!..5!,2%0/24...5 what your company has achieved…. listing on asx listed on 27 april 2004. ore...

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Table of Contents

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

CHAIRMAN'S REVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

PROJECTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

OPERATIONS REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

DIRECTORS’ REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

CORPORATE GOVERNANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18

FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23

Statement of Financial Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23

Statement of Financial Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24

Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25

Notes to and Forming Part of the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26

Directors' Declaration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38

Independent Audit Report to the Members of Rox Resources Limited . . . . . . . . . . . . . . . . . . . . . . .39

SCHEDULE OF MINING TENEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41

OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42

ROX RESOURCES | ANNUAL REPORT 2004

Corporate Directory2

DIRECTORS

Dr Alistair CowdenChairman

Mr Ian MulhollandManaging Director

Mr Michael BlakistonNon-Executive Director

COMPANY SECRETARY

Mr Brett D Dickson

BANKERS

Westpac Banking Corporation40 St George’s TerracePERTH WA 6000

AUDITOR

Ernst & YoungLevel 34, Central Park152 St George’s TerracePERTH WA 6000

Telephone: (08) 9429 2222Facsimile: (08) 9429 2436

SOLICITOR

Blakiston & Crabb1202 Hay StreetWest Perth WA 6005


STOCK EXCHANGE

Australian Stock Exchange Limited

COMPANY CODE

RXL (Fully Paid Shares)

ISSUED CAPITAL

32,272,000 Fully paid ordinary shares5,250,000 20 cent, 31 January 2009 options1,200,000 20 cent, 30 April 2007 options

For shareholder information contact:

SHARE REGISTRY

Computershare Registry Services Pty LtdLevel 2, Reserve Bank Building45 St Georges TerracePerth,Western Australia, 6000


For information on your company contact:

PRINCIPAL & REGISTERED OFFICE

Ground Floor1 Havelock StreetWest Perth,Western Australia, 6005

Telephone: (08) 9486 4537Facsimile: (08) 9486 4933Web: www.roxresources.com.au

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Dear Fellow Shareholder,

I am pleased to present Rox’s first Annual Report.

Rox is fortunate in starting its life with 100% ownership of the historic Menzies goldfield just north of Kalgoorlie in WesternAustralia.When gold was first discovered at Menzies it quickly developed to a point where it had 13 hotels, a hospital and arailway built from Kalgoorlie in just two years. Over the early part of the 20th century Menzies became the transport hub forthe north-eastern goldfields with 14 underground mines and over 650,000 oz of gold produced at the sensational grade of22.5 g/t – these were boom times.

Ownership of the Menzies goldfield over the years has been fragmented and, because of this, this great goldfield has not hadthe attention given to other historic fields. Rox has now consolidated this ownership, and it is our view that there remainsexcellent potential for additional gold production at Menzies.

This potential has already been demonstrated with significant progress achieved in the five months since listing.We have made a number of new high-grade hits and upgraded the resources.The potential for significant mineralisation below 100 metres depth will be investigated in coming months following compilation of the extensive and fragmented historic database.

Rox is in a strong position, it has a 100% owned 170,000 ounce gold resource at Menzies, $3 million in cash and as a youngcompany, relatively few shares on issue.

I commend the Rox team for their efforts and look forward to an exciting year ahead.

Alistair CowdenChairman

Chairman’s Review

The Florence Mine1898(Lady Shenton)

122°00'E

121°00'E St Ives


Projects4

Menzies Project Location Map

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WHAT YOUR COMPANY HAS ACHIEVED….

LISTING ON ASX

Listed on 27 April 2004.

ORE GRADE RC DRILL INTERCEPTS AT KNOWN DEPOSITS

2 metres at 10.8 g/t Au from 31 metres depth at First Hit,1 metre at 15.1 g/t Au from 37 metres depth at Lady Harriet,4 metres at 4.0 g/t Au from 70 metres depth at Lady Harriet,2 metres at 8.6 g/t Au from 59 metres depth at Lady Shenton.

NEW DISCOVERIES FROM RAB DRILLING

13 metres at 9.9 g/t Au from 20 metres depth at Bonnie Jean,10 metres at 1.24 g/t Au from 15 metres depth at Ballarat Menzies,1 metre at 7.8 g/t Au from 30 metres depth at Ballarat Menzies,5 metres at 12.8 g/t Au from 25 metres at Wedderburn.

RESOURCE INCREASEURCE CATEGORY TONNES GRADE OUNCES%

Resource Category Tonnes Grade Ounces %

Measured 75,000 2.3 5,500 3

Indicated 1,559,000 2.5 124,900 73

Inferred 494,000 2.6 40,500 24

TOTAL 2,128,000 2.5 170,900 100

Totals may not add up due to rounding

Highlights

Menzies Consolidated G.M., 1899North Coolgardie G.F.(Yunndaga)


Operations Report6

Menzies Deposit/Prospect Locations

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EXPLORATION PROGRAM

Your company has been actively exploring the Menziesgoldfield since listing, with achievement of some excellentresults.This has involved RC and RAB drilling, datacompilation and database repair, resource estimation and pitoptimisation studies.

RC Drilling 3,349 metres in 46 holes completed

RAB Drilling 6,764 metres in 145 holes completed

Database 18,120 holes containing 269,702 assays

Resource 5 deposits modelled, adding 11% to theEstimate total contained ounces.

The results from drilling have been particularly encouragingbecause they show that there are high-grade along-strikeextensions to known gold deposits, and there are newdiscoveries (such as Bonnie Jean and Ballarat Menzies) stillto be made.

Rox is establishing its credentials as a serious and successfulexplorer.

MENZIES PROJECT DESCRIPTION

Gold was discovered 130 kilometres north of Kalgoorlie atwhat was to become Menzies in 1894 by L R Menzie and JE McDonald who were prospecting for a Perth syndicateheaded by Sir George Shenton. Menzie and McDonaldfound an alluvial gold deposit with many rich nuggets andquartz specimens studded with gold. A rush of prospectorsand miners to the area resulted.The town subsequentlyestablished was named Menzies and the first mine therewas called the Lady Shenton, after Sir George’s wife.

The town soon numbered 1,000 people with 13 hotels,a post office, fire brigade, hospital and many colourfulcharacters. A 20 head battery was installed at Lady Shentonin 1896 followed by another at the First Hit/QueenslandMenzies mine in 1900 and a third at Menzies Consolidated(Yunndaga).The railway line to Menzies was completed in 1898.

The Menzies goldfield was one of Western Australia’s majorhistoric goldfields, with production in its first few decadesreturning approximately 650,000 ounces of gold at 22.5 g/tgold from underground mines. In more recent times open

pit mining treated some 1.68 million tonnes at 2.64 g/t goldfor approximately 143,000 ounces of gold.

Gold mineralisation at Menzies is hosted within three sub-parallel shear zones near the western margin of amafic-ultramafic dominated greenstone sequence.Thestructure is part of the major regional structure which hoststhe world class Paddington, Golden Mile, New Celebrationand St Ives (Kambalda) gold deposits to the south.Theshear zones can be traced for over 15 kilometres withinRox’s tenements with historical workings and goldanomalism occurring discontinuously over almost the entirestrike length.

A major advantage of the Menzies Project is that all existingresources are located on granted mining leases, whichtogether with the excellent infrastructure in the Goldfields,gives Rox the ability to rapidly develop any resource.

RESULTS

Selkirk

Resource modelling of the Selkirk deposit was undertakenso that a pit optimisation could be run to determine wherethe open pit to underground mining transition would occur.It was found that the high-grade resource at the bottom ofthe pit would fall within an expanded pit at current goldprices. An economic comparison with underground miningof this shoot is warranted.The Selkirk shoot is also open atdepth, beyond the depth limit of drilling.

First Hit

RC and RAB drilling immediately south of the First Hitopen pit on the Wedderburn lode intersected significantmineralisation in all drilling programs completed so far.The location of this zone is shown on the diagram below.Significant drilling results were:

FHRC0001 RC 2 m at 10.8 g/t Au from 31 m depth

FHRB0006 RAB 5 m at 12.8 g/t Au from 25 m depth



These intersections are currently being followed up by RCdrilling to determine continuity of mineralisation.


Operations Report8

Resource modelling of the First Hit resource was alsoundertaken and resulted in an increase from the previousestimate.The work also involved digitising of historicunderground workings (to 225 metres below surface) tobetter determine the controlling structures on mineralisation.

