comparative information

Comparative figures are, where appropriate, reclassified so as to be comparable with the figures presented for the financial year.

(d) Cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with banks and 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 an insignificant risk of changes in value.

(e) Income tax

The charge for current income tax expense is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profit or loss for the period. It is calculated using the tax rates that have been enacted or are substantially enacted by the reporting date.

Deferred tax is accounted for using the liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is charged to the statement of comprehensive income except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.

Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised.

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

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the consolidated entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

(f) Property, plant and equipment - Plant and equipment

Plant and equipment is measured on the cost basis less accumulated depreciation and impairment losses.

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 Company and the cost of the item can be measured reliably.

All other repairs and maintenance are charged to the statement of comprehensive income during the financial period in which they are incurred.

Page 20

GOLDSEARCH LIMITED ABN 73 006 645 754

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012

1. STATEMENT OF ACCOUNTING POLICIES (continued)

(f) Property, plant and equipment - Plant and equipment (continued)

Depreciation

All fixed assets are depreciated over their estimated useful lives to the Company. Mining plant and equipment is depreciated in this manner over the estimated life of the relevant mine with due regard to each item’s physical life limitations.

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

Class of fixed asset Depreciation rate

Plant and equipment 7.5 – 40% Diminishing value

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.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the statement of comprehensive income.

(g) Exploration expenditure and mineral leases

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

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

When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest.

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

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

(h) Accounts payable

Trade payables and other accounts payable are recognised when the Company becomes obliged to make future payments resulting from the purchase of goods and services. Due to their short-term nature they are measured at amortised cost and not discounted. These amounts are unsecured and are usually paid within 30 days of recognition.

Page 21

GOLDSEARCH LIMITED

ABN 73 006 645 754

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012

1. STATEMENT OF ACCOUNTING POLICIES (continued)

(i) Receivables

Trade receivable are initially recognised at fair value and subsequently measured at amortised cost using the affective interest method, less any provision for impairment.

(j) Leases

Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses in the periods in which they are incurred.

Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the life of the lease term.

(k) Earnings per share

• i) Basic earnings per share:

Basic earnings per share is determined by dividing the operating profit/(loss) after income tax excluding any cost of servicing equity other than ordinary shares by the weighted average number of ordinary shares outstanding during the financial year.

• ii) Diluted earnings per share:

Diluted earnings per share adjusts the figures used in determining earnings per share by taking into account amounts unpaid on ordinary shares and any reduction in earnings per share that will probably arise from the exercise of options outstanding during the financial year.

(l) Restoration, rehabilitation and environmental expenditure

Restoration, rehabilitation and environmental expenditure to be incurred during the production phase of operations is accrued when the need for such expenditure is established, and then written off as part of the costs of production of the mine property concerned. Significant restoration, rehabilitation and environmental expenditure to be incurred subsequent to the cessation of production at each mine property is accrued, in proportion to production, when its extent can be reasonably estimated.

(m) Employee benefits

• i) 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 represent present obligations in respect of employees’ services up to the reporting date and are measured at the amounts expected to be paid when the leave is taken.

• ii) Long service leave:

The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using projected unit credit method. Consideration is given to the expected future wage and salary level, experience of employee departures and periods of service. Expected future payments are discounted using government bond rates that match, as closely as possible, the estimated future cash outflows.

• ii) Retirement benefit obligations

Contributions to defined contribution funds are recognised as an expense as they become payable.

Page 22

GOLDSEARCH LIMITED ABN 73 006 645 754

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012

1. STATEMENT OF ACCOUNTING POLICIES (continued)

(n) Business undertakings – joint ventures

The Company has certain exploration activities conducted through joint venture operations with other parties. The Company’s interest in these joint ventures is shown in the statement of financial position under the appropriate heading. Details of the interests in the joint venture assets and liabilities are set out in Notes 11 and 12.

(o) Impairment of non-financial assets

Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation/depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised in the statement of comprehensive income 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 flows (cash generating units).

(p) Share-based payments

The cost to the Company of share options granted to directors and executive officers is included at fair value as part of the directors’ and executive officers’ aggregate remuneration in the financial year the options are granted. The fair value of the share option is calculated using the Black Scholes option pricing model, which takes into account the exercise price, the term of the option, the vesting and performance criteria, the impact of dilution, the non-tradable nature of the option, the current price and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option.

The fair value determined at the grant date of the equity settled share based payment is expensed on a straight line basis over the vesting period.

(q) Revenue

Realised gains and losses on sale are recognised as income or expense respectively in the statement of comprehensive income and are calculated as the difference between consideration on sale and the original cost.

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

Dividend revenue is recognised when the right to receive a dividend has been established.

Joint venture income is recognised at the fair value of the consideration received or receivable when the entity obtains control of the revenue.

State grant income is recognised where there is reasonable assurance that the grant will be received and all grant conditions will be met.

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

(r) Goods and services tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense.

Page 23

GOLDSEARCH LIMITED ABN 73 006 645 754

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012

1. STATEMENT OF ACCOUNTING POLICIES (continued)

(r) Goods and services tax (GST) (continued)

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

(s) Financial instruments

The Company classifies its financial assets 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 financial assets at initial recognition and re-evaluates this designation at each reporting date.

Financial assets at fair value through profit or loss

This category has two sub-categories: financial assets held for trading, and those designated at fair value through profit or loss on initial recognition. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by management. The policy of management is to designate a financial asset if the possibility exists, it will be sold in the short term and the asset is subject to frequent changes in fair value. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if they are either held for trading or are expected to be realised within 12 months of the reporting date. The Company held no such financial assets at reporting date.

Loans and receivables

Loans and receivables are non derivative financial assets with fixed or determinable payments that are not quoted on an active market. They arise when the Company provides money, goods or services directly to a debtor with no intention of selling the receivable. 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 receivables in the statement of financial position.

Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Company management has the positive intention and ability to hold to maturity. The Company held no such financial assets at reporting date.

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.

Purchases and sales of investments are recognised on trade-date - the date on which the Company 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 are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Company has transferred substantially all the risks and rewards of ownership.

Page 24

GOLDSEARCH LIMITED

ABN 73 006 645 754

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012

1. STATEMENT OF ACCOUNTING POLICIES (continued)

(s) Financial instruments (Continued)

Subsequent measurement

Available-for-sale financial assets and financial assets at fair value through profit and loss are subsequently carried at fair value.

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

Subsequent measurement (continued)

Realised and unrealised gains and losses arising from changes in the fair value of the financial assets at fair value through profit or loss category are included in the statement of comprehensive income in the period in which they arise. Unrealised gains and losses arising from changes in the fair value of non monetary securities classified as available-forsale are recognised in equity in the available-for-sale investments revaluation reserve.

When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments are included in the statement of comprehensive income as gains and losses from investment securities. The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Company establishes fair value by using valuation techniques. These include reference to the fair values of recent arm’s length transactions, involving the same instruments or other instruments that are substantially the same, discounted cash flow analysis, and option pricing models refined to reflect the issuer’s specific circumstances.

Impairment of financial assets

The Company assesses at each reporting date whether there is objective evidence that a financial asset or group of financial assets is impaired. In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of a security below its cost is considered in determining whether the security is impaired. If any such evidence exists 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 and loss - is removed from equity and recognised in the statement of comprehensive income. Impairment losses recognised in the statement of comprehensive income on equity instruments are not reversed through the statement of comprehensive income.

(t) Provisions, contingent liabilities and contingent assets

Provisions for product warranties, legal disputes, onerous contracts or other claims are recognised when the Group has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of economic resources will be required from the Group and amounts can be estimated reliably. Timing or amount of the outflow may still be uncertain.

Restructuring provisions are recognised only if a detailed formal plan for the restructuring has been developed and implemented, or management has at least announced the plan’s main features to those affected by it. Provisions are not recognised for future operating losses.

