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WEDGETAIL EXPLORATION NL

ANNUAL REPORT 2005

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CONTENTS

Company Details IFC

Chairman’s Report 1

Review of Operations 2

Directors’ Report 9

Corporate Governance Statement 15

Income Statement For The Year Ended 31 December 2005 19

Balance Sheet As At 31 December 2005 20

Statement Of Cash Flows For The Year Ended 31 December 2005 21

Notes To, And Forming Part Of, The Financial Statements 23

Directors Declaration 41

Independent Audit Report 42

Schedule Of Interests In Mining Tenements 43

Supplementary Information 47

COMPANY DETAILS

Director: Clive Donner (Chairman) Frank Vanspeybroeck Geoff Lambert Ross Gillon Evan Kirby Richard Procter

Company Secretary: Stephen Brown

Registered and Principal Office: Ground Floor 24 Outram Street West Perth WA 6005 Telephone: (08) 9488 8800 Facsimile: (08) 9481 0288 Internet: www.wedgetail.net.au email: [email protected]

Auditor: Rothsay Chartered Accountants Level 1, 2 Barrack Street SYDNEY NSW 2000

Bankers: National Australia Bank Limited 1/1238 Hay Street WEST PERTH WA 6005

Share Registry: Computershare Investor Services Pty Ltd Level 2, Reserve Bank Building 45 St George’s Terrace PERTH WA 6000 Telephone: (08) 9323 2000 Facsimile: (08) 9323 2033

Australian Stock Exchange: Code: WTE

Front cover: Aerial photograph showing Golden Eagle project in foreground.

Dear Shareholder

It is with pleasure that I present to you the Annual Report of Wedgetail Exploration NL for the year ending 31 December 2005. The past twelve months have been a time of intense activity for the Company.

Substantial progress was achieved during 2005. A detailed presentation of the specific activities and achievements of the Company are included in the Review of Operations section which follows.

Feasibility

The Board was pleased to announce the successful completion of the Bankable Feasibility Study (“BFS”) on the Nullagine Gold Project on 3 April 2006. The positive factors demonstrated by the BFS results include clear indications that the Project is technically and financially robust, and is expected to deliver a net operating cash flow before debt of between $81 M and $105 M depending on the hedged gold price used.

Successful completion of the BFS marks an important milestone in the development of Wedgetail’s strategy of finding and developing quality gold reserves in the southern Pilbara region of Western Australia. Wedgetail has commenced negotiations with a number of banks to obtain the required funding to commence construction of the processing facility and associated infrastructure. At this stage, it is anticipated that the Company will be able to debt fund the majority of the capital required to construct the various project facilities.

Importantly, the Company will continue to aggressively explore its extensive landholdings in the Nullagine area to exploit the exploration potential of the region, whilst continuing to assess the heap leach potential of low grade material.

Exploration

Exploration continued to be of significant focus during the year with almost 94,000 metres of drilling undertaken over the project area. The understanding of the structural controls of the gold mineralisation across the project has advanced significantly over the past two years, resulting in a number of exciting discoveries, which originated as geological concepts, but were quickly advanced by strategic surface sampling and drilling.

It is anticipated that this understanding of the structural controls will continue to provide exciting exploration targets and opportunities to increase Wedgetail’s mineral resource inventory.

Corporate

The major capital raisings undertaken during 2005 and the early part of 2006 has allowed the company to finalise the BFS whilst continuing to aggressively explore Wedgetail’s extensive landholding in the Nullagine goldfield.

In addition, Wedgetail has been able to recruit key project personnel to assist in transforming the company from a junior explorer to an emerging producer.

In closing, I take the opportunity to thank you as shareholders for your support. I also wish to acknowledge the performance of my board colleagues, the staff and consultants of Wedgetail for their efforts of the past year. There have been many challenges and successes this past year, and the continued and dedicated effort of the team has resulted in some significant outcomes. I take this opportunity to thank them for this commitment.

CLIVE DONNERChairman

CHAIRMAN’S REPORT 1

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INTRODUCTION

Wedgetail is pursuing a two pronged strategy over its large tenement holding in the Nullagine goldfield in the Southern Pilbara region of Western Australia.

The initial phase of the strategy is the development of the project’s existing defined ore reserves. Specifically, this strategy relates to the completion of the Bankable Feasibility Study (“BFS”) on the Nullagine project, and the successful development of a gold processing facility at Nullagine.

The second strategy component relates to using the Nullagine Gold Project to gain maximum leverage from recent and future exploration success at its substantial landholdings in the region. The Company’s Nullagine tenement holdings encompass over 1,500 km2, covering a major portion of the Nullagine Goldfield.

DEVELOPMENT

Wedgetail’s main focus during the last year and the first quarter of 2006 was the completion of the BFS on the Nullagine Gold Project. Successful completion of the BFS was announced on 3 April 2006.

The positive factors demonstrated by the BFS results include clear indications that:

• The Nullagine Gold Project is technically and financially robust

• The Nullagine Gold Project is expected to deliver a net operating cash flow before debt of between $81 M and $105 M depending on the hedged gold price

• Given commencement of construction of the associated infrastructure within the next quarter, the first gold pour is possible at the end of the 1Q2007

The project economic data shown in the table below includes two project cases - a non hedged gold price case and a hedged case, the average gold prices applied being A$800/oz and A$880/oz, respectively.

Project Data

Tonnes Mined 4.5 Mt

Grade Mined 2.38 g/t. Au

Ounces Produced 304,000 oz

Production Rate 70,000 oz Au/pa

Cash Cost A$513/oz

Start up Capital Cost A$43 million

Cash operating margin A$287/oz

Cash operating margin (hedged) A$367/oz

Net cash flow before debt A$81 M

Net cash flow before debt (hedged) A$105 M

IRR 27%

IRR (hedged) 42%

The company’s aim is to establish a solid cashflow from the current reserves established in the BFS and then to further develop the project upside which is provided by:

• The significant exploration potential of the underdeveloped gold field where the company is the dominant land holder.

• Gold production potential from heap leachable low grade material - recently received heap leaching results indicate potential recoveries of 65%-70% from column leaching. This issue is significant as Wedgetail could produce incremental ounces from low cost mineralised material currently not factored into the BFS.

REVIEW OF OPERATIONS

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Other positive factors to emerge from the BFS are:

• Water exploration drilling during the first quarter of 2006 indicates that process water will be available from sources located near the processing plant. The final pump testing program to prove the water source has commenced.

• Low waste to ore stripping ratio of 4.3:1. Ore is available at surface on all deposits.

• 85% of the ore reserves are in the Proven category.

• Simple ore treatment plant flowsheet for a 1.0 Mtpa Carbon in Leach (“CIL”) processing facility.

• Native Title mining agreements already in place. Wedgetail executed agreements with the Palyku and Njamal people in December 2005. These agreements provide for the granting of Wedgetail’s tenement applications and for the timely completion of heritage surveys. In return, Wedgetail will provide a production based royalty and employment and training opportunities for the traditional owners.

This BFS is considered to provide an appropriate engineering and cost estimate basis for development of the Nullagine Project. The BFS results are based on pit optimisation studies that were developed using a spot gold price of A$750/oz, whereas the financial model constructed for the BFS used a spot gold price of A$800/oz. Applying a flat forward hedging strategy for 65% of gold production achieves an average gold price of $A880/oz.

All monetary terms given in the report (unless otherwise denoted) are in Australian dollar currency (base of 1Q 2006). The accuracy of the capital and operating cost estimates in the BFS are considered to be ±15%.

Key performance indicators for the Project are:

Item Reserves Unit Value

Mt Tonnes 4.5

Grade g/t Au 2.4

Plant Recovery % 87

Ounces Produced koz 304

Strip Ratio Waste t: Ore t 4.3

Initial Life of Mine Years 4.8

Cash Cost A$/oz 513

Start up Capital

Plant $M 29.3

Infrastructure $M 8.1

Owners Costs $M 4.9

Total $M 42.3

Financials - unhedged

Gold Price A$/oz 800

Net Cash Flow before debt $M 81.1

IRR % 27

Cash Operating Margin A$/oz 287

Financials - hedged

Ave Gold Price rec’d A$/oz 880

Net Cash Flow before debt $M 105

IRR % 42

Cash Operating Margin A$/oz 367


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Project Upside

There are several areas of upside for the Nullagine Gold Project. The key upside is the exploration potential.

Exploration Upside

The Nullagine project area provides Wedgetail, with its landholdings of over 1,500 km2, very significant exploration upside. Current resources stand at 858,000 oz (590,000 oz are in the measured and indicated mineral resource category), based on a 1.0g/t Au cut off grade. The company intends to leverage itself to take advantage of the exploration potential of the underdeveloped gold field where it is the dominant land holder. There are also numerous near-surface, high-grade oxide targets requiring RC drilling programmes, which the company plans to drill in the June quarter 2006.

Heap Leach Upside

Wedgetail has received encouraging heap leach test results for fresh low grade material from the Golden Eagle prospect. Three column leach tests were prepared with material that had been passed through an HPGR (to a nominal size fraction of 8 mm). The column leach tests returned recoveries of 53%, 73% and 75% which is very encouraging.

At Golden Eagle alone, there is low grade material (2.3 Mt @ 0.68g/t Au for 50 koz), located within the planned pit design and that is currently designated as mineralised waste and is effectively free carried to surface. Preliminary studies indicate that it may be possible to heap leach this material and produce approximately 35,000 oz (@70% recovery) at a A$300/oz cash cost margin, which would produce an additional A$10 M in net cashflow.

Exploration immediately to the west of the Golden Eagle planned pit has returned large intercepts of low grade material (1 g/t Au - 1.5 g/t Au) that could significantly increase the low-grade inventory of material available for a heap leaching circuit, and thereby give the heap leach processing option significant longevity. Further testwork on this material will be undertaken during the June quarter 2006.

These areas of upside demonstrate that the Nullagine Gold Project is a great opportunity for the company to develop and then expand the assets to deliver significant long life cashflow. Additionally:

• The company has already recruited the key personnel to transform the company from explorer into producer.

• A number of major banks, experienced in lending to the smaller resource sector, are actively pursuing the debt facility for the project. All these potential lenders have been to site and understand the outstanding opportunity the company has for further exploration success.

Current Work Plan

Wedgetail has now embarked on obtaining the funding required to advance the project. The company will also commence detailed design elements for the ore treatment facility and supporting infrastructure, at the same time continue the search for used equipment to further reduce capital costs.

It is anticipated that given commencement of construction within the next quarter, the first gold pour is estimated to be at the end of the 1Q2007.



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EXPLORATION

RESOURCE DEVELOPMENT

Resource definition drilling and resource modelling was again the focus for the Nullagine Project during 2005. In addition to ongoing work to extend and infill the large resource at Golden Eagle, this year also saw the first major campaigns to prove-up resources at All Nations, Barton, Golden Gate, Little Wonder and Shearers (Figure 1).

Figure 1: Outline of the Nullagine Project area showing the location of the main resources

In total, almost 40,000 metres were drilled across the project, and the scope and results of the various drilling campaigns are summarised in Table 1.

Table 1: Scope and summary of results of resource definition drilling

DepositReverse Circulation Diamond Core Results: Holes with Intercepts

No. Holes Metres No. Holes Metres >10 gmm* >30 gmm*

Golden Eagle 92 11,091 31 3,213.97 42% 14%

Barton 31 3,526 1 86.80 55% 26%

Golden Gate 139 9,488 68% 40%

All Nations 74 4,816 1 74.80 49% 18%

Shearers 79 2,844 43% 8%

Little Wonder 76 4,486 17% 1%

Total 491 36,251 33 3,375.57

* Note: gmm is an abbreviation for gram-metres, which is the product of the intercept grade, in g/t Au, and the width of the intercept (e.g. 30 gmm is

equivalent to 10 metres grading 3 g/t Au, or 5 metres grading 6 g/t Au). A 1 g/t Au lower cut-off grade is used to calculate intercept grade.