The perspective diagram above shows most of theunderground workings being on the Southern (Queensland Menzies) and Central (Crusoe) zones. Historicunderground mining at First Hit probably ceased because ofdepth limitations (water pumping, access and hoisting costsetc.). Modern technology may now allow First Hit to beeconomically mined to much greater depths than in the past.

There is potential to extend the mineralisation at depthbelow the Northern zone and below the workings at theSouthern and Central zones.The company is planning deepdrill holes to test for these extensions based on geologicalstudies currently in progress.

Lady Shenton

RC drilling of extensions of the Lady Shenton deposit (tothe north of the current open pit) was successful inintersecting high-grade mineralisation.

LSRC0001 RC 2 m at 8.6 g/t Au from 59 m depth

This result is currently being followed up by further RC drilling.

Resource modelling and pit optimisation at Lady Shentonhas allowed an assessment of the remaining potential.Thediagram below shows the Lady Shenton open pit, resourcemodel and underground workings (to 210 metres depthbelow surface).

There are three mineralised lodes, but only the LadyShenton lode has been significantly exploited byunderground mining in the past.There is potential beneaththe Falconer and Big Babe lodes for extensions of high-grade gold mineralisation, and also below and along strikeof the Lady Shenton lode.The company plans deep drillingto test these targets in the near future.

Lady Harriet

RC drilling on the south shoot at Lady Harriet has broughtdrill definition up to 20 x 20 metre spacing and allowed thesouth shoot to be included in the new resource estimate.Some of the drill holes were:

LHRC0002 RC 1 m at 15.1 g/t Au from 37 m depth

LHRC0006 RC 4 m at 4.00 g/t Au from 70 m depth

Resource estimation and pit optimisation work was carriedout to assist assessment of further drilling targets.The resource at Lady Harriet was significantly upgraded(see table below).

First Hit Open Pit, Resource Model & Underground Workings Lady Shenton Open Pit, Resource Model & Underground Workings

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A mineralised zone, some 1.4 km long extending fromWarrior (north) to Pioneer (south) through Lady Harriet isrecognised from previous drilling as having potential for anumber of small high-grade resources.

Yunndaga

The Yunndaga resource was modelled and a pitoptimisation completed.The results highlighted the largemineralised system at Yunndaga as a prime target.A program of deep drilling is planned for the near future totest extensions at depth.The diagram below shows theSouthern Shoot (Princess May) underground workingsdown to 640 metres below surface.The relatively untested(at depth) Northern Shoot, and Central Shoot (PrincessEva) are strong exploration targets.

Open pit mining (during the 1990’s) at Menzies was mainlyrestricted to the oxidised portion of the ore bodies, whichextend mostly down to about 60 metres below surface.Thedeepest pit (Yunndaga), was mined to a maximum depth of110 metres.At Yunndaga the open pit is 1.2 kilometres long.Historical underground mining on the southern shootextracted some 526,000 tonnes at 16 g/t gold (270,000ounces of gold).The Northern Shoot, which was notdiscovered by historic miners, has a stronger near surfaceexpression than that of the historically mined Southern Shoot,which demonstrates the exploration potential still remainingat Yunndaga, and the whole Menzies goldfield. Drill interceptsto be followed-up beneath the pit include:

2m at 23.7 g/t Au

2m at 16.0 g/t Au

2m at 9.1 g/t Au

Yunndaga Open Pit, Resource Model & Underground Workings

Lady Harriet Mineralised Zone


Operations Report10

Bonnie Jean

Rox made a potential new discovery at Bonnie Jean in RAB drilling. Bonnie Jean is at the southern end of a line of old workingsextending over about 1 km long defined by a >100 ppb gold-in-soil anomaly.There appear to be several parallel zones ofmineralisation, which have had very sparse previous drilling.The initial RAB intersection was:

S7RB0052 RAB 13 metres at 9.9 g/t Au from 20 metres depth to end of hole (EOH)

This intercept was originally sampled in 5 metre composites. Re-sampling at 1 metre intervals gave:

5 metres at 19.0 g/t Au from 23 metres (including 3 metres at 30.2 g/t Au from 23 metres)

Ballarat Menzies

RAB drilling at Ballarat Menzies returned highly anomalous results.

S8RB0001 RAB 5 metres at 1.09 g/t Au from 10 metres depth,

S8RB0002 RAB 5 metres at 2.31 g/t Au from 15 metres depth,

S8RB0004 RAB 10 metres at 1.24 g/t Au from 15 metres depth, and

1 metre at 7.8 g/t Au from 30 metres depth to EOH,

S8RB0005 RAB 5 metres at 1.43 g/t Au from 10 metres depth.

Yunndaga Deposit Long Section

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RC drilling to more fully test this area is in progress, with the old workings appearing to be to 15-20 metres deep in places andoccurring over 300-400 metres in strike length.

RESOURCE STATEMENT

Resources now stand at 2.13Mt @ 2.5g/t for 170,900 ounces of gold (refer table below).This is an 11% increase from that attime of listing.

Menzies Total Resources

Prospect Measured Indicated Inferred Total MetalTonnes Grade Tonnes Grade Tonnes Grade Tonnes Grade Ounces

Lady Irene 5,027 3.21 54,362 3.29 35,044 4.74 94,433 3.82 11,610

Selkirk* - - 4,015 3.30 14,041 7.09 18,056 6.25 3,627

Lady Sherry 11,800 1.70 13,011 2.29 6,000 1.40 30,811 1.89 1,873

First Hit* - - 70,492 3.23 69,036 3.08 139,528 3.16 14,157

Aspacia - - 7,000 3.40 12,000 3.20 19,000 3.27 2,000

Lady Shenton* - - 260,626 2.99 20,929 4.17 281,555 3.08 27,860

Golden Age 24,500 2.10 9,474 1.65 4,000 1.20 37,974 1.89 2,311

Unknown 22,000 2.30 5,654 2.78 3,500 1.90 31,154 2.34 2,346

South Dump 12,000 2.70 7,500 2.92 2,000 2.30 21,500 2.74 1,894

Warrior - - 50,150 1.84 0 0.00 50,150 1.84 2,967

Lady Harriet* - - 132,305 3.08 13,420 2.82 145,725 3.06 14,318

Yunndaga* - - 944,604 2.20 313,943 1.89 1,258,547 2.12 85,890

Grand Total 75,327 2.27 1,559,193 2.49 493,913 2.55 2,128,433 2.50 170,853

* New resource estimateTotals may not add up due to rounding.Figures are rounded in summary tables and for public reporting.High-grade cuts were applied at different values for different deposits depending on grade distribution statistics.


Operations Report12

The Company aims to further grow these resourcesthrough the exploration for high-grade underground shootsand new discoveries, while assessing mining options from pitextensions/cutbacks or underground development.

MINING STUDIES

Rox recognised that high-grade portions of the resourceslying below the open pits may be amenable to exploitationby either underground mining or extensions/cutbacks to theexisting open pits. Pit optimisations were run to evaluatehow much might be extractable by open pit, to target anyin-fill drilling required (particularly at the 86,000 ounceYunndaga deposit), and to determine where the open-pit tounderground transition might be for each deposit.

A series of gold prices ranging from A$500/oz to A$700/ozwere used in the optimisations and it was assumed thatcontract mining and toll treatment would be the preferredpath for development.

While the optimisations were run primarily as a tool tobegin assessment of various development options, theyshowed that at a gold price of A$575/oz, 185,000 tonnes ata grade of 4.4 g/t Au yielding 24,200 ounces may beprofitably mined.

This preliminary result highlights the sparse drill informationbelow open pits, and that more information will be neededbefore a decision about mining options can be made.For example, in-fill drilling of sparsely drilled areas mayincrease grades, and the impact of back-filling of open pitsand previous unaccounted-for underground mining needsto be assessed.

Rox will continue to examine the alternatives, includingunderground mining and on-site treatment as a means ofmaximising the value of the resources at Menzies.

