For personal use only - ASX · in Kazakhstan, Central Asia. The Company holds two licence areas in Kazakhstan; an exploration licence at Altyntas, and a Mining Allotment at Dalabai

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TABLE OF CONTENTS

CORPORATE DIRECTORY............................................................................................................... 2

CHAIRMAN’S ADDRESS ................................................................................................................ 3

OPERATIONS REPORT ................................................................................................................... 4

DIRECTORS’ REPORT .................................................................................................................. 13

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME ........................................................ 29

CONSOLIDATED STATEMENT OF FINANCIAL POSITION ................................................................ 30

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ................................................................. 31

CONSOLIDATED STATEMENT OF CASH FLOWS ............................................................................ 33

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ............................................................ 34

DIRECTORS’ DECLARATION ......................................................................................................... 79

INDEPENDENT AUDIT REPORT .................................................................................................... 80

ASX ADDITIONAL INFORMATION ................................................................................................ 82

CORPORATE GOVERNANCE STATEMENT ..................................................................................... 85

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CORPORATE DIRECTORY

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Corporate Directory Directors & Executives

Alan Hopkins Chairman / Non-Executive Director Robin Gill Non-Executive Director Erulan Kanapyanov Non-Executive Director Philippe Reiser Non-Executive Director Luke Martino Alternate Director Peter Thompson Chief Executive Officer Daulet Agaidarov Chief Financial Officer Company Secretary

Harry Spindler Registered Office

311-313 Hay Street, Subiaco 6008 Western Australia Tel: +61 8 6489 0600 Fax: +61 8 9388 3701 Share Registry

Computershare Investor Services Pty Ltd Level 2, 45 St George's Terrace Perth 6000 Western Australia ASX Code: CVR Website: www.centralasia.com.au Lawyer

Price Sierakowski Corporate Lawyers Level 24, St Martin’s Tower 44 St George’s Terrace Perth WA 6000 Auditor

Ernst & Young 11 Mounts Bay Road Perth 6000 Western Australia F

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CHAIRMAN’S ADDRESS

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Dear Shareholders On behalf of the Board, I submit the Annual Report for 31 December 2013. Your Company has faced strong headwinds over the last year with gold prices easing significantly and equity markets deserting the junior resource sector. In this challenging macro environment, your Company worked hard to find a way to restart operations at Dalabai while managing the significant financial overhangs from the previous year. The Company was successful in establishing a gold loan facility that supported a limited restart of operations at Dalabai. This financing enabled the treatment of all gold bearing material on the surface and as a result, the projects technical and financial credentials were re-established. This was achieved with operations running according to plan. Having achieved this, the Company continues to seek a way to re-commence full sustainable mining operations and provide a pathway to lifting the suspension on ASX. To restart full mining at Dalabai, the Company has been actively seeking to secure a project financing facility from a leading Kazakh bank in conjunction with a rescheduling / restructure of near term existing loan arrangements. This combined with an equity financing, should provide the platform for the Company to restart the Dalabai operations and seek relisting on the ASX. The near term future has challenges but the achievement of the remaining steps should provide a real improvement in the Company’s prospects. The Board is focussed on delivering shareholder value by:

The commencement of gold production at Dalabai to generate cashflows

The further evaluation of the Company’s other projects to establish how best to maximise their potential.

Reviewing future resource opportunities that will increase shareholder value and rerate the Company.

I take this opportunity to thank the Board members, our team and all shareholders for their ongoing support during this extremely trying process for all. With this ongoing support, the Company can continue to seek the significant turnaround that is in the Company’s sights.

Alan Hopkins Chairman

PERTH, 28 MAY 2014man’s address

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OPERATIONS REPORT

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Overview

Australian-based gold explorer Central Asia Resources Limited (ASX: CVR) is focused on developing its projects in Kazakhstan, Central Asia.

The Company holds two licence areas in Kazakhstan; an exploration licence at Altyntas, and a Mining Allotment at Dalabai. Both projects have reported Resources, and are within areas of significant prospectivity based on extensive exploration during Soviet times. The licence areas are within recognised gold belts, and close to operating mines and infrastructure.

The Company, through its operating subsidiaries LLP Zhetsugeomining and Palm ES, commenced open pit mining at Dalabai in September 2011. Heap leach processing began in February 2012 and was suspended in November 2012. A limited Restart operation from August to December 2013 treated stockpiled materials and generated further gold sales. The operation has been on Care and Maintenance since January 2013, with plans for a full mining restart, subject to funding, in 2014.

Altyn-Tas and Kepken are the Company's largest prospects, and are located 500km west of Dalabai near the gold mining centre of Akbakai. Exploration and testwork since 2011 demonstrate these deposits’ suitability for both heap leach and carbon-in-pulp / carbon-in-leach (CIP/CIL) treatment. The Company is exploring multiple paths towards their commercialisation. These deposits are held under Exploration Licence 176 which was first granted in 1994 and has been subject to numerous partial relinquishments and extensions of term. It is due to expire in May 2014 but an application for a further extension of term to 2017 has been submitted to the department of Mines and Infrastructure in Kazakhstan, with the process for assessment underway.

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OPERATIONS REPORT (CONTINUED)

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Resources and Reserves

Table 1 - Global Resources

Table 2- Summary of Mineral Resources Estimated Reported according to JORC Category and Deposit

The above information with respect to the Dalabai project has been depleted through mining activities carried out through 2011 to 2013 however there have not been any material changes to the current JORC resources estimates as a result of this activity.

It is noted that an update of the Altyntas and Kepken resource estimates is underway using an independent Kazakh consultant, and incorporating new exploration data acquired since these resource estimates were made in 2009. Due to the inclusion of additional drillhole data, the re-interpretation of some mineralisation trends and the new requirements prescribed by the new JORC code, it is likely that reductions in the amount of Inferred resources and Total resources at Altyntas and Kepken are likely when these resources are remodelled and reported under the JORC code during 2014.

The Company’s Reserves and Resources have been reviewed with currently no changes to the Reserves and Resources reported in the 2012 Annual Report. However, it has been noted above in this report that re-estimations of the Altyntas and Kepken resources are underway and are expected to result in overall reduction of resources. The Company’s Reserves and Resources Statement is updated annually as at 31 December. The Statement is unchanged from that published last year in the 2012 Annual Report.

The Company reviews annually the material changes to estimates of mineral resources and the compliance requirements of those resources for both the Kazakh and Australian authorities. Where no depletion by mining, or additional information from drilling, sampling, trenching, metallurgical testwork etc has become available, and as advised by the Company’s Competent Person, then no changes are made to the Reserve and Resource statement. A review of current and forecast consensus metal prices is also made to ensure that resources are estimated and quoted at appropriate cut-off grades. The consensus forecast gold price used for 2014 is US$1,300 per ounce.

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The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Mr Peter Thompson who is employed by Central Asia Resources Limited. Mr. Thompson is a Member of The Australasian Institute of Mining and Metallurgy and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr. Thompson consents to the inclusion in the report of the matters based on information in the form and context in which it appears. Statements regarding Central Asia Resources’ plans with respect to its mineral properties are forward-looking statements. There can be no assurance that Central Asia Resources’ plans for development of its mineral properties will proceed as currently expected. There can also be no assurance that Central Asia Resources’ will be able to confirm the presence of additional mineral deposits, that any mineralisation will prove to be economic or that a mine will successfully be developed on any of Central Asia Resources’ mineral properties.

The information included in this annual report, unless disclosed otherwise, was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported. Please refer to the above comments regarding a current review of the Altyntas and Kepkin estimates.

Dalabai

Acquired in 2008, Dalabai has been the Company’s focus as a rapid target to develop heap leach operation.

Central Asia Resources commenced gold production under a trial mining licence from the Kazakhstan government at Dalabai in March 2012. A total of 2,645 ounces of gold and 7,784 ounces of silver were produced during the trial mining phase. The company made application for commercial mining status to the Ministry and received that approval in March 2013.

Fig 1: Dalabai processing facility, leach pads and crushing facilities, October 2013

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Fig 2: Irrigation of Leach pads,Dalabai September 2013

The resource at Dalabai is primarily from three identified ore zones, named Zone 4, Zone 5 and Central Zone. Mining in 2011/12 occurred only from Zone 4 to a depth of 10 metres, with plans for simultaneous development of the other pits in 2014 underway.

Processing at Dalabai uses cone crushing to 12mm size, and cement agglomeration of ‘fines’, which are then stacked on two leach pads to a height of 6m. Irrigation of these leach pads by cyanide solution is followed by adsorbtion of gold from the cyanide solution onto resin beads, and by desorbtion of gold from the resin. This desorbtion stage has previously been performed off-site but it is planned to construct a desorbtion and electrowinning circuit at Dalabai during 2014 to allow gold production at site. Leach pads are planned to each have 4 layers reaching 24m height, with a third leach pad required after 6 months of restarted operations.

Limited Restart Operation, 2013

From September to December, 2013, processing operations at Dalabai were resumed, with all available stockpiled ores, including ‘fines’ from previous crushing campaigns, were crushed, agglomerated, stacked on leach pad 2, and leached. Previously leached material on leach pad 1 was also leached again and contributed to gold production. This resulted in the production of 1,040 oz of gold, within the targeted range of 1,000 to 1,100 ounces. Figure 3 below shows the daily levels of gold leached from both pads 1 and 2, as well as the monthly despatches of gold-loaded resin and resultant gold sales

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Fig 3: Daily gold recovery to resin and Gold Sales from 2013 Limited Restart, Dalabai.

Fig 4: Dalabai Leach Pad 2 showing irrigation sprinklers under tent covers, November 2013.

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Altyntas

The Altyntas exploration licence is located 500km north-west of Almaty, Kazakhstan and includes the Altyntas, Kepken and Kengir deposits. Exploration during the Soviet era and more recently by the Company has established near surface gold resources at each deposit. The results of RC drilling at Altyntas completed in late 2012 but not assayed until 2013 were reported in late 2013, and are shown in Table 1 below. This information was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported. These results are being incorporated into an updated block model and resource estimate for Altyntas by an independent Kazakh consultant, so that Kazakh compliant reserves may be calculated and submitted to the Kazakh authorities and a mining lease application made. While some strong gold intersections were reported, several holes testing areas of low drillhole density gave disappointing results, and are expected to result in reduced Inferred Resources at Altyntas, but a higher level of confidence in the updated 2012 JORC Resource estimate once completed.

Altyn-Tas metallurgical testwork confirms it's suitability for both heap leach and CIP/CIL processing, with testwork by Ammtech (Adelaide) in 2011 indicating 52% gold recovery from agglomerated column leach testwork (simulating Heap Leach conditions) and 92% gold recovery within 24 hrs from bottle-roll testwork (simulating Carbon-In-Leach, ‘CIL’ conditions). The CIL testwork indicated low cyanide consumption of 1.1 to 1.4kg NaCN per tonne of ore, and similar gold recoveries at all grind size fractions tested (125 microns, 106 microns and 75 microns). CIL processing is favoured over Heap Leaching for this deposit due to the higher expected gold recoveries, despite the additional capital required for a CIL development.

Kepken and Kengir

Figure 5 - Project location map

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Table 2: RC Drill hole Results, holes ATRC001-042 Altyntas

DRILLHOLE COLLAR NORTHING COLLAR EASTING DIP AZIMUTH FROM TO WIDTH GOLD G/T

ATRC001 4977257.0 339499.3 30.0 208 NSA

ATRC002 4977166.2 339592.2 30.0 207 4 8 4 1.6

ATRC003 4977117.8 339650.4 30.0 209 NSA

ATRC004 4977140.3 339663.9 30.0 208 NSA

ATRC005 4977097.8 339732.4 30.0 211 40 43 3 1.3

61 63 2 0.8

ATRC006 4977040.9 339796.9 30.0 209 42 45 3 1.5

ATRC007 4977058.0 339807.6 30.0 208 57 60 3 0.8

68 77 9 2.6

ATRC008 4976990.7 339861.7 30.0 209 25 29 4 1.2

36 38 2 1.1

ATRC009 4977005.0 339872.3 30.3 206 51 56 5 1.1

ATRC010 4977033.3 339840.2 29.5 205 NSA

ATRC011 4977016.8 339827.6 30.3 210 NSA

ATRC012 4976900.9 339926.8 2.2 0 NSA

ATRC013 4976810.9 339873.8 30.0 11 71 73 2 0.9

90 92 2 0.7

ATRC014 4976840.1 339883.4 30.3 12 48 54 6 1

63 73 10 1.6

ATRC015 4976841.0 339905.7 20.3 18 62 67 5 0.8

75 95 20 2

ATRC016 4976863.5 339914.9 20.3 17 62 65 3 1.6

72 74 2 1.3

90 91 1 1.1

96 97 1 4.1

ATRC017 4976866.5 339892.7 29.5 15 71 73 2 1.5

ATRC018 4977101.9 339689.9 29.3 203 5 9 4 2.6

ATRC019 4977068.2 339766.9 30.0 208 39 48 9 4

including 45 46 1 26.8

52 53 1 2.2

57 58 1 6.8

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DRILLHOLE COLLAR NORTHING COLLAR EASTING DIP AZIMUTH FROM TO WIDTH GOLD G/T

ATRC020 339699.04 4977119.26 61 203 8.0 12.0 4 0.9

16.0 18.0 2 187.1

including 16.0 17.0 1 370.3

51.0 52.0 1 6.0

58.0 64.0 6 3.0

ATRC021 339776.71 4977084.98 61 209 72.0 80.0 8 1.0

89.0 90.0 1 2.9

94.0 98.0 4 1.3

113.0 115.0 2 1.6

ATRC023 339719.04 4977077.42 60 207 6.0 10.0 4 1.4

ATRC024 339757.68 4977054.58 60 206 2.0 19.0 17 1.4

ATRC025 339604.40 4977185.61 60 208 46.0 58.0 12 0.5

including 55.0 58.0 3 1.1

90.0 109.0 19 0.5

including 106.0 109.0 3 1.4

ATRC026 339786.27 4977022.81 59.7 207 0.0 9.0 9 0.6

including 1.0 4.0 3 1.0

ATRC027 339747.28 4977118.44 60 208 97.0 104.0 17 0.5

ATRC028 339639.73 4977176.90 60 205 66.0 72.0 6 2.4

86.0 87.0 1 1.0

ATRC029 339946.41 4976959.25 60 205 53.0 74.0 21 1.0

109.0 120.0 11 4.4

including 109.0 110.0 1 18.8

and 115.0 116.0 1 19.0

ATRC030 339630.81 4977161.01 60 206 84.0 85.0 1 4.8

ATRC031 339908.39 4976912.15 89.7 6.9 NSA

ATRC032 339615.73 4977139.07 61 204 38.0 39.0 1 1.7

ATRC033 339907.85 4976924.12 60 327 15.0 44.0 29 0.6

including 18.0 23.0 5 1.2

45.0 55.0 10 2.9

including 45.0 46.0 1 15.7

ATRC034 339677.45 4977162.78 60 204 94.0 113.0 19 0.6

including 95.0 96.0 1 2.6

including 110.0 111.0 1 2.4

ATRC035 339493.84 4976867.83 70 19 32.0 38.0 6 0.5

ATRC036 339555.06 4977225.91 60 207 26.0 27.0 1 1.0

ATRC037 339523.35 4976864.39 59.7 21 NSA

ATRC038 339565.57 4977240.80 60.7 207 35.0 36.0 1 1.2

53.0 54.0 1 2.1

ATRC039 340118.03 4976602.76 60 10 76.0 77.0 1 0.6

ATRC040 339516.79 4977277.19 60 207 22.0 25.0 3 1.9

40.0 42.0 2 1.6

ATRC041 339514.86 4976851.27 60 21 44.0 45.0 1 0.6

ATRC042 339611.25 4976870.09 60.5 22 NSA

NSA = no significant assays.

All intersections above 0.4 g/t gold are reported, all intersections are downhole (apparent) widths

All drillholes were downhole surveyed and collar surveyed using differential GPS.

Assays were undertaken by Help Geo , a highly regarded laboratory in Kazakhstan, using Fire Assay methods and using sufficient blanks, standards and duplicate samples.

This information was prepared and first disclosed under the JORC Code 2004 and has not been updated.

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Corporate

During the year, the Company raised a total of A$750,000 through the issuance of convertible notes which were subsequently converted to 75 million shares to fund the development of Dalabai, and US1.0m through an unsecured Gold Loan facility with West Asia Minerals Ltd.

Efforts towards capital raising:

Convertible notes financing totalling A$750,000 converted into shares of the Company at 1 cent per share;

Conversion of part of the Millstar convertible loan into shares ($1,439,436 out of $3,000,000);

US$1,500,000 gold loan finance facility (drawdown of tranches is subject to certain conditions precedent). As at 20

th March 2014, only US$1m of this facility was drawndown.

Following a period of 5 months as consultant to the Company, Mr Peter Thompson was appointed as CEO in September 2013. Mr Harry Spindler was appointed as Company Secretary in a part-time capacity in April 2013. In December 2013, the Company announced the resignation of Ms Zhanna Tazhibayeva as Chief Financial Officer and co-Company Secretary. Ms Assyl Beketova acted as CFO during January 2014 to April 2014. Mr Daulet Agaidarov was appointed CFO in April 2014.

Gold sales for 2013 included the sale of some gold still contained on resin at Dalabai, as well as the 1,040 ounces which were produced from the treatment of stockpiled ore from August to December 2013. Gold-rich resin was transported to a third-party desorbtion plant at Semey (1,000km north of Dalabai) for refinement of gold and silver into cathode form, and then sold to Glencore subsidiary Kazzinc. Total revenues from sale of cathode gold for the year amounted to A$1,750,377 (without VAT).

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DIRECTORS’ REPORT

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Directors report

Your Directors submit their report for Central Asia Resources Limited (“Company” or “Parent”) and its subsidiaries (together “the Consolidated Entity” or the “Group”) for the year ended 31 December 2013.

Directors

The names and details of the Company's directors in office during the financial year and until the date of this report are as follows. Directors were in office for this entire year unless otherwise stated.

Alan Hopkins, Chairman / Non- Executive Director (Appointed 1 February 2013)

Experience and expertise

Mr Hopkins has over 25 years’ experience in resource companies including more than twenty years at board

level in public companies, operating in developing countries. This experience has strongly focused on

managing resource companies with international operations and covering all stages through exploration,

development and mining. He has extensive strategic experience in start-up / turnaround situations and

managing through periods of exceptional growth.

Other current listed company directorships in Australia

None

Former directorships in last 3 years in Australia

None

Robin Gill, Non-executive Director (formerly Managing Director until 1 September 2013)


Mr Robin Gill has 37 years' experience in development, production, operations and marketing in the

international petroleum industry, including management and executive roles with both multi-national and

independent oil and gas companies. He was the Managing Director for the Middle East and North Africa of

Dynegy Global Liquids, based in Houston, and Chief Executive of Danagaz WLL, a natural gas development

company based in the Arabian Gulf.


None


None

Erulan Kanapyanov Non-Executive Director


Mr Erulan Kanapyanov is a businessman in Kazakhstan. Over his 30 year career, he has held numerous senior executive and Board positions in industries as varied as property development, geological exploration and mining. He is the shareholder of Kazakhstan-Australia Limited. He is a shareholder of the companies which hold the non-controlling interest in some of Central Asia Resources Ltd’s Kazakhstani subsidiaries.


None

Former listed company directorships in last 3 years in Australia

None

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DIRECTORS’ REPORT (CONTINUED)

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Philippe Reiser, Non-Executive Director


Mr Philippe Reiser has over 30 years' experience in Private Banking. In 1993, he created Compagnie Privée de

Gestion Primatrust SA in Geneva, Switzerland, a multi family office company. He is also active as a member of

several Boards of Directors outside Australia.


None


None

Luke Martino, Alternate Director (Appointed 1 March 2013)


Mr Luke Martino has over 20 years’ experience at partner and board level with major accounting firms and is a Director of several private and public companies. He has gained significant experience and established credibility in the mining and resources, property and hospitality industries. Luke has an entrepreneurial passion for nurturing businesses and specialises in corporate and growth business consulting.


Pan Asia Corporation Limited


NuEnergy Capital Limited (Non-Executive Director)

Guy, Earl of Warwick, Chairman & Joint Acting Managing Director (resigned effective 1 February 2013 as Chairman, resigned effective 4 March 2013 as Joint Acting Managing Director & Director)


Guy, Earl of Warwick, has over 20 years’ experience in mining, manufacturing and real estate. He is a founding shareholder and past Chairman of Windimurra Vanadium Limited. He is presently a principal of the Istana resort in Thailand and has exploration interests in Africa.


None


Windimurra Vanadium Limited

Michael Michael Non-Executive Director and Acting Company Secretary (Appointed 16 and 24 February 2012, resigned 16 January 2013 and 20 April 2012 respectively)


Mr Michael Michael has many years of experience in founding, developing and operating businesses in

executive and non-executive roles. He has served as chairman of both Metaliko Resources Limited; an ASX

listed Kalgoorlie focused gold explorer and Unison Holdings Limited; a design and construct contractor

specialized in mining infrastructure. He has also previously served as a Director of a London based property

developer Multiplex MBS Limited, and as a Director of Kinetiko Energy Limited; an ASX listed coal seam gas

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explorer operating in South Africa. He is currently chairman of Cirrena Labs, a bespoke software engineering

company and Ageus Limited, a venture capital firm.