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Standout results from the resource definition drilling include intercepts such as 6 metres grading 38.1 g/t Au at Barton, 22 metres grading 6.07 g/t Au at All Nations, and 25 metres grading 9.03 g/t Au and 17 metres grading 13.5 g/t Au at Golden Gate. ASX announcements detailing the location of these, and other exciting drill results, were released on the 7th of April, 3rd of May, 5th of October, and 22nd of November 2005, respectively.

A significant increase in the Mineral Resource for the Nullagine Project is the direct result of the company’s major commitment to drilling, and the inventory (at a 1 g/t Au lower cut-off grade) for the various deposits is shown in Table 2.

Table 2: Mineral Resource Inventory for the Nullagine Project

Measured Indicated Inferred Total

Deposit MillionsTonnes

Au (g/t)

kOz MillionsTonnes

Au (g/t)

kOz MillionsTonnes

Au (g/t)

kOz MillionsTonnes

Au (g/t)

kOz

Golden Eagle 4.74 2.04 311 1.44 1.75 81 1.34 1.72 74 7.52 1.93 466

Barton 0.71 2.11 48 0.46 2.13 31 0.20 2.70 17 1.36 2.20 96

Beatons Creek* 1.60 2.15 111 1.60 2.15 111

Golden Gate 0.51 3.69 61 0.06 3.10 6 0.57 3.60 67

All Nations 0.50 2.04 33 0.06 1.75 3 0.04 2.23 3 0.60 2.02 39

Shearers 0.21 1.81 12 0.22 1.51 11 0.09 1.50 4 0.52 1.60 27

Little Wonder 0.19 1.70 10 0.21 1.70 11 0.39 1.70 21

Otways 0.49 1.40 22 0.49 1.40 22

Gambols 0.20 1.50 10 0.20 1.50 10

Total 6.15 2.04 403 2.88 2.13 198 4.21 1.90 257 13.24 2.02 858

* Note: Resource estimates prepared by Hellman Schofield Pty Ltd using a multiple indicator kriging technique, apart from the Beatons Creek resource

which is based on an estimation by the previous owner.

In comparison to the Mineral Resource reported at the end of 2004, the above figures reflect an increase of almost 70% in both the tonnage and metal contained within the measured and indicated categories. The total metal, in all categories, increased by 35% to 858,000 ounces of gold.

During 2005, the reconnaissance exploration program was successful in discovering a number of exciting prospects that returned strong intercepts from scout drilling, and these prospects will be further evaluated by resource definition drilling during the first half of 2006.

RECONNAISSANCE EXPLORATION

Structural Mapping

The understanding of geological controls on gold mineralisation within the Nullagine Project has advanced significantly since the start of a structural mapping program in November 2004, and this important initiative has already paid dividends in the form of a number exciting gold discoveries in the Golden Gate and Five Mile areas. The discoveries originated as geological concepts, and were quickly advanced by well-targeted surface sampling and scout drilling.

The structural mapping has progressed well, with almost 25% of the landholding covered, and the company has the key personnel in place to ensure that this vital work continues during 2006.

Surface Sampling

Major programs of soil and follow-up rock-chip sampling were initiated across the Nullagine Project in August this year, and in tandem these surface sampling techniques have been very effective tools for quickly advancing geological targets through to the drilling stage. Figure 2 shows the target areas evaluated by soil sampling during 2005.



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Figure 2: Target areas (in pale blue) evaluated by soil sampling

The soil sampling technique employed by the company was developed from rigorous study of the gold and pathfinder metal behaviour in the soil horizon above the known gold mineralisation at Golden Eagle and Shearers deposits. The technique has already proven to be far more reliable than previous soil sampling surveys undertaken by other companies, and there is the potential to re-evaluate some of the older exploration areas using the new sampling technique, particularly those areas that encompass what appear to be compelling geological targets.

Scout Drilling

A significant commitment to first-pass drilling of prospective areas within the project continued during the year, with in excess of 54,000 m of inclined RAB and RC drilling undertaken over 14 prospects (Figure 3). The scope and results of the scout drilling campaigns are summarised in Table 3.

Figure 3: Prospects tested by scout drilling


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Table 3: Scope and Summary of Results of Scout Drilling

Prospect Rotary Air Blast Reverse Circulation Results: Holes with Intercepts

No. Holes Metres No. Holes Metres >0.5 gmm* >5 gmm*

Angela 173 10055 5% 1%

Five Mile Creek 165 7376 13% 2%

Linq 162 7685 10 1000 46% 12%

Mundella 50 2100 24% 6%

Shearers 80 4718 29% 10%

Golden Eagle 142 6720 37% 7%

Harrier 27 1068 48% 37%

Falcon 54 2302 12 1252 61% 33%

Biljim South 13 553 31% 15%

Barton North 103 6075 19% 6%

Barton South 35 1991 6% 3%

Federation 4 284 50% 0%

Mountain Maid 12 439 33% 8%

Sunday 27 1070 11% 0%

1030 51599 26 2536

* Note: A 0.25 g/t Au lower cut-off grade is used to calculate the gram-metre values of scout drill hole intercepts.

Following the start-up of the surface sampling programs, the focus of the scout drilling shifted in October 2005, from systematic drilling along broad traverses, to more targeted drilling of gold anomalies delineated by soil and rock-chip sampling over geological targets. The benefits of this change of exploration style can be clearly seen in Table 3, where the drilling success rate is measured by the proportion of holes that intercepted gold mineralisation. The two prospects in which drilling was directed at soil and rock chip anomalies are Falcon and Harrier, and in both cases more than 30% of the holes intersected significant zones of gold mineralisation. Both prospects have been quickly advanced, in a matter of less than two months from the original mapping traverses, to a stage where resource development drilling can commence. Stand-out RAB drill hole intercepts from these prospects include 16 metres grading 5.78 g/t Au at Falcon and 12 metres grading 5.09 g/t Au at Harrier (ASX announcements released on 22nd and 29th December 2005).

The company intends to continue exploration using the methods adopted in late 2005, whereby scout drilling is directed at selected surface sampling anomalies within prospective target areas that are delineated by structural mapping. This approach will ensure that maximum benefit is derived from exploration expenditure, and should enable the company to quickly evaluate the resource potential of its large, highly prospective landholding.

The information in this report that relates to Mineral Resources was compiled by Peter Woodman, who is a Member of the Australasian Institute of Mining and Metallurgy. Peter Woodman is a full time employee of Wedgetail Exploration NL. Mr. Woodman 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 be qualified as a Competent Person as defined by the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Peter Woodman consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.



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The Directors of Wedgetail Exploration NL (“Company” or “Wedgetail”) present their report on the Company for the financial year ended 31 December 2005.

DIRECTORS

The names and details of the Directors of the Company in office during or since the end of the financial year are:

Clive Donner (Non-Executive Chairman)

Clive Donner, 48, has substantial skills in fundraising and project financing spanning over 25 years. He was previously the project finance head and Director responsible for Rothschild Australia’s project finance mining business in Western Australia before spending almost a decade in venture capital and equities in the resources sector. Mr Donner is the Managing Director of LinQ Resources Fund, a mining and resources fund specialising in small cap resources.

Mr Donner was appointed non-executive Chairman of the Company on 5 September 2003.

Frank Vanspeybroeck (Non-Executive Director)

Frank Vanspeybroeck, 56, is the founder of Wedgetail. He has over 23 years experience in the exploration and mining industry in Australia. His experience includes gold mining, commissioning and operating carbon in pulp gold processing plants. He is also the Managing Director of the AIM listed China Goldmines plc.

Mr Vanspeybroeck was Managing Director of the Company from 23 November 1999 until 31 January 2006, and remains a non-executive director.

Geoff Lambert (Non-Executive Director)

Geoffrey Lambert, 61, holds BEc and MEc degrees from the University of Sydney and has had over thirty years experience in investment banking. Mr Lambert has served on the Boards of a number of public companies and is currently a Director of ICS Global Ltd, Stratatel Ltd, Reward Minerals Ltd and Plantcorp Ltd.

Mr Lambert was appointed a non-executive director of the company on 23 November 1999.

Ross Gillon (Non-Executive Director)

Ross Gillon, 49, is a solicitor in Perth and has previously been a director of a number of exploration companies.

Mr Gillon was appointed a non-executive director of the Company on 16 June 2003.

Evan Kirby (Non-Executive Director)

Evan Kirby, 55, holds BSc and PhD degrees from the University of Newcastle upon Tyne. He is a metallurgist with over 30 years international experience covering operations management, technical support, engineering design, and feasibility study management. His work has covered a wide range of processes associated with gold, platinum group metals, base metals and sulfuric acid production. Since 2002, he has operated his own consulting business, Metallurgical Management Services Pty Ltd.

Mr Kirby was appointed a non-executive director of the Company on 23 March 2004.

Richard Procter (Non-Executive Director)

Richard Procter, 55, holds BSc (Eng) (University of the Witwatersrand) and MBA (Cape Town) degrees. He is a mining engineer with over 30 years international experience covering corporate, operations, contracting, consulting and project developments. These positions have included the leadership and management of base and precious metal mining concerns (at both executive and general management levels), development of bankable feasibility studies and their conversion into mining operations; responsibility for mining asset evaluations; undertaking valuations including technical and operational audits, involvement in mining asset due diligence and Expert reporting; and providing technical and strategic planning advice to both mining and industrial organisations.

Mr Procter was appointed a non-executive director of the Company on 15 February 2005.

DIRECTORS’ REPORT

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DIRECTORSHIPS OF OTHER LISTED COMPANIES

Directorships of other listed companies held by directors in the three years immediately before the end of the financial year are as follows:

NAME COMPANY Clive Donner LinQ Capital Limited as the responsible entity for LinQ Resources Fund, Dioro Exploration NL

Geoff Lambert ICS Global Limited, Stratatel Limited, Reward Minerals Limited, Plantcorp Limited, Riversdale Mines Limited, QMASTOR Limited, Encos Limited

Ross Gillon Red River Resources Limited

Evan Kirby Dwyka Diamonds Limited, Sylvania Resources Limited DIRECTORS INTERESTS

As at the date of this report, the interests of the Directors and their associates in the shares of the Company are:-

Director Ordinary Shares Direct Indirect Interest InterestClive Donner - -Frank Vanspeybroeck - 28,675,735Geoff Lambert - 2,835,715Ross Gillon - 4,750,001Evan Kirby - 325,000Richard Procter 300,000 -

COMPANY SECRETARYStephen Brown (Appointed 14 February 2006)

Stephen Brown, 46, is a CPA and Chartered Secretary and has over 20 years experience in the areas of financial and management accounting, administration and company secretarial functions.

John Sendziuk (Resigned 14 February 2006)

John Sendziuk, 63, is a Chartered Accountant who has extensive experience in company secretarial and financial management of public companies.

PRINCIPAL ACTIVITY

The principal activity of the Company during the year was exploration for gold in Western Australia. There was no change in the nature of the Company’s principal activity during the year.

RESULT

The loss after income tax for the financial year was $3,829,112 (2004: loss of $1,068,237).

DIVIDENDS

No dividend was paid during the financial year and the directors do not recommend payment of a dividend.


The prime activity of the Company during the 2005 financial year was the continued exploration and development of the Nullagine Gold Project.

A detailed review of the operations for the year is included in the Review of Operations section of the Annual Report.

DIRECTORS’ REPORT


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STATE OF AFFAIRS

In the opinion of the Directors, there were no other significant changes to the state of affairs of the Company that occurred during the financial year under review not otherwise disclosed in this report or the financial statements.

SIGNIFICANT EVENTS AFTER THE BALANCE DATE

No matter or circumstance has arisen since the end of the financial year that has significantly affected, or may significantly affect the operations of the Company, the results of those operations or the state of affairs of the Company in financial years subsequent to 31 December 2005.

LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS

The Company intends to continue the exploration and development of its existing tenements at Nullagine Gold Project.

REMUNERATION REPORT

The Remuneration Report outlines the remuneration arrangements which were in place during the year, and reman in place at the date of this report, for the Directors and executives of the Company.

Remuneration Philosophy

The performance of the Company depends on the quality of its Directors and executives. To prosper, the Company must attract, motivate and retain highly skilled Directors and executives.

To this end, the Company embodies the following principles in its remuneration framework:• Retention and motivation of key executives• Attraction of quality management to the Company, and • Performance incentives which allow executives to share the rewards of the success of the Company.

Remuneration Committee

The Company is not of sufficient size to warrant the formation of a remuneration committee. It is the Board of Directors responsibility for determining and reviewing compensation arrangements for the Directors and senior executives.

The Board assesses the appropriateness of the nature and amount of remuneration of Directors and senior executives on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a highly qualified Board and executive team.

Remuneration Structure

The structure of non-executive Director and senior executive remuneration is separate and distinct.

Objective

The Board seeks to set remuneration at a level which provides the Company with the ability to attract and retain Directors and executives of the highest calibre, whilst incurring a cost which is acceptable to shareholders.

Structure

Remuneration of non-executive Directors comprises fees determined having regard to industry practice and the need to attract appropriately qualified persons. Fees do not contain any non-monetary elements.

Remuneration of executive Directors and other senior executives are determined after consideration is given to normal commercial rates of remuneration for similar levels of responsibility, industry practices and the need to obtain appropriately qualified persons to fill the executive positions necessary for the Company to operate. Remuneration is not linked to the performance of the Company, but rather on the ability to attract and retain Directors and senior executives of the highest calibre within the industry.

The granting of remuneration options is done by the Board. The Board grants the options by giving consideration to the seniority of the employee’s position and the need to retain highly qualified employees and executive team. The granting

DIRECTORS’ REPORT

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of options is in substance a performance incentive which allows employees to share the rewards of the success of the Company.

Director’s Remuneration Details of the remuneration of each Director of Wedgetail, including their personally-related entities, for the year ended 31 December 2005 are set out as follows:

Year

Short Term

Post

Employment

Equity

Compensation

Directors Fees

$

Consulting Fees

$

Non-monetary

Benefits

$

Super-

annuation

$

Value of Share

Options

$

Total

$

Mr C Donner 2005 46,500 - - - - *246,500

Mr F Vanspeybroeck 2005 - *299,500 - - - *299,500

Mr G Lambert 2005 24,000 - - - - *224,000

Mr R Gillon 2005 24,000 - - - - *224,000

Mr E Kirby 2005 24,000 *219,650 - - - *243,650

Mr R Procter 2005 20,000 - - - - *220,000

* Of the fees paid to Mr Vanspeybroeck, $114,000 relates to deferred fees from prior year consultancies.

The Company did not have any other executives (“specified executive”) with authority for the strategic direction and management of the Company during the year.

Director Employment Contracts

Frank Vanspeybroeck is a Director of IMMO Services (WA) Pty Ltd. The Company has entered into a contract with IMMO Services (WA) Pty Ltd for the supply of management services under normal commercial terms and conditions. The agreement terminated on 31 January 2006, with no termination benefits payable.

Mr Evan Kirby is a Director of Metallurgical Management Services (Pty) Ltd which provides metallurgical consultancy services to the Company.

MEETINGS OF DIRECTORS

The number of meetings of Directors held during the year and the number of meetings attended by each Director was as follows: Directors Meetings No Of Meetings Meetings Held While In Office Attended

Clive Donner 13 11Frank Vanspeybroeck 13 13Geoff Lambert 13 9Ross Gillon 13 11Evan Kirby 13 10Richard Procter (Appointed 15 February 2005) 12 6

INSURANCE OF DIRECTORS AND OFFICERS

The Company agreed to pay a premium in respect of a contract insuring the Directors and Officers of the Company. Full details of the cover and premium are not disclosed as the insurance policy prohibits the disclosure.

DIRECTORS’ REPORT


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SHARE OPTIONS

Options on Issue

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

Expiry Date Number of options Exercise Price

1 August 2006 (unlisted) 3,300,000 3.5 cents19 September 2006 (unlisted) 1,400,000 3.5 cents31 December 2006 (unlisted) 30,000,000 5.5 cents11 October 2007 (unlisted) 140,000 5.5 cents

CORPORATE GOVERNANCE

In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of Wedgetail support and have adhered to the principles of corporate governance. The Company’s corporate governance statement is contained within the Annual Report.

ENVIRONMENTAL REGULATION AND PERFORMANCE

The Company’s operations are subject to environmental regulation under the laws of the Commonwealth and of the State, with specific conditions relating to rehabilitation.

In the case of Approved Notices of Intent to Mine, bonds are held by the Company’s bank which may be released to the company when Department of Industry and Resources is satisfied that conditions imposed on those licences have been met.

Notices of Intent to Mine incorporate environmental conditions, including those related to noise, dust, water run off, rare and endangered flora and fauna, sites of historical and aboriginal significance as well as rehabilitation criteria.

The Directors advise that during the year ended 31 December 2005, no claim has been made by any competent authority that any environmental issues condition of licence or notice of intent have been breached, or any bond forfeited.

AUDITOR’S INDPENDENCE DECLARATION

The following is a copy of a letter received from the Company’s auditors:

“Dear Sirs,In accordance with Section 307C of the Corporations Act 2001 (the “Act”) I hereby declare that to the best of my knowledge and belief there have been:

i) no contraventions of the auditor independence requirements of the Act in relation to the audit of the 31 December 2005 annual financial statements; and

ii) no contraventions of any applicable code of professional conduct in relation to the audit.

Graham Swan (Lead auditor)Rothsay Chartered Accountants”

DIRECTORS’ REPORT

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Non-Audit Services

The Board of Directors has considered the position and is satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. 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 Directors 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 Professional Statement F1, including acting in a management or a decision-making capacity for the Company or acting as advocate for the Company.

The following amounts were paid to the auditors 2005 2004 $ $Auditors’ remuneration - auditing the accounts 15,200 11,000Non-Audit Services - independent report 2,750 7,000

Signed at Perth this 31st day of March 2006 in accordance with a resolution of the Directors.

Richard ProcterDirector

DIRECTORS’ REPORT


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This statement outlines the main corporate governance practices in place throughout the year, which comply with the ASX Corporate Governance Council recommendations unless otherwise stated.

Role of the Board

The Board is responsible for ensuring that the Company is managed in a manner which protects and enhances the interests of its shareholders and takes into account the interests of all stakeholders. To fulfil this role, the Board is responsible for setting the strategic direction for the Company, establishing goals for management and monitoring the achievement of these goals.

Because of the limited size of the Company and its financial affairs and operations, the use of separate committees of the Board of Directors is not considered generally appropriate. All matters that might properly be dealt with by such committees are currently dealt with by the full Board of Directors. Decisions of the Board are, to the extent practicable, unanimous.

Composition of the Board

The names and details of the Directors of the Company in office at the date of this Statement are set out in the Directors’ Report.

The composition of the Board is determined using the following principles:

• Persons nominated as Non-Executive Directors shall be expected to have skills, experience and expertise of benefit to the Company and to bring an independent view to the Board’s deliberations. Persons nominated as Executive Directors must be of sufficient stature and security of employment to express independent views on any matter.

• The Chairperson should ideally be non-executive and independent and be elected by the Board based on his/her suitability for the position. The Board believes that the Chairperson is able, and brings quality and independent judgment, to all relevant issues falling within the scope of the role of a Chairperson, and remains up-to-date with current issues facing the Company by frequent contact with the Managing Director and executives of the Company.

• All Non-Executive Directors are expected voluntarily to review their membership of the Board from time-to-time taking into account length of service, age, qualifications and expertise relevant to the Company’s then current policy and programmes, together with other criteria considered desirable for composition of a balanced Board and the overall interests of the Company.

• Under the Company’s Constitution, the minimum number of Directors is three. At each Annual General Meeting, one third of the Directors (excluding the Managing Director) must resign, with Directors resigning by rotation based on the date of their appointment. Directors resigning by rotation may offer themselves for re-election.

The Board has accepted the following definition of an Independent Director:

“An Independent Director is a Director who is not a member of management (a Non-Executive Director) and who:

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

2. has not within the last three years been employed in an executive capacity by the Company or another group member, or been a Director after ceasing to hold any such employment;

3. is not a principal of a professional adviser to the Company or another group member;4. is not a significant consultant, supplier or customer of the Company or another group member, or an officer of or

otherwise associated, directly or indirectly, with a significant consultant, supplier or customer;5. has no significant contractual relationship with the Company or another group member other than as a Director of

the Company;6. has not served on the Board for a period which could, or could reasonably be perceived to, materially interfere with

the Director’s ability to act in the best interests of the Company; and7. is free from any interest and any business or other relationship which could, or could reasonably be perceived to,

materially interfere with the Director’s ability to act in the best interests of the Company.”

Wedgetail considers a significant consultant, supplier or customer to be material if the total of their annual invoices amounts to more than 5% of the Company’s total expenditure in that category.

CORPORATE GOVERNANCE STATEMENT

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The Company considers that the Board should have at least three Directors (minimum required under the Company’s Constitution) and strives to have a majority of independent Directors. Currently the Board has six non-executive Directors, of which Richard Procter, Geoff Lambert and Evan Kirby are considered to be independent Directors. The Company’s non-executive Chairman, Clive Donner, is not considered to be independent as he is an officer of a substantial shareholder of Wedgetail. Both Frank Vanspeybroeck and Ross Gillon are also not considered to be independent Directors as Mr Vanspeybroeck was previously Managing Director of Wedgetail, and Mr Gillon is a principal of a professional advisor to Wedgetail. The number of Directors is maintained at a level which enables effective spreading of workload and efficient decision making.

The composition of the Board is reviewed on an annual basis to ensure the Board has the appropriate mix of expertise and experience. Where a vacancy exists, through whatever cause, or where it is considered that the Board would benefit from the services of a new Director with particular skills, the Board determines the selection criteria for the position based on the skills deemed necessary for the Board to best carry out its responsibilities, and then appoints the most suitable candidate who must stand for election at the next general meeting of shareholders.

Performance of Directors

The performance of Directors is assessed through review by the Board as a whole of director’s attendance at and involvement in Board meetings, his performance and other matters identified by the Board or other directors. Due to the Board’s assessment of the effectiveness of these processes, the Board has not otherwise formalised measures of a director’s performance.

The Company has not conducted a performance evaluation of the members of the Board during the reporting period, however, the Board conducts a review of the performance of the Company against budgeted targets on an ongoing basis.

Conflict of Interest

In accordance with the Corporations Act 2001 and the Company’s constitution, Directors must keep the Board advised, on an ongoing basis, of any interest that could potentially conflict with those of the Company. Where the Board believes a significant conflict exists, the Director concerned does not receive the relevant Board papers and is not present at the Board meeting whilst the item is considered. Details of Directors related entity transactions with the Company are set out in the related parties note in the financial statements.

Independent Professional Advice and Access to Company Information

Each Director has the right of access to all relevant Company information and to the Company’s executives and, subject to prior consultation with the Chairman, may seek independent professional advice at the Company’s expense. A copy of advice received by the Director is made available to all other members of the Board.

Remuneration

The Board of Directors maintains remuneration policies which are aimed at attracting and retaining a motivated workforce and management team. The intention is to match the outcomes from the remuneration system with the performance of the Company and ultimately the value received by our shareholders on a long-term basis.

The Company embodies the following principles in its remuneration framework:

• retention and motivation of key executives; • attraction of quality management to the Company; and• performance incentives which allow executives to share the rewards of the success of the Company.

