for personal use only - australian securities exchange · 2008 was another excellent year for...

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Suite 4, 213 Balcatta road Balcatta Wa 6021

telephone : (61 8) 9240 4111 Facsimile : (61 8) 9240 4054

e-mail : [email protected] Website : www.conquestmining.com.au

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COMPANY PARTICULARS

DIRECTORS Richard KrasnoffChairman

John TerpuManaging Director

Bruno FirrioloExecutive Director

Joseph RadiciNon-Executive Director

Douglas StewartNon-Executive Director

COMPANY SECRETARY Bruno Firriolo

REGISTERED OFFICE AND Suite 4PRINCIPAL PLACE OF 213 Balcatta RoadBUSINESS Balcatta WA 6021

Telephone: (08) 9240 4111Facsimile: (08) 9240 4054

AUDITORS KPMG152-158 St George’s TerracePerth WA 6000

SHARE REGISTRY Link Market ServicesLevel 9, 333 Collins StreetMelbourne VIC 3000

BANKERS National Australia Bank Limited

STOCK EXCHANGE Listed on the Australian Stock ExchangeThe Home Exchange is in Perth, Western Australia

SX CODE CQT Fully Paid Ordinary Shares

E-MAIL [email protected]

WEB SITE www.conquestmining.com.au

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CONTENTS

PAGE

Managing Director’s Report……………………………………………………………………………………. 3

Review of Operations…………………………………………………………………………………………... 4

Directors’ Report

Directors and Company Secretary……………………………….………………………………. 10

Directors’ Meetings…………………………………………………………………………………. 11

Corporate Governance…………………………………………………………………………..… 11

Principal Activities……………………………………………………………………………......… 13

Operating and Financial Review…………………………………………………………………. 13

Significant Changes in the State of Affairs............................................................................ 13

Dividends……………………………………………………………………………………………. 14

Events Subsequent to Balance Date…………………………………………………………….. 14

Likely Developments………………………………………………………………………………. 14

Environmental Regulation and Performance……………………………………………………. 14

Directors’ Interests……………………………………………………………………………….… 14

Share Options…………………………………………………………………………………….… 14

Indemnification and Insurance of Officers………………………………………………………. 15

Remuneration Report……………………………………………………………………………… 15

Auditor’s Remuneration…………………………………………………………………………… 18

Lead Auditor’s Independence Declaration………………………………………………………. 19

Directors’ Declaration…………………………………………………………………………………………. 20

Income Statements……………………………………………………………………………………………. 21

Statements of Recognised Income and Expense………………………………………………………….. 22

Balance Sheet ........................................................................................................................................23

Statements of Cash Flows……………………………………………………………………………………. 24

Notes to the Financial Statements…………………………………………………………………………… 25

Independent Auditor’s Report………………………………………………………………………………... 49

ASX Additional Information…………………………………………………………………………………… 51For

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MANAGING DIRECTOR’S REPORT

2008 was another excellent year for Conquest Mining, with a significant increase in resources across all ourmetals combined. We continue to offer a unique investment story by delivering expansion to our Mt Carltonproject and our team is committed to achieving development which provides enormous benefit today, withoutcompromising the future.

The process of building Conquest into a vibrant gold producer on the back of the fantastic Mt Carlton/SilverHill deposit has advanced significantly during the past 12 months. The company has progressed within ashort space of time and, if one turns their mind back 2 years, Conquest was then a pure explorationcompany with a market capitalization of only around A$ 3m.

Conquest’s stated aim is to add value to its projects and to create wealth for our stakeholders through thecost-effective discovery and subsequent development of mineral resources. Actions speak loudest and sincethe discovery of the Silver Hill deposit 2 years ago we have made some rapid progress overall. Ourdiscovery at Mt Carlton could well be one of the more significant recent gold discoveries globally and at atime when gold is at near record prices. We still have much work to do and challenges ahead of us but wehave a robust strategy that we are executing to plan.

Our targets include completion of the pre-feasibility study on the Mt Carlton project and re-designating ourresource from inferred/indicated to measured. In addition, we have a growth profile that should see usproducing in excess of 200,000 ounces (gold equivalent) per annum by 2010 and, in the lead up toproduction, an expected increase in market capitalisation.

I am proud to work with our team and to serve shareholders who support us in what only can be describedas an exciting and challenging job of building a modern Australian mining company.

Our employees can feel proud to be part of a vibrant, successful company which is providing secure jobsand expanded career opportunities. The communities in which we operate can feel confident that we aremaking a positive contribution to society and take our environmental and social responsibilities veryseriously.

I would like to thank my fellow Directors for their invaluable contribution to our decision making and thehealthy and constructive direction and support they provide our management team.

I am pleased with our achievements in sustaining development in the last year and going forward, we aim tobe an industry-leading company in this area and to work closely with all of our stakeholders.

John TerpuManaging DirectorPerth, Western Australia

24 September 2008

Managing Director John Terpu with Senior FieldManager Paul Szabo, who played an important roleIn the discovery of Silver Hill.

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REVIEW OF OPERATIONS

OVERVIEW

During the year exploration drilling increased resources in the Silver Hill deposit by 45% for an additional 15million ounces of silver and 350,000 oz of gold, equivalent to 650,000 ounces of gold. The Silver Hill Depositis now estimated to be 23.1 million tonnes at 1.70 g/t gold, 61 g/t silver, and 0.29% copper. Total Mt CarltonProject Resources (Silver Hill, Mt Carlton, Mt Carlton-Western Lodes & Herbert Ck east) are now estimatedto be 25 million tonnes at 1.70 g/t gold, 60 g/t silver, and 0.28% copper for contained 1.35 million ouncesgold, 48 million ounces silver and 70,000 tonnes copper. A milestone of 2.7 million oz gold equivalentresources has now been reached.

A Regional Joint Venture Agreement was signed with Gold Fields Australasia to undertake exploration onthe tenements, but outside of a 7km

2exclusion zone which surrounds the existing deposits. Gold Fields is

well advanced in its first year program and on track to complete its $5 million expenditure commitment.

Conquest has also pressed ahead with development studies, having completed a conceptual study andsuccessfully recovered metals using flotation and the Albion process. Further metallurgical testworkprograms are underway to refine flotation methodology and to examine bacterial leach testwork on flotationconcentrate. Results from this ammenibility testwork are expected in September 2008. The processes beinginvestigated offer the potential for comparison of recoveries and capex to the current development model.

The company has appointed an experienced mining engineer as Chief Operating Officer to drive thedevelopment studies forward, and to assemble the team required for completion of feasibility studies.

Conquest Mining spent $6.6 million on exploration programs during the 2007-2008 financial year andcompleted over 35,000 metres of drilling.

EXPLORATION

Conquest has a focus on metals exploration in Queensland which is a major producer of copper, lead, zinc,and silver. More than half of all Australian production of these metals comes from Queensland and also 10%of gold.

More than 20 million ounces of gold has been discovered in the Central North Queensland Goldfields (Figurebelow). The discovery of the Silver Hill deposit by Conquest’s exploration team at its Mt Carlton Projectindicates that substantial potential still exists.

Figure 1: Tenement Location Map, Central North Queensland Goldfields, showing the location of MajorMines and Population Centres

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Conquest currently has 18 tenements in the Central Queensland area, of which 14 are granted and 4 areunder application. These aggregate 3,501km

2which comprises 1,074 sub-blocks.

Mt Carlton (Conquest 100% + Gold Fields Royalty) 350 sub-blocks – 1,141 km2

Other Exploration Projects (Conquest 100%) 724 sub-blocks – 2,360 km2

Conquest manages its exploration programs from a branch office in Townsville, and has its head office inPerth. The coastal region south of Townsville boasts excellent infrastructure with established towns, roads,railways, water supplies, communications and power stations nearby.

Mt Carlton

The Silver Hill deposit is by far the most significant of four discoveries in the Mt Carlton region and nowconstitutes 92% of project resources. It is the most significant gold discovery in North Queensland in the lastdecade, and has unlocked substantial exploration potential for the Bowen Basin and the Central NorthQueensland Goldfields.

Significant intersections during the year have included 36.2m @ 23g/t gold, 112g/t silver, and 1.97% copperin hole HC07RCD378 from 68.8m depth; 23.9m @ 20.4g/t gold, 72g/t silver, and 1.51% copper in holeHC07RCD377 from 90.1m depth; 72m @ 4.4g/t gold, 15g/t silver, and 0.19% copper in hole HC07RC302from 56m depth. All lie within the current proposed open pit.

Silver Hill Deposit Resources

The Silver Hill Deposit has continued to grow with the extensive drilling programs adding 45% to insituresources of gold, silver and copper.

Resource estimates were completed for the Silver Hill Deposit by consultants Hellman & Schofield Pty Ltd inApril 2008. A combined Indicated and Inferred Resource of 23.1 million tonnes at 1.70 g/t gold, 61 g/tsilver, and 0.29% copper was estimated based on a metal value cut-off of $20/tonne. The $20/tonne(~0.86g/t gold equivalent) cut-off was calculated using commodity prices of A$850 per ounce gold, A$15 perounce silver, and A$5,500 per tonne copper.

Mt Carlton Project Total Resources

Following completion of the resource estimate for the Silver Hill Deposit, Mt Carlton Project resourceestimates now total 25 million tonnes at 1.72 g/t gold, 60 g/t silver, and 0.28% copper for contained 1.4million ounces gold, 48 million ounces silver and 70,000 tonnes copper for totals of 1,377,000 oz gold, 48.24million oz silver and 70,240 tonnes copper (Table 1). Using long term forecast metal prices of $A850 perounce gold, $A15 per ounce silver, and $A5500 per tonne copper, these resources total 2.7 million ouncesgold equivalent (Table 2).

In addition, Hellman and Schofield have reported that a number of areas have sufficient sample density for alevel of confidence equated with a JORC Measured resource. Final review of QAQC (quality control) mayallow such reporting in the near future.

The increase in total resources is an indication of the success of the Silver Hill Deposit drill programsundertaken during the last half of 2007, which saw completion of 20,000 metres of RC and HQ3 diamondcore. This drilling located further high-grade gold intersections beneath V2 Hill at depth, and a substantialincrease in silver mineralisation at Area 39.

The increase in resources during the last year is illustrated below in Figures 2 to 4 which show the March2007 Deposit Model through to the current deposit model at April 2008.F

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Figure 2: Silver Hill Deposit Model – March 2007, with all drill holes to December 2006.

Figure 3: Silver Hill Deposit Model – September 2007.

Figure 4: Silver Hill Deposit Model – April 2008, View facing South. Deposit width 1.25 km.

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Table 1: Mt Carlton Project Total Resources – April 2008

Notes: Mt Carlton Western Lodes Resource was estimated by sectional polygonal methods. Herbert Creek East and Mt Carlton wereestimated by Kriging. Silver Hill Deposits were estimated using Multiple Indicator Kriging by Hellman & Schofield

Table 2: Mt Carlton Project Resources Growth

Note: Calculated Gold Equivalent grade is based on 1 gram gold = 57 grams silver = 0.5% copper.

A Whittle 4D pit optimised resource was calculated using the Hellman and Schofield block model data andmetal prices. Using operational costs derived from the Albion testwork, the pit optimisation indicated that11.6 million tonnes of resource was extractable with a strip ratio of 4.5. However, the pit optimisation alsoshowed that small improvements in mine scheduling or mill recovery would allow an increase in extractableresource to 15 millions tonnes due to the favourable geometry of the deposit (Figure 5).

Figure 5: Whittle Optimised Pit and Deposit, View facing West,Maximum Pit width 600m.