None


Kinetiko Energy Limited

Metaliko Resources Limited

Interests in the Shares and Options of the Company and Related Bodies Corporate

As at the date of this report, the interests of the directors in the shares and options of Central Asia Resources Limited were:

Number of ordinary shares

(Direct)

Number of ordinary shares

(Indirect)

Number of preference

shares

Number of options

Alan Hopkins 1 - - - -

Robin Gill 15,800,000 2,857,143 - 2,500,000

Erulan Kanapyanov - 2,900,000 - 5,500,000

Philippe Reiser 800,000 128,843,525 - 2,500,000

Luke Martino 2 - - - -

1 Appointed 1 February 2013

2 Appointed 14 March 2013

Company Secretary

Harry Spindler Company Secretary (Appointed 9 April 2013)

Mr. Harry Spindler has over 10 years experience with major Corporate Recovery and Advisory Firms. Harry is a member of the Institute of Chartered Accountants in Australia (ICAA) and a member of the Financial Services Institute of Australia (FINSIA). In September 2008, Harry joined Indian Ocean Advisory Group who specialized in growth, corporate and taxation matters. During his career, Harry has worked on high profile restructuring engagements in mining and assists in advising a number of ASX listed mining companies.

Harry also acts as Company Secretary for Sino Gas & Energy Holdings Limited.

Zhanna Tazhibayeva Joint Company Secretary (Appointed 20 April 2012, resigned 20 December 2013)

Ms Zhanna Tazhibayeva has over 12 years of finance and investments experience, predominantly in the accounting profession.

Alan Thomas Joint Company Secretary (Appointed 20 April 2012, resigned 9 April 2013)

Mr Alan Thomas has over 27 years of finance and administration experience, predominantly in the accounting profession. He is a Principal at Crowe Horwath and is a Fellow of the Institute of Chartered Accountants.

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Principal Activities and Review of Operations

The principal activities during the year of entities within the Consolidated Entity were:

Review of previous Dalabai operations, completion of Limited Restart operations at Dalabai, planning for Full Mining Restart at Dalabai, and fund-raising for working capital. Refer to the Operations Report for further details.

Review and Results of operations

Sales revenue for the year was $1,750,377 (without VAT). Gross profit for the period was $363,757.

Consolidated net loss for the year was $10,350,242 (2012: $ 6,438,128). This was largely the result of maintenance and care of the site during 8 months. Limited restart was commenced in August and finished in mid December.

Executive Appointments during the Year

In September 2013, the Company announced the appointment of Mr Peter Thompson as Chief Executive Officer following his engagement as a consultant in April 2013. During a successful career of 26 years, Mr Thompson has gained extensive and relevant experience in both exploration and mining. Previously employed by BCD Resources NL as Chief Executive Officer, as well as St Barbara Limited as General Manager Exploration, Mr Thompson has also held senior exploration roles with Jubilee Mines NL, Anaconda Nickel Ltd and Western Mining Corporation. In addition to being responsible for the discovery of several nickel and gold deposits, he has extensive mining and corporate development experience.

Upon Peter’s commencement as CEO, Mr Robin Gill moved from his role as Managing Director to the role of Non-executive director.

The Company also announced in December 2013 the resignation of Ms Zhanna Tazhibayeva as Chief Financial Officer and in April 2014 the resignation of Ms Assyl Beketova and appointment of Mr Daulet Agaidarov as Chief Financial Officer.

Financial Position and Prospects

The net assets of the Consolidated Entity at balance date were $ 12,335,051 (2012: $17,839,920).

Capital Raising

During the financial year ended 31 December 2013, the Company raised a total of $750,000 through the issue of 75,000,000 shares upon the conversion of convertible notes issued to Millstar Holdings SA Panana and clients of BW Equities. As approved by Shareholders, the Company also issued 143,943,581 shares to Millstar in consideration for the conversion of $1.4 million of its $3M loan and 83,810,000 Options in consideration for its agreement to extend its loan in December 2012.

Significant Changes in the State of Affairs

Significant changes in the state of affairs of the Consolidated Entity during the financial year were as detailed above and in the Operations Report.

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

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Significant Events after the Balance Date

The following significant changes in the Group have occurred subsequent to balance date.

On 8 April 2014, the Company announced that it had reached an agreement with Manas Resources Ltd (MSR) to convert its debt of US$450,000 into equity with the issue of CVR shares at the next equity capital raising issue price, subject to regulatory approvals, if any, and successful completion of the debt financing with the Kazak bank. To compensate MSR for the extension of term for this loan, an additional 15% of shares will be issued to MSR (ie total shares to the increased total value of US$517,500).

On 22 April 2014, the Company announced that its subsidiary Zhetysugeomining LLP (“ZGM”) had executed a US$2.5 million debt facility with the Halyk Bank of Kazakhstan. This loan comprises Capex and Working Capital components, and is in two tranches, of US$1.1m and US$1.4m respectively (subsequently confirmed as US$0.93m and US$1.58m respectively). The interest rate on these loans is 13% for working capital and 14%, for capex, and the loans are secured against the Dalabai project assets, including the new capital items to be purchased with this finance. The loan has a term of 24 months and may be terminated early by the payment of all funds plus a 5% early termination fee. During the term of the loan, loaned funds and mine cashflow may be used only for Dalabai operational expenses, with the exception of $1.5m to be used for repayments of an existing Gold Loan and other non-Dalabai expenses. These restrictions may be relaxed following a review of the first four months of mine operations. The Tranche 2 loan is subject to the Company drawing down Tranche 1, providing notarized beneficial ownership details of 50% of the Company’s shareholdings (this is completed) and providing the pledged security of the Dalabai fixed assets and sub-soil licence to Halyk, transferring all Kazakh accounts to the Halyk Bank, the elimination of all ‘secondary legal issues’ relating to documentation of the secured assets, the confirmed appropriate use of Tranche 1 funds, and the provision of first quarter 2014 financial results for subsidiary companies ZGM and Palm ES.

Ms Assyl Beketova acted as Chief Financial Officer of the Company during January to April 2014. Ms Beketova was based in the Company’s Almaty office, Kazakhstan and had 16 years of experience in Kazakhstan and Canada including Financial Controller, Finance Director, Head of Finance Dept and Chief Accountant in various private organisations including Retail, Energy and Investment Fund sectors. She holds a bachelor degree in Applied Mathematics and an MBA. Ms Assyl Beketova resigned in April 2014.

Mr Daulet Agaidarov has been appointed Chief Financial Officer of the Company. Mr Agaidarov has 16 years experience in Mining, Exploration, Finance, Telecom and Retail sectors, and is a registered practicing accountant, holds an MBA, and has relevant experience with sub-soil licence negotiations in Kazakhstan. Previous employers include London-based Oriel Resources and Hydrogeology Ltd.

Likely Developments and Expected Results

The Company is in the process of seeking financing to allow a full restart of mining activity and required plant upgrades at its Dalabia gold operations in Kazakhstan. The company is evaluating a number of sources of financing including bank debt and equity raisings.

The Company aims to also continue to further evaluate and assess its gold exploration projects (Altyntas/Kepken) subject to project licence renewals and securing sufficient financing to undertake the same.

It is not possible to estimate the future results at this stage.

Environmental Regulation and Performance

The Consolidated Entity through its subsidiaries in Kazakhstan is subject to environmental regulations applicable to license areas in that country. There have not been any known significant breaches of any environmental regulations during the year under review and up until the date of this report.

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Meetings of Directors

The numbers of meetings Directors were eligible to attend during the period and the number of meetings attended by each Director was as follows:

Eligible Directors’ Meetings

Directors’ Meetings Attended

A Hopkins 7 6

R Gill 7 6

P Reiser 7 5

L Martino 6 5

E Kanapyanov 7 7

G Warwick 1 1

M Michael - -

Remuneration Report (Audited)

This remuneration report outlines the director and executive remuneration arrangements of the Company and the Consolidated Entity in accordance with the requirements of the Corporations Act 2001 and its Regulations. For the purposes of this report, Key Management Personnel (“KMP”) of the Consolidated Entity are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company and the Consolidated Entity, directly or indirectly, including any director (whether executive or otherwise) of the Parent company.

For the purposes of this report, the term ‘executive’ encompasses the CEO, CFO and secretaries of the Parent and the Consolidated Entity.

Other than the appointment of Mr Daulet Agaidarov (April 2014) and Ms Assyl Beketova (Jan to April 2014) as CFO’s there were no other changes to KMP after reporting date and before the date the financial report was authorized for issue.

Remuneration Philosophy

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

To this end, the Company embodies the following principles in its remuneration framework, to the extent applicable at this stage of the Company’s development:

provide competitive rewards to attract high calibre executives; and

link executive rewards to shareholder value.

The remuneration of non-executive directors is not directly linked to Company performance whereas executive remuneration may be directly linked to the Company’s performance. During 2013, bonuses and Performance Rights agreed to be issued to KMP’s are linked to performance to align management’s interests to shareholder wealth. Details of KMP are set out below.

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Non-Executive Directors Executive Directors Executives

Alan Hopkins – Chairman / Non-Executive Director (appointed 1 February 2013)

Erulan Kanapyanov

Philippe Reiser

Robin Gill (Appointed 6 February 2012 as Managing Director, transitioned to Non-executive Director on 1 September 2013)

Luke Martino - Alternate Director (appointed 1 March 2013)

Michael Michael (appointed 16 February 2012 as Non-Executive Director and Acting Company Secretary on 24 February 2012, resigned on 16 January 2013 and 20 April 2012, respectively)

Guy, Earl of Warwick – Acting Joint Managing Director (appointed on 06 February 2012 as Chairman and Acting Joint Managing Director, resigned 1 February 2013 as Chairman, resigned 4 March 2013 as Acting Joint Managing Director)

Peter Thompson – Chief Executive Officer (appointed 1 September 2013, was a consultant from April 2013)

Duncan Greenaway – Chief Operating Officer (appointed 29 June 2011 as Exploration Manager and promoted 31 January 2012. Resigned 31 May 2013)

Zhanna Tazhibayeva – Chief Financial Officer and Joint Company Secretary (appointed 14 February and 20 April 2012 respectively. Resigned 20 December 2013.)

Performance of the Consolidated Entity

The performance of the Consolidated Entity is as follows:

Year Ended 31 Dec 2013





$ $ $ $ $

Loss before tax (10,350,242) (6,438,128) (3,824,745) (2,153,479) (7,249,103)

Basic loss per share (cents)

(1.10) (0.84) (0.71) (0.92) (4.12)

Diluted loss per share (cents)

(1.10) (0.84) (0.71) (0.92) (4.12)

Share Price 0.018# 0.018 0.03 0.03 0.05

# Last available share price - closing price at date of suspension

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Remuneration Structure

In accordance with best practice corporate governance, the structure of executive and non-executive director remuneration is separate and distinct.

Executive Remuneration

The Company aims to reward executives with a level and mix of remuneration commensurate with their position and responsibilities within the Consolidated Entity so as to:

align the interests of executives with those of shareholders; and

ensure total remuneration is competitive by market standards.

In determining the level and make-up of executive remuneration, the Board may engage external consultants as needed to provide independent advice.

Remuneration may consist of the following key elements:

Fixed remuneration (base salary, superannuation and non-monetary benefits);

Variable remuneration:

o Short Term Incentive (“STI”); and

o Long Term Incentive (“LTI”).

Fixed Remuneration

Fixed remuneration is reviewed annually.

Executives are given the opportunity to receive their fixed (primary) remuneration in a variety of forms including cash and fringe benefits such as motor vehicles. It is intended that the manner of payment chosen will be optimal for the recipient without creating undue cost for the Consolidated Entity.

Variable Remuneration

Cash bonuses are designed to reward key management personnel for meeting or exceeding their operational objectives and are paid at the discretion of the Board.

The objective of a LTI plan is to reward executives in a manner that aligns remuneration with the creation of shareholder wealth. As such, LTI grants are only made to executives who are able to influence the generation of shareholder wealth and thus have an impact on the Consolidated Entity’s performance against the relevant long term performance hurdle.

The existing remuneration structure is presently linked to the Consolidated Entity’s performance (other than share price) and other operational objectives/targets.

In 2013, LTIs were being granted to executives in the form of cash bonuses and performance rights subject to implementing an appropriate performance rights plan. Further details of the granting of performance rights can be found in note 23 Share-based payment plans. The Company is currently reviewing the implementation of equity performance plans with the aim implementing an appropriate plan in the future consistent with the remuneration philosophy.

Non-Executive Director Remuneration

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

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The Constitution and the ASX Listing Rules specify that the aggregate remuneration of non-executive directors shall be determined from time to time by a general meeting. The latest determination was at the Annual General Meeting held on 22 November 2007 which approved a maximum aggregate remuneration of $200,000 per year.

The amount of aggregate remuneration sought to be approved by shareholders and the fee structure is reviewed annually. The Board may consider advice from external consultants as well as the fees paid to non-executive directors of comparable companies when undertaking the annual review process.

No share based compensation was granted to non-executive Directors in the year ended 31 December 2013.

The non-executive directors do not receive retirement benefits other than statutory superannuation payments.

Hedging of Equity Awards

The Company prohibits executives from entering into arrangements to protect the value of unvested LTI awards. The prohibition includes entering into contracts to hedge their exposure to options awarded as part of their remuneration package.

Employment Contracts

The key terms of employment contracts or agreements with KMP are:

Mr Robin Gill, Non-executive Director (previously Managing Director until 1 September 2013), prior to his transition to a Non-executive Director, Mr Gill had entered into an employment contract on 6 February 2012 for 12 months, with the option to extend the contract for a further 12 months. The contract is capable of termination with one month notice by either party. All expenses properly incurred during the course of business will be reimbursed. Mr Gill received $200,000 p.a. as managing director’s fees, which was reduced to $40,000 p.a. following his transition to non-executive director.

Mr Peter Thompson was appointed Chief Executive Office on 1 September 2013. Mr Thompson is employed under a rolling contract. A summary of the key terms of the present contract is:

(a) Receives fixed remuneration of $300,000 per annum, reviewed annually;

(b) The Executive may be entitled to performance pay, to be determined annually, on a discretionary basis, by the Board. If the Executive ceases employment for any reason during a financial year, he will not be entitled to any performance payment for that financial year. In the case of the first full financial year from the Commencement Date (ie 12 months ending 31 December 2014), the maximum amount of the performance pay which may be paid to the Executive is $200,000.

In determining the amount (if any) of performance pay which is to be paid to the Executive, the Board will have regard to the extent to which Key Performance Indicators (KPIs) agreed with the Executive have been satisfied during the previous financial year (12 months). If no KPIs have been agreed with the Executive, the Board will have regard to the Executive’s overall performance.

With respect to the first full financial year from the Commencement Date (ie for the period ending 31 December 2014), the agreed KPIs include operational performance hurdles such as safety (5%) and C1 cash costs (35%), financial performance hurdles such as net profit (15%), securing financing (35%) and strengthening of the balance sheet through repayment of liabilities (10%).

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(c) The company shall, subject to the shareholder approval of an appropriate Performance Rights Plan (if required) approved by the Board, issue LTI’s in the form of 30 million performance rights, with such rights to vest over 3 years in equal proportions, subject to meeting the specified KPI. Performance rights will be convertible to fully paid ordinary shares of the Company, on a one-for-one basis, immediately on vesting, at no cost upon achieving a Total Shareholder Return (TSR) performance relative to the 75th percentile performance of the Comparator group (S&P/ASX All Ords Gold sub-industry index) for each full financial year after his commencement. The Volume Weighted Average Price (VWAP) of the Company Shares in the one-month preceding the Performance Date (ie the respective December month) compared to VWAP of the Company in the one-month preceding one year before the Performance Date (ie the respective January month), will be used in calculating TSR over the intervening period. The TSR incorporates capital returns as well as dividends notionally reinvested and is considered the most appropriate means of measuring Company performance.

Volume Weighted Average Price (VWAP) is proposed as the LTI performance measure because it is an objective measure and ensures an alignment between comparative shareholder return and reward for the CEO.

(d) In the event that employment is terminated by the Company without cause, Mr Thompson is entitled to a payment of 3 months salary (notice). The CEO may terminate the contract by giving not less than three months’ notice. Any performance rights not already vested in accordance with their terms and conditions will lapse should Mr Thompson’s employment cease during a performance period.

The Chairman’s remuneration is $60,000 per year. Each other non-executive director is paid $40,000 per year.

Mr Duncan Greenaway, previously Chief Operation Officer, entered into an employment contract on 29 June 2011 which came to an end on 31 May 2013. The contract provided for all expenses properly incurred during the course of business to be reimbursed.

Ms Zhanna Tazhibayeva, Chief Financial Officer and Joint Company Secretary, entered into an employment contract on 14 February 2012 which came to an end on 20 December 2013. The contract provided for all expenses properly incurred during the course of business to be reimbursed.

Mr Guy, Earl of Warwick, Joint Acting Managing Director entered into an employment contract on 6 February 2012 for 12 months, with the option to extend the contract for a further 12 months. The contract was capable of termination with one month notice by either party. All expenses properly incurred during the course of business were reimbursed. Mr Warwick resigned from the Consolidated Entity on 4 March 2013.

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Remuneration of key management personnel and highest paid executives of the Company and The Consolidated Entity for the year ended 31 December 2013

Short-term Short-term Post-Employment

Post-Employment

Share Based Payment

Share Based Payment

Total Performance Related

Percentage Comprising

Share based payments

Amount outstanding as at

31 December 2013

Base Fee Other 12

Superannuation Employment Termination

Payments

Ordinary Shares

Options/Perf-ormance

Rights

$ $ $ $ $ $ $ $ % $

Director

A Hopkins 1 55,000 - - - - - 55,000 - - 45,455

R Gill 120,008 - - - - - 120,008 - - 100,007

P Reiser 40,000 - - - - - 40,000 - - 36,667

E Kanapyanov 40,000 54,680 - - - - 94,680 - - 91,347

G Earl of Warwick 2 21,668 - - - - - 21,668 - - -

M Michael 3 1,921 -

- - - - 1,921 - - -

L Martino 4 - 20,000 - - - - 20,000 - - 20,000

Key Management Personnel

P Thompson 5 94,075 649 5,925 49,058 149,707 49,058 33% 88,074

D Greenaway 6 81,333 - 23,125 - - - 104,458 - - 50,725

Z Tazhibayeva 7 96,591 - - - - - 96,591 - - -

Total 550,596 75,329 29,050 - - 49,058 704,033 49,058 33% 432,275

See following page for notes

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Remuneration of key management personnel and highest paid executives of the Company and The Consolidated Entity for the year ended 31 December 2012

Short-term Short-term Post-Employment

Post-Employment

Share Based Payment

Share Based Payment

Total Performance Related

Percentage Comprising

Share based payments

Base Fee Other 12

Superannuation Employment Termination

Payment

Ordinary Shares Options

$ $ $ $ $ $ $ $ %

Director

R Gill 8 186,679 - - - 375,000 - 561,679 375,000 66.8%

P Reiser 33,334 - - - - - 33,334 - -

E Kanapyanov 48,667 - - - - - 48,667 - -

G Earl of Warwick 2 123,341 - - - - - 123,341 - -

M Michael 3 37,000 26,085

- - - - 63,085 - -

A Pankhurst 9 29,929 - 1,706 18,960 - (521) 50,074 - -


D Greenaway 6 188,833 - 40,975 - - - 229,808 - -

Z Tazhibayeva 7 76,844 - - - - - 76,844 - -

M Kong 10

35,064 25,000 2,700 45,000 - - 107,764 - -

C Campbell-Hicks 11

14,334 - 1,290 - - - 15,624 - -

Total 774,025 51,085 46,671 63,960 375,000 (521) 1,310,220 375,000 28.6%

See following page for notes

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Notes for previous pages

1 Appointed on 1 February 2013

2 Resigned 4 March 2013

3 Resigned 15 January 2013

4 Appointed 1 March 2013

5 Appointed CEO on 1 September 2013, engaged as a consultant in April 2013

6 Resigned 31 May 2013

7 Appointed 14 February 2012, resigned 20 December 2013

8 Issue of 15,000,000 shares was approved by the AGM on 31 May 2012

9 Appointed 1 February 2011, resigned 3 February 2012

10 Resigned 15 February 2012, remained on contract until 30 March 2012

11 Appointed 17 January 2011, resigned 31 January 2012

12 Other short term benefits does not include amount of insurance contract premiums paid of $10,200 for insurance of

directors and officers as this cannot be allocated on an individual basis and covers all directors and officers appointed during the year

Terms and Conditions for options

No options were granted / vested /exercised during the year.

400,000 options expired during the year.

