For personal use only - ASX · 2011-10-24 · South Kalimantan. PT. Trimitra Sembada, PT. Cahaya Alam Sejahtera and CV. Rahma. Batulicin is located 152 km north of the capital Banjarmasin

ADAVALE RESOURCES LIMITED

ACN 008 719 015

ANNUAL FINANCIAL REPORTFOR THE YEAR ENDED

30 June 2011

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CORPORATE DIRECTORY 4

REVIEW OF OPERATIONS 5

CORPORATE GOVERNANCE STATEMENT 8

DIRECTORS’ REPORT 15

AUDITOR’S INDEPENDENCE DECLARATION 22

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2011 23

STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2011 24

CASH FLOW STATEMENTAS AT 30 JUNE 2011 25

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2011 26

NOTES TO THE FINANCIAL STATEMENTS 27

DIRECTORS’ DECLARATION 60

INDEPENDENT AUDIT REPORT FOR THE YEAR ENDED 30 JUNE 2011 61

ADDITIONAL INFORMATION 63

ADAVALE RESOURCES LIMITED AND ITS CONTROLLED ENTITIES

CONTENTS

FOR THE YEAR ENDED 30 JUNE 2011

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Directors

Richard Poole

Roger Steinepreis

Philip Suriano

John Risinger

Mark Stevenson

Seiki Takahashi (resigned on 3 December 2010)

Secretary

Sylvie Dimarco

Registered Office

Level 33, Colonial Centre

52 Martin Place

SYDNEY NSW 2000

Telephone +(612) 9227 8900

Facsimile +(612) 9227 8901

Share Registry

Computershare Investor Services Pty Limited

Level 3, 60 Carrington Street

Sydney NSW 2000

Auditor

Robert Nielson Partners

Stock Exchange

Australian Securities Exchange Limited

20 Bridge Street

SYDNEY NSW 2000

ASX Code

ADD (fully paid ordinary shares)

CORPORATE DIRECTORY


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INDONESIA

core group of projects as part of its exploration portfolio. The ongoing process of project review is essential to

maintaining a structured and valid portfolio in Indonesia where understanding complex ownership, forestry and legal

issues is essential to success.

The Company has recognised the importance of establishing sound business relationships with prominent Indonesian

partners and has entered into a joint venture with Mr Haryono Eddyarto, a well known businessman with over

34 years experience in the mining and coal industries. ANR and Mr Haryono have established Adavale Harner

Resources (AHR) - 60% ANR and 40% Mr Haryono - to explore and develop coal assets in Indonesia.

ANR has appointed Mr Marshall Cooper as the Chief Executive Officer of its Indonesian coal interests. Mr Cooper is

an Australian citizen who has living in the region for the past 22 years. Since 1997 he has been employed by Lippo

Group and for the last 4 years has held the position of Chief Executive Advisor to the Chairman of Lippo Group Mining. During

that time his role included acquisitions of projects, establishment of exploration programs, mergers and acquisitions, development

and funding plans and positioning the mining business unit as the future leader of the Lippo Group.


REVIEW OF OPERATIONS

Adavale Resources Limited (ARL) continues with its focus on exploration and development of coal projects in Indonesia and retains

its interest in the Lake Surprise Uranium project in South Australia.

During the year Adavale continued with its mandate to research and identify quality coal projects across Indonesia.

Offices have been established in Jakarta, Balikpapan and Samarinda with full time technical and legal staff, together with an

established network of contacts and professionals.

The company has generated an extensive list of projects over the past year and continues to maintain and upgrade a

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SUMATRA – TAPAN

EAST KALIMANTAN

The projects lie in an area that hosts a number of world class coal deposits. AHR geologists and legal staff are finalising due

diligence on forestry, legal and technical matters prior to commitment to drilling programs and formal documentations. During

the year ARL carried out a short drilling program on a concession in the Samboja area held by PT. Mitra Energy Agung. Results

front the program were inconclusive and ANR is waiting for the concession owner to carry out further reconnaissance drilling.

SOUTH KALIMANTAN



ARL has completed a JORC exploration program on the Tapan Project in Sumatra. The project lies 120 km south of the capital of

Padang. ADA Strategic, a Jakarta based consulting group, carried out the program and prepared a thorough report consistent with

JORC code requirements.

Following the program an initial JORC compliant Inventory Coal Resource of 9.05Mt has been estimated within an 800ha portion of

the concession area. The resource estimate is made up of 2.15Mt Measured, 1.5Mt Indicated and 5.4Mt Inferred. Studies on mine

planning, haulage, processing, port and transhipment facilities have been carried out together with preliminary cash flow forecasts and

capital costs to reach production. Adavale is completing the acquisition of PPA, the company that holds the exploration and

exploitation IUP’s.

Adavale has researched numerous projects in East Kalimantan during the year and reviewed a number of offers. Proposals included

schemes of work and joint ventures on concessions in the areas of Samarinda, Sebulu, Sepaku, Penajam and Grogot.

Preliminary agreements were reached on projects near Sangatta with the owners of PT. Gunung Mas Wisesa, PT Agroindo Bumi

Perkasa and PT. Anugrah Rizki Gunung.

During the year AHR entered into a preliminary agreement to assume mining contracts on three concessions in the Batulicin area of

South Kalimantan. PT. Trimitra Sembada, PT. Cahaya Alam Sejahtera and CV. Rahma. Batulicin is located 152 km north of the

capital Banjarmasin. The three projects are located within 27km of Batulicin and are surrounded by world class coal mines. Due

diligence and negotiations with the vendor continues

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LAKE SURPRISE - SOUTH AUSTRALIA (100% Adavale)

Competent Persons Statements

The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information

compiled by Steven MacMillan who is a Member or Fellow of The Australasian Institute of Mining and Metallurgy.



Steven MacMillan is a full-time employee of the company. Steven MacMillan has sufficient experience relevant to the style of

mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person

as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’.

Steven MacMillan consents to the inclusion in the report of the matters based on his information in the form and context in which it

appears.

Adavale’s sedimentary uranium project at Lake Surprise in South Australia comprises EL 3622 and EL 3620 over an area of

1,836km2. Two prospect areas – Clayton Basin and Mumpie - have been the focus of exploration to date.Adavale is continuing to

explore the project. Program’s during the year explored deeper targets in the Eyre Formation within the Mumpie prospect in order to

test for uranium mineralisation similar to the Beverly and Beverly Four Mile deposits. Results were encouraging and extensions to

testing the mineralization are planned

Adavale is in the process of compiling all exploration and data gathered to date and to complete a detailed report on the project. The

Company will then consider whether to look for joint venture partners to continue the exploration program

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CORPORATE GOVERNANCE STATEMENT

• the Board should comprise at least three directors;

• the Chairman of the Board should be an independent non-executive director;

• the Board should comprise a majority of non-executive directors, with at least 50 percent of the Board being

independent non-executive directors;

• the Board should comprise directors with a broad range of expertise both nationally and internationally;

• directors appointed by the Board are subject to election by shareholders at the following annual general meeting and

and thereafter directors (other than executive directors) are subject to re-election at least every three years. The tenure

for executive director is linked to his holding of executive office.

The names of the directors of the company in office at the date of this Statement are set out in the directors’ report of this

financial report.

The composition of the Board is reviewed on an annual basis to ensure that the Board has the appropriate mix of expertise and

experience. When 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, potential candidates are identified by the Board with advice from external

consultants if necessary. The Board then appoints the most suitable candidate who must stand for election at the next general

meeting of shareholders.

direction, establishing goals for management and monitoring the achievement of these goals.

Board Processes

The Board currently holds at least four scheduled meetings each year, plus strategy meetings and any extraordinary meetings at

such other times as may be necessary to address any specific significant matters that may arise.

Composition of the Board


This statement outlines the main Corporate Governance practices in place throughout the financial year, which comply with the

Australian Stock Exchange (ASX) Corporate Governance Council recommendations, unless otherwise stated.

Role of the Board

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

To fulfil this role, the Board is responsible for the overall Corporate Governance of the consolidated entity including its strategic

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• The date after 1 January that the Designated Officer or Employee receives a written preliminary Half Year Report

and the time of release of the Appendix 4D Half Year Report to ASX;

• The date after 1 July that the Designated Officer or Employee receives a written preliminary Full Year Report

and the time of release of the Appendix 4E Full Year Report to the ASX; and

• whilst in possession of price sensitive information.

Directors must obtain the approval of the Chairman of the Board and notify the Company Secretary once they sell or buy shares in

the Company. In accordance with the provisions of the Corporations Act 2001 and the Listing Rules of the ASX, directors

advise the Exchange of any transactions conducted by them in shares in the Company.

Director Dealings in Company Shares

The Constitution permits directors and employees to acquire shares in the Company. Company policy prohibits directors and

senior management from dealing in Company shares or exercising options;

and of the Company, the directors are of the opinion that such a review is not efficient nor practicable.

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 that a

significant conflict exists, the director concerned does not receive the relevant board papers and is not present at the meeting

whilst the item is considered.

CORPORATE GOVERNANCE STATEMENT (CONT)

Nomination Committee

Given the small size of the Board and of the Company, a nomination committee has not been established.

Evaluation of Board Performance

No performance evaluation for the Board and its members took place in the reporting period. Given the small size of the Board


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Ordinarily the Committee meets at least twice during the year.

The responsibilities of the Audit Committee include:

• reviewing the financial report and other financial information distributed externally;

• reviewing any new accounting policies to ensure compliance with Australian Accounting Standards and generally

accepted accounting principles;

consultation with the Chairman, may seek independent professional advice at the consolidated entity’s expense. A copy of advice

received by the director is made available to all other members of the Board.


Remuneration of Executives

Due to the small size of the Board and of the Company, a Remuneration Committee has not been established, but the Board

establishes and monitors remuneration packages and policies applicable to the Chief Executive Officer, based on the performance in

job and comparative remuneration packages in the market and financial position of the Company.

The remuneration levels for the Chairman and non-executive directors were established in February 2000, and have not changed

since that time.

The external auditors and the Chief Executive Officer are invited to Audit Committee meetings at the discretion of the Committee.

Audit Committee

All members of the Committee must be non-executive directors. The role of the Committee is to advise on the establishment and

maintenance of a framework of internal control and appropriate ethical standards for the management of the consolidated entity.

It also gives the Board of Directors additional assurance regarding the quality and reliability of financial information prepared for

use by the Board in determining policies or for inclusion in the financial report.

and industry surveys and having regard for the overall performance of the Company.

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


Remuneration levels are competitively set to attract and retain qualified and experienced directors, executives and staff. Where

necessary, independent advice is sought on the appropriateness of remuneration packages, given trends in comparative companies

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The Audit Committee reviews the performance of the external auditors on an annual basis and normally meets with them during the

year as follows:

Audit Planning

• To discuss the external audit plan;

• To discuss any significant issues that may be foreseen;

• improving the quality of the accounting function.