Tonnes Gradeg/t Au

GoldOunces

Gradeg/t Ag

SilverOunces

Grade% Cu

Coppertonnes

Silver Hill Deposit 23,100,000 1.70 1,263,000 61 45,000,000 0.29 66,700

Mt Carlton 966,000 1.35 42,000 38 1,090,000 0.345 3,400

Mt Carlton - Western Lodes 558,000 1.49 26,700 120 2,100,000 n/a 0

Herbert Creek East 351,000 2.17 24,500 4.2 47,000 n/a 0

Total Resources 25,000,000 1.70 1,350,000 60.3 48,200,000 0.28 70,000

January July March September April GoldTonnes

2006 2006 2007 2007 2008 Equivalent

GOLD 94,000 oz 308,000 oz 857,900 oz 1,024,800 oz 1,353,000 oz 1,353,000 oz

SILVER 3,200,000 oz 13,200,000 oz 20,967,000 oz 33,437,000 oz 48,200,000 oz 846,000 oz

COPPER 4,500 t 25,000 t 38,523 t 55,800 t 70,000 t 454,000 oz

TOTAL 2,650,000 oz

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Figure 6: Drill Holes and Deposit Outline – with hole collars coloured by gold equivalent grade x intersectionmetre width

Since discovery of the Silver Hill Deposit, Conquest has completed 47,000m of Reverse Circulation drillingand 23,000m of HQ3 diamond core drilling. Exploration drilling has continued with a focus on extending theresource to the west during 2008 (Figure 6). The company has commenced pre-feasibility studies toestablish development parameters for the current resources. Exploration at Mt Carlton has delivered theseresources at an exploration cost of $6 per ounce of gold equivalent compared with an Australian average of$60 to $70 per ounce for grass-roots exploration.

Metallurgy

Gold (which accounts for more than half the resource value) occurs either as free gold, or with silver inelectrum, or in sulphide minerals including pyrite. Diagnostic testwork on a composite concentrate sampleshowed that 23% of gold was free and cyanide recoverable, and is in line with previous testwork whichrecovered up to 30% gold by a gravity circuit and amalgam.

A substantial number of flotation tests have been completed on composite samples aimed at maximisingrecovery. Rougher flotation has achieved high recoveries of copper, gold, and silver to maximum values of97%, 95%, and 92%. Further testwork showed that 25% of the gold and silver was reporting in a pyriteconcentrate. The balance was in an enargite-dominated concentrate, which had high arsenic levels abovenormal refinery limits. A number of commercial technologies have been developed for the treatment of suchrefractory ores, and include Pressure Oxidation, Bacterial Leaching (which includes the Gold Fields BIOXprocess), and the Albion Process. During the year the company received advice on these options, andembarked on test programs with the Albion Process and Bacterial Leaching.

Core Resources completed Albion testwork on a composite sample of HQ diamond drill core. Copperrecovery of 89.1% was achieved using acid leaching and solvent electrowin extraction (SXEW). Cyanideleaching of the Albion leach oxidised residue returned 88% gold and 65% silver recovery. This clearlydemonstrated the Albion process can successfully recover these metals. Core Resources hasrecommended that the next phase of testwork be conducted on expected ROM (run of mine) grade rougherand cleaner concentrates to establish three baseline performance tests.

The company has also commenced a bacterial leach program to establish whether Silver Hill flotationconcentrate is amenable to oxidation by a range of bacterial species which have already been used inmineral extraction processes. The results of this amenability testwork will allow evaluation of processoptions.

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Conceptual Study Completed

A conceptual study was completed for the company by AARC consultants to examine the Albion Process asa development model for the project. As a result of the recommendations, a pre-feasibility study has nowcommenced with the task of completing preliminary engineering plans and defining costs to 25% confidencelevel. This study is due for completion by the end of 2008.

It is anticipated that at completion of this study enough information will have been generated from themetallurgical testwork and engineering studies to allow a decision on the preferred development path.

Gold Fields Regional Joint Venture

Gold Fields Australasia Pty Ltd (GFA) and Conquest last year concluded a joint venture agreement over 8contiguous exploration tenements – the Regional JV Area, but excluding the Mt Carlton Project of 7 km

2..

GFA has a pre-existing 3% gross revenue royalty on production from its interest in Conquest’s 100%owned Mt Carlton tenements.

GFA can earn a 51% interest in the Regional JV Area subject to completing 150,000m of drilling within threeyears. Initially, it is obliged to spend A$5m during the first year of the agreement in order to progress to thedrilling requirement. On completion of the drilling requirement (150,000m) GFA can increase its interest to75% by paying Conquest an amount based on expenditure incurred and an independently determined NetPresent Value of the Regional JV Area at that time. Upon satisfying the drilling requirement, GFA also hasan option to acquire a 50% interest in the Mt Carlton Project by paying an amount based on theindependently determined NPV of the Mt Carlton Project at that time.

In summary the Regional JV with GFA allows Conquest’s shareholders:

to retain all the value it has created out of the Silver Hill & Mt Carlton deposits; to share in the upside of any major discovery by GFA in the wider Mt Carlton area; to pursue a dual path of becoming a producer, via development of the Silver Hill deposit, whilst

retaining the ability to aggressively explore the wider Mt Carlton area; and to share in the expert knowledge and support that Gold Fields can provide.

During the year GFA has completed substantial exploration programs including helicopter electromagnetic(EM) geophysical survey, ground-based gravity survey, ground-based induced polarisation (IP) electricalgeophysical survey, soil sampling surveys with geochemical multi-element analysis, and extensivegeological reconnaissance to generate new targets for drilling. GFA have also completed 20 deepprecollared diamond holes and have 20 staff including 5 geologists dedicated to field work on the project.

Collinsville Regional Exploration

Conquest has a substantial regional land holding covering about 1,700km2. The ground encloses new

epithermal gold targets along with several large-scale porphyry-related copper-gold targets. Much of theexploration in the 1970’s was only for copper or base metals and so no precious metal data exists. Morerecent exploration in the 1980’s focused on gold and epithermal deposits and the exploration decisionsappear to be strongly influenced by the results of largely ineffective stream sediment sampling. Accordingly,previous explorers had conducted little follow-up work and much of the Connors Arch and Bowen Basin areaaround Collinsville has received little attention. However, the recent success by Conquest on the Mt Carltontenements with identification of a new camp or mineral field has lent support to our exploration team’s beliefthat this under-explored region will host world-class deposits.

During the last year Conquest has been focused on delivering value to share holders through advancementof the Mt Carlton Project. The company has also secured excellent value for its shareholders through theGold Fields Regional Joint Venture, and will consider the advancement of the other regional explorationtenements through a combination of joint venture and sole-funded programs.

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DIRECTORS’ REPORT

1. Directors and Company Secretary

The names and particulars of the qualifications, experience and special responsibilities of the Directors andCompany Secretary in office at any time during or since the end of the financial year are:

Richard Krasnoff BA (Econ), MBA (Harvard), GAICDNon-Executive Director (Appointed 28 October 2004)Chairman (Appointed 12 May 2006)

Mr Krasnoff was previously a Group Director of E-Commerce and a member of the Executive Committee atWesfarmers reporting directly to former Managing Director Michael Chaney. He spent 10 years consultingto top-tier companies in both Australia and Canada for McKinsey & Co (including 4 years asPrincipal/partner). He has an MBA from the Harvard Business School and has extensive experience indeveloping growth and performance-improvement strategies for industrial and resource companies. MrKrasnoff is a director of Grange Resources Ltd (since June 2005) which is listed on the ASX.

John Terpu MAICDManaging Director (Appointed 15 June 1999)

Mr Terpu has over 15 years of commercial and management expertise gained in a broad range of businessand investment activities. He has been involved in the mining and exploration industry through theacquisition and investment in a number of strategic exploration and mining projects. Mr Terpu has a widerange of contacts in the exploration and mining investment community. Mr Terpu did not hold anydirectorships in other listed companies in the previous 3 years.

Bruno Firriolo CPA, B.Bus (Acctg)Executive Director (Appointed 17 November 2003)Company Secretary (Appointed 5 April 2002)

Mr Firriolo is a Certified Practising Accountant who has held the office of Company Secretary with ConquestMining Limited since April 2002 and was appointed an Executive Director in November 2003. He has been apartner with the accounting firm Cleaver & Associates since April 1991 dealing with all aspects of accountingand taxation. For many years Mr Firriolo offered specialised taxation consulting services to other accountingfirms as well as major corporate clients. Mr Firriolo’s experience in financial and corporate matters issupplemented by a period of co-ownership in a national wholesale business. Mr Firriolo did not hold anydirectorships in other listed companies in the previous 3 years.

Joseph Radici, CPA, B Bus (Acctg)Non-Executive Director (Appointed 12 May 2006)

Mr Radici is a Certified Practising Accountant (CPA) and Fellow of the Taxation Institute of Australia. He hasoperated an accounting practice in Western Australia since 1983, presently trading as J L Radici &Associates. His client base includes large business and corporations.

Since 1995 he has been chairman of a number of unlisted public companies which have specialised in landsubdivisions throughout Perth, Western Australia as well as developments overseas. In addition to skillsgained on serving on company boards, Mr Radici has a wide network of entrepreneurial associations and isa respected member of Perth's business community. Mr Radici did not hold any directorships in other listedcompanies in the previous 3 years.

Douglas Stewart, BSc, FAusIMM, FAIGNon-Executive Director (Appointed 30 November 2007)

Mr Stewart has over 35 years experience in the mining industry in a variety of geological and engineeringroles. His experience covers a wide range of commodities. Mr Stewart has had managementresponsibilities on mining operations in Africa, Canada and New Zealand in both open pit and undergroundmines.

Mr Stewart was formerly an Associate Director of NM Rothschild & Sons (Australia) performing technicaldue diligence and valuations for potential investments for Rothschild Golden Arrow Fund as well as raisingover $100 million for the fund. Mr Stewart was most recently the Managing Director of Territory ResourcesLimited until July 2007, where he played a principal role in managing that company through IPO and intoproduction. His work included undertaking a feasibility study, capital raising, regulatory approvals,construction of port facilities, commercial agreements and appointment of suitable personnel to plan andoperate the mine. Mr Stewart held directorships in other listed companies in the previous 3 years -Territory Resources Ltd (March 2005 to July 2007) and Grange Resources Ltd (October 2007 to present).

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DIRECTORS’ REPORT

2. Directors’ Meetings

The following table sets out the number of meetings of the Company held during the year ended 30 June2008 and the number of meetings attended by each Director.

During the year 11 Directors meetings were held.

The number of meetings at which Directors were in attendance is as follows:

Board Meetings Audit Committee Meetings

A B A B

R Krasnoff 11 11 2 2J Terpu 11 11 - -B Firriolo 11 11 2 2J Radici 11 11 2 2D Stewart 7 7 - -

A – Number of meetings held while in officeB – Meetings attended

3. Corporate Governance

The ASX Listing Rules require listed companies to include in their annual report details of specific aspects oftheir corporate governance practices, and disclose and explain any departures from the Best PracticeRecommendations contained in the ASX Corporate Governance Council’s “Principles of Good CorporateGovernance and Best Practice Recommendations” 1

stEdition March 2003.

The Board of Conquest is committed to high standards of corporate governance and during the 2008financial year maintained its review of the Company’s corporate governance framework to ensure thatappropriate best practices are in place having regard to the Company’s size and operations.

The following documents form the basis of the Company’s corporate governance system and can be viewedin their entirety at the Company’s Website at www.conquestmining.com.au

1. Board Charter2. Audit Committee Charter3. Executive Committee Charter4. Directors’ and Executive Officers’ Code of Conduct5. Performance Evaluation Process6. Code of Business Conduct7. Dealings in Conquest Mining Limited Securities8. Communications Strategy9. Disclosure Policy10. Risk Management and Internal Control Policy

The Managing Director and Chief Financial Officer have made declarations in writing to the board in relationto the Company’s financial report and risk management as required by Recommendations 4.1 and 7.2.

Relevant details of any departures from Best Practice Recommendations are listed in the table at the end ofthis section.