There were no changes to the terms and conditions of options previously granted. Refer to note 23.

Performance Rights

As at 31 December 2013 or since, the Company has not implemented a performance rights plan nor issued any Performance Rights.

Once implemented, the rights to be granted under this plan will be depended on the Company’s performance. Each Performance Right will be a personal contractual right. A Performance Right will provide the opportunity to receive fully paid ordinary shares for nil cost, contingent on achieving a performance hurdle over a specified performance period.

A Performance Right may be exercised if it has not otherwise lapsed in accordance with the Executive, Officer and Employee Performance Rights Plan on the satisfaction of prescribed performance criteria within the performance period.

Although not yet issued, pursuant to the International Financial Reporting Standards (IFRS), as the Company has agreed to issue Mr Peter Thompson with 30 million performance rights subject to shareholder approval of an appropriate Performance Rights Plan (if required) approved by the Board, the accounting treatment grant date is treated to be 1 September 2013. Please refer to details of Mr Thompson’s key contract terms (pg 21) for details regarding the performance conditions of the proposed performance rights.

There have been no shares issued during or since the end of the financial year as a result of exercise of any performance rights,

END OF AUDITED REMUNERATION REPORT

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Insurance of Officers

The Company has entered into deeds of access and indemnity with each Director. These deeds provide access to documentation and indemnification against liability for loss suffered, as a result of any act or omission, to the extent permitted by the Corporations Act 2001, from conduct of the Company’s business.

The Company has paid premiums for cover until 31 March 2014. The cover insures all the Directors of the Company against costs incurred in defending proceedings except for conduct involving:

a wilful breach of duty; or

a contravention of sections 182 or 183 of the Corporations Act 2001, as permitted by section 199B of the Corporations Act 2001.

The total amount of insurance contract premiums paid was $10,200. This amount has not been included in Directors’ and Executives’ remuneration.

Dividends

No dividends were paid during the year and no recommendation is made as to the payment of dividends.

Non-Audit Services

No non-audit services were provided by the Consolidated Entity's auditor, Ernst & Young.

Lead-Auditor’s Independence Declaration

The lead auditor’s independence declaration is set out on page 28 and forms part of the Directors’ Report for the financial year ended 31 December 2013.

Earnings Per Share

The basic loss per share for the Consolidated Entity is as follows:

Year Ended

31 Dec 2013 Year Ended

31 Dec 2012

$ $

Basic loss per share (cents) (1.10) (0.84)

Diluted loss per share (cents) (1.10) (0.84)

Share Price 0.018# 0.018

# Last available share price - closing price at date of suspension (14 December 2012)

Share Options

As at 31 December 2013, unissued shares of the Company under options are:

Exercise price ¢

Expiry date Number of options

3.5 19-May-14 108,413,763

Balance 108,413,763

Option holders do not have any right, by virtue of the option, to participate in any share issue of the Company.

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Employees

The Consolidated Entity had 37 employees as at 31 December 2013 (2012: 46).

Signed in accordance with a resolution of the Directors.

Alan Hopkins

Non-executive Chairman Perth, 28 May 2014

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A member firm of Ernst & Young Global LimitedLiability limited by a scheme approved under Professional Standards Legislation

RK:AF:CAR:027

Ernst & Young11 Mounts Bay RoadPerth WA 6000 AustraliaGPO Box M939 Perth WA 6843

Tel: +61 8 9429 2222Fax: +61 8 9429 2436ey.com/au

Auditor’s Independence Declaration to the Directors of Central AsiaResources LimitedIn relation to our audit of the financial report of Central Asia Resources Limited for the financial yearended 31 December 2013, to the best of my knowledge and belief, there have been no contraventions ofthe auditor independence requirements of the Corporations Act 2001 or any applicable code ofprofessional conduct.

Ernst & Young

Robert KirkbyPartnerPerth28 May 2014

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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

29

For The Year Ended 31 December 2013

Consolidated

31 Dec 2013 31 Dec 2012

Notes $ $

Revenues from sales 1,750,377 4,041,367

Cost of goods sold (1,386,620) (3,789,517)

Gross profit 363,757 251,850

Other Income

Interest revenue 1,091 5,999

Other income 9 250,754 574

251,845 6,573

Loss on disposal of assets (39,625) (8,218)

Foreign exchange loss (365,590) (231,400)

Finance costs (359,545) (433,757)

General administration (3,269,922) (4,754,538)

Performance Rights Expense 23 (49,058) -

Other expenses 25 (6,882,104) (277,462)

Loss on disposal of investments 19 - (991,176)

Loss before Income Tax (10,350,242) (6,438,128)

Income Tax Expense 7 - -

Net Loss for the Year (10,350,242) (6,438,128)

Other Comprehensive Loss for the Year

Items that may be reclassified subsequently to profit or loss - -

Net foreign currency translation 2,906,764 (1,020,419)

Total Comprehensive Loss for the Year (7,443,478) (7,458,547)

Net Loss Attributable to:

Non-controlling interest 14 (524,130) (267,143)

Members of the Parent (9,826,112) (6,170,985)

(10,350,242) (6,438,128)

Comprehensive Net Loss Attributable To:

Non-controlling interest 14 (654,842) (204,025)

Members of the Parent (6,788,636) (7,254,522)

(7,443,478) (7,458,547)

Basic and diluted loss per share for the period attributable to ordinary equity holders (cents per share)

15 (1.10) (0.84)

The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

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As At 31 December 2013

Consolidated

31 Dec 2013 31 Dec 2012

Notes $ $

Current Assets

Cash and cash equivalents 3 270,475 294,077

Trade and other receivables 4 887,593 867,483

Inventories 5 263,138 1,493,435

Total Current Assets 1,421,206 2,654,995

Non-Current Assets

Exploration and evaluation expenditure 6 8,082,607 7,132,187

Property, plant and equipment and mine properties 8 8,358,392 13,203,576

Financial assets 9 278,107 54,246

Total Non-Current Assets 16,719,106 20,390,009

Total Assets 18,140,312 23,045,004

Current Liabilities

Trade and other payables 10 1,947,608 1,845,879

Provisions 11 277,456 207,184

Borrowings 12 2,324,426 422,918

Total Current Liabilities 4,549,490 2,475,981

Non-Current Liabilities

Provisions 11 653,802 483,507

Borrowings 12 601,969 2,245,596

Total Non-Current Liabilities 1,255,771 2,729,103

Total Liabilities 5,805,261 5,205,084

Net Assets 12,335,051 17,839,920

Equity

Contributed equity 13(a) 45,014,070 43,124,519

Reserves 13(b) (648,256) (3,734,790)

Accumulated losses (31,197,640) (21,371,528)

Parent interest 13,168,174 18,018,201

Non-Controlling Interest 14 (833,123) (178,281)

Total Equity 12,335,051 17,839,920

The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

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Consolidated Statement of Changes in Equity For The Year Ended 31 December 2013

Consolidated Issued Capital Foreign

Currency Reserve

Option Reserve Equity

Reserve Accumulated

Losses Non-Controlling

Interest Total Equity

$ $ $ $ $ $ $

At 1 January 2013 43,124,519 (5,433,590) 2, 675,128 (976,328) (21,371,528) (178,281) 17,839,920

Net loss for the period - - - - (9,826,112) (524,130) (10,350,242)

Other comprehensive income - 3,037,476 - - - (130,712) 2,906,764

Total comprehensive income/(loss), net of tax

- 3,037,476 - - (9,826,112) (654,842) (7,443,478)

Transactions with owners in their capacity as owners:

Disposal of subsidiaries - - - - - - -

Performance Rights Expense - - 49,058 - - - 49,058

Share issued 1,909,551 - - - - - 1,909,551

Share issue costs (20,000) - - - - - (20,000)

At 31 December 2013 45,014,070 (2,396,114) 2,724,186 (976,328) (31,197,640) (833,123) 12,335,051

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Consolidated Issued Capital Foreign

Currency Reserve

Option Reserve Equity Reserve Accumulated

Losses Non-Controlling

Interest Total Equity

$ $ $ $ $ $ $

At 1 January 2012 40,940,819 (4,350,053) 1,921,245 (976,328) (15,200,543) 52,821 22,387,961

Net loss for the period - - - - (6,170,985) (267,143) (6,438,128)

Other comprehensive income - (1,083,537) - - - 63,118 (1,020,419)

Total comprehensive income/(loss), net of tax

- (1,083,537) - - (6,170,985) (204,025) (7,458,547)

Transactions with owners in their capacity as owners:

Disposal of subsidiaries - - - - - (27,077) (27,077)

Share based payments - - 753,883 - - - 753,883

Shares issued 2,248,424 - - - - - 2,248,424

Share issue costs (64,724) - - - - - (64,724)

At 31 December 2012 43,124,519 (5,433,590) 2,675,128 (976,328) (21,371,528) (178,281) 17,839,920

The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes

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CONSOLIDATED STATEMENT OF CASH FLOWS

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Consolidated Statement of Cash flows


Consolidated

31 Dec 2013 31 Dec 2012

Notes $ $

Cash Flows Used In Operating Activities

Receipts 1,933,519 4,526,331

Payment to suppliers and employees (3,237,537) (5,754,080)

Interest received - 5,999

Net Cash Flows Used In Operating Activities 26 (1,304,018) (1,221,750)

Cash Flows Used In Investing Activities

Exploration & evaluation (430,520) (552,561)

Purchase of plant and equipment & mine properties (90,000) (1,230,478)

Proceeds from sale of property, plant and equipment 51,941 81,117

Net Cash Flows Used In Investing Activities (468,579) (1,701,922)

Cash Flows From Financing Activities

Equipment lease payments - (6,441)

Proceeds from borrowings 1,786,712 343,345

Repayment of borrowings (67,360) -

Proceeds from issue of securities - 1,848,424

Share issue costs (20,000) (64,724)

Net Cash Flows From Financing Activities 1,699,352 2,120,604

Net Decrease in Cash and Cash Equivalents (73,245) (803,068)

Net foreign exchange difference on cash and cash equivalents

49,643 (10,714)

Cash and cash equivalents at the beginning of the period 294,077 1,107,859

Cash and Cash Equivalents at End of Period 3 270,475 294,077

The above Consolidated Statement of Cash flows should be read in conjunction with the accompanying notes.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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Notes to the consolidated financial statements

1. Corporate Information

Central Asia Resources Limited is a listed public company limited by shares and registered and domiciled in Australia. The address of the registered office is 311-313 Hay Street, Subiaco 6008, Western Australia. The financial report of Central Asia Resources Limited (the “Company”) and its subsidiaries (together the “Consolidated Entity” or the “Group”) for the year ended 31 December 2013 was authorised for issue in accordance with a resolution of the directors on 28 May 2014. Central Asia Resources Limited is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange and is a for-profit entity.

The nature of the operations and principal activities of the Consolidated Entity are described in the Directors' Report.

2. Summary of Significant Accounting Policies

Table of contents

(a) Basis of preparation

(b) Going concern

(c) Compliance with IFRS

(d) Significant accounting judgements, estimates and assumptions

(e) Changes in accounting policies and disclosures

(f) New Accounting Standards and Interpretations

(g) Basis of consolidation

(h) Business combinations

(i) Operating segments

(j) Foreign currency translation

(k) Cash and cash equivalents

(l) Trade and other receivables

(m) Inventories

(n) Investments and other financial assets

(o) Property, plant and equipment & mine properties

(p) Intangible assets

(q) Exploration & evaluation expenditure

(r) Leases

(s) Impairment of non-financial assets other than goodwill and indefinite life intangibles

(t) Trade and other payables

(u) Borrowings

(v) Provisions and employee benefits

(w) Share-based payment transactions

(x) Contributed equity

(y) Revenue recognition

(z) Income tax and other taxes

(aa) Earnings per share

(bb) Stripping costs during production phase

(cc) Comparatives

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(a) Basis of preparation

The financial report is a general purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board. The financial report has also been prepared on a historical cost basis, except for embedded derivative which has been measured at fair value.

The financial report is presented in Australian dollars and all values are rounded to the nearest dollar unless otherwise stated.

(b) Going concern

The 31 December 2013 financial report has been prepared on the going concern basis that contemplates the continuity of normal business activities and coping with liabilities in the ordinary course of business.

The Consolidated Entity held cash on hand and on deposit as at 31 December 2013 of $270,475. The Consolidated Entity incurred a loss of $10,350,242. At 31 December 2013, the Consolidated Entity had a net current liability position of $3,128,284 .

The directors believe that the Group will be able to continue as a going concern as:

(i) Subsequent to the year end, as announced on 22 April 2014, the Company announced that its subsidiary Zhetysugeomining LLP (“ZGM”) had executed a US$2.5 million debt facility with the Halyk Bank of Kazakhstan. This loan comprises Capex and Working Capital components, and is in two tranches, of US$1.1m and US$1.4m respectively (subsequently confirmed as US$0.93m and US$1.58m respectively). The interest rate on these loans is 13% for working capital and 14% for capex, and the loans are secured against the Dalabai project assets including the new capital items to be purchased with this finance. The loan has a term of 24 months and may be terminated early by the payment of all funds plus a 5% early termination fee.

During the term of the loan, loaned funds and mine cashflow may be used only for Dalabai operational expenses, with the exception of $1.5m to be used for repayments of an existing Gold Loan and other non-Dalabai expenses. These restrictions may be relaxed following a review of the first four months of mine operations. The Tranche 2 loan is subject to the Company drawing down Tranche 1, providing notarized beneficial ownership details of 50% of the Company’s shareholdings (this is completed) and providing the pledged security of the Dalabai fixed assets and sub-soil licence to Halyk, transferring all Kazakh accounts to the Halyk Bank, the elimination of all ‘secondary legal issues’ relating to documentation of the secured assets, the confirmed appropriate use of Tranche 1 funds, and the provision of first quarter 2014 financial results for subsidiary companies ZGM and Palm ES.

These funds together with the proposed equity raising should provide capital and working capital funds for a full restart of mining and processing operations at Dalabai, including the installation of a Resin Desorbtion system and the construction of a third Leach Pad.

(ii) The directors of the Group are currently reviewing debt & capital raising options and are confident, based on discussions with prospective lenders and investors to date, that the Group will be able to raise sufficient capital to meet its capital requirements.

(iii) During March 2014, Manas Resources Limited (MSR) confirmed their willingness to convert their debt of US$450,000 into equity at a share price equal to that of the Company’s next share issue.

(iv) In February 2014 the value of the Tenge, the local currency in Kazakstan was rerated by the Kazakhstan Central Bank, from 155 to 183 tenge per US$1. Further devaluation of the Tenge has been flagged as likely for 2014. The Company receives all gold and silver revenues in USD and this Tenge devaluation will result in lower operating costs in Kazakhstan.

While the Group expects existing cash resources, future proceeds from sales and the upcoming capital raising to be sufficient to meet its obligations for the next 12 months and therefore has prepared the financial report on the basis that the Group will continue to meet its commitments and can continue normal business activities and realise assets and settle liabilities in the ordinary course of business, there exists uncertainty as to the actual commencement and completion of mining and processing at the Dalabai site.

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Should the Group be unable to successfully achieve the matters set out above, there is uncertainty as to whether the Group will be able to meet its debts as and when they fall due, and thus continue as a going concern.

The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets amounts, nor any amount or classification of liabilities that might be necessary should the Group not be able to continue as a going concern.

(c) Compliance with IFRS

The financial report complies with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board.

(d) Significant accounting judgements, estimates and assumptions

The preparation of the Consolidated Entity’s consolidated financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities and contingent liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. However, actual outcomes can differ from these estimates.

In particular, information about significant areas of estimation uncertainty considered by management in preparing the consolidated financial statements is described below.

Mine rehabilitation (Note 11)

The Consolidated Entity assesses its mine rehabilitation provisions annually. Significant estimates and assumptions are made in determining the provision for mine rehabilitation as there are numerous factors that will affect the ultimate liability payable. These factors include estimates of the extent and costs of rehabilitation activities, timing of these activities, technological changes, regulatory changes, cost increases as compared to the inflation rates and discount rates. These uncertainties may result in future actual expenditure differing from the amounts currently provided. The provision at reporting date represents management’s best estimate of the present value of the future rehabilitation costs required. Changes to estimated future costs are recognised in the statement of financial position by either increasing or decreasing the rehabilitation liability and related asset if the initial estimate was originally recognised as part of an asset. Any reduction in the rehabilitation liability and therefore any deduction from the related asset may not exceed the carrying amount of that asset. If it does, any excess over the carrying value is taken immediately to profit or loss.

If the change in estimate results in an increase in the rehabilitation liability and therefore an addition to the carrying value of the asset, the entity is required to consider whether this is an indication of impairment of the asset as a whole and test for impairment.

Ore reserve and resource estimates

Ore reserves are estimates of the amount of ore that can be economically and legally extracted from the Consolidated Entity’s mining properties. The Consolidated Entity estimates its ore reserves and mineral resources based on information compiled by appropriately qualified persons relating to the geological data on the size, depth and shape of the ore body, and requires complex geological judgments to interpret the data. The estimation of recoverable reserves is based upon factors such as estimates of foreign exchange rates, commodity prices, future capital requirements, and production costs along with geological assumptions and judgments made in estimating the size and grade of the ore body. Changes in the reserve or resource estimates may impact upon the carrying value of exploration and evaluation assets, mine properties, property, plant and equipment, provision for rehabilitation, recognition of deferred tax assets, and depreciation and amortisation charges.

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Exploration and evaluation expenditure (Note 6)

The application of the Consolidated Entity’s accounting policy for exploration and evaluation expenditure requires judgement in determining whether it is likely that future economic benefits are likely either from future exploitation or sale. The determination of a Joint Ore Reserves Committee (JORC) resource is itself an estimation process that requires varying degrees of uncertainty depending on sub-classification and these estimates directly impact the point of deferral of exploration and evaluation expenditure. The deferral policy requires management to make certain estimates and assumptions about future events or circumstances, in particular whether an economically viable extraction operation can be established. Estimates and assumptions made may change if new information becomes available. If, after expenditure is capitalised, information becomes available suggesting that the recovery of expenditure is unlikely, the amount capitalised is written off in the profit or loss in the period when the new information becomes available.

Impairment of assets

The Consolidated Entity assesses each cash-generating unit annually to determine whether any indication of impairment exists. Where an indicator of impairment exists, a formal estimate of the recoverable amount is made, which is considered to be the higher of the fair value less costs to sell and value in use. These assessments require the use of estimates and assumptions such as long-term commodity prices, discount rates, future capital requirements, exploration potential and operating performance. Fair value is determined as the amount that would be obtained from the sale of the asset in an arm’s length transaction between knowledgeable and willing parties. Fair value for mineral assets is generally determined as the present value of estimated future cash flows arising from the continued use of the asset, which includes estimates such as the cost of future expansion plans and eventual disposal, using assumptions that an independent market participant may take into account. Cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Management has assessed its cash generating units as being an individual mine site, which is the lowest level for which cash inflows are largely independent of those of other assets. The recoverable amount is sensitive to the discount rates used for the discounted cashflow model as well as the expected future cash inflows and the growth rate used for extrapolation purposes. The key assumptions used to determine the recoverable amount for the different cash generating units, including the sensitivity analysis, are disclosed and further explained in note 8(c).

Contingent liabilities (Note 21)

By their nature, contingencies will only be resolved when one or more uncertain future events occur or fail to occur. The assessment of contingencies inherently involves the exercise of significant judgment and estimates of the outcome of future events.

Recovery of deferred tax assets (Note 7)

Judgment is required in determining whether deferred tax assets are recognised on the statement of financial position. Deferred tax assets, including those arising from unutilised tax losses, require management to assess the likelihood that the Consolidated Entity will generate taxable earnings in future periods, in order to utilise recognised deferred tax assets. Estimates of future taxable income are based on forecast cash flows from operations and the application of existing tax laws in each jurisdiction. To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the Consolidated Entity to realise the net deferred tax assets recorded at the reporting date could be impacted.

Additionally, future changes in tax laws in the jurisdictions in which the Consolidated Entity operates could limit the ability of the Consolidated Entity to obtain tax deductions in future periods.

(e) Changes in accounting policy and disclosures

The accounting policies adopted are consistent with those of the previous financial year except as follows:

The Consolidated Entity has adopted the following new and amended Australian Accounting Standards and AASB Interpretations effective as of 1 January 2013. The adoption of the standards or interpretations is described below:

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AASB 10 Consolidated Financial Statements

AASB 10 establishes a new control model that applies to all entities. It replaces parts of AASB 127 Consolidated and Separate Financial Statements dealing with the accounting for consolidated financial statements and UIG-112 Consolidation – Special Purpose Entities.

The new control model broadens the situations when an entity is considered to be controlled by another entity and includes new guidance for applying the model to specific situations, including when acting as a manager may give you control, the impact of potential voting rights and when holding less than a majority voting rights may give control. The adoption of AASB 10 had no effect on the financial position or performance of the Group as identified controls were represented by voting rights.