Comparison of New Resource Estimates with Previous Resource Estimates

Deposit Previous CurrentTonnes Grade g/t Au Ounces Au Tonnes Grade g/t Au Ounces Au Change Ounces Au

Lady Irene 94,433 3.82 11,610 94,433 3.82 11,610 0

Selkirk* 18,000 8.95 5,201 18,056 6.25 3,627 -1,574

Lady Sherry 30,811 1.89 1,873 30,811 1.89 1,873 0

First Hit* 71,500 4.56 10,477 139,528 3.16 14,157 +3,680

Aspacia 19,000 3.27 2,000 19,000 3.27 2,000 0

Lady Shenton* 440,000 3.05 43,211 281,555 3.08 27,860 -15,351

Golden Age 37,974 1.89 2,311 37,974 1.89 2,311 0

Unknown 31,154 2.34 2,346 31,154 2.34 2,346 0

South Dump 21,500 2.74 1,894 21,500 2.74 1,894 0

Warrior 50,150 1.84 2,967 50,150 1.84 2,967 0

Lady Harriet* 89,500 1.79 5,149 145,725 3.06 14,318 +9,169

Yunndaga* 830,000 2.42 64,527 1,258,547 2.12 85,890 +21,363

Total 1,734,059 2.75 153,566 2,128,433 2.50 170,853 +17,287

* New resource estimateTotals may not add up due to rounding.Figures are rounded in summary tables and for public reporting.High-grade cuts were applied at different values for different deposits (see Appendix 3) depending on grade distribution statistics

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WHAT’S NEXT

Encouraged by the excellent progress to date, the companywill conduct follow-up drilling on surface targets where theresource potential is judged to be highest.We will alsoundertake drill testing of deep resource targets below themajor deposits at Lady Shenton,Yunndaga and First Hit,which have the greatest potential of adding to the resourceinventory.This work should lead to a re-estimate ofresources and further assessment of mining options.

At the same time, the company recognises that it is ideallyplaced to take advantage of any resource projectopportunities that come about, through its strong cashposition, and tight capital structure.The company maintains awatching brief for such opportunities that offer to add value.

The information on mineralisation contained in this statement accurately reflectsinformation compiled by Mr Ian Mulholland B.Sc (Hons), M.Sc., F.Aus.I.M.M.,F.A.I.G., who is a Competent Person (as defined by the Australasian Code forReporting of Identified Mineral Resources and Ore Reserves) with relevantexperience in relation to such mineralisation. Mr Mulholland has givenpermission for the information to be included in this statement, and is a fulltime employee of the Company.


Directors’ Report14

Mr Mulholland is a geologist with over 20 years broadexperience in a number of commodity groups includinggold, silver, copper, lead, zinc, uranium, nickel and kaolin inthe exploration and mining industry. He has managedactivities from grass roots exploration to advanced resourcedefinition, feasibility studies and mining operations for majorcompanies such as WMC and Esso, medium sizedcompanies, Otter Gold and Aurora Gold and juniorcompanies, Archaean Gold, Summit Resources andConquest Mining. Ian’s strength is in bringing resources toeconomic fruition and his experience is particularlyappropriate for his role with Rox.

Mr Mulholland was Development Manager for ArchaeanGold, managing the Nimbus silver-zinc project pre-feasibilitystudy prior to Archaean’s take-over. He was thenExploration Manager for Anaconda Nickel Limited,managing their extensive tenement and explorationportfolio, with particular emphasis on resource and projectmanagement from exploration through development to theproduction stage adding some 1.3 billion tonnes to theresource available to Anaconda.

Mr Mulholland has a B.Sc. (Hons), Geology from theUniversity of Sydney and a M.Sc. in Geology from the JamesCook University of North Queensland. He is a Fellow of theAusIMM, the AIG, and the Society of Economic Geologists.

Dr Cowden has over 20 years experience as a geologistand mining company executive in Australia, Africa, Europeand New Zealand.This experience ranges through aspectrum of activities; from capital and debt raisings,corporate restructuring, ASX listings, exploration companymanagement, project generation, grass roots exploration,project management, feasibility studies through to minegeology and mineral deposit research.

He has been involved with major projects and discoveriessuch as Nimbus silver-zinc, Sunrise Dam mine, Kanowna Bellegold mine, Magnetic Minerals Dongara mineral sands project,Syerston nickel - cobalt laterite deposit, Hartley platinummine, St Ives gold mine and Kambalda nickel mines.

Dr Cowden was a founding director of the AustralianGold Council and has a B.Sc (Hons), Geology from theUniversity of Edinburgh and a PhD in Geology from theUniversity of London. He is currently Chairman ofAustralis Aquaculture Limited and Managing Director ofVulcan Resources Limited.

DR ALISTAIR COWDEN

B.Sc. (Hons), Ph.D, MAusIMM, MAIG(Non-Executive Chairman)

MR IAN MULHOLLAND

BSc (Hons), MSc, F.Aus.I.M.M., F.A.I.G., F.S.E.G.Managing Director

Your Directors present their report on the Company for the period 27 November 2003, being the date of incorporation,to 30 June 2004.

DIRECTORS

The names and details of the Company’s directors in office during the financial period and until the date of this report areas follows. Directors were in office for the period from incorporation to the date of signing this report.

Mr Blakiston is a practicing solicitor with legal experience inthe resources sector. Mr Blakiston holds the degrees ofBachelor of Jurisprudence and Bachelor of Laws from theUniversity of Western Australia and is a partner of thecorporate and resource law firm, Blakiston & Crabb.Mr Blakiston has been practicing law for over 20 years.

Mr Blakiston is a director of Platinum Australia Ltd, ColltechAustralia Limited,Vulcan Resources Limited,Tony BarlowAustralia Ltd, Australian Development Capital Ltd and is theChairman of investment bank Chatsworth Stirling Pty Ltd.

Mr Blakiston has extensive commercial experience both inadvisory and directorial capacities having been involved inproject assessment, structuring and financing, joint venturesand strategic alliances in the resource industry. In addition,Mr Blakiston has experience in initial public offerings,takeovers and mergers, corporate and project fundraisings(either with debt or equity), construction, offtake and sales contracts.

INTEREST IN THE SHARES AND OPTIONSOF THE COMPANY

As at the date of this report the interest of the directors inthe shares and options of Rox Resources Limited were:

Ordinary Shares Options

Held directly Held by related ent. Held directly

A Cowden – 2,520,000 1,250,000

I Mulholland 1,350,000 – 3,000,000

M Blakiston – 1,197,857 1,000,000

EARNINGS PER SHARE

Basic earnings per share (0.5) cents

Diluted earnings per share (0.5) cents

PRINCIPAL ACTIVITIES

The principal activity of the Company since incorporationwas the acquisition of its mineral tenements, listing on theAustralian Stock Exchange and exploration at Menzies.

RESULT FROM OPERATIONS

During the period the Company recorded a loss fromoperations of $64,431.

DIVIDENDS

No amounts have been paid or declared by way ofdividend of the Company since the date of incorporationand the Directors do not recommend the payment of any dividend.

MR MICHAEL BLAKISTON

B.Juris. LLB(Non-Executive Director)

15


Directors’ Report16

REVIEW OF OPERATIONS

A review of operations of the Company is set outelsewhere in this report.

SIGNIFICANT CHANGES IN STATE OFAFFAIRS

On 27 April 2004 the Company was admitted to theofficial lists of the Australian Stock Exchange after raising$4.454 million through the issue of 22,272,000 fully paid shares.

Prior to its listing on Australian Stock Exchange theCompany completed the acquisition of its Menzies projectfrom Deep Yellow Limited by the payment of $500,000 andthe issue of 2,500,000 fully paid shares.

MATTERS SUBSEQUENT TO THE END OFTHE FINANCIAL PERIOD

No matter or circumstance has arisen since the end of thefinancial period which significantly affected or maysignificantly affect the operations of the Company, theresults of those operations or the state of affairs of theCompany in subsequent financial periods.

ENVIRONMENTAL ISSUES

The Company carries out operations in Western Australiawhich are subject to environmental regulations under bothCommonwealth and State legislation in relation to itsexploration activities. During the financial period there hasbeen no significant breach of these regulations.

AUDIT COMMITTEE

At the date of this report, the Company does not have aseparately constituted Audit Committee as all mattersnormally considered by an Audit Committee will be dealtwith by the full Board.

MEETING OF DIRECTORS

During the financial period ended 30 June 2004 there were eight meetings of Directors which were attended byall the Directors.

DIRECTOR AND EXECUTIVEEMOLUMENTS

Details of the nature and amount of each element of theemolument of each director of the company are as follows:

Base Fee Superannuation Options3

Directors $ $ Number Value $

M Blakiston1 5,242 480 1,000,000 68,300

A Cowden 6,233 560 1,250,000 83,375

I Mulholland 56,880 5,118 3,000,000 204,900

Executives

B Dickson2 – – 750,000 37,350

1. Chatsworth Stirling Pty Ltd, a company in which Mr Blakiston is a shareholder and director, received feestotalling $6,600 for corporate advice. In additionBlakiston & Crabb, an entity of which Mr Blakiston is apartner, received fees totalling $19,219 for legal advice.