• considering whether non-audit services provided by the external auditor are consistent with maintaining the external auditor’s

independence;

• liaising with the external auditors and ensuring that the annual and half-year statutory audits are conducted in an effective

• monitoring the establishment of an appropriate internal control framework and considering enhancements;

• monitoring the establishment of appropriate ethical standards;

• To discuss the impact of any proposed changes in accounting policies on the financial statements;

• To review the nature and impact of any changes in accounting policies adopted by the consolidated entity during the year;

• To review the fees proposed for the audit work to be performed.

identified appropriate and prompt remedial action is taken by management;

• reviewing the nomination and performance of the auditor. The current external auditors were appointed in 2006;

• monitoring the procedures in place to ensure compliance with the Corporations Act, 2001 and ASX Listing Rules and all other

regulatory requirements;

• addressing any matters outstanding with auditors, Australian Taxation Office, Australian Securities and Investments

ASX and financial institutions; and



• reviewing the Company’s policies and procedures for convergence with International Financial Reporting Standards;

• reviewing external audit reports to ensure that where major deficiencies or breakdowns in controls or procedures have been

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• Internal Audit - the company does not have an internal audit function but utilises its financial resources as needed to assist the

Board in ensuring compliance with internal controls.

accordance with the continuous disclosure requirements of the Corporations Law and ASX Listing Rules.

• Quality and integrity of personnel – formal appraisals are conducted at least annually for all employees.

• Investment appraisal – the consolidated entity has clearly defined guidelines for capital expenditure. These include annual

budgets, detailed appraisal and review procedures, and levels of approval authority.

The Board acknowledges that it is responsible for the overall internal control framework, but recognises that no cost effective

internal control system will preclude all errors and irregularities. To assist in discharging this responsibility, the Board has

instigated an internal control framework that can be described under the following headings:

• Financial reporting - there is a comprehensive monthly reporting system with monthly results being prepared and presented to the

the Board within three weeks of the month end. The consolidated entity reports to shareholders half-yearly. The Chief

Executive Officer states in writing to the Board that the Company’s financial reports present a true and fair view, in all

material respects of the Company’s financial condition and operational results and are in accordance with relevant accounting

standards.

To organise, review and report on any special reviews or investigations deemed necessary by the Board.

Internal Control Framework

and any significant adjustments required as a result of the audit;

• To make the necessary recommendation to the Board for the approval of these documents.

Half-year and annual reporting

• To review the results and findings of the auditor, the adequacy of accounting and financial controls, and to monitor the

implementation of any recommendations made;

• Continuous disclosure – the consolidated entity has a policy that all shareholders and investors have equal access to the

Company’s information and has procedures to ensure that all price sensitive information is disclosed to the ASX in



Prior to announcement of results

• To review the pro forma half-yearly and pro forma preliminary final report prior to lodgement of those documents with the ASX,

• To review the draft financial report and the audit report and to make the necessary recommendation to the Board for the

of the financial report.

As required

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www.adavaleresources.com.au

The Board encourages full participation of shareholders at the Annual General Meeting to ensure a high level of accountability and

identification with the consolidated entity’s strategy and goals. Important issues are presented to the shareholders as single

resolutions.

The shareholders are requested to vote on the appointment and aggregate remuneration of directors, the granting of options and

shares to directors and changes to the Constitution. Copies of the Constitution are available to any shareholder who requests it.

ASX. The financial report is sent to any shareholder who requests it;

• proposed major changes in the consolidated entity which may impact on share ownership rights are submitted to a vote of

shareholders;

• notices of all meetings of shareholders.

Documents that are released publicly are made available on the consolidated entity’s internet web site at

The Role of Shareholders

The Board of Directors aims to ensure that the shareholders are informed of all major developments affecting the consolidated

entity’s state of affairs. Information is communicated to shareholders as follows:

• The full annual financial report is available to all shareholders;

• the half-yearly report contains summarised financial information and a review of the operations of the consolidated entity during

the period. The half-year reviewed financial report is prepared in accordance with the requirements of applicable Accounting

• Business transactions are properly authorised and executed.

Ethical Standards

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 the consolidated entity.



Business Risk Management

Comprehensive practices are established such that:

• Capital expenditure and revenue commitments above a certain size require prior Board approval;

Standards and the Corporations Act 2001 and is lodged with the Australian Securities and Investments Commission and the

• Occupational health and safety standards and management systems are monitored and reviewed to achieve high standards of

performance and compliance with regulations; and

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Diversity

The board is committed to having an appropriate blend of diversity on the board and in the Group's senior executive positions.

It recognises the benefits arising from board diversity and has established a policy regarding diversity.

The policy outlines requirements for the Board to develop measureable objectives for achieving diversity and annually

assess both objectives and the progress in achieving those objectives. According, the Board has developed objects regarding

gender diversity and aims to achieve these objectives over the next few years as director and senior executive positions

become available.

No. % No. %

Board representation 0 0% 0 0%

Key management personal representation 0 0% 0 0%

Group Representation 1 16% 1 14%



2011 2010

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Interests in Shares and

Richard Poole,

Non-Executive Director,

Chairman LLB, B Juris, B Comm

ASIA 27,004,435 options

Appointed 12 July 2004

Roger Steinepreis

Non- Executive Director

LLB, B Juris

Appointed 26 May 2006 2,500,000 options

Philip Suriano

Non-Executive Director

Appointed 26 May 2006 20,000,000 options

John Risinger 8,626,293 fully paid Mr Risinger has over 35 years experience in the drilling

Executive Director industry and in managing drilling and operations in mineral

Appointed 16 April 2007 exploration. He has had many years experience at board

20,000,000 options level in a number of listed and unlisted public companies.

Mark Stevenson 21,254,314 fully paid Mr Stevenson is President and CEO of Holloman Holdings

Non-Executive Director paid ordinary shares Corporation and has had over 30 years experience in

Appointed 16 April 2007 management, engineering and operations in the upstream Oil

and Gas Industry. He holds a B.S. in Constructional

Engineering from Texas Tech University, Lubbock Texas.

B Bus, Bkg & Fin, Monash wide knowledge and experience in finance, operations and

sales Director of Laserbond Limited, Resources & Energy

Group Limited and BBX Holdings Limited.

ordinary shares

lawyer in excess of 24 years.

Current Directorships include Imugene Limited, Avonlea

Minerals Limited, Firestrike Resources Limited and Apollo

Consolidated Limited.

2,666,667 fully paid Mr Suriano’s career stretches over both corporate banking

ordinary shares and the Australian television industry where he has gained

Limited, Tiaro Coal Limited, Stirling Resources Limited

and Strathfield Group Limited.

17,320,172 fully paid Mr Steinepreis graduated from the University of Western

ordinary shares Australia where he completed his law degree. He was

admitted as a barrister and solicitor of the Supreme Court of

Western Australia in 1987 and has been practicing as a

ordinary shares and acquisitions. He is a principal of Arthur Phillip Pty

Limited and has been involved in a range of fund raising and

advisory projects for public and private clients. He is

currently a director of Australian Power and Gas Limited and

Resources & Energy Group Limited.

Former Directorships Hudson Resources Limited,

Merchant House International Limited, BBX Holdings

The directors present their report on the Company and its controlled entities for the financial year ended 30 June 2011.

Directors

The directors of the Company at any time during or since the end of the financial year are:

Name and Qualifications Experience and Special Responsibilities

Options

50,796,085 fully paid Mr Poole is a qualified lawyer who specialises in mergers


DIRECTORS’ REPORT

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Sylvie Dimarco The Company Secretary at the date of this report is Ms

Company Secretary, Sylvie Dimarco. Ms Dimarco holds a Bachelor of Laws from

LLB the University of Sydney and has practiced as commercial

Appointed 20 March 2009

commercial, property and corporations law. Ms Dimarco is

also a Company Secretary of Resources & Energy Group

For the past four years Ms Dimarco has been working as

the Compliance Officer of Arthur Phillip, an investment

house and corporate advisor.

Directors’ Meetings

Director

Eligible Attended

R Poole 13 12

R Steinepreis 13 13

P Suriano 13 13

J Risinger 13 13

M Stevenson 13 13

S Takahashi * 5 4

* S Takahashi resigned on 3 December 2010.

lawyer for eleven years. Ms Dimarco has experience in

Limited and BBX Holdings Limited. Ms Dimarco is a

The number of directors’ meetings (including meetings of committees of directors and approvals by circular resolution) and number

of meetings attended by each of the directors of the Company during the financial year were:

Board Meetings

All other business of the board was dealt with by circular resolutions. There were 11 circular resolutions during the year.

DIRECTORS’ REPORT (CONT)

Company Secretary


Certificated member of the Chartered Secretaries of Australia.

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Adavale Resources Ltd has established itself in the coal industry in Indonesia and will continue to research and identify quality

coal projects across Indonesia.

2011 2010

$ $

126,266 161,533

(1,391,184) (2,231,270)

(1,264,918) (2,069,737)

(1,264,918) (2,069,737)

During the 2011 year, Adavale Resources Ltd entered into a Joint Venture in Indonesia to explore and mine coal in Indonesia.

The effective start date of the Joint Venture will commence on 1 August 2011.

On 20 September 2011, Options were issued to Marshall Cooper (CEO of PT Adavale Nusantara Resources, subsidiary of Adavale

Resources Limited) as part of his remuneration package.

On 28 September 2011, the board announced the appointment of Mr Haryono Eddyarto as a Non-Executive Director.

With the exception of the above, no matters or circumstances have arisen since the end of the year which significantly affected or

may significant affect the operations of the Company, the results of those operations, or the state of affairs of the Company

in future financial years.

Except for the matters discussed above or disclosed elsewhere in the attached financial statements, there were no significant changes

to the state of affairs of the group during the year.

Events Subsequent to Balance Date

Loss from continuing operations

Profit/(loss) from ordinary activities

Dividends

No dividends were paid during the financial year and the directors recommend that no dividend be paid in respect of the year ended

30 June 2011.

Significant Changes in the State of Affairs

The company is also continuing exploration on its uranium project at Lake Surprise in South Australia as well as evaluating

other uranium and coal exploration opportunities.

Review and Results of Operations

The consolidated loss of the company was $1,264,918 which compared with a net loss for the prior year of $2,069,737.

The loss from ordinary activities before income tax expense includes the following revenues and expenses disclosure is relevant in

explaining the financial performance of the entity:

Revenue from continuing operations



Principal Activities

The principal activities of the consolidated entity are mining explorations and development in Australia and Indonesia.

Expenses from continuing operations

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The Company will continue to establish itself in the coal industry in Indonesia. The Company recognises the importance of

establishing sound business relationships with prominent Indonesian partners.

