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A.B.N 23 003 669 163

ANNUAL REPORT

2009

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TABLE OF CONTENTS

CHAIRMAN AND MANAGING DIRECTOR’S REPORT…………… 3 TENEMENT SCHEDULES………………………………………… 4,10 DIRECTORS’ REPORT…………………………………………….. 12 CORPORATE GOVERNANCE………………………………………. 20 INCOME STATEMENTS……………………………………………… 24 STATEMENTS OF CHANGES IN EQUITY………….…………….. 25 BALANCE SHEETS.…………………………………………………. 26 STATEMENTS OF CASH FLOWS…………………………………. 27 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.. 28 DIRECTORS’ DECLARATION………………………………………. 49 INDEPENDENT AUDIT REPORT...……………………………….. 50 ADDITIONAL INFORMATION……………………………………… 52 F

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CHAIRMAN AND MANAGING DIRECTOR’S REPORT Dear Fellow Shareholder I present the Annual Report of MIL Resources Limited for the Year Ended 30 June 2009. OVERVIEW I am pleased to report that MIL has made a strong start to building its future through its investments in PNG which is a nation well known for its mineral wealth. The 2008 – 09 year consisted of advancing our PNG interests at both the Amazon Bay ironsands project held by Titan Mines Limited (MIL 25% with a right to earn 90%) and a portfolio of hard rock gold and copper projects held by Titan Metals Limited (MIL 50%).

FIGURE 1 – LOCATION OF TITAN MINES AND TITAN METALS PROJECTS IN PNG

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PROJECT COMMODITY TITLE AREA km2

TITAN METALS LIMITED Poi Au, Cu EL 1628 1,014 Domara Creek Cu, Ni, Mo EL 1637 960 Golden Peak Au ELA 1625 123 Legusalum (West Lihir) Au, Cu ELA 1638 1,163 Tanga Is Au ELA 1639 408 North New Britain Au, Cu ELA 1640 999 South New Britain Au, Cu ELA 1642 361 Palabong Au, Cu ELA 1645 1,476

Total Area (km2) 6,504 TITAN MINES LIMITED

Amazon Bay Fe, Ti, V EL 1396 780 Sandbank Bay Fe, Ti, V EL 1623 389 Amazon East Au, Cu ELA 1643 541 Amazon South (offshore) Fe, Ti, V ELA 1681 956

Total Area (km2) 2,666

TABLE 1 – TENEMENTS HELD BY TITAN MINES AND TITAN METALS IN PNG

Titan Mines Limited – Amazon Bay Ironsands Project Summary of 2008 – 09 Activities

• Identifying an exploration target(1) of 3 – 4 billion tonnes of magnetite ironsands at Amazon Bay based on a 3072 line kilometre airborne magnetic survey flown at 200m and 400m line spacing and interpretation of magnetic, radiometrics, geology and previous drilling.

• Identification of the highly magnetic ironsands anomalies Barracouta and Threadfin • Identification of a major offshore ironsands target at Amazon Bay and lodging of ELA

1681 (Amazon South) to protect the anomaly which spans 45km across the Amazon Bay project area and remains open to the south.

• The granting of ironsands EL1623 Sandbank Bay and subsequent interpretation of airborne magnetics.

• The sampling of over 200 testpit and hand auger sites at Amazon Bay which returned encouraging values up to 1.02% V205 (vanadium), 50.7%Fe (iron) and 20% Ti02

(titanium). • The vanadium results put a new focus on Amazon Bay given the demand for

vanadium where its dominant end use is in steelmaking as an alloying element with iron, steel and titanium. During the year MIL will undertake investigation and hold discussions with potential customers or processors for the Amazon Bay Ironsands concentrate.

The magnetics shows areas of pronounced highly magnetic “hotspots” at Barracouta and Threadfin anomalies which was the subject of a sampling program involving the collection of over 200 testpit and hand auger samples.

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At Barracouta 37 samples were collected from surface to a maximum depth of 6 metres and at Threadfin 171 samples were collected from surface to a maximum depth of 10 metres. The samples were prepared into 16 representative composites and sent to Metcon Laboratories, Sydney where they were screened, blended, riffle divided and separated on a dry rotating magnetic drum separator to produce a magnetic concentrate. The magnetic fraction (iron bearing magnetics) was then riffle sampled and pulverized and sent to Spectrolabs, Geraldton for assay.

Nine of the composites were selected for magnetic upgrading from samples which contained plus 15% magnetics by weight. These underwent grinding to 53 micron in a wet rod mill and separated in a slurry using a permanent magnet and sent to Spectrolabs for assay. The results are shown below in Table 2 and Figure 2.

Metallurgical Composite

Fe % V205 % Ti02 % Al2 03 % Si02 %

437253 48.7 0.98 18.1 2.3 6.2 437254 50.1 1.00 18.8 2.0 4.8 437256 50.7 1.02 18.5 2.0 4.5 437259 42.5 0.84 20.0 2.7 9.6 437260 45.4 0.90 18.5 2.6 8.5 437262 48.4 0.98 18.2 2.3 6.5 437263 50.0 1.01 17.0 2.3 5.9 437264 44.1 0.89 19.3 2.8 8.9 437265 48.7 0.99 18.6 2.2 6.2

TABLE 2 - AMAZON BAY IRONSANDS ASSAYS AFTER MAGNETIC UPGRADING

FIG 2 - AMAZON BAY – IRON (Fe%), VANADIUM (V205%) and TITIANIUM (Ti02%) RESULTS AT BARRACOUTA AND THREADFIN PROSPECTS

Proposed Activities for 2009 - 2010

MIL intends to conduct further metallurgical testwork to determine the optimal process route for the treatment of the Amazon Bay vanadium rich titanomagnetite in parallel with discussions with potential end users.