2. Mr Dickson did not receive any executiveremuneration. Coolform Investments Pty Ltd, acompany in which Mr Dickson is a director andshareholder, received fees totalling $17,578 for theprovision of services.

3. Fair Value of Options

During the period 5,250,000 options with an exerciseprice of $0.20 were awarded to Directors afterapproval was obtained by shareholders at a generalmeeting and 750,000 were awarded to an executive.Options granted as part of remuneration have beenvalued using the Black Scholes methodology, an optionpricing model which takes account of factors such asthe option exercise price, the current level andvolatility of the underlying share price and the time tomaturity of the option. Currently the fair value ofthese options are not recognised as expenses in thefinancial statements.

Since grant no options issued to directors or executiveshave been exercised and at balance date and the date ofthis report 6,000,000 remain outstanding.

17

EMPLOYEES

At 30 June 2004 the Company had two employees.

CORPORATE STRUCTURE

Rox Resources Limited is a company limited by shareswhich is incorporated and domiciled in Australia.

INDEMNIFICATION AND INSURANCE OFDIRECTORS AND OFFICERS

The Company has made an agreement indemnifying all thedirectors and officers of the Company against all losses orliabilities incurred by each director and officer in theircapacity as directors and officers of the Company.

LIKELY DEVELOPMENTS AND EXPECTEDRESULTS OF OPERATIONS

Likely developments in the operations of the Company andthe expected results of those operations in future financialyears have not been included in this report as the directorsbelieve, on reasonable grounds, that the inclusion of suchinformation would be likely to result in unreasonableprejudice to the Company.

SHARE OPTIONS

At the date of this report and at the reporting date therewere 6,450,000 unissued shares under options. Refer tonote 15 of the financial statements for further details onoptions outstanding.

Option holders do not have any right, by virtue of theoption, to participate in any share issue of the Company orany related body corporate or in the interest issue of anyother registered scheme.

CORPORATE GOVERNANCE

In recognising the need for the highest standard ofcorporate behaviour and accountability, the directors ofRox Resources Limited support the principles of corporategovernance.The Company’s corporate governancestatement is contained in the following section of thisAnnual Report.

Signed in accordance with a resolution of the directors.

Alistair CowdenChairman

Perth, 29 September 2004


Corporate Governance18

INTRODUCTION

Rox Resources Limited ACN 107 202 602 ("Company")has adopted systems of control and accountability as thebasis for the administration of corporate governance. Someof these policies and procedures are summarised below.

The following additional information about the Company'scorporate governance practices is set out on theCompany's website at www.roxresources.com.au:

• Corporate governance disclosures and explanations;

• Statement of Board and Management Functions;

• Nomination Committee Charter ;

• Policy and procedure for selection and appointment ofnew directors;

• Summary of code of conduct for directors and key executives;

• Summary of policy on securities trading;

• Audit Committee Charter ;

• Policy and procedure for selection of external auditorand rotation of audit engagement partners;

• Summary of policy and procedure for compliance withcontinuous disclosure requirements;

• Summary of arrangements regarding communicationwith and participation of shareholders;

• Summary of Company's risk management policy andinternal compliance and control system;

• Process for performance evaluation of the Board,Board committees, individual directors and key executives;

• Remuneration Committee Charter ; and

• Corporate Code of Conduct.

EXPLANATIONS FOR DEPARTURES FROMBEST PRACTICE RECOMMENDATIONS

During the Reporting Period the Company has compliedwith each of the Ten Essential Corporate GovernancePrinciples and the corresponding Best PracticeRecommendations as published by the ASX CorporateGovernance Council ("ASX Principles andRecommendations"), other than in relation to thematters specified below.

19

Princ. Recom. Notification of DepartureRef. Ref.

1 1.1 The functions of management were not formallydisclosed prior to the Board approving its Statementof Board and Management Functions on 9 June2004.The Statement of Board and ManagementFunctions was disclosed on 17 June 2004.

2 2.1 No member of the Board satisfies the test ofindependence as set out in box 2.1 of ASXCorporate Governance Council’s Principles of GoodCorporate Governance and Best PracticeRecommendations("Independence Test").

2 2.2 The chairperson satisfies all of the criteria inaccordance with the Independence Test with theexception that he has an interest in 7.7% of theshares in the Company.

2 2.4 A separate nomination committee has not been formed.

3 3.1 A formal code of conduct was adopted on 9 June 2004.

3 3.2 A written securities trading policy was adopted on 9 June 2004.

4 4.2 A separate audit committee has not been formed.

4 4.3 The full Board carries out the functions of an auditcommittee which is not in compliance with thecriteria specified in the best practicerecommendation 4.3.

Explanation for Departure

Prior to 9 June 2004 separate functions of theBoard and management existed and were practisedprior to the formal adoption of the Statement ofBoard and Management Functions.

The Board considers Mr Michael Blakiston and Dr Alistair Cowden to be independent for thereasons set out under the heading "Identification ofIndependent Directors" in the Annual Report.The existing structure of the Company is consideredappropriate given the early stage of development ofthe Company and the fact the Company's projectsare all early stage exploration projects.

Notwithstanding this, the Board considers Dr Cowden to be independent for the reasons setout under the heading "Identification of IndependentDirectors" in the Annual Report.

Given the Board comprises three members it wasdecided that no efficiencies would be achieved byestablishing a separate nomination committee.The whole board carries out the duties whichwould otherwise be undertaken by the nominationcommittee in accordance with the NominationCommittee Charter which was adopted on 9 June2004. Each member excludes him or herself frommatters in which he has a material person interestand otherwise ensures compliance with all aspectsof the Corporations Act in relation to related party transactions.

Although there was no written policy the Boardconsiders that the business practices and ethicsexercised by individual Board members and keyexecutives was of the highest standards. On 9 June2004 the Company certified its practices as a codeof conduct and disclosed this code of conduct on17 June 2004.

All directors and employees were aware of existinglegislative restrictions regarding trading in theCompany's securities. The Company has nowadopted and disclosed a policy.

The whole Board carries out the duties of the auditcommittee. In so acting, the whole Board followsthe Audit Committee Charter disclosed on theCompany's website.

Based on the fact that the Company is in its earlystages as an exploration company, the Board doesnot consider that the Company will gain any benefitfrom a separate audit committee.



Princ. Recom. Notification of DepartureRef. Ref.

4 4.4 The Company adopted a formal Audit CommitteeCharter on 9 June 2004.

5 5.1 There were no written policies and proceduresdesigned to ensure ASX Listing Rule disclosurerequirements were complied with until 9 June 2004.

6 6.1 The Company's shareholder communication strategywas designed and disclosed on 9 June 2004.

7 7.1 The Board adopted a formal framework for itspolicy on risk oversight and management on 9 June 2004.

8 8.1 The process for evaluation of the Board, individualdirectors and key executives was not disclosedduring the Reporting Period.

9 9.1 The Company’s remuneration policy was notdisclosed during the Reporting Period. Although thepolicy was not disclosed it did exist and was appliedduring the Reporting Period.

9 9.2 A separate remuneration committee has not been formed.

10 10.1 On 9 June 2004 the Company adopted itscorporate code of conduct.

Explanation for Departure

Prior to 9 June 2004 the Board conducted aninformal review of the Company's accounts.The Company was only incorporated in November2003 and listed on the ASX on 27 April 2004;therefore this information was not complex.

Although there was no written policy, policies andprocedures did in fact exist. These have now beendocumented and formally approved by the Board.

Prior to 9 June 2004 the Company has activelyimplemented strategies to facilitate communicationwith its shareholders, including making informationavailable to shareholders on its website.

Prior to 9 June 2004 the Company had in placeinformal procedures for assessing risk.

A performance evaluation of the Board, individualdirectors and key executives has been carried outby the Chairman. When considering whether toacquire a new project, the Chairman and Boardassesses the level of skills on the Board and whetherthese are relevant to the proposed acquisition.The Chairman will also undertake a formal reviewof the Managing Director in the 2004/2005 financialyear as the Company was only listed in April 2004.

Although the policy was not disclosed it did existand was applied during the Reporting Period.

The full Board considers those matters that wouldusually fall to a remuneration committee and doesso in accordance with the RemunerationCommittee Charter which was adopted on 9 June2004. The Board members decided that noefficiencies would be achieved by establishing aseparate remuneration committee. All matters ofremuneration were determined by the Board inaccordance with Corporations Act requirements,especially in respect of related party transactions.No director participated in any deliberationregarding his own remuneration or related issues.

Although there was no disclosed code of conductthe Board considers its business practices, as led bythe example of the Board and key executives, werethe equivalent of a code of conduct.