Directors

The emoluments of each director of the Company are as follows:

Salary Expatriate Share-Based

& Fees Benefit & Super- Payment Total

Remunerat'n annuation Shares & Options

$ $ $ $ $

(a) Company Directors’ remuneration

2011

Richard Poole i 24,000 - - - 24,000

Roger Steinepreis ii 24,000 - - - 24,000

Philip Suriano iii 144,000 - - 26,000 170,000

John Risinger iv 194,092 - 9,908 26,000 230,000

Mark Stevenson 24,000 - - - 24,000

Seiki Takahashi v 125 125

410,217 0 9,908 52,000 472,125

2010

Richard Poole i 24,000 - - - 24,000

Roger Steinepreis ii 24,000 - - - 24,000

Philip Suriano iii 24,000 - - - 24,000

John Risinger iv 134,092 - 9,908 - 144,000

Mark Stevenson 24,000 - - - 24,000

Seiki Takahashi v 24,000 - - - 24,000

254,092 - 9,908 - 264,000

i Fees payable to Mr Poole were paid to Arthur Phillip Pty Limited, a company controlled by him.

ii Fees payable to Mr Steinepreis were paid to Steinepreis Paganin, a firm of which he is a partner.

iii Fees payable to Mr Suriano were paid to Entertainment Marketing Enterprise Pty Ltd, a company controlled by him.

iv Fees payable to Mr Risinger were paid directly or paid to Larca Pty Limited, a company controlled by him.

v Seiki Takashahi resigned on 3 December 2010.

Future Developments



Remuneration Report

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Exercise

Directors Type Number Price

John Risinger Class A 5,000,000 $0.04

Class B 5,000,000 $0.04

Class C 5,000,000 $0.045

Class D 5,000,000 $0.05

Phillip Suriano Class A 5,000,000 $0.04

Class B 5,000,000 $0.04

Class C 5,000,000 $0.045

Class D 5,000,000 $0.05

Date of Grant Date of Expiry

8 December 2010

8 December 2010

8 December 2010

8 December 2010

31 July 2014

31 July 2014

31 July 2015

31 July 2016

8 December 2010 31 July 2014




The Company also indemnifies executive officers of the Company and its controlled entities for all liabilities to another person (other

than the Company or a related body corporate) that may arise from their position in the Company and its controlled entities, except

where the liability arises out of conduct involving a lack of good faith.

directors and company secretary, against all liabilities to another person (other than the Company or a related body corporate) that

may arise from their position as directors or company secretary of the Company and its controlled entities, except where the liability

arises out of conduct involving a lack of good faith. The agreement stipulates that the Company will meet the full amount of any

such liabilities, including costs and expenses.

The Company also indemnifies the current directors and company secretary of its controlled entities for all liabilities to another

person (other than the Company or a related body corporate) that may arise from their position, except where the liability arises

out of conduct involving a lack of good faith. The agreement stipulates that the Company will meet the full amount of any such

liabilities, including costs and expenses.

(c) Share Options Issued as Remuneration

Indemnification of Officers and Auditors

The Company indemnifies, to the extent permitted by law, all directors and the company secretary of the Company and all former

Key Management PersonnelIndemnification of Officers and Auditors

The Group had no other key management personnel during the year.

(b) Remuneration Policies

The Board establishes and monitors the remuneration of the Chief Executive Officer. Currently no Chief Executive Officer has been

appointed.

Remuneration levels are competitively set to attract and retain qualified and experienced directors, executives and staff, and having

regard for the overall performance of the Company. Where necessary the Board obtains independent advice on the appropriateness of



remuneration packages, given trends in comparative companies and industry surveys.

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The Company does not indemnify its auditors.

Options

Exercise

Type Number Price

Series 3 1,428,571 $0.21

Series 4 1,547,619 $0.21

Unlisted 65,697,879 $0.04

Class A 10,000,000 $0.04

Class B 10,000,000 $0.04

Class C 10,000,000 $0.045

Class D 10,000,000 $0.05

10,000,000 $0.04

MOA 10,000,000 $0.10

MOB 10,000,000 $0.10

MOC 10,000,000 $0.10

Environmental Issues

$

Valuation of options 870.00

870.00


The Board of directors is satisfied that the provision of non-audit services during the year is compatible with the general standard of

independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the nature of the services

disclosed below did not compromise the external auditor’s independence.

The following fees were paid or payable to Robert Nielson Partners for non-audit services provided during the year ended



The Company’s operations are not regulated by any significant environmental regulation under a law of the Commonwealth or of a

State or Territory.

Non-Audit Services

21 February 2008 30 November 2011

21 February 2008 1 December 2011




Auditor’s Independence Declaration

The auditor’s independence declaration for the year ended 30 June 2011 has been received and can be found on page 22.

30 June 2011:

20 September 2011 31 March 2014





At the date of this report the unissued ordinary shares of Adavale Resources Limited under option are as follows:-


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Proceedings on Behalf of the Company

No person has applied for leave of court to bring proceedings on behalf of the Company, or intervene in any proceedings to which the

Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings.

The Company was not a party to any such proceedings during the year.

Signed in accordance with a resolution of the directors:

Richard Poole

Chairman

Sydney, 29 September 2011



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robertnielsonpartners rnnnnpABN 65 141 087 768 Level 7 280 George Street

chartered accountant Sydney NSW 2000 Australia

business advisors Box R176 Royal Exchange

NSW 1225 Australia

T 61 2 9235 0299

F 61 2 9222 1065

E [email protected]

1.

2.

Robert Nielson

Date 29 September 2011

Liability limited by a scheme approved under Professional Standards Legislation

I declare that to the best of my knowledge and belief, during the year ended 30 June 2011, there have been:

no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in

relation to the audit; and

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


AUDITORS INDEPENDENCE DECLARATION

UNDER SECTION 307C OF THE CORPORATIONS ACT 2001

TO THE DIRECTORS OF ADAVALE RESOURCES LIMITED

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Notes 2011 2010

$ $

4 126,266 161,533

126,266 161,533

(313,970) (126,193)

Audit Fee (23,000) (18,200)

(32,559) (12,000)

(353,959) (527,689)

(90,770) (51,443)

(21,886) -

(134,339) (68,627)

(15,000) (15,000)

(120,125) (144,000)

(32,259) (739,574)

- (449,940)

Exchange rate difference (71,403) -

Share based expenses (52,000) -

(129,914) (78,604)

(1,391,184) (2,231,270)

- -

(1,264,918) (2,069,737)

- -

(1,264,918) (2,069,737)

7 (0.48) (1.13)

7 (0.48) (1.13)

7 (0.48) (1.13)

7 (0.48) (1.13)

Total comprehensive income/(loss)

Earnings per Share attributable to the ordinary


STATEMENT OF COMPREHENSIVE INCOME


Consolidated

Other expenses from ordinary activities

Profit / (Loss) from ordinary activities before

income tax expense

Income tax expense relating to ordinary activities

Profit / (Net Loss) from ordinary activities after

income tax expense

Insurance

Revenue from ordinary activities

Other Revenue

Total revenue

shareholder of the company

Share registry fees

Management and administration

Directors fees

Write-off of exploration expenditure

Impairment of exploration licence

Employee expenses

Premises expenses

Contractor and consultants expenses

Legal expenses

Other comprehensive income for the year

Basic (loss)/earnings per share – cents

Earnings per Share from continuing operations:

Basic (loss)/earnings per share – cents

Diluted (loss)/earnings per share – cents

Diluted (loss)/earnings per share – cents

The accompanying notes form part of these financial statements

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Notes 2011 2010

$ $

CURRENT ASSETS

Cash assets 8 2,908,011 2,556,280

Receivables 9 105,136 29,894

Other 3,731 8,832

TOTAL CURRENT ASSETS 3,016,878 2,595,006

NON-CURRENT ASSETS

Receivables 9 16,360 15,000

Property, plant and equipment 10 7,259 4,486

Other 11 4,368,197 3,576,108

TOTAL NON-CURRENT ASSETS 4,391,816 3,595,594

TOTAL ASSETS 7,408,694 6,190,600

CURRENT LIABILITIES

Payables 12 174,151 266,978

Provisions 13 15,754 6,193

TOTAL CURRENT LIABILITIES 189,905 273,171

TOTAL LIABILITIES 189,905 273,171

NET ASSETS 7,218,789 5,917,429

EQUITY

Contributed equity 15 37,326,273 34,771,995

Reserves 43,433 31,433

Accumulated losses (30,150,917) (28,885,999)

TOTAL EQUITY 7,218,789 5,917,429


STATEMENT OF FINANCIAL POSITION


The accompanying notes form part of these financial statements.

Consolidated

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Notes 2011 2010

$ $

Cash flows from operating activities

Cash receipts in the course of operations 15,207 14,542

Cash payments in the course of operations (1,464,720) (903,860)

Interest received 115,596 157,451

Net cash provided by/(used in) operating activities 22(b) (1,333,917) (731,867)

Cash flows from investing activities

Purchase of property, plant and equipment (4,282) -

(824,348) (1,532,994)

Net cash (used in) investing activities (828,630) (1,532,994)

Cash flows from financing activities

Issue of shares 2,627,921 -

Costs of issue shares (113,643) -

Net cash provided by (used in) financing activities 2,514,278 -

Net increase/(decrease) in cash held 351,731 (2,264,861)

Cash at beginning of financial year 2,556,280 4,821,141

Cash at end of financial year 22(a) 2,908,011 2,556,280


CASH FLOW STATEMENT


Development,exploration & evaluation expenses

capitalised

Consolidated


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Note Share Accumulated Option

ECONOMIC ENTITY Capital Losses Revaluation Total

Reserves

$ $ $ $

Balance at 1 July 2009 34,771,995 (26,816,262) 31,433 7,987,166

Total comprehensive loss for the year - (2,069,737) - (2,069,737)

Balance at 30 June 2010 34,771,995 (28,885,999) 31,433 5,917,429

Balance at 1 July 2010 34,771,995 (28,885,999) 31,433 5,917,429

Total comprehensive loss for the year - (1,264,918) - (1,264,918)

Issue of shares 2,627,921 - - 2,627,921

Costs of shares (113,643) - - (113,643)

Share based 40,000 - 12,000 52,000

Balance at 30 June 2011 37,326,273 (30,150,917) 43,433 7,218,789


STATEMENT OF CHANGES IN EQUITY



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1. REPORTING ENTITY

2.

(a)

The financial statements were authorised for issue on 29 September 2011 by the directors of the company.

(b)

Accounting Standards Board (IASB).

Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to

accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. All significant

areas of estimation uncertainty and critical judgements in applying accounting policies have been disclosed in the following notes to

Adavale Resources Limited

Level 33 Colonial Centre

52 Martin Place

SYDNEY NSW 2000

The principal place of business is:

NOTES TO THE FINANCIAL STATEMENTS


Adavale Resources Limited (the “Company”) is a company domiciled in Australia. The consolidated financial statements of the

Company as at and for the year ended 30 June 2011 comprise the Company and its subsidiaries (together referred to as the “Group”)

Unit 8 & 9

88 Forrest Street

COTTESLOE WA 6011

current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data,

obtained both externally and within the group.

BASIS OF PREPARATION

Statement of Compliance

The registered office of the Company is:

and the Group’s interest in associates and jointly controlled entities. The Group is primarily involved in mining exploration.


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

Standards including Accounting Standards interpretations, adopted by the Australian Accounting Standards Board (AASB) and the

Corporations Act 2001. The consolidated financial report of the Group and the financial report of the Company comply with all

Australian equivalents to International Financial Reporting Standards (IFRSs) and interpretations adopted by the International

Use of estimates and Judgements

The preparation of the financial statements requires management to make judgements, estimates and assumptions that effect the

application of accounting polices and the reported amounts of assets, liabilities, income and expenses.

