ANNUAL

REPORT 2007
[CORPORATE DIRECTORY]
DIRECTORS SHARE REGISTRY
Mark Fitzpatrick Non-executive Chairman Security Transfer Registrars Pty Ltd
David F Hatch Managing Director 770 Canning Highway
Murray G Pollock Non-executive Director Applecross WA 6153
Chris P Melloy Non-executive Director Tel: (618) 9315 2333
John Rowe Non-executive Director Fax: (618) 9315 2233
email: [email protected]
COMPANY SECRETARY
Graham Anderson AUDITORS
Leonard Math Ord Partners
Level 2, 47 Colin Street
SENIOR MANAGEMENT West Perth WA 6005
Rowan Johnston Resident Manager
Nick Winnall Exploration Manager STOCK EXCHANGE LISTING
Dennis McDeed Deputy Resident Manager Securities in Westonia Mines Limited
Mirna Tedeschi Office Manager are listed on:
DW Corporate Contract Accountants Australian Stock Exchange Limited
Home Branch – Perth
REGISTERED & PRINCIPAL OFFICE ASX Code – WEZ, WEZO
Level 1, 9 Havelock Street
West Perth WA 6005 WEBSITE
Tel: (618) 9321 3088 www.westoniamines.com.au
Fax: (618) 9321 8804
email: [email protected]

[CONTENTS]
Profile 1
Highlights 1
Chairman’s report 2
Westonia Gold Project 4
Exploration 7
Safety, Environment & Social Aspects 11
The Board of Directors 12
Financial Report 13
[PROFILE]

Located in the
highly prospective
Westonia Greenstone
WESTONIA Belt in Western
Perth Kalgoorlie Australia
Southern Cross PERTH

Albany

Westonia Mines Limited is a Perth based ASX listed exploration and aspiring mining company.

The company is pursuing success through assembling and capitalising on a quality asset base from a suite of
exploration tenements covering over 700km2 within the Westonia Greenstone Belt.

The company’s development strategy is based on adding to the proven and well defined Westonia gold mining project
located in Western Australia’s historic Westonia Greenstone Belt in the State’s south-eastern Goldfields.

Westonia Mines is applying modern exploration techniques and innovative technology in a focused effort to assess
the potential for undiscovered mineralisation in this region, which when added to the Westonia gold mines Edna
May mineralisation, will enhance project’s development potential.

The company has developed a geological model for the entire field, which is being used to identify new targets in this
significantly under explored region.

[HIGHLIGHTS]
• Completed Westonia open pit feasibility study, with decision made to add to
the resource base to improve project economics.

• Dismantling and relocation of the Big Bell processing plant to Westonia

completed on time and within budget. The components have been stored
ready for construction.

• Cost-effective, disciplined exploration strategy has identified numerous target

areas for upcoming field exploration programs.

• Established positive relationships with regulators, the Westonia community

and service providers.


 [CHAIRMAN’S REPORT]
Dear Shareholder,

This time last year we were looking forward to the completed feasibility study
establishing a case for mining to commence. In anticipation of a favourable
outcome we negotiated a letter of offer for substantial project debt from
a highly regarded financier. The offer was conditional upon the company
deciding to commence mining and raising the balance of the project finance as
new equity. Unfortunately the project economics demonstrated in the March
2007 feasibility study/review were insufficient for the project to proceed at that
time. The decision on whether to proceed was taken after lengthy consideration
of alternatives, but the base case did not offer an increase in the inherent share
value that was commensurate with the risks involved.

Since then, the company has considered numerous alternative mining and processing strategies in an attempt
to improve the economics. To date these efforts have not been able to lower the total cash cost per ounce
sufficiently for the project to proceed in the current gold price environment. However, the Edna May open
pit project remains very much alive, as a decision to proceed could be precipitated at any time by any of the
following factors: the right gold price; by finding more gold in the economic vicinity of the pit; or by a change in
the supplier environment that led to a reduced total cash cost.

The Edna May project remains the company’s core asset and we will continue to pursue opportunities to mine
it. We will maintain the existing project in a ’finance ready’ condition in anticipation of a rising gold price; we
have already begun an exploration programme to find additional, economically enhancing ounces and intend
to further explore the underground potential and we will monitor supplier pricing.

Of the three factors mentioned above, exploration is the one we can drive, so the company is now focussing
its resources on finding more gold. Our recent analysis of the database (of drilling, geochem, aeromag and
other data) has generated an exploration programme with twin aims. Firstly to identify enough gold within
the economic vicinity of the Edna May open pit – either as additional surface resources or from underground
potential – to commence mining; and secondly to explore for a stand-alone mine on the Westonia Greenstone
Belt (“WGB”).

We regard the WGB as under-explored but with potential. As a strategy to realise our broader vision of the
company’s potential, considerable effort will be applied in the future to developing the WGB. The recent review
of the regional data base identified numerous targets, and the drill testing of the higher priority ones has
commenced. The database will continue to be interrogated, particularly in the light of new information coming
from the drill programmes, additional geochemical surveys and aeromagnetic surveys, and it is anticipated
that more targets will emerge in coming months.


[CHAIRMAN’S REPORT continued]

Corporate
Mr John Rowe, an experienced geologist previously with MPI and then Lion Ore, joined the board in October
2006. Mr Rowe’s expertise in gold and base metals has been a valuable addition to the Board, particularly in
our recent data analysis and exploration programme development and we look forward to his contribution as
the exploration programme progresses.

On behalf of the board, I thank each member of our small staff for their contribution this past year. I also
thank my fellow directors for their thoughtful direction of and ongoing commitment to the company.

Your Board remains optimistic about the future. We own a 1.3m ounce open pit gold resource which should be
mined if the gold price increases sufficiently and we are actively exploring for proximate gold resources that can
lower the cash cost per ounce. If either of these two things occurs within the next 12 months then a proactive
mining focus will be reinstated. In addition, we look forward to some success in our exploration of the greater
WGB, where our objective is to discover our next mine.

Yours truly,
Mark Fitzpatrick
Chairman


 [WESTONIA GOLD PROJECT]
During the early part of 2007, the Company concluded that the financial returns from developing the Edna May
open pit project were inadequate at that time. The adverse combination of a low grade Resource, a significant capital
hurdle, an inflationary cost environment and a weakening Australian dollar gold price resulted in unacceptable risk
to shareholders for the expected returns.

Instead of risking shareholder value, the Company has continued to position itself to add shareholder value by taking
further steps towards becoming a producer.

In so doing, the value in the Company’s assets has been preserved and activities continue towards increasing the asset base.

Shareholders are reminded that the considerable Edna May open pit Resource remains intact and unhedged and that
the underground mining potential is unchanged.

The Company’s immediate focus is on testing the higher ranked exploration targets with the objective of adding
higher quality Resources and Reserves. Success in achieving this goal will lower the overall unit operating cost
structure and improve project robustness.

Edna May
Open Pit
showing
geological
setting

Edna May Open Pit

Following the completion of the base case Feasibility Study in 2006, the Company continued in its attempts to
improve project economics. Realised benefits from a series of value-add initiatives were however largely offset by the
effects of industry wide inflationary cost pressures and the weakening Australian dollar gold price.

Although capital costs were contained, unit operating costs remained in the $550/oz to $600/oz range.


[WESTONIA GOLD PROJECT continued]
The Company nevertheless continued its debt financing and equity raising discussions to an advanced stage in the
event that the minimum gold price trigger was reached. In March 2007 the Company concluded that development
would result in unacceptable risk to shareholders for the expected returns.

The current Resource base upon which the Company seeks to build in order to achieve producer status is
summarised below.

2006 Edna May Resource Estimate

Measured Indicated Inferred Total
Cut off Million Gold Thousand Million Gold Thousand Million Gold Thousand Million Gold Thousand
g/t Tonnes g/t Ounces Tonnes g/t Ounces Tonnes g/t Ounces Tonnes g/t Ounces

0.50 16.6 1.15 615 13.3 1.13 484 8.3 1.0 267 38.2 1.11 1,366
0.70 12.1 1.36 529 9.2 1.37 404 5.0 1.3 204 26.3 1.34 1,137
1.00 7.1 1.72 395 5.2 1.78 298 2.6 1.7 138 14.9 1.73 831

Pump dewatering
the pit


 [WESTONIA GOLD PROJECT continued]

Westonia Processing Plant

During the latter part of 2006, the Company raised
$6.1M in a rights issue which was fully taken up by
shareholders. The purpose of that raising was to
fund the dismantling of the Company’s fully owned
processing plant and relocate it to Westonia.

A contract for $5.2M was executed in December 2006

and dismantling crews were mobilised to Big Bell in
the Murchison goldfields in January 2007. The above
contract value included a $400,000 allowance for site
cleanup and rehabilitation.

The dismantling and transport operations were

Mills being dismantled completed on time and within budget. By May 2007,
all equipment for relocation had been successfully
unloaded at the Company’s specially prepared laydown
area in Westonia adjacent to the proposed mill site,
or was stored in a secure yard in Perth awaiting
refurbishment inspection.

Following dismantling and relocation of the Big Bell

plant to Westonia, the Company recovered its $1.5
million cash backed performance bond. In its place,
a $200,000 refundable deposit was lodged whilst
Westonia’s management completed its site cleanup
requirements. At the time of writing, demolition
blasting of the crusher and mill foundations had been
completed and the Company was in dialogue with the
tenement owner at Big Bell to recover the $200,000
deposit.
Mills arriving at Westonia
Dewatering
During the 2006/07 year, the Company has maintained
the Edna May open pit in a dewatered condition at an
annual cost of approximately $400,000.

As a result of the dewatered status of the pit, the

underground decline portal has remained accessible
and inpit access to Golden Point drill hole locations
has been possible.

A decision on whether to continue pit dewatering is

expected to be made in the September 2007 quarter.

Laydown area in Westonia

(near mine site)


[EXPLORATION]

Greenfinch
RC drilling carried out in late 2006 at Greenfinch, which is adjacent to the proposed mill site at Westonia identified
new, but localised higher grade gold mineralisation in the vicinity of the hanging wall contact. This mineralisation
occurs from surface.

A Resource estimate, which complies with the JORC code, was estimated in February 2007. This Resource is
additional to the Edna May Resource and the results are tabulated below:

2007 Greenfinch Resource Estimate

Indicated Inferred Total
Cut off Million Grade Thousand Million Grade Thousand Million Grade Thousand
g/t Tonnes Ounces Tonnes Ounces Tonnes Ounces

0.50 2.2 1.14 82 0.6 1.10 22 2.8 1.13 104

0.70 1.4 1.44 67 0.4 1.43 17 1.8 1.43 84
1.10 0.8 1.95 47 0.2 1.98 13 1.0 1.96 60

The above Resource estimate applies to approximately 400 metres strike length of the Greenfinch gneiss, drill tested
to approximately 100 metres depth. This represents less than half the known strike length of the Greenfinch gneiss.
The discovery cost for the Resource ounces defined to date is less than $10/oz.

Although occurring from surface in a location close to the proposed mill site, the average grade of the Greenfinch
mineralisation is similar to that of the Edna May Resource. Accordingly, the Company decided not to invest further
funds into Greenfinch drilling at present.

The Greenfinch Resource therefore is likely to be expandable with the investment of more drilling along strike and
with positive mine life consequences, but will occur at a later date.

Greenfinch
Exploration
Drilling


 [EXPLORATION]

Aeromagnetic
survey area
completed to date

Aeromagnetic Survey/Database Compilation

The aeromagnetic survey conducted in March 2006 over a portion of the central part of the Westonia Greenstone
Belt provided the Company with a number of Edna May “look-alike” targets. The cost effectiveness of acquiring such
high quality data resulted in a decision to carry out a much larger aeromagnetic survey over the entire central part of
the greenstone belt. The second survey flown in March 2007 brought the extent of areal coverage to some 300 km2.

During the latter part of 2006 and the first half of 2007, all available historical exploration data, together with the
aeromagnetic survey information was compiled into a single electronic exploration database.

This database was then used by the Company’s exploration staff to identify and rank a significant number of newly
identified targets together with previously known drill targets.


[EXPLORATION]

Long section
view of reef
interpretation

Underground
During mid-2007, an extensive review of underground mining potential was also undertaken. This involved reviewing
historical reports, re-logging of selected diamond drill core, geological re-interpretation and 3-D modelling.

In addition, re-entry and refurbishment costs for the 1980’s decline were estimated together with new development,
dewatering and ventilation requirements.

The Board has made a budget allocation to drill several deep exploration diamond holes with the objective of testing
projected arcuate high grade reef “hinge points” within the Edna May Gneiss. These zones are known from shallower
underground mining to often contain higher grades and be significantly wider. Drilling is anticipated to occur after
an independent review of the technical report has been accepted.

Golden Point
RC drilling in late 2006 confirmed the potential for Golden Point to host an easily accessible, high grade, narrow
underground mining operation. No further expenditure is planned for Golden Point until the Company is closer to
committing to underground mining.