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Titan Metals Limited The Company holds a 50% interest in Titan Metals Limited, a private PNG registered company which holds 8 Exploration Licences (EL’s) and Exploration Licence Applications (ELA’s) hosting potential for significant discoveries of gold, copper, nickel and molybdenum deposits (Table 1). The ELA’s, located within the coastal Central Province, and the eastern island provinces of New Britain and New Ireland have all had previous work and largely remain under explored from as far back as the 1960’s. Summary of 2008 – 09 Activities

• The granting of hard rock EL’s 1637 Domara Creek and EL 1628 Poi totalling 1893km2.

• The identification of large gold anomaly at Poi associated with the Poi intrusive complex where stream sediment and rock chip results ranged from <0.01g/t Au to 6.25 g/t Au and 14ppm Cu to 5.42% Cu.

• A 718 line km airborne magnetic - radiometric survey defined an extensive radiometric anomaly striking over 10km long and 1.5km wide coincident with cross cutting radiometric structures and magnetic anomalies at Poi.

• High grade gold assays defining five gold zones at Poi, namely Alusi, Wacheri, Bona Flats, Upper Wacheri and Kebei Ridge. The results indicate that Poi represents a large porphyry gold copper exploration target(1) defined by a prominent syenite ridge, strong geophysical radiometric anomalism and structures striking over 10km.

• Data from a 772 line km airborne magnetic - radiometric survey at Domara Creek is currently being modeled.

The Titan Metals project portfolio is shown in Figure 1 and includes:

• Poi project, Central Province – potential for copper-gold deposits hosted within alkali intrusive rocks. Prominent geophysical and gold geochemical anomalies. Titan’s stream samples grade up to 35.6 g/t Au (Table 3).

• West Lihir Project, New Ireland – located on the Bougainville - New Ireland volcanic arc and hosting the Legusulum porphyry copper-gold deposit on which a limited shallow drilling program into the limonite stained lithic cap was undertaken. The targets are Panguna (Bougainville) porphyry copper gold type deposits and high grade Lihir type deposits.

• Golden Peak Project, Central Province – hosts the Iawarere epithermal gold prospect. Previous explorers identified veining and alteration over a zone of approximately 2 km by 800 m and trenching returned assays of 15 m of 5.5 g/t gold that included 2 m of 43g/t gold.

• Domara Creek project, Central Province – ultramafic complex targeting copper, nickel, cobalt, silver and molybdenum.

• New Britain Projects – these ELAs are prospective for copper-molybdenum-gold systems hosted within quartz porphyry and monzodiorite intrusive and altered volcanics. Previous work returned assays up to 50.1 g/t gold from the Yonathon River alteration zone which covers 2 km by 800 m.

• Palabong Project, New Ireland – Palabong covers several highly prospective areas with potential for copper-gold deposits and epithermal gold volcanic systems. Numerous porphyry intrusives have been identified including some related to the Weitin River Caldera structure which also shows anomalous copper geochemistry.

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• Tanga Island Project – covers an area highly prospective for epithermal volcanic systems. Previous work at the Dawal Creek gold prospect returned results up to 1.8 g/t gold.

During the year activities were focussed on processing several of the ELA’s to grant and the identification at Poi of a number of significant gold-copper exploration targets within EL 1628. Mining Warden Hearings were held at Poi, Domara and Golden Peak and Exploration Licences were granted by the PNG Minister for Mining at Poi (EL 1628) and Domara (EL 1637). The Golden Peak ELA remains pending along with West Lihir, Tanga Island, North New Britain, South New Britain and Palabong. POI Project Subsequent to grant, at Poi, airborne geophysics modelling defined an extensive radiometric anomaly striking over 10km long and 1.5km wide coincident with cross-cutting radiometric structures and magnetic anomalies (Figs 3, 4). This setting is considered to be a favourable host to gold copper mineralized systems.

Fig 3 - POI RADIOMETRICS AND LOCATION OF GOLD PROSPECTS

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Reconnaissance at Poi including stream sediment sampling resulted in the definition of five gold zones within the Poi intrusive complex (Table 3 and Figure 4).

SAMPLE Au g/t PROSPECT SAMPLE Au g/t

Alusi 406002 0.02 Upper Wacheri 406020 0.01 406003 0.01 406021 2.15* 406007 0.01 406022 0.01 406009 28.40 406024 0.02 406041 2.86 406025 0.01 406042 35.60* 406026 0.01 406044 10.25* 406027 0.01 406045 0.48 406028 0.01 406046 0.02 406033 0.04

Wacheri 406034 0.01 Kebei Ridge 406001 0.05 406035 0.01 406004 0.01 406036 1.78 406005 0.01 406037 30.70 406006 0.01 406038 1.39 406008 0.02 406039 8.00 406010 0.01

Bona Flats 406051 17.60* 406011 0.08 406052 0.73* 406012 0.06 406053 1.47* 406013 0.03 406055 0.85* 406023 0.01

Upper Wacheri

406014 0.02 406029 0.02 406015 0.01 406030 0.01 406016 0.01 406031 0.37 406017 0.01 406032 0.01 406018 0.02 406040 0.51 406019 0.01 406043 0.02

* screen fire assay

Table 3: Gold fire assay results from pan concentrates at Poi F

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Figure 4: Gold stream sediment geochemistry at Poi

Proposed Activities for 2009 - 2010

Work planned for Poi in 2009 - 2010 includes mapping, stream sampling, rockchip sampling, trenching, geophysical modeling and the definition of drill targets.