21

SKILLS, EXPERIENCE, EXPERTISE ANDTERM OF OFFICE OF EACH DIRECTOR

A profile of each director containing the applicableinformation is set out in the Directors' Report.

IDENTIFICATION OF INDEPENDENTDIRECTORS

The independent directors of the Company are Mr MichaelBlakiston, non-executive director, and Dr Alistair Cowden,non-executive Chairman.

Mr Blakiston is a principal of the firm Blakiston & Crabb andis a director and shareholder of Chatsworth Stirling Pty Ltd.Blakiston & Crabb have been the main provider of legalservices to the Company. Chatsworth Stirling Pty Ltd hasprovided corporate advice to the Company. As a result ofMr Blakiston being a principal of Blakiston & Crabb and adirector and shareholder of Chatsworth Stirling Pty Ltd,he does not fit within paragraph 3 of the IndependenceTest. Mr Blakiston passes all other aspects of theIndependence Test.

The Board of Rox Resources Limited (in the absence of Mr Blakiston) considered he was capable of anddemonstrated that he consistently made decisions and tookactions which are designed to be for the best interests ofthe Company and therefore considered him to possess thecharacteristics required of a person who would be eligibleto take the role of an independent director.The Boardnoted that the fees paid to Blakiston & Crabb and toChatsworth Stirling Pty Ltd were not high enough to bematerial to Mr Blakiston's practice or the firm Blakiston &Crabb or to Chatsworth Stirling Pty Ltd and were also notmaterial to the Company.Therefore the Board consideredMr Blakiston to be independent.

Dr Alistair Cowden has an interest in 7.7% of the shares inthe Company and therefore does not fit within paragraph 1 of the Independence Test.The Board of the Company (inabsence of Dr Cowden) noted that Dr Cowden did notcontrol the Company and considered that he was capableof and demonstrated that he consistently makes decisionsand took actions in the best interests of the Company andtherefore considered him to possess the characteristicsrequired of a persons who would be eligible to take on therole of an independent director.

The Board noted the potential for conflict in which Dr Cowden has an interest and would require Dr Cowdento declare such interest and not participate in the decisionmaking process unless otherwise allowed by the Board,as is required under the Corporations Act.

STATEMENT CONCERNING AVAILABILITYOF INDEPENDENT PROFESSIONALADVICE

If a director considers it necessary to obtain independentprofessional advice to properly discharge the responsibilityof his/her office as a director then, provided the directorfirst obtains approval for incurring such expense from thechairperson, the Company will pay the reasonable expensesassociated with obtaining such advice.

NAMES OF NOMINATION COMMITTEEMEMBERS AND THEIR ATTENDANCE ATCOMMITTEE MEETINGS

The full Board carried out the functions of a nominationcommittee. Relevant issues were dealt with at the regularBoard meetings on an as required basis.

NAMES AND QUALIFICATIONS OF AUDITCOMMITTEE MEMBERS

The full Board carries out the functions of an AuditCommittee in accordance with the Audit Committee Charterwhich was adopted by the Company on 9 June 2004.

The relevant financial expertise and industry experience of each of the Board members is set out in the Directors' Report.

NUMBER OF AUDIT COMMITTEEMEETINGS AND NAMES OF ATTENDEES

During the Reporting Period the full Board conducted aninformal review of the Company's accounts on 23 February2004. Subsequent to year end the full board met toconsider the annual financial report.



CONFIRMATION WHETHERPERFORMANCE EVALUATION OF THEBOARD AND ITS MEMBERS HAVE TAKENPLACE AND HOW CONDUCTED

During the Reporting Period an evaluation of the Boardand its members was carried out by way of an informalreview conducted by the Chairman.

COMPANY’S REMUNERATION POLICIES

Disclosure of directors' and executives' remuneration is setout in the Directors' Report.

The Company has separate remuneration policies forexecutive and non-executive directors. Non-executivedirectors will receive a fixed fee for their services to theCompany. Non-executive director's fees not exceeding anaggregate of $150,000 per annum have been approved bythe Company in general meeting.

Executive directors receive a salary for their services to theCompany.There is no direct link between remunerationpaid to any of the directors and corporate performancesuch as bonus payments for achievements of certain keyperformance indicators.

NAMES OF REMUNERATION COMMITTEEMEMBERS AND THEIR ATTENDANCE ATCOMMITTEE MEETINGS

The full Board carried out the functions of RemunerationCommittee.The full board considered matters ofremuneration on 3 June 2004.

EXISTENCE AND TERMS OF ANY SCHEMESFOR RETIREMENT BENEFITS FOR NON-EXECUTIVE DIRECTORS

The Company does not have any terms or schemes relatingto retirement benefits for non-executive directors.

23

Notes 27/11/03 – 30/6/04

($)

Revenues from ordinary activities 2 37,241

Depreciation 3 (198)

Other expenses from ordinary activities 3 (101,474)

Loss from ordinary activities before income tax expense (64,431)

Income tax expense relating to ordinary activities 4 –

Net loss attributable to members of Rox Resources Limited 16 (64,431)

Share Issue Costs 15 (388,223)

Total changes in equity other than those resulting from transactions with owners as owners attributable to members of Rox Resources Limited (452,654)

Basic loss per share (cents per share) 7 (0.5)

Diluted loss per share (cents per share) 7 (0.5)

The accompanying notes form part of these financial statements.

Statement of Financial PerformanceFor the Period Ended 30 June 2004

24

Notes 2004

($)

CURRENT ASSETS

Cash assets 9 3,362,372

Receivables 10 805

Total Current Assets 3,363,177

NON-CURRENT ASSETS

Plant and equipment 11 17,196

Deferred exploration costs 12 1,287,483

Total Non-Current Assets 1,304,679

TOTAL ASSETS 4,667,856

CURRENT LIABILITIES

Payables 13 101,826

Provisions 14 4,134

Total Current Liabilities 105,960

TOTAL LIABILITIES 105,960

NET ASSETS 4,561,896

EQUITY

Contributed Equity 15 4,626,327

Accumulated losses 16 (64,431)

TOTAL EQUITY 4,561,896


As at 30 June 2004

Statement of Financial Position

25

Notes 27/11/03 – 30/6/04

($)

CASH FLOWS FROM OPERATING ACTIVITIES

Interest received 37,241

Payments to suppliers and employees (42,361)

Expenditure on mineral interests (244,557)

Net cash used in operating activities 8 (249,677)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of equipment (14,278)

Purchase of mineral tenements (500,000)

Net cash used in investing activities (514,278)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issue of ordinary shares 4,514,550

Share issue costs (388,223)

Net cash provided by financing activities 4,126,327

Net increase in cash held 3,362,372

Cash at 27 November 2003 (“date of incorporation”) –

Cash at 30 June 2004 9 3,362,372


Statement of Cash FlowsFor the Period Ended 30 June 2004

26

NOTE 1 STATEMENT OF SIGNIFICANTACCOUNTING POLICIES

The significant accounting policies that have been adoptedby Rox are detailed as follows:

(a) Basis of Accounting

The financial report is a general purpose financialreport, which has been prepared in accordance withthe requirements of the Corporations Act 2001including applicable Accounting Standards. Othermandatory professional reporting requirements(Urgent Issues Group Consensus Views) have alsobeen complied with.

The financial report has been prepared on an accrualsbasis and is based on historical costs and does not takeinto account changing money values or, except wherestated, current valuations of non-current assets. Cost isbased on the fair values of the consideration given inexchange for assets.

The following is a summary of the material accountingpolicies adopted by the Company in the preparation ofthe financial report.The accounting policies have beenconsistently applied, unless otherwise stated.

(b) Cash and Cash Equivalents

Cash on hand and in banks and short-term depositsare stated at nominal values.

For the purposes of the Statement of Cash Flows, cashincludes cash on hand and in banks and moneymarkets investments readily convertible to cash within2 working days net of outstanding bank overdrafts.

(c) Deferred Exploration and EvaluationExpenditure

Costs arising from exploration and evaluation activitiesare carried forward provided such costs are expectedto be recouped through successful development, or bysale, or where exploration and evaluation activitieshave not, at balance date, reached a stage to allow areasonable assessment regarding the existence ofeconomically recoverable reserves.

Costs carried forward in respect of area of interestthat is abandoned are written off in the year in whichthe decision to abandon is made.

(d) Payables

Liabilities are carried at cost, which is the fair value ofthe consideration to be paid in the future for goodsand services received whether or not billed.

(e) Contributed Equity

Ordinary share capital is recognized at the fair value ofthe consideration received by the Company.