 [EXPLORATION]

Other Activities
At the Dick’s Reward base metals prospect, a ground based gradient array IP survey was carried out over some
2 km2 of the known anomalous area. This survey demonstrated the presence of only weak conductors, meaning that
in combination with previously acquired surface and drilling geochemistry, economic base metal occurrences were
unlikely to be present. Westonia relinquished its interest and the tenement was handed back to the owner.

Deeper drill testing of encouraging RAB assays at the Perrins prospect indicated that the previously identified
mineralisation was shallow and supergene in nature.

One of the previously identified Edna May “look-alike” targets, known as CJ was partially drill tested in March 2007.
The remainder of the target area is located within a flora and fauna conservation reserve and has not been drill
tested. Favourable rock units were identified with this drilling, however only low level gold assays were reported.

Re-commencement of Field Activities

Following an extensive review of the prioritised exploration targets, RAB drill testing of the higher ranked surface
exploration targets identified to date is anticipated to commence in October.

Ongoing database interrogation is continuing and it is expected that new drill targets should be identified as a result
of this work.

The Company is also intending to carry out extensive geochemical sampling along the Northern margins of the
greenstone belt over a recently granted tenement, with the objective of identifying additional drill targets.

Aeromagnetic &
geological setting

10
[SAFETY, ENVIRONMENTAL & SOCIAL ASPECTS]

Safety and Health

The company is committed to protecting the safety and health of its employees, contractors, visitors and the local
community. We have a zero harm policy. During the year, it was regrettable that one of the Company’s contractors
incurred a Lost Time Injury whilst dismantling the processing plant at Big Bell.

Environment
We are committed to minimising the impact we have on the natural environment within and surrounding our
operations.

All regulatory and permitting requirements have been submitted to the relevant authorities and dialogue to date
suggests that full regulatory approval for the Westonia gold mining project is imminent.

During the past year, a new and increased level of permitting has been introduced, which requires the Company
to submit programmes of work prior to undertaking field exploration programmes. The Company has embraced
this additional requirement into its planning and approval process, however compliance has extended approval
timeframes.

Community
It is important that we understand the needs and expectations of our stakeholders, in particular the local community
near our project. We aim to be a good neighbour and so encourage feedback and input from stakeholders on our
operations. The high level of support and interest in the Company’s progress indicates that stakeholders are keen to
see the project proceed, participate in its progress and understand the opportunities that project development will
bring to the community.

Westonia Mines Limited continued to engage with and build its relationships with the Westonia community during
the past year. To support the social and economic welfare of the local community, we undertook to employ local
contractors and casual employees wherever possible.

We have established numerous positive relationships with landholders as a result of interaction arising from our
exploration activities and we work with the community in supporting fundraising activities for the local Royal Flying
Doctor Service.

The information in this report that relates to mineral resources is based on work completed by Mr Nicolas Johnson, who
is a Member of the Australian Institute of Geoscientists. Mr Johnson is a full time employee of Hellman and Schofield Pty
Ltd and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration
and to the activity which he is undertaking to qualify as a “Competent Person” as defined in the 2004 edition of the
“Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr Johnson consents to
the inclusion in the report of the matters based on his information in the form and context in which it appears.

The information in this report that relates to exploration results and exploration potential is based on information
compiled by Mr Nick Winnall, who is an employee of Westonia Mines Limited and has sufficient experience which is
relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking
to qualify as a “Competent Person” as defined in the 2004 edition of the “Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves”. Mr Winnall consents to the inclusion in the report of the matters based on
his information in the form and context in which

11
 [THE BOARD OF DIRECTORS]

Mark Fitzpatrick (55)

B.E., MBA, FAICD, MIEAust (Non Executive Chairman)
Mr Fitzpatrick has been actively involved in the development and growth of a diverse range of businesses and
resources projects in Australia over the last 30 years. He is an experienced company director with expertise in
resource project financing, project management and investment banking.

David Hatch (53)

Assoc MEng, DipGeoSc, MAusIMM, MAICD (Managing Director)
Mr Hatch is a Mining Engineer with 30 years experience in a range of mineral commodities. His strong operations
management and leadership background includes open pit and underground mines within Australia and several
overseas locations.

Murray Pollock (59)

MAICD (Non Executive Director)
Mr Pollock is a businessman with over 30 years experience in the mineral services industry, principally in drilling. He
is an investor and consultant to several companies on drilling and mine management services.

Chris Melloy (52)

BE (Hons), MEngSc, F Fin, MAusIMM, ASIA (Non Executive Director)
Mr Melloy is an Executive Director and founding shareholder of Lion Manager, the management company
responsible for the operation of Lion Selection Limited as well as a non executive Director of Austindo Resources
Corporation NL.

He has 31 years experience in the mining industry in both operations and finance, including mine planning,
operating and senior mine management roles, as well as mining analysis and research in the stock broking industry.

John Rowe (58)

BSc (Hons) ARSM, MAusIMM (Non Executive Director)
Mr. Rowe has over 35 years experience in mine geology, exploration, general mine management and business
development both in Australia and overseas, with significant experience with the gold and nickel industries in WA.
As a former mine geologist, Mr. Rowe has varied experience in gold, nickel and copper mineralization and played a
major role in the corporate and operational establishment of Kalgoorlie Consolidated Gold Mines Pty Ltd. He is a
non executive Director of Sally Malay Mining Limited.

12
Westonia Mines Limited
ABN 74 084 669 036

Annual Financial Report

for the year ended 30 June 2007

 Westonia Mines Limited - Annual Report

Contents
Directors' Report 2
Auditor’s Independence Declaration 10
Corporate Governance Statement 11
Income Statements 14
Balance Sheets 15
Statements of Changes in Equity 16
Statements of Cash Flows 17
Notes to the Financial Statements 18
Directors' Declaration 41
Independent Audit Report 42
ASX Additional Information 44

1
 Westonia Mines Limited – Annual Report

Directors’ Report
Your directors submit their report on the consolidated entity (referred to hereafter as the Group) consisting of Westonia Mines Limited
and the entities it controlled at the end of, or during, the year ended 30 June 2007.

DIRECTORS
The names and details of the company’s directors in office during the financial year and until the date of this report are as follows.
Where applicable, all current and former directorships held in listed public companies over the last three years have been detailed below.
Directors were in office for this entire period unless otherwise stated.
Names, qualifications, experience and special responsibilities
Mark Fitzpatrick (55), B.E., MBA, MMR, FAIM, FAICD, MIEAust (Non Executive Chairman)
As a venture capitalist, CEO and corporate consultant, Mr Fitzpatrick has been actively involved in the development and growth of a
diverse range of businesses and resources projects in Australia over the last 30 years. He is an experienced company director with
experience in resource project financing, project management and investment banking. Mr Fitzpatrick has not held any former listed
company directorships within the last 3 years.

David Hatch (53), Assoc MEng, MAusIMM, MAICD (Managing Director)

Mr Hatch is a Mining Engineer with 30 years experience in a range of mineral commodities. His strong operations management and
leadership background includes open pit and underground mines within Australia and several overseas locations. Mr Hatch has not held
any former listed company directorships within the last 3 years.

Murray Pollock (59), MAICD (Non Executive Director)

Mr Pollock is a businessman with over 30 years experience in the mineral services industry, principally in drilling. He is an investor and
consultant to several companies on drilling and mine management services. Mr Pollock has not held any former listed company
directorships within the last 3 years.

Chris Melloy (52), BE (Hons), MEngSc, GDipAppFin (Sec Inst), MAusIMM, ASIA (Non Executive Director)
Mr Melloy is an Executive Director of Lion Manager, the management company responsible for the operation of Lion Selection Group
as well as a non Executive Director of Austindo Resources Corporation NL (since 2001). Within the last 3 years Mr Melloy has been a
former director of Exco Resources Limited
He has 31 years experience in the mining industry in both operations and finance, including mine planning, operating and senior mine
management roles, as well as mining analysis and research in the stock broking industry.

John Rowe (58), BSc (Hons) ARSM, MAusIMM (Non Executive Director)
John Rowe brings a wealth of geological and business development skills to the company. Mr Rowe has 35 years experience within the
Nickel and Gold industry of Western Australia. He has held a variety of positions in mine management, exploration and business
development and was previously employed as an executive of Lion Ore in Australia.
Mr Rowe was appointed as Non Executive Director on 12 October 2006 and is also a director of Sally Malay Mining Limited (since
2006) and Perseverance Corporation Limited (since 2007). Mr Rowe has not held any former listed company directorships within the last
3 years.
COMPANY SECRETARY
Graham Anderson, BBus, CA
Graham Anderson is 44 years of age, has a Bachelor of Business Degree and is a member of the Institute of Chartered Accountants.
Graham commenced his career in 1983 with Ernst & Young before later moving to the national chartered accounting firms of Duesburys
and Horwath as a Partner with particular responsibilities for providing a range of audit and related corporate services.
Graham has extensive experience and knowledge of the ASX Listing Rules and Corporations Act and has acted as Director and
Company Secretary to a number of ASX listed entities. He has also been significantly involved in the IPO stage including due diligence
process for Australis Aquaculture Ltd, Dynasty Metals Australia Ltd, Echo Resources Ltd and Pegasus Metals Ltd in the past 3 years.
He is currently the Director and Company Secretary of Dynasty Metals Australia Ltd, APA Financial Services, Echo Resources Ltd,
Pegasus Metals Ltd and Company Secretary of Apex Minerals NL and Mamba Minerals Ltd.
Leonard Math, BBus
Leonard Math graduated from Edith Cowan University, majoring in Accounting and Information Systems, in 2003. In 2005 Leonard
worked as an Auditor at Deloitte before joining GDA Corporate as a Senior Accountant.
His public company responsibilities include corporate compliance role, including extensive liaison with ASX and ASIC, control and
implementation of corporate governance, completion of annual financial reports and auditor liaison, and shareholder relations with
registry and shareholders both retail and institutional.
Graham Anderson and Leonard Math were appointed joint Company Secretaries on 31 July 2007.
John Fitzgerald was Company Secretary from 6 March 2007 to 31 July 2007.
John Hannaford was Company Secretary from the beginning of the financial year until he resigned on 6 March 2007.
2
 Westonia Mines Limited - Annual Report

Directors' Report continued

Interests in the shares and options of the company and related bodies corporate
As at the date of this report, the interests of the directors in the shares and options of Westonia Mines Limited were:
Options over
Ordinary
Ordinary
Shares
Shares
Mark Fitzpatrick 812,500 -
David Hatch 629,065 2,635,626
Murray Pollock 15,725,802 935,748
Chris Melloy 1,504,688 167,188
John Rowe - -

NATURE OF OPERATIONS AND PRINCIPAL ACTIVITIES

Following the completion of the Westonia Gold Project feasibility study base case, the Company pursued a series of value add initiatives,
which were aimed at reducing operating and capital costs. In addition, funds were committed to add to the Resource and Reserve base by
drilling out a portion of the Greenfinch strike length adjacent to the proposed Edna May pit and plant location.

Whilst some of the value add initiatives succeeded in achieving cost reductions, these were offset by cost increases in other areas due to the
current industry wide inflationary cost pressures.

In December, 2006 the Company raised approximately $6.1 million, predominantly to dismantle and relocate the Big Bell plant to
Westonia. A $5.2 million contract was subsequently awarded to Interquip Pty Ltd, who commenced site work in January 2007. The Big
Bell plant move was completed on time and within the budget and the Company recovered its $1.5 million cash backed performance bond
in August 2007.

Financing and equity raising negotiations progressed through until March 2007, where upon it became apparent that development of the
Edna May project at the prevailing gold price was too risky and would provide inadequate returns for shareholders.

The Company proceeded to fund itself for a renewed exploration effort by raising a further $3.1 million in July 2007. A concerted
technical effort identified a series of new exploration targets, drill testing of which was due to commence in October 2007.

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

OPERATING AND FINANCIAL REVIEW

Operating Results for the Year

The operating loss after income tax of the Group for the year ended 30 June 2007 was $9,730,197 (2006: $12,606,793).
2007
Revenues Results
$ $
Geographic segments
Australia 387,038 (9,730,197)
Consolidated entity revenues and loss from ordinary activities after income tax expense 387,038 (9,730,197)

Shareholder Returns
2007 2006
Basic and diluted loss per share (cents) (3.5) (5.6)

3
 Westonia Mines Limited - Annual Report

Directors' Report continued

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

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

The board has a number of mechanisms in place to ensure that management's objectives and activities are aligned with the risks
identified by the board. These include the following:
• Strategic planning, which encompasses strategy statements designed to meet stakeholders needs and manage business risk.
• Implementation of board approved operating plans and budgets and board monitoring of progress against these budgets.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

Apart from the above or as noted elsewhere in this report no significant changes in the state of affairs of the Group occurred during the
financial year.

SIGNIFICANT EVENTS AFTER THE BALANCE DATE

No matters or circumstances, besides those disclosed at note 24, have arisen since the end of the financial year which significantly
affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in
future financial years.

LIKELY DEVELOPMENTS AND EXPECTED RESULTS

Likely developments in the operations of the Group and the expected results of those operations in future financial years have not been
included in this report as the inclusion of such information is likely to result in unreasonable prejudice to the Group.