Full details of Directors’ and specified executives’ remuneration is set out in the Directors’ Report and in the Directors’ and Executives’ Disclosures note in the financial statements.

Due to the limited size of the Company and of its operations and financial affairs, the use of a separate remuneration committee is not considered appropriate for Wedgetail.



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Committees

To assist the Board in achieving the highest standards of Corporate Governance, the Directors will aim in due course to establish an Audit Committee, and a Remuneration Committee, both to be constituted with a majority of non-executive Directors.

Audit Committee: Wedgetail did not have a separately established audit committee. However, the duties and responsibilities typically delegated to such a committee are expressly included in the board’s responsibilities and therefore were not in compliance with item 4.2 of the ASX Corporate Governance Principles. The Board does not believe any marked efficiencies or enhancements would be achieved by the creation of a separate committee. An Audit Committee Charter is currently being planned.

Remuneration Committee: Recommendation 9.2 of the ASX Corporate Governance Principles requires the establishment of a remuneration committee. During the year, Wedgetail did not have a separately established remuneration committee. However, the duties and responsibilities typically delegated to such a committee are expressly included in the main board’s responsibilities. The Board does not believe that any marked efficiencies or enhancements would be achieved by the creation of a separate committee.

Ethics

It is the policy of Wedgetail that all Directors, managers and employees are expected to act with the utmost integrity and objectivity, striving at all times to enhance the reputation and performance of Wedgetail.

Risk Management

The company has in place a framework to safeguard company assets and ensure that business risks are identified and properly managed. The company has in place a number of risk management controls which include the following:

• Performance and funding of exploration activities;

• Budget controls;

• Guidelines and limits for the approval of capital expenditure and investments;

• A comprehensive insurance programme;

• Status of Mining Tenements; and

• Continuous disclosure obligations.

Management is required to provide to the Board regular reports on all these matters.

The Board receives regular reports about the financial condition and operating results of the company. The Chief Executive Officer and Chief Financial Officer annually provide a formal statement to the Board that in all material respects and to the best of their knowledge and belief:

• The Company’s financial reports present a true and fair view of the Company’s financial condition and operational results and are in accordance with relevant accounting standards; and

• The Company’s risk management and internal control systems are sound, appropriate and operating efficiently and

effectively.

Group Strategic Planning

The company has adopted a formal and dynamic process of strategic planning. The Board reviews and endorses strategies designed to ensure the long term successful outcome for the company.


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Trading in the Company’s Securities by Directors and Employees

The Board has adopted a policy in relation to dealings in the Company’s securities which applies to all directors and employees. Under the policy, directors are prohibited from short term or “active” trading in the Company’s securities, and directors and employees are prohibited from dealing in the Company’s securities whilst in possession of price sensitive information. The Chairman or Company Secretary must be notified of any proposed transaction.

Role of Shareholders

The shareholders of the company play an important role in corporate governance by virtue of their responsibilities for voting on the appointment of directors.

The Board ensures that shareholders are kept fully informed on developments affecting the company through:

• The Annual Report and Wedgetail newsletters distributed to shareholders;

• Compliance with Australian Stock Exchange’s continuous disclosure requirements (and subsequent shareholder announcements); and

• The annual general meeting and other meetings called to obtain approval for Board action.



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Note 2005 2004 $ $ Revenue from ordinary activities 3 239,643 1,028,626 Bad Debt written off (250,000) -Carrying amount of non current assets sold (1,869) -Carrying amount of investments sold - (564,383)Depreciation and amortisation (268,506) (238,059)Employment /consultants (947,532) (519,566)Non cash fair value adjustment (74,500) -Finance costs (1,313,090) -Management and administration expenses (1,206,171) (697,883)Other expenses from ordinary activities (7,087) (76,972) Profit/(Loss) from ordinary activities before income tax expense 4 (3,829,112) (1,068,237)Income tax expense 5 - - Net profit/(loss) attributable to the members of Wedgetail Exploration NL 17 (3,829,112) (1,068,237) Total Changes In Equity Other Than Those Resulting From Transactions With Owners As Owners (3,829,112) (1,068,237) Earnings per share – Basic 24 (0.004) (0.001)

The accompanying notes form part of the financial statements.

Income Statement For The Year Ended 31 December 2005

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Note 2005 2004 $ $ Current Assets Cash and cash equivalents 6 4,430,059 2,516,922 Receivables 7 9,148,851 310,228 Total Current Assets 13,578,910 2,827,150 Non-Current Assets Exploration assets 8 17,268,213 8,820,128 Property plant and equipment 9 3,002,372 1,994,842 Receivables 10 - 250,000 Other financial assets 11 582,772 611,594 Total Non-Current Assets 20,853,357 11,676,564 Total Assets 34,432,267 14,503,714 Current liabilities Trade & Other Payables 12 3,712,157 1,047,363 Provisions 13 38,024 -

Interest Bearing Liabilities 14 6,655,634 39,985 Total Current Liabilities 10,405,815 1,087,348 Non Current Liabilities

Interest Bearing Liabilities 15 2,602,668 2,527,938 Total Non Current Liabilities 2,602,668 2,527,938 Total Liabilities 13,008,483 3,615,286 Net Assets 21,423,784 10,888,428 Equity Contributed equity 16 28,183,910 14,232,159 Accumulated losses 17 (6,760,126) (3,343,731) Total Equity 21,423,784 10,888,428


Balance Sheet As At 31 December 2005


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Note 2005 2004 $ $

Cash Flows From Operating Activities Rental and other income 130,194 54,040Interest and borrowing costs paid (775,336) -Payments to suppliers and employees (1,924,132) (1,018,671)Interest and distributions received 107,081 252,578

Net Cash Used In Operating Activities 22 (b) (2,462,193) (712,053) Cash Flows From Investing Activities

Payments for plant and equipment (1,282,593) (1,077,507)Payment for mineral exploration areas (8,448,085) (5,767,760)Payments for investments - (250,000)Proceeds from sale of investments - 196,896Proceeds from sale of plant and equipment 2,181 -Payments for mineral exploration security deposits (45,678) -Proceeds from security deposits - 98,984

Net Cash Used In Investing Activities (9,774,175) (6,799,387) Cash Flows From Financing Activities

Drawdown on borrowings 6,624,862 2,500,000Proceeds from shares issued 7,524,643 790,000Repayments of borrowings - (432,077)

Net Cash Provided By Financing Activities 14,149,505 2,857,923 Net Increase / (Decrease) In Cash Held 1,913,137 (4,653,517) Cash Held At The Beginning Of Period 2,516,922 7,170,439 Cash Held At The End Of The Financial Year 22 (a) 4,430,059 2,516,922


Statement Of Cash Flows For The Year Ended 31 December 2005

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Note 2005 2004 $ $

Total equity at the beginning of the year 10,888,428 11,166,665 Net loss 17 (3,829,112) (1,068,237)Equity settled transactions: Value of share options expensed 17 412,717 -Transactions with equity holders in their capacity as equity holders: Contributions of equity, net of transaction costs 16 13,951,751 790,000 Total equity at the end of the year 21,423,784 10,888,428


Statement Of Changes In Equity For The Year Ended 31 December 2005


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1. CORPORATE INFORMATION Wedgetail Exploration NL (“Wedgetail” or the “Company”) is a public listed no liability company that is incorporated

and domiciled in Australia.

During the year, the principal activity of Wedgetail was gold exploration and development of the Nullagine gold project in Western Australia.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis Of Presentation This is a general purpose financial report of the Company that has been prepared in accordance with applicable

accounting standards and other mandatory professional reporting requirements (Urgent Issues Group Consensus Views) and the Corporations Act 2001. The accounting policies have been consistently applied.

The financial statements have been prepared on the basis of historical costs, except where stated certain current and non-current assets are held at current valuation.

(b) Statement of Compliance The full year financial report complies with Australian Accounting Standards, which include Australian

equivalents to International Financial Reporting Standards (‘AIFRS’). Compliance with AIFRS ensures that the full year financial report, comprising the financial statements and notes thereto, complies with International Financial Reporting Standards (‘IFRS’).

This is the first full year financial report prepared based on AIFRS and comparatives for the year ended 31 December 2004 have been restated accordingly. A summary of the significant accounting policies of the Company under AIFRS are disclosed in Notes 2. (c) to (s).

Reconciliations of the transition from previous Australian Generally Accepted Accounting Principles (“AGAAP”) to IFRS have been included in Note 26 to this report.

(c) Income Tax Income tax on the income statement for the periods presented comprises current and deferred tax. Income tax

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

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised.

Notes To, And Forming Part Of, The Financial Statements

For The Year Ended 31 December 2005

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued

(d) Property, Plant and Equipment

Cost and valuation Items of property, plant and equipment comprising a class of non current assets are carried at cost less

accumulated depreciation and any impairment in value.

Land and buildings are measured at cost.

The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the assets employed and subsequent disposal. The expected net cash flows have been discounted to their net present values in determining recoverable amounts.

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

Depreciation Depreciation is calculated on a diminishing value basis to write off the net cost of each item of plant and

equipment over its expected useful life to the company. The expected useful lives are as follows:

Plant and equipment 5 – 10 years.

(e) Mineral Exploration Expenditure Costs incurred during exploration and evaluation are accumulated in respect of each identifiable area of

interest.

Exploration and evaluation costs shown in the Balance Sheet represent an accumulation of net direct exploration and evaluation costs incurred by the company in relation to the acquisition of areas of interest for which rights of tenure are current and expected to be maintained and in respect of which:

i) such costs are expected to be recouped through successful development and exploitation of the area; or ii) exploration and/or evaluation activities in the areas have not yet reached a stage which permits an

assessment of the existence or otherwise of economically recoverable reserves.

The directors regularly review the capitalised exploration costs and where appropriate areas of interest are written down to their recoverable amount.

The ultimate recoupment of costs related to the areas of interest in the exploration and evaluation phase is dependent on the successful and commercial exploitation of the relevant areas.




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(f) Investments and other financial assets

From 1 January 2004 to 31 December 2004 Investments in corporations other than related corporations are valued at the lower of cost or directors’ valuation.

Marketable securities held as inventory are valued at the lower of cost or net realisable value as determined in respect of each security holding. Dividend income is recognised in the Income Statement.

From 1 January 2005 The Company classifies its investments in the following categories: financial assets at fair value through

profit and loss, loan 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 re-evaluates this designation at each reporting date.

(g) Leases Leases are classified at their inception as either operating or finance leases based on the economic substance of

the agreement so as to reflect the risks and benefits incidental to ownership.

Operating leases The minimum lease payments of operating leases, where the lessor effectively retains substantially all of the

risks and benefits of ownership of the leased item, are recognised as an expense on a straight line basis.

Contingent rentals are recognised as an expense in the financial year in which they are incurred.

Finance leases Leases which effectively transfer substantially all of the risks and benefits incidental to ownership of the leased

item to the economic entity are capitalised at the present value of the minimum lease payments. A lease liability of equal value is also recognised.

Capitalised lease assets are depreciated over the estimated useful life of the assets. Minimum lease payments are allocated between interest expense and reduction of the lease liability with the interest expense calculated using the interest rate implicit in the lease and charged directly to the Income Statement

The cost of improvements to or on leasehold property is capitalised, disclosed as leasehold improvements, and amortised over the unexpired period of the lease or the estimated useful lives of the improvements, whichever is the shorter.

(h) Segment reporting A segment is a distinguishable component of the consolidated entity that is engaged either in providing products

or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments.



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(i) Goods and Services Tax Revenue, expenses and assets are recognised net of the amount of goods and services tax (“GST”), except

where the amount of GST incurred is not recoverable from the taxation authority. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the Balance Sheet.

Cash Flows are included in the statement of cash flows on a gross basis.

The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows.

(j) Trade Payables and Other Creditors These amounts represent liabilities for goods and services provided to the company prior to the end of the

financial year and which are unpaid, together with assets ordered before the end of the financial year. The amounts are unsecured and are usually paid within 30 days of recognition.