Any transaction costs arising on the issue of ordinaryshares are recognized directly in equity as a reductionof the share proceeds received.

(f) Income Tax

Tax effect accounting has been adopted using theliability method.The income tax expense in thestatement of financial performance has beendetermined after adjusting for income and expenditurethat are not assessable or allowable for taxationpurposes.To the extent timing differences occurbetween the time items are recognised in the financialstatements and when items are taken into account indetermining taxable income the net related tax benefitor liability calculated at current rates is disclosed as afuture income tax benefit or a provision for deferredincome tax.

• Future income tax benefits are not brought toaccount unless:

• in the opinion of the directors, realization of thebenefits is virtually certain;

• expected future assessable income is derivable ofa nature and of an amount sufficient to enable thebenefit to be realized;

• the conditions of deductibility imposed by taxlegislation can continue to be complied with; and

• no changes in tax legislation adversely affect Roxor its controlled entities in realizing the benefit.

(g) Receivables

Trade receivables are recognised and carried at originalinvoice amount less a provision for any uncollectibledebts. An estimate for doubtful debts is made whencollection of the full amount is no longer probable. Baddebts are written off as incurred.

For the Period Ended 30 June 2004

Notes to and Forming Partsof the Financial StatementsFor the Period Ended 30 June 2004

27

NOTE 1 STATEMENT OF SIGNIFICANTACCOUNTING POLICIES, cont.

(h) Plant and equipment

Cost and valuation All classes of plant and equipment are measured at cost.

DepreciationDepreciation is provided on a straight-line basis on allplant and equipment. Major depreciation periods are:

Plant and equipment 6-30%

(i) Employee Benefits

Provision is made for the employee benefitsaccumulated as a result of employees renderingservices up to the reporting date.These benefitsinclude wages and salaries, annual leave, sick leave andlong service leave.

Liabilities arising in respect of wages and salaries, annualleave sick leave and other employee benefits expectedto be settled within 12 months of the reporting dateare measured at the nominal amounts based onremuneration rates which are expected to be paidwhen the liability is settled. All other employee benefitliabilities are measured at the present value of theestimated future cash outflow to be made in respect ofservices provided by employees up to the reportingdate. In determining the present value of future cashoutflows, the market yield as at the reporting date onnational government bonds, which have terms tomaturity approximating the terms of the related liability,are used.

Employee benefit expenses and revenues arising inrespect of the following categories:

– Wages and salaries, non-monetary benefits, annualleave, long service leave, sick leave and other leavebenefits; and

– Other types of employee benefits

are recognised against profits on a net basis in theirrespective categories.

The value of the equity-based compensation schemedescribed in Note 23 is not being recognised as anemployee benefit expense.

(j) Revenue Recognition

Revenue is recognised to the extent that it is probablethat the economic benefits will flow to the entity andthe revenue can be reliably measured.The followingspecific recognition criteria must also be met beforerevenue is recognised:

InterestControl of the right to receive the interest payment.

(k) Leases

Leases are classified at the inception as either operatingor finance leases, based on the economic substance ofthe agreement so as to reflect the risks and benefitsincidental to ownership.

Operating leasesThe minimum lease payments of operating leases,where the lessor effectively retains substantially all ofthe risks and benefits of ownership of the leased item,are recognised as an expense on a straight-line basis.

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

(l) Recoverable Amount

Non-current assets are not carried at an amountabove their recoverable amount, and where carryingvalues exceed this recoverable amount assets arewritten down. In determining recoverable amount, theexpected net cash flows have not been discounted totheir present value.

(m) Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net ofthe amount of GST except:

• where the GST incurred on a purchase of goodsand services is not recoverable from the taxationauthority, in which case the GST is recognised aspart of the cost of acquisition of the asset or aspart of the expense item as applicable; and

• receivables and payables are stated with theamount of GST included.

The net amount of GST recoverable from, or payable to,the taxation authority is included as part of receivablesor payables in the Statement of Financial Position.

28

NOTE 1 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES, cont.

Cash flows are included in the Statement of Cash Flow on a gross basis and the GST component of cash flows arisingfrom investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified asoperating cash flows.

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

(n) Earnings Per Share

Basic Earnings Per Share – Basic earnings per share is determined by dividing the profit from ordinary activities after relatedincome tax expense by the weighted average number of ordinary shares outstanding during the financial year.

Diluted Earnings Per Share – Diluted EPS is calculated as net profit attributable to members, adjusted for :

– costs of servicing equity (other than dividends);– the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been

recognised as expenses;– other discretionary changes in revenues or expenses during the period that would result from the dilution of potential

ordinary shares; and– dividend by the weighted average of ordinary shares and dilutive potential ordinary shares adjusted for any

bonus element.

(o) Comparatives

The Company was incorporated on 27 November 2003 and therefore there is no prior period comparative information.

NOTE 2 REVENUE FROM ORDINARY ACTIVITIES 2004($)

Revenue from non-operating activities

Interest received 37,241

NOTE 3 EXPENSES AND LOSSES/(GAINS)

Expenses from ordinary activities

Depreciation 198

Other Expenses from ordinary activities

Corporate expenses 55,917

Occupancy and related expenses 34,772

Staff expenses 4,020

Exploration expenditure expensed during the period 6,765

101,474


NOTE 4 INCOME TAX EXPENSE

Prima facie tax on loss from ordinary activities before income taxis reconciled to the income tax as follows:

Ordinary loss before income tax 64,431

Prima facie tax benefit on profit (loss) from ordinary activitiesbefore income tax at 30% 19,329

Non-deductible expenditure (8,432)

Tax losses not brought to account as future income tax benefit (10,898)

Income tax expense attributable to ordinary activities –

Unbooked future income tax benefits:

The Company has accumulated tax losses of $36,326.

The potential future income tax benefit of these losses ($10,898) will only be realised if:

(i) the Company derives future assessable income of a nature and of an amount sufficient to enable the benefit from thelosses and deductions to be released;

(ii) the Company continues to comply with the conditions for deductibility imposed by the law; and

(iii) no changes in tax legislation adversely affect the Company in realising the benefit from the deductions for the losses.

NOTE 5 DIRECTOR AND EXECUTIVE DISCLOSURES

(a) Details of Specified Directors and Specified Executives

(i) Specified Directors

Alistair Cowden Non-executive ChairmanIan Mulholland Managing DirectorMichael Blakiston Non-executive Director

(ii) Specified Executives

Brett Dickson Company Secretary

(b) Director and Executive Emoluments

The Board assesses the appropriateness of the nature and amount of emoluments of officers on a periodic basis byreference to the relevant employment market conditions with the overall objective of ensuring maximum stakeholderbenefit from the retention of a high quality board and executive team.

Details of the nature and amount of each element of the emolument of each specified director and specified executive ofthe company are as follows:

29

30

NOTE 5 DIRECTOR AND EXECUTIVE DISCLOSURES, cont.

Base Fee Superannuation Options3 Total

Director $ $ Number Value $

M Blakiston1 5,242 480 1,000,000 68,300 74,022

A Cowden 6,233 560 1,250,000 83,375 90,168

I Mulholland 56,880 5,118 3,000,000 204,900 266,898

Total 68,355 6,158 356,575 431,088

Executive

B Dickson2 – – 750,000 37,350

1. Chatsworth Stirling Pty Ltd, a company in which Mr Blakiston is a shareholder and director, received fees totalling$6,600 for corporate advice. In addition Blakiston & Crabb, an entity of which Mr Blakiston is a partner, received feestotalling $19,219 for legal advice.

2. Mr Dickson did not receive any direct remuneration. Coolform Investments Pty Ltd, a company in which Mr Dickson is a director and shareholder, received fees totalling $17,578 for the provision of services.

3. Fair Value of OptionsOn 30 January 2004 5,250,000 options with an exercise price of $0.20 and an expiry date of 31 January 2009 wereawarded to specified Directors after approval was obtained by shareholders at a general meeting and 750,000 optionswith an exercise price of $0.20 and an expiry date of 30 April 2007 were awarded to specified executives. Optionsgranted as part of remuneration have been valued at $356,575 (specified directors) and $37,350 (specifiedexecutives) using the Black Scholes methodology, an option pricing model which takes account of factors such as theoption exercise price, the current level and volatility of the underlying share price and the time to maturity of theoption. Currently the fair value of these options are not recognised as expenses in the financial statements.Since grant date no options issued to specified directors have been exercised and at balance date 6,000,000 remain outstanding.