The Board of Directors

Details of the skills, experience and expertise of each of the directors in office at the date of this report, andtheir terms of office, are included in the “Directors and Company Secretary” section of the director’s report.Remuneration policies are included in the “Remuneration Report”.

Independence

An independent Director is a non-executive Director (i.e. is not a member of management) and:

is not a substantial shareholder of the Company or an officer of, or otherwise associated directly with,a substantial shareholder of the Company;

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DIRECTORS’ REPORT

3. Corporate Governance (continued)

within the last three years has not been employed in an executive capacity by the Company or itsformer subsidiaries, or been a Director after ceasing to hold any such employment;

is not a principal or employee of a professional adviser to the Company or its former subsidiarieswhose billings exceed five per cent of the adviser's total revenue. A Director who is a principal oremployee of a professional adviser will not participate in the provision of any service to the Companyby the professional adviser;

is not a significant supplier or customer of the Company or its former subsidiaries, or an officer of orotherwise associated directly or indirectly with a significant supplier or customer. A significantsupplier is defined as one whose revenues from the Company exceed five per cent of the supplier'stotal revenue. A significant customer is one whose amounts payable to the Company exceed five percent of the customer's total operating costs;

has no material contractual relationship with the Company or its former subsidiaries other than asa Director of the Company;

is free from any interest and any business or other relationship which could, or could reasonablybe perceived to, materially interfere with the Director's ability to act in the best interests of theCompany.

The Board considers that Messrs Krasnoff, Radici and Stewart met the above criteria to be classed asindependent Directors.

Independent Professional Advice

Procedures are in place to allow any Director or Committee of the Board to seek external professional adviceas considered necessary, at the Company's expense.

Audit Committee

The members of the Audit Committee, at any time during or since the end of the financial year, were MessrsKrasnoff, Firriolo and Radici. Their relevant expertise and experience are detailed in the “Directors andCompany Secretary” section of the Directors’ report. There were 2 meetings of the Audit Committee heldduring the reporting period.

Departures From Best Practices Recommendations

PrincipleRef

RecommendationRef

Notification of departure and explanation

2 2.1 In the period 1 July 2007 to 29 November 2007 only two directors satisfiedthe test of independence as set out in the ASX CGC PracticeRecommendations (or were otherwise considered to be independent bythe Company).During that period the number on the Board at any one time was 4. Given thesize and scope of the Company’s operations the Board considered that it wasappropriately structured to discharge its duties in a manner that was in the bestinterests of the Company and its shareholders from both a long-term strategicand day-to-day operations perspective. The Board was of the view that therewas an appropriate balance between independent representation andmaintaining sufficient relevant experience for the Board to fulfil its objectives.From the appointment on 30 November 2007 of an additional independent non-executive director, the Board comprised a majority of independent directors.

2 2.4 There was no Nomination Committee.In the Board’s view there are no efficiencies to be gained by establishing aseparate Nomination Committee. The Board’s Executive Committee carries outthe functions of the Nomination Committee.

4 4.3 The Audit Committee consists of three members, one of whom is notindependent.The majority of the Audit Committee comprises 2 non-executive, independentDirectors.The Board considers that the current structure of the Audit Committee issufficient to properly fulfil the objectives of the Committee.

9 9.2 There was no Remuneration Committee.In the Board’s view there are no efficiencies to be gained by establishing aseparate Remuneration Committee. The Board’s Executive Committee followsappropriate procedures to evaluate levels of remuneration.

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DIRECTORS’ REPORT

4. Principal Activities

As in the previous year, the principal activities of the Company during the year were mineral exploration, withcurrent emphasis being on progressing the Mt Carlton gold/silver/copper development.

5. Operating and Financial Review

The profit from ordinary activities of the Company for the financial year ended 30 June 2008 was $459,800(2007 - Loss $3,160,928).

The Company spent $6.6 million on exploration programs during the 2007 – 2008 financial year,predominantly on exploring for gold, silver and copper at the Company’s Mt Carlton tenement in NorthQueensland. Part of this expenditure is attributed to pre–feasibility studies to enable the Company toevaluate the commercial prospects for its known resources and prepare development and processingmodels.

The Company wrote off $326,000 exploration expenditure in respect of tenements which were no longersignificant to its operations and were relinquished.

As at 15 April 2008 the Company had discovered 2.65 million ounces of gold equivalent resources at its MtCarlton Project (including over 1.3 million ounces gold).

Further details of operations undertaken during the year are set out in the accompanying Review ofOperations Report on the pages immediately preceding the Directors’ Report.

6. Significant Changes in the State of Affairs

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

The Company received $23,408,000 from the issue of fully paid ordinary shares pursuant toplacement and conversion of options, before the costs associated therewith.

On 24 July 2007 the Company entered into a Farmin/Joint Venture agreement with Gold FieldsAustralasia Pty Ltd (“GFA”), a wholly owned subsidiary of Gold Fields Limited, the world’s 4

thlargest

gold producer. The agreement allows for the accelerated exploration of an area of approximately1,640 sq kms surrounding the Company’s Mt Carlton project. In order to earn a 51% interest in thesurrounding area, GFA must spend at least $5 million within the first 12 months and then continue onto complete at least 150,000 metres drilling within 3 years. Upon satisfying the drilling requirement,GFA may increase its interest by acquiring a further 24%, and also has the option to acquire a 50%interest in the Mt Carlton project by paying 50% of the NPV at that time.

Up to 26 May 2008 the Company held listed securities of 16,000,000 fully paid ordinary shares and16,000,000 2012 options in Ellendale Resources NL (“Ellendale”). The Ellendale shares resultedfrom the sale during the previous financial year of various exploration tenements to an unlistedCompany for shares and options in the unlisted company for consideration of $100,000. Theholdings in that unlisted company were later exchanged for the Ellendale shares. Ellendale optionswere acquired at a cost of $160,000 in that Company’s June 2007 entitlements issue. Pursuant to ascheme of arrangement, on 26 May 2008 Ellendale merged with Hawthorn Resources Limited(“Hawthorn”). The fair value of the Hawthorn securities received as consideration by the Company inexchange for its Ellendale holdings exceeded the previously mentioned costs by $1,868,000, andthe resulting profit is brought to account in the current financial year in accordance with applicableaccounting policies.

The merger between Ellendale and Hawthorn resulted in the Company receiving 5 Hawthornordinary shares for every 2 Ellendale ordinary shares held, and 8 Hawthorn ordinary shares forevery 5 Ellendale options held. Upon conversion, the Company held a total of 65,600,000 Hawthornordinary shares giving it a stake of 5.66% in Hawthorn. Conquest’s holding in Hawthorn isdetermined by reference to the quoted last sale price at balance date. Since the investment iscategorised as an asset held for sale, the change in the fair value of the holding is carried to the FairValue Reserve which is a separate component of equity.

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DIRECTORS’ REPORT

7. Dividends

Up until the date of this report, no dividend has been declared or paid by the Company and the Directors donot recommend payment of a dividend.

8. Events Subsequent to Balance Date

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

9. Likely Developments

The Company will focus on the exploration of its portfolio of mining tenements and the acquisition of newprojects and/or assets with particular emphasis on progressing the Mt Carlton gold/silver/copperdevelopment.

Further information about likely developments in the operations of the Company and the expected results ofthose operations on future financial years has not been included in this report because disclosure of theinformation would be likely to result in unreasonable prejudice to the Company.

10. Environmental Regulation and Performance

The Group’s operations were subject to environmental regulations under both Commonwealth and Statelegislation in relation to its exploration activities.

The Directors are not aware of any breaches during the period covered by this report.

11. Directors' Interests

The relevant interest of each Director in the share capital of the Company as at the date of this report is:

DirectorFully PaidOrdinaryShares

R Krasnoff 870,000J Terpu *19,453,132B Firriolo 1,356,250J Radici 649,065D Stewart 43,000

*Included in the abovementioned are 15,209,000 shares in relation to which Mr Terpu’s view is that heretains an equitable interest. The ownership of those shares is the subject of current legal proceedingsagainst ANZ Bank.

12. Share Options

Options Granted to Directors and Executive Officers of the Company

During or since the end of the year there were no options over unissued ordinary shares in Conquest MiningLimited granted to Directors and Executive officers of the Company as part of their remuneration.

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DIRECTORS’ REPORT

12. Share Options (continued)

Unissued Shares Under Option

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

Expiry date Exercise price Number of Shares5 December 2008 $0.20 1,500,00016 January 2009 $0.20 3,000,000

22 June 2009 $0.20 200,00022 June 2010 $0.50 400,000

17 August 2009 $0.80 50,000

The Options do not entitle the holder to participate in any share issue of the Company or any other bodycorporate.

During or since the end of the financial year the Company issued Ordinary Shares as a result of the exerciseof Options as follows:

Exercise date Exercise price Number of Shares10 July 2007 $0.20 450,00020 July 2007 $0.20 200,000

30 August 2007 $0.20 800,0003 December 2007 $0.20 500,000

13. Indemnification and Insurance of Officers

The Company resolved that it would indemnify its current Directors and Officers. Coverage in respect of thisindemnity has been provided via a Directors and Officers insurance policy negotiated at commercial terms.

Excluding the matter noted above the Company has not, during or since the financial year-end, in respect ofany person who is, or has been an officer or auditor of the Company or a related body corporate:

indemnified or made any relevant agreement for indemnifying against a liability incurred as an officer,including costs and expenses in successfully defending legal proceedings; or

paid or agreed to pay a premium in respect of a contract insuring against a liability incurred as an officerfor the costs or expenses to defend legal proceedings.

14. Remuneration Report - Audited

14.1 Principles of compensation - audited

All compensation/remuneration arrangements for Directors and Executive Officers are determined at Boardlevel after taking into account the current competitive rates prevailing in the market.

Performance Evaluation

The Chairman is responsible for undertaking a continuous review of the performance and contribution ofindividual directors and Executive Officers. The Board will continually review its evaluation processes inorder to ensure the effectiveness of the board and any committees to which the Board delegated its power.

Remuneration Policies

Responsibility for the Company’s remuneration policies has been delegated by the Board to the ExecutiveCommittee, which will:

Determine appropriate compensation arrangements for the directors, the Managing Director, andemployees, and make appropriate recommendations to the Board;

Determine the executive remuneration policy; and Review and submit to the Board equity-based plans.

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DIRECTORS’ REPORT

14. Remuneration Report – Audited (continued)

Overall Director Remuneration

Directors shall receive remuneration for their services as Directors within fixed annual limits approved byshareholders. The Executive Committee recommends the actual payments to Directors and the Board isresponsible for ratifying any recommendations if appropriate. The maximum aggregate Directors’ feesapproved by shareholders is currently $500,000. Further, shareholders must approve the framework for anyequity schemes and if a Director is recommended for being able to participate in an equity scheme, thisparticipation must be approved by the shareholders.

Director RemunerationMain principles

The remuneration policy reflects the Company’s obligation to align Executive Directors' remuneration withshareholders' interests and to engage appropriately qualified executive talent for the benefit of the company.The main principles of the policy are:

Reward reflects the competitive global market in which the company operates. Individual reward should belinked to performance criteria; and

Executives should be rewarded for both financial and non-financial performance.

Elements of Remuneration

The Executive Directors’ total remuneration consists of the following:

Salary - salaried Executive Directors receive a fixed sum payable fortnightly in cash; Bonus - salaried Executive Directors are eligible to participate in a bonus scheme if deemed appropriate; Superannuation – salaried Executive Directors are eligible to participate in superannuation schemes; Long Term Incentives - Executive Directors may participate in share option schemes with the approval of

shareholders; Directors’ fees – Executive Directors are entitled to be paid Directors’ fees; and Other benefits - Executive Directors are entitled to have their indemnity insurance paid by the Company.