Page 25

GOLDSEARCH LIMITED

ABN 73 006 645 754

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012

1. STATEMENT OF ACCOUNTING POLICIES (continued)

(t) Provisions, contingent liabilities and contingent assets (continued)

Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the reporting date, including the risks and uncertainties associated with the present obligation. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. Provisions are discounted to their present values, where the time value of money is material.

Any reimbursement that the Group can be virtually certain to collect from a third party with respect to the obligation is recognised as a separate asset. However, this asset may not exceed the amount of the related provision.

In those cases where the possible outflow of economic resources as a result of present obligations is considered improbable or remote, no liability is recognised.

(u) Segment reporting

Segment revenues and expenses are those directly attributable to the segments and include any joint revenue and expenses where a reasonable basis of allocation exists. Segment assets include all assets used by a segment and consist principally of cash, receivables, inventories, intangibles and property, plant and equipment, net of allowances and accumulated depreciation and amortisation. While most such assets can be directly attributed to individual segments, the carrying amount of certain assets used jointly by two or more segments is allocated to the segments on a reasonable basis. Segment liabilities consist principally of payables, employee benefits, accrued expenses, provisions and borrowings.

2. REVENUE AND OTHER INCOME

REVENUE AND OTHER INCOME Other revenue from operating activities Operating activities - Interest received - Dividend income - Sales of tenement interest - Drilling grant Total revenue from operating activities Other income - Net gain on sale of property, plant & equipment - Net gain on sale of investments Total other income Total income from continuing activities.	2012 2011 $ $ 10,580 2,538 83 1,567 - 441,764 - 48,182
	10,663 494,051
	- 21,454 98,394 656,648
	98,394 678,102
	109,057 1,172,153

Page 26

GOLDSEARCH LIMITED

ABN 73 006 645 754

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012

LOSS FOR THE YEAR Loss before income tax has been determined after: Depreciation of plant and equipment (refer to Note 8) Less: depreciation capitalised (refer to Note 10) Depreciation expense Rental expense on operating leases Capitalised exploration expenses written off Superannuation – defined contribution Movements in provisions – employee benefits	2012 2011 $ $ 11,746 22,134 (2,302) (15,755)
	9,444 6,379
	47,822 45,987 1,424,255 1,093,228 38,932 37,296 (5,739) 4,023

3. LOSS FOR THE YEAR

4. INCOME TAX

4. INCOME TAX
The prima facie tax payable on profit/(loss)	is reconciled to the income
tax expense as follows:
Prime facie tax payable on loss before income tax at
30% (2011: 30%)	(1,158,337)	(192,152)
Add: tax effect of:
- Non-allowable items	949,901	329,512
- Net of current year tax losses not recognised and
deductible items (exploration expenditure and
others)	(550,912)	(237,705)
- Net of deferred tax losses not recognised and
brought to accounts	759,348	102,345
Income tax expense/(benefit)	-	-

Subject to the provisions of the Income Tax Assessment Act, if the Company derives assessable income it will be able to utilise carry-forward losses. At 30 June 2012 the Company has estimated carry-forward tax losses, after adjusting for temporary differences, of approximately $21,235,234 (2011: $18,707,331) which amounts to an income tax benefit which has not been recognised in the statement of financial position of $6,370,570 (2011: $5,612,199). The Company has no estimated carry-forward capital loss (2011: $Nil).

Certain losses which have been incurred in the course of mining activities are only available for offset against future mining income. Due to the manner and nature of activities giving rise to these carry-forward tax losses, a detailed analysis would be required should the Company return to profits.

The net deferred tax asset will only be obtained if:

• (a) the Company derives future assessable income of a nature and of an amount sufficient to enable the benefit from the deductions for the loss to be realised;

• (b) the Company continues to comply with the conditions for deductibility imposed by law; and

• (c) no changes in tax legislation adversely affect the Company in realising the benefit from the deduction of the loss.

Consequently, no deferred tax asset has been recognised

Page 27

GOLDSEARCH LIMITED

ABN 73 006 645 754

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012

5. ACCUMULATED LOSSES Accumulated losses at beginning of year Net loss attributable to members of Goldsearch Limited Accumulated losses at end of year 6. TRADE AND OTHER RECEIVABLES GST receivable	2012 $ 2011 $ (23,277,908) (22,630,734) (3,861,124) (647,174)
	(27,139,032) (23,277,908)
	61,103 -

5. ACCUMULATED LOSSES

The above assets are not subject to any accrued interest and are not subject to any impairment on any past due amount. These amounts are receivable in the ordinary course of business. The full amounts are expected to be received within 30 days, and not past due.

7. OTHER ASSETS

Rental bond - held to maturity Prepayments 8. PROPERTY, PLANT AND EQUIPMENT Equipment at cost Accumulated depreciation Motor vehicle at cost Accumulated depreciation Total property, plant and equipment Reconciliation of property, plant and equipment Equipment Carrying amount at beginning of year Additions Transfer from exploration building & equipment Disposal Depreciation Carrying amount at end of year	18,300 18,300 28,715 33,003
	47,015 51,303
	72,104 88,336 (39,400) (32,978)
	32,704 55,358
	61,300 61,300 (61,300) (61,300)
	- -
	32,704 55,358
	55,358 10,059 840 26,496 - 28,504 (11,748) - (11,746) (9,701)
	32,704 55,358

Page 28

GOLDSEARCH LIMITED

ABN 73 006 645 754

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012

8. PROPERTY, PLANT AND EQUIPMENT (continued)

2012 $ 2011 $ Exploration building and equipment Carrying amount at beginning of year - 77,654 Additions - 5,256 Transfer to field equipment - (28,504) Disposal - (41,546) Depreciation - (12,860) Carrying amount at end of year - - 9. OTHER FINANCIAL ASSETS Shares in controlled entities at cost (a) (Note 27) 885 885 Shares in listed companies - at fair value (i) 884,372 1,992,556 Shares in unlisted companies at cost (ii) 1 1 Provision for impairment (ii) (1) (1) 885,257 1,993,441 (a) Shares in controlled entities are valued at cost as fair value is unable to be determined. Reconciliation of other financial assets Carrying amount at beginning of year 1,993,441 2,696,185 Additions at cost (i) 248,033 1,664,836 Value of investment sold (351,675) (1,081,200) Impairment charge (1,377,106) - Loss/(gain) on sale of investments 3,473 (488,603) Revaluation gain/(loss) to fair value 369,091 (797,777) Carrying amount at end of year 885,257 1,993,441		2012 $ 2011 $ - 77,654 - 5,256 - (28,504) - (41,546) - (12,860)
		- -

• (i) Listed investments are recorded at fair value which consist of the following material investments:

Minority interest in Independence Group NL (IGO) shares

As at 30 June 2012 the Company had sold off its total investment in IGO (2011: balance of 1,667 shares) with a market value at reporting date of $Nil (2011: $9,385). In prior years the movement in the fair value of this investment is recorded in the ‘available-for-sale investments revaluation reserve’.

Page 29

GOLDSEARCH LIMITED ABN 73 006 645 754

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012

9. OTHER FINANCIAL ASSETS (continued)

• (i) Listed investments are recorded at fair value which consist of the following material investments (continued):

Minority interest in Morning Star Gold NL (MCO) shares.

As at 30 June 2012 the Company held 1,732,108 MCO shares (2011: 2,555,417) with a fair value of $190,532 (2011: $638,854). As of 30 June 2012 the Company expensed $353,979 as an impairment expense in the Statement of Comprehensive Income for the movement in the fair value of this investment. In the prior year the gain in fair value was recorded in the ‘available-for-sale investments revaluation reserve’ (see also Note 30).

Minority interest in Musgrave Minerals Ltd (MGV) shares.