ENVIRONMENTAL REGULATION AND PERFORMANCE

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

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

REMUNERATION REPORT
The remuneration report is set out under the following main headings:
A Principles used to determine the nature and amount of remuneration
B Details of remuneration
C Service agreements
D Share-based compensation
E Additional information
The information provided under headings A-D includes remuneration disclosures that are required under Accounting Standard AASB
1024 Related Party Disclosures. These disclosures have been transferred from the financial report and have been audited. The
disclosures in Section E are additional disclosures required by the Corporations Act 2001 and the Corporations Regulations 2001 which
have not been audited.

A Principles used to determine the nature and amount of remuneration (audited)

Remuneration Policy
The remuneration policy of Westonia Mines Limited has been designed to align director and executive objectives with shareholder and
business objectives by providing a fixed remuneration component and offering specific long-term incentives based on key performance
areas affecting the Group’s financial results. The board of Westonia Mines Limited believes the remuneration policy to be appropriate
and effective in its ability to attract and retain high calibre executives and directors to run and manage the Group.

The board’s policy for determining the nature and amount of remuneration for board members and senior executives of the Group is as
follows:
The remuneration policy, setting the terms and conditions for the executive directors and other senior executives, was developed by the
board. All executives receive a base salary (which is based on factors such as length of service and experience) and superannuation. The
board reviews executive packages annually by reference to the Group’s performance, executive performance and comparable information
from industry sectors and other listed companies in similar industries.

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

4
 Westonia Mines Limited - Annual Report

Directors' Report continued

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

The executive directors and executives receive a superannuation guarantee contribution required by the government, which is currently
9%, and do not receive any other retirement benefits. Some individuals, however, may choose to sacrifice part of their salary to increase
payments towards superannuation.

The board policy is to remunerate non-executive directors at market rates for comparable companies for time, commitment and
responsibilities. The board determines payments to the non-executive directors and reviews their remuneration annually, based on market
practice, duties and accountability. Independent external advice is sought when required. The maximum aggregate amount of fees that
can be paid to non-executive directors is subject to approval by shareholders at the Annual General Meeting (currently $200,000). Fees
for non-executive directors are not linked to the performance of the Group. However, to align directors’ interests with shareholder
interests, the directors are encouraged to hold shares in the company and are able to participate in employee option plans.

Performance based remuneration

The remuneration policy has been tailored to increase goal congruence between shareholders and directors and executives. Currently, this
is facilitated through the issue of options to executives to encourage the alignment of personal and shareholder interests. The company
believes this policy will be effective in increasing shareholder wealth. For details of directors and executives interests in options at year
end, refer note 18.

Company performance, shareholder wealth and directors' and executives' remuneration

The remuneration policy has been tailored to increase the direct positive relationship between shareholders investment objectives and
directors and executives performance. Currently, this is facilitated through the issue of options to executives to encourage the alignment
of personal and shareholder interests. The company believes this policy will be effective in increasing shareholder wealth.

5
 Westonia Mines Limited - Annual Report

Directors' Report continued

B Details of remuneration (audited)
Details of the remuneration of the directors and the key management personnel (as defined in AASB 124 Related Party Disclosures) of
Westonia Mines Limited and the Westonia Group are set out in the following table.

The key management personnel of Westonia Mines Limited and the Group include the directors and company secretary as per page 3
above and the following executive officer who has authority and responsibility for planning, directing and controlling the activities of the
Group:
h Rowan Johnston – Resident Manager

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

Key management personnel and other executives of Westonia Mines Limited and the Group
Share-based
Short-Term Post Employment Payments Total
Salary Retirement
& Fees Non Monetary Superannuation benefits Options
$ $ $ $ $ $
Directors
Mark Fitzpatrick
2007 76,000 - 6,840 - - 82,840
2006 40,750 - 3,667 - - 44,417
David Hatch
2007 220,000 20,663 19,800 - 28,807 289,270
2006 220,000 21,974 19,800 - 386,747 648,521
Murray Pollock
2007 38,000 - 3,420 - - 41,420
2006 22,333 - 2,010 - - 24,343
Chris Melloy*
2007 38,000 - - - - 38,000
2006 22,333 - - - - 22,333
John Rowe (appointed 12 October 2006)
2007 28,356 - - - - 28,356
Pieter Greeff (resigned 25 November 2005)
2006 10,792 - 562 - - 11,354
Other key management personnel
John Fitzgerald (appointed 6 March 2007, resigned 31 July 2007)
2007 59,280 - 5,335 - 13,600 78,215
John Hannaford** (resigned 6 March 2007)
2007 94,876 - - - - 94,876
2006 17,440 - - - - 17,440
Dennis Wilkins (Company Secretary, resigned 1 May 2006)
2006 41,772 - - - - 41,772
Rowan Johnston
2007 200,000 22,596 18,000 - - 240,596
2006 200,000 14,803 18,000 - 15,425 248,228

Total key management personnel compensation

2007 754,512 43,259 53,395 - 42,407 893,573
2006 575,420 36,777 44,039 - 402,172 1,058,408

* These payments are to Lion Manager, the management company responsible for the operation of Lion Selection Group, for the
services of Mr Chris Melloy as a Non Executive director. Refer note 22.

** These payments were to Ventnor Capital Pty Ltd for the services of Mr John Hannaford as Company Secretary.

6
 Westonia Mines Limited - Annual Report

Directors' Report continued

C Service agreements (audited)
The details of service agreements of the key management personnel of Westonia Mines Limited and the Group are as follows:

David Hatch, Managing Director:

• Term of agreement – 6 months notice of termination is required.
• Base salary, exclusive of statutory superannuation, of $220,000 to be reviewed annually by the board.
• Mr Hatch is also to be supplied with a fully maintained motor vehicle.
• Payment of termination benefit on early termination by the employer, other than for gross misconduct, includes any accrued long
service leave and annual entitlements, superannuation, retiring allowance, superannuation gratuity to the value of which does not
exceed the maximum amount ascertained in accordance with the formula set out in section 200G of the Corporations Act 2001.

Rowan Johnston, Resident Manager:

• Term of agreement – 3 months notice of termination is required.
• Base salary, exclusive of statutory superannuation, of $200,000 to be reviewed annually by the board.
• Mr Johnston is also to be supplied with a fully maintained motor vehicle to a value of $30,000 per year.
• Payment of a bonus of $25,000 gross upon commencement of plant construction at Westonia and a bonus of $25,000 upon successful
commissioning of the plant.
• Payment of termination benefit on early termination by the employer, other than for gross misconduct, includes any accrued long
service leave and annual entitlements, superannuation, retiring allowance, superannuation gratuity to the value of which does not
exceed the maximum amount ascertained in accordance with the formula set out in section 200G of the Corporations Act 2001.

D Share-based compensation (audited)

Options are issued to directors and executives as part of their remuneration. The options are not issued based on performance criteria, but
are issued to the majority of directors and executives of Westonia Mines Limited to increase goal congruence between executives,
directors and shareholders. The following options were granted to or vested with key management personnel during the year:
Value per
Exercise option at
Granted Price grant date Exercised % of
Grant Date Number Vesting Date Expiry Date (cents) (cents) Number Remuneration
Directors
David Hatch 15/03/2006 200,000 22/11/2006 22/11/2009 11 16.9 N/A 5.9%
David Hatch 15/03/2006 200,000 22/11/2007 22/11/2010 11 17.8 N/A 4.1%
Other key management personnel
John Fitzgerald 03/04/2007 200,000 03/04/2007 03/04/2010 20 6.8 N/A 17.4%
John Fitzgerald 03/04/2007 800,000 (1) 03/04/2010 20 6.8 N/A N/A

(1) The vesting of these options are based on a number of performance hurdles that had not been met prior to the resignation of Mr
Fitzgerald.

There were no ordinary shares issued upon exercise of remuneration options to directors or other key management personnel of Westonia
Mines Limited during the year. Refer to note 27 for model inputs for the options granted.

E Additional information – unaudited

Performance income as a proportion of total compensation
No performance based bonuses have been paid to key management personnel during the financial year.

7
 Westonia Mines Limited - Annual Report

Directors' Report continued

DIRECTORS’ MEETINGS
During the year the company held thirteen meetings of directors. The attendance of directors at meetings of the board were:
Directors’ Meetings Audit Committee
A B A B
Mark Fitzpatrick 12 13 2 2
David Hatch 13 13 * *
Murray Pollock 12 13 2 2
Chris Melloy 11 13 2 2
John Rowe 9 9 1 1
Notes
A - Number of meetings attended.
B - Number of meetings held during the time the director held office during the year.
* - Not a member of the Audit Committee.

SHARES UNDER OPTION

At the date of this report there are 42,475,256 unissued ordinary shares in respect of which options are outstanding.
Number of options
Balance at the beginning of the year 30,564,669

Movements of share options during the year

Exercised at 20 cents (20 August 2006, unlisted) (155,550)
Expired (20 cents, 20 August 2006, unlisted) (27,249,119)
Expired (36 cents, 27 April 2007, unlisted) (30,000)
Expired (42 cents, 27 April 2007, unlisted) (30,000)
Issued, exercisable at 20 cents, on or before 2 April 2010 (unlisted) 1,000,000

Total number of options outstanding as at 30 June 2007 4,100,000

Issued, exercisable at 10 cents, on or before 30 June 2010 (listed) 38,375,256

Total number of options outstanding as at the date of this report 42,475,256

The balance is comprised of the following:

Expiry date Exercise price (cents) Number of options
22 Nov 2008 11 200,000
22 Nov 2009 11 200,000
22 Nov 2010 11 700,000
2 Apr 2010 20 1,000,000
30 Jun 2010 10 38,375,256
22 Nov 2010 20 2,000,000

Total number of options outstanding at the date of this report 42,475,256

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

INSURANCE OF DIRECTORS AND OFFICERS

During or since the financial year, the company has paid premiums insuring all the directors of Westonia Mines Limited against costs
incurred in defending proceedings for conduct involving:
(a) a wilful breach of duty; or
(b) a contravention of sections 182 or 183 of the Corporations Act 2001,
as permitted by section 199B of the Corporations Act 2001.
The total amount of insurance contract premiums paid is confidential under the terms of the insurance policy.

The Company has entered into a Deed of Indemnity, Insurance and Access with each Director. In summary the Deed provides for:
• Access to corporate records for each Director for a period after ceasing to hold office in the Company,
• The provision of Directors and Officers Liability Insurance, and
• Indemnity for legal costs incurred by Directors in carrying out the business affairs of the Company.
8
 Westonia Mines Limited - Annual Report

Directors' Report continued

NON-AUDIT SERVICES
The following non-audit services were provided by the entity's auditor, Ord Partners or associated entities. The directors are satisfied
that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations
Act. The directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise the auditor
independence requirements of the Corporations Act 2001 for the following reasons:
− All non-audit services have been reviewed by the audit committee to ensure they do not impact the impartiality and objectivity of the
auditor;
− None of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for
Professional Accountants, including reviewing or auditing the auditor’s own work, acting in a management or a decision-making
capacity for the Company, acting as advocate for the Company or jointly sharing economic risk and rewards.

Ord Partners received or are due to receive the following amounts for the provision of non-audit services:
2007 2006
$ $
Department of Industry & Resources tenement audits 2,500 -

AUDITOR’S INDEPENDENCE DECLARATION

A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 11.

ROUNDING OF AMOUNTS
The amounts contained in this report and in the financial statements have been rounded to the nearest $1 (where rounding is applicable)
under the option available to the company under ASIC Class Order 98/100. The company is an entity to which the Class Order applies.

Signed in accordance with a resolution of the directors.

Mark Fitzpatrick
Chairman
Perth, 27 September 2007

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 Westonia Mines Limited - Annual Report

Directors' Report continued

O R D
PARTNERS
CHARTEREDACCOUNTANTS

27 September 2007

Ian K Macpherson CA
To the Board of Directors of Westonia Mines Limited
Robert W Parker CA

Dear Sirs
Craig A Vivian CA
AUDITORS INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE
CORPORATIONS ACT 2001
I declare that, to the best of my knowledge and belief, in relation to the audit for the year
ended 30 June 2007, there have been:

• no contraventions of the auditor independence requirements as set out in the

Corporations Act 2001 in relation to the audit; and

• no contraventions of any applicable code of professional conduct in relation to

the audit.

Yours faithfully
ORD PARTNERS

Robert Parker
Partner

Enclosed: Type Enclosure Here

Level 2, 47 Colin Street

West Perth WA 6005
PO Box 359
West Perth WA 6872
+61 8 9321 3514
¬ +61 8 9321 3523
[email protected]
www.ordgroup.com.au
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 Westonia Mines Limited - Annual Report

Corporate Governance Statement

This statement outlines the main corporate governance practices in place for the financial year ended 30 June 2007 which comply with
the ASX Corporate Governance Council principles of Good Corporate Governance and Best Practice Recommendations, unless
otherwise stated.

The Board of Directors

The company's constitution provides that the number of directors shall not be less than three and not more than nine. There is no
requirement for any share holding qualification.