The non-executive Directors total remuneration consists of the following:

Directors fees – non-executive Directors are entitled to be paid directors fees; Superannuation – non-executive Directors are entitled to participate in superannuation schemes; and Other benefits – non-executive Directors are entitled to have their indemnity insurance paid by the Company.

14.2 Directors’ and executive officers’ remuneration – audited

During the year there were no executive officers, other than the Managing Director and a Director who is theCompany Secretary, for whom disclosure of remuneration is required. Details of the nature and amount ofeach major element of the remuneration of each Director of the Company are:

ShortTerm

ShortTerm

PostEmployment

Sharebased

payments

OtherLongTerm

DirectorsBase

Remuneration

$

Non-cashBenefits

$

SuperannuationContributions

$

Value ofOptions

$ $

Total

$

Value ofOptions as aProportion of

RemunerationR Krasnoff 2008 - - 40,000 - - 40,000 -

2007 - - 26,203 - - 26,203 -J Terpu 2008 233,164 34,716 20,721 - 3,992 292,593 -

2007 84,538 3,974 172,394 2,466,375 14,792 2,742,073 89.95%B Firriolo 2008 161,813 - 21,010 - - 182,823 -

2007 118,464 - 24,984 - - 143,448 -J Radici 2008 - - 30,000 - - 30,000 -

2007 - - 17,989 - - 17,989 -D Stewart 2008 - - 29,166 - - 29,166 -TOTALS 2008 394,977 34,716 140,897 - 3,992 574,582 -

2007 203,002 3,974 241,570 2,466,375 14,792 2,929,713 -

Proportion of above remuneration performance related %: None

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DIRECTORS’ REPORT

14. Remuneration Report (continued)

14.3 Equity instruments

All options refer to options over ordinary shares of Conquest Mining Limited, which are exercisable on a one-for-one basis.

Options and rights over equity instruments granted as compensation.

During or since the end of the financial year, the Company did not issue options over unissued ordinaryshares in Conquest Mining Limited to Directors of the Company as part of their remuneration.

Options issued to Directors at any time and exercised during or since the end of the financial year were asfollows:

Name Position Number of OptionsExercised

Exercise Date Exercise Price

Mr R Krasnoff Chairman 500,000 3 December 2007 $0.20

Options are issued by the Company as an appropriate form of remuneration to provide Directors withincentives to maximise returns to shareholders.

14.4 Analysis of options and rights over equity instruments granted as remuneration – audited

There were no options vested or expired during the year or options unexercised at balance date granted asremuneration to Directors of the Company.

14.5 Service Agreements - audited

Remuneration and other terms of employment for Messrs Terpu and Firriolo are formalised in serviceagreements as discussed below:

J Terpu – Managing Director Term of agreement – 3 years commencing 19 October 2006; Base annual salary effective at 30 June 2008 was $275,000, inclusive of superannuation, reviewed annually; Payment of a termination benefit on early termination by the Company, other than for incompetence, criminal

conviction or extended incapacity equal to the base salary for the remaining term of the agreement.

B Firriolo – Executive Director/Company Secretary Term of agreement – 3 years commencing on 1 December 2006; Base annual salary effective at 30 June 2008 was $165,000, inclusive of superannuation, reviewed annually; Payment of a termination benefit on early termination by the Company, other than for incompetence, criminal

conviction or extended incapacity equal to 3 months base salary for the remaining term of the agreement.

14.6 Other Transactions

Where Directors had other transactions with the Company, particulars of those transactions, which do notform part of this Remuneration Report, are shown at Note 22 to the audited Financial Statements.

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DIRECTORS’ REPORT

15. Auditor’s Remuneration

The Company Consolidated The Company2008 2007 2007

$ $ $Auditors of the Company – KPMGAudit services 42,920 38,300 38,300Other assurance services - 2,410 2,410

Total 42,920 40,710 40,710

16. Lead Auditor’s Independence Declaration

The lead auditor’s independence declaration is set out on the following page and forms part of the DirectorsReport for the year ended 30 June 2008.

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

John TerpuManaging DirectorPerth, Western Australia24 September 2008

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DIRECTORS’ DECLARATION

In the opinion of the Directors of Conquest Mining Limited (the “Company”):

(a) the financial statements and notes (and the remuneration disclosures that are contained in theRemuneration Report section of the Directors’ Report set out on pages 15 to 17), are inaccordance with the Corporations Act 2001, including:

(i) giving a true and fair view of the financial position of the Company as at 30 June 2008and of its performance for the financial year ended on that date; and

(ii) complying with Australian Accounting Standards (including the Australian AccountingInterpretations) and the Corporations Regulations 2001.

(b) the remuneration disclosures that are contained in the Remuneration Report section of theDirectors’ Report comply with Australian Accounting Standard AASB 124 Related PartyDisclosures, the Corporations Act 2001 and the Corporations Regulations 2001; and

(c) there are reasonable grounds to believe that the Company will be able to pay its debts as andwhen they become due and payable.

The Directors have been given the declaration by the Managing Director and Chief Financial Officer requiredby section 295A of the Corporations Act 2001 for the financial year ended 30 June 2008.

Signed in accordance with a resolution of the Directors made pursuant to section 295(5) of the CorporationsAct 2001.

On behalf of the Board

John TerpuManaging DirectorPerth, Western Australia

24 September 2008

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INCOME STATEMENTSFor the year ended 30 June 2008


$ $ $Profit on sale of available-for-sale listedinvestments 6 1,868,000 225,305 225,305Other income 6 161,107 149,525 149,525Financial income 6 1,974,380 690,278 689,221

4,003,487 1,065,108 1,064,051

Expenses

Exploration and evaluationexpenditure written offLoss on sale of tenementsDepreciation and amortisation expenseDepreciation capitalised to carrying valueof exploration and evaluation expenditureAdministration expensesMandate completion fee- cash component- fair value of shares issued in lieu of cashFair value of conditional entitlements totake up options granted as corporateretainer incentive feesFair value of options granted as employeeremunerationChange in value of held-for-trading listedinvestments

14

13

326,656-

153,628

(126,151)1,821,204

167,727875,000

587,850

19,463

15,415

639,86948,22691,086

(65,401)1,501,653

--

-

2,033,140

(7,302)

560,03812,89391,086

(65,401)1,500,307

--

-

2,033,140

108,151Total expenses 3,840,792 4,241,271 4,240,214

Profit/(loss) before income tax expense 7 162,695 (3,176,163) (3,176,163)

Income tax benefit 9 297,105 15,235 15,235

Net profit/(loss) for the year 18 459,800 (3,160,928) (3,160,928)

Earnings per share 2008 2007

Basic profit/(loss) per share (cents pershare) 22 0.18 (1.64)Diluted profit/(loss) per share (cents pershare) 22 0.18 (1.64)

The income statements should be read in conjunction with the accompanying notes.

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STATEMENTS OF RECOGNISED INCOME AND EXPENSEFor the year ended 30 June 2008

The Company Consolidated The CompanyNote 2008 2007 2007

$ $ $Change in fair value of available-for-salelisted investmentsTransfer to income statement on sale 17

(889,600)(1,868,000)

2,860,000(173,845)

2,860,000(173,845)

Net income/(expense) recognised directly inequity (2,757,600) 2,686,155 2,686,155

Profit/(loss) for the year 459,800 (3,160,928) (3,160,928)

Total recognised income and expense forthe year (2,297,800) (474,773) (474,773)

Other movements in equity arising from transactions with owners as owners are set out in note 17.

The statements of recognised income and expense should be read in conjunction with the accompanyingnotes.

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BALANCE SHEETAs at 30 June 2008

The Company The CompanyNote 2008 2007

$ $

Current AssetsCash and cash equivalents 23 31,525,367 15,584,123Trade and other receivables 10 502,263 167,031Prepayments 11 9,939 12,249

Total Current Assets 32,037,569 15,763,403

Non-Current AssetsReceivables 10 70,000 90,500Investments 12 2,240,136 3,145,151Property, plant & equipment 13 712,008 686,198Exploration and evaluation expenditure 14 14,672,368 8,430,961

Total Non-Current Assets 17,694,512 12,352,810

Total Assets 49,732,081 28,116,213

Current LiabilitiesTrade and other payables 15 972,672 494,577Employee benefits 16 95,074 66,246

Total Current Liabilities 1,067,746 560,823

Total Liabilities 1,067,746 560,823

Net Assets 48,664,335 27,555,390

EquityShare capital 17 75,216,414 52,416,982Reserves 17 247,715 3,183,227Accumulated losses 18 (26,799,794) (28,044,819)

Total Equity 48,664,335 27,555,390

The balance sheets should be read in conjunction with the accompanying notes.

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STATEMENTS OF CASH FLOWSFor the year ended 30 June 2008

The Company Consolidated The CompanyNote 2008 2007 2007

$ $ $Cash flows from operating activitiesCash receipts from customers 167,250 91,706 91,403Payments to suppliers and employees (1,764,576) (1,483,373) (1,482,027)Cash used in operations (1,597,326) (1,391,667) (1,390,624)Interest received 1,642,537 650,144 647,701Income tax offsets refunded 312,340 - -

Net cash provided by / (used in)operating activities 23 357,551 (741,523) (742,923)

Cash flows from investing activitiesProceeds from the sale of tenements - 430,000 103,000Proceeds from sale of property, plant andequipment 6,681 4,492 4,492Proceeds from sale of available-for-salelisted investments - 300,305 300,305Exploration and evaluation expenditure (6,130,834) (5,030,195) (4,943,046)Acquisition of tenements - - (140,455)Repayments of tenement bonds 20,500 112,500 112,500Acquisition of property, plant andequipment (237,086) (428,114) (428,114)Acquisition of available-for-saleinvestments - (160,000) (160,000)(Investment in)/recovery thereof -controlled entities - - 428,347

Net cash used in investing activities (6,340,739) (4,771,012) (4,722,971)

Cash flows from financing activitiesProceeds from issue of equity securities 17 23,408,000 19,721,923 19,721,923

Transaction costs of issuing shares 17 (1,483,568) (223,500) (223,500)Net cash provided by financingactivities 21,924,432 19,498,423 19,498,423

Net increase in cash and cash equivalents 15,941,244 13,985,888 14,032,529Cash and cash equivalents at beginning ofyear 15,584,123 1,598,235 1,551,594Cash and cash equivalents at end ofyear 23 31,525,367 15,584,123 15,584,123

The statements of cash flows should be read in conjunction with the accompanying notes.

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Notes to the Financial Statements

1. Reporting Entity

The financial statements for the year ended 30 June 2008 relate to Conquest Mining Limited (the "Company")

which is a company domiciled in Australia. Comparative figures, where applicable, relate to the Company

and its former subsidiaries (together referred to as the "Group").

2. Basis of Preparation

(a) Statement of compliance

The financial report is a general purpose financial report which has been prepared in accordance with

Australian Accounting Standards (AASBs) (including Australian Interpretations) adopted by the Australian

Accounting Standards Board (AASB) and the Corporations Act 2001. The consolidated financial report of

the Group and the financial report of the Company comply with International Financial Reporting Standards

(IFRSs) and interpretations adopted by the International Accounting Standards Board (IASB).

The financial statements were approved by the Board of Directors on the date the director’s report and

declaration was signed.

(b) Basis of measurement

The financial statements have been prepared on the historical cost basis with the exception of available-for-

sale financial assets that are accounted for at fair value.

On 17 June 2007, all subsidiary companies were deregistered.

(c) Functional and presentation currency

These financial statements are presented in Australian dollars which is the Company’s functional currency

and the functional currency of the Group.

(d) Use of estimates and judgements

The preparation of financial statements requires management to make judgements, estimates and

assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities,

income and expenses. Actual results may differ from these estimates. Estimates and underlying

assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the

period in which the estimate is revised and in any future periods affected.