As at 30 June 2012 the Company held 8,673,000 MGV shares (2011:8,673,000) with a fair value of $693,840 (2011: $1,344,315) and 1,837,000 unquoted 25 cent options (2011: 1,837,000) the option has a Nil fair valuation (2011: Nil)

As of 30 June 2012 the Company expensed $665,910 as an impairment expense in the Statement of Comprehensive Income for the movement in the fair value of this investment. In the prior year the loss in fair value was recorded in the ‘available-forsale investments revaluation reserve’ (see also Note 30).

During the financial year ended 30 June 2011, the Company received its share of the sale consideration under the tenement sale agreement, the Company was issued 3,675,000 shares and 1,837,500 unlisted options to acquire new shares at an exercise price of 25 cent per option from 5 years of grant date. The total consideration based on the share and option valuation received on the sale of the Company tenement sold to MGV was $1,271,550 and has been capitalised as part of the acquisition cost of those shares.

(ii) Unlisted investments and provisions:

Minority interest in Capix Pty Ltd shares.

The Company made a provision for impairment on its investment in this company as of 30 June 2002 and the directors have continued to provide against this investment since that date.

There would be no material capital gains tax payable if these listed assets were sold at their market value at reporting date.

Page 30

GOLDSEARCH LIMITED

ABN 73 006 645 754

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012

10. EXPLORATION AND INVESTMENT EXPENDITURE Mining expenditure (pre-production) Exploration and evaluation expenditure carried forward in respect of mining areas of interest: Balance at beginning of year Exploration expenditure, at cost capitalised during the year Capitalised exploration expenditure, sold under the tenement sale agreement (refer note 9 (i)) Capitalised exploration expenditure, at cost written off during the year Balance at end of year Depreciation included in exploration expenditure	2012 2011 $ $ 3,897,191 5,027,855 1,833,874 792,349
	5,731,065 5,820,204
	- (829,785) (1,424,255) (1,093,228)
	4,306,810 3,897,191
	2,302 16,175

Mineral exploration is to be amortised when production commences, or written off to the statement of comprehensive income. The carrying values do not purport to be the amounts receivable by the Company in the event the interests in the mining leases were farmed out or sold, with the recovery of this capitalised exploration expenditure dependent upon future successful mining or realisation of this asset.

11. BUSINESS UNDERTAKINGS – JOINT VENTURES

a) Musgrave Minerals Limited (7.17% shareholding)

In April 2010 Goldsearch and Independence Group signed a Heads of Agreement to vend their interests in the Musgrave tenements into Musgrave Minerals Limited. Musgrave Minerals Limited was formed with an initial public offering (IPO) and listing on the Australian Securities Exchange (ASX) 29 April 2011.

Musgrave Minerals has established a strong exploration team and commenced drilling at two prospects – Moorilyanna, which is part of the Mimili Project and Deering Hills. The Company has also identified priority targets and commenced ground follow-up of targets generated from a large regional VTEM survey completed last July.

The Musgrave geological province is considered very prospective for magmatic nickelcopper sulphide deposits with the region host to the large Nebo-Babel nickel-copper sulphide deposit in the West Musgrave currently held by BHP Billiton.

Musgrave Minerals commenced an RC drilling program at its Moorilyanna Prospect in early April 2012. The program aimed to test six basement targets at shallow-moderate depths. All six targets were co-incident with existing near-surface copper mineralisation and IP geophysical anomalies.

Drilling data is currently being compiled and the remaining targets assessed. The IP anomalies are interpreted to reflect the response from a combination of sulphide mineralisation and magnetite.

Musgrave’s regional vacuum drilling program at Deering Hills will re-continue in August.

Page 31

GOLDSEARCH LIMITED

ABN 73 006 645 754

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012

11. BUSINESS UNDERTAKINGS – JOINT VENTURES (continued)

• a) Musgrave Minerals Limited (7.17% shareholding) (continued)

Goldsearch holds 8,673,000 Musgrave Minerals Limited shares and 1,837,500 - 25 cent 5 year options.

• b) Chinalco Yunnan Copper – Mary Kathleen joint venture

In August 2009 Goldsearch entered into a farm-in and joint venture agreement with China Yunnan Copper Australia Limited (CYU), now Chinalco Yunnan Copper Resources Limited whereby CYU can earn a minimum interest of 49% in all tenements by spending $750,000 and up to a 70% interest by spending $1.5 million over three years and issuing Goldsearch 3,000,000 options to purchase ordinary shares in CYU at .40 cents per share. (2,000,000 of these options expired on 20 August 2011)

During June 2011, CYU advised Goldsearch Limited it had spent the required $1,500,000 to earn its 70% interest and the tenement ownership transfers are now with the Queensland Mining Department for registration and transfer. Goldsearch is now meeting 30% of the ongoing costs of drilling. Significant copper and cobalt results have been obtained from drilling at Elaine Dorothy and Mt Dorothy. A recent June 2012 inferred JORC resource report has been prepared for the area at 26.5 million tons of mineralisation.

• c) Queensland Mining Corporation joint venture

Goldsearch entered into a joint venture agreement with North Queensland Mines Pty Ltd – now Queensland Mining Corporation (QMN) on exploration permits EPM 13336 and EPM 15718 whereby QMN can earn 70% and 75% respectively by spending $750,000 by 31 May 2008.

Goldsearch at all times retains a 25% interest in the tenements.

QMC has advised that it has spent in excess of $750,000 under the terms of the farm-in agreement and Goldsearch is currently auditing the expenditure to establish that the relevant interest has been earned.

d) TM Resources AB joint venture

In May 2008 Goldsearch signed an option agreement with TM Resources AB, a Swedish company wholly owned by Tumi Resources Limited (Tumi), a company based in Toronto, Canada. Under the terms of the option agreement Goldsearch may earn up to 70% interest in the Jugansbo nr1 (2006:173), Sala nr4 (2005:274), Kobergs nr1 (2006:73) and Hällefors nr1 (2005:292) mineral licences. The initial minimum commitment by Goldsearch is to fund a SkyTEM airborne electromagnetic and magnetic geophysical survey. That survey has been completed over the licence areas.

If Goldsearch elects to proceed based on the results of the SkyTEM it must fund cumulative expenses of:

• 100,000 Euros (including the EM Survey) within year 1;

• 300,000 Euros in year 2;

• and 1,000,000 Euros in year 3 to earn the 70% interest.

In February 2009 Goldsearch handed back the Kobergs nr 1 licence to Tumi, the remaining licences of Jagansbo nr 1 and Sala nr 4 were allowed to lapse in June 2012 without further work. Hallefors nr 1 was the only remaining licence.

Page 32

GOLDSEARCH LIMITED

ABN 73 006 645 754

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012

11. BUSINESS UNDERTAKINGS – JOINT VENTURES (continued)

• d) TM Resources AB joint venture (continued)

Tumi Resources agreed to waive the minimum second year expenditure commitment, delaying this expenditure commitment by one year, subject to proposed geophysical surveys being completed prior to the end of 2010. This was achieved.

A new budget of $85,000 had been approved for Hallefors to follow up ground work and prepare for possible drilling. Tumi increased the period to complete the program to April 2012, which expired without any drilling on Hallefors taking place, therefore Goldsearch’s interest in the joint venture has lapsed.

12. EXPLORATION TENEMENTS

Expenditure commitments

Minimum expenditure requirements to retain current rights of tenure to granted tenements for the year ended 30 June 2012, and the parties responsible for funding that expenditure, are as follows:-

• EPM 13336 Queensland $160,000 to be funded 70% by Queensland Mining Corporation, 30% Goldsearch  EPM 15718 Queensland $ 77,243 to be funded 70% by Queensland Mining Corporation, 30 % Goldsearch  EPM 14019 Queensland EPM 14019 Queensland $150,000 to be funded 70% by China Yunnan Copper, 30% Goldsearch  EPM 14022 Queensland EPM 14022 Queensland $143,000 to be funded 70% by China Yunnan Copper, 30% Goldsearch

• EPM 14019 Queensland EPM 14019 Queensland

• EPM 14022 Queensland EPM 14022 Queensland

• EL 4843 Victoria $ 70,000 to be funded 100% by Goldsearch $600,243

The Company has also made application for further exploration tenements. Whilst no formal expenditure commitment exists until licences are granted and access agreements are in place, should all of these applications be granted, an additional minimum annual expenditure requirement of $215,000 would arise.