AASB 11 Joint Arrangements

AASB 11 replaces AASB 131 Interests in Joint Ventures and UIG-113 Jointly Controlled Entities – Non-monetary Contributions by Venturers. AASB 11 uses the principle of control in AASB 10 to define joint control, and therefore the determination of whether joint control exists may change. In addition it removed the option to account for jointly controlled entities using proportionate consolidation. Instead, accounting for a joint arrangement is dependent on the nature of the rights and obligations arising from the arrangement. Joint operations that give the venturers a right to the underlying assets and obligations themselves is accounted for by recognising the share of those assets and obligations. Joint ventures that give the venturers a right to the net assets is accounted for using the equity method. The adoption of AASB 11 had no effect on the financial position or performance of the Group as there were no joint arrangements or operations that existed during the year under audit. Consequential amendments were also made to other standards via AASB 2011-7 and amendments to AASB 128.

AASB 12 Disclosures of Interest in Other Entities

AASB 12 includes all disclosures relating to an entity’s interests in subsidiaries, joint arrangements, associates and structured entities. New disclosures have been introduced regarding the judgments made by management to determine whether control exists, and to require summarised information about joint arrangements, associates and structured entities and subsidiaries with non-controlling interests. Refer to note 16(b) for the required disclosures made.

AASB 13 Fair Value Measurement

AASB 13 establishes a single source of guidance for determining the fair value of assets and liabilities. AASB 13 does not change when an entity is required to use fair value, but rather, provides guidance on how to determine fair value when fair value is required or permitted. Application of this definition may result in different fair values being determined for the relevant assets. AASB 13 also expands the disclosure requirements for all assets or liabilities carried at fair value. This includes information about the assumptions made and the qualitative impact of those assumptions on the fair value determined. The adoption of AASB 13 had no effect on the financial position or performance of the Group. Consequential amendments were also made to other standards via AASB 2011-8 which has resulted in additional disclosures around the fair values of financial instruments. Refer to note 22 for additional disclosures made.

AASB 19 Employee Benefits (Revised 2011)

The revised standard changes the definition of short-term employee benefits. The distinction between short-term and other long-term employee benefits is now based on whether the benefits are expected to be settled wholly within 12 months after the reporting date. The adoption of AASB 119 had no effect on the financial position or performance of the Group. Consequential amendments were also made to other standards via AASB 2011-10.

AASB 2012-2 Amendment to Australian Accounting Standards – Disclosures – Offsetting Financial Assets and Financial Liabilities

AASB 2012-2 principally amends AASB 7 Financial Instruments: Disclosures to require disclosure of the effect or potential effect of netting arrangements, including rights of set-off associated with the entity's recognised financial assets and recognised financial liabilities, on the entity's financial position, when all the offsetting criteria of AASB 132 are not met. The adoption of AASB 2012-2 had no effect on the financial position or performance of the Group.

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Improvements to AASBs 2009-2011 Cycle

AASB 2012-5 makes amendments resulting from the 2009-2011 Annual Improvements Cycle. The standard addresses a range of improvements, including the following:

- Repeat application of AASB 1 is permitted (AASB 1)

- Clarification of the comparative information requirements when an entity provides a third balance sheet (AASB 101 Presentation of Financial Statements). The adoption of AASB 2012-5 had no effect on the financial position or performance of the Group.

AASB 2012-9 Amendment to AASB 1048 arising from the withdrawal of Australian Interpretation1039

AASB 2012-9 amends AASB 1048 Interpretation of Standards to evidence the withdrawal of Australian Interpretation 1039 Substantive Enactment of Major Tax Bills in Australia. The adoption of AASB 2012-9 had no effect on the financial position or performance of the Group.

AASB CF 2013-1 Amendments to Australian Conceptual Framework

AASB CF 2013-1 replaces the guidance in the Framework on the objective of general purpose financial reporting and the qualitative characteristics of useful information, as an integral part of the Framework and it also withdraws Statement of Accounting Concepts SAC 2 Objective of General Purpose Financial Reporting.

The adoption of AASB CF 2013-1 had no effect on the financial position or performance of the Group.

Interpretation 20 Stripping costs in the production phase of a surface mine

This interpretation applies to stripping costs incurred during the production phase of a surface mine. Production stripping costs are to be capitalised as part of an asset, if an entity can demonstrate that it is probably that future economic benefits will be realised, the costs can be reliably measured and the entity can identify the component of an ore body for which access has been improved. This asset is to be called the “stripping activity asset”.

The stripping activity asset shall be depreciated or amortised on a systematic basis, over the expected useful life of the identified component of the ore body that becomes more accessible as a result of the stripping activity, the units of production method shall be applied unless another method is more appropriate. The adoption of interpretation 20 has no effect of the financial position performance of the group as this has been earlier adopted in 2012.

(f) New Accounting Standards and Interpretations

Standards issued but not yet effective up to the date of issuance of the Consolidated Entity’s financial statements are listed below. This listing is of standards and interpretations issued, which the Consolidated Entity reasonably expects to be applicable at a future date. The Consolidated Entity intends to adopt those standards when they become effective. The Consolidated Entity has not yet assessed the impact the changes will have on the financial statements.

AASB 1053 Application of Tiers of Australian Accounting Standards;

This standard establishes a differential financial reporting framework consisting of two tiers of reporting requirements for preparing general purpose financial statements:

a. Tier 1: Australian Accounting Standards b. Tier 2: Australian Accounting Standards - Reduced Disclosure Requirements

Tier 2 comprises the recognition, measurement and presentation requirements of Tier 1 and substantially reduced disclosures corresponding to those requirements.

The following entities apply Tier 1 requirements in preparing general purpose financial statements:

a. For-profit entities in the private sector that have public accountability (as defined in this standard) b. The Australian Government and State, Territory and Local governments

The following entities apply either Tier 2 or Tier 1 requirements in preparing general purpose financial statements:

a. For-profit private sector entities that do not have public accountability b. All not-for-profit private sector entities

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c. Public sector entities other than the Australian Government and State, Territory and Local governments.

Consequential amendments to other standards to implement the regime were introduced by AASB 2010-2, 2011-2, 2011-6, 2011-11, 2012-1, 2012-7 and 2012-11.

AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirements [AASB 124];

This amendment deletes from AASB 124 individual key management personnel disclosure requirements for disclosing entities that are not companies. It also removes the individual KMP disclosure requirements for all disclosing entities in relation to equity holdings, loans and other related party transactions.

AASB 2012-3 Amendments to Australian Accounting Standards – Offsetting Financial Assets and Financial Liabilities;

AASB 2012-3 adds application guidance to AASB 132 Financial Instruments: Presentation to address inconsistencies identified in applying some of the offsetting criteria of AASB 132, including clarifying the meaning of "currently has a legally enforceable right of set-off" and that some gross settlement systems may be considered equivalent to net settlement.

Interpretation 21 Levies

This Interpretation confirms that a liability to pay a levy is only recognised when the activity that triggers the payment occurs. Applying the going concern assumption does not create a constructive obligation.

AASB 9 Financial Instruments (application date of 1 January 2017);

AASB 9 includes requirements for the classification and measurement of financial assets. It was further amended by AASB 2010-7 to reflect amendments to the accounting for financial liabilities.

These requirements improve and simplify the approach for classification and measurement of financial assets compared with the requirements of AASB 139. The main changes are described below.

a. Financial assets that are debt instruments will be classified based on (1) the objective of the entity's business model for managing the financial assets; (2) the characteristics of the contractual cash flows.

b. Allows an irrevocable election on initial recognition to present gains and losses on investments in equity instruments that are not held for trading in other comprehensive income. Dividends in respect of these investments that are a return on investment can be recognised in profit or loss and there is no impairment or recycling on disposal of the instrument.

c. Financial assets can be designated and measured at fair value through profit or loss at initial recognition if doing so eliminates or significantly reduces a measurement or recognition inconsistency that would arise from measuring assets or liabilities, or recognising the gains and losses on them, on different bases.

d. Where the fair value option is used for financial liabilities the change in fair value is to be accounted for as follows:

► The change attributable to changes in credit risk are presented in other comprehensive income (OCI)

► The remaining change is presented in profit or loss

If this approach creates or enlarges an accounting mismatch in the profit or loss, the effect of the changes in credit risk are also presented in profit or loss.

Consequential amendments were also made to other standards as a result of AASB 9, introduced by AASB 2009-11 and superseded by AASB 2010-7 and 2010-10.

The AASB issued a revised version of AASB 9 (AASB 2013-9) during December 2013. The revised standard incorporates three primary changes:

1. New hedge accounting requirements including changes to hedge effectiveness testing, treatment of hedging costs, risk components that can be hedged and disclosures;

2. Entities may elect to apply only the accounting for gains and losses from own credit risk without applying the other requirements of AASB 9 at the same time; and

3. The mandatory effective date moved to 1 January 2017.

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AASB 2013-3 Amendments to AASB 136 – Recoverable Amount Disclosures for Non-Financial Assets;

AASB 2013-3 amends the disclosure requirements in AASB 136 Impairment of Assets. The amendments include the requirement to disclose additional information about the fair value measurement when the recoverable amount of impaired assets is based on fair value less costs of disposal.

AASB 2013-4 Amendments to Australian Accounting Standards – Novation of Derivatives and Continuation of Hedge Accounting [AASB 139];

AASB 2013-4 amends AASB 139 to permit the continuation of hedge accounting in specified circumstances where a derivative, which has been designated as a hedging instrument, is novated from one counterparty to a central counterparty as a consequence of laws or regulations.

AASB 2013-5 Amendments to Australian Accounting Standards – Investment Entities;

These amendments define an investment entity and require that, with limited exceptions, an investment entity does not consolidate its subsidiaries or apply AASB 3 Business Combinations when it obtains control of another entity.

These amendments require an investment entity to measure unconsolidated subsidiaries at fair value through profit or loss in its consolidated and separate financial statements. These amendments also introduce new disclosure requirements for investment entities to AASB 12 and AASB 127.

AASB 2013-7 Amendments to AASB 1038 arising from AASB 10 in relation to Consolidation and Interests of Policyholders [AASB 1038];

AASB 2013-7 removes the specific requirements in relation to consolidation from AASB 1038, which leaves AASB 10 as the sole source for consolidation requirements applicable to life insurer entities.

Annual Improvements 2010-2012 Cycle – Annual Improvements to IFRSs 2010-2012 Cycle (application date of 1 January 2015);

This standard sets out amendments to International Financial Reporting

Standards (IFRSs) and the related bases for conclusions and guidance made during the International Accounting Standards Board’s Annual Improvements process. These amendments have not yet been adopted by the AASB.

The following items are addressed by this standard:

► IFRS 2 - Clarifies the definition of 'vesting conditions' and 'market condition' and introduces the definition of 'performance condition' and 'service condition'.

► IFRS 3 - Clarifies the classification requirements for contingent consideration in a business combination by removing all references to IAS 37.

► IFRS 8 - Requires entities to disclose factors used to identify the entity's reportable segments when operating segments have been aggregated. An entity is also required to provide a reconciliation of total reportable segments' asset t the entity's assets.

► IAS 16 & IAS 38 - Clarifies that the determination of accumulated depreciation does not depend on the selection of the valuation technique and that it is calculated as the difference between the gross and net carrying amounts.

► IAS 24 - Defines a management entity providing KMP services as a related party of the reporting entity. The amendments added an exemption from the detailed disclosure requirements in paragraph 17 of IAS 24 for KMP services provided by a management entity. Payments made to a management entity in respect of KMP services should be separately disclosed.

Annual Improvements 2011-2013 Cycle – Annual Improvements to IFRSs 2011-2013 Cycle (application date of 1 January 2015);

This standard sets out amendments to International Financial Reporting

Standards (IFRSs) and the related bases for conclusions and guidance made during the International Accounting Standards Board’s Annual Improvements process. These amendments have not yet been adopted by the AASB.

The following items are addressed by this standard:

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► IFRS 13 - Clarifies that the portfolio exception in paragraph 52 of IFRS 13 applies to all contracts within the scope of IAS 39 or IFRS 9, regardless of whether they meet the definitions of financial assets or financial liabilities as defined in IAS 32.

► IAS 40 - Clarifies that judgment is needed to determine whether an acquisition of investment property is solely the acquisition of an investment property or whether it is the acquisition of a group of assets or a business combination in the scope of IFRS 3 that includes an investment property. That judgment is based on guidance in IFRS 3.

AASB 1031 Materiality;

The revised AASB 1031 is an interim standard that cross-references to other Standards and the Framework (issued December 2013) that contain guidance on materiality.

AASB 1031 will be withdrawn when references to AASB 1031 in all Standards and Interpretations have been removed.

AASB 2013-9 Amendments to Australian Accounting Standards – Conceptual Framework, Materiality and Financial Instruments (Parts A and B are effective 1 January 2014 while Part C will be effective 1 January 2015).

The Standard contains three main parts and makes amendments to a number Standards and Interpretations.

Part A of AASB 2013-9 makes consequential amendments arising from the issuance of AASB CF 2013-1.

Part B makes amendments to particular Australian Accounting Standards to delete references to AASB 1031 and also makes minor editorial amendments to various other standards.

Part C makes amendments to a number of Australian Accounting Standards, including incorporating Chapter 6 Hedge Accounting into AASB 9 Financial Instruments.

The above standards and interpretations are applicable for financial years beginning on or after 1 January 2014 unless otherwise stated.

(g) Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at and for the period ended 31 December each year (the Consolidated Entity).

Subsidiaries are all those entities over which the Consolidated Entity has the power over the investee, exposure, or rights, to variable returns from its involvement with the investee, and the ability to use its power over the investee to affect its return.

The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. In preparing the consolidated financial statements, all intercompany balances, transactions, unrealised gains and losses resulting from intra-group transactions and dividends have been eliminated in full.

Subsidiaries are fully consolidated from the date on which control is obtained by the Consolidated Entity and cease to be consolidated from the date on which control is transferred out of the Consolidated Entity.

Investments in subsidiaries held by the Company are accounted for at cost in the separate financial statements of the parent entity less any impairment charges. Dividends received from subsidiaries are recorded as a component of other revenues in the separate statement of comprehensive income of the parent entity, and do not impact the recorded cost of the investment. Upon receipt of dividend payments from subsidiaries, the parent will assess whether any indicators of impairment of the carrying value of the investment in the subsidiary exist. Where such indicators exist, to the extent that the carrying value of the investment exceeds its recoverable amount, an impairment loss is recognised.

Non-controlling interests are allocated their share of net profit after tax in the statement of comprehensive income and are presented within equity in the consolidated statement of financial position, separately from the equity of the owners of the parent.

Losses are attributed to the non-controlling interest even if that results in a deficit balance.

A change in the ownership interest of a subsidiary that does not result in a loss of control, is accounted for as an equity transaction.

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If the Consolidated Entity loses control over a subsidiary, it:

Derecognises the assets (including goodwill) and liabilities of the subsidiary

Derecognises the carrying amount of any non-controlling interest

Derecognises the cumulative translation differences, recorded in equity

Recognises the fair value of the consideration received

Recognises the fair value of any investment retained

Recognises any surplus or deficit in profit or loss

Reclassifies the parent's share of components previously recognised in other comprehensive income to profit or loss, or retained earnings, as appropriate

(h) Business combinations

When the Consolidated Entity acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic conditions, the Consolidated Entity’s operating or accounting policies and other pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

If the business combination is achieved in stages, the acquisition date fair value of the acquirer's previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability will be recognised in accordance with AASB 139 either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as equity, it should not be remeasured until it is finally settled within equity.

Business combinations are accounted for using the acquisition method. The consideration transferred in a business combination shall be measured at fair value, which shall be calculated as the sum of the acquisition date fair values of the assets transferred by the acquirer, the liabilities incurred by the acquirer to former owners of the acquiree and the equity issued by the acquirer, and the amount of any non-controlling interest in the acquiree. For each business combination, the acquirer measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree's identifiable net assets. Acquisition-related costs are expensed as incurred.

(i) Operating segments

An operating segment is a component of an entity that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same entity), whose operating results are regularly reviewed by the entity's chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance and for which discrete financial information is available. This includes start up operations which are yet to earn revenues. Management will also consider other factors in determining operating segments such as the existence of a line manager and the level of segment information presented to the board of directors.

Operating segments have been identified based on the information provided to the chief operating decision makers — being the board of directors.

(j) Foreign currency translation

(i) Functional and presentation currency

Both the functional and presentation currency of the Company is Australian dollars ($). The Kazakhstan subsidiaries' functional currency is the Tenge (KZT) which is translated to the presentation currency (see below for consolidated reporting).

(ii) Transactions and balances

Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the reporting date.

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Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

(iii) Translation of the Consolidated Entity Companies’ functional currency to presentation currency

The results of the Kazakhstan subsidiaries are translated into Australian Dollars (presentation currency) at an average rate for the year. Assets and liabilities are translated at exchange rates prevailing at reporting date.

Exchange variations resulting from the translation are recognised in the foreign currency translation reserve in equity.

On consolidation, exchange differences arising from the translation of the monetary item forming part of the net investment in Kazakhstan subsidiaries are taken to the foreign currency translation reserve. If a Kazakhstan subsidiary were sold, the proportionate share of exchange differences would be transferred out of equity and recognised in the statement of comprehensive income.

(k) Cash and cash equivalents

Cash and cash equivalents in the statement of financial position comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts. Bank overdrafts are included within interest-bearing loans and borrowings in current liabilities on the statement of financial position.

(l) Trade and other receivables

Trade receivables, which generally have 30-60 day terms, are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less an allowance for impairment.

Collectability of trade receivables is reviewed on an ongoing basis at an operating unit level. Individual debts that are known to be uncollectible are written off when identified. An impairment provision is recognised when there is objective evidence that the Consolidated Entity will not be able to collect the receivable. Financial difficulties of the debtor, default payments or debts more than 60 days overdue are considered objective evidence of impairment. The amount of the impairment loss is the receivable carrying amount compared to the present value of estimated future cash flows, discounted at the original effective interest rate.

(m) Inventories

Inventories are stated at the lower of cost and net realisable value. Net realisable value represents estimated selling price in the ordinary course of business less any further costs expected to be incurred to completion and disposal. Cost is determined on a weighted average basis and includes all costs incurred in the normal course of business including direct material and direct labour costs and an allocation of production overheads, depreciation and amortisation and other costs incurred in bringing each product to its present location and condition. Production costs are determined on a 12-month rolling average basis.

Quantities of broken ore and concentrate stocks are assessed primarily through surveys and assays.

Inventories are categorised as follows:

• Broken ore: ore stored in an intermediate state that has not yet passed through all the stages of

production;

• Gold in process - materials that are currently in the process of being converted to either semi-finished or

saleable product;

• Gold in resin - semi-finished product;

• Cathode gold - saleable product;

• Stores, spares and consumables: materials, goods or supplies (including energy sources) to be either

directly or indirectly consumed in the production process.

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(n) Investments and other financial assets

Investments and financial assets within the scope of AASB 139 Financial Instruments: Recognition and Measurement are categorised as either financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, or available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired or originated.

When financial assets are recognised initially, they are measured at fair value, plus, in the case of assets not at fair value through profit or loss, directly attributable transaction costs.

Recognition and derecognition

All regular way purchases and sales of financial assets are recognised on the trade date i.e., the date that the Consolidated Entity commits to purchase the asset. Regular way purchases or sales are purchases or sales of financial assets under contracts that require delivery of the assets within the period established generally by regulation or convention in the market place. Financial assets are derecognised when the right to receive cash flows from the financial assets has expired or when the entity transfers substantially all the risks and rewards of the financial assets. If the entity neither retains nor transfers substantially all of the risks and rewards, it derecognises the asset if it has transferred control of the assets.

(i) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are carried at amortised cost using the effective interest rate method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired. These are included in current assets, except for those with maturities greater than 12 months after balance date, which are classified as non-current.

(o) Property, plant and equipment & mine properties

Plant and equipment is stated at historical cost less accumulated depreciation and any accumulated impairment losses. Such cost includes the cost of replacing parts that are eligible for capitalisation when the cost of replacing the parts is incurred. Similarly, when each major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement only if it is eligible for capitalisation. All other repairs and maintenance are recognised in profit or loss as incurred.

Land and buildings are measured at historical cost, less accumulated depreciation on buildings and any impairment losses recognised.

Capitalised work in progress will not be depreciated until it is transferred into the relevant categories.

Depreciation is calculated of the specific assets as follows:

Land — not depreciated

Capitalised Work In Progress – not depreciated

Mine properties & development expenditure – units of production basis over the Life of Mine

Buildings — straight-line basis over 13 years

Plant and equipment — straight-line basis over 4 to 9 years

Leased equipment — straight-line basis over 5 years

Motor vehicles — straight-line basis over 4 to 9 years

The assets' residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each financial year end.

Derecognition

An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal.

Mine properties

Once the technical feasibility and commercial viability of the extraction of mineral resources in a particular area of interest become demonstrable, the exploration and evaluation assets attributable to that area of interest are reclassified as mine properties and disclosed as a component of property, plant and equipment. All development costs subsequently incurred within that area of interest are capitalised and carried at cost.