(k) Trade Receivables and Revenue Recognition Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the

financial assets.

Other debtors are recognised at the amount receivable and are due for settlement within 30 days from the end of the month in which services were provided.

(l) Cash and cash equivalents Cash and cash equivalents includes cash on hand and in banks and investments in money market instruments,

net of any outstanding bank overdraft.

(m) Borrowing Costs Borrowing costs are recognised as an expense when incurred.

(n) Interest Bearing Loans and Borrowings All loans and borrowings are initially recognised at cost. Any accrued interest is recorded in payables.

(o) Revenues Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and

the revenue can be reliably measured. Dividend and distribution revenue is recognised when the shareholders right to receive payment is established.

Interest revenue is recognised as the interest accrues. Rental revenue is recognised in accordance with rental agreements.

(p) Share Based Payment Transactions Equity based compensation benefits are provided to certain employees and suppliers as consideration for goods

and services received.

Share options granted after 7 November 2002 and vested before 1 January 2005 No expense is recognised in respect of these options. The shares are recognised when the options are exercised

and the proceeds received are allocated to share capital.

Share options granted after 1 January 2005 The fair value of options granted is recognised as an expense. The fair value is measured at grant date and

recognised over the period that the holder becomes unconditionally entitled to the options.




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(q) Employee Entitlements

(i) Wages and Salaries and Annual Leave Liabilities for wages and salaries, including annual leave expected to be settled within twelve months of

the reporting date are recognised in the provision for employee benefits up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.

(ii) Employee Benefit on-costs Employee benefit on costs, including payroll tax and superannuation guarantee charge, are charged as an

expense when incurred.

(r) AASB 1 Transitional exemptions The Company has made its election in relation to the transitional exemptions allowed by AASB1 ‘First-time

Adoption of Australian Equivalents to International Financial Reporting Standards’ as follows: Business Combinations AASB 3 ‘Business Combinations’ was not applied retrospectively to past business combinations (i.e. business

combinations that occurred before the date of transition to AIFRS)

Share-based payment transactions AASB 2 ‘Share-Based Payments’ has not been applied to equity instruments granted after 7 November 2002 that

vested on or before 1 January 2005.

(s) Comparatives Where required by Accounting Standards, comparative figures have been adjusted to conform to changes in

presentation for the current financial year.

2005 2004 $ $3. REVENUE FROM ORDINARY ACTIVITIES Interest received 97,081 252,578 Distributions received 10,000 - Proceeds from disposal of fixed assets 2,181 - Proceeds from sale of financial asset - 704,958

Rental & others 130,381 71,090

239,643 1,028,626 4. OPERATING PROFIT / (LOSS) Loss before income tax expense includes the following specific gains and expenses:

Expenses

Bad debt written off 250,000 -Non cash fair value adjustment 74,500 -Depreciation and amortisation 268,506 238,059Value of share options expensed 412,717 -Finance costs

Interest paid or payable – other persons 619,724 -Borrowing costs paid – other persons 693,366 -

Net Gains Gain on disposal of shares - 140,576Gain on disposal of fixed asset 312 -



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2005 2004 $ $5. INCOME TAX

Profit / (loss) before income tax expense (3,829,112) (1,068,237) Prima facie tax on operating profit/(loss) (1,148,734) (320,471) Tax effect of permanent differences

Provision for diminution in value of investments 22,350 -Future income tax benefit not brought to account 1,126,384 320,471

Income Tax Expense Attributable To Operating Profit (Loss) - -

The company has approximately $12,097,900 (2004: $2,328,470) in losses for income tax purposes unrecouped at

balance date (subject to confirmation by the Commissioner of Taxation). The aggregate future income tax benefit of $3,629,370 (2004: $698,541) has not been carried forward as an asset in the Balance Sheet as realisation of the benefit is not regarded as virtually certain and will only be obtained if:

(a) the company derives future assessable income of a nature and of an amount sufficient to enable the benefit from the exploration expenditure and tax losses to be realised;

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

(c) no changes in tax legislation adversely affect the company in realising the benefit from the tax losses.

6. CURRENT ASSETS - CASH

Cash at bank 192,746 995,865Cash on deposit 4,237,313 1,521,057

4,430,059 2,516,922 7. CURRENT ASSETS - RECEIVABLES

Debtors 9,085,802 17,050GST refundable 63,049 293,178

9,148,851 310,228

During December 2005 the Company entered into Underwriting Agreements with various parties, whereby the Underwriters agreed to underwrite the exercise of the Company’s 31 December 2005 options. At 31 December 2005, application monies were outstanding for 180,021,235 shares, at an issue price of $0.05 per share. Shareholders approved the issue of the Underwritten Shares on 2 March 2006, with all outstanding amounts under the Underwriting Agreements received by the Company during March 2006.

8. EXPLORATION TENEMENTS Mineral Exploration And Evaluation Expenditure

Carrying amount at beginning of year 8,820,128 3,052,368Current year expenditure 8,448,085 5,767,760

Carrying Amount At End Of Year 17,268,213 8,820,128

Recoverability of the company’s carrying value of interests in mineral projects is subject to the successful development and exploitation of the exploration properties or alternatively, the sale of these tenements at amounts at least equal to the book values.




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2005 2004 $ $9. PLANT AND EQUIPMENT Plant and Equipment – at cost 2,024,851 1,677,873

Less Accumulated Depreciation (416,267) (323,364) Written Down Value 1,608,584 1,354,509 MOTOR VEHICLES Motor Vehicles – at cost 124,081 111,181Less Accumulated Depreciation (29,562) (9,443) Written Down Value 94,519 101,738 LAND AND BUILDINGS

Land and Buildings – at cost 1,214,356 432,669Less Accumulated Depreciation - -

Written down Value 1,214,356 432,669 LEASEHOLD IMPROVEMENTS

Leasehold Improvements – at cost 133,486 128,699Less Accumulated Depreciation (48,573) (22,773)

Written Down Value 84,913 105,926

Total Written Down Value at End of Year 3,002,372 1,994,842

PLANT AND EQUIPMENT - RECONCILIATION

Carrying amount at beginning of year 1,354,509 1,128,302Additions 483,219 252,243Disposals (1,869) -Plant Development / Upgrade - 180,037Less Depreciation (227,275) (206,073) Carrying Amount At End Of Year 1,608,584 1,354,509 MOTOR VEHICLES - RECONCILIATION

Carrying amount at beginning of year 101,738 27,770Additions 12,900 83,181Less Depreciation (20,119) (9,213) Carrying Amount at End of Year 94,519 101,738



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2005 2004 $ $

LAND AND BUILDINGS - RECONCILIATION

Carrying amount at beginning of year 432,669 -Additions at cost 781,687 432,669 Carrying Amount at End of Year 1,214,356 432,669 LEASEHOLD IMPROVEMENTS - RECONCILIATION

Carrying amount at beginning of year 105,926 -Additions 4,787 128,699Less Depreciation (25,800) (22,773) Carrying Amount at End of Year 84,913 105,926

Total Amount at End of Year 3,002,372 1,994,842

10. NON CURRENT ASSETS - RECEIVABLES Other debtors - 250,000

11. NON CURRENT ASSETS – OTHER FINANCIAL ASSETS Available for sale financial assets at fair value 457,000 531,500Security deposits 125,772 80,094 582,772 611,594 Market Value Of Shares In Listed Companies 457,000 543,500

12. CURRENT LIABILITIES - PAYABLES Trade creditors 3,712,157 1,047,363

Trade creditors are non interest bearing and are generally on 30 day terms.

During December 2005 the Company entered into Underwriting Agreements with various parties, whereby the Underwriters agreed to underwrite the exercise of the Company’s 31 December 2005 options (refer to Notes 7 and 16). The Underwriting Agreements provide that the Company will pay a fee of 1 cent per 31 December 2005 option underwritten. Underwriting fees of $2,573,952 outstanding at year end have since been paid.

13. CURRENT LIABILITIES - PROVISIONS Provision for employee entitlements 38,024 -

The provision consists of annual leave expected to be settled within twelve months of the reporting date.




31

2005 2004 $ $14. CURRENT LIABILITIES – INTEREST BEARING LIABILITIES Convertible note 2,500,000 - Hire Purchase Liability 90,117 39,985

Borrowings 4,065,517 - 6,655,634 39,985

On the 25th August 2004, the Company issued a Convertible Note for $2.5m to Rothschild Australia Global Resources Fund Ltd, subsequently renamed LinQ Capital Limited, as trustee for the LinQ Resources Fund. Interest is calculated at 10% per annum. The note will mature on the 31st May 2006. It can be converted into shares in the company at 3.5 cents per share. There is a Mining Mortgage and a fixed and floating charge over the company’s assets as security for the Convertible Note.

The Company negotiated and drawn down a $4.0m working capital facility with Investec Bank (Australia) Limited. Interest is calculated at the average rate for bank accepted bills plus a margin of 2.85%. The facility is due for repayment on 11 April 2006. There is a fixed and floating charge over the assets of the company as security for the facility.

15. NON CURRENT LIABILITIES - INTEREST BEARING LIABILITIES Interest Bearing Liabilities Hire Purchase Liability 102,668 27,938

Convertible Note 2,500,000 2,500,000

Total Non Current Interest Bearing Liabilities 2,602,668 2,527,938

On the 3rd March 2005, the company issued a Convertible Note for $2.5m to LinQ Capital Limited as trustee for the LinQ Resources Fund. Interest is calculated at 10% per annum. The note will mature on the 31st January 2007, however may be extended to no later than 31 January 2008. It can be converted into shares in the company at 5.5 cents per share. There is a Mining Mortgage and a fixed and floating charge over the company’s assets as security for the Convertible Note.



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16. CONTRIBUTED EQUITY 2005 2004 $ $

(a) Issued Capital 1,274,355,298 (2004: 939,089,234) ordinary shares 28,183,910 14,232,159

(b) Movement In Issued Capital Balance at the beginning of the financial year 14,232,159 13,442,159 254,221,235 ordinary shares were issued on 31 December 10,137,110 - 2005 at 5 cents per share pursuant to the Underwriting Agreements dated December 2005 (Refer Notes 7 and 12). (12,711,062 less costs 2,573,952) 3,173,962 ordinary shares were issued on 31 December 158,698 - 2005 from the exercise of options at an exercise price of 5 cents 10,715 ordinary shares were issued on 1 November 2005 536 - from the exercise of options at an exercise price of 5 cents 77,700,120 ordinary shares were issued on 27 April 2005 3,647,406 - at 5 cents per share for exploration and working capital requirements (3,885,006 less costs 237,600) 100,000 ordinary shares were issued on 15 April 2005 5,000 - from the exercise of options at an exercise price of 5 cents

60,032 ordinary shares were issued on 24 March 2005 3,001 - from the exercise of options at an exercise price of 5 cents 55,555,555 ordinary shares were issued on 30 September - 500,000 2004 from the Convertible Note instrument with Rothschild Australia Global Resources Fund Pty Ltd 6,000,000 ordinary shares were issued on 25 August - 90,000 2004 from the exercise of options

7,142,857 ordinary shares were issued on 23 July 2004 - 200,000 at 2.8 cents per share towards the acquisition of mining tenements

Balance At The End Of Year 28,183,910 14,232,159




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16. CONTRIBUTED EQUITY continued

(c) Terms and Conditions of Contributed Equity

Ordinary Shares

Ordinary shares have the right to receive dividends as declared and, in the event of winding up the company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held.

Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the company.

(d) Options

2005 2004 Number Number

Options - listed Balance at beginning of year 205,765,862 205,765,862Issued during year 51,800,082 -Exercised during year (257,565,944) -Expired during year - - Balance at end of year - 205,765,862

51,800,082 listed options expiring 31 December 2005, with an exercise price of 5 cents per share were issued on 27 April 2005.