The above obligations, relating to both granted tenements and applications, are not provided for in the financial statements and are payable as and when they fall due.

Page 33

GOLDSEARCH LIMITED

ABN 73 006 645 754

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012

2012 2011 $ $

13. COMMITMENTS FOR EXPENDITURE

Operating lease commitments:

Non-cancellable lease contracted for but not capitalised in the accounts:-

Rental of premises - - not later than 1 year - later than 1 year and not later than 5 years	24,868 47,822 - 24,868
	24,868 72,690

The property lease is a non-cancellable lease with a two-year term, with rent payable monthly in advance. Contingent rental provisions within the lease agreement require that minimum lease payments shall be increased by 4% per annum.

Exploration expenditure commitments:

In order to maintain current rights of tenure to granted exploration tenements, the Company is required to perform minimum exploration work to meet the minimum expenditure requirements specified by various State governments. These obligations are subject to renegotiation when application for a mining lease is made and at other times. These obligations are not provided for in the financial statements and are payable:

- not later than 1 year - later than 1 year and not later than 5 years	600,243 699,000 4,754,656 1,010,000
	5,354,899 1,709,000

As detailed in Notes 11 and 12 these exploration expenditure commitments are largely funded by existing joint venture arrangements.

14. TRADE AND OTHER PAYABLES Trade creditors Sundry creditors and accruals	238,464 94,095 183,715 1,174
	422,179 95,269

The above amounts all relate to normal unsecured creditors incurred in the normal course of the Company's business operations and are within the credit terms of each relevant supplier or service provider.

Page 34

GOLDSEARCH LIMITED

ABN 73 006 645 754

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012

		2012	2011
		$	$
15.	PROVISIONS
	Employee benefits	95,830	69,829
16.	ISSUED CAPITAL
(a)	Issued shares:
	367,764,517 ordinary fully paid shares at
	beginning of year (2011: 367,764,517)	27,004,519	27,004,519
	Issued during the year:
	100,512,000 ordinary shares issued	2,210,240	-
	Share issue cost	(120,017)	-
	468,276,517 ordinary fully paid shares at end of
	year (2011: 367,764,517)	29,094,742	27,004,519
(b)	Issued options:
	Issue price of options issued in prior years and
	which have expired	2,745,074	2,745,074
	At reporting date	31,839,816	29,749,593
(c)	Movement in issued shares during the year
	Date Details	Number of	Number of
		shares	shares
	1 July opening balance	367,764,517	367,764,517
	8 August 2011 Ordinary shares issued	40,000,000	-
	9 February 2012 Ordinary shares issued	60,512,000	-
	30 June closing balance	468,276,517	367,764,517
	Holders of ordinary shares are entitled to participate in dividends when declared and
	are entitled to one vote per share, either in person or by proxy, at shareholder
	meetings. In the event of winding up the Company, ordinary shareholders are		ranked
	after all other creditors and are entitled to any proceeds of liquidation in proportion to
	the number of and amounts paid on the shares held.
	Ordinary shares have no par value and the Company does not have a limited amount of
	authorised capital.

Page 35

GOLDSEARCH LIMITED

ABN 73 006 645 754

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012

16. ISSUED CAPITAL (continued)

(d) Movement in issued share options during the year:

The Company had no quoted options granted, the following table show the movement of unquoted options granted during the financial year ended 30 June 2012:

Date Details Exercise price Expiry date Unquoted options (f) 1 July 2011 opening balance n/a n/a 2 December 2011 options issued 5.0 cents 1 December 2014 6 May 2012 options lapsed 5.0 cents 1 December 2012 30 June 2012 closing balance Weighted average exercise price 5.0 cents 1 December 2014	Number - 22,250,000 (1,000,000)
	21,250,000

The Company had no quoted or unquoted options granted during the financial year ended 30 June 2011.

(e) Uncalled capital :

No calls are outstanding at year end. All issued shares are fully paid.

(f) Terms and conditions of quoted and unquoted options:

Unquoted options:

The 22,250,000 unquoted options entitle the holder to subscribe for 1 fully paid share in the Company for each option exercised. The conditions attached at the time of the issue of each of the options specify the exercise price (which has been clarified as a price per share subscribed), the vesting period and the expiry date.

(g) Capital management:

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

The Company currently has no debt funding available or external capital requirement. The Company’s capital includes ordinary share capital share options and reserves. The financial liabilities are supported by financial assets.

Management effectively manages the Company capital by assessing the Company’s financial risks and adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of share issues. The Company strategy remains unchanged from prior year.

Page 36

GOLDSEARCH LIMITED

ABN 73 006 645 754

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012

17. RESERVES Available-for-sale investments revaluation reserve. Balance at beginning of year Unrealised gain/(loss) to fair value Adjustment on sale of investment Balance at end of year	2012 2011 $ $ (372,564) 913,816 369,091 (797,777) 3,473 (488,603)
	- (372,564)

Changes in the fair value of investments classified as available-for-sale financial assets are taken to the available-for-sale investments revaluation reserve. Amounts are recognised in profit and loss when the associated assets are sold or impaired.

Share-based payment reserve.

Balance at beginning of year Share based expenses Balance at end of year	- - 349,325 -
	349,325 -

The fair value of equity settled share-based payments to consultants and directors or their associates are recognised in the statement of comprehensive income on a straight line method over their vesting periods (refer to Note 18). Total reserves 349,325 (372,564)

18. SHARE-BASED PAYMENTS

The following share-based payment arrangements existed during the financial year ended 30 June 2012:

On 2 December 2011, 22,250,000 share options were granted to directors and consultants or their associates as approved by shareholders at the annual general meeting held on 24 November 2011.

The options held no voting or dividend rights and were not transferable.

The following share-based payment arrangements were in existence during the period:

		Options series	Number	Grant	Expiry	Exercise	Fair value at
				date	date	price	grant date
						(cents)	(cents)
(1)	2	December 2011	22,250,000	02/12/11	01/12/14	5.0	1.57

Page 37

GOLDSEARCH LIMITED

ABN 73 006 645 754

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012

18. SHARE-BASED PAYMENTS (continued)

The weighted average fair value of the share options granted during the financial year is 1.57 (2011: Nil cents). Options were priced using the Black Scholes option pricing model. Expected volatility is based on the historical share price volatility.

Inputs into the model		Options
		Series (1)
Grant date share price	cents	2.5
Exercise price	cents	5.0
Expected volatility	%	122.4
Option life	months	36
Dividend yield	%	Nil
Risk-free interest rate	%	4.75

The following reconciles the outstanding share options on issue at the beginning and end of the financial year:

	2012	2012	2011	2011
	Number of	Weighted Number of		Weighted
	options	average options		average
	(underlying	exercise		exercise
	securities)	price $		price $
Balance at beginning of year	-	-	-	-
Granted during the year	22,250,000	0.05	-	-
Lapsed during the year	(1,000,000)	0.05	-	-
Balance at end of year	21,250,000	0.05	-	N/A
Exercisable at end of year	21,250,000	0.05	-	N/A

(i) Exercised

No share options granted as remuneration were exercised during the year (2011: Nil).

(ii) Recognition of share based payments expense

The total value of options included in remuneration for the year is calculated in accordance with Accounting Standard AASB 2 ‘Share-based Payment’. The standard requires the value of the options to be determined at grant date and to be recognised as an expense in the statement of comprehensive income over the vesting period.