The directors evaluate estimates and judgments incorporated into the financial report based on historical knowledge and best available

the financial statements.

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3. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

Material accounting policies adopted in the preparation of this financial report are presented below. The financial report has been

prepared on an accruals basis and is based on historical costs, modified, where applicable, by the measurement at fair value of

selected non-current assets, financial assets and financial liabilities.

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

statements, and have been applied consistently by all entities in the Group unless otherwise stated.

(a) Principles of Consolidation

The consolidated financial statements incorporate the assets and liabilities of all entities controlled by Adavale Resources Limited

(the parent entity) as at 30 June 2011 and the results of all controlled entities for the year then ended. Adavale Resources Limited

and its controlled entities together are referred to in this financial report as the consolidated entity.

Controlled Entities

A controlled entity is any entity controlled by Adavale Resources Limited. Control exists where Adavale Resources Limited has the

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

potential voting rights that are currently exercisable are taken into account.

In the Company’s financial statements, investments in controlled entities are carried at cost. A list of controlled entities is contained

in Note 21 of the accounts.

Where controlled entities have entered or left the economic entity during the year, their financial statements have been included from

the date control was obtained or until the date control ceased.

Minority equity interests in the equity and results of the entities that are controlled are shown as a separate item in the Consolidated

financial report.

Transactions Eliminated on Consolidation

Unrealised gains and losses and inter-entity balances resulting from transactions with or between controlled entities are eliminated on

consolidation.




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3. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT).

(b) Revenue Recognition

(c) Goods and Services Tax

(d) Foreign Currency Transactions and Balances



Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the

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

The gross proceeds of non-current asset sales are included as revenue at the date control of the asset passes to the buyer, usually

when an unconditional contract of sale is signed.

The gain or loss on disposal is calculated as the difference between the carrying amount of the asset at the time of disposal and the net

proceeds on disposal.

Revenues are recognised at fair value of the consideration received net of the amount of goods and services tax (GST). Exchanges of

goods or services of the same nature and value without any cash consideration are not recognised as revenues.


Functional and Presentation Currency

The functional currency of each of the Group’s entities is measured using the currency of the primary economic environment in which

that entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity’s functional

and presentation currency.

Interest Revenue

Interest revenue is recognised as it accrues, taking into account the effective yield on the financial asset.

Sale of Non-Current Assets

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.

Revenues, 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 Australian Tax Office (ATO). In these circumstances the GST is recognised as part of the cost of

acquisition of the asset or as part of an item of the expense.

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(d) Foreign Currency Transactions and Balances (cont)

exchange rate for reporting purposes. The non-monetary items are translated into AUD, using the year end exchange rate for

reporting purposes.

• Income and expenses are translated at average exchange rates for the period; and

• Retained earnings are translated at the exchange rates prevailing at the date of the transaction.

The transactions are translated to Australian Dollars which is the Company's functional currency.

(e) Taxation

Except for business combinations, no deferred income tax is recognised from the initial recognition of an asset or liability, where there

is no effect on accounting or taxable profit or loss.

The Company subsidiary, PT Adavale Nusantara transacts in USD. The monetary items are translated into AUD, using the average

Foreign currency monetary items are translated at the year end exchange rate. Non-monetary items measured at historical cost

continued to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at their fair value are

reported at the exchange rate at the date when fair values were determined.

Exchange differences arising on the translation of monetary items are recognised in the profit and loss, except where deferred in

equity as a qualifying cash flow or net investment hedge.

Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well

unused tax losses.

currency are translated as follows:

• Assets and liabilities are translated at year-end exchange rates prevailing at that reporting date;

Exchange differences arising on translation of foreign operations with functional curerncies other than Australian dollars are

recognised in the comprehensive income.




The income tax expense (revenue) for the year comprises current income tax expense (income) and deferred tax expense (income).

Current income tax expense charged to profit or loss is the tax payable on taxable income. Current tax liabilities (assets) are measured

at the amounts expected to be paid to (recovered from) the relevant taxation authority.

Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the extent that the gain or

loss is directly recognised in equity, otherwise the exchange difference is recognised in the income statement.

Foreign Operations

The financial results and position of foreign operations whose functional currency is different from the Group’s presentational

Transaction and Balances

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction.

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Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures, deferred

tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be controlled

and it is not probable that the reversal will occur in the foreseeable future.

Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement

or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are

offset where: (a) a legally enforceable right of set-off exists; and (b) the deferred tax assets and liabilities relate to income

income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where

it is intended that in future periods in which significant amounts of deferred tax assets or liabilities are expected to be

recovered or settled.

(f) Financial Instruments

Financial instruments are initially measured at cost on trade date basis, which includes transaction costs, when the related contractual

Recognition




Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market

and are stated at cost using the effective interest rate method.

Held-to-Maturity Investments

Deferred tax assets and liabilities are calculted at the tax rates that are expected to apply to the period when the asset is realised

or the liability is settled adn their measurement also reflects the manner in which management expects to recover or settle the

carrying amount of the related asset or liability.

Deferred tax assets relating to temporary differences and usused tax losses are recongised only to the extent that it is probable that

future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.

the period in which they arise.

Loans and Receivables

designated by management and within the requirements of AASB 139: Recognition and Measurement of Financial Instruments.

Realised and unrealised gains and losses arising from changes in the fair value of these assets are included in the income statement in

rights or obligations exist. Subsequent to initial recognition these instruments are measured as set out below.

Financial Assets at Fair Value Through Profit and Loss

A financial instrument is classified in this category if acquired principally for the purpose of selling in the short term, or if so

These investments have fixed maturities and it is the company’s intention to hold these investments to maturity. Any

held-to-maturity investments held by the company are stated at amortised cost using the effective interest rate method.

Available-for-sale financial instruments include any financial assets not included in the above categories. Available-for-sale financial

Available-for-Sale Financial Instruments

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Fair Value

(g) Impairment of Assets

(h) Receivables

(i) Investments

(j) Depreciation and amortisation

Useful Lives




Controlled Entities

Investments in controlled entities are carried in the Company’s financial statements at the lower of cost and recoverable amount.

All assets, including intangibles, have limited useful lives and are depreciated/amortised using the diminishing value method, with the

case of available-for-sale financial instruments, a prolonged decline in the value of the instrument is considered to determine whether

an impairment has arisen. Impairment losses are recognised in the comprhensive income statement.

At each reporting date the group reviews the carrying values of its tangible and intangible assets to determine whether there is any

indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of

exception of finance lease assets which are amortised over the term of the relevant lease, or where it is likely the consolidated entity

will obtain ownership of the asset, the life of the asset.

Assets are depreciated or amortised from the date of acquisition or, in respect of internally constructed assets, from the time an asset

is completed and held ready for use. Goodwill balances are reviewed annually and any balance representing future benefits for which

the realization is considered to be no longer probable are written off.

the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying

value over its recoverable amount is expensed to the compehensive income statement.

The collectability of debts is assessed at balance date and specific provision is made for any doubtful accounts.

Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the

value of all unlisted securities, including recent arms length transactions, reference to similar instruments and option pricing models.

Impairment

At each reporting date, the company assesses whether there is objective evidence that a financial instrument has been impaired. In the

Financial Liabilities

Non-derivative financial instruments are recognised at amortised cost, comprising original debt less principal payments and

amortisation.

Depreciation and amortisation rates and methods are reviewed annually for appropriateness. When changes are made, adjustments

are reflected prospectively in current and future periods only. Depreciation and amortisation are expensed.

The depreciation/amortisation rates used for each class of asset during the current and prior year are as follows:

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2011 2010

Plant and Equipment 3-5 years 3-5 years

Field Equipment 3-5 years 3-5 years

(k) Payables

(l) Employee Benefits

(m) Provisions

(n) Cash

(o) Earnings per Share

(i) Basic earnings per share:

Basic earnings per share is determined by dividing net profit after income tax attributable to members of the

Company by the weighted average number of ordinary shares outstanding during the financial year.

(ii) Diluted earnings per share:

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into

account the after tax effect of interest and other financing costs associated with dilutive potential ordinary

shares and the weighted average number of shares assumed to have been issued for no consideration in relation

to dilutive potential ordinary shares.




investments with short periods to maturity which are readily convertible to cash on hand and are subject to an insignificant risk of

changes in value, net of outstanding bank overdrafts.

Liabilities are recognised for amounts to be paid in the future for goods or services received.

Provision is made for the Company’s liability for employee benefits arising from services rendered by employees to balance date.

A provision is recognised when a legal or constructive obligation exists as a result of a past event and it is probable that an outflow of

economic benefits will be required to settle the obligation.

For the purposes of the statement of cash flows, cash includes deposits at call with financial institutions and other highly liquid

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(p) Exploration Expenses Capitalised

(i) the rights to tenure of the area of interest are current; and

(ii) at least one of the following conditions is also met:

(a) the exploration and evaluation expenditures are expected to be recouped through successful

development and exploitation of the area of interest, or alternatively, by its sale; or

(b) exploration and evaluation activities in the area have not, at the reporting date, reached a stage which

permits a reasonable assessment of the existence, or otherwise, of economically recoverable reserves and active

and significant operations in, or relating to, the area of interest are continuing.

(p) Exploration Expenses Capitalised (cont)

(q) Intangible assets


determine the extent of the impairment loss (if any). Where an impairment loss subsequently reverses, the carrying amount of the

asset is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not

exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in previous years.

Exploration and evaluation assets are initially measured at cost and include acquisition of rights to explore, studies, exploratory

drilling, trenching and sampling and associated activities and an allocation of depreciation and amortisation of assets used in

exploration and evaluation activities. General and administrative costs are only included in the measurement of exploration and

evaluation costs where they are related directly to operational activities in a particular area of interest.

Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an

exploration and evaluation asset may exceed its recoverable amount. The recoverable amount of the exploration and evaluation asset

(for the cash generating unit(s) to which it has been allocated being no larger than the relevant area of interest) is estimated to

Exploration and evaluation expenditure

Exploration and evaluation expenditures in relation to each separate area of interest are recognised as an exploration and evaluation

asset in the year in which they are incurred where the following conditions are satisfied:



Where a decision has been made to proceed with development in respect of a particular area of interest, the relevant exploration and

evaluation asset is tested for impairment and the balance is then reclassified to development.

The intangible assets of the Company are exploration licenses acquired during the year ended 30 June 2007. The licenses are

measured at cost less accumulated impairment losses. A review of the exploration licences occur each year

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(r) Segment Reporting

Comparative segment information has been re-presented in conformity with the transitional requirements of the standard. Since the

change in accounting policy only impacts presentation and disclosure aspects there is no impact on earnings per share.

An operating segment is a component of the Group that engages in business activities from which it may earn revenue and incur

expenses, including revenues and expenses that relate to transaction with any of the Company’s other components.

Unallocated items comprising mainly of head office assets, expenses and liabilities.

(s) Share Based Payments

It is measured by fair value of the equity at the grant date. Fair value is meansured by the use of a Black Scholes model.

The purpose of performance securities are to provide cost effective consideration to directors for their ongoing commitment and

contribution to the Company in their respective roles as Directors.