There were no significant areas of estimation uncertainty and critical judgements in applying accounting

policies that have had a significant effect on the amount recognised in the financial statements.

3. Significant Accounting Policies

The accounting policies set out below have been applied consistently to all periods presented in these

financial statements, and have been applied consistently by the Company.

(a) Basis of consolidation

(i) Subsidiaries

Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern

the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing

control, potential voting rights that presently are exercisable are taken into account. The financial statements

of subsidiaries were included in the consolidated financial statements from the date that control commenced

until the date that control ceased.

In the Company financial statements, investments in subsidiaries were carried at cost, less impairments.

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3. Significant Accounting Policies (continued)

(ii) Transactions eliminated on consolidation

Intra-group balances, and any unrealised income and expenses arising from intra-group transactions, were

eliminated in preparing the consolidated financial statements.

(b) Exploration and evaluation expenditure

Exploration, evaluation and development costs represent intangible assets and are accumulated in respect

of each separate area of interest. Exploration and evaluation costs are carried forward where right of tenure

to the area of interest is current and they are expected to be recouped through the sale or successful

development and exploitation of the area of interest, or where exploration and evaluation activities in the

area of interest have not 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.

When an area of interest is abandoned or the Directors decide that it is not commercial, any accumulated

costs in respect of that area are written off in the financial period in which the decision is made. Each area of

interest is also reviewed at the end of each accounting period and accumulated costs are written off to the

extent that they will not be recoverable in the future.

Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of

interest are demonstrable, exploration and evaluation assets attributable to that area of interest are first

tested for impairment and then reclassified from intangible assets to mining property and development

assets within property, plant and equipment.

(c) Property, plant and equipment

(i) Recognition and measurement

Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment

losses.

Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-

constructed assets includes the cost of materials and direct labour, any other costs directly attributable to

bring the asset to a working condition for its intended use, and the costs of dismantling and removing the

items and restoring the site on which they are located. Purchased software that is integral to the functionality

of the related equipment is capitalised as part of that equipment.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for asseparate items (major components) of property, plant and equipment.

(ii) Subsequent Costs

The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount ofthe item if it is probable that the future economic benefits embodied within the part will flow to the Companyand its cost can be measured reliably. The costs of the day-to-day servicing of property, plant andequipment are recognised in profit or loss as incurred.

(iii) Depreciation

Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part

of an item of property, plant and equipment. Leased assets are depreciated over the shorter of the lease

term and their useful lives. Land is not depreciated.

The estimated useful lives for the current and comparative periods are as follows:

plant and equipment 3 – 12 years

leasehold improvements 40 years

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(c) Property, plant and equipment (continued)

(iii) Depreciation (continued)

Depreciation methods, useful lives and residual values are reassessed at each reporting date.

(d) Financial instruments(i) Non-derivative financial instruments

Non-derivative financial instruments comprise investments in equity and debt securities, loans and

receivables, cash and cash equivalents, loans and borrowings and trade and other payables.

Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair valuethrough profit and loss, any directly attributable transaction costs, except as described below. Subsequent toinitial recognition non-derivative financial instruments are measured as described below.

A financial instrument is recognised if the Company becomes a party to the contractual provisions of theinstrument. Financial assets are derecognised if the Company’s contractual rights to the cash flows from thefinancial assets expire or if the Company transfers the financial asset to another party without retainingcontrol or substantially all risks and rewards of the asset. Regular way purchases and sales of financialassets are accounted for at trade date, i.e. the date that the Company commits itself to purchase or sell theasset. Financial liabilities are derecognised if the Company’s obligations specified in the contract expire orare discharged or cancelled.

Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayableon demand and form an integral part of the Company’s cash management are included as a component ofcash and cash equivalents for the purpose of the statement of cash flows.

Held-to-maturity investments

If the Company has the positive intent and ability to hold debt securities to maturity, then they are classified

as held-to-maturity. Held-to-maturity investments are measured at amortised cost using the effective interest

method, less any impairment losses.

Available-for-sale financial assets

Available-for-sale financial assets, subsequent to initial recognition, are measured at fair value and changes

therein, other than impairment losses and foreign exchange gains and losses on available-for-sale monetary

items, are recognised as a separate component of equity. When an investment is derecognised, the

cumulative gain or loss in equity is transferred to profit or loss.

Financial assets at fair value through profit or loss

An instrument is classified as at fair value through profit or loss if it is held for trading or is designated as

such upon initial recognition. Financial instruments are designated at fair value through profit or loss if the

Company manages such investments and makes purchase and sale decisions based on their fair value in

accordance with the Company’s documented risk management or investment strategy. Upon initial

recognition attributable transaction costs are recognised in profit or loss when incurred. Financial

instruments at fair value through profit or loss are measured at fair value, and changes therein are

recognised in profit or loss.

Loans and receivables

Loans and receivables are measured at amortised cost using the effective interest method, less any

impairment losses. The collectibility of debts is assessed at reporting date and where required specific

provision is made for any doubtful debts.

Other financial liabilitiesOther financial liabilities comprise loans, borrowings and other payables being measured at amortised costusing the effective interest method.

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3. Significant Accounting Policies (continued)(ii) Share capital

Ordinary SharesOrdinary shares are classified as equity. Incremental costs directly attributable to issue of ordinary shares

and share options are recognised as a deduction from equity, net of any related income tax benefit.

Dividends

Dividends are recognised as a liability in the period in which they are declared.

(e) Impairment

(i) Financial assets

A financial asset is considered to be impaired if objective evidence indicates that one or more events have

had a negative effect on the estimated future cash flows of that asset.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference

between its carrying amount, and the present value of the estimated future cash flows discounted at the

original effective interest rate. An impairment loss in respect of an available-for-sale financial asset is

calculated by reference to its current fair value.

Individually significant financial assets are tested for impairment on an individual basis. The remaining

financial assets are assessed collectively in groups that share similar credit risk characteristics.

All impairment losses are recognised in profit or loss. Any cumulative loss in respect of an available-for-sale

financial asset recognised previously in equity is transferred to profit or loss.

An impairment loss is reversed if the reversal can be related objectively to an event occurring after the

impairment loss was recognised. For financial assets measured at amortised cost, the reversal is

recognised in profit or loss. For available-for-sale financial assets that are equity securities, the reversal is

recognised directly in equity.

(ii) Non-financial assets

The carrying amounts of the Company’s non-financial assets, other than deferred tax assets, are reviewed at

each reporting date to determine whether there is any indication of impairment. If any such indication exists

then the asset’s recoverable amount is estimated.

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its

recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash

flows that largely are independent from other assets and groups. Impairment losses are recognised in profit

or loss. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the

carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other

assets in the unit (group of units) on a pro rata basis.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair

value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their

present value using a pre-tax discount rate that reflects current market assessments of the time value of

money and the risks specific to the asset.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses

recognised in prior periods are assessed at each reporting date for any indications that the loss has

decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates

used to determine the recoverable amount. An impairment loss is reversed only to the extent that the

asset’s carrying amount does not exceed the carrying amount that would have been determined, net of

depreciation or amortisation, if no impairment loss had been recognised.

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3. Significant Accounting Policies (continued)(f) Non-current assets held for sale

Non-current assets (or disposal groups comprising assets and liabilities) that are expected to be recovered

primarily through sale rather than through continuing use are classified as held for sale. Immediately before

classification as held for sale, the assets (or components of a disposal group) are remeasured in accordance

with the Company’s accounting policies. Thereafter generally the assets (or disposal group) are measured

at the lower of their carrying amount and fair value less cost to sell. Any impairment loss on a disposal group

first is allocated to goodwill, and then to remaining assets and liabilities on pro rata basis, except that no loss

is allocated to inventories, financial assets, deferred tax assets and employee benefit assets which continue

to be measured in accordance with the Company’s accounting policies. Impairment losses on initial

classification as held for sale and subsequent gains or losses on remeasurement are recognised in profit or

loss. Gains are not recognised in excess of any cumulative impairment loss.

(g) Employee benefits

(i) Short-term benefits

Liabilities for employee benefits for wages, salaries and annual leave represent present obligations resulting

from employees’ services provided to reporting date and are calculated at undiscounted amounts based on

remuneration wage and salary rates that the Company expects to pay as at reporting date.

(ii) Other long-term employee benefits

The Company’s net obligation in respect of long-term employee benefits is the amount of future benefit that

employees have earned in return for their service in the current and prior periods and are calculated at

undiscounted amounts based on remuneration wage and salary rates that the Company expects to pay as at

reporting date.

(iii) Share-based payment transactions

Share options may be granted to Directors and employees at the Directors’ discretion. The grant date fair

value of options granted is recognised as an employee expense, with a corresponding increase in equity,

over the period in which the grantees become unconditionally entitled to the options. The amount

recognised is adjusted to reflect the actual number of share options that vest, except for those that fail to

vest due to market conditions not being met.

(h) Revenue from services

Revenue from services is recognised in profit or loss in proportion to the stage of completion of the

transaction at the reporting date.

(i) Finance income and expenses

Finance income comprises interest income on funds invested, dividend income, gains on the disposal of

available-for-sale financial assets, changes in the fair value of financial assets at fair value through profit or

loss, foreign currency gains, and gains on hedging instruments that are recognised in profit or loss. Interest

income is recognised as it accrues, using the effective interest method. Dividend income is recognised on

the date that the Company’s right to receive payment is established, which in the case of quoted securities is

the ex-dividend date.

Finance expenses comprise interest expense on borrowings, foreign currency losses, changes in the fair

value of financial assets at fair value through profit or loss, impairment losses recognised on financial assets,

and losses on hedging instruments that are recognised in profit or loss. All borrowing costs are recognised

in profit or loss using the effective interest method.

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3. Significant Accounting Policies (continued)(j) Income tax

Income tax expenses comprise current and deferred tax. Income tax expense is recognised in profit or loss

except to the extent that it relates to items recognised directly in equity, in which case it is recognised in

equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or

substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax if recognised using the balance sheet method, providing for temporary differences between the

carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation

purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of

goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and

that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries and

jointly controlled entities to the extent that they probably will not reverse in the foreseeable future. Deferred

tax is measured at the tax rates that are expected to be applied to the temporary differences when they

reverse, based on the laws that have been enacted or substantively enacted by the reporting date.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available

against which temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date

and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Additional income taxes that arise from the distribution of dividends are recognised at the same time as the

liability to pay the related dividend is recognised.

(k) Segment reporting

A segment is a distinguishable component of the consolidated entity that is engaged either in providing

products or services (business segment), or in providing products or services within a particular economic

environment (geographical segment), which is subject to risks and rewards that are different from those of

other segments.

(l) Goods and Services Tax

Revenue, expenses and assets are recognised net of the amount of goods and services tax(GST), except where the amount of GST incurred is not recoverable from the taxation authority. In thesecircumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of theexpense.

Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable

from, or payable to, the ATO is included as a current asset or liability in the statement of financial position.

Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flowsarising from investing and financing activities which are recoverable from, or payable to, the ATO areclassified as operating cash flows.

(m) Earnings per share

Basic earnings per shareBasic earnings per share is determined by dividing the net profit/(loss) after income tax attributable tomembers of the Company by the weighted average number of ordinary shares outstanding during thefinancial year, adjusted for bonus elements in ordinary shares issued during the year.

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(m) Earnings per share (continued)

Diluted earnings per shareDiluted earnings per share adjusts the figures used in the determination of basic earnings per share to takeinto account the after income tax effect of interest and other financing costs associated with dilutive potentialordinary shares and the weighted average number of shares assumed to have been issued for noconsideration in relation to dilutive potential ordinary shares.

(n) New standards and interpretations not yet adopted

The following standards, amendments to standards and interpretations have been identified as those whichmay impact the entity in the period of initial application. They are available for early adoption at 30 June2008, but have not been applied in preparing this financial report.