Page 38

GOLDSEARCH LIMITED

ABN 73 006 645 754

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012

2012 2011 $ $

19. REMUNERATION OF AUDITORS

Amounts received or due and receivable by the auditors for:

• auditing the accounts 51,000 45,012

20. ECONOMIC DEPENDENCY

The Company's principal activities are mineral exploration and investment. Other than interest derived from funds on deposit and dividends and capital growth from its investments, the Company does not derive income from any trading activity and is dependent upon the support of shareholders and the market to finance its on-going exploration program.

21. CONTINGENT LIABLITIES

The Company operations are subject to significant environmental regulation under the Laws of the Commonwealth and States in Australia. Presently, rehabilitation bonds for a value of $20,000 (2011: $40,000) have been lodged over certain leases held by the Company in favour of the Victorian Department of Industry and Resources. It is anticipated that these bonds will not be called on as the Company maintains a strict policy of appropriate rehabilitation over its exploration sites. The Company's activities involve low level disturbance associated with its exploration drilling programs, as it is not presently involved in any mining activities.

Other than the above rehabilitation bonds no other financial assets of the Company have been pledged as collateral or security for any of the Company’s liabilities.

Otherwise the directors are not aware of any potential liabilities or claims against the Company as at the date to which these financial statements are made up.

22. RELATED PARTY TRANSACTIONS

The names of persons who were directors of the Company at any time during the year and to the date of these financial statements are:

J. Landerer, CBE AM J.M.E. Percival R.B. Leece, AM RFD T.V. Willsteed A.G. Harris deceased 12 November 2011

Transactions between related parties are on normal commercial terms and conditions unless otherwise stated. Complete details of the remuneration of directors and key management personnel is set out in the Remuneration Report which forms part of the accompanying Directors’ Report.

Page 39

GOLDSEARCH LIMITED

ABN 73 006 645 754

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012

22. RELATED PARTY TRANSACTIONS (continued)

The totals of remuneration paid to key management personnel of the Company during the year are as follows:

Short–term employee benefits Post-employment benefits	2012 2011 $ $ 426,940 426,371 75,874 30,817
	502,814 457,188

Details of shares and options held by key management personnel are included in the Remuneration Report set out in the accompanying directors’ report.

(a) Key management personnel related entity transactions

Mr J. Landerer, CBE AM is the senior partner of Landerer & Company. Landerer & Company act as solicitors to the Company. Charges for services provided during the year amounted to $24,716 (2011: $12,368).

The Company employs Ms J. Gregan, spouse of Mr J.M.E. Percival. Ms Gregan's employment agreement is in accordance with normal market terms and conditions.

Key management personnel and their related entities hold directly, indirectly or beneficially as at the reporting date the following interests in the Company:

			Quoted share	Quoted share		Unquoted share	Unquoted share
	Ordinary shares		options			options
Directors	Direct	Indirect	Direct	Indirect		Direct	Indirect
J. Landerer, CBE AM 5,725,872		4,243,129		-	-	-	4,250,000
A.G. Harris	220,000	-		-	-	-	-
R.B. Leece, AM RFD -		11,996,465		-	-	-	3,250,000
J.M.E. Percival	4,000	7,481,709		-	-	-	4,000,000
T.V. Willsteed	-	3,308,000		-	-	-	3,250,000

Movements in these holding during the year were as follows:

(i) The following shares and options	were acquired	during the period
J. Landerer, CBE AM -	400,000	-	-	-	4,250,000
A.G. Harris -	-	-	-	-	-
R.B. Leece, AM RFD -	-	-	-	-	3,250,000
J.M.E. Percival -	-	-	-	-	4,000,000
T.V. Willsteed -	-	-	-	-	3,250,000

(ii) No shares or options were sold, or options exercised, during the period

Page 40

GOLDSEARCH LIMITED ABN 73 006 645 754

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012

23. STATEMENT OF CASH FLOWS

(a) Reconciliation of cash:

For the purposes of the statement of cash flows, cash includes:

• (i) cash on hand and at bank, cash on deposit, net of outstanding bank overdrafts; and

(ii) investments in money market instruments with 30 days or less to maturity.

Cash as at the end of the year as shown in the statement of cash flows is reconciled to the related items in the statement of financial position as follows:

	2012	2011
	$	$
Cash at 30 June is shown in the statement of financial position as:
Cash on hand	700	700
Cash at bank	207,553	219,603
Deposits at call	26,976	46,623
	235,229	266,926

(b) Reconciliation statement:

A reconciliation of “net cash used in operating activities” to “Profit/(loss) after income tax” is as follows:

	Loss after income tax Add/(less) Depreciation Write-off of capitalised exploration expenditure Share based payment expenses Investment impairment charge Net gain on disposal of investments Changes in assets and liabilities: (Increase)/decrease in receivables (Increase)/decrease in prepayments# Increase/(decrease) in provisions# Increase/(decrease) in trade creditors and accruals# Net cash used in by operating activities	(3,861,124) (647,174) 9,444 6,379 1,424,255 1,093,228 349,325 - 1,377,106 - (98,394) (1,098,413) (47,661) 14,000 3,356 (5,694) (5,739) 4,023 43,709 14,087
		(805,723) (619,564)

Amounts reported are net of exploration expenditure.

The Company does not have any formal loan facilities in place at the date of these financial statements.

Page 41

GOLDSEARCH LIMITED

ABN 73 006 645 754

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012

23. STATEMENT OF CASH FLOWS (continued)

(c) Non-cash financing and investing activities

During the year ended 30 June 2011, the Company received 3,675,000 fully paid ordinary shares and 1,837,000 unquoted options to acquire fully paid shares as consideration under the Musgrave tenement sale agreement referred to in Note 11(a). The fair value of this consideration was $1,271,550 and is recorded as part of the acquisition cost of these investments.

24. EARNINGS PER SHARE

EARNINGS PER SHARE	2012	2011
	$	$
The following reflects the income and share data used in the
calculations of basic and diluted earnings per share (EPS):
Basic loss cents per share	(0.90)	(0.18)
Diluted loss cents per share	(0.90)	(0.18)
Weighted average number of ordinary shares outstanding
during the year used to calculated basic EPS	426,979,555	367,764,517
Weighted average number of ordinary shares outstanding
during the year used to calculated diluted EPS	426,979,555	367,764,517
Loss from continuing operations used to calculated basic
EPS and diluted EPS	(3,861,124)	(647,174)

There is no impact from 22,250,000 options outstanding at 30 June 2012 (2011: Nil options) on the earnings per share calculation because they are anti-dilutive. These options could potentially dilute basic EPS in the future. There have been no transactions involving ordinary shares or potential ordinary shares that would significantly change the number of ordinary shares or potential ordinary shares outstanding between the reporting date and the date of completion of these financial statements.

Page 42

GOLDSEARCH LIMITED

ABN 73 006 645 754

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012

25. SEGMENT INFORMATION

AASB 8 requires operating segments to be identified on the basis of components of the consolidated entity that are regularly reviewed by the chief operating decision makers in order to allocate resources to the segment and to assess its performance.

Description of segments

Management has determined the operating segments based on reports presented to the board for making strategic decisions.

• Mineral exploration overseas

This Segment covers all exploration investment and expenditure conducted overseas, which includes:

Sweden; the Company was earning a 70% interest in three exploration licences which cover two separate targets which cover an area of approximately 200 square kilometres. Refer to Note 11(d).

Cambodia; during the financial year ended 30 June 2012, the Company was evaluating tenement holding within Cambodia.

• Minerals exploration Australia – Queensland

This segment covers all exploration investment and expenditure incurred in Queensland, which includes:

Mary Kathleen JV; The Company currently holds a 30% interest in the Mary Kathleen JV. Refer to Note 11 (b).

Duck Creek; The Company currently holds 100% diluting to 30% on the Duck Creek tenement. Refer to Note 11 (c).

• Minerals exploration Australia – Other

All other minerals exploration projects and joint venture projects have been grouped within this segment.