(t) Critical Accounting Estimates and Judgements

Impairment Testing

The directors evaluate estimates and judgements incorporated into the financial report based on historial and best available

current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic

data, obtained both externally and within the Group. Critical estimates and judgements relating to the impairment testing of

assets of the Group are as follows:

Exploration and Evaluation Expenditure:

The Group capitalises expenditure relating to exploration and evaluation where it is considered likely to be recoverable or where

the activities have not reached a stage that permits a reasonable assessment of the existence of reserves.

The Group assess impairment at the end of each reporting period by evaluating conditions and events specific to the Group. As a

result of their testing, they have exploration and evaluation assets valued at $4,368,197 (2010: $3,576,108).

Adavale Resources Limited has written off $32,259 of costs for 4 Indonesian projects in the 2011 year (2010: $739,574 of costs

were written off for Australian projects).

(u) Parent Entity Financial Information

The financial information for the parent entity, Adavale Resources Lmited, disclosed in note 26 has been parepared on the same

basis as the basis of the consolidated fianncial staetments of the Group.




As of 1 July 2009 the company presents operating segments based on information reported internally. Due to the adoption of IFRS 8

Operating segments, the accounting policy was changed in respect of segment operating disclosures.

The performance securities issued to the Directors is recognised as a share-based payment expense, with a corresponding increase in

equity.

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-

-




AASB 124: Related Party Disclosures (applicable for annual reporting periods commencing on or after 1 January 2011).

This Standard removes the requirement for government-related entities to disclose details of all transactions with the government and

other government-related entities and clarifies the definition of a “related party” to remove inconsistencies and simplify the structure

of the Standard. No changes are expected to materially affect the Group.

AASB 1053: Application of Tiers of Australian Accounting Standards and AASB 2010–2: Amendments to Australian Accounting

Standards arising from Reduced Disclosure Requirements [AASB 1, 2, 3, 5, 7, 8, 101, 102, 107, 108, 110, 111, 112, 116, 117, 119,

121, 123, 124, 127, 128, 131, 133, 134, 136, 137, 138, 140, 141, 1050 & 1052 and Interpretations 2, 4, 5, 15, 17, 127, 129 & 1052]

(applicable for annual reporting periods commencing on or after 1 July 2013).

AASB 1053 establishes a revised differential financial reporting framework consisting of two tiers of financial reporting requirements

for those entities preparing general purpose financial statements:

Tier 1: Australian Accounting Standards; and

Tier 2: Australian Accounting Standards – Reduced Disclosure Requirements.

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

fewer disclosure requirements.

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

- for-profit private sector entities that have public accountability; and

- the Australian Government and state, territory and local governments.

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

requirements for Tier 2 entities.

AASB 2010–2 makes amendments to Australian Accounting Standards and Interpretations to give effect to the reduced disclosure

requirements for Tier 2 entities. It achieves this by specifying the disclosure paragraphs that a Tier 2 entity need not comply with as

well as adding specific “RDR” disclosures.

This Standard is applicable retrospectively and includes revised requirements for the classification and measurement of financial

instruments, as well as recognition and derecognition requirements for financial instruments. The Group has not yet determined any

potential impact on the financial statements.

AASB 2010–2 makes amendments to Australian Accounting Standards and Interpretations to give effect to the reduced disclosure

requirements for Tier 2 entities. It achieves this by specifying the disclosure paragraphs that a Tier 2 entity need not comply with as

well as adding specific “RDR” disclosures.

AASB 2009–12: Amendments to Australian Accounting Standards [AASBs 5, 8, 108, 110, 112, 119, 133, 137, 139, 1023 & 1031 and

Interpretations 2, 4, 16, 1039 & 1052] (applicable for annual reporting periods commencing on or after 1 January 2011).

AASB 9: Financial Instruments (December 2010) (applicable for annual reporting periods commencing on or after 1 January 2013).

The AASB has issued new and amended Accounting Standards and Interpretations that have mandatory application dates for future

reporting periods and which the Group has decided not to early adopt. A discussion of those future requirements and their impact on

the Group is as follows:

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This Standard is not expected to impact the Group.

This Standard makes numerous editorial amendments to a range of Australian Accounting Standards and Interpretations, including

amendments to reflect changes made to the text of IFRSs by the IASB. However, these editorial amendments have no major impact on

the requirements of the respective amended pronouncements.

AASB 2010–6: Amendments to Australian Accounting Standards – Disclosures on Transfers of Financial Assets [AASB 1 & AASB 7]

(applicable for annual reporting periods beginning on or after 1 July 2011).

This Standard adds and amends disclosure requirements about transfers of financial assets, especially those in respect of the nature of

the financial assets involved and the risks associated with them. Accordingly, this Standard makes amendments to AASB 1: First-time

Adoption of Australian Accounting Standards, and AASB 7: Financial Instruments: Disclosures, establishing additional disclosure

requirements in relation to transfers of financial assets.



AASB 2010–7: Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) [AASB 1, 3, 4, 5, 7, 101,

102, 108, 112, 118, 120, 121, 127, 128, 131, 132, 136, 137, 139, 1023 & 1038 and Interpretations 2, 5, 10, 12, 19 & 127] (applies to

periods beginning on or after 1 January 2013).

adding an explicit statement to AASB 7 that qualitative disclosures should be made in the context of the quantitative disclosures to

better enable users to evaluate an entity’s exposure to risks arising from financial instruments;

amending AASB 101 to the effect that disaggregation of changes in each component of equity arising from transactions recognised in

other comprehensive income is required to be presented, but is permitted to be presented in the statement of changes in equity or in

the notes;

adding a number of examples to the list of events or transactions that require disclosure under AASB 134; and

making sundry editorial amendments to various Standards and Interpretations.

AASB 2010–5: Amendments to Australian Accounting Standards [AASB 1, 3, 4, 5, 101, 107, 112, 118, 119, 121, 132, 133, 134, 137,

139, 140, 1023 & 1038 and Interpretations 112, 115, 127, 132 & 1042] (applicable for annual reporting periods beginning on or after

1 January 2011).



AASB 2009–14: Amendments to Australian Interpretation – Prepayments of a Minimum Funding Requirement [AASB Interpretation

14] (applicable for annual reporting periods commencing on or after 1 January 2011).

This Standard amends Interpretation 14 to address unintended consequences that can arise from the previous accounting requirements

when an entity prepays future contributions into a defined benefit pension plan.

AASB 2010–4: Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project [AASB 1,

AASB 7, AASB 101 & AASB 134 and Interpretation 13] (applicable for annual reporting periods commencing on or after 1 January

2011).

This Standard details numerous non-urgent but necessary changes to Accounting Standards arising from the IASB’s annual

improvements project. Key changes include:

clarifying the application of AASB 108 prior to an entity’s first Australian-Accounting-Standards financial statements;


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AASB 2010–10: Further Amendments to Australian Accounting Standards – Removal of Fixed Dates for First-time Adopters [AASB

2009–11 & AASB 2010–7] (applies to periods beginning on or after 1 January 2013).

This Standard makes amendments to AASB 2009–11: Amendments to Australian Accounting Standards arising from AASB 9, and

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

The amendments brought in by this Standard ultimately affect AASB 1: First-time Adoption of Australian Accounting Standards and

provide relief for first-time adopters from having to reconstruct transactions that occurred before their transition date.

[The amendments to AASB 2009–11 will only affect early adopters of AASB 2009–11 (and AASB 9: Financial Instruments that was

issued in December 2009) as it has been superseded by AASB 2010–7.]


This Standard makes amendments to AASB 112: Income Taxes.

The amendments brought in by this Standard introduce a more practical approach for measuring deferred tax liabilities and deferred

tax assets when investment property is measured using the fair value model under AASB 140: Investment Property.

Under the current AASB 112, the measurement of deferred tax liabilities and deferred tax assets depends on whether an entity expects

to recover an asset by using it or by selling it. The amendments introduce a presumption that an investment property is recovered

entirely through sale. This presumption is rebutted if the investment property is held within a business model whose objective is to

consume substantially all of the economic benefits embodied in the investment property over time, rather than through sale.

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

The amendments are not expected to impact the Group.

AASB 2010–9: Amendments to Australian Accounting Standards – Severe Hyperinflation and Removal of Fixed Dates for First-time

Adopters [AASB 1] (applies to periods beginning on or after 1 July 2011).

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

The amendments brought in by this Standard provide relief for first-time adopters of Australian Accounting Standards from having to

reconstruct transactions that occurred before their date of transition to Australian Accounting Standards.

Furthermore, the amendments brought in by this Standard also provide guidance for entities emerging from severe hyperinflation

either to resume presenting Australian-Accounting-Standards financial statements or to present Australian-Accounting-Standards

financial statements for the first time.

This Standard makes amendments to a range of Australian Accounting Standards and Interpretations as a consequence of the issuance

of AASB 9: Financial Instruments in December 2010. Accordingly, these amendments will only apply when the entity adopts AASB 9.

As noted above, the Group has not yet determined any potential impact on the financial statements from adopting AASB 9.

AASB 2010–8: Amendments to Australian Accounting Standards – Deferred Tax: Recovery of Underlying Assets [AASB 112]

(applies to periods beginning on or after 1 January 2012).




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4. REVENUE FROM ORDINARY ACTIVITIES

2011 2010

$ $

Revenue from outside the operating activities

Interest 111,059 146,991

Other Revenue 15,207 14,542

126,266 161,533

5. AUDITORS’ REMUNERATION

2011 2010

$ $

Remuneration of the auditor of the parent entity for:

- auditing or reviewing the financial statements 23,000 18,200

- valuation of options 870 -

23,870 18,200




Consolidated

Consolidated

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6. TAXATION

2011 2010

$ $

The prima facie tax on loss from ordinary activities before

income tax is reconciled to income tax as follows:

a. Prima facie tax receivable on loss from ordinary activities at (379,475) (620,922)

30% (2010: 30%)

Tax effect of deferred tax assets not brought to account 379,475 620,922

Income tax expense attributable to entity - -

The directors have not recognised any tax assets in respect of losses, as they do not believe that the conditions for recognition set out

in Note 1(e) have been met.

7. ASSET BACKING AND EARNINGS PER SHARE

2011 2010

$ $

Continuing Operations

Net tangible asset backing – cents per share 1.08 2.03

Earnings per share

- Basic – cents (0.48) (1.13)

- Diluted – cents (0.48) (1.13)

Earnings/(loss) used in the calculation of basic and diluted EPS (1,264,918) (2,069,739)

Weighted average number of ordinary shares used in the calculation of basic and

diluted EPS

- in the calculation of basic EPS 263,615,155 183,593,979

- in the calculation of diluted EPS 263,615,155 183,593,979

Number of options not considered dilutive 118,674,069 2,976,190

As the company reported a loss for the year ended 30 June 2011, options on issue were not included in the calculation of diluted

earnings per share.