AASB 8 Operating Segments introduces the “management approach” to segment reporting. AASB8, which becomes mandatory for the Company’s 30 June 2010 financial statements, will require thedisclosure of segment information based on the internal reports regularly reviewed by the Company’sChief Operating Decision Maker in order to assess each segment’s performance and to allocateresources to them. Currently the Company presents segment information in respect of its businessand geographical segments (see note 24). Under the management approach, the Company willcontinue to present segment information on the same basis.

Revised AASB 101 Presentation of Financial Statements introduces as a financial statement(formerly “primary” statement) the “statement of comprehensive income”. The revised standard doesnot change the recognition, measurement or disclosure of transactions and events that are requiredby other AASBs. The revised AASB 101 will become mandatory for the Company’s 30 June 2010financial statements. The Company has not yet determined the potential effect of the revisedstandard on the Company’s disclosures.

AASB 2008-1 Amendments to Australian Accounting Standard – Share-based Payment: VestingConditions and Cancellations changes the measurement of share-based payments that contain non-vesting conditions. AASB 2008-1 becomes mandatory for the Company’s 30 June 2010 financialstatements. The Group has not yet determined the potential effect of the amending standard on theCompany’s financial report.

4. Determination of Fair Values

A number of the Company’s accounting policies and disclosures require the determination of fair value, forboth financial and non-financial assets and liabilities. Fair values have been determined for measurementand/or disclosure purposes based on the following methods. Where applicable, further information about theassumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

(i) Investments in equity securities

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

(ii) Trade and other receivables

The fair value of trade and other receivables is estimated as the present value of future cash flows,discounted at the market rate of interest at the reporting date.F

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4. Determination of Fair Values (continued)

(iii) Share-based payment transactions

The fair value of Director and employee stock options is measured using the Black-Scholes formula.Measurement inputs include share price on measurement date, exercise price of the instrument, expectedvolatility (based on weighted average historic volatility adjusted for changes expected due to publiclyavailable information), weighted average expected life of the instruments (based on historical experience andgeneral option holder behaviour), expected dividends, and the risk-free interest rate (based on governmentbonds). Service and non-market performance conditions attached to the transactions are not taken intoaccount in determining fair value.

5. Financial Risk Management

Overview

This note presents information about the Company’s exposure to credit, liquidity and market risks, itsobjectives, policies and processes for measuring and managing risk, and the management of capital.

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

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

Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrumentfails to meet its contractual obligations, and arises principally from the Company’s receivables fromcustomers and investment securities. At the balance sheet date there were no significant concentrations ofcredit risk.

Cash and cash equivalents

The Company limits its exposure to credit risk by only investing in liquid securities and only withcounterparties that have an acceptable credit rating.

Trade and other receivables

As the Company operates primarily in exploration activities, it does not have trade receivables and thereforeis not exposed to credit risk in relation to trade receivables.

The Company where necessary establishes an allowance for impairment that represents its estimate ofincurred losses in respect of other receivables and investments. The management does not expect anycounterparty to fail to meet its obligations.

Exposure to credit risk

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

Company Carrying amount

Note 2008 2007

Available-for-sale financial assets 12 2,230,400 3,120,000

Loans and receivables 10 572,263 275,531

Cash and cash equivalents 23 31,525,367 15,584,123

Financial assets held for trading 12 9,736 25,151

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5. Financial Risk Management (continued)

Credit Risk (continued)Impairment Losses

None of the Company’s other receivables are past due (2007: nil).

Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due.The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always havesufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, withoutincurring unacceptable losses or risking damage to the Company’s reputation.

The Company manages liquidity risk by maintaining adequate cash reserves from funds raised in the marketand by continuously monitoring forecast and actual cash flows. The Company does not have any externalborrowings.

The Company does not anticipate a need to raise additional capital in the next 12 months to meet forecastoperational and exploration activities. The decision on how the Company will raise future capital will dependon market conditions existing at that time.

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

Company30 June 2008

Carryingamount

Contractualcash flows

6 mths orless 6-12 mths 1-2 years 2-5 years

Trade and other payables 972,672 972,672 972,672 - - -

Company30 June 2007

Carryingamount

Contractualcash flows

6 mths orless 6-12 mths 1-2 years 2-5 years

Trade and other payables 494,577 494,577 494,577 - - -

Market Risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates andequity prices will affect the Company’s income or the value of its holdings of financial instruments. Theobjective of market risk management is to manage and control market risk exposures within acceptableparameters, while optimising the return.

Currency Risk

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

Interest Rate Risk

The Company is exposed to interest rate risk (primarily on its cash and cash equivalents), which is the riskthat a financial instrument’s value will fluctuate as a result of changes in the market interest rates on interest-bearing financial instruments. The Company does not use derivatives to mitigate these exposures.

The Company adopts a policy of ensuring that as far as possible it maintains excess cash and cashequivalents in short terms deposit at interest rates maturing over 90 day rolling periods.

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Interest Rate Risk (continued)Profile

At the reporting date the interest rate profile of the Company’s interest-bearing financial instruments was:

Company

Carrying amount

2008 2007

Fixed rate instruments

Financial assets – cash and cash equivalents - -

Variable rate instruments

Financial assets – cash and cash equivalents 31,525,367 15,584,123

Fair value sensitivity analysis for fixed rate instruments

The Company does not account for any fixed rate financial assets and liabilities at fair value through profit orloss or through equity, therefore a change in interest rates at the reporting date would not affect profit or lossor equity.

Cash flow sensitivity analysis for variable rate instruments

A change of 100 basis points in interest rates at the reporting date would have increased (decreased) equityand profit or loss by the amounts shown below. This analysis assumes that all other variables remainconstant. The analysis is performed on the same basis for 2007.

Company

Profit or loss Equity

100bp

increase

100bp

decrease

100bp

increase

100bp

decrease

30 June 2008

Variable rate instruments 265,651 265,651 - -

30 June 2007

Variable rate instruments 109,091 109,091 - -

Fair Values

Fair values versus carrying amounts

The fair values of financial assets and liabilities, together with the carrying amounts shown in the balance

sheet, are as follows:

Company 30 June 2008 30 June 2007

Carrying

amount

Fair value Carrying

amount

Fair value

Available-for-sale financial assets 2,230,400 2,230,400 3,120,000 3,120,000

Financial assets held for trading 9,736 9,736 25,151 25,151

Loans and receivables 572,263 572,263 275,531 275,531

Cash and cash equivalents 31,525,367 31,525,367 15,584,123 15,584,123

Trade and other payables (972,672) (972,672) (494,577) (494,577)

33,365,094 33,365,094 18,510,228 18,510,228

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Other Market Price Risk

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

Investments are managed on an individual basis and material buy and sell decisions are approved by theBoard of Directors. The primary goal of the Company’s investment strategy is to maximise investmentreturns.

The Company’s investments are solely in equity instruments. These instruments are classified as held-for-trading at fair value through profit or loss and, available-for-sale with fair value changes recognised directly inequity until derecognised.

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

Sensitivity Analysis – Equity Price Risk

All of the Company’s equity investments are listed on the Australian Securities Exchange. For suchinvestments classified as available-for-sale, a three percent increase in stock prices at 30 June 2008 wouldhave increased equity by $66,912 (2007: an increase of $93,600); an equal change in the opposite directionwould have decreased equity by $66,912 (2007: a decrease of $93,600). For such investments classified asheld-for-trading and fair valued through profit and loss, the impact on profit or loss would have been anincrease or decrease of $292 (2007: $755). The analysis is performed on the same basis for 2007.

Commodity Price Risk

The Company operates primarily in the exploration and evaluation phase and accordingly the Company’sfinancial assets and liabilities are subject to minimal commodity price risk.

Capital Management

Capital is defined as the equity of the Company.

The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as agoing concern, so as to maintain a strong capital base sufficient to maintain future exploration anddevelopment of its projects. In order to maintain or adjust the capital structure, the Company may returncapital to shareholders, issue new shares or sell assets to reduce debt. The Company’s focus has been toraise sufficient funds through equity to fund exploration and evaluation activities. The Company monitorscapital on the basis of the gearing ratio, however there are no external borrowings as at balance date.

The Company encourages employees to be shareholders through Share Option Plans.

There were no changes in the Company’s approach to capital management during the year. Riskmanagement policies and procedures are established with regular monitoring and reporting.

The Company is not subject to externally imposed capital requirements.

Note 30 June 2008 30 June 2007

Listed equities – Available-for-sale 12 2,230,400 3,120,000

– Held-for-trading 12 9,736 25,151

Total equity investments 2,240,136 3,145,151

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6.(i) The Company recorded a $1,868,000 profit on the disposal of shares in Ellendale Resources duringthe year.


$ $ $

6.(ii) Other Income

Income from non-operating activitiesProfit on sale of fixed assets - 1,350 1,350Profit on sale of tenements - 58,168 58,168Other Income 161,107 90,007 90,007

161,107 149,525 149,525

6.(iii) Financial Income

Interest income 1,974,380 690,278 689,221

7. Profit/(Loss) from ordinary activities

Profit/loss from operating activities before income tax has been arrived at after charging/(crediting) thefollowing items:

Depreciation - plant & equipment 152,650 90,108 90,108Depreciation capitalised to carrying value ofexploration and evaluation expenditure (126,151) (65,401) (65,401)Net depreciation 26,499 24,707 24,707Amortisation - Leasehold Improvements 978 978 978Write-off of obsolete fixed assets 48,374 - -Loss on sale of fixed assets 2,593 - -Exploration expenditure written off 326,656 639,869 560,038Loss on sale of tenements - 48,226 12,893Operating lease rental expense 21,219 25,902 25,902Change in value of:- held for trading investments- liquidation of subsidiaries

15,415-

(7,302)-

(7,302)115,453

Employee entitlements 28,828 30,908 30,908

8. Auditor’s Remuneration

Auditors of the Company – KPMGAudit servicesOther assurance services

42,920-

38,3002,410

38,3002,410

Total 42,920 40,710 40,710

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$ $ $

9. Income Tax Benefit

(a) Recognised in the income statement

Current income tax expense - - -Deferred tax expense relating to the originationand reversal of temporary differences - - -

Refundable R & D tax offset 297,105 15,235 15,235

Total income tax refund 297,105 15,235 15,235

(b) Reconciliation between income tax expense and pre-tax profit/(loss)

Profit/(loss) before tax 162,695 (3,176,163) (3,176,163)

Income tax using the domestic corporation taxrate of 30% (2007: 30%) 48,809 (952,849) (952,849)Tax effect of:Prior year adjustmentsNon-deductible expensesItems recognised in equityIncome not assessable in current yearPrior year capital losses utilisedUnused tax losses and temporary differencesnot recognised as deferred tax assetsCapital gain on expiry of options

109,922298,685

(150,024)(99,553)

(248,640)

40,801-

-827,029

---

123,7232,097

-827,029

---

123,7232,097

Income tax expense on pre-tax profit/(loss) - - -

(c) Unrecognised deferred tax balances

Deferred tax assets and (liabilities) calculated at30% (2007: 30%) have not been recognised inrespect of the following:Income tax losses 8,855,159 - 6,843,939Temporary differences (3,903,583) - (2,137,823)

4,951,576 - 4,706,116

Deductible temporary differences and tax losses do not expire under current tax legislation. Deferred tax assets (anddeferred tax liabilities relating to capitalised exploration expenditure for which immediate tax write-off is available) havenot been recognised in the financial statements.

(d) Movement in temporary differences during the year

30 June2008

$

Movements2008

$

30 June2007

$

Movements2007

$

1 July2006

$Temporary differences(a) Recognised in income

Exploration expenditure (4,261,631) (1,890,595) (2,371,036) (1,371,053) (999,983)Other payables and provisions 37,199 10,125 27,074 11,403 15,671Other items (109,832) (144,984) 35,152 35,152 -

(b) Recognised in equityCapital raising expenses 430,681 259,694 170,987 24,303 146,684

Totals (3,903,583) (1,765,760) (2,137,823) (1,300,195) (837,628)

Movements are shown for the Group which comprised a tax-consolidated group headed by the Parent Company until 17June 2007 when all subsidiaries were de-registered. Immediately thereafter the calculations are continued for theCompany in its own right.