 Investments

During the year the Company held equity investments in Morning Star Gold NL (MCO), Independence Group NL (IGO) and Musgrave Minerals Ltd (MGV). Refer to Note 9.

 Administration

This segment covers all other unallocated expenditure and income for operating the Company.

Page 43

GOLDSEARCH LIMITED

ABN 73 006 645 754

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012

25. SEGMENT INFORMATION (continued)

Mineral exploration overseas Mineral exploration Australia Investments Administration Total Queensland Other 2012 Revenue - - - 98,478 10,579 109,057 Results (618,673) (3,302) (802,280) (1,278,628) (1,158,241) (3,861,124) Assets - 3,237,531 1,069,279 885,257 376,051 5,568,118 Liabilities - 334,828 2,430 - 180,751 518,009 Acquisition of non– current assets 274,996 1,395,161 163,716 248,034 840 2,082,747 Depreciation - - 2,302 - 9,444 11,746 Other non-cash expenses - - - - - - Mineral exploration overseas Mineral exploration Australia Investments Administration Total Queensland Other 2011 Revenue - - 511,401 658,214 2,538 1,172,153 Results - (67,965) (513,862) 658,214 (723,561) (647,174) Assets 343,677 1,845,673 1,707,841 1,993,441 373,587 6,264,219 Liabilities 39,898 - 7,582 - 117,618 165,098 Acquisition of non– current assets 109,543 89,809 598,253 1,664,836 25,560 2,488,001 Depreciation - - 16,319 - 6,379 22,698 Other non-cash expenses - - 665 - 4,023 4,688 2012 2011 $ $ 26. FRANKING CREDITS The amount of the franking credits available for subsequent reporting periods are: Balance at the end of the reporting period 84,279 84,243	Mineral exploration overseas Mineral exploration Australia Investments Administration Total Queensland Other - - - 98,478 10,579 109,057	Mineral exploration overseas Mineral exploration Australia Investments Administration Total Queensland Other - - - 98,478 10,579 109,057
	(618,673) (3,302) (802,280) (1,278,628) (1,158,241) (3,861,124)
	- 3,237,531 1,069,279 885,257 376,051 5,568,118
	- 334,828 2,430 - 180,751 518,009
	274,996 1,395,161 163,716 248,034 840 2,082,747 - - 2,302 - 9,444 11,746 - - - - - - Mineral exploration overseas Mineral exploration Australia Investments Administration Total Queensland Other - - 511,401 658,214 2,538 1,172,153
	- (67,965) (513,862)	658,214 (723,561) (647,174)
	343,677 1,845,673 1,707,841	1,993,441 373,587 6,264,219
	39,898 - 7,582	- 117,618 165,098
		1,664,836 25,560 2,488,001 - 6,379 22,698 - 4,023 4,688 2012 2011 $ $ 84,279 84,243

26. FRANKING CREDITS

Page 44

GOLDSEARCH LIMITED

ABN 73 006 645 754

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012

27.	CONTROLLED ENTITIES	Country of	Percentage	Percentage
		incorporation	owned	owned
	Parent entity:		2012	2011
	Goldsearch Limited	Australia	-	-
	Controlled entities:
	Caytale Pty Limited (i)	Australia	100%	100%
	Chiljill Pty Limited (i)	Australia	100%	100%
	Miltonpak Pty Limited (i)	Australia	100%	100%

• (i) The above subsidiary companies have no activities other than as holders of exploration rights on certain tenements.

The financial statement cover Goldsearch Limited as an individual entity, separate consolidated accounts of the consolidated entity formed by the Company and these wholly owned subsidiaries listed above have not been prepared on the grounds of immateriality.

28. FINANCIAL RISK MANAGEMENT

Financial risk management policies

The Company’s financial instruments consist mainly of current accounts with banks, accounts receivable and payable and investments in listed and unlisted companies.

i. Treasury risk management

Management considers on a regular basis the financial risk exposures and evaluates treasury management strategies in the context of the most recent economic conditions and forecasts.

The overall risk management strategy seeks to meet the Company’s financial targets, whilst minimising potential adverse effects on financial performance.

Management operates under policies approved by the board of directors which approves and reviews risk management policies on a regular basis. These include future cash flow requirements.

ii. Financial risk exposures and management

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

(a) Market risk

The Company is subject to the normal economic factors including volatility of stock market prices and interest rates, both of which impact upon the availability of equity and debt capital respectively and the ability to realise listed investments if and when required.

Page 45

GOLDSEARCH LIMITED

NOTES TO THE FINANCIAL STATEMENTS

ABN 73 006 645 754

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012

28. FINANCIAL RISK MANAGEMENT (continued)

ii. Financial risk exposures and management (continued)

(b) Foreign currency risk exposure

At reporting date, the Company was not exposed to any currency exchange risk through primary financial assets or liabilities. However under the heads of agreement for the Tumi joint venture in Sweden as detailed in Note 11 the Company will be exposed to foreign exchange movements between the Euro and Australian dollar should the directors decide to continue to earn a 70% interest in the project by committing to a minimum expenditure of 1 million Euro. The Company will adopt appropriate monitoring tools and evaluate this risk if and when it elects to undertake to contribute to this joint venture.

(c) Interest rate risk exposure

The Company is exposed to interest rate risk through primary financial assets and financial liabilities. The Company continually monitors interest rates and financial markets for the Company’s cash on deposit and regularly reviews future cash flow requirements. The following table summarises the interest rate risk for the Company, together with the effective weighted average interest rate for each class of financial assets and liabilities.

Note 2012 Financial assets Cash 23 Receivables 6 Investments-non-listed securities 9 Investments-listed securities 9 Total financial assets Weighted average interest rate Financial liabilities Trade and sundry creditors 14 Total financial liabilities Weighted average interest rate Net financial assets	Floating Fixed interest maturing in Non - interest bearing interest rate 1 year or less over 1 to 5 years 1 year or less over 1 to 5 years Total $ $ $ $ $ $ 208,253 26,976 - - - 235,229 - - - - - - - - - - 885 885 - - - - 884,372 884,372
	208,253 26,976 - - 885,257 1,120,486
	2.25% 6.25% - - - - - - - 422,179 - 422,179
	- - - 422,179 - 422,179
	- - - - - -
	208,253 26,976 - (422,179) 885,257 698,307

Page 46

GOLDSEARCH LIMITED

ABN 73 006 645 754

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012

28. FINANCIAL RISK MANAGEMENT (continued)

ii. Financial risk exposures and management (continued)

Note 2011 Financial assets Cash 23 Receivables 6 Investments-non-listed securities 9 Investments-listed securities 9 Total financial assets Weighted average interest rate Financial liabilities Trade and sundry creditors 14 Total financial liabilities Weighted average interest rate Net financial assets	Floating Fixed interest maturing in Non - interest bearing interest rate 1 year or less over 1 to 5 years 1 year or less over 1 to 5 years Total $ $ $ $ $ $ 219,603 46,623 - - - 266,226 - - - - - - - - - - 885 885 - - - -1,992,556 1,992,556
	219,603 46,623 - -1,993,441 2,259,667
	0.00% 5.58% - - - - - - - 95,259 - 95,259
	- - - 95,259 - 95,259
	- - - - - -
	219,603 46,623 - (95,259)1,993,441 2,164,408

(d) Credit risk exposure

The maximum exposure to credit risk, excluding the value of any collateral or other security, at reporting date to recognised financial assets is the carrying amount, net of any provision for impaired receivables, as disclosed in the statement of financial position and notes to the financial statements.

The Company does not have any material credit risk exposure to any single debtor or group of debtors under financial instruments entered into by the Company.

Receivables due from major debtors are not normally secured by collateral, however the credit worthiness of debtors is monitored.