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Amortisation of capitalised mine properties is provided on the unit-of-production method resulting in an amortisation charge proportional to the depletion of the economically recoverable mineral resources. Costs are amortised from the commencement of production.

(p) Intangible assets

Intangible assets that are acquired by the Group are measured at cost less accumulated amortisation and accumulated impairment losses.

(q) Exploration & evaluation expenditure

Exploration and evaluation costs related to an area of interest are carried forward only when rights of tenure to the area of interest are current and provided that one of the following conditions is met:

such costs are expected to be recouped through successful development and exploitation of the area of interest, or alternatively by its sale; or

exploration and/or evaluation activities in the area of interest have not yet reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area are continuing.

Costs carried forward in respect of an area of interest that is abandoned are written off in the period in which the decision to abandon is made.

(r) Leases

The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement at inception date, whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset, even if that right is not explicitly specified in an arrangement.

(i) the Consolidated Entity as a lessee

Finance leases, which transfer to the Consolidated Entity substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance costs in profit or loss.

Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term if there is no reasonable certainty that the Consolidated Entity will obtain ownership by the end of the lease term.

Operating lease payments are recognised as an operating expense in the statement of comprehensive income on a straight-line basis over the lease term. Operating lease incentives are recognised as a liability when received and subsequently reduced by allocating lease payments between rental expense and reduction of the liability.

(ii) the Consolidated Entity as a lessor

Leases in which the Consolidated Entity retains substantially all the risks and benefits of ownership of the leased asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised as an expense over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.

(s) Impairment of non-financial assets other than goodwill and indefinite life intangibles

Non-financial assets other than goodwill and indefinite life intangibles are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

The Company conducts an annual internal review of asset values, which is used as a source of information to assess for any indicators of impairment. External factors, such as changes in expected future processes, technology and economic conditions, are also monitored to assess for indicators of impairment. If any indication of impairment exists, an estimate of the asset's recoverable amount is calculated.

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An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. Recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows that are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are tested for possible reversal of the impairment whenever events or changes in circumstances indicate that the impairment may have reversed.

(t) Trade and other payables

Trade and other payables are carried at amortised cost and due to their short-term nature they are not discounted. They represent liabilities for goods and services provided to the Consolidated Entity prior to the end of the financial year that are unpaid and arise when the Consolidated Entity becomes obliged to make future payments in respect of the purchase of these goods and services. The amounts are unsecured and are usually paid within 30 days of recognition.

(u) Borrowings

All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs.

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. Fees paid on the establishment of loan facilities that are yield related are included as part of the carrying amount of the loans and borrowings.

Borrowings are classified as current liabilities unless the Consolidated Entity has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset (i.e. an asset that necessarily takes a substantial period of time to get ready for its intended use or sale) are capitalised as part of the cost of that asset. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. The Consolidated Entity does not currently hold qualifying assets but, if it did, the borrowing costs directly associated with this asset would be capitalised (including any other associated costs directly attributable to the borrowing and temporary investment income earned on the borrowing).

(v) Provisions and employee benefits

Provisions are recognised when the Consolidated Entity has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

When the Consolidated Entity expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the statement of comprehensive income net of any reimbursement.

Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present obligation at the reporting date. The discount rate used to determine the present value reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision resulting from the passage of time is recognised in finance costs.

Restructuring provisions

Restructuring provisions are only recognised when general recognition criteria provisions are fulfilled. Additionally, the Consolidated Entity needs to follow a detailed formal plan about the business or part of the business concerned, the location and number of employees affected, a detailed estimate of the associated costs, and appropriate time line. The people affected have a valid expectation that the restructuring is being carried out or the implementation has been initiated already.

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Employee leave benefits

(i) Wages, salaries, annual leave and sick leave

Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be settled within 12 months of the reporting date are recognised in respect of employees' services up to the reporting date. They are measured at the amounts expected to be paid when the liabilities are settled. Expenses for non-accumulating sick leave are recognised when the leave is taken and are measured at the rates paid or payable.

(ii) Long service leave

The liability for long service leave is recognised and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures, and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows.

Rehabilitation provision

Rehabilitation includes mine closure and restoration costs which include the costs of dismantling and demolition of infrastructure or decommissioning, the removal of residual material and the remediation of disturbed areas specific to the site. Provisions are recognised at the time that the environmental disturbance occurs.

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

The amount of the provision for future rehabilitation costs is capitalised as an asset and recognised in property, plant and equipment and is depreciated over the useful life of the mineral resource. The unwinding of the effect of discounting on the provision is recognised as a finance cost.

(w) Share-based payment transactions

Equity settled transactions

The Consolidated Entity provides benefits to its employees in the form of share-based payments, whereby employees render services in exchange for shares or rights over shares (equity-settled transactions).

There is one Employee Share Option Plan (ESOP), which provides benefits to directors and other KMP.

The cost of these equity-settled transactions with employees is measured by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using a Black-Scholes option pricing model or a modified version of the same with respect to Performance Rights, further details of which are given in note 23.

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled (the vesting period), ending on the date on which the relevant employees become fully entitled to the award (the vesting date).

At each subsequent reporting date until vesting, the cumulative charge to the statement of comprehensive income is the product of:

(i) The grant date fair value of the award

(ii) The current best estimate of the number of awards that will vest, taking into account such factors as the likelihood of employee turnover during the vesting period and the likelihood of non-market performance conditions being met

(iii) The expired portion of the vesting period

The charge to the statement of comprehensive income for the period is the cumulative amount as calculated above less the amounts already charged in previous periods. There is a corresponding entry to equity.

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Equity-settled awards granted by Central Asia Resources Limited to employees of subsidiaries are recognised in the parent's separate financial statements as an additional investment in the subsidiary with a corresponding credit to equity. As a result, the expense recognised by Central Asia Resources Limited in relation to equity-settled awards only represents the expense associated with grants to employees of the parent. The expense recognised by the Consolidated Entity is the total expense associated with all such awards.

Until an award has vested, any amounts recorded are contingent and will be adjusted if more or fewer awards vest than were originally anticipated to do so. Any award subject to a market condition or non-vesting condition is considered to vest irrespective of whether or not that market condition or non-vesting condition is fulfilled, provided that all other conditions are satisfied.

The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share (see note 15).

(x) Contributed equity

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

(y) Revenue recognition

Revenue is recognised and measured at the fair value of the consideration received or receivable to the extent it is probable that the economic benefits will flow to the Consolidated Entity and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:

(i) Sale of goods

Revenue is recognised and measured at the fair value of the consideration received or receivable to the extent it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue from the sale of goods is recognised when there has been a transfer of risks and rewards to the customer, no further work or processing is required, the quantity and quality of the goods based on management’s best estimate, the price is fixed and generally title has passed.

(ii) Interest revenue

Revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.

(iii) Rental revenue

Rental revenue from investment properties is accounted for on a straight-line basis over the lease term. Contingent rental income is recognised as income in the periods in which it is earned.

(z) Income tax and other taxes

Current tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities based on the current period's taxable income. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date.

Current income tax relating to items recognised directly in equity is recognised in equity and not in the statement of comprehensive income. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Deferred income tax is provided on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognised for all taxable temporary differences except:

When the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss;

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When the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future;

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised, except:

When the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

When the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilized.

The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Unrecognised deferred income tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.

Tax consolidation legislation

The Company has no wholly-owned Australian controlled entities to tax consolidate with.

Other taxes

Revenues, expenses and assets are recognised net of the amount of GST/VAT except:

When the GST/VAT incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST/VAT is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable

Receivables and payables, which are stated with the amount of GST/VAT included

The net amount of GST/VAT recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.

Cash flows are included in the statement of cash flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority is classified as part of operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authorities.

(aa) Earnings per share

Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude any costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus element.

Diluted earnings per share is calculated as net profit attributable to members of the parent, adjusted for:

Costs of servicing equity (other than dividends) and preference share dividends;

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The after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and

Other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares, divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.

(bb) Stripping costs during the production phase

Stripping activity undertaken during the production phase may create two benefits – the first being the extraction of ore (inventory) in the current period and the second being improved access to the ore body to be mined in a future period. Where the benefit is improved access to ore to be mined in the future, these costs are to be recognised as a non-current asset, if the following required criteria are met:

(a) it is probable that the future economic benefit (improved access to the ore body) associated with the stripping activity will flow to the entity;

(b) the component of the ore body for which access has been improved can be identified; and

(c) the costs relating to the stripping activity associated with that component can be measured reliably.

The stripping activity asset is to be accounted for as an addition to, or as an enhancement of, an existing asset. This means that the stripping activity asset will be accounted for as part of an existing asset.

The stripping activity asset is to be initially measured at cost. This will be the accumulation of costs directly incurred to perform the stripping activity that benefits the identified component of ore.

The production measure is calculated for the identified component of the ore body. It effectively involves a comparison of the expected level of activity for that component of the ore body, with the actual level of activity, to identify when additional activity may be creating a future benefit. Activity incurred at the expected level and its associated costs, form part of the cost of inventory produced in that period. Any excess of actual activity over the expected level (and the associated costs) needs to be considered to determine whether it represents a stripping activity asset.

The stripping activity asset is required to be depreciated or amortised on a systematic basis, over the expected useful life of the identified component of the ore body that becomes more accessible as a result of the stripping activity.

(cc) Comparatives

Where applicable, comparatives have been adjusted to present them on the same basis as the current period figures.

3. Cash and Cash Equivalents

Consolidated

31 Dec 2013 31 Dec 2012

$ $

Cash held in Australia 1:

- Australian Dollars 6,717 42,215

- United States Dollars 101,812 221,777

Cash held in Kazakhstan 2:

- Kazakhstan Tenge 161,946 30,085

- United States Dollars - -

Total cash at bank 270,475 294,077

1. Held in at call accounts with Westpac Bank

2. Held in at call accounts with Center Credit Bank in Kazakhstan

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4. Trade and Other Receivables

Consolidated

31 Dec 2013 31 Dec 2012

$ $

GST receivable 9,838 13,349

Prepayments 107,429 47,688

Other receivables 1 770,326 806,446

887,593 867,483

1. Other receivables consist of claimable federal and state taxes incurred during the construction of the Dalabai project. This amount is not receivable in cash from the government. However, it is anticipated that these taxes will be offset against future federal and state taxes payable in the future.

5. Inventories

Consolidated

31 Dec 2013 31 Dec 2012

$ $

Gold in process - 780,230

Gold in resin - 156,628

Cathode gold - 238,768

Stores, spares and consumables 263,138 317,809

263,138 1,493,435

Inventories comprise broken ore stocks, gold in process, semi-finished products, cathode gold and stores, spares and consumables. Stores, spares and consumables represent materials and supplies consumed in the production process. All stocks have been calculated as the lower of cost and net realisable value, with net realisable value representing the estimated selling price in the ordinary course of business less any further costs expected to be incurred in respect of such disposal.

6. Exploration and Evaluation Expenditure

Consolidated

31 Dec 2013 31 Dec 2012

$ $

Opening balance at beginning of period 7,132,187 7,625,048

Additions 112,712 930,740

Write-off of Dalabai E&E expenditure (215,350) -

E&E expenditures disposed as a result of disposal of Altynsaigeo LLP - (1,032,739)

Foreign exchange movement 1,053,058 (390,862)

Closing balance at end of year 8,082,607 7,132,187

The recoverability of the carrying amount of the exploration and evaluation assets is dependent on the successful development and commercial exploitation, or alternatively, sale of the respective areas of interest.

The Dalabai exploration expenditure was fully written off as the company decided not to renew the exploration contract and as such, it voluntarily expired during the year.

Altyn-Tas and Kepken deposits are held under Exploration Licence 176 which was first granted in 1994 and has been subject to numerous partial relinquishments and extensions of term. This Licence was due to expire on 15 May 2014. An application for a further extension of term to 2017 was submitted to the department of Mines and Infrastructure in Kazakhstan in January 2014, with the process for assessment still underway.

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7. Income Tax

Consolidated

31 Dec 2013 31 Dec 2012

$ $

A reconciliation between tax expense and the product of accounting loss before income tax multiplied by the Company’s statutory income tax rate is as follows:

Accounting loss before income tax (10,350,242) (6,438,128)

At the Company’s statutory income tax rate of 30% (2012: 30%) (3,105,073) (1,931,438)

Tax effect of non-deductible items - -

Tax effect of amounts which are non assessable (deductible) in calculating taxable income

125 96,673

(3,104,948) (1,834,765)

Movement in unrecognised temporary differences 1,931,596 (38,484)

Foreign tax rate adjustment 206,655 415,966

Current period tax losses for which no deferred tax asset has been recognised

966,697 1,457,283

Income tax expense reported in the statement of comprehensive income

- -

Movement in unrecognised temporary differences related to items charged directly to equity:

Capital raising costs - -

Other - -

Movement in unrecognised temporary differences - -

Income tax expense reported in other comprehensive income - -

Unrecognised deferred tax assets:

Carry forward revenue tax losses 3,099,712 2,974,262

Carry forward foreign tax losses 809,910 1,363,850

Capital asset tax cost base 10,390 10,390

Capital raising costs 185,647 291,303

Accruals and provisions 63,756 43,234

Borrowing expenses - 4

Legal fees 19,927 11,268

Deferred tax asset offset against deferred tax liability (126,313) (226,321)

4,063,029 4,467,990

Recognised deferred tax liabilities:

Prepayments - -

Borrowings 126,313 226,321

Offset deferred tax asset (126,313) (226,321)

- -

No income tax is payable by the Consolidated Entity.

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Income Tax losses

The Consolidated Entity has:

$10,332,373 (2012: $9,914,206) of Australian tax losses; and

$4,049,551 (2012: $6,819,250) foreign tax losses.

Foreign losses of the Consolidated Entity exist in 20% (Kazakhstan) corporate income tax. Estimated future income tax benefits arising from income tax losses are not brought to account at reporting date as realisation of the benefit is not regarded as probable. The Corporate tax rate in Australia is 30% (2012: 30%). The Corporate tax rate in Kazakhstan is 20% for non-subsurface users and a progressive rate applies to subsurface users.

The future income tax benefit will only be obtained if:

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

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

(c) No changes in tax legislation adversely affect the Company in realising the benefit.

The Company has no franking credits as at 31 December 2013.

8. (a) Property, Plant and Equipment & Mine Properties

Consolidated

31 Dec 2013 31 Dec 2012

$ $

Intangibles – at cost 68,175 59,275

Less accumulated amortization and impairment (41,538) (8,844)

26,637 50,431

Capitalised work in progress – at cost - 4,317

Less accumulated depreciation and impairment - -

- 4,317

Mine properties & development expenditure – at cost 7,970,347 6,757,927

Less accumulated depreciation and impairment (3,770,654) (577,498)

4,199,693 6,180,429

Machinery and equipment – at cost 3,189,036 2,891,330


1,202,939 2,257,322

Office equipment – at cost 235,774 203,684

Less accumulated depreciation and impairment (168,981) (71,237)

66,793 132,447

Land and Buildings – at cost 5,942,158 5,166,197


2,862,329 4,578,630

Total 8,358 ,392 13,203,576

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8 (b) Reconciliation of Carrying Amounts of the Property, Plant and Equipment & Mine Properties at the Beginning and End of the Period

Consolidated

Intangibles Capital Work In Progress

Mine Properties & Development

Expenditure

Machinery & Equipment

Office Equipment

1

Land & Buildings

Total

$ $ $ $ $ $ $

1 January 2013 50,432 4,317 6,180,429 2,257,322 132,447 4,578,630 13,203,577

Additions - 876 21,735 1,562 11,374 - 35,547

Disposals at cost - - - (142,981) - - (142,981)

Transferred from Work In Progress - (5,460) - 4,515 - 945 -

Write-off - - - - - - -

Reclassified - - - - - - -

Depreciation for the period (10,867) - (15,320) (422,980) (40,654) (275,261) (765,082)

Impairment (19,598) - (3,089,858) (885,043) (49,142) (2,105,913) (6,149,554)

Write-back on depreciation - - - 86,270 - - 86,270

Foreign exchange movement 6,670 267 1,102,707 304,274 12,768 663,929 2,090,615

31 December 2013 26,637 - 4,199,693 1,202,939 66,793 2,862,330 8,358,392

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Consolidated Intangibles Capital Work In Progress

Mine Properties & Development

Expenditure

Machinery & Equipment

Office Equipment

1

Land & Buildings

Total

$ $ $ $ $ $ $

1 January 2012 - 5,879,224 7,343,331 2,255,561 60,080 178,358 15,716,554

Additions 25,324 576,274 486,751 340,366 146,047 57,973 1,632,735

Disposals at cost - - - (188,481) (36,575) - (225,056)

Transferred from Work In Progress 35,2562 (5,412,122) - 397,168 - 4,979,698 -

Write-off - (812,614) - - - - (812,614)

Reclassified - - (697,420)3 - - - (697,420)

Depreciation for the period (8,954) - (584,728) (487,008) (48,236) (572,800) (1,701,726)

Write-back on depreciation - - - 61,616 13,948 - 75,564

Foreign exchange movement (1,195) (226,445) (367,505) (121,900) (2,817) (64,599) (784,461)

31 December 2012 50,431 4,317 6,180,429 2,257,322 132,447 4,578,630 13,203,576

1. Office Equipment with a carrying value of $0 (2012: $845) is pledged as security for borrowings as disclosed in note 12.

As part of the transition from the development stage to the production stage the Group has reclassified

2. $35,256 to intangible assets;

3. $697,420 to inventories

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8(c) Impairment testing of the assets

The Consolidated Entity performed its annual impairment test as at 31 December 2013. The total impairment of $6,149,554 related to the Dalabai reportable segment. The recoverable amount of these assets has been determined based on a value in use calculation using cash flow projections from financial budgets approved by senior management covering a three year period. The discount rate applied to cash flow projections is 15% with gold price of US$1,300 per oz and silver price of US$24 per oz and recovery rate of 65%. As a result of this analysis, management recognised impairment for these assets as a carrying value exceeds the recoverable amount

Key assumptions used in value in use calculations

The calculations of value in use for these assets are most sensitive to the following assumptions:

• Price of gold and silver • Recovery rate • Discount rates

Discount rates - Discount rates represent the current market assessment of the risks specific to these assets, taking into consideration the time value of money and individual risks of the underlying assets that have not been incorporated in the cash flow estimates. The discount rate calculation is based on the specific circumstances of the Consolidated Entity and is derived from its weighted average cost of capital (WACC). The WACC takes into account both debt and equity. The cost of equity is derived from the expected return on investment by the Consolidated Entity’s investors. Segment specific risk is incorporated by applying individual beta factors. The cost of debt is based on the borrowings the Consolidated Entity is obliged to service. The beta factors are evaluated annually based on publicly available marked data. A rise in discount rates would results in a further impairment, visa versa.

Price of gold and silver - Estimate of the price of gold and silver is a moderate assumption of the management, whereas published forecasts from reputable brokers are far more positive. The movement in commodity prices are impacted by a number of factors. A decrease in gold and silver prices would result in a future impairment, visa versa.

Recovery rate - The recovery rate of 65% has been used. Management assesses this recovery rate in relation to the industry average of similar operations in the region. Notwithstanding this, management believes that this position is conservative given that recovery rates obtained from laboratory test work has indicated better recovery and will expect this to be achieved with the result of steady improvement. A decrease in recovery rates would result in a future impairment, visa versa.

9. Financial Assets

Consolidated

31 Dec 2013 31 Dec 2012

$ $

Rehabilitation fund 1

52,526 44,047

Embedded derivative asset2 215,021 -

Security bond 10,560 10,199

278,107 54,246

1. The Group is required under Kazakhstan legislation to deposit fixed amounts to a bank account for payment of future rehabilitation

expenses by periodic cash contributions to a bank account in Kazakhstan to ensure funds are available for post exploration and mining

operations land rehabilitation.

2. Embedded derivative asset relates to the WAM Gold Loan Facility (see note 12). This facility is to be repaid in gold in monthly

repayments of 48 oz per month for 25 months from November 2013. The average forward price at date of inception was US$1,371

and devalued to US$1,201 as at 31 December 2013. At 31 December 2013, the forecast gold price is less lower than the implied value

and as such, has resulted in an asset at this time and recognised against other income in the statement of comprehensive income.

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10. Trade and Other Payables

Consolidated

31 Dec 2013 31 Dec 2012

$ $

Employee liabilities 117,146 263,842

Trade creditors 1 1,255,918 1,253,034

Other creditors and accruals 2 574,544 329,003

1,947,608 1,845,879

1. Trade creditors are non-interest bearing.

2. Other creditors and accruals are non-interest bearing.

11. Provisions

Consolidated

31 Dec 2013 31 Dec 2012

Current $ $

Social commitment 1 37,805 59,067

Historical Cost Compensation Payment provision 2 60,318

49,408

Provision for rehabilitation 3 - 4,254

Annual leave entitlements 111,311 94,455

Other accruals 68,022 -

277,456 207,184

Non-current

Social commitment 1

336,700 221,134

Provision for rehabilitation 3 188,026 167,276

Historical Cost Compensation Payment provision 2 129,076 95,097

653,802 483,507

1. The Consolidated Entity’s mining licenses and contracts include a requirement for the social development of the region in which the

Dalabai and Altyn-Tas projects are located. This is expected to be made at US$33,000 per annum.