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The Company The Company2008 2007

$ $

10. Trade and other receivables

CurrentOther debtors 502,263 167,031

Non-currentTenement security bonds 70,000 90,500

11. Prepayments

Prepayments 9,939 12,2499,939 12,249

12. Investments

Non-CurrentAvailable-for-sale listed investments – at fair value 2,230,400 3,120,000Held-for-trading listed investments – at fair value 9,736 25,151

2,240,136 3,145,151

13. Property, Plant and Equipment

Leasehold Improvements – at cost 10,586 39,105Less: Accumulated amortisation (2,335) (5,317)

8,251 33,788

Plant & Equipment – at cost 1,192,971 1,102,182Less: Accumulated depreciation (489,214) (449,772)

703,757 652,410

Carrying amount at end of year 712,008 686,198

Reconciliations

Leasehold ImprovementsCarrying amount at beginning of year 33,788 34,766Less: AmortisationLess: Write off of obsolete items

(978)(24,559)

(978)-

Carrying amount at end of year 8,251 33,788

Plant & EquipmentCarrying amount at beginning of year 652,410 317,546Additions 237,086 428,114Less: Carrying value of disposals (9,274) (3,142)Less: Write-off of obsolete items (23,815) -Less: Depreciation (152,650) (90,108)

Carrying amount at end of year 703,757 652,410For

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$ $

14. Exploration expenditure

Costs carried forward in respect of areas of interest inexploration phase - at costBalance at beginning of the yearTransfer from former subsidiaryExpenditure during the yearCarrying value of tenements soldAmounts written off during the year

8,430,961-

6,568,063-

(326,656)

3,817,556140,454

5,087,713(54,724)

(560,038)

Balance at end of the year 14,672,368 8,430,961

The ultimate recoupment of costs carried forward for exploration expenditure phases is dependent on thesuccessful development and commercial exploitation, or alternatively, the sale of the respective areas.

15. Trade and Other Payables

Trade creditors 894,430 451,253Other creditors and accruals 78,242 43,324

972,672 494,577

16. Employee Benefits

CurrentEmployee entitlements 95,074 66,246

Aggregate employee entitlements 95,074 66,246

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17. Issued Capital and Reserves

(i) Issued Capital

Ordinary Shares - Fully Paid


$ $

Fully paid ordinary shares at 1 July 2007:234,812,818 (1 July 2006: 140,435,348) 52,416,982 29,368,820

Issuance of ordinary fully paid shares during the year:33,850,000 (2007: 10,642,857) 23,018,000 3,725,000

Issuance of fully paid ordinary shares during the year inlieu of cash 1,136,363 (2007: Nil) 875,000 -

Listed and unlisted options exercised during the year:1,950,000 (2007: 83,035,547)- cash component- transfer from option reserve

390,000-

15,857,1103,549,739

Shortfall options issued pursuant to underwriting: Nil(2007: 699,066) - 139,813

Transaction costs of issuing shares (1,483,568) (223,500)

271,749,181 fully paid ordinary shares at 30 June 2008(30 June 2007: 234,812,818) 75,216,414 52,416,982

Total Issued Capital at end of year 75,216,414 52,416,982

Note:

Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitledto one vote per share at shareholders' meetings.

(ii) Option Reserve

Option reserve comprises the consideration received for the issue of options over unissued ordinaryshares of the Company and the fair value of options over unissued ordinary shares granted asemployee remuneration until the options are exercised or expire.

Total Option Reserve at beginning of year 323,227 4,438,292

(a) Listed Options to take up Ordinary Shares in the Company (exercisable up to expiry date of 31December 2006 for a price of $0.20 each).

Balance at 1 July 2007:Nil (July 2006: 75,234,613) - 3,556,730Exercise of this class of options during the year:Nil (2007: 74,535,547) - (3,549,739)Options expired on 31 December 2007: Nil(2006: 699,066) - (6,991)Balance at 30 June 2008: Nil(30 June 2007: Nil) - -

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17. Issued Capital and Reserves (continued)

(b) Unlisted Options to take up Ordinary Shares in the Company (exercisable up to various expirydates from 12 December 2006 to 12 December 2007 for various exercise prices).


$ $Balance at beginning of 2007 financial year:7,500,000 unlisted options exercisable at $0.10 eachwith an expiry date of 12 December 2006 - conditionalentitlement - 565,287Movements:Above conditional entitlement expired 12 December2006 - (565,287)Nil unlisted options exercisable at $0.10 each with anexpiry date of 12 December 2007 – conditionalentitlement granted (2007: 7,500,000) - 2,466,375Unlisted options referred to immediately aboveexercised: Nil (2007: 7,500,000) - (2,466,375)Balance at beginning of 2008 financial year:1,750,000 unlisted options exercisable at $0.20 eachwith expiry dates from 8 September 2007 to 3December 2007 (2007: 2,750,000) 191,175 316,275Movements:Unlisted options referred to immediately aboveexercised during the year: 1,750,000 (2007: 1,000,000) (191,175) (125,100)

Balance at end of year:2008: Nil 12 December 2007 conditional entitlementand Nil other options (2007: Nil 12 December 2007conditional entitlement and 1,750,000 other options) - 191,175

(c) Unlisted Options to take up Ordinary Shares in the Company (exercisable up to various expirydates for a price of $0.20 each).

Balance at beginning of year: 4,500,000 (2007: Nil)Movements:Nil unlisted options exercisable at $0.20 each withexpiry dates of 5 December 2008 to 16 January 2009issued to a senior employee – initially part of aconditional entitlement. The issued options may beexercised in 1.5M tranches after various dates (2007:4,500,000)

101,077

-

-

101,077

Balance at end of year: 4,500,000 (2007: 4,500,000) 101,077 101,077

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17. Issued Capital and Reserves (continued)

(d) Unlisted Options to take up Ordinary Shares in the Company (exercisable up to various expirydates and at various exercise prices).


$ $Balance at beginning of period: Issued 400,000, furtherconditional entitlement 800,000 (2007: Nil)Movements:Conditional entitlements to a maximum total of Nil(2007: 1,200,000) unlisted options exercisable atprices from $0.20 to $0.60 each with expiry dates of 2years after issue of specified tranches of options weregranted to technical support staff subject to serviceconditions.Issued during the period: 400,000 (2007: 400,000)Exercised during the period: 200,000 (2007: Nil)

30,975

-11,898(6,200)

-

30,975--

Balance at end of period: Issued 600,000, furtherconditional entitlement 400,000 (2007: Issued 400,000,800,000 conditional entitlement 36,673 30,975

(e) Unlisted Options to take up Ordinary Shares in the Company (exercisable up to 17 August 2009for a price of $0.80)

Balance at beginning of period:Nil (2007: Nil)Issue of 50,000 unlisted options exercisable at $0.80each

-

7,565

-

-Balance at end of period:As referred to above: 50,000 (2007: Nil) 7,565 -

(f) Entitlements to unlisted options to take up Ordinary Shares in the Company (exercisable withinthree years of issue dates of three tranches totalling 6,000,000 units, issuable uponachievement of and at price targets of $1.20 to $1.60).

Balance at beginning of period: Nil (2007: Nil)Grant of conditional entitlements to take up options:6,000,000 (2007: Nil)Transfer to accumulated losses on cancellation ofabove (2007:Nil)

-

587,850

(587,850)

-

-

-Balance at end of period: Nil (2007: Nil) - -Total Option Reserve at end of year 145,315 323,227

(iii) Fair Value Reserve

Fair Value reserve includes the cumulative net change in the fair value of available-for-sale investments until theinvestment is derecognised.

Balance at beginning of yearChange in fair value of available-for-sale listedinvestmentsTransfer to income statement on sale

2,860,000

(889,600)(1,868,000)

173,845

2,860,000(173,845)

Balance at end of year 102,400 2,860,000

(iv) Total Reserves at end of Year

Option ReserveFair Value Reserve

145,315102,400

323,2272,860,000

247,715 3,183,227

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18. Accumulated Losses


$ $

Accumulated losses at beginning of year (28,044,819) (27,482,357)Net profit/(loss) attributable to members of the parententity 459,800 (3,160,928)Transfer from option reserve 785,225 2,598,466

Accumulated losses at the end of the year (26,799,794) (28,044,819)

The fair values attributed to options or entitlements thereto granted to employees and consultants aretransferred to accumulated losses when those options or entitlements are exercised, lapsed or cancelled.

19. Share Based Payments

During the year ended 30 June 2008 technical support staff (or nominees) and an unrelated consulting firmwere granted share options and conditional entitlements thereto. There were no similar grants during theprevious year. The terms and conditions of the grants made during the 2008 financial year are as follows:

Grant Date Total Numberof Instruments

VestingConditions

Contractual Life ofOptions

(1) Option grant 23 August 2007(2) Grant of conditional entitlements 24 July 2007 (3 tranches)

50,0006,000,000

NilPrice Targets

2 Years3 Years after issue dates

Fair value of share options and entitlements and assumptions for the year ended 30 June 2008:

(1) (2)

Fair value at grant date $0.153 $0.1547 - $0.0528Share price $0.625 $0.88Exercise price $0.80 $1.20 - $1.60Expected volatility (expressed as weighted average volatility used in themodelling under binomial lattice model) 50% 30%Option life (expressed as weighted average life used in the modelling underbinomial lattice model) 2 years

3 years from issuedates

Expected dividends - -Risk-free interest rate (based on government bonds) 6.35% 6.35%

The basis of measuring fair value is consistent with that disclosed in the financial report for the year ended30 June 2007.

The grant of conditional entitlements to 6,000,000 options was subsequently cancelled prior to 30 June2008.

The options outstanding at 30 June 2008 have an exercise price in the range of $0.20 to $0.80 and aweighted average contractual life of 2.45 years.

The weighted average share price at the date of exercise for share options exercised during the year ended30 June 2008 was $0.77F

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20. Commitments

Exploration expenditure commitments

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

Not later than one year 5,464,720 1,690,000Later than one year but not later than five years 4,494,720 8,358,000

Total 9,959,440 10,048,000

Employee remuneration commitments

Directors

Commitments under non-cancellable employmentcontracts not provided for in the financial statementsand payable:Within one year 440,000 433,750One year or later and no later than five years 144,092 590,756

584,092 1,024,506

Non-cancellable operating lease expense commitments

Future operating lease commitments not provided forin the financial statements and payable:

Within one year 84,999 126,396Later than one year but not later than five years - 93,444

84,999 219,840

The Company leases properties under non-cancellable operating leases expiring in 2008/09. Leasesgenerally provide the Company with a right of renewal at which time all terms are negotiated. Leasepayments comprise a fixed base amount.

21. Related Parties

The following were key management personnel of the consolidated entity at any time during the reportingperiod and unless indicated were key management personnel for the entire period.

R Krasnoff Non-Executive DirectorJ Terpu Managing DirectorB Firriolo Executive Director and Company SecretaryJ Radici Non-Executive DirectorD Stewart Non-Executive Director (appointed 30 November 2007)


$ $

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21. Related Parties (continued)

Movements in Shares and Share Options

The movements during the reporting period in the numbers of shares and share options in the ParentCompany held, directly, indirectly or beneficially, by each key management person, including their relatedparties, is as follows:

Fully PaidOrdinaryShares

3 Dec 2007UnlistedOptions

Richard KrasnoffOpening Balance 1/7/07 250,000 500,000Movements – conversion

– bought500,000120,000

(500,000)-

Closing Balance 30/6/08 870,000 -

John TerpuOpening Balance 1/7/07 18,553,132Movements - bought 900,000Closing Balance 30/6/08 *19,453,132

*Included in the abovementioned are 15,209,000 shares in relation to which Mr Terpu’s view is that heretains an equitable interest. The ownership of those shares is the subject of current legal proceedingsagainst ANZ Bank.