As and if the company's activities increase in size, nature and scope the size of the board will be reviewed periodically and the optimum
number of directors required to supervise adequately the company's constitution determined within the limitations imposed by the
constitution and as circumstances demand.

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

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

The board considers that the company is not currently of a size, nor are its affairs of such complexity to justify the formation of separate
or special committees at this time. The board as a whole is able to address the governance aspects of the full scope of the company's
activities and to ensure that it adheres to appropriate ethical standards.

Role of the Board

The board's primary role is the protection and enhancement of long-term shareholder value.

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

Appointments to Other Boards

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

Independent Professional Advice

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

Continuous Review of Corporate Governance

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

ASX Principles of Good Corporate Governance

The board has reviewed its current practices in light of the ASX Principles of Good Corporate Governance and Best Practice Guidelines
with a view to making amendments where applicable after considering the company's size and the resources it has available.

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

The following table sets out the recommendations that the Company did not follow during the financial period and the reasons for non-
compliance.

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 Westonia Mines Limited - Annual Report

Corporate Governance Statement continued

ASX Principle Reference/comment

Principle 1: Lay solid foundations for management and oversight

1.1 Formalise and disclose the functions The company has not adopted this recommendation to formalise and disclose the
reserved to the board and those functions reserved to the board and those delegated to management. The company
delegated to management has a small board, comprising five directors, four of whom are non-executive
(including the chairman).

The full board currently meets every month. In addition, strategy meetings and
any extraordinary meetings are held at such other times as may be necessary to
address any specific significant matters that may arise.

Principle 2: Structure the board to add value

2.1 A majority of board members should Given the company’s background, the nature and size of its business and the
be independent directors current stage of its development, the board comprises five directors, four of whom
are non-executive (including the independent chairman). Of the non-executive
directors, only three are independent. The board believes that this is both
appropriate and acceptable at this stage of the company’s development.

The company considers the expense of sourcing additional directors at this stage
of its development is unwarranted. The roles and functions within the company
must remain flexible in order for it to best function within its level of available
resources.

The board believes the alignment of the interests of directors with those of
shareholders as being the most efficient way to ensure shareholders interests are
protected.

2.4 The board should establish a The board has no formal nomination committee. Acting in its ordinary capacity
nomination committee from time to time as required, the board carries out the process of determining the
need for, screening and appointing new directors. In view of the size and
resources available to the company, it is not considered that a separate nomination
committee would add any substance to this process.

Principle 4: Safeguard integrity in financial reporting

4.2 The board should establish an audit The board is of the view that due to the small size of the board and the company, a
committee separate committee would not provide any additional efficiencies or safeguards in
fulfilling the company’s financial reporting obligations.

The board may from time to time delegate issues to a sub-committee who report
their findings back to the board. The board as part of its on-going financial
reporting processes meets with audit personnel to discuss audit related issues.

Principle 5: Make timely and balanced disclosure

5.1 Establish written policies and The company has instigated internal procedures designed to provide reasonable
procedures designed to ensure assurance as to the effectiveness and efficiency of operations, the reliability of
compliance with ASX listing rule financial reporting and compliance with relevant laws and regulations. The board
disclosure requirements and to is acutely aware of the continuous disclosure regime and there are systems in place
ensure accountability at a senior to ensure compliance, underpinned by experience.
management level for that
compliance

Principle 7: Recognise and manage risk

7.1 The board or appropriate board While the company does not have formalised policies on risk management the
committee should establish policies board recognises its responsibility for identifying areas of significant business risk
on risk oversight and management and for ensuring that arrangements are in place for adequately managing these
risks. This issue is regularly reviewed at board meetings and risk management
culture is encouraged amongst employees and contractors.

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 Westonia Mines Limited - Annual Report

Corporate Governance Statement continued

ASX Principle Reference/comment

Principle 8: Encourage enhanced performance

8.1 Disclose the process for performance The remuneration of executive and non-executive directors is reviewed by the
evaluation of the board, its board with the exclusion of the director concerned. The remuneration of
committees and individual directors, management and employees is reviewed and approved by the board.
and key executives
Acting in its ordinary capacity, the board from time to time carries out the process
of considering and determining performance issues including the identification of
matters that may have a material effect on the price of the company’s securities.
Whenever relevant, any such matters are reported to ASX.

Principle 9: Remunerate fairly and responsibly

9.2 The board should establish a The company does not consider it appropriate to have a sub-committee of the
remuneration committee board to consider remuneration matters as this function is carried out by the full
board.

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 Westonia Mines Limited - Annual Report

Income Statements
YEAR ENDED 30 JUNE 2007 Notes Consolidated Parent Entity
2007 2006 2007 2006
$ $ $ $
REVENUE FROM CONTINUING OPERATIONS 4 387,038 427,088 387,038 427,088

EXPENDITURE
Depreciation expense 5 (122,030) (109,530) (122,030) (109,530)
Corporate expenses (321,650) (252,442) (321,650) (252,442)
Occupancy expenses (231,071) (164,302) (231,071) (164,302)
Employee and consultant expenses (899,649) (474,404) (899,649) (474,404)
Travel and accommodation expenses (72,668) (83,018) (72,668) (83,018)
Impairment of exploration and development
expenditure (8,513,181) (6,901,270) (8,513,181) (6,901,270)
Provision for impairment of plant & equipment - (4,600,000) - (4,600,000)
Other expenses (65,528) (464,749) (65,528) (464,749)

LOSS BEFORE INCOME TAX (9,838,739) (12,622,627) (9,838,739) (12,622,627)

INCOME TAX BENEFIT / (EXPENSE) 6 108,542 15,834 108,542 15,834

NET LOSS ATTRIBUTABLE TO EQUITY HOLDERS OF

WESTONIA MINES LIMITED (9,730,197) (12,606,793) (9,730,197) (12,606,793)

Basic and diluted loss per share for loss attributable to

the ordinary equity holders of the company (cents per
share) 26 (3.5) (5.6)

The above Income Statements should be read in conjunction with the Notes to the Financial Statements.

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 Westonia Mines Limited - Annual Report

Balance Sheets
AT 30 JUNE 2007 Notes Consolidated Parent Entity
2007 2006 2007 2006
$ $ $ $
CURRENT ASSETS
Cash and cash equivalents 7 1,075,686 5,014,414 1,075,686 5,014,414
Trade and other receivables 8 294,577 130,742 294,575 130,740
Other assets 9 1,902,872 1,967,284 1,892,872 1,967,284
TOTAL CURRENT ASSETS 3,273,135 7,112,440 3,263,133 7,112,438

NON-CURRENT ASSETS
Other financial assets 10 1,500 35,500 11,502 35,502
Property, plant and equipment 11 3,600,080 3,260,908 3,600,080 3,260,908
Mining properties 12 - 4,703,501 - 4,703,501
TOTAL NON-CURRENT ASSETS 3,601,580 7,999,909 3,611,582 7,999,911

TOTAL ASSETS 6,874,715 15,112,349 6,874,715 15,112,349

CURRENT LIABILITIES
Trade and other payables 13 392,618 2,020,608 392,618 2,020,608
Provisions 14 805,578 5,223,543 805,578 5,223,543
TOTAL CURRENT LIABILITIES 1,198,196 7,244,151 1,198,196 7,244,151

TOTAL LIABILITIES 1,198,196 7,244,151 1,198,196 7,244,151

NET ASSETS 5,676,519 7,868,198 5,676,519 7,868,198

EQUITY
Issued capital 15 30,088,089 22,591,978 30,088,089 22,591,978
Reserves 16(a) 498,673 456,266 498,673 456,266
Accumulated losses 16(b) (24,910,243) (15,180,046) (24,910,243) (15,180,046)
TOTAL EQUITY 5,676,519 7,868,198 5,676,519 7,868,198

The above Balance Sheets should be read in conjunction with the Notes to the Financial Statements.

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 Westonia Mines Limited - Annual Report

Statements of Changes in Equity

CONSOLIDATED AND PARENT ENTITY
Share Capital (Accumulated
YEAR ENDED 30 JUNE 2007 Ordinary Losses) Reserves Total
$ $ $ $
BALANCE AT 1 JULY 2005 20,507,406 (2,573,253) 2,464 17,936,617

Loss for the year - (12,606,793) - (12,606,793)

Income tax on items taken directly to equity (15,834) - - (15,834)
TOTAL RECOGNISED INCOME AND EXPENSE FOR THE
YEAR ATTRIBUTABLE TO MEMBERS OF WESTONIA
MINES LIMITED (15,834) (12,606,793) - (12,622,627)

Contributions to equity net of transactions costs 2,100,406 - - 2,100,406

Share based payments - - 453,802 453,802
TRANSACTIONS WITH EQUITY HOLDERS IN THEIR
CAPACITY AS EQUITY HOLDERS 2,100,406 - 453,802 2,554,208

BALANCE AT 30 JUNE 2006 22,591,978 (15,180,046) 456,266 7,868,198

BALANCE AT 1 JULY 2006 22,591,978 (15,180,046) 456,266 7,868,198

Loss for the year 16(b) - (9,730,197) - (9,730,197)

Income tax on items taken directly to equity (108,542) - - (108,542)
TOTAL RECOGNISED INCOME AND EXPENSE FOR THE
YEAR ATTRIBUTABLE TO MEMBERS OF WESTONIA
MINES LIMITED (108,542) (9,730,197) - (9,838,739)

Contributions to equity net of transactions costs 15 7,604,653 - - 7,604,653

Share based payments 16(a) - - 42,407 42,407
TRANSACTIONS WITH EQUITY HOLDERS IN THEIR
CAPACITY AS EQUITY HOLDERS 7,604,653 - 42,407 7,647,060

BALANCE AT 30 JUNE 2007 30,088,089 (24,910,243) 498,673 5,676,519

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

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 Westonia Mines Limited - Annual Report

Statements of Cash Flows

YEAR ENDED 30 JUNE 2007 Notes Consolidated Parent Entity
2007 2006 2007 2006
$ $ $ $
CASH FLOWS FROM OPERATING ACTIVITIES
Research and development grant received - 161,147 - 161,147
Payments to suppliers and employees (1,536,833) (917,590) (1,536,833) (917,590)
Interest received 472,798 236,234 472,798 236,234
NET CASH (OUTFLOW) FROM OPERATING
ACTIVITIES 25(a) (1,064,035) (520,209) (1,064,035) (520,209)

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from sale of plant and equipment - 2,727 - 2,727
Purchase of property, plant and equipment (461,202) (433,301) (461,202) (433,301)
Payments for exploration activities (1,612,080) (501,815) (1,612,080) (501,815)
Payment for project development (6,634,664) (3,107,231) (6,634,664) (3,107,231)
Payment for bonds - (1,631,311) - (1,631,311)
NET CASH (OUTFLOW) FROM INVESTING
ACTIVITIES (8,707,946) (5,670,931) (8,707,946) (5,670,931)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issues of ordinary shares 6,150,818 2,234,100 6,150,818 2,234,100
Subscriptions received prior to allotment - 1,771,400 - 1,771,400
Payment of share issue costs (317,565) - (317,565) -
NET CASH INFLOW FROM FINANCING
ACTIVITIES 5,833,253 4,005,500 5,833,253 4,005,500

NET (DECREASE) IN CASH AND CASH

EQUIVALENTS (3,938,728) (2,185,640) (3,938,728) (2,185,640)
Cash and cash equivalents at the beginning of the
financial year 5,014,414 7,200,054 5,014,414 7,200,054
CASH AND CASH EQUIVALENTS AT THE END OF THE
FINANCIAL YEAR 7 1,075,686 5,014,414 1,075,686 5,014,414

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

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 Westonia Mines Limited - Annual Report

Notes to the Financial Statements

30 JUNE 2007

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have been
consistently applied to all the years presented, unless otherwise stated. The financial report includes separate financial statements for
Westonia Mines Limited as an individual entity and the consolidated entity consisting of Westonia Mines Limited and its subsidiaries.

(a) Basis of preparation

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

Compliance with IFRS

Australian Accounting Standards include Australian equivalents to International Financial Reporting Standards (AIFRS). Compliance
with AIFRS ensures that the consolidated financial statements and notes and the parent entity financial statements and notes of Westonia
Mines Limited comply with International Financial Reporting Standards (IFRS).

Historical cost convention

These financial statements have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale
financial assets, financial assets and liabilities (including derivative instruments) at fair value through profit or loss, certain classes of
property, plant and equipment and investment property.

(b) Principles of consolidation

Subsidiaries
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Westonia Mines Limited (“company” or
“parent entity”) as at 30 June 2007 and the results of all subsidiaries for the year then ended. Westonia Mines Limited and its subsidiaries
together are referred to in this financial report as the Group or consolidated entity.

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

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

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group.

The Group applies a policy of treating transactions with minority interests as transactions with parties external to the Group. Disposals to
minority interests result in gains and losses for the Group that are recorded in the income statement. Purchases from minority interests
result in goodwill, being the difference between any consideration paid and the relevant share acquired of the carrying value of
identifiable net assets of the subsidiary.