2. Payment for compensation of historical costs is an obligatory payment to be made by a subsurface user to the state budget in the

Republic of Kazakhstan. It is a fixed payment to compensate the state for geological survey and development costs of the contact

territory incurred before the subsurface use contract was concluded. This is expected to be made on a quarterly basis for US$17,802.

3. Provision for rehabilitation is obligatory provision to restore land and other natural objects after mining. This estimate will become

payable after mining operations cease.

Reconciliation of provisions

Consolidated Social

commitment Historical cost compensation

Rehabilita-tion

Annual leave entitlements

Other Total

$ $ $ $ $ $ Balance at 31 Dec 2012 280,201 144,505 171,530 94,455 - 690,691 Additions 74,995 23,516 - 51,819 68,022 218,352 Payment (21,033) - - (49,144) - (70,177) Reversal (1,727) (323) (9,257) - - (11,307) Foreign Exchange 42,069 21,696 25,753 14,181 - 103,699

Balance at 31 Dec 2013 374,505 189,394 188,026 111,311 68,022 931,258

Current 37,805 60,318 - 111,311 68,022 277,456 Non-current 336,700 129076 188,026 - - 653,802

374,505 189,394 188,026 111,311 68,022 931,258

Additions include the impact of the discounting of the unwinding of the provision.

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12. Borrowings

31 Dec 2013 Manas

Resources1

Millstar Loan 2 Gold Loan

3 Total

$ $ $

Current 494,447 1,354,540 475,439 2,324,426

Non-Current - - 601,969 601,969

Total 494,447 1,354,540 1,077,408 2,926,395

31 Dec 2012 Lease

Equipment Millstar Loan

2 Manas Loan

1 Total

$ $ $ $

Current 845 - 422,073 422,918

Non-Current - 2,245,596 - 2,245,596

Total 845 2,245,596 422,073 2,668,514

1. On 18 January 2013, the Group entered into a deed of settlement and release with Manas Resources Ltd, whereby the Group had

agreed to settle the outstanding debt within 12 months of the execution dated. During March 2014 Manas Resources confirmed their

willingness to convert their debt into equity and this has been agreed with the Company.

2. The loan from Millstar is a A$3.0 million facility that is non-interest bearing and unsecured. The term of the loan was extended and is

now repayable in full on 15 December 2014. This loan is initially recognised at fair value of the consideration received and is

subsequently measured at amortised cost using the effective interest method. As part of the original borrowing, 50,487,237 options

were issued to Millstar. On 26 June 2013, Millstar were issued 83,810,000 options in consideration for agreeing to extend the

repayment date of its loan until 15 December 2014 (as announced on 28 December 2012). Details are included in Note 23.

3. On 19 August 2013, CVR and West Asia Minerals Limited (WAM) entered into a US$1.5M unsecured gold finance facility. The loan is

for a term of 28 months, to be drawn down in 4 tranches with no repayments for the first 3 months. As at 31 December 2013,

US$999,630 had been drawn down with the remaining US$500,370 subject to CVR securing further funding amounting to a minimum

US$2 million. Repayments are payable from gold production at Dalabai. Following full drawdown, the Company will be required to

repay an aggregate equivalent of 1,825 ounces of gold, at a rate of 73 oz per month, or equivalent in cash if approved by the lender.

As at 31 December 2013, CVR is liable to repay 48.65oz per month. In the event of default, the loan will revert to a royalty on future

Dalabai production of 5% of gross gold sales, if the full $1.5m has been drawndown, or a lower % royalty on a pro-rata basis if less

than $1.5m has been drawndown.

13. (a) Contributed Equity

Consolidated Consolidated 31 Dec 2013 31 Dec 2012

Paid up capital Number of

Shares $

Number of Shares

$

Issued ordinary capital 763,100,102 43,124,519 763,100,102 45,829,342

Capital raising costs - 1,889,551 - (2,704,823)

763,100,102 45,014,070 763,100,102 43,124,519

Beginning of the period 763,100,102 43,124,519 673,163,156 40,940,819

Ordinary shares issued 218,943,581 1,909,551 89,936,946 2,248,424

Capital raising costs - (20,000) - (64,724)

Balance at end of period 982,043,683 45,014,070 763,100,102 43,124,519

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Ordinary shares issued during the period were a result of:

• issue of 75,000,000 ordinary shares on 19 April 2013 upon the conversion of $750,000 convertible notes; and

• issue of 143,943,581 ordinary shares upon the partial conversion of Millstar’s loan in the amount of $1,159,551.

Terms and Conditions of Contributed Equity

• Ordinary shares have the right to receive dividends as declared and, in the event of winding up the company, to

participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on

shares held.

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

shares are fully paid and have no par value.

Options outstanding as at 31 December 2013 totalled 108,413,763 (2012: 108,813,763). Refer to note 23 for further details.

Capital Management

• When managing capital, management’s objective is to ensure the entity continues as a going concern as well as to

obtain optimal returns to shareholders and benefits for other stakeholders. Management also aims to maintain a

capital structure that ensures the lowest cost of capital available to the Company.

• The Consolidated Entity monitors the adequacy of capital by analysing cash flow forecasts over the term of the life of

mine for each of its projects.

• Appropriate capital levels are maintained to ensure that all approved expenditure programs are adequately funded.

This funding is derived from equity and borrowings.

The Consolidated Entity is not subject to any externally imposed capital requirements.

13 (b) Reserves

Consolidated Foreign

Currency Reserve

Option Reserve

Equity Reserve

Total

$ $ $ $

At 1 January 2012 (4,350,053) 1,921,245 (976,328) (3,405,136)

Total comprehensive income/(loss), net of tax (1,083,537) - - (1,083,537)

Share based payment - 753,883 - 753,883

At 31 December 2012 (5,433,590) 2,675,128 (976,328) (3,734,790)

Total comprehensive income/(loss), net of tax 3,037,476 - - 3,037,476

Performance Rights Expense - 49,058 - 49,058

At 31 December 2013 (2,396,114) 2,724,186 (976,328) (648,256)

- The foreign currency reserve is used to record exchange differences associated with subsidiaries with functional

currencies different from the presentation currency.

- The option reserve is used to recognise the fair value or issue price of options issued and performance rights.

- The equity reserve is used to record the difference between the carrying value of non-controlling interests and the

consideration paid, where there has been a transaction involving non-controlling interests. The reserve is attributable to

the equity of the parent.

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14. Non-Controlling Interest

Consolidated

31 Dec 2013 31 Dec 2012

$ $

Opening balance (178,281) 52,821

Share of foreign exchange movement (130,712) 63,118

Disposal of subsidiaries - (27,077)

Non-Controlling interest portion of loss for the period (524,130) (267,143)

(833,123) (178,281)

31 Dec 2013 31 Dec 2012

Accumulated balance of material non-controlling interest: $ $

Altyn-Tas LLP (143,818) (44,131)

Onzhas LLP (6,252) (1,604)

Zhetysugeomining LLP (683,054) (132,546)

Profit/(loss) allocated to material non-controlling interest:

Altyn-Tas LLP (30,761) (34,055)

Onzhas LLP (3,212) (1,442)

Zhetysugeomining LLP (490,157) (214,604)

The summarised financial information of these subsidiaries are provided below. This information is based on amounts before inter-company elimination.

Summarised statement of profit or loss for 2013 Altyn-Tas LLP Onzhas LLP Zhetysugeomining LLP $ $ $ Revenue 483 83 1,752,408 Cost of sales - - (1,643,858) Administrative expenses (76,437) (1,815) (684,473) Other expense (13) (1,039) (4,182,851) Foreign exchange gain/(loss) (539,247) (29,346) (142,797)

Profit before tax (615,214) (32,117) (4,901,571) Income tax - - -

Profit/(loss) for the year (615,214) (32,117) (4,901,571)

Total comprehensive profit/(loss) (615,214) (32,117) (4,901,571)

Attributable to non-controlling interest (30,761) (3,212) (490,157)

Summarised statement of profit or loss for 2012 Altyn-Tas LLP Onzhas LLP Zhetysugeomining LLP $ $ $ Revenue 105 - 4,041,627 Cost of sales - - (3,916,717) Administrative expenses (115,469) - (692,510) Other expense (149,067) (3,767) (1,459,303) Foreign exchange gain/(loss) (416,663) (10,653) (119,135)

Profit before tax (681,094) (14,420) (2,146,038) Income tax - - -

Profit/(loss) for the year (681,094) (14,420) (2,146,038)

Total comprehensive profit/(loss) (681,094) (14,420) (2,146,038)

Attributable to non-controlling interest (34,055) (1,442) (214,604)

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Summarised statement of financial position for 2013

Altyn-Tas LLP Onzhas LLP Zhetysugeomining LLP

$ $ $ Current Assets 55,170 1,988,024 1,554,497 Non-Current Assets 21,311,188 714 3,370,284 Current Liabilities (32,205,811) (2,113,592) (12,536,595) Non-Current Liabilities - - (653,802)

Total Equity (10,839,453) (124,854) (8,265,616)

Attributable to: - equity holders of parent (10,695,635) (118,603) (7,582,562) - non controlling interest (143,818) (6,251) (683,054)

Summarised statement of financial position for 2012

Altyn-Tas LLP Onzhas LLP Zhetysugeomining LLP

$ $ $ Current Assets 29,399 601,309 1,711,570 Non-Current Assets 18,425,339 621 6,101,881 Current Liabilities (27,280,054) (679,120) (10,110,798) Non-Current Liabilities (20,319) - (463,187)

Total Equity (8,845,635) (77,190) (2,760,534)

Attributable to: - equity holders of parent (8,801,504) (75,586) (2,627,988) - non controlling interest (44,131) (1,604) (132,546)

Ownership interests are disclosed at Note 16.

15. Loss Per Share

The following reflects the information used in calculating basic and diluted loss per share:

Consolidated

31 Dec 2013 31 Dec 2012

$ $

Net loss attributable to ordinary equity holders (9,826,112) (6,170,985)

Weighted average number of ordinary shares for basic and diluted loss per share

1

889,308,980 738,275,724

Loss per share (cents per share) (1.10) (0.84)

1. 108,413,763 (2012: 108,813,763) options on issue can potentially dilute basic earnings per share in the future but were not included

in the calculation of dilutive earnings per share because they are anti-dilutive for the period as their inclusion would decrease the loss

per share.

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16. Related Party Disclosures

(a) Directors and Key Management Personnel

Disclosures relating to Directors and KMP remuneration are set out in the Directors’ Report.

Consolidated

31 Dec 2013 31 Dec 2012

$ $

Short-term employee benefits 625,925 825,110

Post employment benefits 29,050 110,631

Security-based payment 49,058 374,479

704,033 1,310,220

Equity Transactions with Directors and Key Management Personnel (Consolidated)

All equity transactions with KMP other than those arising from the exercise of remuneration options have been entered into under terms and conditions no more favourable than those the Consolidated Entity would have adopted if dealing at arm's length.

Shareholdings held by Directors/KMP and their Related Entities

Balance at 1 January

2013

Acquired During the

Period

Disposed During the

Period

Granted as Remuneration

Ceasing to be Key

Management Person

Balance at 31 December

2013

Number Number Number Number Number Number

Directors

A Hopkins - - - - - -

R Gill 18,657,143 - - - - 18,657,143

P Reiser 129,283,525 - - - - 129,283,525

E Kanapyanov 2,900,000 - - - - 2,900,000

G Warwick 65,994,315 - - - (65,994,315) -

M Michael 1,000,000 - - - (1,000,000) -

L Martino - - - - - -


P Thompson - - - - - -

D Greenaway 438,416 - (438,416) -

Z Tazhibayeva - - - - - -

Total 218,273,399 - - - (67,432,731) 150,840,668

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2012

Acquired During the

Period

Disposed During the

Period


Ceasing to be Key

Management Person


2012


Directors

R Gill 3,657,143 - - 15,000,000 - 18,657,143

P Reiser 126,400,952 2,882,573 - - - 129,283,525

E Kanapyanov 2,900,000 - - - - 2,900,000

G Warwick 53,994,315 12,000,000 - - - 65,994,315

M Michael - 1,000,000 - - - 1,000,000

A Pankhurst 1,500,000 - - - (1,500,000) -


D Greenaway 438,416 - - - - 438,416

C Campbell-Hicks 5

2,000,000 - - - (2,000,000) -

Total 190,890,826 15,882,573 - 15,000,000 (3,500,000) 218,273,399

Option holdings held by Directors/KMP and their Related Entities


2013

Acquired During the

Period

Forfeited / Expired

During the Period


Ceasing to be key

management person


2013


Directors

A Hopkins

- - - - - -

R Gill 2,500,000 - - - - 2,500,000

P Reiser 2,500,000 - - - - 2,500,000

E Kanapyanov 5,500,000 - - - - 5,500,000

G Warwick 2,500,000 - - - (2,500,000) -

M Michael - - - - - -

L Martino

- - - - - -


P Thompson

- - - - - -

D Greenaway - - - - - -

Z Tazhibayeva

- - - - - -

Total 13,000,000 - - - (2,500,000) 10,500,000

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All options as a the respective reporting dates were fully vested.

(b) Transactions with Related Parties

Subsidiaries:

The consolidated financial statements include the financial statements of Central Asia Resources Limited and its subsidiaries as per the following table:

Name Country of Incorporation

Equity (%) Investment ($)

31 Dec 2013 31 Dec 2012 31 Dec 2013 31 Dec 2012

Golden Eagle Investment Resources Limited

British Virgin Islands

100% 100% 1,463,271 1,463,271

Moonstone Holdings Ltd 1

Jersey 100% 100% 2,760,000 2,760,000

Palmerston Ltd 1

British Virgin

Islands 100% 100% 240,000 240,000

Altyn-Tas LLP 2

Kazakhstan 95% 95% 28,299 28,299

Onzhas LLP Kazakhstan 90% 90% 1,915,047 1,915,047

Zhetysugeomining LLP 3 Kazakhstan 90% 90% 1,135 1,135

Palm-ES LLP Kazakhstan 100% 100% 4,078 4,078

1. Investment held by Golden Eagle Investment Resources Limited.

2. Investment held by Moonstone Holdings Ltd.

3. Investment held 100% by Onzhas LLP.

Voting rights are equivalent to ownership interests above.


2012

Acquired During the

Period

Forfeited / Expired

During the Period


Ceasing to be key

management person


2012


Directors

R Gill 2,500,000 - - - - 2,500,000

P Reiser 2,500,000 - - - - 2,500,000

E Kanapyanov 5,500,000 - - - - 5,500,000

G Warwick 2,500,000 - - - 2,500,000

A Pankhurs

10,000,000 - (600,000) - (9,400,000) -


C Campbell-Hicks

9,000,000 - - - (9,000,000) -

Total 32,000,000 - (600,000) - 18,400,000 13,000,000

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(c) Transactions with Related Parties

The following totals are related party transactions which occurred during the year. Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.

Consolidated Entity

Sales Purchases Other Transactions

31 Dec

2013 31 Dec

2012 31 Dec

2013 31 Dec

2012 31 Dec

2013 31 Dec

2012

$ $ $ $ $ $

Director related

Kazakhstan-Australia LLP 1

- - 17,383 26,983 - -

Kazakhstan-Australia Association LLP

2

- - 156,231 120,900 - -

Grovebook Enterprises Pty Ltd 3 - - 13,000 26,085 - -

Aktasty-Geologiya LLP 4 - - - - 9,466

Zhikhaz Corporation 5 - - - 2,137 - -

Indian Ocean Advisory Group Pty Ltd

6

- - 242,589 - - -

Consolidated Parent

31 Dec 2013 31 Dec 2012 31 Dec 2013 31 Dec 2012

$ $ $ $

Trade and Other Receivables

Kazakhstan-Australia LLP - - - -

Aktasty-Geologiya LLP 4 9,466 9,466 9,466 9,466

Trade and Other Payables

Kazakhstan-Australia LLP 1 70 6,474 - -

Kazakhstan-Australia Association LLP 2

184,620 42,217 184,620 42,217

Zhikhaz Corporation 5 - 1,407 - -

All payables are unsecured, and settled by cash.

1. The Group leased warehouse and office facilities from Kazakhstan-Australia LLP, an entity related to Mr Kanapyanov.

2. Kazakhstan-Australia Association LLP, an entity related to Mr Kanapyanov, provided consulting services to the Company not all of

these fees have been paid.

3. Grovebook Enterprises Pty Ltd, an entity related to Mr Michael, provides company administration and secretarial services.

4. Central Asia Resources disposed of Altynsaigeo LLP to Aktasty-Geologiya, an entity related to Mr Kanapyanov, for $9,466.

5. The Group leased office facilities from Zhikhaz Corporation LLP, an entity related to Mr Kanapyanov.

6. Indian Ocean Advisory Group Pty Ltd, an entity related to Mr Luke Martino, and of which Mr Harry Spindler is an employee. This

company provides company administration, secretarial and accounting services. These services were provided on normal commercial

terms and conditions and at market rates.

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17. Capital and Other Expenditure Commitments

Exploration and Development Commitments

Commitments in relation to the Consolidated Entity’s licenses are determined by work programs agreed with the government, on the signing of the license agreement and then on an annual basis. Work program amendments can be applied for, if required.

Under the agreed development work programs, the estimated commitment required to be paid over the next years is:

< 1 Year >1 Year < 5 Years Total

$ $ $

767,312 798,711 1,566,023

Lease Commitments

Finance lease commitments – the Consolidated Entity as lessee

Consolidated

31 Dec 2013 31 Dec 2012

$ $

Office Equipment Lease

Within one year - 1,228

More than one and less than five years - -

Total minimum lease payment - 1,228

Less amounts representing finance charges - (383)

Present value of minimum lease payments - 845

Included in the financial statements as:

Current borrowing - 845

Non-current borrowing - -

- 845

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18. Segment Reporting

For management purposes, the Group is organised into business units based on the nature of activities and has two reportable segments, as follows:

Dalabai segment (the mining activity and the gold processing activity combined);

Exploration segment (the exploration and evaluation activity).

31 Dec 2013

Dalabai Exploration Total

$ $ $

Revenues - external 1,750,377 - 1,750,377

Embedded derivative gain 215,021 - 215,021

E&E Write-off (215,350) - (215,350)

Depreciation (756,056) (9,026) (765,082)

Impairment property plant & equipment & mine properties

(5,992,301) - (5,992,301)

Segment loss for the period (9,988,491) (361,751) (10,350,242)

Segment assets 9,692,931 8,447,381 18,140,312

Segment liabilities (5,238,283) (566,978) (5,805,261)

31 Dec 2012

Dalabai Exploration Total

$ $ $

Revenues - external 4,041,367 - 4,041,367

Loss on disposal of investments - (991,176) (991,176)

Loss on disposal of assets (12,458) 4,240 (8,218)

Write-off PP&E (812,614) - (812,614)

Depreciation (60,846) (26,305) (87,151)

Impairment property plant & equipment & mine properties

(168,375) - (168,375)

Segment loss for the period (5,056,117) (1,382,011) (6,438,128)

Segment assets 16,040,898 7,004,106 23,045,004

Segment liabilities (4,429,550) (775,535) (5,205,085)

No operating segments have been aggregated to form the above reportable operating segments. Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment.

Segment performance is evaluated based on a number of factors. Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with third parties. Prior to 2012 the Group had only one segment since all of the projects were under exploration or development. In 2012 the Dalabai project commenced production with the first sales made in May 2012. Therefore, the Dalabai project related production unit is treated as a separate segment while other exploration activities remained under the Exploration segment.

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19. Sale of subsidiaries

No subsidiaries were sold in 2013.

In the 4th

quarter of 2012 the Group disposed of two subsidiaries (Altynsaigeo LLP and Buguty-Palm LLP, holders of the Bizhe and Uenke-Bulak tenements, respectively).

20. Significant Events After the Balance Date

The following significant changes in the Group have occurred subsequent to balance date.

On 8 April 2014, the Company announced that it had reached an agreement with Manas Resources Ltd (MSR) to convert its debt of US$450,000 into equity with the issue of CVR shares at the next equity capital raising issue price, subject to regulatory approvals, if any, and successful completion of the debt financing with the Kazak bank. To compensate MSR for the extension of term for this loan, an additional 15% of shares will be issued to MSR (ie total shares to the increased total value of US$517,500).