Titan Metals continues to progress the ELAs towards grant after which it proposes to undertake exploration work with the objective of bringing a number of the projects to drill ready status. OTHER ACTIVITIES Magnesium Technology The Company retains the exclusive rights to the Dow Technology for magnesium production which produced magnesium metal for over 60 years. During year the Company has been pursuing possible joint venture or licence opportunities for the MIL-Dow technology.

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Magnesite Tenements

Tenements* Area Hectares Expiry Date MIL Interest Held %

MINING LEASES Myrtle Springs ML5000 18.0 30.03.2022 100%

Myrtle Springs ML5001 14.3 30.03.2022 100%

MISCELLANEOUS PURPOSE LEASES Myrtle Springs MPL 18 16.0 30.03.2022 100%

Myrtle Springs MPL 27 5.4 30.09.2015 100%

*All Tenement Leases are registered in the name of Magnesium Developments Limited, a controlled entity of MIL Resources Limited.

TABLE 4. SOUTH AUSTRALIAN TENEMENT SCHEDULE AS AT 30 JUNE 2009

The Company surrendered ML6092 in South Australia and Huandot ML23292 in the Northern Territory. FUNDING At 30 June 2009, MIL’s net cash was $2.4 million. Of this, $430,000 is to meet MIL’s commitments to Titan Mines Limited and Titan Metals Limited. The Company is actively seeking fund raising opportunities and looks forward to a positive announcement in the near future. Pat Elliott Chairman and Managing Director

(1) To the extent that there is information included in the projects set out above any potential quantity and grade is conceptual in nature, there has been insufficient exploration to define a mineral resource under the JORC Code and it is uncertain if further exploration will result in the determination of a mineral resource under the JORC Code.

The information contained in this report that relates to Exploration Results or Mineral Resources or Ore Reserves is based on information compiled by John Haggman who is a Member of the Australian Institute of Geoscientists. Mr Haggman is a Director of MIL Resources Limited and has sufficient experience which is relevant to the style of mineral deposits under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 edition of the “Australasian Code for Reporting of Mineral Resources and Ore Reserves”. Mr Haggman consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.

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MIL RESOURCES LIMITED AND CONTROLLED ENTITIES

A.B.N 23 003 669 163

FINANCIAL REPORT

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2009

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MIL RESOURCES LIMITED

AND CONTROLLED ENTITIES DIRECTORS’ REPORT

Your Directors present their report on the company and its controlled entities together with the financial report for the year ended 30 June 2009. Principal Activities The principal activities of the consolidated entity during the course of the year consisted of the pursuit of opportunities to invest in and develop a number of activities in the resources sector, these activities included;

• The earning of a 25% (and up to 90%) interest in the Amazon Bay Ironsands project in Papua New Guinea (PNG) and the carrying out of work programmes to better define the likely resource target, metallurgical work to establish the most effective process flowsheet and initial feasibility studies;

• Carrying out work programmes and progressing exploration licence applications in respect of its

50% interest in Titan Metals which has a portfolio of EL’s and ELAs in PNG prospective for gold, copper, molybdenum and nickel. Current focus is on work programmes on the Poi gold copper prospect which occurs as a well defined gold copper mineralized syenite ridge with alluvial gold draining the intrusive system.

• Pursing possible joint venture or licence opportunities for the MIL-DOW Magnesium Process

Technology; Review of Operations During the year the key operational activities of the economic entity were as follows: Titan Mines – Amazon Bay PNG

• Identifying an exploration target(1) of 3 – 4 billion tonnes of magnetite ironsands at Amazon Bay based on a 3072 line kilometre airborne magnetic survey flown at 200m and 400m line spacing and interpretation of magnetic, radiometrics, geology and previous drilling.

• Identification of the highly magnetic ironsands anomalies Barracouta and Threadfin • Identification of a major offshore ironsands target at Amazon Bay and lodging of ELA 1681

(Amazon South) to protect the anomaly which spans 45km across the Amazon Bay project area and remains open to the south.

• The granting of ironsands EL1623 Sandbank Bay and subsequent interpretation of airborne magnetics.

• The sampling of over 200 testpit and hand auger sites at Amazon Bay which returned encouraging values up to 1.02% V205 (vanadium), 50.7%Fe (iron) and 20% Ti02 (titanium).

• The vanadium results put a new focus on Amazon Bay given the demand for vanadium where its dominant end use is in steelmaking as an alloying element with iron, steel and titanium. During the year MIL will undertake investigation and hold discussions with potential customers or processors for the Amazon Bay Ironsands concentrate.