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

Minority interests in the results and equity of subsidiaries are shown separately in the consolidated income statement and balance sheet
respectively.

Investments in subsidiaries are accounted for at cost in the individual financial statements of Westonia Mines Limited.

(c) Segment reporting

A business segment is identified for a group of assets and operations engaged in providing products or services that are subject to risks
and returns that are different to those of other business segments. A geographical segment is identified when products or services are
provided within a particular economic environment subject to risks and returns that are different from those of segments operating in
other economic environments.

18
 Westonia Mines Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2007
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
(d) Revenue recognition
Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial assets.

(e) Income tax

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

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

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

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

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

Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.

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

Leases where a significant portion of the risks and rewards of ownership are not transferred to the Group as lessee are classified as
operating leases (note 21). Payments made under operating leases (net of any incentives received from the lessor) are charged to the
income statement on a straight-line basis over the period of the lease.

(g) Business combinations

The purchase method of accounting is used to account for all business combinations, including business combinations involving entities
or businesses under common control, regardless of whether equity instruments or other assets are acquired. Cost is measured as the fair
value of the assets given, equity instruments issued or liabilities incurred or assumed at the date of exchange plus costs directly
attributable to the acquisition. Where equity instruments are issued in an acquisition, the fair value of the instruments is their published
market price as at the date of exchange unless, in rare circumstances, it can be demonstrated that the published price at the date of
exchange is an unreliable indicator of fair value and that other evidence and valuation methods provide a more reliable measure of fair
value. Transaction costs arising on the issue of equity instruments are recognised directly in equity.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair
values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value
of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the Group’s share
of the fair value of the identifiable net assets of the subsidiary acquired, the difference is recognised directly in the income statement, but
only after a reassessment of the identification and measurement of the net assets acquired.

Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as
at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing
could be obtained from an independent financier under comparable terms and conditions.

19
 Westonia Mines Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2007
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
(h) Impairment of assets
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment,
or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is
recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of
an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels
for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of
assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of
the impairment at each reporting date.

(i) Cash and cash equivalents

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

(j) Trade and other receivables

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

(k) Investments and other financial assets

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

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

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

(ii) Loans and receivables

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

(iii) Held-to-maturity investments

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

(iv) Available-for-sale financial assets

Available-for-sale financial assets, comprising principally marketable equity securities, are non-derivatives that are either designated in
this category or not classified in any of the other categories. They are included in non-current assets unless management intends to
dispose of the investment within 12 months of the balance sheet date.

Recognition and derecognition

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

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

20
 Westonia Mines Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2007
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
Subsequent measurement
Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective interest method.

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

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

Fair value
The fair values of quoted investments are based on last trade prices. If the market for a financial asset is not active (and for unlisted
securities), the Group establishes fair value by using valuation techniques. These include the use of recent arm’s length transactions,
reference to other instruments that are substantially the same, discounted cash flow analysis, and option pricing models making
maximum use of market inputs and relying as little as possible on entity-specific inputs.

Impairment
The Group assesses at each balance date whether there is objective evidence that a financial asset or group of financial assets is impaired.
In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of a security below its
cost is considered as an indicator that the securities are impaired. If any such evidence exists for available-for-sale financial assets, the
cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that
financial asset previously recognised in profit or loss – is removed from equity and recognised in the income statement. Impairment
losses recognised in the income statement on equity instruments classified as available-for-sale are not reversed through the income
statement.

(l) Fair value estimation

The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.

The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and available-for-sale
securities) is based on quoted market prices at the balance sheet date. The quoted market price used for financial assets held by the Group
is the last trade price.

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

(m) Property, plant and equipment

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

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

Land is not depreciated. Depreciation of plant and equipment is calculated using the straight line method to allocate their cost, net of their
residual values, over their estimated useful lives. The rates vary between 10% and 33% per annum.

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

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its
estimated recoverable amount (note 1(h)).

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

21
 Westonia Mines Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2007
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
(n) Exploration, evaluation and development expenditure
Exploration and evaluation costs, including the costs of acquiring licences, are capitalised as exploration and evaluation assets on an area
of interest basis. Costs incurred before the consolidated entity has obtained the legal rights to explore an area are recognised in the
income statement.

Exploration and evaluation assets are only recognised if the rights of the area of interest are current and either:

(i) the expenditures are expected to be recouped through successful development and exploitation of the area of interest; or

(ii) activities in the area of interest have not at the reporting date, reached a stage which permits a reasonable assessment of the existence
or other wise of economically recoverable reserves and active and significant operations in, or in relation to, the area of interest are
continuing.

Exploration and evaluation assets are assessed for impairment if (i) sufficient data exists to determine technical feasibility and
commercial viability, and (ii) facts and circumstances suggest that the carrying amount exceeds the recoverable amount (see impairment
accounting policy (h)). For the purposes of impairment testing, exploration and evaluation assets are allocated to cash-generating units to
which the exploration activity relates. The cash generating unit shall not be larger than the area of interest.

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 to mining
property and development assets.

(o) Site restoration

In accordance with the consolidated entity’s published environmental policy and applicable legal requirements, a provision for site
restoration in respect of contaminated land is recognised when the land is contaminated.

The provision is the best estimate of the present value of the expenditure required to settle the restoration obligation at the reporting date,
based on current legal requirements and technology. Future restoration costs are reviewed annually and any changes are reflected in the
present value of the restoration provision at the end of the reporting period.

The amount of the provision for future restoration costs is capitalised and is depreciated in accordance with the policy set out in note
1(m). The unwinding of the effect of discounting on the provision is recognised as a finance cost.

(p) Trade and other payables

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

(q) Employee benefits

(i) Wages and salaries, annual leave and other employee benefits
Provision is made for employee benefits accumulated as a result of employees rendering services up to the reporting date. These benefits
include wages and salaries, annual leave, and long service leave.

Liabilities arising in respect of wages and salaries, annual leave and any other employee benefits expected to be settled within twelve
months of the reporting date are measured at their nominal amounts based on remuneration rates which are expected to be paid when the
liability is settled. All other employee benefit liabilities are measured at the present value of the estimated future cash outflow to be
made in respect of services provided by employees up to the reporting date. In determining the present value of future cash outflows, the
market yield as at the reporting date on national government bonds, which have terms to maturity approximating the terms of the related
liability, are used.

(ii) Share-based payments

The consolidated entity has an ‘Employee and Contractor Option Plan’ (“ECOP”) for employees, contractors and executives (including
executive directors) of the company.

The plan permits the company, at the discretion of the directors, to grant options over unissued ordinary shares of the company to eligible
directors, members of staff and contractors as specified in the plan rules.

The options, issued for nil consideration, are granted in accordance with performance guidelines established by the directors of the
company.

22
 Westonia Mines Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2007
The options are issued for a specified period and each option is convertible into one ordinary share. The exercise price of the options,
determined in accordance with the rules of the plan, is based on the market price of a share on invitation date, grant date, or another
specified date after grant close. All options expire on the earlier of their expiry date or termination of the employee’s employment.

Options do not vest until a specified period after granting and their exercise is conditional on the consolidated entity achieving certain
performance hurdles.

There are no voting or dividend rights attached to the options. Voting rights will attach to the ordinary shares when the options have
been exercised. The options cannot be transferred and will not be quoted on the ASX.

(r) Issued capital

Ordinary shares are classified as equity.

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

(s) Earnings per share

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

(ii) Diluted earnings per share

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

(t) Goods and Services Tax (GST)

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

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

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

(u) Share based payments

Equity-settled share-based payments are measured at fair value at the date of grant. Fair value is measured by use of the Black & Scholes
option pricing model. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of
non-transferability, exercise restrictions, and behavioural considerations.

The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the
vesting period, based on the consolidated entity’s estimate of shares that will eventually vest.

For cash-settled share based payments, a liability equal to the portion of the goods or services received is recognised at the current fair
value determined at each reporting date.

(v) Rounding of amounts

The company is a kind referred to in Class Order 98/100, issued by the Australian Securities and Investments Commission, relating to the
“rounding off” of amounts in the financial report. Amounts in the financial report have been rounded off in accordance with that Class
Order to the nearest $1.

23
 Westonia Mines Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2007
(w) New accounting standards and interpretations
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2007 reporting periods. The
Group’s and the parent entity’s assessment of the impact of these new standards and interpretations is set out below.

(i) AASB 7 Financial Instruments: Disclosures and AASB 2005-10 Amendments to Australian Accounting Standards [AASB 132, AASB
101, AASB 114, AASB 117, AASB 133, AASB 139, AASB 1, AASB 4, AASB 1023 & AASB 1038]
AASB 7 and AASB 2005-10 are applicable to annual reporting periods beginning on or after 1 January 2007. The Group has not adopted
the standards early. Application of the standards will not affect any of the amounts recognised in the financial statements, but will impact
the type of information disclosed in relation to the Group’s and the parent entity’s financial instruments.

(ii) AASB-I 10 Interim Financial Reporting and Impairment

AASB-I 10 is applicable to reporting periods commencing on or after 1 November 2006. The Group has not recognised an impairment
loss in relation to goodwill, investments in equity instruments or financial assets carried at cost in an interim reporting period but
subsequently reversed the impairment loss in the annual report. Application of the interpretation will therefore have no impact on the
Group’s or the parent entity’s financial statements.

(x) Critical accounting judgements, estimates and assumptions

The preparation of financial statements in conformity with AIFRS requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher
degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are:

Share based payment transactions

The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the
date at which they are granted. The fair value is determined by an internal valuation using a Black-Scholes option pricing model, using
the assumptions detailed in note 27.

Impairment of exploration and development expenditure

At the end of the financial year the Company assessed the impairment of the exploration and development expenditure carried forward
with regard to the current status of the Westonia Gold Project at the prevailing gold prices. As a result of the impairment assessment all
capitalised expenditure totalling $5,540,866 of exploration expenditure and $2,972,315 of development expenditure was written off as at
30 June 2007.

24
 Westonia Mines Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2007
2. FINANCIAL RISK MANAGEMENT
(a) Financial risk management objectives
The consolidated entity’s financial control function provides services to the business, co-ordinates access to domestic and international
financial markets, and manages the financial risks relating to the operations of the consolidated entity.

(b) Significant accounting policies

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and
the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity
instrument are disclosed in note 1 to the financial statements.

(c) Interest rate risk

The Group's exposure to interest rate risks and the effective interest rates of financial assets and financial liabilities, both recognised and
unrecognised at the balance date, are as follows:

2007 Fixed interest rate maturing in:

Total carrying Weighted
amount as per average
Floating More than 5 Non interest the balance effective
interest rate 1 year or less 1 to 5 years years bearing sheet interest rate
Financial instrument $ $ $ $ $ $ %
Financial assets
Cash and cash equivalents 1,075,686 - - - - 1,075,686 5.7
Trade and other
receivables - - - - 294,577 294,577 -
Term and bond deposits - 1,895,355 - - - 1,895,355 5.7
Total financial assets 1,075,686 1,895,355 - - 294,577 3,265,618

Financial liabilities
Trade creditors - - - - (298,751) (298,751) -
Other creditors and
accruals - - - - (93,867) (93,867) -
Total financial liabilities - - - - (392,618) (392,618)

2006 Fixed interest rate maturing in:

Total carrying Weighted
amount as per average
Floating More than 5 Non interest the balance effective
interest rate 1 year or less 1 to 5 years years bearing sheet interest rate
Financial instrument $ $ $ $ $ $ %
Financial assets
Cash and cash equivalents 4,712,371 295,641 - - 6,402 5,014,414 4.0
Trade and other
receivables - - - - 130,742 130,742 -
Term and bond deposits - 1,967,284 - - 35,000 2,002,284 -
Total financial assets 4,712,371 2,262,925 - - 172,144 7,147,440

Financial liabilities
Trade creditors - - - - (205,818) (205,818) -
Other creditors and
accruals - - - - (1,814,789) (1,814,789) -
Total financial liabilities - - - - (2,020,607) (2,020,607)

25
 Westonia Mines Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2007
2. FINANCIAL RISK MANAGEMENT (cont’d)
(d) Net fair values
All financial assets and liabilities have been recognised at the balance date at amounts approximating their carrying value.

(e) Liquidity risk management

The consolidated entity manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by
continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.