During December 2005 the Company entered into Underwriting Agreements with various parties, whereby the Underwriters agreed to underwrite the exercise of the Company’s 31 December 2005 options.

Options - unlisted Balance at beginning of year - 6,000,000Issued during year 34,700,000 -Exercised during year - (6,000,000)Expired during year - - Balance at end of year 34,700,000 -

30,000,000 unlisted options to subscribe for fully paid ordinary share were granted to Investec Australia Bank on 3 November 2005. The options have an exercise price of 5.5 cents per share, and expire on 11 October 2007.

3,300,000 unlisted employee options were granted on 1 August 2005. The options have an exercise price of 3.5 cents per share, and expire on 1 August 2006.

1,400,000 unlisted employee options were granted on 19 September 2005. The options have an exercise price of 3.5 cents per share, and expire on 19 September 2006.



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16. CONTRIBUTED EQUITY continued

(e) Convertible Notes

Movement in notes convertible to ordinary shares in the capital of the parent entity are as follows:

No. of Conversion No. of Balance Convertible Notes Price Potential Ordinary $ $ Shares

Opening balance 2,500,000 0.035 71,428,571 2,500,000Issue of convertible notes 2,500,000 0.055 45,454,545 2,500,000

Closing balance 5,000,000 116,883,116 5,000,000 The total number of potential ordinary shares outstanding in the capital of the parent entity at 31 December 2005, in

respect of options and convertible notes, is 151,583,116 (2004: 277,194,433) ordinary shares.

17. ACCUMULATED LOSSES 2005 2004 $ $

Opening balance at the beginning of year (3,343,731) (2,275,494) Net profit/(loss) attributable to members of Wedgetail Exploration NL (3,829,112) (1,068,237)

Equity settled transactions 412,717 - Closing Balance At The End Of Year (6,760,126) (3,343,731)

18. SEGMENTAL INFORMATION

The company operated for the financial year within Australia.

The principal activity of the company was mineral exploration.

19. EXPENDITURE COMMITMENTS

(a) Exploration

Due to the nature of the company’s activities, it is difficult to accurately forecast the amount of future expenditure that will be necessary to incur in order to maintain present interests. Expenditure contracts on mineral tenure can be reduced by selective relinquishment of exploration tenements, or by the re-negotiation of expenditure commitments.

The minimum level of exploration commitments: - Not later than one year is 991,000 900,000- later than one year and not later than five years is 2,887,500 2,500,000- later than five years is 1,800,000 1,600,000

(b) Operating Lease CommitmentsThe minimum level of operating lease commitments:

- Not later than one year is 255,862 254,250- later than one year and not later than five years is 111,393 367,255




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19. EXPENDITURE COMMITMENTS continued 2005 2004 $ $ (c) Finance Lease Commitments

The minimum level of operating lease commitments: - Not later than one year is 90,117 39,985- later than one year and not later than five years is 102,667 27,938

20. REMUNERATION OF AUDITOR Amounts received, or due and receivable by the auditor for:

Auditing 15,200 11,000Other services 2,750 7,000

17,950 18,000

21. RELATED PARTY INFORMATION

(a) Names Of Directors

The persons holding positions as Directors of the Company during the financial year were:

C DonnerF VanspeybroeckG LambertR GillonE Kirby R Procter

(b) Directors’ Remuneration

Year

Short Term

Post

Employment

Equity

Compensation

Directors Fees

$

Consulting Fees

$

Non-monetary

Benefits

$

Super-

annuation

$

Value of Share

Options

$

Total

$

Non-Executive Directors

Mr C Donner 2005 46,500 - - - - 46,500

2004 36,000 - - - - 36,000

Mr G Lambert 2005 24,000 - - - - 24,000

2004 24,000 - - - - 24,000

Mr R Gillon 2005 24,000 - - - - 24,000

2004 24,000 - - - - 24,000

Mr E Kirby 2005 24,000 19,650 - - - 43,650

2004 24,000 21,599 - - - 45,599

Mr R Procter (Appointed15 February 2005)

2005 20,000 - - - - 20,000

2004 - - - - - -

Executive Director

Mr F Vanspeybroeck 2005 - * 299,500 - - - 299,500

2004 - * 162,000 - - - 162,000

* Of the fees paid to Mr Vanspeybroeck, $114,000 (2004: $55,000) are deferred fees relating to prior year consultancies.



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21. RELATED PARTY INFORMATION continued

(c) Executives’ Remuneration

The company does not employ any executive officers apart from the Directors.

(d) Directors’ Interests As At 17 March 2006

Director Ordinary Shares Direct Indirect Interest Interest

Clive Donner - - Frank Vanspeybroeck - 28,675,735 Geoff Lambert - 2,835,715 Ross Gillon - 4,750,001 Evan Kirby - 325,000 Richard Procter 300,000 -

(e) Other Transactions With Specified Directors

Frank Vanspeybroeck is a Director of IMMO Services (WA) Pty Ltd. The Company has entered into a contract with IMMO Services (WA) Pty Ltd for the supply of management services under normal commercial terms and conditions. During the period that company was paid $299,500 (2004: $162,000). The agreement terminated on 31 January 2006, with no termination benefits payable.

Mr Ross Gillon is a partner of Lawton Gillon which provides legal services to the Company. During the period that Partnership was paid $29,010 (2004: $18,545).

Mr Evan Kirby is a Director of Metallurgical Management Services (Pty) Ltd which provides metallurgical consultancy to the Company. During the period that Company was paid $19,650 (2004: $21,599).

Mr Clive Donner is a director of LinQ Corporate Pty Ltd, which is owned by a trust in which Mr Donner is one of the beneficiaries. During the year this company received a net fee of $218,570 (inc GST) for corporate and financial advice provided at normal commercial rates.

The LinQ Resources Fund (through LinQ Capital Limited, the Responsible Entity for the LinQ Resources Fund, of which Mr Donner is a Director and which is owned by a trust in which Mr Donner is one of the beneficiaries) is due to receive an underwriting fee of $592,000 pursuant to an underwriting agreement dated 16 December 2005 on the same terms and conditions as the other underwriters pursuant to this agreement. The LinQ Resources Fund also received $165,000 (inc GST) as establishment fees for funding provided, and interest on the convertible note facilities amounting to $671,848. These fees were payable and paid to the LinQ Resources Fund, not the responsible entity, LinQ Capital Limited. Mr Donner is a minority shareholder of the LinQ Resources Fund in which he owns less than 1% of the fund.

Mr Donner is a director and a beneficiary of Woodcross Holdings Pty Ltd, the trustee of the Woodcross Trust, which received $18,120 for the lease of office furniture to the Company at commercial rates.




37

2005 2004 $ $22. NOTES TO THE STATEMENT OF CASH FLOWS (a) Reconciliation Of Cash

Cash as at the end of the financial year as shown in the Statement of Cash Flows is reconciled to the related items in the Statement of Financial Position as follows:

Cash at bank 192,746 995,865Cash on deposit 4,237,313 1,521,057

4,430,059 2,516,922

(b) Reconciliation Of Net Cash Provided By Operating Activities To Operating Loss After Income Tax

Profit/(Loss) after income tax (3,829,112) (1,068,237)Profit on sale of property, plant and equipment (312) Depreciation 273,194 238,737Provision on diminution in financial assets 74,500 Gain on sale of investments - (140,576)Share based payments 412,717 -Provisions 38,024 -Interest expense capitalised 65,517 -Bad debt written off 250,000 -Movement in assets and liabilities

Trade receivables (67,691) (17,050)Tax asset 230,128 (196,993)Trade creditors and accruals 90,842 472,066

Net Cash Used In Operating Activities (2,462,193) (712,053)

(c) Non-Cash Investing Activities There were no non-cash investing activities

23. FINANCIAL INSTRUMENTS

The company’s accounting policies, including the terms and conditions of each class of financial liability and equity instrument, both recognised and unrecognised at the balance date, are as follows:

Short Term Deposits Short term deposits are stated at the lower of cost and net realisable value. Interest is recognised in the Statement

of Financial Performance when earned.

Listed Shares Listed shares are carried at the lower of cost or recoverable amount. Dividend income is recognised when the

dividends are declared by the investee.

Trade Payables and Accruals Liabilities are recognised for amounts to be paid in the future for goods and services received, whether or not billed

to the Company. Trade liabilities are normally settled on 60 day terms.



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23. FINANCIAL INSTRUMENTS continued

(a) Interest Rate Risk

The company’s exposure to interest rate risk, which is the risk that a financial instrument’s value will fluctuate as a result of changes in market, interest rates and the effective weighted average interest rates on these financial assets, is as follows:

2005 Weighted Average Floating Fixed Interest Maturing Non-Interest Effective Interest 1 Year 1 – 5 years Bearing Total Interest $ $ $ $ $ % Financial Assets Interest bearing deposits 5.4% 4,237,313 - - - 4,237,313Cash at bank 3.7% 192,746 - - - 192,746Receivables/tax asset - - - 9,148,851 9,148,851Shares in listed companies - - - 457,000 457,000Security deposits 5.4% - 125,772 - - 125,772 Total Financial Assets 4,430,059 125,772 - 9,605,851 14,161,682 Financial Liabilities

Payables - - - 3,712,157 3,712,157Hire Purchase Liability - 90,117 102,668 - 192,785Provisions - - - 38,024 38,024Borrowings 8.5% - 4,065,517 - - 4,065,517Convertible notes 10.0% - 2,500,000 2,500,000 - 5,000,000 Total Financial Liabilities - 6,655,634 2,602,668 3,750,181 13,008,483 Net Financial Assets 4,430,059 (6,529,862) (2,602,668) 5,855,670 1,153,199




39

23. FINANCIAL INSTRUMENTS continued

2004 Weighted Average Floating Fixed Interest Maturing Non-Interest Effective Interest 1 Year 1 – 5 years Bearing Total Interest $ $ $ $ $ %Financial Assets Interest bearing deposits 4.65% 1,521,057 - - - 1,521,057Cash at bank - - - 995,865 995,865Receivables/tax asset - - - 560,228 560,228Shares in listed companies - - - 531,500 531,500Security deposits - - - 80,094 80,094 Total Financial Assets 1,521,057 - - 2,167,687 3,688,744 Financial Liabilities

Payables - - - 1,047,363 1,047,363Hire Purchase Liability - 39,985 27,938 - 67,923Convertible note 10.00% - - 2,500,000 - 2,500,000 Total Financial Liabilities - 39,985 2,527,938 1,047,363 3,615,286 Net Financial Assets 1,521,057 (39,985) (2,527,938) 1,120,324 73,458

(b) Credit Risk

The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date, to recognised financial assets is the carrying amount, net of any provisions for doubtful debts, as disclosed in the Balance Sheet and notes to the financial statements.

The company does not have any material risk exposure to any single debtor or group of debtors, under financial instruments entered into by it.

(c) Net Fair Values

Methods and assumptions used in determining net fair value.

For assets and other liabilities, the net fair value approximates their carrying value. No financial assets and financial liabilities are readily traded on organised markets in standardised form, other than listed investments. The company has no financial assets where carrying amount exceeds net fair values at balance date.

The aggregate net fair values and carrying amounts of financial assets and financial liabilities are disclosed in the Balance Sheet and in the notes to and forming part of the financial statements.



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24. EARNINGS PER SHARE 2005 2004 Cents Per Share Cents Per Share

Basic earnings per share – (loss) (0.004) (0.001)

Weighted average number of ordinary shares outstanding during the year in calculation of basic EPS 992,002,115 875,765,821

Diluted earnings per share is not considered to be materially different from basic earnings per share and accordingly is not disclosed.

25. CONTINGENT LIABILITES

Bonds are held with respect to mining licences for which Notices of Intent have been lodged. Bonds are set by the Department of Minerals and Energy, however there is no certainty that such bonds will be adequate to cover any environmental damage in the event of mining. The company is not able to determine the nature or extent of any further requirement in respect of changing environmental requirements.