Titan Metals Limited

• The granting of hard rock EL’s 1637 Domara Creek and EL 1628 Poi totalling 1893km2; • The identification of large gold anomaly at Poi associated with the Poi intrusive complex where

stream sediment and rock chip results ranged from <0.01g/t Au to 6.25 g/t Au and 14ppm Cu to 5.42% Cu;

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• A 718 line km airborne magnetic - radiometric survey defined an extensive radiometric anomaly striking over 10km long and 1.5km wide coincident with cross cutting radiometric structures and magnetic anomalies at Poi;

• High grade gold assays defining five gold zones at Poi, namely Alusi, Wacheri, Bona Flats, Upper Wacheri and Kebei Ridge. The results indicate that Poi represents a large porphyry gold copper exploration target(1) defined by a prominent syenite ridge, strong geophysical radiometric anomalism and structures striking over 10km; and

• Data from a 772 line km airborne magnetic - radiometric survey at Domara Creek is currently being modeled.

Magnesium Technology The Company retains the exclusive rights to the Dow Technology for magnesium production which produced magnesium metal for over 60 years. During the year the Company has been pursuing possible joint venture or licence opportunities for the MIL-Dow technology. As these opportunities have not led to any successful progress during the year the Company ceased its consulting contracts with engineers who had worked on the Dow technology in the USA and shut down all operations in respect of the Dow Technology. Results of Operations The consolidated Income Statement shows a net loss from ordinary activities for the financial year of $672,624 compared with $1,059,344 in 2008. Net cash outflows from operating and investing activities were $1,249,605 compared to $2,365,275 in 2008.

Significant Changes in State of Affairs There were no significant changes in the state of affairs of the economic entity. Subsequent Events

The directors are not aware of any significant events in the consolidated entity occurring since the year ended 30 June 2009. Environmental Regulation The economic entity’s operations are subject to normal environmental regulations under Australian and overseas legislation in relation to its mining exploration and other activities. The Directors believe that the economic entity has adequate systems in place for the management of its environmental requirements and are not aware of any significant breaches of those environmental requirements during the period covered by this report. Dividends No dividends have been declared or paid since the start of the financial period and the directors do not recommend the payment of a final dividend for the year ended 30 June 2009 (2008: $nil).

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Directors The names of the Directors of the company during or since the end of the financial year are: Patrick Elliott – BCom, MBA, CPA Chairman and Managing Director

Mr Elliott, has over 35 years experience in investment, financial and industrial management, having previously been with Consolidated Goldfields Australia Limited, Morgan Grenfell Australia Limited and Natcorp Investments Limited. Mr Elliott is also a Director of Argonaut Resources NL, Australia Oriental Minerals NL Crossland Uranium Mines Limited, Global Geoscience Limited and Platsearch NL. Mr Elliott has been a Director since 1991 and became Managing Director on 31 January 2006 and Chairman in March 2006. He is also a director of a number of private industrial companies.

James Beecher – BCom, MBA, FCPA, FAICD Company Secretary and Executive Director

Mr Beecher, was appointed Company Secretary in July 2004 and a Director in September 2005. Mr Beecher has over 30 years experience in senior finance, accounting and secretarial positions in resources, financial services and services companies.

John Haggman – BSc, AIG, Executive Director

Mr Haggman graduated with a Bachelor of Science in geology from Macquarie University, Sydney in 1986 and is a Member of the Australian Institute of Geoscientists. He has more than 22 years international experience as a senior geologist, country manager, exploration manager, vice-president exploration and director of companies involved in mineral exploration in Australia, South East Asia, New Zealand, PNG, South and Central America, India, China and USA. These companies include Cyprus Gold Australia, Arimco N.L, Climax Mining Ltd, and King Engle Resources Pty Limited. He has been closely associated with the teams responsible for the discovery and feasibility studies of Selwyn-Starra (Qld), Junction Reefs (NSW) and Dinkidi (Philippines) ore bodies.

Malcolm Richmond – BSc (Hons), BCom, FAIMM, ATSE Non-Executive Director

Professor Richmond is visiting Professor of Business and Professor of Engineering at the University of Western Australia, and a former member of the Senate at Murdoch University. Professor Richmond, a metallurgist by profession, was with the CRA / Rio Tinto Group for 26 years. He worked for CRA/Rio Tinto in a number of positions including: Vice President Strategy and Acquisitions; Managing Director Research and Technology and Managing Director Development, Hamersley Iron Pty Limited. Professor Richmond has been a non-executive Director since 2001. Mr Richmond is and has been a Director of Advance Breaking Technology Ltd, Territory Iron, Strike Resources Ltd, and Structural Monitoring Systems.

Directors Meetings The following table sets out the number of Directors’ meetings (including meetings of committees of Directors) held during the financial year and the number of meetings attended by each Director (while they were a Director or committee member).

Board of Directors Audit Committee Remuneration &

Nominations Committee

Held Attended Held Attended Held Attended

PJD Elliott 4 4 2 2 - -

JD Beecher 4 4 2 2 - -

MR Richmond 4 4 2 2 - -

John Haggman 4 4 2 2 - -

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Interests in shares or options – key management personnel The relevant interest of each key management person in the shares and options issued by the companies within the consolidated entity, as notified by the Directors to the Australian Stock Exchange in accordance with S205G(1) of the Corporations Act, 2001, at the date of this report is as follows : Movements in shares The movement during the reporting period in the number of ordinary shares in MIL Resources Limited held, directly, indirectly or beneficially, by each key management person, including their related parties, is as follows:

Held at 1 July 2008

Purchases Sales Held at 30 June 2009

Directors

PJD Elliott 387,136 - - 387,136

JD Beecher 513,768 - - 513,768

MR Richmond - - - -

John Haggman 6,400,000 - - 6,400,000

Held at 1 July 2007

Purchases Sales Held at 30 June 2008

Directors

PJD Elliott 387,136 - - 387,136

JD Beecher 53,472 460,296 - 513,768

MR Richmond - - - -

John Haggman - 6,400,000 - 6,400,000

Executives

P Cameron - - - -

Listed and unlisted options The movement during the reporting period in the number of listed and unlisted options in MIL Resources Limited held, directly, indirectly or beneficially, by each key management person, including their related parties, is as follows:

Held at 1 July 2008

Granted/ Purchased

Exercised Other changes

Held at 30 June 2009

Vested and exercisable at 30 June

2009

Directors

PJD Elliott Listed 87,985 - - - 87,985 87,985

Unlisted 150,000 - - - 150,000 -

JD Beecher Listed 12,152 - - - 12,152 12,152

Unlisted 100,000 - - - 100,000 100,000

MR Richmond Listed - - - - - -

Unlisted 150,000 - - - 150,000 -

John Haggman Listed 3,000,000 - - - 3,000,000 3,000,000

Unlisted - - - - - -

Executives

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Held at 1 July 2007

Granted/ Purchased

Exercised Other changes

Held at 30 June 2008

Vested and exercisable at 30 June

2008

Directors

PJD Elliott Listed - 87,985 - - 87,985 87,985

Unlisted 150,000 - - - 150,000 -

JD Beecher Listed - 12,152 - - 12,152 12,152

Unlisted 100,000 - - - 100,000 100,000

MR Richmond Listed - - - - - -

Unlisted 150,000 - - - 150,000 -

John Haggman Listed 3,000,000 - - - 3,000,000 3,000,000

Unlisted - - - - - -

Executives

P Cameron Listed - - - - - -

Unlisted 150,000 - - - 150,000 -

See Note 17 in relation to vesting of unlisted options held by PJD Elliott and MR Richmond Share options No share options were granted by MIL Resources Limited to key management personnel during the financial year as remuneration. Unlisted options over ordinary shares at the date of this report

Shares Exercise Price

190,200

Expiry Date

$1.20 31 May 2010 600,000 Various 30 June 2011 300,000 $1.38 30 June 2011 100,000 $1.20 30 June 2011 150,000 $2.00 31 October 2012 100,000 $1.16 30 June 2011 500,000 $1.50 30 June 2011 150,000 $1.34 30 June 2011

2,090,200 Shares issued on exercise of options No ordinary shares of MIL Resources Limited were issued and paid for during or since the end of the year as a result of the exercise of unlisted options.

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Performance shares As part of the consideration for the purchase of Titan Metal Limited the Company has agreed to issue 6,000,000 shares in the Company to John Haggman, Paul Joyce, and Rob Reynolds upon the following conditions being satisfied;

(i) The Company’s shares trade above 12.5 cents for a continuous period of 30 days, or;

(ii) A JORC compliant resource (including some in the Indicated Category) with an “in-ground” value in excess of US$500 million arising from at least one of the Titan Metals current ELAs, or

(iii) Titan Metals undertakes an IPO or listing prior to MIL expending A$700,000 that provides

MIL with shares to a value of at least 200% of the sum of MIL’s expenditure plus $300,000. These conditions have not been met at the date of this report. Listed options over ordinary shares at the date of this report There were 60,329,111 listed options and 2,090,200 unlisted options over ordinary shares at the date of this report.

Auditor’s Independence Declaration The auditor’s independence declaration in relation to the audit for the financial year is provided on page 23 of this report as required under Section 307C of the Corporations Act. Non-audit Services During the year KPMG, the Company’s auditor, has performed no other services in addition to their statutory duties. Details of the amounts paid to the auditor of the Company, KPMG, and its related practices for audit services provided during the year are set out below: Consolidated 2009 2008 Statutory audit $ $ Auditors of the Company - Audit and review of financial reports 45,990 42,000 Total 45,990 42,000

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Remuneration Report The parent entity’s policy for determining the nature and amount of emoluments of board members and senior executives of the company is as follows: The remuneration structure for executive officers and Directors, including executive Directors, seeks to emphasise payment for results through providing individual reward arrangements, for example the use of share options as disclosed in the Directors Report. The objective of the individual reward arrangements is to both reinforce the short and long term goals of the company and to provide a common interest between management and shareholders. All directors are now engaged on a consultancy basis in order to preserve the Company’s cash. Professor Richmond receives non-executive director’s fees of $40,000 per annum plus superannuation guarantee payments to his nominated superannuation fund.

Employment contracts

As at 30 June 2009 there are no Executive contracts in place.

All key management personnel, including the directors other than Malcolm Richmond are engaged on a consulting basis with no fixed terms.

Key management personnel remuneration Key management personnel have authority and responsibility for planning, directing and controlling the activities of the Company and the consolidate entity. Key management personnel include directors and the five most highly remunerated directors and executives (as required by S300A of the Corporations Act.) for the Company and the consolidated entity.