5. SEGMENT INFORMATION
Description of segments
The Group’s operations are in the mining industry in Australia.

Consolidated Parent Entity

2007 2006 2007 2006
$ $ $ $
4. REVENUE
From continuing operations
Other revenue
Interest income 386,788 263,123 386,788 263,123
Research and development grant - 161,147 - 161,147
Other income 250 2,818 250 2,818
387,038 427,088 387,038 427,088

5. EXPENSES
Loss before income tax includes the following
specific expenses:
Depreciation
Motor vehicles 10,442 8,821 10,442 8,821
Office furniture and equipment 14,262 16,704 14,262 16,704
Computer equipment 3,612 1,753 3,612 1,753
Mining machinery and equipment 93,714 82,252 93,714 82,252
Total depreciation 122,030 109,530 122,030 109,530

Rental of premises under operating lease 144,745 125,832 144,745 125,832

Net loss on disposal of plant and equipment - 5,164 - 5,164

6. INCOME TAX
(a) Income tax expense/(benefit)
Deferred tax benefit on origination and reversal of
temporary differences (108,542) (15,834) (108,542) (15,834)
Total income tax benefit per income statement (108,542) (15,834) (108,542) (15,834)

26
 Westonia Mines Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2007 Consolidated Parent Entity
2007 2006 2007 2006
$ $ $ $
6. INCOME TAX (cont’d)
(b) Numerical reconciliation of income tax benefit to
prima facie tax payable
Loss from continuing operations before income tax
benefit (9,838,739) (12,622,627) (9,838,739) (12,622,627)

Prima facie tax benefit at the Australian tax rate of 30%

(2006: 30%) (2,951,622) (3,786,788) (2,951,622) (3,786,788)

Add tax effect of:

Non-deductible expenses 15,891 138,454 15,891 138,454
Effect of current year tax losses not recognised 1,323,199 1,302,319 1,323,199 1,302,319
Effect of reversal of previously recognised prior
year tax losses - 2,150,629 - 2,150,629
Effect of reversal of temporary differences 1,586,035 292,508 1,586,035 292,508
2,925,125 3,883,910 2,925,125 3,883,910

Less tax effect of:

(Over) provision for prior year (4,198) - (4,198) -
Tax deductible equity raising costs (77,847) (64,612) (77,847) (64,612)
Non assessable income - (48,344) - (48,344)
(82,045) (112,956) (82,045) (112,956)

Income tax (benefit) (108,542) (15,834) (108,542) (15,834)

© Amounts recognised directly in equity

Relating to equity raising costs (108,542) (15,834) (108,542) (15,834)

Deferred tax expense/(benefit) attributable to entity

recognised in equity (108,542) (15,834) (108,542) (15,834)

(d) Recognised deferred tax assets & liabilities

Consolidated & Parent Entity
Assets Liabilities Net
2007 2006 2007 2006 2007 2006
$ $ $ $ $ $
Plant and equipment - 3,632 - - - 3,632
Big Bell asset & provision - 1,162,492 - (75,000) - 1,087,492
Exploration & mine properties - 97,200 - (1,320,699) - (1,223,499)
Equity raising - 108,542 - - - 108,542
Accruals & provisions 3,699 19,355 - - 3,699 19,355
Prior year expensed blackhole
costs - 301 - - - 301
Other items - 12,244 (3,699) (8,067) (3,699) 4,177
3,699 1,403,766 (3,699) (1,403,766) - -

27
 Westonia Mines Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2007
6. INCOME TAX (cont’d)
(e) Movement in temporary differences recognised
during the year
Balance at Recognised in Recognised in Balance at
1 July 2006 income equity 30 June 2007
$ $ $ $
Plant and equipment 3,632 (3,632) - -
Big Bell asset & provision 1,087,492 (1,087,492) - -
Exploration & mine properties (1,223,499) 1,223,499 - -
Equity raising 108,542 - (108,542) -
Accruals & provisions 19,355 (15,656) - 3,699
Prior year expensed blackhole costs 301 (301) - -
Other items 4,177 (7,876) - (3,699)
Net tax assets/(liabilities) - 108,542 (108,542) -

Balance at Recognised in Recognised in Balance at

1 July 2005 income equity 30 June 2006
$ $ $ $
Plant and equipment (11,553) 15,185 - 3,632
Big Bell asset & provision - 1,087,492 - 1,087,492
Exploration & mine properties (2,307,481) 1,083,982 - (1,223,499)
Equity raising 124,376 - (15,834) 108,542
Accruals & provisions 26,862 (7,507) - 19,355
Prior year expensed blackhole costs 602 (301) - 301
Tax value of losses recognised 2,150,628 (2,150,628) - -
Other items 16,566 (12,389) - 4,177
Net tax assets/(liabilities) - 15,834 (15,834) -

(f) Unrecognised deferred tax assets

Consolidated Parent Entity
2007 2006 2007 2006
$ $ $ $
Deferred tax assets at 30% have not been recognised in respect of the following:
Deductible temporary differences 2,036,636 292,508 2,036,636 292,508
Tax losses 5,216,267 4,082,322 5,216,267 4,082,322
Capital losses 32,812 32,812 32,812 32,812
7,285,715 4,407,642 7,285,715 4,407,642

No income tax is payable by the consolidated entity. The directors have considered it prudent not to bring to account the future income
tax benefit of income tax losses and exploration deductions until there is virtual certainty of deriving assessable income of a nature and
amount to enable such benefit to be realised.

This future income tax benefit will only be obtained if:

(a) future assessable income is derived of a nature and of an amount sufficient to enable the benefit to be realised;

(b) the conditions for deductibility imposed by tax legislation continue to be complied with; and

© no changes in tax legislation adversely affect the consolidated entity in realising the benefit.

28
 Westonia Mines Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2007 Notes Consolidated Parent Entity
2007 2006 2007 2006
$ $ $ $
7. CURRENT ASSETS – CASH AND CASH EQUIVALENTS
Cash and cash equivalents as shown in the balance
sheets and the statements of cash flows 1,075,686 5,014,414 1,075,686 5,014,414

8. CURRENT ASSETS – TRADE AND OTHER RECEIVABLES

Government taxes receivable 265,421 75,787 265,421 75,787
Other receivables 29,156 54,955 29,154 54,953
294,577 130,742 294,575 130,740

9. CURRENT ASSETS – OTHER ASSETS

Prepayments 9,017 12,226 9,017 12,226
Term deposits 9(a) 1,893,855 1,955,058 1,883,855 1,955,058
1,902,872 1,967,284 1,892,872 1,967,284

(a) Term deposits are tenement and performance bonds in relation to various assets. These deposits are not at call.

10. NON-CURRENT ASSETS – OTHER FINANCIAL ASSETS

Shares in unlisted controlled entity – at cost 23 - - 2 2
Loan to controlled entity - - 10,000 -
Term and bond deposits 1,500 35,500 1,500 35,500
1,500 35,500 11,502 35,502

11. NON-CURRENT ASSETS – PROPERTY, PLANT AND EQUIPMENT

Freehold land
Cost 11(a) 391,301 - 391,301 -

Motor vehicles
Cost 51,789 51,789 51,789 51,789
Accumulated depreciation (34,755) (24,313) (34,755) (24,313)
11(a) 17,034 27,476 17,034 27,476

Office furniture and equipment

Cost 106,714 93,124 106,714 93,124
Accumulated depreciation (71,034) (56,772) (71,034) (56,772)
11(a) 35,680 36,352 35,680 36,352

Computer equipment
Cost 16,354 10,043 16,354 10,043
Accumulated depreciation (10,548) (6,936) (10,548) (6,936)
11(a) 5,806 3,107 5,806 3,107

Mining machinery and equipment

Cost 7,942,980 7,892,980 7,942,980 7,892,980
Accumulated depreciation (192,721) (99,007) (192,721) (99,007)
Provision for impairment (4,600,000) (4,600,000) (4,600,000) (4,600,000)
11(a) 3,150,259 3,193,973 3,150,259 3,193,973

Total property, plant and equipment at cost 8,509,138 8,047,936 8,509,138 8,047,936
Accumulated depreciation (309,058) (187,028) (309,058) (187,028)
Provision for impairment (4,600,000) (4,600,000) (4,600,000) (4,600,000)
Net book amount 3,600,080 3,260,908 3,600,080 3,260,908

29
 Westonia Mines Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2007 Notes Consolidated Parent Entity
2007 2006 2007 2006
$ $ $ $
11. NON-CURRENT ASSETS – PLANT AND EQUIPMENT (cont’d)
(a) Reconciliations of the carrying amounts of plant
and equipment

Freehold land
Opening net book amount - - - -
Additions 391,301 - 391,301 -
Closing net book amount 391,301 - 391,301 -

Motor vehicles
Opening net book amount 27,476 36,297 27,476 36,297
Additions - - - -
Depreciation charge (10,442) (8,821) (10,442) (8,821)
Closing net book amount 17,034 27,476 17,034 27,476

Office furniture and equipment

Opening net book amount 36,352 49,608 36,352 49,608
Additions 13,590 3,448 13,590 3,448
Depreciation charge (14,262) (16,704) (14,262) (16,704)
Closing net book amount 35,680 36,352 35,680 36,352

Computer equipment
Opening net book amount 3,107 1,863 3,107 1,863
Additions 6,311 2,997 6,311 2,997
Depreciation charge (3,612) (1,753) (3,612) (1,753)
Closing net book amount 5,806 3,107 5,806 3,107

Mine machinery and equipment (i)

Opening net book amount 3,193,973 2,596,932 3,193,973 2,596,932
Additions 50,000 5,287,184 50,000 5,287,184
Disposals - (7,891) - (7,891)
Depreciation charge (93,714) (82,252) (93,714) (82,252)
Impairment charge - (4,600,000) - (4,600,000)
Closing net book amount 3,150,259 3,193,973 3,150,259 3,193,973

(i) Mine machinery includes the Big Bell Mill which had a carrying value at the beginning of the prior year of $2,550,000. During the
prior year the Company carried out an impairment assessment of the Big Bell Mill. An estimate of the cost of the Company’s obligation
to relocate the mill and rehabilitate the site was conducted, which resulted in a provision of $4,850,000 being recorded at 30 June 2006.
This amount has been included in ‘Additions’ for the prior year. This brought the total carrying value of the mill to $7,400,000. The
impairment assessment based on an independent appraisal, concluded that a value for the mill of $2,800,000 was appropriate resulting in
a provision for impairment of $4,600,000.

30
 Westonia Mines Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2007 Consolidated Parent Entity
2007 2006 2007 2006
$ $ $ $
12. NON-CURRENT ASSETS – MINING PROPERTIES
Exploration and evaluation costs carried forward in
respect of mining areas of interest
Opening net book amount 3,915,850 8,014,172 3,915,850 8,014,172
Incurred during the year 1,625,016 439,752 1,625,016 439,752
Transferred to Development - (1,290,208) - (1,290,208)
Provision for impairment (5,540,866) (3,247,866) (5,540,866) (3,247,866)
Closing net book amount - 3,915,850 - 3,915,850

Development costs carried forward in respect of

mining areas of interest
Opening net book amount 787,651 - 787,651 -
Incurred during the year 2,184,664 2,826,847 2,184,664 2,826,847
Transferred from Exploration - 1,290,208 - 1,290,208
Provision for rehabilitation costs - 324,000 - 324,000
Provision for impairment (2,972,315) (3,653,404) (2,972,315) (3,653,404)
Closing net book amount - 787,651 - 787,651

Total expenditure carried forward in respect of mining

properties - 4,703,501 - 4,703,501

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

At the end of the financial year the Company assessed the impairment of the exploration and development expenditure carried forward
with regard to the current status of the Westonia Gold Project at the prevailing gold prices. As a result of the impairment assessment all
capitalised expenditure totalling $5,540,866 of exploration expenditure and $2,972,315 of development expenditure was written off as at
30 June 2007.

13. CURRENT LIABILITIES – TRADE AND OTHER PAYABLES

Trade payables 298,751 205,819 298,751 205,819
Other payables and accruals 93,867 43,389 93,867 43,389
Subscriptions received - 1,771,400 - 1,771,400
392,618 2,020,608 392,618 2,020,608

14. CURRENT LIABILITIES – PROVISIONS

Employee benefits 81,578 49,543 81,578 49,543
Site restoration 724,000 5,174,000 724,000 5,174,000
805,578 5,223,543 805,578 5,223,543

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 Westonia Mines Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2007
14. CURRENT LIABILITIES – PROVISIONS (cont’d)
Movements in provisions
Consolidated & Parent Entity 2007 Employee Site
entitlements restoration
$ $
Current
Carrying amount at start of year 49,543 5,174,000
Provisions made during the year 46,222 650,000
Provisions used during the year (14,187) (5,100,000)
Carrying amount at end of year 81,578 724,000

Site restoration
The relocation of the Big Bell Mill was completed during the year which accounted for the provisions used of $5,100,000 during the
year. The remaining provision relates to completing the site restoration as required under the agreement between the Company and
Harmony Gold Mines, vendor of Big Bell Mill, and rehabilitation of the evaporative ponds at the Westonia Mine site. Under certain
conditions, Newmont Mining Corporation is responsible for some rehabilitation of M77/88 and M77/110.