(e) Liquidity risk

The Company manages liquidity risk by monitoring forecast cash flows to ensure that adequate funding is maintained. The Company’s financial liabilities consist of trade and other payables in the normal course of business and as such are normally due for payment within 30 days of receipt of a valid tax invoice. The Company does not have any liquidity risk associated with any borrowing.

(f) Price risk

The Company is not presently exposed to commodity price risk other than the commercial feasibility of various exploration and evaluation activities is sensitive to the expected pricing of the relevant resource, and the continuing volatility of stock markets which affect the unrealised fair value of the listed investments which are held as ‘available-for-sale financial assets’. The Company currently holds these as long term investments.

Page 47

NOTES TO THE FINANCIAL STATEMENTS

GOLDSEARCH LIMITED

ABN 73 006 645 754

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012

28. FINANCIAL RISK MANAGEMENT (continued)

ii. Financial risk exposures and management (continued)

(f) Price risk (continued)

The Company continually monitors the financial markets in relation to its holding of listed investments. The Company will only dispose of its investments when it believes that it is in the best interests for shareholders of the Company or when the liquidity of the Company requires it to realise the fair value of one or more of the Company’s listed investments.

(g) Interest rate risk

It is Company policy to assess cash flow requirements and prevailing interest rates at the time of deciding the mixture of debt funding and either prevailing fixed and floating interest rate.

Interest rate risk on cash and short term deposits is not considered to be a material risk due to the short term nature of these financial instruments.

As at the reporting date a variance of +/- 100 basis points would have affected the group’s after-tax loss and equity by +/- $2,978 (2011: +/- $2,538).

iii. Net fair values of financial assets and liabilities

• (i) The net fair values of cash and cash equivalents and non-interest bearing monetary financial assets and liabilities approximate their carrying values as disclosed in the statement of financial position and the notes to the financial statements.

• (ii) Listed investments have been valued at the quoted market bid price at the date of the statement of financial position (level 1). For unlisted investments where there is no organised financial market, the net fair value has been based on a reasonable estimation of the underlying net assets or discounted cash flows of the investment (level 2). (Refer to Note 9).

9).
2012	Level 1	Level	2	Total
Financial assets:	$	$		$
Available-for-sale financial assets:
- Listed investment	331,652		-	331,652
- Listed investment (restricted to April 2013)	552,720		-	552,720
- Unlisted investments	-	885		885
Total	884,372	885		885,257
2011
Financial assets:
Available-for-sale financial assets:
- Listed investment	921,660		-	921,660
- Listed investment (restricted to April 2013)	1,070,896		-	1,070,896
- Unlisted investments	-	885		885
Total	1,992,556	885		1,993,441

Page 48

GOLDSEARCH LIMITED ABN 73 006 645 754

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012

28. FINANCIAL RISK MANAGEMENT (continued)

iv. Sensitivity analysis

The Company has performed a sensitivity analysis relating to its exposure to price risk at reporting date, as detailed in the following table. The directors are of the opinion that a sensitivity analysis on all other above-mentioned risks will not show any material impacts on the Company’s financial instruments. This sensitivity analysis demonstrates the effect on the current year results and equity which could result from a change in this risk.

Share market price sensitivity analysis

The following tables show the effect on profit and equity as a result of changes in the market price of listed investments, with all other variables remaining constant would be as follows:

		2012	2011
Change in profit		$	$
–	Increase in share price by 5%	-	-
–	Decrease in share price by 5%	-	-
Change in equity
–	Increase in share price by 5%	44,219	99,628
–	Decrease in share price by 5%	(44,219)	(99,628)

29. REHABILITATION COSTS

No known commitments for rehabilitation costs exist as at the date of preparation of these financial statements. (Refer to Note 21).

30. EVENTS SUBSEQUENT TO REPORTING DATE

Since reporting date and to the date of this report:

• the Company announced on 20 July 2012 that it had arranged a private placement of 65,000,000 ordinary fully paid shares at 1 cent per share to a syndicate of sophisticated investors The placement was made subject to shareholder approval which was obtained at a general meeting held on 30 August 2012. The placement was completed on 7 September and provided $650,000 additional working capital to finance the on-going contributions to exploration costs on the Mary Kathleen joint venture with Chinalco Yunnan Copper Resources Limited.

Otherwise no other matters or circumstances have arisen since 30 June 2012 that have significantly affected or may significantly affect:

• The Company’s operations in future years;

• The results of those operations in future years; or

• The Company’s state of affairs in future years.

Page 49

GOLDSEARCH LIMITED

ABN 73 006 645 754

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012

31. Changes in accounting policies

Adoption of AASBs and improvements to AASBs 2011 – AASB 1054 and AASB 2011-1

The AASB has issued AASB 1054 Australian Additional Disclosures and 2011-1 Amendments to Australian Accounting Standards arising from the Trans-Tasman Convergence Project , and made several minor amendments to a number of AASBs. These standards eliminate a large portion of the differences between the Australian and New Zealand accounting standards and IFRS and retain only additional disclosures considered necessary. These changes also simplify some current disclosures for Australian entities and remove others.

Standards, amendments and interpretations to existing standards that are not yet effective and have not been adopted early by the Company

At the date of authorisation of these financial statements, certain new standards, amendments and interpretations to existing standards have been published but are not yet effective, and have not been adopted early by the Company.

Management anticipates that all of the relevant pronouncements will be adopted in the Company accounting policies for the first period beginning after the effective date of the pronouncement. Information on new standards, amendments and interpretations that are expected to be relevant to the Company financial statements is provided below

Certain other new standards and interpretations have been issued but are not expected to have a material impact on the Company financial statements.

AASB 9 Financial Instruments (effective from 1 January 2013)

The AASB aims to replace AASB 139 Financial Instruments: Recognition and Measurement in its entirety. The replacement standard (AASB 9) is being issued in phases. To date, the chapters dealing with recognition, classification, measurement and derecognition of financial assets and liabilities have been issued. These chapters are effective for annual periods beginning 1 January 2013. Further chapters dealing with impairment methodology and hedge accounting are still being developed.

Management have yet to assess the impact that this amendment is likely to have on the financial statements of the Company. However, they do not expect to implement the amendments until all chapters of AASB 9 have been published and they can comprehensively assess the impact of all changes.

Consolidation Standards

A package of consolidation standards are effective for annual periods beginning or after 1 January 2013. Information on these new standards is presented below. The Company management have yet to assess the impact of these new and revised standards on the Company financial statements.

AASB 10 Consolidated Financial Statements (AASB 10)

AASB 10 supersedes the consolidation requirements in AASB 127 Consolidated and Separate Financial Statements (AASB 127) and Interpretation 112 Consolidation – Special Purpose Entities. It revised the definition of control together with accompanying guidance to identify an interest in a subsidiary. However, the requirements and mechanics of consolidation and the accounting for any non-controlling interests and changes in control remain the same.

Page 50

GOLDSEARCH LIMITED ABN 73 006 645 754

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012

31. Changes in accounting policies (continued)

AASB 11 Joint Arrangements (AASB 11)

AASB 11 supersedes AASB 131 Interests in Joint Ventures (AASB 131). It aligns more closely the accounting by the investors with their rights and obligations relating to the joint arrangement. It introduces two accounting categories (joint operations and joint ventures) whose applicability is determined based on the substance of the joint arrangement. In addition, AASB 131’s option of using proportionate consolidation for joint ventures has been eliminated. AASB 11 now requires the use of the equity accounting method for joint ventures, which is currently used for investments in associates.

AASB 12 Disclosure of Interests in Other Entities (AASB 12)

AASB 12 integrates and makes consistent the disclosure requirements for various types of investments, including unconsolidated structured entities. It introduces new disclosure requirements about the risks to which an entity is exposed from its involvement with structured entities.