Key management personnel remuneration (Company and consolidated)

Directors

Short-Term Post

Employ-ment

Share based

payments Total

Salary and Fees

$

Consul-ting Fees

$

Other benefits

$

Super-annuation

$

Options (i) $

$

JD Beecher 2009 - 52,500 - - - 52,500 2008 - 117,014 - - - 117,014

PJD Elliott 2009 - 56,000 - - - 56,000 2008 - 78,000 - - - 78,000

MR Richmond 2009 40,000 - - 3,600 - 43,600 2008 40,000 45,000 - 3,600 - 88,600

J Haggman 2009 - 72,000 - - - 72,000 2008 - - - - - - Former key management personnel

P Cameron (ii) 2009 - 28,209 - - - 28,209 2008 - 195,951 - - - 195,951 Compensation: key management personnel

2009 40,000 208,709 - 3,600 - 252,309

2008 40,000 435,965 - 3,600 - 479,565

(i) No option expenses arose for the financial year ended 2009 (2008:nil) as no options were

issued. (ii) Peter Cameron ceased to be employed by the Company on 10 December 2008.

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MIL RESOURCES LIMITED AND CONTROLLED ENTITIES CORPORATE GOVERNANCE

The Company’s has followed the Corporate Governance Principles and Recommendations of the ASX Corporate Governance Council to the extent appropriate for the size and nature of its business.

Set out below are statements disclosing the extent to which the Company has followed the Recommendations in the reporting period and where Recommendations have not been followed reasons for not following them.

Principle 1: Lay solid foundations for management and oversight The Company has a Board (1 non-executive Director, 2 executive directors plus the Managing Director) with the Managing Director managing activities; roles and functions are flexible in order to meet specific requirements. The Company has adopted a Board Charter, which sets out the Board and management’s responsibilities:

The Board is responsible for identifying obligations and expectations, both regulatory and ethical, of shareholders, regulators, creditors and others. The Board is responsible to ensure that these expectations and obligations are met to the extent the Company’s resources allow. This may include meeting promised milestones and financial estimates. The responsibility for the operation and administration of the Company has been delegated to the Managing Director. He is assisted by a number of consultants, contractors and employees in the areas of engineering, financial, management, accounting, modelling and company secretarial matters.

Apart from this Charter the Company has not in detail formalised the functions reserved to the Board and those delegated to management. Performance of senior executives including executive directors is evaluated subjectively by the Managing Director on a continuing basis. This process has taken place in the reporting period.

Principle 2: Structure the board to add value

The Company does not currently comply with the recommendations in Section 2.1 and 2.2 that a majority of Directors and the Chair should be independent directors and in Section 2.3 in that Mr Elliott is both chair and CEO. The Company is managed by a small number of executive directors. The Company has had the corporate strategy over the past 2 years of preserving and conserving cash. The Company is of a size where engaging additional directors is not considered as promoting shareholder value.

Performance of the Board, Board committees and directors is evaluated subjectively by the Managing Director on a continuing basis. This process has taken place in the reporting period.

The skills, experience and expertise relevant, to the position of director held by each director in office at the date of the annual report are:

Patrick Elliott – BCom, MBA, CPA Mr Elliott, has over 35 years experience in investment, financial and industrial management, having previously been with Consolidated Goldfields Australia Limited, Morgan Grenfell Australia Limited and Natcorp Investments Limited. Mr Elliott is also a Director of Argonaut Resources NL, Australia Oriental Minerals NL, Crossland Uranium Mines Limited, Global Geoscience Limited and Platsearch NL. Mr Elliott has been a Director since 1991 and became Managing Director on 31 January 2006 and Chairman in March 2006. He is also a director of a number of private industrial companies.

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James Beecher – BCom, MBA, FCPA, FAICD Mr Beecher has over 30 years experience in senior finance, accounting and secretarial positions in resources, financial services and services companies. Mr Beecher was appointed a Director in September 2005.

John Haggman – BSc, AIG,

Mr Haggman graduated with a Bachelor of Science in geology from Macquarie University, Sydney in 1986 and is a Member of the Australian Institute of Geoscientists. He has more than 22 years international experience as a senior geologist, country manager, exploration manager, vice-president exploration and director of companies involved in mineral exploration in Australia, South East Asia, New Zealand, PNG, South and Central America, India, China and USA. These companies include Cyprus Gold Australia, Arimco N.L, Climax Mining Ltd, and King Engle Resources Pty Limited. He has been closely associated with the teams responsible for the discovery and feasibility studies of Selwyn-Starra (Qld), Junction Reefs (NSW) and Dinkidi (Philippines) ore bodies. Mr Haggman was appointed a Director in 2008.

Malcolm Richmond – BSc (Hons), BCom, FAIMM, ATSE – Independent Director Professor Richmond is visiting Professor of Business and Professor of Engineering at the University of Western Australia, and a former member of the Senate at Murdoch University. Professor Richmond, a metallurgist by profession, was with the CRA / Rio Tinto Group for 26 years. He worked for CRA/Rio Tinto in a number of positions including: Vice President Strategy and Acquisitions; Managing Director Research and Technology and Managing Director Development, Hamersley Iron Pty Limited. Professor Richmond has been a Director since 2001. Mr Richmond is and has been a Director of Advance Breaking Technology Ltd, Territory Iron, Strike Resources Ltd, and Structural Monitoring Systems. Professor Richmond was appointed a Director in 2002

The Company has not established materiality thresholds as every payment, apart from those relating to themselves, are approved by the Managing Director and Company Secretary. All payments in respect of the Managing Director are ratified by the Board.