15. ISSUED CAPITAL

(a) Share capital
2007 2006
Number of Number of
$ $
Notes shares shares
Ordinary shares fully paid 15(b), 15(d) 307,002,051 30,088,089 234,157,498 22,591,978

Total contributed equity 307,002,051 30,088,089 234,157,498 22,591,978

(b) Movements in ordinary share capital

2007 2006
Number of Number of
$ $
shares shares
Beginning of the financial year 234,157,498 22,591,978 220,998,086 20,507,406
Issued during the year:
− Placement of shares to raise additional capital at 17
cents per share 10,420,000 1,771,400 13,109,412 2,228,600
− Issued on exercise of options 155,550 31,110 50,000 5,500
− Renounceable rights issue at 10 cents per share 61,197,083 6,119,708 - -
− Issued as consideration for sub-underwriting fees in
relation to the renounceable rights issue 1,071,920 107,192 - -
Less items taken direct to equity - (108,542) - (15,834)
Less transaction costs - (424,757) - (133,694)
End of the financial year 307,002,051 30,088,089 234,157,498 22,591,978

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 Westonia Mines Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2007
15. ISSUED CAPITAL (cont’d)
© Movements in options on issue Number of options
2007 2006
Beginning of the financial year 30,564,669 28,164,669
Issued/(lapsed) during the year:
− Exercisable at 20 cents, on or before 20 August 2006 (27,249,119) -
− Exercisable at 20 cents, on or before 27 April 2010 1,000,000 -
− Exercisable at 36 cents, on or before 27 April 2007 (30,000) -
− Exercisable at 42 cents, on or before 27 April 2007 (30,000) -
− Exercisable at 11 cents, on or before 22 November 2008 - 200,000
− Exercisable at 11 cents, on or before 22 November 2009 - 200,000
− Exercisable at 11 cents, on or before 22 November 2010 - 750,000
− Exercisable at 20 cents, on or before 22 November 2010 - 2,000,000
− Exercisable at 40 cents, on or before 31 May 2006 - (700,000)
Options exercised during the year:
− Exercisable at 20 cents, on or before 20 August 2006 (155,550) -
− Exercisable at 11 cents, on or before 22 November 2010 - (50,000)
End of the financial year 4,100,000 30,564,669

(d) Ordinary shares

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

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

Consolidated Parent Entity

2007 2006 2007 2006
$ $ $ $
16. RESERVES AND ACCUMULATED LOSSES
(a) Reserves
Share-based payments reserve
Balance at beginning of year 456,266 2,464 456,266 2,464
Employee share options 42,407 453,802 42,407 453,802
Balance at end of year 498,673 456,266 498,673 456,266

(b) Accumulated losses

Balance at beginning of year (15,180,046) (2,573,253) (15,180,046) (2,573,253)
Net loss for the year (9,730,197) (12,606,793) (9,730,197) (12,606,793)
Balance at end of year (24,910,243) (15,180,046) (24,910,243) (15,180,046)

© Nature and purpose of reserves

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

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

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 Westonia Mines Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2007
18. KEY MANAGEMENT PERSONNEL DISCLOSURES
(a) Details of key management personnel
(i) Directors
The following persons were directors of Westonia Mines Limited during the financial year:

Mark Fitzpatrick Chairman

David Hatch Managing Director
Murray Pollock Non Executive Director
Chris Melloy Non Executive Director
John Rowe Non Executive Director appointed 12 October 2006

(ii) Other Key Management Personnel

The following persons also had authority and responsibility for planning, directing and controlling the activities of the Group, directly or
indirectly, during the financial year:

John Fitzgerald Company Secretary appointed 6 March 2007

John Hannaford Company Secretary resigned 6 March 2007
Rowan Johnston Resident Manager

(b) Key management personnel compensation

Consolidated Parent Entity
2007 2006 2007 2006
$ $ $ $
Short-term benefits 797,771 612,197 797,771 612,197
Post employment benefits 53,395 44,039 53,395 44,039
Other long-term benefits - - - -
Termination benefits - - - -
Share-based payments 42,407 402,172 42,407 402,172
893,573 1,058,408 893,573 1,058,408

The company has taken advantage of the relief provided by Corporations Regulation 2M.6.04 and has transferred the detailed
remuneration disclosures to the directors’ report. The relevant information can be found in sections A-C of the remuneration report on
pages 5 to 8.

c) Equity instrument disclosures relating to key management personnel

(i) Options provided as remuneration and shares issued on exercise of such options
Details of options provided as remuneration and shares issued on the exercise of such options, together with terms and conditions of the
options, can be found in section D of the remuneration report on page 8.

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 Westonia Mines Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2007
18. KEY MANAGEMENT PERSONNEL (cont’d)
(ii) Option holdings
The numbers of options over ordinary shares in the company held during the financial year by each director of Westonia Mines Limited
and other key management personnel of the Group, including their personally related parties, are set out below:

2007 Balance at Balance at

start of the Granted as Other end of the Vested and
year compensation Exercised changes year exercisable Unvested
Directors of Westonia Mines Limited
Mark Fitzpatrick - - - - - - -
David Hatch 2,600,000 - - - 2,600,000 2,400,000 200,000
Murray Pollock 3,750,477 - - (3,750,477) - - -
Chris Melloy 23,333 - - (23,333) - - -
John Rowe - - - - - - -
Other key management personnel of the Group
John Fitzgerald - 1,000,000 - - 1,000,000 200,000 800,000
John Hannaford - - - - - - -
Rowan Johnston 250,000 - - - - - -

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

2006 Balance at Balance at

start of the Granted as Other end of the Vested and
year compensation Exercised changes year exercisable Unvested
Directors of Westonia Mines Limited
Mark Fitzpatrick - - - - - - -
David Hatch - 2,600,000 - - 2,600,000 2,200,000 400,000
Murray Pollock 3,750,477 - - - 3,750,477 3,750,477 -
Chris Melloy 23,333 - - - 23,333 23,333 -
Other key management personnel of the Group
John Hannaford - - - - - - -
Rowan Johnston - 250,000 - - 250,000 250,000 -

(iii) Share holdings

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

2007 Received
during the Other
Balance at year on the changes Balance at
start of the exercise of during the end of the
year options year year
Directors of Westonia Mines Limited
Ordinary shares
Mark Fitzpatrick 650,000 - 162,500 812,500
David Hatch 367,334 - 191,834 559,168
Murray Pollock 13,854,000 - 936,054 14,790,054
Chris Melloy 1,070,000 - 267,500 1,337,500
John Rowe - - - -
Other key management personnel of the Group
Ordinary shares
John Fitzgerald - - - -
John Hannaford - - - -
Rowan Johnston - - - -

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 Westonia Mines Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2007
18. KEY MANAGEMENT PERSONNEL (cont’d)
2006 Received
during the Other
Balance at year on the changes Balance at
start of the exercise of during the end of the
year options year year
Directors of Westonia Mines Limited
Ordinary shares
Mark Fitzpatrick - - 650,000 650,000
David Hatch - - 367,334 367,334
Murray Pollock 13,590,054 - 263,946 13,854,000
Chris Melloy 1,070,000 - - 1,070,000
Other key management personnel of the Group
Ordinary shares
John Hannaford - - - -
Rowan Johnston - - - -

(d) Loans to key management personnel

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

(e) Other transactions with key management personnel

Refer to note 22 for other transactions and balances with key management personnel.

Consolidated Parent Entity

2007 2006 2007 2006
$ $ $ $
19. REMUNERATION OF AUDITORS
During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related practices and
non-related audit firms:
Audit services
Ord Partners – audit and review of financial reports 27,500 23,250 27,500 23,250
Department of Industry & Resources tenement audits 2,500 - 2,500 -
30,000 23,250 30,000 23,250

20. CONTINGENCIES
The company has an obligation to rehabilitate a tenement currently being used as an evaporation pond. A bond of $324,000 has been
committed as the estimated rehabilitation cost. A provision has been raised for this amount.

The company has a contractual obligation to rehabilitate the former site of the Big Bell plant following the relocation of the plant during
the year. A bond of $400,000 has been committed as the estimated rehabilitation cost. A provision has been raised for this amount.

Apart from the above there are no material contingent liabilities or contingent assets of the Group at balance date.

36
 Westonia Mines Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2007 Consolidated Parent Entity
2007 2006 2007 2006
$ $ $ $
21. COMMITMENTS
(a) Exploration commitments
All of the company’s tenements are situated in the state of Western Australia.

In order to maintain an interest in the mining and exploration tenements in which the company is involved, the company is committed to
meet the conditions under which the tenements were granted and the obligations of any joint venture agreements. The timing and amount
of exploration expenditure commitments and obligations of the company are subject to the minimum expenditure commitments required
as per the Mining Act, as amended, and may vary significantly from the forecast based upon the results of the work performed which will
determine the prospectivity of the relevant area of interest. These obligations are not provided for in the financial report and are payable.

Outstanding exploration commitments are as follows (no estimate has been given of expenditure commitments beyond 12 months as this
is dependent on the directors’ ongoing assessment of operations and, in certain circumstances, Native Title negotiations):

within one year 541,122 596,469 541,122 596,469

(b) Lease commitments: Group as lessee

Operating leases (non-cancellable):
Minimum lease payments
within one year 103,860 91,300 103,860 91,300
later than one year but not later than five years 26,260 119,900 26,260 119,900
Aggregate lease expenditure contracted for at reporting
date but not recognised as liabilities 130,120 211,200 130,120 211,200

The property lease is a non-cancellable lease with a five-year term, with rent payable monthly in advance. Contingent rental provisions
within the lease agreement require the minimum lease payments to be increased by fixed amounts on the annual anniversary dates. An
option exists to renew the lease at the end of the five-year term for an additional term of two years. The lease allows for subletting of all
lease areas.

22. RELATED PARTY TRANSACTIONS

5. Parent entity
The ultimate parent entity within the Group is Westonia Mines Limited.

(b) Subsidiaries
Interests in subsidiaries are set out in note 23.

© Key management personnel

Apart from the details disclosed in this note and note 18, no director has entered into a material contract with the company since the end
of the previous financial year and there were no material contracts involving directors’ interests existing at year end except as disclosed
below.

Lion Manager
The company paid $38,000 (2006: $22,333) in lieu of directors fees, and expense reimbursements totalling $23,633, to Lion Manager,
the management company responsible for the operation of Lion Selection Group, for the services or Mr Chris Melloy as a Non Executive
director. Mr Melloy is an Executive Director of Lion Manager. Lion Selection Group is a substantial shareholder in Westonia Mines
Limited. Lion Selection Group also received 1,071,920 ordinary shares in the Company with a deemed value of $107,192 in satisfaction
of a sub-underwriting fee in relation to the rights issue conducted in November 2006. An amount of $10,000 (2006: $6,000) was owing
to Lion Manager at 30 June 2007, included in creditors.

Payments were made at commercial rates and on an arm’s length basis.

Ventnor Capital Pty Ltd

Ventnor Capital, a company of which Mr Hannaford is a Director, provided company secretarial and other corporate services to Westonia
Mines Limited during the year until his resignation on 6 March 2007. The amounts paid were at arms length and are disclosed at note
18(b) above.

An amount of nil (2006: $6,944) was owing to Ventnor Capital at 30 June 2007.

37
 Westonia Mines Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2007
23. SUBSIDIARIES
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiary in accordance with the
accounting policy described in note 1(b):
Name Country of Incorporation Class of Shares Equity Holding*
2007 2006
% %
Westonia Mines Minerals Pty Ltd Australia Ordinary 100 100

*The proportion of ownership interest is equal to the proportion of voting power held.

24. EVENTS OCCURRING AFTER THE BALANCE SHEET DATE

In July 2007 the Company completed a rights issue of 38,375,256 ordinary shares at 8 cents per share with one free attaching option per
share, to raise a gross amount of $3.07 million.

No other matter or circumstance has arisen since 30 June 2007, which has significantly affected, or may significantly affect the
operations of the Group, the result of those operations, or the state of affairs of the Group in subsequent financial years.

25. CASH FLOW STATEMENT

Consolidated Parent Entity
2007 2006 2007 2006
$ $ $ $
(a) Reconciliation of net loss after income tax to net
cash outflow from operating activities
Net loss for the year (9,730,197) (12,606,793) (9,730,197) (12,606,793)
Non-Cash Items
Depreciation of non-current assets 122,030 109,530 122,030 109,530
Share based payments 42,407 453,802 42,407 453,802
Net (profit)/loss on disposal of plant and equipment - (5,164) - (5,164)
Impairment of exploration expenditure 5,540,866 3,247,866 5,540,866 3,247,866
Impairment of development expenditure 2,972,315 3,653,404 2,972,315 3,653,404
Income tax benefit (108,542) - (108,542) -
Provision for impairment of plant and equipment - 4,600,000 - 4,600,000
Change in operating assets and liabilities, net of
effects from purchase of controlled entities
(Increase)/decrease in trade and other receivables (152,772) - (152,772) -
(Increase)/decrease in prepayments 74,412 (12,226) 74,412 (12,226)
(Decrease)/increase in trade and other payables 143,411 27,715 143,411 27,715
Increase in employee entitlement provisions 32,035 11,657 32,035 11,657
Net cash outflow from operating activities (1,064,035) (520,209) (1,064,035) (520,209)

(b) Non-cash investing and financing activities

1,071,920 ordinary shares in the Company with a deemed value of $107,192 were issued in consideration of a sub-underwriting fee in
relation to the rights issue conducted in November 2006.