Consolidated



Consolidated

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8. CASH ASSETS

2011 2010

$ $

Cash at bank 2,908,011 2,556,280

9. RECEIVABLES

2011 2010

$ $

Current

Other receivables 105,136 29,894

105,136 29,894

Non-current

Other receivables 16,360 15,000

16,360 15,000

10. PROPERTY, PLANT AND EQUIPMENT

2011 2010

$ $

Field equipment

At cost 8,322 8,322

Accumulated depreciation (5,949) (5,194)

2,373 3,128

Office equipment

At cost 10,165 5,887

Accumulated depreciation (5,279) (4,529)

4,886 1,358

Total property, plant and equipment – Net book value 7,259 4,486

Movement in Carrying Values Field Office Total

Equipment Equipment

$ $ $

Carrying value as at 1 July 2010 3,128 1,358 4,486

Additions - 4,278 4,278

Disposals - - -

Depreciation (755) (750) (1,505)

Carrying value as at 30 June 2011 2,373 4,886 7,259

Consolidated

Consolidated

Consolidated




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11. OTHER NON-CURRENT ASSETS

2011 2010

$ $

Exploration Licences 1,050,160 1,049,960

Exploration expenditure capitalised

- Development phase 2,013,797 1,391,531

- Exploration and evaluation phase 1,304,240 1,134,617

4,368,197 3,576,108

Exploration Licences are carried at cost of acquisition less impairment losses.

Recoverability of the carrying amount of exploration assets is dependent on the successful production and sale of uranium ore and coal.

Capitalised costs amounting to $824,348 (2010:$1,532,944) have been included in cash flows from investing activities in the

cash flow statement. In the 2011 year, 4 Indonesian projects were relinquished, which included Lumpo, Lampung, Dimori and Rizki.

The total costs written off for the 4 Indonesian projects totalled $32,259 in the 2011 year.

Adavale Resources Limited relinquished all its holdings in Springvale, Queensland and had written off $622,125,exploration costs

in the 2010 year. Mt Flint in South Australia had also been relinquished and $117,449 of costs were written off in the 2010 year.

12. PAYABLES

2011 2010

$ $

Trade creditors 36,894 89,656

Trade creditors to related parties 26,694 142,924

Other creditors and accruals 110,563 34,398

174,151 266,978

Further information relating to trade creditors to related parties is set out in note 24.

The terms and conditions of the transactions with directors and related parties are no more favourable than those available, or

which might reasonably be expected to be available, on similar transactions to non-Director related entities on an arm's

length basis.

Consolidated




Consolidated

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13. PROVISIONS

2011 2010

Current $ $

Employee benefits 15,754 6,193

15,754 6,193

(a) Movement in provisions Employee

benefits

$

Consolidated

Opening balance as at 1 July 2010 6,193

Additional provision 9,561

Amount used -

Balance as at 30 June 2011 15,754

14. LOAN AND BORROWINGS

A converting loan agreement with Arthur Phillip Pty Ltd (a related party of Mr Richard Poole), was approved at the

Annual General Meeting on 26 November 2010.

The terms of the loan are as follows:

(a) Loan has a Face Value of $1,000,000;

(b) The Company may make multiple draw downs under the Loan;

(c ) Interest shall accrue on the Loan at 8%;

(d) If the Loan has not been repaid or converted, the Company will repay any or all of the Loan 24 months after the execution date:

(e ) Where an event of default occurs, Arthur Phillip may require the Company to repay any or all of the Loan plus any interest.

(f) The Loan is convertible into Shares at a conversion price of 5 cents per Share;

(g) The conversion of the Loan into Shares is subject to and conditional upon the company obtaining Shareholder approval

(h) The Loan is an unsecured debt instrument ranking alongside general secured creditors.

In consideration for Arthur Phillip Pty Ltd to provide the Loan to the Company, the Company has agreed to issue to Arthur

Phillip Pty Ltd 10,000,000 Options. The terms and conditions are as follows:

Exercise Price $0.04

Expiry Date 31-Jul-14

As at the date of this report the Converting loan agreement has not been executed nor the associated options granted.




Consolidated

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15. CONTRIBUTED EQUITY

2011 2011 2010 2010

No $ No $

Issued and Paid-up Share Capital

(a) Ordinary shares, fully paid 316,990,019 34,771,995 183,593,979 34,771,995

316,990,019 34,771,995 183,593,979 34,771,995

Number No $ No $

Ordinary Shares

Balance as at 1 July 183,593,979 34,771,995 183,593,979 34,771,995

Non-recounceable Entitlement issue as at 22 Nov 2010 (i) 18,337,116 366,742 - -

Performance shares issued on 26 Nov 2010 (iii) 2,000,000 40,000 - -

Shortfall placement on 3 Dec 2010 (i) 104,058,870 2,081,176 - -

Additional shares issued on 3 Dec 2010 (ii) 9,000,000 180,000 - -

Options exercised in 2010 (iv) 54 2 - -

Less: transactions costs of issue - (113,643) - -

Closing balance at 30 June 316,990,019 37,326,273 183,593,979 34,771,995

Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share when

a poll is called else one vote each on a show of hands.

In the event of a winding up of the Company, ordinary shareholders rank after all creditors and are fully entitled to any proceeds of

liquidation.

(i) On 19 October 2010, the company announced a pro-rata non-renounceable entitlement issue offer of 2 cents per share.

A total of 18,337,116 new ordinary shares were applied from a total offer of 122,395,986 shares on 22 Nov 2010. A shortfall

of 104,058,870 ordinary shares resulted and the shortfall shares were allocated pursuant to the underwriting agreement. On

3 Dec 2010 it was announced the shortfall were placed.

(ii) An additional 9,000,000 shares were placed to raise a further $180,000, on the same terms as the entitlement issue. The

additional placements were made to sophiscated investors pursuant to ASX Listing rule 7.1.

(iii) On 26 October 2010, 2,000,000 performance shares were approved at the AGM for 2 director of Adavale Resources Ltd.

These being 1,000,000 ordinary shares to John Risinger and 1,000,000 ordinary shares to Philip Suriano.

(v) On 26 November 2010, the performance securities were approved at the AGM for 2 directors of Adavale Resources Ltd.

The primary purpose of granting the performance options to Messrs John Risinger and Philip Suriano is to provide cost

effective consideration for their ongoing commitment and contribution to the Company in their roles as Directors and to

provide an incentive to them to deliver a mining project in Indonesia.

(iv) 54 options were exercised from shareholders during 2011, resulting in 54 ordinary shares issued at 4 cents.

Consolidated Consolidated




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15. CONTRIBUTED EQUITY (continued)

(b) Options

2011 2010

No No

Options - exercisable at 0.21, expiring date 30 Nov 2011

Opening balance 1,428,571 1,428,571

Issued - -

Closing balance 1,428,571 1,428,571

Options - exercisable at 0.21, expiring date 01 Dec 2011

Opening balance 1,547,619 1,547,619

Issued - -

Closing balance 1,547,619 1,547,619

Options - exercisable at 0.04, expiring date 31 Jul 2014

Opening balance - -

Issued 65,697,879 -

Closing balance 65,697,879 -

Class A Options - exercisable at 0.04, expiring date 31 Jul 2014

Opening balance - -

Issued 10,000,000 -


Class B Options - exercisable at 0.04, expiring date 31 Jul 2014

Opening balance - -

Issued 10,000,000 -


Class C Options - exercisable at 0.045, expiring date 31 Jul 2015

Opening balance - -

Issued 10,000,000 -


Class D Options - exercisable at 0.05, expiring date 31 Jul 2016

Opening balance - -

Issued 10,000,000 -


Options - exercisable at 0.04, expiring date 31 Jul 2014

Opening balance - -

Issued 10,000,000 -





Consolidated

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There is no externally imposed capital requirements for the Company.

16. RESERVES

The option reserve records items recognised as expenses on valuation of Directors share options

17. DIVIDENDS

The Directors do not recommend a dividend for the year ended 30 June 2011. No dividend was paid for the year ended 30 June

2011

18. FINANCIAL INSTRUMENTS

Financial Risk Management




(c) Capital Risk Management

The Company's activities expose it to a variety of financial risks; market risk (including fair value interest rate risk and price risk),

credit risk, liquidity risk and cash flow interest rate risk. The Company's overall risk management program focuses on the

unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Company.

The company’s objective when managing capital is to safeguard its ability to continue as a going concern. In order to maintain or

adjust the capital structure, the company may issue new shares or return capital to shareholders.

The company’s strategy, which is unchanged from the prior year, was to maintain a sufficient level of cash to meet its obligations,

when the debt is due and its investment commitment.

financial risks and provides principles for overall risk management.

Risk management is carried out by the board of directors under policies approved by the Board. The board identifies and evaluates

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(a) Interest Rate Risk

Interest Rate Risk Exposures

Weighted Floating Non-

Average Interest 1 year or 1 to 5 years more than 5 Interest Total

Note Interest rate less years Bearing

rate

$ $ $ $ $ $

2011

Financial assets

Cash assets 8 4.66% 1,872,774 1,035,238 - - - 2,908,012

Receivables 9 - - - - 105,136 105,136

Other current assets - - - - 3,731 3,731

1,872,774 1,035,238 - - 108,867 3,016,879

Financial liabilities

Payables 13 - - - - 174,151 174,151

- - - - 174,151 174,151

2010

Financial assets

Cash assets 8 2.55% 563,719 1,992,561 - - - 2,556,280

Receivables 9 - - - - 29,894 29,894

Other current assets - - - - 8,832 8,832

563,719 1,992,561 - - 38,726 2,595,006

Financial liabilities

Payables 13 - - - - 266,977 266,977

- - - - 266,977 266,977




The consolidated entity is exposed to interest rate fluctuations.

The consolidated entity’s exposure to interest rate risk and the effective weighted average interest rate for classes of financial assets

and financial liabilities is set out below:

Fixed interest maturing in:

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18. FINANCIAL INSTRUMENTS DISCLOSURE (CONTINUED)

Financial Risk Management (continued)

Interest Rate Sensitivity Analysis

At 30 June 2011, the effect on profit and equity as a result of changes in the interest rate, with all other variables

Economic Economic

Entity Entity

30 June 2011 30 June 2010

$ $

Change in profit

- Increase in interest rate by 2% 2,462 3,279

- Decrease in interest rate by 2% (2,462) (3,279)

Change in equity

- Increase in interest rate by 2% 2,462 3,279

- Decrease in interest rate by 2% (2,462) (3,279)

(b) Net Fair Values of Financial Assets and Liabilities

Valuation Approach

The balances of financial assets and liabilities approximate their net fair value.

remaining constant would be as follows:

Net fair values of financial assets and liabilities are determined by the consolidated entity on the following basis:

Monetary financial assets and financial liabilities not readily traded in an organised financial market are determined by valuing them




A sensitivity analysis was performed relating to the exposure to interest rate risk at balance date. This sensitivity analysis

demonstrates the effect on the current year results and equity which should result from a change in these risks.

of the cash flows. The carrying amounts of bank term deposits, trade debtors, other debtors, accounts payable, bank loans and lease

liabilities approximate net fair value.