The Remuneration and Nominations Committee comprises Mr Elliott and Professor Richmond. There have been no meetings of the Committee during the year as these matters have been the subject of discussion and consideration by the Board and at Board meetings.

Each Director of the Company has the right to seek independent professional advice at the expense of the Company. Prior approval of the Chairman is required, but this will not be unreasonably withheld.

Principle 3: Promote ethical and responsible decision-making

The Company has established a policy concerning trading in its securities by Directors, management, staff and significant consultants which restricts trading to defined time periods.

The Company does not have a formal code of conduct, again reflecting the Company’s small size and the close interaction of the small number of individuals throughout the organisation.

Principle 4: Safeguard integrity in financial reporting

The Managing Director and the personnel responsible for producing the financial results have declared in writing to the board that the financial records of the Company for the financial year have been properly maintained, the Company’s financial reports for the year ended 30 June 2009 comply with accounting standards and present a true and fair view of the Company’s financial condition and operational results.

The Audit Committee, which had a formal charter approved by the Board, now comprises the Board as a whole. As there are only 4 directors it is appropriate that the full Board comprise the Audit Committee. As the Company does not have a majority of independent directors the Audit Committee cannot be structured to consist of only non executive directors and a majority of independent directors. As the full Board comprises the Audit Committee the Chair is the non independent chair of the Board.

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The Company’s auditor, KPMG was appointed in 1989 and a new engagement partner was appointed in June 2008.

Principle 5: Make timely and balanced disclosure

The Company, its Directors and staff are aware of continuous disclosure requirements and operate in an environment where strong emphasis is placed on full and appropriate disclosure. The Company does not have formal written policies regarding disclosure, but uses strong informal systems carried out by experienced individuals

Principle 6: Respect the rights of shareholders

The Company does not have a formal written communications strategy to promote effective communication with shareholders, as it believes this is excessive for small companies. The Company communicates regularly with shareholders via its website and timely announcements to the ASX. Communications strategy is a standing item discussed at all Board meetings.

Principle 7: Recognise and manage risk

The Company is a small company and does not believe that there is significant need for formal policies on risk oversight and management. However there is in place a operational committee to oversee the risk oversight and management of the projects operating in Titan Mines Limited and Titan Metals Limited.

Risk management arrangements are the responsibility of the Board of Directors and senior management collectively. Management and the Board consider the effectiveness of the Company’s management of its material business risks.

The Managing Director and the personnel responsible for producing the financial results have declared in writing to the Board 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 the system is operating effectively in all material respects in relation to financial reporting risks.

Principle 8: Remunerate fairly and responsibly

The Remuneration and Nominations Committee comprises Mr Elliott and Professor Richmond. There have been no meetings of the Committee during the year as these matters have been the subject of discussion and consideration by the Board and at Board meetings.

The Board Remuneration and Nominations Committee determines remuneration levels on an individual basis. Directors believe that the size of the Company makes individual salary negotiation more appropriate than formal remuneration policies.

The Company discloses the fees paid to all Directors and executive officers of the company in this Annual Report.

The Company has an Employee Share Option Plan, which was introduced in 2001, following approval from shareholders. No shares or Options have been issued under this Plan in this or the previous reporting period.

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INCOME STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2009

Note Consolidated Company

2009 2008 2009 2008

$ $ $ $

Revenue - 33,584 - 33,584

Other Income 5 28,267 - 28,267 -

Consultants expenses (415,061) (652,647) (415,061) (652,647)

Corporate expenses (22,501) (87,738) (22,501) (87,738)

Employment expense 7 (43,969) (44,027) (43,969) (44,027)

Occupancy expenses (54,861) (147,245) (54,861) (147,245)

Impairment of loans and investments - - - (183,711)

Administrative Expenses (41,318) (124,330) (41,246) (124,246)

Insurance (29,521) (68,461) (29,521) (68,461)

Travel (23,197) (138,736) (23,197) (138,736)

Depreciation 15 (7,710) (10,411) (7,710) (10,411)

Other operating expenses (101,231) (138,393) (101,231) (132,786) Operating loss before financing costs (711,102) (1,378,404) (711,030) (1,556,424)

Financial income 9 168,603 334,924 168,603 334,924

Financial expenses 9 - - - -

Net financing costs 168,603 334,924 168,603 334,924

Share of loss of equity accounted investees, net of income tax 23 (130,125) (15,864) - -

Loss before Tax (672,624) (1,059,344) (542,427) (1,221,500)

Income tax expense 10 - - - -

Net Loss for the year (672,624) (1,059,344) (542,427) (1,221,500)

Basic and diluted loss, cents per share 11 (0.42) (0.73)

The Income Statements are to be read in conjunction with the notes set out on pages 24 to 48

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STATEMENTS OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 30 JUNE 2009

Consolidation Note Share Capital

Foreign currency

Translation Reserve

Value of options issued

Retained losses Total

$ $ $ $ $

Equity

Balance at 1 July 2007 91,202,475 71,211 243,140 (90,523,536) 993,290

Net loss for the year - - - (1,059,344) (1,059,344)

Share compensation expense 46,250 46,250

Rights Issue 4,817,421 - - - 4,817,421 Securities issued on acquisition 970,181 - 265,000 - 1,235,181

Currency translation reserve - (71,211) - 71,211 -

Balance at 30 June 2008 18 96,990,077 - 554,390 (91,511,669) 6,032,798

Balance at 1 July 2008 96,990,077 - 554,390 (91,511,669) 6,032,798

Net loss for the year - - - (672,624) (672,624)

Balance at 30 June 2009 18 96,990,077 - 554,390 (92,184,293) 5,360,174

The Statements of Changes in Equity are to be read in conjunction with the notes set out on page 24 to 48.