Fully PaidOrdinaryShares

Bruno FirrioloOpening Balance 1/7/07 1,356,250Movements -Closing Balance 30/6/08 1,356,250

Joseph RadiciOpening Balance 1/7/07 649,065Movements -Closing Balance 30/6/08 649,065

Douglas StewartCommencing as a director -Movements 43,000Closing Balance 30/6/08 43,000

Key management personnel compensation

The key management personnel compensation is as follows:


$ $ $Short term employee benefits 459,608 240,580 240,580Other long term benefits 3,992 14,792 14,792Post employment benefits 140,897 241,570 241,570

Share-based payments - 2,466,375 2,466,375

604,497 2,963,317 2,963,317

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21. Related Parties (continued)

Individual directors and executives disclosure

Information regarding individual directors and executives compensation, service agreements and someequity instruments disclosures is provided in the Remuneration Report section of the Director’s Report.

Other key management personnel transactions

The Managing Director of the Company, Mr Terpu, is a Director of Ruby Lane Pty Ltd and Nextstar Pty Ltd.

During the year the Company paid Ruby Lane Pty Ltd, a total of $84,874: (2007: $81,944) for leasing of theCompany’s registered offices.

During the year the Company received from Nextstar Pty Ltd $30,942 (2007: Nil) for reimbursement ofgeological staff costs and expenses, at cost.

Cleaver & Associates, an entity in which Mr Firriolo is a partner, received fees of $1,020 (2007: $1,174) forprovision of accounting services.

22. Earnings per Share


$ $

Basic profit/(loss) per Share (cents per Share) 0.18 (1.64)Weighted average number of Ordinary Shareson issue used in the calculation of basicearnings per Share 259,226,454 192,413,876

Diluted profit/(loss) per Share (cents per Share) 0.18 (1.64)Weighted average number of Ordinary Shareson issue and shares under option used in thecalculation of basic earnings per Share 262,444,687 192,413,876

Basic earnings per share (‘EPS’) is calculated by dividing the net profit/(loss) after income tax attributable tomembers of the Company by the weighted average number of ordinary shares of the Company outstandingduring the financial year.

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to takeinto account the after income tax effect of interest and other financing costs associated with dilutive potentialordinary shares and the weighted average number of shares assumed to have been issued for noconsideration in relation to dilutive potential ordinary shares.

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23. Statement of Cash Flows

For the purposes of the statement of cash flows, cash includes cash on hand and in banks, and moneymarket investments readily convertible to cash within two working days, net of outstanding bank overdrafts.


$ $ $(a) Reconciliation of cash and cash

equivalentsReconciliation of cash balance comprises:Cash at bank 31,525,367 - 15,584,123

31,525,367 - 15,584,123

(b) Reconciliation of profit/(loss) fromordinary activities after income tax to netcash used in operating activities:

Profit/(loss) from ordinary activities after incometax 459,800 (3,160,928) (3,160,928)

Add/(less) items classified as investing/financingactivities:

Profit on sale of available-for-sale listedinvestments (1,868,000) (225,305) (225,305)

Profit on disposal of fixed assets - (1,350) (1,350)Write off of obsolete fixed assets 48,374 - -Profit on sale of tenements - (58,168) (58,168)Loss on sale of tenements 2,593 - -

Add/(less) non-cash items:

Depreciation/Amortisation 27,477 25,685 25,685Options issued – employee benefits expense (netof reversals) 19,463 2,033,140 2,033,140

Exploration expenditure written off 326,656 639,869 560,038Change in value of held-for-trading listedinvestments 15,415 (7,302) 108,151

Value of shares issued in lieu of cash for servicesrendered 875,000 - -

Value of conditional entitlements to take upoptions granted as corporate retainer incentivefees 587,850 - -

Change in assets and liabilities during thefinancial year:Increase/(decrease) in administration payables 118,589 127,187 91,857Increase/(decrease) in interest bearing liabilities - (4,077) (4,077)Increase/(decrease) in employee entitlements 28,828 30,908 30,908(Increase) /decrease in administrationreceivables (286,804) (140,017) (141,709)

(Increase)/decrease in prepayments 2,310 (1,165) (1,165)

Net cash used in Operating activities 357,551 (741,523) (742,923)

(c) Non cash financing and investing activities

During the previous financial year, the Company sold various tenements to an unlisted company for sharesand options in the unlisted company for a consideration of $100,000. Later in the previous financial year, theholdings in that unlisted company were exchanged for 16,000,000 fully paid ordinary shares in EllendaleResources NL, which were held until May 2008 when that shareholding together with 16,000,000 options inthat same company acquired for cash of $160,000 were exchanged for 65,600,000 fully paid ordinary sharesin Hawthorn Resources Ltd.

24. Segment Reporting

The Company operates predominantly in one industry of mineral exploration and one geographical segmentbeing Australia

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25. Interest In Joint Ventures

The Company has various interests in joint ventures where other parties may earn an equity interest. Thepercentage interests of the parties may vary depending on the terms of the Joint Ventures and the level ofexpenditure undertaken.

On 24 July 2007 the Company entered into a Farmin/Joint Venture agreement with Gold Fields AustralasiaPty Ltd (GFA), a wholly owned subsidiary of Gold Fields Limited, the world’s 4

thlargest gold producer. The

agreement allows for the accelerated exploration of an area of approximately 1,640 sq kms surrounding theCompany’s Mt Carlton project. In order to earn a 51% interest in the surrounding area, GFA must spend atleast $5 million within the first 12 months and then continue on to complete at least 150,000 metres drillingwithin 3 years. Upon satisfying the drilling requirement, GFA may increase its interest by acquiring a further24%, and also has the option to acquire a 50% interest in the Mt Carlton project by paying 50% of the NPVat that time.

The table below details the level of equity that may be earned in various other tenements should the venturercomplete its total earning rights.

Venture Partner Activity Possible EquityPartner May Earn

Hannans Reward Hannans Reward Ltd Mineral Exploration 90%

26. Subsequent Events

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

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ASX ADDITIONAL INFORMATION

Additional information as required by the Australian Stock Exchange Limited Listing Rules and notdisclosed elsewhere in this report is set out below.

1. Shareholder Information

1.1 As at 19 September 2008 the Company had 4,111 holders of Ordinary Fully Paid Shares.

Voting Rights

Subject to any rights or restrictions for the time being attached to any class or classes (at present there arenone) at general meetings of shareholders or classes of shareholders:

(a) each shareholder entitled to vote, may vote in person or by proxy, attorney or representative;

(b) on a show of hands, every person present who is a shareholder or a proxy, attorney or representative ofa shareholder has one vote; and

(c) on a poll, every person present who is a shareholder or a proxy, attorney or representative of ashareholder shall, in respect of each Fully Paid Share held, or in respect of which he/she has appointeda proxy, attorney or representative, have one vote for the share, but in respect of partly paid Sharesshall have a fraction of a vote equivalent to the proportion which the amount paid up bears to the totalissue price for the Share.

1.2 Distribution of Shares (as at 19 September 2008)

No. Fully PaidShares

Number ofHolders

1-1,000 215,027 3031,001-5,000 3,614,762 1,2125,001-10,000 6,455,907 78310,001-100,000 51,061,109 1,490100,001-over 210,402,376 323

271,749,181 4,111

The number of shareholders holding less than a marketable parcel is 571.

1.3 Substantial Shareholders

The following shareholder is recorded as a substantial shareholder:

GOLD FIELDS LTD and associated entities.

1.4 Holders of Unquoted Equity Securities (as at 19 September 2008).

Employee Related Issues (Non-KMP)Various Expiry Dates

Unlisted OptionsPeter Rea 4,500,000Paul Szabo 400,000Martin Male 200,000

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1.5 Twenty Largest Shareholders (as at 19 September 2008)

Fully Paid OrdinaryOrdinary Shareholders Number PercentageSt Ives Gold Mining Company Pty Ltd 50,754,817 18.68HSBC Custody Nominees (Australia) Limited – A/C 2 12,230,000 4.50JJ Holdings (Vic) Pty Ltd <Summerlea S/F A/C> 8,354,459 3.07Citicorp Nominees Pty Limited 5,849,252 2.15K & J Goorjian <K & J Goorjian S/F A/C> 4,900,000 1.80Lute Investments Pty Ltd <Rea Family A/C> 4,666,666 1.72National Nominees Limited 4,349,077 1.60HSBC Custody Nominees (Australia) Limited 4,305,747 1.58Valleyrose Pty Ltd <Terpu Super Fund A/C> 4,244,132 1.56Merrill Lynch (Australia) Nominees Pty Limited 3,055,518 1.12B Nicholson 2,916,300 1.07Arodam Pty Ltd <The Arodam A/C> 2,420,000 0.89ANZ Nominees Limited <Cash Income A/C>Sparta Nominees Pty Ltd

2,135,8002,000,000

0.790.74

P R Harris <Harris Family A/C> 1,937,400 0.71Berkeley Consultants Pty Ltd 1,730,000 0.64Vibraye Holdings Pty Ltd <Robinson Super Fund A/C> 1,600,010 0.59R & S Foundation Pty Ltd <Carlisle St Medical Centre S/F A/C> 1,532,290 0.56D & S O’Neil <O’Neil Super Fund A/C> 1,517,787 0.56Conay Holdings Pty Ltd 1,500,000 0.55

Total 120,711,628 44.42

1.6 Share Buy-Backs

There is no current on-market buy-back scheme.

2. Other Information

Conquest Mining Limited, incorporated and domiciled in Australia, is a public listed Company limitedby Shares.

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3. Schedule Of Tenements

Project Tenement Registered Holder CQT Application Expiry Area

Details Interest % or Grant Date DateWESTERNAUSTRALIA

Devine Well P37/5749 Conquest Mining Limited 100 13/10/2006 12/10/2010 47 ha

Cardinia P37/5750 Conquest Mining Limited 100 13/10/2006 12/10/2010 120 ha




QUEENSLAND

Crush Creek EPM11147 Conquest Mining Limited 100 3/07/1996 31/12/2009 23 blks



Bulgonunna EPM11971# Conquest Mining Limited 100 31/08/2004 30/08/2007 25 blks

Mount Carlton EPM10164 Conquest Mining Limited 100 28/06/1994 31/12/2009 33 blks


Mount Carlton EPM12829# Conquest Mining Limited 100 24/03/2000 23/03/2008 2 blks


Mount Carlton EPM13867# Conquest Mining Limited 100 10/04/2003 09/04/2008 19 blks

Mt Magnus EPM15597 Conquest Mining Limited 100 22/05/2008 21/05/2010 123 blks

Wyarra Hills EPM15598* Conquest Mining Limited 100 4/05/2006 Appl’n 180 blks

Marlborough Pocket EPM15623 Conquest Mining Limited 100 20/02/2008 19/02/2010 98 blks

Mt Leslie EPM15630 Conquest Mining Limited 100 02/05/2007 01/05/2009 100 blks

Mt Barker EPM15637 Conquest Mining Limited 100 02/05/2007 01/05/2009 87 blks

Mt Herbert EPM15805 Conquest Mining Limited 100 20/02/2008 19/02/2010 26 blks

Mt Pickaninny EPM16480* Conquest Mining Limited 100 23/05/2007 Appl’n 41 blks

Wyarra Hills 1 EPM17242* Conquest Mining Limited 100 11/01/2008 Appl’n 32 blks

Wyarra Hills 2 EPM17243* Conquest Mining Limited 100 11/01/2008 Appl’n 14 blks

* Tenements pending# Renewal pending

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