The net fair value of investments in unlisted shares in other corporations is determined by reference to the underlying net assets and

an assessment of future maintainable earnings and cash flows of the respective corporations.

at the present value of contractual future cash flows on amounts due from customers (reduced for expected credit losses) or due to

suppliers. Cash flows are discounted using standard valuation techniques at the applicable market yield having regard to the timing

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(c) Unrecognised Financial Instruments

The Company and controlled entities do not have any unrecognised financial instruments.

(d) Foreign Currency Risk

The Group's exposure to foreign currency risk was as follows based on notional amounts:

AUD USD AUD USD

Other Debtors 38,277 71,800 29,894 -

Other Creditors (172,352) (1,932) (266,978) -

The following significant exchange rates applied during the year:

2011 2010 2011 2010

AUD

USD 1.0333 0.0894 1.0739 0.8523

Sensitivity analysis

A strengthening of the AUD, as indicated below, against the AUD at 30 June would have increase/(decreased) equity and

profit or loss by the amounts shown below. The analysis is based on foreign currency exchange rate variances that the

Group considered reasonably possible at the end of the rpeorting period. The analysis assumes that all other variables, in particular

interest rates remain constant.

Equity Profit or loss Equity Profit or loss

30-Jun-11

AUD (10% strenthening) (48,250) 48,638 58,972 (20,832)

30-Jun-10

AUD (10% strenthening) - - - -




Average Rate Reporting date-Spot Rate

Strengthening Weakening


2011 2010

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(e) Credit Risk Exposures

(f) Liquidity Risk

periods.

(g) Capital Management Risk

returns for shareholders and benefits to other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return

capital to shareholders, issue new shares or sell assets.

The Company monitors capital on the basis of the gearing ratio. The ratio is calculated as net debt divided by total capital. Net debt is

calculated as total borrowing less cash and cash equivalents. Total capital is calculated as equity shown in the balance sheet plus net

debt. As the company is in a transitionary stage the gearing ratio has been maintained throughout the year at 0%.

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through

credit facilities or other fund raising initiatives, to meet commitments as and when they fall due

Management monitors rolling forecasts of the Group’s liquidity on the basis of expected cash flow. Consolidated Economic Entity

cash reserves of $2,908,011 (2010: $2,556,280) as at 30 June 2011 will ensure liquidity risk is minimised for future financial

The Company’s objective when managing capital is to safeguard its ability to continue as a going concern, so that it can provide





Credit risk represents the loss that would be recognised if counterparties failed to perform as contracted. The Company measures

credit risk on a fair value basis. The credit risk on financial assets, excluding investments, of the consolidated entity, which have

been recognised on the statement of financial position, is the carrying amount, net of any provision for doubtful debts.

The Company has no significant credit risk exposure to any single counterparty or any group of counterparties having similar

characteristics.

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2011 2010

$ $

Exploration lease commitments

Minimum expenditure commitments on exploration

licences

Committed but not provided for and

payable:

Within one year 235,000 245,269

One year or later and no later than for five years - -

235,000 245,269

2011 2010

Operating lease commitment $ $

Minimum expenditure commitments on rental

lease

Committed but not provided for and

payable:

Within one year 33,488 -

One year or later and no later than for five years 33,488 -

66,976 -

Estimated amount payable for the share of property lease of office premises in Indonesia.

Consolidated


19. COMMITMENTS


Consolidated


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20. SEGMENT INFORMATION

(a) Primary Reporting – Business Segments Mining and Mining and Other Total

Year ended 30 June 2011 exploration exploration

$ $ $ $

Australia Indonesia

Revenue

Sales - - - -

Interest 572 - 110,487 111,059

Other - - 15,207 15,207

Total Segment Revenue 572 - 125,694 126,266

Segment Result

(127,695) (333,454) (803,769) (1,264,918)

- - - -

(127,695) (333,454) (803,769) (1,264,918)

2,354,400 2,013,797 - 4,368,197

4,075 68,219 4,829,164 4,901,458

- Others 24,264 133,327 2,757,680 2,915,271

2,382,739 2,215,343 7,586,844 12,184,926

- Loans 2,759,986 2,016,246 - 4,776,232

- Others 21,345 1,800 166,759 189,904

2,781,331 2,018,046 166,759 4,966,136


NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2011

Total segment assets

- Exploration expenditure

Profit/(loss) from ordinary activities before income tax

Income tax expense

Net Profit/(loss)

The Company has identified its operating segments based on internal reports that are reviewed by the Board and management. The

Company operated in one business segment during the year, being mining and in two geographical areas, being Australia and

Indonesia.

The segment reporting is detailed below:

- Receivables

Total segment liabilities

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20. SEGMENT INFORMATION (CONT)

(b) Primary Reporting – Business Segments Mining and Mining and Other Total

Year ended 30 June 2010 exploration exploration

$ $ $ $

Australia Indonesia

Revenue

Sales - - - -

Interest 145 - 146,846 146,991

Other - - 14,542 14,542

Total Segment Revenue 145 - 161,388 161,533

Segment Result

(938,374) - (1,131,363) (2,069,737)

- - - -

(938,374) - (1,131,363) (2,069,737)

2,202,098 1,391,631 - 3,593,729

33,665 - 2,423,769 2,457,434

- Others 4,486 - 2,543,620 2,548,106

2,240,249 1,391,631 4,967,389 8,599,269

- Loans 2,408,669 - - 2,408,669

- Others 98,288 - 174,881 273,169

2,506,957 - 174,881 2,681,838


30 June 2011 30 June 2010

12,184,926 8,599,269

(4,776,231) (2,408,669)

7,408,695 6,190,600




Profit/(loss) from ordinary activities before income tax

Income tax expense

Net Profit/(loss)

Total segment assets

- Exploration expenditure

- Receivables

Total segment liabilities

All segment assets are located in Australia and Indonesia.

c) Segment assets:

Reportable segments’ assets reconciled to total assets as follow:

Segment Assets

Intersegment Eliminations

Total assets as per balance sheet

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20. SEGMENT INFORMATION (CONT)


30 June 2011 30 June 2010

4,966,136 2,681,838

(4,776,231) (2,408,668)

189,905 273,170

21. CONTROLLED ENTITIES

Particulars in relation to controlled entities

2011 2010

% %

Company:

Adavale Resources Limited

Controlled entities:

Adavale Minerals Pty Ltd 100 100

Adavale Queensland Pty Ltd 100 100

Adavale Indonesia Pty Ltd 100 100

The above entities were incorporated in Australia.

PT Adavale Nusantara 100 -

Adavale Harner Resources 60 -

Incorporated in Indonesia


d) Segment liabilities:

Reportable segments’ liabilities reconciled to total liabilities as follow:

Segment Liabilities

Intersegment Eliminations


Total liabilities as per balance sheet

Ordinary Shares

Consolidated Entity Interest


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22. NOTES TO THE STATEMENTS OF CASH FLOWS

2011 2010

Notes $ $

Cash at bank 8 2,908,011 2,556,280

(1,264,918) (2,069,737)

1,509 1,855

4,537 10,460

- 1,189,514

32,259 -

52,000 (100)

(1,174,613) (868,008)

(76,038) (11,017)

(92,827) 140,965

9,561 6,193

(1,333,917) (731,867)

Shares granted to key management personnel as share-based payments are as follows:

Grant Date No.

John Risinger 26-Nov-10 1,000,000

Philip Suriano 26-Nov-10 1,000,000

On 26 November 2010, the performance securities were approved at the AGM for 2 directors of Adavale Resources Ltd.

The primary purpose of granting the performance options to Messrs John Risinger and Philip Suriano is to provide cost effective

consideration for their ongoing commitment and contribution to the Company in their roles as Directors and to provide an

incentive to them to deliver a mining project in Indonesia.

- Depreciation of non-current assets

- Accrued interest

(b) Reconciliation of the operating loss after

tax to the net cash flow from operations

Profit/(loss) from ordinary activities after

income tax

Add/(less) non cash items:

term deposits at call, net of outstanding bank

overdrafts. Cash as at the end of the financial year

as shown in the statements of cash flows is

reconciled to the related items in the statement of

financial position as follows:

cash includes cash on hand and at bank and short



Consolidated


(a) Reconciliation of Cash

For the purposes of the statements of cash flows,

- Impairment losses

- Write-off of exploration costs

- Other

Changes in assets and liabilities:

- (Increase)/decrease in receivables

- Increase/(decrease) in trade creditors and accruals

- Increase/(decrease) in provisions

Net cash provided by/(used in) operating activities

23. SHARE BASED PAYMENTS

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Options granted to key management personnel as share-based payments are as follows:

Exercise

Directors Type Number Price

John Risinger Class A 5,000,000 $0.04

Class B 5,000,000 $0.04

Class C 5,000,000 $0.045

Class D 5,000,000 $0.05

Philip Suriano Class A 5,000,000 $0.04

Class B 5,000,000 $0.04

Class C 5,000,000 $0.045

Class D 5,000,000 $0.05

estimated using the Black-Scholes option pricing model applying the following inputs:

At the weighted average exercise price: $0.045

Weighted average life of the options: 3.75 years

Expected share price violatility: 15%

Risk-free interest rate: 4.96%

The terms and conditions of the grants of the options are as follows:

(a) Class A - give the optionholder the right to subscribe to one share;

(b) Class B - shall only vest and be exercisable upon the Company selling and shipping its first load of coal;

(c ) Class C - shall on vest and be exercisable upon the Company selling and shipping 500,000th tonne of coal; and

(d) Class D - shall on best and be exerciable upon the Company selling and shipping its 1,000,000th tonne of coal.





31 July 20158 December 2010

23. SHARE BASED PAYMENTS (CONTINUED)








The grant date fair value of the share based payments were measured using the Black-Scholes formula. Expected volatility is

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2011 2010

$ $

Short-term employee benefits 300,000 120,000

Directors fees 120,125 144,000

Share based payments 52,000 -

Total 472,125 264,000

Directors’ transactions with the Company or its controlled entities

2011 2010

$ $

137,266 252,000

65,956 14,888

26,982 120,000

by Mr John Risinger for provision of management

and advisory services during the year 91,196 40,000

Fees paid to Drill Logic Pty Limited, a company controlled

by Mr Mark Stevenson and Mr John Risinger for the

provision of exploration services during the year - 17,380

available, or which might reasonably be expected to be available, on similar transactions to non-Director-related entities on an arm’s

company secretarial, administration, management and

advisory services during the year

(a) The key management personnel compensation comprised:

Consolidated

Apart from the details disclosed in this note and elsewhere in the financial report, no director or other related party has entered into a

contracts involving directors’ interests existing at year-end.

24. RELATED PARTIES

material contract with the Company or the consolidated entity since the end of the previous financial year and there were no material

Directors’ and Key Management Personnel

The directors of Adavale Resources Limited are considered the key management personnel of the consolidated economic entity.

The directors’ remuneration and equity holdings have been disclosed in the directors report attached to the financial statements.

Consolidated

Fees paid to Arthur Phillip Pty Limited, a company

controlled by Mr Richard Poole for provision of

length basis.