Director and director related entities held directly, indirectly or beneficially as at the reporting date the following equityinterests in the Company:

Ordinary Shares 5,017,857Options over Ordinary Shares 5,250,000

NOTE 6 AUDITOR’S REMUNERATION 2004$

Remuneration of the auditor of the Company for :

Auditing and reviewing the financial report 5,000

Other services –

5,000


31

NOTE 7 LOSS PER SHARE 2004($)

The following reflects the income and share data used in thecalculation of basic and diluted earnings per share

Net profit (loss) (64,431)

Adjustments:

Nil –

Earnings used in calculating basic and diluted earnings per share (64,431)

Weighted average number of ordinary shares used in calculating basic earnings per share 13,142,037

Effective of dilutive securities:

Share options (i) –

Adjusted weighted average number of ordinary shares used in calculating diluted earnings per share 13,142,037

(i) Share options are not dilutive as their exercise would have the impact of decreasing loss per share.

Conversion, calls, subscriptions or issues after 30 June 2004

Since the end of the financial year no ordinary shares have been issued pursuant to the exercise of options.

There have been no other conversions to, calls of, or subscriptions for ordinary shares or issues of potential ordinary sharessince the reporting date and before the completion of this financial report.

NOTE 8 CASH FLOW INFORMATION

(a) Reconciliation of Cash Flow from Operations with Loss from ordinary activities after Income Tax:

Loss from ordinary activities after Income Tax 64,431

Adjustments for non-cash expense items

– Depreciation (198)

– Provision for employee benefits (4,134)

Changes in Assets and Liabilities

– Increase in capitalised exploration 287,484

– Increase in receivables 805

– Increase in payables (98,711)

Cash Out Flow from Operations 249,677

32

NOTE 8 CASH FLOW INFORMATION, cont.

(b) Non Cash Financing and Investing Activities

During the period the Company issued 2,500,000 fully paid shares at a deemed price of $0.20 per share to Deep YellowLimited as part satisfaction for the purchase of the Menzies project.

(c) The Company does not have any credit standby arrangements, used or unused loan facilities.

NOTE 9 CASH ASSETS 2004$

Cash at bank 3,362,372

NOTE 10 CURRENT RECEIVABLES

Trade Debtors 805

Terms and Conditions

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

NOTE 11 PLANT AND EQUIPMENT

Equipment cost 17,394

Accumulated depreciation 11(a) (198)

17,196

(a) Movements in plant and equipment

– Carrying amount at beginning –

– Additions 17,394

– Depreciation (198)

Closing balance 17,196


33

NOTE 12 DEFERRED EXPLORATION COST 2004$

Exploration Expenditure

Areas of interest in exploration and evaluation phases

Balance at beginning of period –

Acquired during the year 1,000,000

Expenditure incurred during the period 287,483

1,287,483

Ultimate recoupment of exploration and evaluation expenditure carried forward is dependent on successful development and commercial exploitation or, alternatively, sale of the respective areas.

NOTE 13 CURRENT PAYABLES

Trade creditors (a)(i) 86,894

Related parties (a)(i) and (ii) 14,933

101,827

(a) Terms and Conditions

Terms and conditions relating to the above financial instruments.

(i) Creditors are non–interest bearing and generally on 30 day terms.

(ii) Related party creditors are companies associated with directors or officers of the Company.

NOTE 14 PROVISIONS

Employee benefits 4,134

34

NOTE 15 CONTRIBUTED EQUITY 2004($)

Issued and paid up capital – Ordinary shares fully paid

Ordinary shares at beginning of period – Nil –

Issue of 1,500,000 shares upon incorporation 150

Issue of 6,000,000 shares at $0.01 per share 60,000

Issue of 22,272,000 shares at $0.20 per share pursuant to Prospectus 4,454,400

Issue of 2,500,000 shares at $0.20 to purchase mineral tenements 500,000

Less cost of share issue (388,223)

At reporting date: 32,272,000 ordinary shares 4,626,327

(a) Share Options

During the year 5,250,000 options exercisable at $0.20 cents per share on or before 31 January 2009 were issuedtogether with 1,200,000 options exercisable at $0.20 per share on or before 30 April 2007. No options have beenexercised at the date of this financial report.

NOTE 16 ACCUMULATED LOSSES

Balance at 27 November 2003 (date of incorporation) –

Net loss attributable to members of Rox Resources Limited (64,431)

Balance at end of year (64,431)

NOTE 17 EXPENDITURE COMMITMENTS

(a) The Company has entered into certain obligations to perform minimum work on leases held.These obligations vary fromtime to time in accordance with contracts signed.The Company is required to meet tenement lease rentals andDepartment of Petroleum and Minerals minimum expenditure requirements which for the 2004/05 financial year amountto $372,700.These may be varied or deferred on application and are expenditures expected to be met in the normalcourse of business.

(b) Lease Expenditure Commitments

The Company has entered into a sub–lease arrangement with Vulcan Resources Limited to lease office space for a 12month period ending 27 April 2005.The lease has no renewal, escalation or purchase arrangement nor are there anycontingent rental payments.The lease may be terminated with one months notice.


35

NOTE 17 EXPENDITURE COMMITMENTS, cont. 2004($)

Payable within 1 year 65,000

Later than 1 year and not later than 5 years –

Later than 5 years –

65,000

NOTE 18 SEGMENTS

The Company operates only in one business, being the exploration for gold. Geographically all the Company’s activities areconducted in Western Australia.

NOTE 19 CONTINGENT LIABILITIES

Rehabilitation

Pursuant to the Agreement for Sale of Mining Interests between the Company and Deep Yellow Limited dated 20 February2004 the Company is required to replace mining bonds which total approximately $221,000.These bonds will be releasedupon the completion of all rehabilitation requirements in regard to the mining tenements at Menzies.The exact cost ofrehabilitation is not known at this stage but may equal the total of the bonds put in place.

Native Title

The Company has been notified of a number of competing native title claims under the Commonwealth Native Title Act 1993,covering areas in Eastern Goldfields of Western Australia.

Until further information is available and State legislation is finalised, the Company will not be in a position to assess the likelyeffect, if any, of any claim on the Company. However, the directors expect that existing exploration activities will not bematerially affected by any claim or the claims in aggregate.

NOTE 20 EVENTS SUBSEQUENT TO REPORTING DATE

There has been no event or circumstance since balance date which may have an effect on this financial report.

NOTE 21 RELATED PARTY TRANSACTIONS

Other director related transactions

During the year the Company purchased its Menzies project from Deep Yellow Limited for $500,000 cash plus the issue of2,500,000 fully paid shares. Dr Cowden is a director of Deep Yellow Limited.

The Company leases office facilities from Vulcan Resources Limited, a company which Dr Cowden and Mr Blakiston aredirectors. During the financial period an amount of $18,000 was paid for those facilities.

The above transactions were entered into on normal commercial terms.

36


NOTE 22 FINANCIAL INSTRUMENTS DISCLOSURE

(a) Interest Rate Risk

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

2004Floating Interest Non Interest Weighted Average

Rate Bearing Interest Rate

Financial Assets

– Cash 3,362,372 – 4.1%

– Trade Debtors – 805 N/A

Total Financial Assets 3,362,372 805

Financial Liabilities

– Payables – 101,826 N/A

Total Financial Liabilities – 101,826

(b) Credit Risk

The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognisedfinancial assets is the carrying amount, net of any provisions for doubtful debts of those assets, as disclosed in the statementof financial position and notes to the financial statements.The Company does not have any material credit risk exposure toany single debtor or group of debtors under financial instruments entered into by the Company.

(c) Net Fair Values

For assets and liabilities the net fair value approximates their carrying value.

No financial assets and financial liabilities are readily traded on organised markets in standardised form other than listed investments.

NOTE 23 EMPLOYEE BENEFITS 2004($)

Employee benefitsThe aggregate employee benefit liability is comprised provisions (current) 4,134

Employee Share Incentive Scheme

An Employee Share Scheme has been established where Rox Resources Limited may, at the discretion of directors, grantoptions over the ordinary shares of Rox Resources Limited to directors, executives and employees of the Company.The options, issued for nil consideration, are granted in accordance with performance guidelines established by the directors.

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NOTE 23 EMPLOYEE BENEFITS, cont.

No options have been issued pursuant to the scheme.

Superannuation Commitments

The Company contributes various percentages of theemployee’s income, but not less than that required understatutory regulations, to employee nominated complyingsuperannuation funds. Employees may contribute amountseither as fixed dollar amounts or as a percentage ofincome. At year end all amounts due had been contributedto the employee nominated superannuation fund.