26. IMPACT OF ADOPTING AUSTRALIAN EQUIVALENTS TO INTERNATIONAL FINANCIAL REPORTING STANDARDS

The Company has investigated the transition from Australian Generally Accepted Accounting Principles (“AGAAP”) to Australian equivalents to International Financial Reporting Standards (“IFRS”). The Company’s assessment of the impact of adopting Australian equivalents to IFRS is set out below:

2005 2004 $ $

Balance Sheet Total equity as at beginning of year as reported under AGAAP 10,888,428 11,166,665Adjustments relating to adoption of IFRS - -As restated under Australian equivalents to IFRS 10,888,428 11,166,665 Income Statement Net profit / (loss) for the year as reported under AGAAP (1,068,237)Adjustments relating to adoption of IFRS -As restated under Australian equivalents to IFRS (1,068,237)

There are no material impacts occur on the recognition and disclosure of cash flows.




41

In accordance with a resolution of the Directors of Wedgetail Exploration NL, I state that:

In the opinion of the Directors:

(a) The statements and notes of the Company are in accordance with the Corporations Act 2001, including:

(i) giving a true and fair view of the Company’s financial position as at 31 December 2005, and performance for the year ended on that date; and

(ii) complying with Accounting Standards and Corporations Regulations 2001; 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.

On behalf of the Board.

Richard ProcterDirector

Perth, 31 March 2006

Directors’ Declaration

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ScopeThe financial report comprises the balance sheet, income statement, statement of cashflows, statement of equity changes, accompanying notes and the directors’ declaration for Wedgetail Exploration NL, the company, for the year ended 31 December 2005.

The directors of the company are responsible for the preparation and true and fair presentation of the financial report in accordance with the Corporations Act 2001. This includes responsibility for the maintenance of adequate accounting records and internal controls that are designed to prevent and detect fraud and error, and for the accounting policies and accounting estimates inherent in the financial report.

Audit approachWe conducted an independent audit of the financial report in order to express an opinion on it to the members of the company. Our audit was conducted in accordance with Australian Auditing Standards in order to provide reasonable assurance as to whether the financial report is free of material misstatement. The nature of an audit is influenced by factors such as the use of professional judgement, selective testing, the inherent limitations of internal control, and the availability of persuasive rather than conclusive evidence. Therefore an audit cannot guarantee that all material misstatements have been detected.

We performed procedures to assess whether in all material respects the financial report presents fairly in accordance with the Corporations Act 2001, Australian Accounting Standards and other mandatory professional reporting requirements in Australia a view which is consistent with our understanding of the company’s and the consolidated entity’s financial position, and of their performance as represented by the results of their operations and cash flows.

We formed our opinion on the basis of these procedures, which included:• examining on a test basis, information to provide evidence supporting the amounts and disclosures in the financial

report, and• assessing the appropriateness of the accounting policies and disclosures used and the reasonableness of significant

accounting estimates made by the directors.

Whilst we considered the effectiveness of management’s internal controls over financial reporting when determining the nature and extent of our procedures, our audit was not designed to provide assurance on internal controls.

IndependenceWe are independent of the company, and have met the independence requirements of Australian professional ethical requirements and the Corporations Act 2001.

Audit opinionIn our opinion, the financial report of Wedgetail Exploration NL is in accordance with:a) the Corporations Act 2001, including: (i) giving a true and fair view of the company’s financial position as at 31 December 2005 and its performance for

the year ended on that date; and (ii) complying with Accounting Standards and the Corporations Regulations 2001; andb) other mandatory professional reporting requirements.

Rothsay

Graham R Swan Partner

Dated: 31 March 2006

The liability of Rothsay Chartered Accountants is limited by the Accountants Scheme, approved under the Professional Standards Act 1994 (NSW).

INDEPENDENT AUDIT REPORT TO THE MEMBERS OF

WEDGETAIL EXPLORATION NL


43

Prospect Area Tenement Area Wedgetail Registered Holder Beneficial Interest %

ALL NATIONS M46/199 8.1004 Ha 100% Wedgetail Exploration NL M46/225 0.5 Ha 100% Wedgetail Exploration NL M46/98 4.8555 Ha 100% Wedgetail Exploration NL P46/1188 0.5 Ha 100% Wedgetail Exploration NL BARTONS G46/02 0.8 Ha 75% *Livestock Marketing Pty Ltd M46/164 9 Ha 75% *Livestock Marketing Pty Ltd M46/3 16.9 Ha 75% *Livestock Marketing Pty Ltd M46/441 103.43 Ha 100% TupperGlenda Pty Ltd BEATONS CREEK M46/10 121.05 Ha 100% Commsecure Limited M46/11 465 Ha 100% Commsecure Limited M46/9 248 Ha 100% Commsecure Limited BEATONS CREEK EAST M46/263 360 Ha 100% Wedgetail Exploration NL P46/1263 200 Ha 100% Wedgetail Exploration NL P46/1264 160 Ha 100% Wedgetail Exploration NL P46/1329 18 Ha 100% Wedgetail Exploration NL P46/1330 6 Ha 100% Wedgetail Exploration NL CADJEBUT M46/432 529 Ha 100% Wedgetail Exploration NL P46/1289 200 Ha 100% Wedgetail Exploration NL P46/1290 22.9 Ha 100% Wedgetail Exploration NL P46/1292 200 Ha 100% Wedgetail Exploration NL P46/1298 143 Ha 100% Wedgetail Exploration NL COOKES CREEK E46/486 62 Blks 100% Wedgetail Exploration NL E46/573 14 Blks 100% Wedgetail Exploration NL M46/251 955 Ha 100% Wedgetail Exploration NL M46/252 955 Ha 100% Wedgetail Exploration NL M46/372 956 Ha 100% Wedgetail Exploration NL M46/373 956 Ha 100% Wedgetail Exploration NL M46/374 956 Ha 100% Wedgetail Exploration NL M46/375 956 Ha 100% Wedgetail Exploration NL M46/376 956 Ha 100% Wedgetail Exploration NL M46/377 956 Ha 100% Wedgetail Exploration NL M46/378 637 Ha 100% Wedgetail Exploration NL M46/379 955 Ha 100% Wedgetail Exploration NL M46/380 956 Ha 100% Wedgetail Exploration NL M46/381 956 Ha 100% Wedgetail Exploration NL M46/382 956 Ha 100% Wedgetail Exploration NL M46/464 956 Ha 100% Wedgetail Exploration NL M46/465 955 Ha 100% Wedgetail Exploration NL M46/466 955 Ha 100% Wedgetail Exploration NL M46/467 955 Ha 100% Wedgetail Exploration NL M46/468 955 Ha 100% Wedgetail Exploration NL M46/469 955 Ha 100% Wedgetail Exploration NL M46/470 955 Ha 100% Wedgetail Exploration NL M46/471 955 Ha 100% Wedgetail Exploration NL M46/472 955 Ha 100% Wedgetail Exploration NL M46/473 955 Ha 100% Wedgetail Exploration NL DAVIS RIVER L46/41 2191 Ha 100% Wedgetail Exploration NL FEDERATION M46/64 20 Ha 100% Wedgetail Exploration NL

Schedule Of Interests In Mining Tenements

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A n n u a l R e p o r t 2 0 0 5


FIVE MILE E46/308 15 Blks 100% Tyson Resources Pty Ltd L46/33 15.05 Ha 100% Wedgetail Exploration NL M46/192 46.16 Ha 100% Wedgetail Exploration NL/Olive, Alan Jones M46/212 981 Ha 100% Tyson Resources Pty Ltd M46/213 17 Ha 100% Tyson Resources Pty Ltd M46/234 418 Ha 100% Tyson Resources Pty Ltd M46/235 589.5 Ha 100% Tyson Resources Pty Ltd M46/261 933 Ha 100% Tyson Resources Pty Ltd M46/262 954 Ha 100% Tyson Resources Pty Ltd M46/264 955 Ha 100% Tyson Resources Pty Ltd M46/265 955 Ha 100% Tyson Resources Pty Ltd M46/266 955 Ha 100% Tyson Resources Pty Ltd M46/445 429 Ha 100% Wedgetail Exploration NL M46/446 391 Ha 100% Wedgetail Exploration NL M46/50 18.855 Ha 75% *Simba Holdings Pty Ltd P46/1123 70 Ha 100% Wedgetail Exploration NL/Olive, Alan Jones P46/1328 9.14 Ha 100% Wedgetail Exploration NL P46/1368 200 Ha 100% Ruane, Michael P46/1369 200 Ha 100% Wedgetail Exploration NL P46/1370 200 Ha 100% Wedgetail Exploration NL P46/1371 200 Ha 100% Wedgetail Exploration NL P46/1372 200 Ha 100% Wedgetail Exploration NL P46/1404 180 Ha 100% Bighead Enterprises Pty Ltd P46/1405 158 Ha 100% Bighead Enterprises Pty Ltd P46/1406 180 Ha 100% Bighead Enterprises Pty Ltd P46/1407 158 Ha 100% Bighead Enterprises Pty Ltd P46/1408 154 Ha 100% Bighead Enterprises Pty Ltd P46/1409 179 Ha 100% Bighead Enterprises Pty Ltd P46/1418 132 Ha 100% Bighead Enterprises Pty Ltd P46/1419 140 Ha 100% Bighead Enterprises Pty Ltd P46/1420 195 Ha 100% Bighead Enterprises Pty Ltd P46/1436 121 Ha 100% Wedgetail Exploration NL P46/1437 120 Ha 100% Wedgetail Exploration NL P46/1445 174 Ha 100% Wedgetail Exploration NL P46/1446 145 Ha 100% Wedgetail Exploration NL P46/1447 191 Ha 100% Wedgetail Exploration NL P46/1448 159 Ha 100% Wedgetail Exploration NL P46/1449 160 Ha 100% Wedgetail Exploration NL P46/1450 159 Ha 100% Wedgetail Exploration NL P46/1451 170 Ha 100% Wedgetail Exploration NL P46/1452 118 Ha 100% Wedgetail Exploration NL P46/1458 143 Ha 100% Wedgetail Exploration NL P46/1461 3 Ha 100% Wedgetail Exploration NL GOLDEN EAGLE E46/394 4 Blks 100% Wedgetail Exploration NL L46/45 1 Ha 100% Wedgetail Exploration NL M46/186 986 Ha 100% Wedgetail Exploration NL M46/267 592 Ha 100% Wedgetail Exploration NL M46/300 15 Ha 100% Wedgetail Exploration NL M46/436 200 Ha 100% Wedgetail Exploration NL M46/443 87 Ha 100% Wedgetail Exploration NL M46/444 175 Ha 100% Wedgetail Exploration NL P46/1320 15 Ha 100% Wedgetail Exploration NL P46/1444 11 Ha 100% Wedgetail Exploration NL GOLDEN GATE E46/279 3 Blks 75% *Simba Holdings Pty Ltd M46/129 30.8 Ha 75% *Simba Holdings Pty Ltd M46/163 4.85 Ha 100% Wedgetail Exploration NL M46/187 50 Ha 75% *Simba Holdings Pty Ltd M46/189 32.5 Ha 75% *Simba Holdings Pty Ltd M46/200 700 Ha 75% *Simba Holdings Pty Ltd M46/448 319 Ha 75% *Livestock Marketing Pty Ltd M46/457 288 Ha 100% Bighead Enterprises Pty Ltd M46/47 47.835 Ha 75% *Simba Holdings Pty Ltd P46/1421 92 Ha 100% Bighead Enterprises Pty Ltd P46/1422 162 Ha 100% Bighead Enterprises Pty Ltd