Fees paid to Steinepreis Paganin, a firm of which Mr

Roger Steinepreis is a partner, for the provision of legal

services during the year

Fees paid to Entertainment Marketing Enterprise Pty

The terms and conditions of the transactions with directors and their director-related entities were no more favourable than those

Fees paid to Larca Pty Ltd, a company controlled




Ltd, a company controlled by Mr Philip Suriano for

the provision of management and advisory services

during the year

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2011 2010

$ $

15,950 2,000

6,695 4,000

4,049 2,049

- 55,000

- 79,875

26,694 142,924

A converting loan agreement with Arthur Phillip Pty Ltd (a related party of Mr Richard Poole), was approved at the

Annual General Meeting on 26 November 2010. The loan is for $1,000,000 and the financial benefit to be granted to Arthur

Phillip is the entry into the loan and the payment of interest under the loan. The funds of the Loan is to be used primarily to

assist in the construction and establishment of mining operations and available working capital. (see note 14)

As at the date of this report the converting loan agreement has not been executed or the associated option granted.

During the 2011 year, Adavale Resources Ltd entered into a Joint Venture in Indonesia to explore and mine coal in Indonesia.

The effective start date of the Joint Venture will commence on 1 August 2011.

On 20 September 2011, options were issued to Marshall Cooper (CEO of PT Adavale Nusantara Resources, subsidiary of Adavale

Resources Limited) as part of his remuneration package.

On 28 September 2011, the board announced the appointment of Mr Haryono Eddyarto as a Non-Executive Director.

With the exception of the above, no matters or circumstances have arisen since the end of the year which 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 future financial years.

Transactions with associated company

For the purpose of administering a number of associated companies, an administration company Norfolk Management Pty Ltd was

formed, with Adavale Resources Limited holding one share being 50% of the issued capital. The company operates solely as an

administrative function and recharges as an administrative fee for the share of administrative expenses incurred on behalf of Adavale

Resources Limited. During the year $144,960 (2010 - $99,468) was paid to Norfolk Management Pty Ltd as administrative fees. The

company made neither profits nor losses for the year ended 30 June 2011, hence there is no proportional share of results bought to

account to the company or Group financial statements.

Other related parties transactions

Steinepreis Paganin

Larca Consulting Pty Limited

Entertainment Marketing Enterprise Pty Ltd

Seiki Takahashi

Directors’ balances with the Company or its controlled entities

Consolidated

Payables (see note 12)

Arthur Phillip Pty Limited

25. EVENTS SUBSEQUENT TO REPORTING DATE




24. RELATED PARTIES (CONTINUED)

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26. PARENT ENTITY FINANCIAL INFORMATION

(a) Summary financial information

The individual financial statements for the parent entity show the following aggregate amounts:

2011 2010

$ $

Balance Sheet

Current Assets 2,795,612 2,548,206

Total Assets 9,167,956 7,413,566

Current Liabilities 166,762 174,882

Total Liabilities 166,762 174,882

Shareholders' contributed equity 37,326,274 34,771,995

Reserves 43,433 31,433

Accumulated Losses (28,368,513) (27,564,744)

9,001,194 7,238,684

2011 2010

$ $

Statement of Comprehensive Income

Total profit/(loss) (803,768) (1,131,363)

Total comprehensive income/(loss) (803,768) (1,131,363)

(b) Contingent Liabilities of the Parent

The parent entity did not have any contingent liabilities as at 30 June 2011.

(c ) Commitments

The parent entity did not have any contractual commitment as at 30 June 2011.




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On behalf of the Directors

Mr R Poole

Chairman

Sydney, 29 September 2011

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


DIRECTORS' DECLARATION

The directors of the Company declare that:

1. the financial statements and notes, as set out on pages 23 to 59 are in accordance with the Corporations Act 2001 and:

(a) comply with Accounting Standards and the Corporations Regulations 2001; and

(b) give a true and fair view of the financial position as at 30 June 2011 and of the performance for the year ended on

that date of the company;

2. the Chief Executive Officer has declared that:

(a) The financial records of the Company for the financial year have been properly maintained in accordance with

Section 286 of the Corporations Act 2001;

(b) The financial statements and notes for the financial year comply with the Accounting Standards, and;

(c ) The financial statements and notes for the financial year give a true and fair view;

3. in the directors’ opinion, there are reasonable grounds to believe that the company will be able to pay its debts as and

when they become due and payable.

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robertnielsonpartners rnnnnpABN 65 141 087 768 Level 7 280 George Street

chartered accountant Sydney NSW 2000 Australia

business advisors Box R176 Royal Exchange

NSW 1225 Australia

T 61 2 9235 0299

F 61 2 9222 1065

E [email protected]

Scope

Report on the Financial Report

The financial report and the directors’ responsibility

responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the financial

report that is free from material misstatement, whether due to fraud and error; selecting and applying appropriate accounting polices;

and making accounting estimates that are reasonable in the circumstances In Note 1 the directors also state, in accordance with

Accounting Standard AASB 101; Presentation of Financial Statements, that compliance with the Australian equivalent to International

Financial Reporting Standards(IFRS) ensures that the financial report, comprising the financial statements and notes, complies with IFRS.

Audit Approach

We have audited the accompanying financial report of Adavale Resources Limited ("the company") and Adavale Resources Limited and

Controlled Entities ("the consolidated entity") comprising the statement of financial position as at 30 June 2011, the statement of

comprehensive income, statement of changes in equity, statement of cash flows for the year ended at that date, a summary of significant

accounting policies and other explanatory notes and the directors' declaration of the consolidated entity comprising the company

and the entities it controlled at the year's end or from time to time during the financial year.

The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with

Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This

Our responsibility is to express an opinion on the financial report based on our audit. We have conducted our audit in accordance

with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to

audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material

misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The

procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial

report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's

preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances,

but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluation

the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as

INDEPENDENT AUDIT REPORT

TO THE MEMBERS OF ADAVALE RESOURCES LIMITED

evaluating the overall presentation of the financial report.

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

Liability limited by a scheme approved under Professional Standards Legislation

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In our opinion,

(a) the financial report of Adavale Resources Limited and its controlled entities is in accordance with the Corporation Act 2001 ,

including:

(i)

(ii)

Robert Nielson Date 29 September 2011

Corporations Regulations 2001; and

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

Corporations Act.


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

Audit Opinion

giving a true and fair view of the company’s and the consolidated entity’s financial position as at 30 June 2011

and of its performance for the year ended on that date; and

complying with Accounting Standards in Australia (including Australian Accounting interpretations) and with the

Independence

In our opinion the Remuneration Report of Adavale Resources Limited for the year ended 30 June 2011, complies with s 300A of the

of the Corporations Act 2001. Our responsibility is to express an opionion on the Remuneration Report, based on our audit conducted

in accordance with the Australian Auditing Standards

Report on Remuneration Report

The Directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with s300A

We have audited the Remuneration Report included in pages 18 to 19 of the report of the directors for the year ended 30 June 2011

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Additional information included in accordance with the Listing Rules of the Australian Securities Exchange Limited.

1. SHAREHOLDER INFORMATION

(a) Distribution of holders at 21 September 2011

Number of Holders

Distribution is:

1 - 1,000

1,001 - 5,000

5,001 - 10,000

10,001 - 100,000

100,001 and Over

parcel

(b) Voting rights

There are no restrictions on voting rights attached to the ordinary shares. On a show of hands every member present

in person shall have one vote and upon a poll, every member present or by proxy shall have one vote every share held.

(c ) Substantial shareholders (as at 21 September 2011)

The Company’s register of substantial shareholders shows the following:

Shareholder Number of shares

(d) Shareholders

Mark Stevenson 21,254,314 6.70%

The twenty largest shareholders hold 62.53% of the total issued ordinary shares in the Company as at 21 September 2011.


ADDITIONAL INFORMATION

Fully paid

ordinary shares

216

67

42

545

265

Holding less than a marketable 416

%

Richard Poole 48,440,203 15.28%

Haryono Eddyarto 31,441,033 9.92%

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(e) Restricted Securities

There are no securities subject to escrow restrictions.

(f) Unquoted Equity Securities (as at 21 September 2011)

Options

Expiry 30 November 2011 and exercisable at $0.21

Crosby Special Situations Fund Ltd

Expiry 1 December 2011 and exercisable at $0.21

Crosby Special Situations Fund Ltd

Expiry 31 July 2014 and exercisable at $0.04






Expiry 31 Mar 2014 and exercisable at $0.10



2. QUOTATION

Listed securities in Adavale Resources Limited are quoted on the Australian Securities Exchanges

3. AUDIT COMMITTEE

As at the date of the Directors’ Report, the Company did not have an audit committee of the board of directors. The company

is not of a size, nor are the affairs of a complexity, sufficient to warrant the existence of a separate audit committee.

All matters which could be delegated to such a committee are dealt with by the full Board.

100%

1,547,619 100%

10,000,000 100%

10,000,000 100%

10,000,000 100%

10,000,000 100%

10,000,000 100%

10,000,000

65,697,879 100%

10,000,000 100%

10,000,000 100%


ADDITIONAL INFORMATION

Number on issue % held

1,428,571 100%

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1. FONTELINA PTY LTD

2. ARTHUR PHILLIP NOMINEES PTY LTD


4. HOLLOMAN VALUE HOLDINGS LLC

5. EAGLE RESOURCES PTY LTD



8. BLUEKNIGHT CORPORATION PTY LTD

9. LARCA PTY LTD <THE RISINGER FAMILY A/C>

10. BYRON DEVESON SUPERANNUATION FUND PTY LTD <THE BYRON DEVESON S/F A/C>

11. LIPPO SECURITIES NOMINEES (BVI) LTD <CLIENT A/C>

12. HUDSON CORPORATE LTD

13. MR DAVID ARTHUR PAGANIN <DA PAGANIN FAMILY NO 2 A/C>

14. RANCHLAND HOLDINGS PTYLTD

15. ZERO NOMINEES PTY LTD

16. PHEAKES PTY LTD <SENATE A/C>

17. MR ROGER STEINEPREIS <RC STEINEPREIS FT NO 2 A/C>

18. GANRA PTY LTD <THE FLANNERY FAMILY A/C>

19. MRS SONJA LOUISE NEWMAN HEATH + MR JAMES PETER GUEST THOMPSON <T H CAPITAL SUPER FUND A/C>

20. MR ANDREW MUIRHEAD SKIDMORE

19,852,193 6.26

19,333,333 6.10

16,500,000 5.21

11,051,073 3.49

10,157,094

198,214,897 62.54

6,916,241 2.18

5,728,845 1.81

5,000,000 1.58

3,355,864 1.06

2,500,000 0.79

2,393,105 0.75

2,222,223 0.70

2,000,000 0.63

2,000,000 0.63

3.20

9,943,733 3.14

7,706,000 2.43

7,628,333 2.41

7,150,906 2.26

Top Twenty Shareholders at 20 September 2011

NameNumber % of Issued

of Shares Shares

34,008,870 10.73

22,767,084 7.18

65

4. TENEMENT SCHEDULE

STATE TENEMENT STATUS DESCRIPTION AREA TENEMENT AREA ADD EQUITY

SA EL 3620 Granted Lake Arthur East Area 898 100%

(75km E Marree)

SA EL 3622 Granted Lake Arthur East Area 938 100%

(65km E Marree)

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