Consequential amendments to AASB 127 Separate Financial Statements (AASB 127) and AASB 128 Investments in Associates and Joint Ventures (AASB 128)

AASB 127 Consolidated and Separate Financial Statements was amended to AASB 127 Separate Financial Statements which now deals only with separate financial statements. AASB 128 brings investments in joint ventures into its scope. However, AASB 128’s equity accounting methodology remains unchanged.

AASB 13 Fair Value Measurement (AASB 13)

AASB 13 does not affect which items are required to be fair-valued, but clarifies the definition of fair value and provides related guidance and enhanced disclosures about fair value measurements. It is applicable for annual periods beginning on or after 1 January 2013. The Company management have yet to assess the impact of this new standard.

AASB 2011-9 Amendments to Australian Accounting Standards Presentation of Items of Other Comprehensive Income s (AASB 101 Amendments)

The AASB 101 Amendments require an entity to group items presented in other comprehensive income into those that, in accordance with other IFRSs: (a) will not be reclassified subsequently to profit or loss and (b) will be reclassified subsequently to profit or loss when specific conditions are met. It is applicable for annual periods beginning on or after 1 July 2012. The Company management expects this will change the current presentation of items in other comprehensive income; however, it will not affect the measurement or recognition of such items.

Amendments to AASB 119 Employee Benefits (AASB 119 Amendments)

The AASB 119 Amendments include a number of targeted improvements throughout the Standard. The main changes relate to defined benefit plans. They:

• eliminate the ‘corridor method’, requiring entities to recognise all gains and losses arising in the reporting period in other comprehensive income

• streamline the presentation of changes in plan assets and liabilities

• enhance the disclosure requirements, including information about the characteristics of defined benefit plans and the risks that entities are exposed to through participation in them.

The amended version of AASB 119 is effective for financial years beginning on or after 1 January 2013. The Company management have yet to assess the impact of this revised standard on the financial statements.

Page 51

GOLDSEARCH LIMITED

ABN 73 006 645 754

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012

31. Changes in accounting policies (continued)

AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirements (AASB 124 Amendments)

AASB 2011-4 makes amendments to AASB 124 Related Party Disclosures to remove individual key management personnel disclosure requirements, to achieve consistency with the international equivalent (which includes requirements to disclose aggregate (rather than individual) amounts of KMP compensation), and remove duplication with the Corporations Act 2011. The amendments are applicable for annual periods beginning on or after 1 July 2013. The Company management have yet to assess the impact of these amendments.

Amendments to IAS 32 Financial Instruments: Presentation and IFRS 7 Financial Instruments: Disclosures

The amendments to IAS 32 add application guidance to address inconsistencies in applying IAS 32’s criteria for offsetting financial assets and financial liabilities. Qualitative and quantitative disclosures have been added to IFRS 7 relating to gross and net amounts of recognised financial instruments that are (a) set off in the statement of financial position and (b) subject to enforceable master netting arrangements and similar agreements, even if not set off in the statement of financial position. The amendments are applicable for annual periods beginning on or after 1 January 2014. The Company management have yet to assess the impact of these amendments.

AASB Interpretation 20 Stripping Costs in the Production Phase of a Surface Mine

Clarifies that costs of removing mine waste materials (overburden) to gain access to mineral ore deposits during the production phase of a mine must be capitalised as inventories under AASB 112 Inventories if the benefits from stripping activity is realised in the form of inventory produced.

Otherwise, if stripping activity provides improved access to the ore, stripping costs must be capitalised as a non-current, stripping activity asset if certain recognition criteria are met (as an addition to, or enhancement of, an existing asset). The interpretation is applicable for annual periods beginning on or after 1 January 2013. The interpretation will have no impact on the Company as it has no mining activities.

32. COMPANY DETAILS

The registered office of the Company is c/- Boroughs, Level 6, 77 Castlereagh Street, Sydney NSW 2000.

The principal place of business of the Company is Level 4, 20 Loftus Street, Sydney NSW 2000.

Page 52

GOLDSEARCH LIMITED ABN 73 006 645 754

DIRECTORS’ DECLARATION

The directors of Goldsearch Limited declare that:

1. The financial statements and associated notes for the financial year ended 30 June 2012:

2. (a) are in accordance with the Corporations Act 2001;

3. (b) comply with Accounting Standards and the Corporations Regulations 2001; and

4. (c) the financial report also complies with International Financial Reporting Standards issued by the International Accounting Standards Board (IASB) as disclosed in note 1; and

5. (d) give a true and fair view of the financial position of the Company as at 30 June 2012 and the performance of the Company for the financial year then ended.

6. The chief executive officer/chief financial officer has declared that:

7. (a) the financial records of the Company for the financial year have been properly maintained in accordance with section 286 of the Corporations Act 2001;

8. (b) the financial statements and notes for the financial year comply with Accounting Standards; and

9. (c) the financial statements and notes for the financial year give a true and fair view.

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

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

On behalf of the directors

• J. Landerer CBE AM

Director

Sydney, 13 September 2012.

Page 53

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Grant Thornton Audit Pty Ltd ACN 130 913 594

Level 2 215 Spring Street Melbourne Victoria 3000 GPO Box 4984 Melbourne Victoria 3001

T +61 3 8663 6000 F +61 3 8663 6333 E info.vic@au.gt.com W www.grantthornton.com.au

Independent Auditor’s Report

To the Members of Goldsearch Limited

Report on the financial report

We have audited the accompanying financial report of Goldsearch Limited (the “Company”), which comprises the statement of financial position as at 30 June 2012, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information and the Directors’ Declaration of the Company.

Directors responsibility for the financial report

The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view of the financial report in accordance with the Australian Accounting Standards and the Corporations Act 2001. This responsibility includes such internal controls as the Directors determine are necessary to enable the preparation of the financial report to be free from material misstatement, whether due to fraud or error. The Directors also state, in the notes to the financial report, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements , that compliance with the Australian equivalents to International Financial Reporting Standards ensures that the financial report, comprising the financial statements and notes, complies with International Financial Reporting Standards.

Auditor’s responsibility

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

Grant Thornton Australia Limited is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and the member firms are not a worldwide partnership. Grant Thornton Australia Limited, together with its subsidiaries and related entities, delivers its services independently in Australia.

Liability limited by a scheme approved under Professional Standards Legislation

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An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error.

In making those risk assessments, the auditor considers internal controls relevant to the Company’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial report.

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

Electronic presentation of audited financial report

This auditor’s report relates to the financial report of Goldsearch Limited for the year ended 30 June 2012 included on Goldsearch Limited’s web site. The Directors are responsible for the integrity of Goldsearch Limited’s web site. We have not been engaged to report on the integrity of Goldsearch Limited’s web site. The auditor’s report refers only to the statements named above. It does not provide an opinion on any other information which may have been hyperlinked to/from these statements. If users of this report are concerned with the inherent risks arising from electronic data communications they are advised to refer to the hard copy of the audited financial report to confirm the information included in the audited financial report presented on this web site.

Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.

Auditor’s opinion

In our opinion:

• a the financial report of Goldsearch Limited is in accordance with the Corporations Act 2001, including:

• i giving a true and fair view of the Company’s financial position as at 30 June 2012 and of its performance for the year ended on that date; and

• ii complying with Australian Accounting Standards and complying with and the Corporations Regulations 2001; and

• b the financial report also complies with International Financial Reporting Standards as disclosed in the notes to the financial statements.

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Report on the remuneration report

We have audited the remuneration report included in pages 6 to 11 of the Directors’ Report for the year ended 30 June 2012. The Directors of the Company are responsible for the preparation and presentation of the remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards.

Auditor’s opinion on the remuneration report

In our opinion, the remuneration report of Goldsearch Limited for the year ended 30 June 2012, complies with section 300A of the Corporations Act 2001.

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GRANT THORNTON AUDIT PTY LTD Chartered Accountants

==> picture [166 x 51] intentionally omitted <==

S. C. Trivett Partner – Audit and Assurance

Melbourne, 13 September 2012