On 22 April 2014, the Company announced that its subsidiary Zhetysugeomining LLP (“ZGM”) had executed a US$2.5 million debt facility with the Halyk Bank of Kazakhstan. This loan comprises Capex and Working Capital components, and is in two tranches, of US$1.1m and US$1.4m, respectively (subsequently confirmed as US$0.93m and US$1.58m, respectively). The interest rate on these loans is 13% for Working Capital and 14% for Capex, and the loans are secured against the Dalabai project assets, including the new capital items to be purchased with this finance. The loan has a term of 24 months and may be terminated early by the payment of all funds plus a 5% early termination fee. During the term of the loan, loaned funds and mine cashflow may be used only for Dalabai operational expenses, with the exception of $1.5m to be used for repayments of an existing Gold Loan and other non-Dalabai expenses. These restrictions may be relaxed following a review of the first four months of mine operations. The Tranche 2 loan is subject to the Company drawing down Tranche 1, providing notarized beneficial ownership details of 50% of the Company’s shareholdings (this is completed) and providing the pledged security of the Dalabai fixed assets and sub-soil licence to Halyk, transferring all Kazakh accounts to the Halyk Bank, the elimination of all ‘secondary legal issues’ relating to documentation of the secured assets, the confirmed appropriate use of Tranche 1 funds, and the provision of first quarter 2014 financial results for subsidiary companies ZGM and Palm ES.

In April 2014, Mr Daulet Agaidarov has been appointed Chief Financial Officer of the Company. Mr Agaidarov has 16 years experience in Mining, Exploration, Finance, Telecom and Retail sectors, and is a registered practicing accountant, holds an MBA, and has relevant experience with sub-soil licence negotiations in Kazakhstan. Previous employers include London-based Oriel Resources and Hydrogeology Ltd.

21. Contingent Liabilities

There are no contingent liabilities for the Consolidated Entity of which the Directors are aware.

22. Financial Risk Management

The Consolidated Entity is focused on the exploration and commercial exploitation of gold and silver in Kazakhstan. As such, the Consolidated Entity is exposed to the following risks:

Credit risk;

Interest rate risk;

Foreign currency risk; and

Liquidity risk.

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The Consolidated Entity does not enter into or trade in financial instruments, including derivative financial instruments for speculative purposes. The use of financial instruments and the overall risk management strategy of the Consolidated Entity is governed by the Board of Directors and is primarily focussed on ensuring the Consolidated Entity is able to finance its business plans.

Credit Risk

Credit risk is the risk a counter party will default on its contractual obligations resulting in a financial loss to the Consolidated Entity. The Consolidated Entity’s maximum exposure is equal to the carrying amount of its financial assets and trade and other receivables which comprise cash, receivables, security deposits and loans as at 31 December 2013.

The Consolidated Entity’s short-term cash surplus are invested and held at major banks with optimal credit ratings, resulting in exposure to standard financial system risk.

Interest Rate Risk

Interest rate risk is the risk that a fair value or future cash flow of a financial instrument will fluctuate because of changes in underlying cash rate.

Interest rates on financial liabilities are fixed until maturity.

Other financial assets that are not listed below have not been included as they are not interest bearing and are therefore not subject to interest rate risk.

Consolidated

31 Dec 2013 31 Dec 2012

$ $

Financial Assets

Floating rate

Cash and cash equivalents 270,475 3,300

Security bond 10,560 10,199

Embedded derivate asset 215,021 -

496,056 13,499

The following table summarises the sensitivity of the fair value of financial instruments held at balance date, following a movement in underlying cash interest rates with other variables held constant. The 1% (2012: 1%) sensitivity is based on reasonably possible changes over a financial year, using the observed range of historical rates for the preceding 5 year period.

Consolidated

31 Dec 2013 31 Dec 2012

$ $

+1% (2012: +1%)

Profit Increase 4,961 135

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Foreign Currency Risk

The Consolidated Entity’s exposure to foreign currency risk at the reporting date was as follows, based on notional amounts:

Consolidated 31 Dec 2013

AUD 1 KZT USD Total

Cash 6,717 161,947 101,811 270,475

Trade and other receivables 24,005 863,588 - 887,593

Embedded derivative asset - - 215,021 215,021

Borrowings (1,354,540) - (1,571,855) (2,926,395)

Trade and other payables (228,537) (1,719,071) - (1,947,608)

Net balance sheet exposure (1,552,355) (693,536) (1,255,023) (3,500,914)

Consolidated 31 Dec 2012

AUD 1 KZT USD Total

Cash 42,215 30,085 221,777 294,077

Trade and other receivables 22,943 844,540 - 867,483

Borrowings (2,246,441) - (422,073) (2,668,514)

Trade and other payables (253,811) (1,519,597) (72,471) (1,845,879)

Net balance sheet exposure (2,435,094) (644,972) (272,767) (3,352,833)

1. AUD balance sheet items are not a subject of the currency risk analysis, they are shown above for information purpose

only

The following significant exchange rates (A$) applied during the period:

Average Rate Reporting Date Spot Rate

31 Dec 2013 31 Dec 2012 31 Dec 2013 31 Dec 2012

KZT 147.2351 154.4169 135.9400 156.3500

USD 0.9682 1.0356 0.8890 1.0372

Sensitivity analysis

A 10 per cent strengthening of the A$ against the following currencies at 31 December would have increased/ (decreased) other comprehensive income and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant. The analysis is performed on the same basis for the periods ended 31 December 2012.

AUD Other comprehensive income Profit or Loss

31 Dec 2013

USD - 127,418

KZT 170 510

31 Dec 2012

USD - 24,797

KZT 4,031 58,634

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A 10% weakening of the A$ against the above currencies at 31 December would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.

Significant assumptions used in the foreign currency exposure sensitivity analysis include:

Reasonably possible movements in foreign exchange rates were determined based on a review of recent movements and consideration of economic climate;

The reasonably possible movement of ±10% was calculated by consideration of the A$ average rate moving between an achieved high/low rates of approximately 1.0595/0.8845 respectively;

The translation of the net assets in subsidiaries with a functional currency other than AUD has not been included in the sensitivity analysis as part of the equity movement; and

Commodity Price Risk

The Group’s gold production is sold on spot gold markets and hence has exposure to gold price fluctuations. Hence the Group’s revenue is exposed to spot gold price risk.

The Group may from time to time be party to derivative financial instruments in the normal course of business to protect future revenue from gold operations from a significant fall in the price of gold. Gold price exposures will be managed within approved policy parameters. During the year, no forward gold contracts were entered into (31 December 2012: Nil).

On 19 August 2013, CVR and West Asia Minerals Limited (WAM) entered into a US$1.5M unsecured gold finance facility. The loan is for a term of 28 months, to be drawn down in 4 tranches with no repayments for the first 3 months. As at 31 December 2013, US$999,630 had been drawn down with the remaining US$500,370. Repayments are payable from gold production at Dalabai. Following full drawdown, the Company will be required to repay an aggregate equivalent of 1,825 ounces of gold, at a rate of 73 oz per month, or equivalent in cash if approved by the lender. As at 31 December 2013, CVR is liable to repay 48.65oz per month. In the event of default, the loan will revert to a royalty on future Dalabai production of 5% of gross gold sales, if the full $1.5m has been drawndown, or a lower % royalty on a pro-rata basis if less than $1.5m has been drawndown.

This loan has resulted in a derivate asset of $215,021 at 31 December 2013 (see note 9). This facility is to be repaid in gold in monthly repayments of 48 oz per month for 25 months from November 2013. The average forward price at date of inception was US$1,371 and devalued to US$1,201 as at 31 December 2013. At 31 December 2013, the forecast gold price is less lower than the implied value and as such, has resulted in an asset at this time and recognised against other income in the statement of comprehensive income.

If the forecasted gold price increases, the Group’s expected payments increase resulting in a derivative liability. Conversely, if the forecasted price decreases, the Group’s expected payments decrease, resulting in a derivate asset. Changes in the fair value of this derivative will impact the Company’s profit and loss statement. If the forecast gold price for the coming year was to increase by 10%, it would increase the Group’s loss by $151,882, where as if it decreased by 10%, it would increase the Group’s profit by $151,882.

Liquidity Risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities.

Management of liquidity risk is achieved through adoption of policies to maintain sufficient available funding to meet its commitments. The need for available funds is monitored through the maintenance of future rolling cash forecasts.

The following table illustrates the contractual maturities of the Consolidated Entity financial liabilities:

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Consolidated 31 Dec 2013 31 Dec 2012

< 1 Year 1 to 5 Years

> 5 Years Total < 1 Year 1 to 5 Years

> 5 Years Total

$ $ $ $ $ $

Trade and other payables

1,947,608 - - 1,947,608 1,845,879 - - 1,845,879

Loans and borrowings

3,032,199 756,659 - 3,788,858 423,301 3,000,000 - 3,423,301

Total 4,979,807 756,659 - 5,736,466 2,269,180 3,000,000 - 5,269,180

Net Fair Values

Except for borrowings, the carrying amount of financial assets and financial liabilities recorded in the financial statements approximate their fair values due to its short term maturity. The fair value of borrowings that do not have an active market, are based on valuation techniques such as present value techniques, using both observable and unobservable market inputs.

23. Share Based Payment Plans

Option Plans

As a consideration for the extension of the maturity of loan to Millstar, the lender was issued 83,810,000 options to purchase shares in the entity on 28 June 2013. These options had a strike price of AUD $0.01 each and expired unexercised on 15 December 2013. A total of $754,404 has been recognised in the option reserve in 2012 representing the value of the consideration. The options reached expiry without being exercised.

Range of Exercise Price and Weighted Average Remaining Contractual Life

The Options outstanding at 31 December 2013 have an exercise price of $0.035 and a weighted remaining contractual life of 0.38 years (2012: 1.38 years).

Option pricing model

Equity-settled transactions

The fair value of the services received in return for share options granted are measured by reference to the fair value of share options granted. The estimate of the fair value of the services received is measured based on the binomial option-pricing model. The contractual life of the option is used as an input into the model. Expectations of exercise are incorporated into the binomial option-pricing model.

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The summaries of the options are as follows:

31 December 2013

Grant Date Expiry Date Exercise Price Balance at Start of Year

Granted During the Year

Exercised During the Year

Cancelled / Forfeited During

the Year

Balance at End of the Year

Exercisable at End of the Year

$ Number Number Number Number Number Number

06-Aug-08 28-Feb-13 $0.60 200,000 - - (200,000) - - 29-May-09 28-Feb-13 $0.40 200,000 - - (200,000) - - 19-May-11 19-May-14 $0.035 86,413,763 - - - 86,413,763 86,413,763 18-Jul-11 19-May-14 $0.035 22,000,000 - - - 22,000,000 22,000,000 28-Jun-13 15-Dec-13 $0.01 - 83,810,000 (83,810,000) - -

108,813,763 83,810,000 - (84,210,000) 108,413,763 108,413,763 Weighted average exercise price, ¢ 3.67 1.0 - 1.23 3.5 3.5

31 December 2012

Grant Date Expiry Date Exercise Price Balance at Start of Year

Granted During the Year

Exercised During the Year

Cancelled / Forfeited During

the Year

Balance at End of the Year

Exercisable at End of the Year

$ Number Number Number Number Number Number

06-Aug-08 28-Feb-12 $0.50 200,000 - - (200,000) - -

06-Aug-08 28-Feb-13 $0.60 200,000 - - - 200,000 200,000

29-May-09 28-Feb-12 $0.25 200,000 - - (200,000) - -

29-May-09 28-Feb-13 $0.40 200,000 - - - 200,000 200,000

29-May-09 28-Feb-14 $0.60 200,000 - - (200,000) - -

19-May-11 19-May-14 $0.035 86,413,763 - - - 86,413,763 86,413,763

18-Jul-11 19-May-14 $0.035 22,000,000 - - - 22,000,000 22,000,000

109,413,763 - - (600,000) 108,813,763 108,813,763

Weighted average exercise price, ¢ 3.90 - - 45.00 3.67 3.67

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Performance Rights Plan (proposed)

At the date of this report, the Company has not implement a Performance Rights Plan nor issued any Performance Rights.

Once adopted, it is envisaged that the rights to be granted under this plan will be depended on the Company’s performance. Each Performance Right will be a personal contractual right. A Performance Right will provide the opportunity to receive fully paid ordinary shares for nil cost, contingent on achieving a performance hurdle over a specified performance period.

A Performance Right may be exercised if it has not otherwise lapsed in accordance with the Executive, Officer and Employee Performance Rights Plan (once completed) on the satisfaction of prescribed performance criteria within the performance period.

Although not yet issued, pursuant to the International Financial Reporting Standards (IFRS), as the Company has agreed to issue Mr Peter Thompson with 30 million performance rights subject to shareholder approval of an appropriate Performance Rights Plan (if required) approved by the Board, the accounting treatment grant date is treated to be 1 September 2013.

Performance Rights will carry no rights to dividends or voting.

The following table illustrates the number and weighted average grant fair value at grant date of Performance Rights granted per accounting standards as share based payments and outstanding at 31 December 2013.

Class Exercise price

Grant date Expiry date

Key terms

No. of shares under

Performance Rights

Weighted average grant fair value at

grant date

Performance Rights Nil 1-Sept-131 1 Mar-15

2 (a) 10,000,000 $0.01


2 (b) 10,000,000 $0.01


2 (c) 10,000,000 $0.01

30,000,000 $0.01

1 Please note that these Performance Rights have not yet been issued however, are deemed to be granted on 1 September 2013 pursuant to IFRS.

2 These dates may be subject to change once the Company finalises its Performance Rights Plan and the Performance Rights issued.

The movements in Performance Rights during the financial year ended 31 December 2013 are as follows:

31-Dec-13 31-Dec-13 31-Dec-13 31-Dec-12 31-Dec-12 31-Dec-12

No Weighted average exercise

price

Weighted average

grant fair value

No Weighted average exercise

price

Weighted average

grant fair value

Outstanding at the beginning of the year

- - - - - -

Granted during the year 30,000,000 - $0.01 - - -

Forfeited during the year - - - - - -

Exercised during the year - - - - - -

Outstanding at the end of the year 30,000,000 - $0.01 - - -

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The fair value of these Performance Rights granted during the year at grant date is set out in the table above with the following table settling out the key inputs into the Performance Right valuation model:

Number granted

Valuation date

Share price

Exercise price

Expiry date

Dividend yield

Market base probability of vesting

10,000,000 1/09/2013 $0.01 Nil 31/03/15 Nil N/A

10,000,000 1/09/2013 $0.01 Nil 31/03/16 Nil N/A

10,000,000 1/09/2013 $0.01 Nil 31/03/17 Nil N/A

The total value of Performance Rights included in remuneration for the year is calculated in accordance with Accounting Standard AASB 2 ‘Share-based Payment’. The Standard requires the value of the Performance rights to be determined at grant date and to be recognised as an expense in the profit & loss component of the statement of comprehensive income over the vesting period. Consequently a Performance Rights expense of $49,058 was incurred during the 2013 financial year (2012: $nil).

Key Terms of Performance Rights (proposed)

The terms of the performance rights to be issued to Mr Thompson as discussed above are detailed below.

The Performance Rights are to be satisfied by the issue or procurement of fully paid ordinary shares in the Company when the applicable performance hurdle is met. The performance hurdle is the Total Shareholder Return (TSR) performance relative to the 75th percentile performance of the comparator group (S&P/ASX All Ords Gold sub-industry index) in the financial years ending 31 December 2014, 31 December 2015 and 31 December 2016 (apportioned evenly).

The Volume Weighted Average Price (VWAP) of the Company Shares in the one-month preceding the Performance Date (ie the respective December month) compared to VWAP of the Company in the one-month preceding one year before the Performance Date (ie the respective January month), will be used in calculating TSR over the intervening period. The TSR incorporates capital returns as well as dividends notionally reinvested and is considered the most appropriate means of measuring Company performance.

In the case of the first 10 million Performance Right’s (subject to TSR performance for the financial year ending 31 December 2014), the Volume Weighted Average Price (VWAP) of the Company Shares at Commencement is deemed to be 1c.

Performance Rights will only be exercisable subject to the Performance Hurdle being achieved during the Performance Period. The entire annual allocation will convert if Company TSR is at the 75th percentile or higher than the comparator group performance. The detailed breakdown of the relationship between Company performance and the conversion of Performance Rights is:

There have been no shares issued during or since the end of the financial year as a result of exercise of any

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24. Information Relating to Parent Entity

Parent

31 Dec 2013 31 Dec 2012

$ $

Current Assets 108,528 286,935

Total Assets 9,842,737 26,306,873

Current Liabilities 3,198,612 683,053

Total Liabilities 3,800,582 2,928,649

Issued Capital 45,014,069 43,124,519

Reserves 2,724,186 2,675,128

Accumulated losses (41,696,100) (22,421,423)

6,042,155 23,378,224

Loss of the Parent Entity (19,274,677) (3,583,612)

Total Comprehensive Loss of the Parent (19,274,677) (3,583,612)

The parent:

- Has no contingent assets or liabilities.

- Has not provided any guarantees.

Has arranged a funding package for its continuing operations (refer Note 2b)

25. Other Expenses

Consolidated

31 Dec 2013 31 Dec 2012

$ $

Write-off of Dalabai Exploration & Evaluation expenditures 215,350 -

Write down of inventory 190,034 168,375

Impairment of property, plant, equipment and mine properties 5,992,301 -

Shareholder costs - 106,229

Other expenses 484,419 2,858

6,882,104 277,462

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26. Reconciliation of Net Loss After Tax to Net Cash flows From Operations

Consolidated

31 Dec 2013 31 Dec 2012

$ $

Net loss after tax (10,350,242) (6,438,128)

Non-cash adjustment to reconcile loss after tax to net cash flows

Loss on disposal of assets 39,625 8,218

Interest expense and lease payments classified as financing activity

- (1,530)

Share based payment expense 49,058 400,000

Depreciation and amortization expense 765,082 87,151

Write-off of PPE - 812,614

Cancellation of options - (521)

Foreign exchange loss 365,590 -

Finance costs 359,545 403,544

Loss on disposal of investments - 991,176

Movement in provisions 240,567 79,139

Write-off of Dalabai E&E expenditure 215,350 -

Impairment of property, plant, equipment and mine properties

5,992,301 -

Impairment of inventory 190,034 -

Change in fair value of embedded derivative asset (215,021) -

Change in assets/liabilities:

Decrease/(Increase) in trade and other receivables (20,110) 403,832

Decrease/(Increase) in inventory 1,040,263 993,268

(Increase)/Decrease in other assets (8,840) (1,157)

Increase in trade and other payables 32,781 1,040,644

Net cash flow used in operating activities (1,304,018) (1,221,750)

27. Auditor’s Remuneration

The Auditor of Central Asia Resources Limited is Ernst & Young.

Amounts received or due and receivable by the company auditors for an audit of the financial report of the entity:

Consolidated

31 Dec 2013 31 Dec 2012

$ $

Australia 78,000 81,622

Kazakhstan 24,000 33,797

102,000 115,419

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DIRECTORS’ DECLARATION

79

DIRECTORS’ DECLARATION


In accordance with a resolution of the Directors of Central Asia Resources Limited, I state that:

1. In the opinion of the directors:

a. The financial statements and notes of the consolidated entity are in accordance with the Corporations Act 2011, including:

i. Giving a true and fair view of the consolidated entity’s financial position as at 31 December 2013 and of its performance for the year ended for that date; and

ii. Complying with Australian Accounting Standards and the Corporations Regulations 2001,

b. The financial statements and notes also comply with International Financial Reporting Standards as disclosed in Note 2; and

c. Subject to matters disclosed in Note 2(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

2. This declaration has been made after receiving the declarations required to be made to the Directors from the Chief Executive Officer and the Chief Financial Officer in accordance with section 295A of the Corporations Act 2001 for the financial year ended 31 December 2013.

On behalf of the Board

Alan Hopkins

Chairman / Non-Executive Director

Perth, 28 May 2014

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A member firm of Ernst & Young Global LimitedLiability limited by a scheme approved under Professional Standards Legislation RK:AF:CAR:026

Ernst & Young11 Mounts Bay RoadPerth WA 6000 AustraliaGPO Box M939 Perth WA 6843

Tel: +61 8 9429 2222Fax: +61 8 9429 2436ey.com/au

Independent auditor's report to the members of Central Asia ResourcesLimited

Report on the financial report

We have audited the accompanying financial report of Central Asia Resources Limited, which comprisesthe consolidated statement of financial position as at 31 December 2013, the consolidated statement ofcomprehensive income, the consolidated statement of changes in equity and the consolidated statementof cash flows for the year then ended, notes comprising a summary of significant accounting policies andother explanatory information, and the directors' declaration of the consolidated entity comprising thecompany and the entities it controlled at the year's end or from time to time during the financial year.

Directors' responsibility for the financial report

The directors of the company are responsible for the preparation of the financial report that gives a trueand fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and forsuch internal controls as the directors determine are necessary to enable the preparation of the financialreport that is free from material misstatement, whether due to fraud or error. In Note 2(c), the directorsalso state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, thatthe financial statements comply with International Financial Reporting Standards.