26. LOSS PER SHARE

Consolidated
2007 2006
$ $
(a) Reconciliation of earnings used in calculating loss
per share
Loss attributable to the ordinary equity holders of the
company used in calculating basic and diluted loss per
share (9,730,197) (12,606,793)
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 Westonia Mines Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2007
26. LOSS PER SHARE (cont’d)
Number of Number of
shares shares
(b) Weighted average number of shares used as the
denominator
Weighted average number of ordinary shares used as
the denominator in calculating basic and diluted loss per
share 278,207,244 224,558,623

© Information on the classification of options

As the Group has made a loss for the year ended 30 June 2007, all options on issue are considered antidilutive and have not been
included in the calculation of diluted loss per share. These options could potentially dilute basic loss per share in the future.

27. SHARE-BASED PAYMENTS

Employees and Contractors Option Plan (“ECOP”)
An Employees and Contractors Option Plan (“ECOP”) has been established, approved by the board on 18 April 2002 and at the Annual
General Meeting on 5 June 2002. The plan permits the company, at the discretion of the directors, to grant options over unissued
ordinary shares of the company to eligible directors, members of staff and contractors as specified in the plan rules.

The options, issued for nil consideration, are granted in accordance with performance guidelines established by the directors of the
company. In exercising their discretion under the rules, the directors will take into account matters such as the position of the eligible
person, the role they play in the company group, the nature or terms of their employment or contract and the contribution they make to
the company group as a whole.

The options are issued for a specified period and each option is convertible into one ordinary share. The exercise price of the options,
determined in accordance with the rules of the plan, is based on the market price of a share on invitation date, grant date, or another
specified date after grant close. All options expire on the earlier of their expiry date or termination of the employee’s employment.

Options do not vest until a specified period after granting and their exercise is conditional on the achievement of certain performance
hurdles.

There are no voting or dividend rights attached to the options. Voting rights will attach to the ordinary shares when the options have
been exercised. The options cannot be transferred and will not be quoted on the ASX.

Set out below are summaries of the options granted:

Consolidated and Parent Entity
2007 2006
Weighted Weighted
average average
Number of exercise price Number of exercise price
options cents options cents
Outstanding at the beginning of the year 3,160,000 17.2 60,000 39.0
Granted 1,000,000 20.0 3,100,000 16.8
Forfeited - - - -
Exercised - - - -
Expired (60,000) 39.0 - -
Outstanding at year-end 4,100,000 17.6 3,160,000 17.2
Exercisable at year-end 3,100,000 17.4 2,760,000 18.1

The weighted average remaining contractual life of share options outstanding at the end of the financial year was 3.1 years (2006: 0.55
years), with exercise prices ranging from 11 to 20 cents.

39
 Westonia Mines Limited - Annual Report

Notes to the Financial Statements continued

30 JUNE 2007
27. SHARE-BASED PAYMENTS (cont’d)
The fair value of the options granted during the year was calculated by using the Black-Scholes European Option Pricing Model applying
the following inputs:

Grant Date Expiry Date Number Exercise Life of the Share Price Volatility Risk Free Fair Value at
Granted Price (cents) Option at Grant Date Interest Grant Date
(years) (cents) Rate (cents)
2007
03/04/2007 03/04/2010 1,000,000 20 3.0 11.8 106% 6.25% 6.8
2006
15/03/2006 22/11/2010 1,500,000 20 4.7 21.0 106% 5.50% 16.4
15/03/2006 22/11/2010 200,000 11 4.7 21.0 106% 5.50% 17.8
15/03/2006 22/11/2009 200,000 11 3.7 21.0 106% 5.50% 16.9
24/01/2006 22/11/2010 500,000 20 4.8 20.5 106% 5.50% 16.1
24/01/2006 22/11/2010 200,000 11 4.8 20.5 106% 5.50% 17.4
24/01/2006 22/11/2008 200,000 11 2.8 20.5 106% 5.50% 15.5
14/11/2005 22/11/2010 300,000 11 5.0 8.1 106% 5.50% 6.2

Historical volatility has been used as the basis for determining expected share price volatility as it assumed that this is indicative of future
trends, which may not eventuate.

Total expenses arising from share-based payment transactions recognised during the period were as follows:

Consolidated Parent Entity

2007 2006 2007 2006
$ $ $ $
Options issued to employees and contractors as part of:
Other expenses 42,407 453,802 42,407 453,802

40
 Westonia Mines Limited - Annual Report

Directors' Declaration
In the directors’ opinion:
(a) the financial statements and notes set out on pages 15 to 41 are in accordance with the Corporations Act 2001, including:
(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements; and
(ii) giving a true and fair view of the company’s and the consolidated entity’s financial position as at 30 June 2007 and of their
performance for the financial year ended on that date; and
(b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable;
and
(c) the audited remuneration disclosures set out on pages 5 to 8 of the directors’ report comply with Accounting Standards AASB 124
Related Party Disclosures and the Corporations Regulations 2001.

The directors have been given the declarations by the chief executive officer and chief financial officer required by section 295A of the
Corporations Act 2001.

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

Mark Fitzpatrick
Chairman

Perth, 27 September 2007

41
 O R D
PARTNERS
CHARTEREDACCOUNTANTS

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF

WESTONIA MINES LIMITED

We have audited the accompanying financial report of Westonia Mines Limited, which
comprises the balance sheet as at 30 June 2007, and the income statement, statement of Ian K Macpherson CA
changes in equity and cash flow statement for the year ended on that date, a summary of
significant accounting policies, other explanatory notes and the directors’ declaration of
the consolidated entity comprising the company and the entities it controlled at the year’s Robert W Parker CA
end or from time to time during the financial year.
We have also audited the remuneration disclosures contained in the directors’ report. As Craig A Vivian CA
permitted by the Corporations Regulations 2001, the company has disclosed information
about the remuneration of directors and executives (“remuneration disclosures”), required
by Accounting Standard AASB 124 Related Party Disclosures, under the heading
“remuneration report” in pages 5 to 8 of the directors’ report and not in the financial
report.

Directors’ responsibility for the financial report and the AASB 124 remuneration
disclosure contained in the directors’ report

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

The directors of the company are also responsible for the remuneration disclosures
contained in the directors’ report.

Auditor’s responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We
conducted our audit in accordance with Australian Auditing Standards. These Auditing
Standards require that we comply with relevant ethical requirements relating to audit
Level 2, 47 Colin Street
engagements and plan and perform the audit to obtain reasonable assurance whether the West Perth WA 6005
financial report is free from material misstatement.
PO Box 359
West Perth WA 6872
+61 8 9321 3514
¬ +61 8 9321 3523
[email protected]
www.ordgroup.com.au

42
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the
risks of material misstatement of the financial report, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the
financial report and the remuneration disclosures contained in the directors’ report in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the
overall presentation of the financial report and the remuneration disclosures contained in the directors’ report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.

Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
We confirm that the independence declaration required by the Corporations Act 2001, provided to the directors
of Westonia Mines Limited on 27 September 2007, would be in the same terms if provided to the directors as at
the date of this auditor’s report.

Auditor’s opinion on the financial report

In our opinion:

(a) the financial report of Westonia Mines Limited is in accordance with the Corporations Act 2001,
including:

(i) giving a true and fair view of the company’s and consolidated entity’s financial position as at 30
June 2007 and of its performance for the year ended on that date; and

(ii) complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Regulations 2001; and

(b) the financial report also complies with International Financial Reporting Standards as disclosed in Note
1.

Auditor’s opinion on the AASB 124 remuneration disclosures contained in the directors’ report

In our opinion, the remuneration disclosures that are contained in pages 5 to 8 of the directors’ report comply
with Accounting Standard AASB 124.

ORD PARTNERS

Chartered Accountants

Robert Parker
Partner
Perth, 27 September 2007

43
 Westonia Mines Limited - Annual Report

ASX Additional Information

Additional information required by Australian Stock Exchange Ltd and not shown elsewhere in this report is as follows. The information
is current as at 27 September 2007.

(a) Distribution of equity securities

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

Ordinary shares
Number of holders Number of shares
1 - 1,000 30 8,930
1,001 - 5,000 180 649,781
5,001 - 10,000 307 2,618,649
10,001 - 100,000 1,249 49,013,633
100,001 and over 333 293,086,314
2,099 345,377,307
The number of shareholders holding less than a marketable parcel of shares are: 265 981,121

(b) Twenty largest shareholders

The names of the twenty largest holders of quoted ordinary shares are:
Listed ordinary shares
Percentage of
Number of shares
ordinary shares
1 Lion Selection Group Ltd 152,096,301 44.04%
2 Goldrich Holdings Pty Ltd 14,000,000 4.05%
3 Zero Nominee Pty Ltd 8,859,375 2.57%
4 HSBC Custody Nominee Australia Ltd 7,000,000 2.03%
5 ANZ Nominee Ltd 6,040,024 1.75%
6 Drummond Shay Margaret 5,022,792 1.45%
7 Charlemagne Investments Pty Ltd 2,475,000 0.72%
8 Exwere Investments Pty Ltd 1,954,688 0.57%
9 Readco Management Pty Ltd 1,897,444 0.55%
10 Inmont Pty Ltd 1,525,125 0.44%
11 R O stone Pty Ltd 1,141,000 0.33%
12 Pretorius Leon Eugene 1,450,000 0.42%
13 Auselect Ltd 1,312,500 0.38%
14 Jayleaf Holdings Pty Ltd 1,300,000 0.38%
15 Willstreet Pty Ltd 1,266,000 0.37%
16 Hooper Bailie Industries 1,250,000 0.36%
17 Kwort Joseph & Fokas K A 1,200,000 0.35%
18 Andrew Drummond & Associate Partners 1,114,550 0.32%
19 Geddes Angus Wiliam S 525,000 0.15%
20 Fortis Clearing Nominee Pty Ltd 1,560,363 0.45%
212,990,162 61.68%

44
 Westonia Mines Limited - Annual Report

ASX Additional Information

Additional information required by Australian Stock Exchange Ltd and not shown elsewhere in this report is as follows. The information
is current as at 27 September 2007.

(c) Distribution of options securities

Analysis of numbers of option holders by size of holding:

Options
Number of holders Number of options
1 - 1,000 40 26,157
1,001 - 5,000 160 460,334
5,001 - 10,000 92 704,393
10,001 - 100,000 1300 6,094,391
100,001 and over 43 31,089,981
535 38,375,256
The number of options holders holding less than a marketable parcel of options are: 12 38,375,256

(d) Twenty largest option holders

The names of the twenty largest option holders of quoted options are:
Listed ordinary shares
Percentage of
Number of shares
ordinary shares
1 Lion Selection Group Ltd 16,899,589 44.04%
2 HSBC Custody Nominee Australia Ltd 1,031,250 2.69%
3 Fortis Clearing Nominee Pty Ltd 1,016,348 2.65%
4 Zero Nominee Pty Ltd 984,375 2.57%
5 Brycki Christopher 952,000 2.48%
6 Robert Macfadyen Pty Ltd 943,750 2.46%
7 Goldrich Holdings Pty Ltd 879,648 2.29%
8 ANZ Nominee Ltd 523,644 1.36%
9 Lawrence Crowe Cons Pty Ltd 500,000 1.30%
10 Rubiton Pty Ltd 500,000 1.30%
11 Geddes Angus William S 358,210 0.93%
12 Verbier Investments Pty Ltd 350,121 0.91%
13 Bosch Katrina Alison 350,000 0.91%
14 Charlemagne Investments Pty Ltd 325,000 0.85%
15 Geijera Pty Ltd 290,000 0.76%
16 Proe D J& Charmberlain J 269,000 0.70%
17 Maverick Exploration Pty Ltd 254,084 0.66%
18 Treacy Joseph 252,521 0.66%
19 Poon Jane Yuet Kiu Or 250,763 0.65%
20 Goffacan Pty Ltd 250,500 0.65%
27,180,991 70.82%

45
 Westonia Mines Limited - Annual Report

ASX Additional Information continued

(e) Substantial shareholders
The names of substantial shareholders who have notified the Company in accordance with section 671B of the Corporations Act 2001
are:
Number of Shares
Lion Selection group 152,096,301

(f) Voting rights

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

(g) Schedule of interests in mining tenements

Percentage held /
Location Status Tenement
earning
BODALIN
Bodalin SW Granted E77/1165 100%

BODALIN SOUTH
Kent Road Application E77/1452 100%

DICKS REWARD
Dicks Rewards Granted E77/898 Option to acquire 100%

JILBADGIE
Jilbadgie East Granted E77/1132 Earning 65%

MINE
Paddock Granted M77/110 100%
Golden Point East Granted M77/124 100%
Mine Granted M77/88 100%

SANDFORD ROCKS
Sandford Rocks Application E77/1494 100%

WESTONIA
Begley Granted E77/1069 100%
Westonia N.E. Granted E77/1324 100%
Westonia Belt Granted E77/516 100%
Westonia West Granted E77/990 100%
L77/18 100%
Le Trois Application M77/827 100%
Great Battler Application M77/841 100%
Le Trois East Application M77/842 100%
Westonia NW Application P77/3712 100%
West Westonia Application P77/3713 100%
Westonia NE Application P77/3714 100%
Bodallin Application P77/3875 100%
Corsini Road Application P77/3876 100%
Hitching Road Application P77/3877 100%
Stoneman Road Application P77/3878 100%
Kaolin Street Application P77/3879 100%

46