NOTE 24 IMPACT OF ADOPTING AASBEQUIVALENTS TO IASB STANDARDS

The Company has allocated internal resources to conductimpact assessments to isolate key areas that will beimpacted by the transition to IFRS. As a result of thisassessment priority has been given to considering thepreparation of an opening balance sheet in accordance withAASB equivalents to IFRS as at 1 July 2004.This will formthe basis of accounting for Australian equivalents of IFRS inthe future, and is required when the Company prepares itsfirst fully IFRS compliant financial report for the year ended30 June 2006.

Set out below are the key areas where accounting policieswill change and may have an impact on the financial reportof Rox Resources Limited. At this stage the Company hasnot been able to reliably quantify the impacts on thefinancial report.

Impairment of Assets

Under the AASB136 Impairment of Assets the recoverableamount of an asset is determined as the higher of netselling price and value in use.This will result in a change in the group’s current accounting policy which determinesthe recoverable amount of an asset on the basis ofundiscounted cash flows. Under the new policy it is likelythat impairment of assets will be recognised sooner andthat the amount of write–downs will be greater. Reliableestimation of the future financial effects of this change inaccounting policy is impracticable because the conditionsunder which impairment will be assessed are not yet known.

Share Based Payments

Under AASB 2 Share Based Payments, the Company will berequired to determine the fair value of options issued toemployees as remuneration and recognise an expense inthe Statement of Financial Performance.This standard is notlimited to options and also extends to other forms ofequity based remuneration. It applies to all share–basedpayments issued after 7 November 2002 which have notvested as at 1 January 2005. Reliable estimation of thefuture financial effects of this change in accounting policy isimpracticable as the details of future equity basedremuneration plans are unknown.

Income Taxes

Under the AASB12 Income Taxes, the Company will berequired to use a balance sheet liability method whichfocuses on the tax effects of transactions and other eventsthat affect amounts recognised in either the Statement ofFinancial Position or a tax–based balance sheet. It is notexpected that there will be any material impact as a resultof adoption of this standard.

Exploration

No specific IFRS guidance currently exists for the treatmentof exploration expenditure. An exposure draft, ED6, hasbeen drafted which proposes that the treatment previouslyused under Australian GAAP may continue to be usedsubject to impairment testing. If it was determined that theasset was impaired it would be immediately written off tothe statement of financial performance.


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In accordance with a resolution of the Directors of Rox Resources Limited, I state that:

1. In the opinion of the Directors:

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

(i) giving a true and fair view of the Company’s financial position as at 30 June 2004 and its performance for the periodended on that date; and

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

(b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

On behalf of the Board

Alistair Cowden

Perth, 29 September 2004

Directors’ Declaration

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INDEPENDENT AUDIT REPORT TO MEMBERS OF ROX RESOURCES LIMITED

Scope

The financial report and directors’ responsibilityThe financial report comprises the statement of financial position, statement of financial performance, statement of cash flows,accompanying notes to the financial statements, and the directors’ declaration for Rox Resources Limited (the company), forthe period from incorporation on 27 November 2003 to 30 June 2004.

The directors of the company are responsible for preparing a financial report that gives a true and fair view of the financialposition and performance of the company, and that complies with Accounting Standards in Australia, in accordance with theCorporations Act 2001.This includes responsibility for the maintenance of adequate accounting records and internal controls thatare designed to prevent and detect fraud and error, and for the accounting policies and accounting estimates inherent in thefinancial report.

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

We performed procedures to assess whether in all material respects the financial report presents fairly, in accordance with theCorporations Act 2001, including compliance with Accounting Standards in Australia, and other mandatory financial reportingrequirements in Australia, a view which is consistent with our understanding of the company’s financial position, and of itsperformance as represented by the results of its operations and cash flows.

We formed our audit opinion on the basis of these procedures, which included:

• examining, on a test basis, information to provide evidence supporting the amounts and disclosures in the financial report,and

• assessing the appropriateness of the accounting policies and disclosures used and the reasonableness of significantaccounting estimates made by the directors.

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

We performed procedures to assess whether the substance of business transactions was accurately reflected in the financialreport.These and our other procedures did not include consideration or judgement of the appropriateness or reasonablenessof the business plans or strategies adopted by the directors and management of the company.

Independent Audit ReportTo the Members of Rox Resources Limited


40

Independence

We are independent of the company, and have met the independence requirements of Australian professional ethicalpronouncements and the Corporations Act 2001. In addition to our audit of the financial report, we were engaged toundertake the services disclosed in the notes to the financial statements.The provision of these services has not impaired our independence.

Audit opinion

In our opinion, the financial report of Rox Resources Limited is in accordance with:

(a) the Corporations Act 2001, including:

(i) giving a true and fair view of the financial position of Rox Resources Limited at 30 June 2004 and of its performancefor the period from incorporation on 27 November 2003 to 30 June 2004; and

(ii) complying with Accounting Standards in Australia and the Corporations Regulations 2001; and

(b) other mandatory financial reporting requirements in Australia.

Ernst & Young

V W TidyPartner

Perth

Date: 29 September 2004

Independent Audit ReportTo the Members of Rox Resources Limited

41

Project Tenement Interest

Menzies M29/14 100%

Menzies M29/88 100%

Menzies M29/153 100%





Menzies MLA29/223 100%

Menzies MLA29/225 100%

Menzies L29/41 100%

Menzies L29/42 100%

Menzies L29/43 100%

Menzies L29/44 100%

Menzies L29/58 100%

Key to Tenement Schedule

GlossaryM Mining LeaseMLA Mining Lease ApplicationL Miscellaneous Licence

Schedule of Mining Tenements


Other Information42

The following information was applicable as at 31 August 2004.

1. Shareholding

(a) Distribution of Shareholders Number

Category (size of Holding) Number

1 – 1,000 –

1,001 – 5,000 7

5,001 – 10,000 88

10,001 – 100,000 346

100,001 and over 40

481

(b) The number of shareholdings held in less than marketable parcel is four.

(c) There were no substantial shareholders listed in the Company's register as at 31 August 2004.

(d) Top 20 shareholders

Name Number of Shares % of Issued Share Capital

1. Drumfrochar Pty Ltd <Lynedoch A/C> 2,520,000 7.81

2. Deep Yellow Limited 2,500,000 7.75

3. Mr Ian Robert Mulholland 1,350,000 4.18

4. Residuum Nominees Pty Ltd 1,197,857 3.71

5. Mr John Damian Kenny 1,131,545 3.51

6. Mr Brett Dickson <Family Account> 735,000 2.28

7. Georgina Dickson 725,000 2.25

8. Bayonet Investments Pty Ltd <Mutual A/C> 711,800 2.21

9. Interstate Investments Pty Ltd 650,000 2.01

10. Cobville Pty Ltd <H & D Orner Super Fund A/C> 500,000 1.55

11. Sancoast Pty Ltd 441,700 1.37

12. Ackland Printing Pty Ltd <Super Fund A/C> 275,000 0.85

13. Jaspon Holdings Pty Ltd <Jock Clough Family A/C> 250,000 0.77

43

(d) Top 20 shareholders, cont.

Name Number of Shares % of Issued Share Capital

14. Mannwest Group Pty Ltd 250,000 0.77

15. Mr Aaron Mark Colleran 250,000 0.77

16. Reawin Pty Ltd <Jackson Super Fund A/C> 250,000 0.77

17. Jasper Hill Resources Pty Ltd <Superannuation Account> 225,000 0.70

18. Marcello Cardaci 214,014 0.66

19. Coakley Pastoral Company Pty Ltd <T D Coakley Family A/C> 200,000 0.62

20. L & S Davies Pty Ltd <Davies International A/C> 200,000 0.62

14,576,916 45.16

There is a total of 32,272,000 fully paid ordinary shares on issue, all of which are listed on Australian Stock Exchange Limited.At shareholders meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has onevote on a show of hands.

(e) Restricted Securities

The following securities have been classified as Restricted Securities:

Number Class Escrow Period

1,335,367 Fully Paid Ordinary Shares To 30 January 2005

8,364,633 Fully Paid Ordinary Shares To 27 April 2006

750,000 Options exercisable at $0.20, expire 30/04/07 To 27 April 2006

5,250,000 Options exercisable at $0.20, expire 31/01/09 To 27 April 2006

2. Use of Funds

Since admission to the official lists of ASX the Company has used its cash and assets in a form readily convertible to cashin a way that was consistent with its business objectives.

!..5!,2%0/24...5 what your company has achieved…. listing on asx listed on 27 april 2004. ore...

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