Auditor's responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted ouraudit in accordance with Australian Auditing Standards. Those standards require that we comply withrelevant ethical requirements relating to audit engagements and plan and perform the audit to obtainreasonable assurance about whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures inthe financial report. The procedures selected depend on the auditor's judgment, including the assessmentof the risks of material misstatement of the financial report, whether due to fraud or error. In makingthose risk assessments, the auditor considers internal controls relevant to the entity's preparation and fairpresentation of the financial report in order to design audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity'sinternal controls. An audit also includes evaluating the appropriateness of accounting policies used andthe reasonableness of accounting estimates made by the directors, as well as evaluating the overallpresentation of the financial report.

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

Independence

In conducting our audit we have complied with the independence requirements of the Corporations Act2001. We have given to the directors of the company a written Auditor’s Independence Declaration, acopy of which is included in the directors’ report.F

or p

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nly

A member firm of Ernst & Young Global LimitedLiability limited by a scheme approved under Professional Standards Legislation RK:AF:CAR:026

Opinion

In our opinion:

a. the financial report of Central Asia Resources Limited is in accordance with the Corporations Act2001, including:

i giving a true and fair view of the consolidated entity's financial position as at 31 December2013 and of its performance for the year ended on that date; and

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

b. the financial report also complies with International Financial Reporting Standards as disclosed inNote 2(c).

Emphasis of Matter

Without qualifying our opinion:

a. we draw attention to Note 2(b) in the financial report (which describes the principal conditionsthat raise doubt about the entity’s ability to continue as a going concern). These conditionsindicate the existence of a material uncertainty that may cast significant doubt about theconsolidated entity’s ability to continue as a going concern and therefore, the consolidated entitymay be unable to realise its assets and discharge its liabilities in the normal course of business.

b. we draw your attention to Note 6 of the financial report where directors disclosed that theexploration license for AltynTas expired on 15 May 2014. An application for extension waslodged as at 31 December 2013. The approval has not been received as at the date of thisreport. This indicates the existence of material uncertainty as to whether the consolidated entitywill be able to retain its right to explore the area of interest and will be able to recover theexploration asset recognised as at 31 December 2013.

Report on the remuneration report

We have audited the Remuneration Report included in the directors' report for the year ended 31December 2013. The directors of the company are responsible for the preparation and presentation of theRemuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility isto express an opinion on the Remuneration Report, based on our audit conducted in accordance withAustralian Auditing Standards.

Opinion

In our opinion, the Remuneration Report of Central Asia Resources Limited for the year ended 31December 2013, complies with section 300A of the Corporations Act 2001.

Ernst & Young

Robert KirkbyPartnerPerth28 May 2014

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ASX ADDITIONAL INFORMATION

82

ASX Additional Information

Additional information required by the Australian Securities Exchange Limited and not shown elsewhere in this report is as follows. This information is complete up to 13 May 2014.

ORDINARY SHARE CAPITAL

(a) Distribution of ordinary shares

The Company has a total of 982,043,683 fully paid ordinary shares on issue. There were 162 holders holding less than a marketable parcel.

(b) Voting Rights

On a show of hands, every ordinary shareholder present in person, or by proxy, attorney or representative has one vote. On a poll, every shareholder present in person, or by proxy, attorney or representative has one vote for any share held by the shareholder.

(c) Twenty Largest Shareholders

The names of the twenty largest holders of quoted Shares as at 13 May 2014 are:

Name Number of Shares

Percentage of Ordinary

Shares

MILLSTAR HOLDING SA PANAMA 193,943,581 19.75

RE-RESOURCES & ENERGIES SA 125,600,952 12.79

CITICORP NOMINEES PTY LIMITED 98,562,613 10.04

NOJOOD HOLDING COMPANY WLL 57,283,457 5.83

HSBC CUSTODY NOMINEES AUSTRALIA LIMITED 22,931,714 2.34

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 3 22,571,429 2.30

NATIONAL NOMINEES LIMITED 17,014,859 1.73

MR GURSHARAN ROBIN GILL 15,800,000 1.61

JP MORGAN NOMINEES AUSTRALIA LIMITED <CASH INCOME A/C> 13,832,394 1.41

J P MORGAN NOMINEES AUSTRALIA LIMITED 10,100,000 1.03

SURFBOARD PTY LTD <ARW SUPER FUND NO1 A/C> 9,646,572 0.98

TAURUS CORPORATE SERVICES PTY LTD 9,000,000 0.92

MICSAL INVESTMENTS PTY LTD 8,733,601 0.89

RL HOLDINGS PTY LTD <AIRLIE A/C> 7,100,000 0.72

ROMAN RESOURCE MANAGEMENT PTY LTD 6,858,968 0.70

KENRICH ENDLESS INVESTMENT LTD 6,731,632 0.69

SHAIKH DUAIJ SALMAN MUBARAK ALKHALIFA 6,285,714 0.64

MR KENT FREDERICK KAY + MRS ANNABEL BARBARA KAY <KAYMAN PTY LTD S/FUND A/C>

6,035,000 0.61

KOLLEY PTY LTD <LUCAS FAMILY A/C> 5,930,358 0.60

FOSTER WEST SECURITIES PTY LTD <THE SPARTACUS A/C> 5,734,424 0.58

649,697,268 66.16

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ASX ADDITIONAL INFORMATION (CONTINUED)

83

(d) Substantial Shareholders

The names of Substantial Shareholders who have notified the Company in accordance with section 671B of the Corporations Act 2001 are:

Listed Ordinary Shares Number of

Shares Percentage of Ordinary

Shares Philippe Reiser 126,400,952 18.78 Earl of Warwick 53,994,315 8.02

Set out above is an extract from the Company’s register of last substantial shareholder notices as received by the Company and/or lodged at the ASX. Shareholdings and percentages reported in the table are as reported in the most recent notifications received, however these may differ from current holdings as substantial shareholders are required to notify the Company only in respect of changes which act to increase or decrease their percentage holding by at least 1% of total voting rights.

(e) Distribution of Equity Securities

The number of Shareholders, by size of holding, in each class of Share are:

Ordinary Shares

Number of Holders

Number of Shares

1 - 1,000 15 568 1,001 - 5,000 6 19,472 5,001 - 10,000 52 442,371 10,001 - 100,000 352 18,570,727 100,001 and over 459 963,010,545

884 982,043,683 The number of Shareholders holding less than a marketable parcel of Shares are (based on a share price of $0.018):

162 2,190,246

OPTIONS

(f) Distribution of Options

The Company has a total of 108,413,763 Options (exercise price $0.035, expiry 19 May 2014) on issue.

(g) Distribution of Equity Securities

The number of Optionholders, by size of holding, in each class of Share are:

Ordinary Shares

Number of Holders

Number of Shares

1 - 1,000 - -

1,001 - 5,000 - -

5,001 - 10,000 - -

10,001 - 100,000 - -

100,001 and over 10 108,413,763

10 108,413,763

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ASX ADDITIONAL INFORMATION (CONTINUED)

84

(h) Twenty Largest Option Holders

The names of the twenty largest holders of Options as at 13 May 2014 are:

Unlisted Options

Name Number of Options

Percentage of Options


ROMAN RESOURCE MANAGEMENT PTY LTD 10,097,447 9.31

MS ANGELA MARY DENT 9,000,000 8.30

MR CHRIS CAMPBELL HICKS 9,000,000 8.30

MR FRANCIS ROBERT HAWDON HARPER 8,414,540 7.76

MS JEANETTE VICTORIA RICHARDSON 8,414,539 7.76

AKTASTY GEOLOGIA LIMITED 5,500,000 5.07

MR GURSHARAN ROBIN GILL 2,500,000 2.31

HILLBROW INVESTMENTS LIMITED 2,500,000 2.31

MR PHILIPPE REISER 2,500,000 2.31

108,413,763 100.00

(i) Largest holders of unquoted options holding more than 20%

Unlisted Options

Name Number of Options

Percentage of Options


SCHEDULE OF TENEMENTS

Interest in Mining Tenements

DALABAI ALTYNTAS

Licence Number 2618 EL 176

Licence Type Mining Allotment Exploration Licence

Area 3.81sq km 55,38sq km (AT 12,7 + KEP

39,0 + KENGIR 3,68)

Grant Date 23 April, 2008 15 May, 1994

Expiry Date 23 April, 2023 15 May, 20141

Holder ZGM Altyntas LLP

Interest (%) 90% 95%

1 An application to further extend the Altyntas licence until May, 2017 was submitted in January 2014 and is pending review by the Kazakh

Department of Mines and Infrastructure (“MINT”)

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CORPORATE GOVERNANCE STATEMENT

85

The Board of Directors is responsible for the corporate governance of Central Asia Resources Limited (the ‘Company’). The Company operates in accordance with the corporate governance principles as set out by the ASX corporate governance council and required under ASX listing rules. As the framework of how the Company carries out its duties and obligations, the Board has considered the eight principles of corporate governance as set out in the ASX Corporate Governance Principles and Recommendations with 2010 Amendments, 2nd Edition (the ‘Principles’).

THE EIGHT PRINCIPLES OF CORPORATE GOVERNANCE ARE:

1. Lay solid foundations for management and oversight;

2. Structure the Board to add value;

3. Promote ethical and responsible decision-making;

4. Safeguard integrity in financial reporting;

5. Make timely and balanced disclosure;

6. Respect the rights of shareholders;

7. Recognise and manage risk; and

8. Remunerate fairly and responsibly.

There are a number of recommendations in the Principles with which the Company does not comply due to the size of the Company and the Board, and its practical management requirements. A summary of the Principles and those recommendations with which the Company does not comply are detailed at the end of this statement.

The Company is in the process of reviewing and updating all governance policies and charters which will be made available on the Company’s website www.centralasia.com.au following completion of the review.

Principle 1 – Lay Solid Foundations or Management and Oversight

Companies should establish and disclose the respective roles and responsibilities of Board and management.

Recommendation 1.1: Companies should establish the functions reserved to the Board and those delegated to senior executives and disclose those functions.

The Board is responsible for the governance of the Company. The role of the Board is to provide overall strategic guidance and effective oversight of management.

The Board delegates to the Managing Director and or Chief Executive Officer responsibility for implementing the Company’s strategic direction and managing the Company’s day to day operations.

Recommendation 1.2: Companies should disclose the process for evaluating the performance of senior executives.

The Managing Director is responsible for assessing the performance of the key executives within the Company. The basis of evaluation of senior executives will be on agreed performance measures.

Principle 2 – Structure the Board to Add Value

Companies should have a Board of an effective composition, size and commitment to adequately discharge its responsibilities and duties. The Company’s board size and composition is subject to limits imposed by the Company’s constitution, which provides for a minimum of 3 directors and a maximum of 10.

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2013 Annual Report

86

Recommendation 2.1: A majority of the Board should be independent directors.

The membership and structure of the Board is selected to provide the Company with the most appropriate direction in the areas of business controlled by the Company. The Board considers that the individuals on the Board can, and do, make quality and independent judgments in the best interests of the Company on all relevant issues.

All directors are aware that they are required to bring an independent judgment to bear on Board decisions. Where a potential conflict of interest may arise, involved Directors must, unless the remaining Directors resolve otherwise, withdraw from deliberations concerning the matter.

The Board at the date of this report consists of 4 members (excluding alternate Directors), 4 non-executive directors and 3 non-independent.

The Directors which have held office during the year and to the date of this statement are:

Current Directors: Role Independence and nature of interests

Alan Hopkins Chairman / Non-Executive Director (appointed 1 February 2013)

Alan is considered to be independent

Robin Gill Non-Executive Director Robin previously acted as Joint Managing Director of the Company. On 1 September 2013, Robin became the Non-Executive Director however, there has not been a period of at least 3 years since ceasing his executive employment, and as such, Robin is not considered to be independent.

Erulan Kanapyanov Non-Executive Director Eurlan previously acted as an Executive Director of the Company however, there has not been a period of at least 3 years since ceasing his executive employment, and as such, Eurlan is not considered to be independent.

Philippe Reiser Non-Executive Director Philippe is a substantial shareholder of the Company and as such, is not considered to be independent.

Luke Martino Alternate Director (appointed 1 March 2013)

Luke is considered to be independent

Previous Directors:

Guy, Earl of Warwick

Resigned effective 1 February 2013 as Chairman and resigned effective 4 March 2013 as Joint Acting Managing Director

Guy previously acted as Joint Managing Director of the Company however, there has not been a period of at least 3 years since ceasing his executive employment and he was a substantial shareholder of the Company. As such, Guy was not considered to be independent.

Michael Michael Resigned as Non-Executive Director on 16 January 2013

Michael was considered to be independent

The Board considers that the composition of the Board is appropriate given the size and development of the Company.

Refer to the Director’s report for details of each director’s profile.

Recommendation 2.2: The chair should be an independent director.

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Recommendation 2.3: The roles of the chair and chief executive officer should not be exercised by the same individual.

The Chairman of the Company is Mr Alan Hopkins, who satisfies the test of independence.

The Company has followed ASX recommendations in the assessment of whether a director is considered to be "independent" and with respect to conducting regular reviews of directors' independence (refer above).

The Company has not yet set specific materiality thresholds in relation to the consideration of director independence. Regardless of their independence all directors are encouraged to bring an independent judgement to bear on Board decisions.

Recommendation 2.4: The Board should establish a nomination committee.

The Board has not established a nomination committee. The Board, as a whole, deals with areas that would normally fall within the Charge of the Nomination Committee.

Recommendation 2.5: Companies should disclose the process for evaluating the performance of the Board, its committees and individual directors.

The Board undertakes ongoing self-assessment and review of its performance and of the performance of the Chairman and Individual Directors.

Principle 3 – Promote Ethical and Responsible Decision-making

Companies should actively promote ethical and responsible decision-making.

Recommendation 3.1: Companies should establish a code of conduct and disclose the code or a summary of the code as to:

• the practices necessary to maintain confidence in the company’s integrity;

• the practices necessary to take into account their legal obligations and the reasonable expectations of their stakeholders; and

• the responsibility and accountability of individuals for reporting and investigating reports of unethical practices.

The Company is committed to Directors and employees maintaining high standards of behaviour, business ethics and integrity as well as ensuring that activities are in compliance with the letter and spirit of both the law and Company policies.

Recommendations 3.2 & 3.3: Companies should establish a policy concerning diversity and disclose the policy or a summary of that policy, and in each annual report disclose the measurable objectives for achieving diversity.

Central Asia Resources Limited is committed to providing a diverse and inclusive work environment in which everyone is treated fairly and with respect. This applies to directors and all employees of Central Asia Resources Limited. However, due to the small size of the Company, it has not yet developed a formal diversity policy.

The Company recognises that a talented and diverse workforce is a key competitive advantage and that success is a reflection of the equality and skill of its people. Diversity assists the business in achieving its objectives and delivering for its stakeholders by enabling it to attract and retain the most qualified and experienced individuals to the workforce.

The Company’s general policy when choosing employees is to recruit and manage on the basis of competence and performance regardless of age, nationality, race, gender, religious beliefs, sexuality, physical ability or cultural background.

Recommendation 3.4: Companies should disclose in each annual report the proportion of women employees in the whole organisation, women in senior executive positions and women on the board.

The Company embraces diversity, with a focus on female participation. Diversity is not limited to gender, age, ethnicity and/or cultural backgrounds.

As at March 2014 the proportion of women employed in the Group was:

• All employees – 37% • In management positions – 50%

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• In senior executive positions – 33% • Board – nil%

Principle 4 – Safeguard Integrity in Financial Reporting

Companies should have a structure to independently verify and safeguard the integrity of their financial reporting.

Recommendation 4.1: The Board should establish an audit committee.

Recommendation 4.2: The audit committee should be structured so that it:

• consists of only non-executive directors;

• consists of a majority of independent directors;

• is chaired by an independent chair, who is not chair of the Board; and

• has at least three members.

The Board has not yet established an Audit Committee. The Board, as a whole, deals with areas that would normally fall within the Charge of the Audit Committee.

Recommendation 4.3: The audit committee should have a formal charter.

The Board has not yet established a formal charter for an Audit committee.

Principle 5 – Make Timely and Balanced Disclosure

Companies should promote timely and balanced disclosure of all material matters concerning the company.

Recommendation 5.1: Companies should establish written policies designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior executive level for that compliance and disclose those policies or a summary of those policies.

The Company has obligations under the Corporations Act and ASX Listing Rules to keep the market fully informed of information which may have a material effect on the price or value of its securities. The Company discharges these obligations by releasing information to ASX in the form of an ASX release or disclosure in other relevant documents (e.g. the Annual Report).

Principle 6 – Respect the Rights of Shareholders

Companies should respect the rights of shareholders and facilitate the effective exercise of those rights.

Recommendation 6.1: Companies should design a communications policy for promoting effective communication with shareholders and encouraging their participation at general meetings and disclose their policy or a summary of that policy.

The Company is committed to the promotion of investor confidence by ensuring that trade in its securities takes place in an efficient, competitive and informed market. The Board Charter recognises the importance of forthright communication as a key plank in building shareholder value and that to prosper and achieve growth, the Company must (among other things) earn the trust of employees, customers, suppliers, communities and security holders by being forthright in its communications and consistent in its fulfilment of obligations.

Shareholders will be provided with the following reports and communications:

• Annual Report;

• Notice of Annual General Meeting; and

• any other documents which the Board deems appropriate.

At the Annual General Meeting of the Company, shareholders will be encouraged to ask questions of the Board and the Company’s Auditor.

The Company commits to dealing fairly, transparently and openly with both current and prospective shareholders using available channels and technologies to reach and communicate promptly.

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Principle 7 – Recognise and Manage Risk

Companies should establish a sound system of risk oversight and management and internal control.

Recommendation 7.1: Companies should establish policies for the oversight and management of material business risks and disclose a summary of those policies.

Management determines the Company’s risk profile and is responsible for overseeing and approving risk management strategy and policies, internal compliance and internal control.

The Board oversees an ongoing assessment of the effectiveness of risk management and internal compliance and control.

Recommendation 7.2: The Board should require management to design and implement the risk management and internal control system to manage the company’s material business risks and report to it on whether those risks are being managed effectively. The Board should disclose that management has reported to it as to the effectiveness of the Company’s management of its material business risks.

The responsibility for undertaking and assessing risk management and internal control effectiveness is delegated to management. Management is required by the Board to report back on the efficiency and effectiveness of risk management.

Recommendation 7.3: The Board should disclose whether it has received assurance from the chief executive officer (or equivalent) that the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks.

The CEO and the Chief Financial Officer confirm in writing to the Board that the financial reports of the Company for the financial period:

• 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;

• the above statement is founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the Board; and

• the Company’s risk management and internal compliance and control system is operating efficiently and effectively in all material respects.

Principle 8 – Remunerate Fairly and Responsibly

Companies should ensure that the level and composition of remuneration is sufficient and reasonable and that its relationship to performance is clear.

Recommendation 8.1: The Board should establish a remuneration committee.

The Board has not established a remuneration committee. The Board, as a whole, deals with areas that would normally fall within the Charge of the Remuneration Committee.

Recommendation 8.2: Companies should clearly distinguish the structure of non-executive directors’ remuneration from that of executive directors and senior executives.

Directors’ and Senior Executives’ remuneration is aligned to the long-term interests of shareholders within an appropriate control framework.

Further information on directors’ and executives’ remuneration is set out in the directors’ report.

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Departure from Best Practice Recommendations

From 1 January 2012 to 31 December 2012, the Company complied with each of the Eight Essential Corporate Governance Principles and Best Practice Recommendations published by the ASX Corporate Governance Council, other than the recommendations specified in the table below.

Recommendation Notification of Departure Explanation from Departure

2.1 A majority of the Board are not independent directors.

The Board believes that the individuals on the Board can, and do, make quality and independent judgments in the best interests of the Company on all relevant issues.

2.2 & 2.3 The chair was not an independent director for the entire period.

The roles of the chair and chief executive officer/ managing director were exercised by the same individual for a portion of the period..

Guy Warwick acted as Chairman during the period 1 January 2013 to 31 January 2013 and Joint Managing Director until his resignation on 4 March 2013. He was not classed as an independent director because of the size of his shareholding and also acted as Joint Managing Director. This departure was rectified on 1 February 2013 with the appointment of Mr Alan Hopkins as Non executive Chairman. Mr Peter Thompson as appointed Chief Executive Officer in September 2013.

2.4 The Board has not established a nomination committee.

The whole Board carries out the duties which would otherwise be undertaken by the nomination committee. The need for a nomination committee will be reviewed annually.

3.2 & 3.3 The Board has not established a policy concerning diversity.

Due to the small size of the Group, a Diversity Policy has not yet been introduced. This is anticipated to occur in 2014.

4.1, 4.2 & 4.3 The Board has not established an audit committee.

The whole Board carries out the duties which would otherwise be undertaken by an audit committee. The need for an audit committee and formal charter will be reviewed annually.

8.1 The Board has not established a remuneration committee.

The whole Board carries out the duties which would otherwise be undertaken by the remuneration committee. The need for a remuneration committee will be reviewed annually.

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Documents

For personal use only - ASX · in Kazakhstan, Central Asia. The Company holds two licence areas in Kazakhstan; an exploration licence at Altyntas, and a Mining Allotment at Dalabai