45 Prospect Area Tenement Area Wedgetail Registered Holder Beneficial Interest %

LITTLE WONDER M46/146 5.259 Ha 100% Wedgetail Exploration NL M46/198 9.7234 Ha 100% Wedgetail Exploration NL MIDDLE CREEK E46/391 18 Blks 100% Wedgetail Exploration NL E46/449 2 Blks 100% Wedgetail Exploration NL M46/272 875 Ha 100% Wedgetail Exploration NL M46/273 891 Ha 100% Wedgetail Exploration NL M46/274 955 Ha 100% Wedgetail Exploration NL M46/275 897 Ha 100% Wedgetail Exploration NL M46/276 955 Ha 100% Wedgetail Exploration NL M46/277 223 Ha 100% Wedgetail Exploration NL M46/282 319 Ha 100% Wedgetail Exploration NL M46/302 636 Ha 100% Wedgetail Exploration NL M46/430 200 Ha 100% Wedgetail Exploration NL M46/431 200 Ha 100% Wedgetail Exploration NL M46/447 201 Ha 100% Wedgetail Exploration NL P46/1270 25.48 Ha 100% Wedgetail Exploration NL P46/1299 200 Ha 100% Wedgetail Exploration NL P46/1300 200 Ha 100% Wedgetail Exploration NL P46/1410 198 Ha 100% Bighead Enterprises Pty Ltd P46/1411 199 Ha 100% Bighead Enterprises Pty Ltd P46/1412 200 Ha 100% Bighead Enterprises Pty Ltd P46/1413 192 Ha 100% Bighead Enterprises Pty Ltd P46/1414 200 Ha 100% Bighead Enterprises Pty Ltd P46/1415 190 Ha 100% Bighead Enterprises Pty Ltd P46/1416 198 Ha 100% Bighead Enterprises Pty Ltd P46/1417 200 Ha 100% Bighead Enterprises Pty Ltd P46/1423 196 Ha 100% Bighead Enterprises Pty Ltd P46/1424 196 Ha 100% Bighead Enterprises Pty Ltd P46/1425 196 Ha 100% Bighead Enterprises Pty Ltd P46/1426 198 Ha 100% Bighead Enterprises Pty Ltd P46/1427 200 Ha 100% Bighead Enterprises Pty Ltd P46/1428 191 Ha 100% Bighead Enterprises Pty Ltd P46/1429 190 Ha 100% Bighead Enterprises Pty Ltd P46/1430 200 Ha 100% Bighead Enterprises Pty Ltd P46/1431 200 Ha 100% Bighead Enterprises Pty Ltd P46/1432 200 Ha 100% Bighead Enterprises Pty Ltd P46/1433 200 Ha 100% Bighead Enterprises Pty Ltd P46/1453 145 Ha 100% Wedgetail Exploration NL P46/1454 173 Ha 100% Wedgetail Exploration NL P46/1455 146 Ha 100% Wedgetail Exploration NL P46/1456 123 Ha 100% Wedgetail Exploration NL P46/1457 170 Ha 100% Wedgetail Exploration NL MIDDLE CREEK NORTH P46/1478 160 Ha 100% Wedgetail Exploration NL P46/1479 157 Ha 100% Wedgetail Exploration NL P46/1480 160 Ha 100% Wedgetail Exploration NL P46/1481 152 Ha 100% Wedgetail Exploration NL P46/1482 160 Ha 100% Wedgetail Exploration NL P46/1483 134 Ha 100% Wedgetail Exploration NL P46/1484 160 Ha 100% Wedgetail Exploration NL P46/1485 134 Ha 100% Wedgetail Exploration NL P46/1486 179 Ha 100% Wedgetail Exploration NL P46/1487 144 Ha 100% Wedgetail Exploration NL


A n n u a l R e p o r t 2 0 0 5

46

A n n u a l R e p o r t 2 0 0 5


MOSQUITO CREEK E46/450 2 Blks 100% Wedgetail Exploration NL E46/452 8 Blks 100% Wedgetail Exploration NL E46/572 15 Blks 100% Tyson Resources Pty Ltd M46/278 921 Ha 100% Wedgetail Exploration NL M46/279 929 Ha 100% Wedgetail Exploration NL M46/283 637 Ha 100% Wedgetail Exploration NL M46/303 424 Ha 100% Wedgetail Exploration NL M46/426 319 Ha 100% Wedgetail Exploration NL M46/427 637 Ha 100% Wedgetail Exploration NL M46/428 956 Ha 100% Wedgetail Exploration NL M46/429 637 Ha 100% Wedgetail Exploration NL P46/1384 198 Ha 100% Tyson Resources Pty Ltd P46/1388 173 Ha 100% Wedgetail Exploration NL P46/1459 176 Ha 100% Wedgetail Exploration NL P46/1460 110 Ha 100% Wedgetail Exploration NL P46/1488 186 Ha 100% Wedgetail Exploration NL P46/1489 134 Ha 100% Wedgetail Exploration NL P46/1490 186 Ha 100% Wedgetail Exploration NL P46/1491 134 Ha 100% Wedgetail Exploration NL MT MCKAY E46/659 67 Blks 100% Wedgetail Exploration NL NOREENA DOWNS E46/630 70 Blks 100% Wedgetail Exploration NL E46/631 70 Blks 100% Wedgetail Exploration NL E46/632 60 Blks 100% Wedgetail Exploration NL NULLAGINE EAST E46/718 70 Blks 100% Wedgetail Exploration NL E46/719 70 Blks 100% Wedgetail Exploration NL E46/720 70 Blks 100% Wedgetail Exploration NL NULLAGINE SOUTH P46/1557 128.35 Ha 100% Wedgetail Exploration NL P46/1558 179.7 Ha 100% Wedgetail Exploration NL P46/1559 147.21 Ha 100% Wedgetail Exploration NL P46/1560 196.78 Ha 100% Wedgetail Exploration NL P46/1561 154.74 Ha 100% Wedgetail Exploration NL P46/1562 189.48 Ha 100% Wedgetail Exploration NL P46/1563 184.6 Ha 100% Wedgetail Exploration NL P46/1564 169.94 Ha 100% Wedgetail Exploration NL P46/1565 199.06 Ha 100% Wedgetail Exploration NL P46/1566 184.06 Ha 100% Wedgetail Exploration NL P46/1567 196.94 Ha 100% Wedgetail Exploration NL P46/1568 200 Ha 100% Wedgetail Exploration NL P46/1569 199.47 Ha 100% Wedgetail Exploration NL P46/1570 198.71 Ha 100% Wedgetail Exploration NL P46/1571 198.29 Ha 100% Wedgetail Exploration NL P46/1572 198.98 Ha 100% Wedgetail Exploration NL P46/1573 198.54 Ha 100% Wedgetail Exploration NL P46/1574 199.21 Ha 100% Wedgetail Exploration NL P46/1575 200 Ha 100% Wedgetail Exploration NL P46/1576 200 Ha 100% Wedgetail Exploration NL ONE MILE P46/1309 200 Ha 100% Wedgetail Exploration NL P46/1310 200 Ha 100% Wedgetail Exploration NL P46/1311 200 Ha 100% Wedgetail Exploration NL P46/1312 200 Ha 100% Wedgetail Exploration NL P46/1313 200 Ha 100% Wedgetail Exploration NL P46/1314 200 Ha 100% Wedgetail Exploration NL P46/1315 200 Ha 100% Wedgetail Exploration NL P46/1316 200 Ha 100% Wedgetail Exploration NL P46/1317 200 Ha 100% Wedgetail Exploration NL P46/1318 200 Ha 100% Wedgetail Exploration NL P46/1319 200 Ha 100% Wedgetail Exploration NL TWENTY MILE SANDY M46/433 929 Ha 100% Wedgetail Exploration NL M46/434 464 Ha 100% Wedgetail Exploration NL P46/1291 118 Ha 100% Wedgetail Exploration NL P46/1293 173 Ha 100% Wedgetail Exploration NL P46/1302 200 Ha 100% Wedgetail Exploration NL P46/1303 200 Ha 100% Wedgetail Exploration NL P46/1304 173 Ha 100% Wedgetail Exploration NL P46/1305 173 Ha 100% Wedgetail Exploration NL P46/1306 173 Ha 100% Wedgetail Exploration NL* Net Profit interest.



47

SHAREHOLDERS INFORMATION

DISTRIBUTION OF SHAREHOLDERS AT 31 MARCH 2006

Category Number of Units shareholders 1 to 1,000 45 21,0391,001 to 5,000 197 642,8525,001 to 10,000 292 2,543,46410,001 to 100,000 2,825 133,103,356100,001 and over 1,266 1,159,437,481 4,625 1,295,748,192 Holders holding less than a marketable parcel 757 5,963,992 Percentage held by twenty largest holders is 49.45%

SUBSTANTIAL SHAREHOLDINGS

The number of ordinary shares held by the substantial shareholders as at 31 March 2006 were

LinQ Resources Fund 298,700,771

TOTAL HOLDING OF THE TWENTY LARGEST HOLDERS OF EACH SECURITY

Top twenty shareholders as at 31 March 2006

Number of % of Issued Shares shares RBC Dexia Investor Services Australia Nominees Pty Ltd <RA A/c> 305,700,771 23.59WestPac Custodian Nominees Limited 107,437,078 8.29Westpac Direct Equity Investments Pty Ltd 48,835,487 3.77ANZ Nominees Limited 45,243,010 3.49J P Morgan Nominees Australia Limited 21,906,789 1.69Ms Lea Hache 15,860,415 1.22Vanspeybroeck Superannuation Pty Ltd 10,693,111 0.83Mr Minlu Fu 9,938,508 0.77National Nominees Limited Mr Francis Alan Bradley 9,528,715 0.74Hales & Co Pty Ltd 8,300,000 0.64Mr Paul Neville Griffin 8,000,000 0.62Mr Francis Alan Bradley 6,560,000 0.51RFC Growth Fund Limited 6,000,000 0.46Ms Jialing Liu 5,978,325 0.46Jair Pty Ltd 5,959,880 0.46Nefco Nominees Pty Ltd 5,140,000 0.40Merrill Lynch (Australia) Nominees Ltd 5,000,000 0.39Delvin Investments Pty Ltd 4,938,345 0.38Topsfield Pty Ltd 4,938,345 0.38New City Enterprises Pty Ltd 4,625,000 0.36 640,583,779 49.45

SUPPLEMENTARY INFORMATION

A n n u a l R e p o r t 2 0 0 5

48

SHAREHOLDERS INFORMATION

COMPANY DETAILS

i) The name of the Company Secretary is Stephen Brown.

ii) The address of the registered and principal office in Australia is Ground Floor, 24 Outram Street, WEST PERTH WA 6005. The telephone number is (08) 9488 8800, facsimile number is (08) 9481 0288.

iii) The Company ACN is 003 257 556

VOTING RIGHTS

a) On a show of hands each member present in person or by proxy has one vote.

b) On a poll every member present in person or by proxy has one vote for each share held in the company.

STOCK EXCHANGES THAT HAVE GRANTED QUOTATION TO THE COMPANY’S SECURITIES

The company’s securities are quoted on the Australian Stock Exchange Limited.

UNLISTED OPTIONS ON ISSUE

Options issued by the Company which are not listed on the Australian Stock Exchange are as follows:

• 3,300,000 employee options exercisable on or before 1 August 2006 at an exercise price of $0.035 each;• 1,400,000 employee options exercisable on or before 19 September 2006 at an exercise price of $0.035 each;• 30,000,000 options exercisable on or before 11 October 2007 at an exercise price of $0.055 each;• 140,000 employee options exercisable on or before 31 December 2006 at an exercise price of $0.055 each.

ON MARKET BUY - BACK

There is no current on market buy - back.

SUPPLEMENTARY INFORMATION

Ground Floor

24 Outram Street

West Perth WA 6005

Telephone: (08) 9488 8800

Facsimile: (08) 9481 0288

wedgetail exploration nl - millennium minerals · pdf filecompany details director: clive...

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