Company Note Share Capital

Foreign currency

Translation Reserve

Value of options issued

Retained losses Total

Equity $ $ $ $ $

Balance at 1 July 2007 91,202,475 - 243,140 (90,301,187) 1,144,428

Net loss for the year - - -

(1,221,500) (1,221,500)

Share compensation expense - - 46,250 46,250

Non- Renounceable Issue 4,817,421 - - - 4,817,421 Securities issued on acquisition 970,181 - 265,000 - 1,235,181

Balance at 30 June 2008 18 96,990,077 - 554,390

(91,522,687) 6,021,780

Balance at 1 July 2008 96,990,077 - 554,390 (91,522,687) 6,021,780

Net loss for the year - - -

(542,427) (542,427)

Balance at 30 June 2009 18 96,990,077 - 554,390

(92,065,114) 5,479,353

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BALANCE SHEETS AS AT 30 JUNE 2009

Note Consolidation Company 2009 2008 2009 2008 $ $ $ $ CURRENT ASSETS Cash and cash equivalents 12 2,399,784 3,649,389 2,399,784 3,649,317 Trade and other receivables 13 165,347 243,577 848,382 226,614 Inventory 16,911 16,911 16,911 16,911 TOTAL CURRENT ASSETS 2,582,042 3,909,877 3,265,077 3,892,842 NON-CURRENT ASSETS Investment in Subsidiaries 14 - - 2,805,469 2,805,469 Investment in Associates 23 3,359,324 3,489,450 - - Property, plant and equipment 15 9,981 7,621 9,981 7,621 TOTAL NON-CURRENT ASSETS 3,369,305 3,497,071 2,815,450 2,813,090 TOTAL ASSETS 5,951,347 7,406,948 6,080,527 6,705,932 CURRENT LIABILITIES Trade and other payables 16 591,173 1,374,150 601,174 684,152 TOTAL CURRENT LIABILITIES 591,173 1,374,150 601,174 684,152 TOTAL LIABILITIES 591,173 1,374,150 601,174 684,152 NET ASSETS 5,360,174 6,032,798 5,479,353 6,021,780

EQUITY Issued capital 18 96,990,077 96,990,077 96,990,077 96,990,077 Reserve for own shares 554,390 554,390 554,390 554,390 Translation reserve - - - - Retained losses (92,184,293) (91,511,669) (92,065,114) (91,522,687) TOTAL EQUITY 5,360,174 6,032,798 5,479,353 6,021,780

The Balance Sheets are to be read in conjunction with the notes set out on pages 24 to 48.

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STATEMENT OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2009

Note Consolidation Company

CASH FLOWS FROM OPERATING ACTIVITIES 2009 2008 2009 2008

$ $ $ $ Cash paid to suppliers and employees (830,331) (1,669,485) (830,259) (1,455,846) Cash receipts in the course of operations 173,464 33,584 173,464 33,584 Net cash used in operating activities 24 (656,867) (1,635,901) (656,795) (1,422,262)

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of property, plant and equipment (10,070) (442) (10,070) (442)

Interest received 141,849 334,924 141,849 334,924 Payments for funding of equity investments (762,784) - (762,784) - Acquisition of subsidiaries and associates - (1,073,856) - (1,073,856) Proceeds of property, plant and equipment 38,267 10,000 38,267 10,000 Net cash used in investing activities (592,738) (729,374) (592,738) (729,374)

CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from the issue of share capital - 4,880,423 - 4,880,423 Pre-payment of share issue costs - - - - Advances to controlled entities - - - (213,711) Net cash provided by (used in) financing activities - 4,880,423 - (4,666,712) NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (1,249,605) 2,515,145 (1,249,533) 2,515,076 Cash and cash equivalents at 1 July 3,649,389 1,134,244 3,649,317 1,134,241

Cash and cash equivalents at 30 June 2,399,784 3,649,389 2,399,784 3,649,317

The statements of cash flows are to be read in conjunction with the notes set out on pages 24 to 48.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2009

Notes to the financial statements

1. Reporting Entity

MIL Resources Limited (the “Company”) is a listed public company, incorporated and domiciled in Australia. The address of the Company’s registered office is Suite 2, Level 3, 9-13 Young Street, Sydney, NSW 2000. The consolidated financial statements of the Company as at and for the year ended 30 June 2009 comprises the Company and its subsidiaries (“the Consolidated Entity”), and the Group’s interest in associates and jointly controlled entities.

The consolidated financial report was authorised for issue by the directors on 27 August 2009.

2. Basis of preparation

(a) Statement of compliance

The financial report is a general purpose report which has been prepared in accordance with Australian Accounting Standards (AASBs) (including Australian Accounting interpretations) adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The consolidated financial report of the Group and the financial report of the Company comply with International Financial Reporting Standards (IFRSs) and interpretations adopted by the International Accounting Standards Board (IASB).

This report should also be read in conjunction with public announcements made by MIL Resources Limited during the year in accordance with the continuous disclosure obligations arising under the Corporations Act 2001.

(b) Functional and presentation currency

The financial report is presented in Australian dollars, which is the functional currency of the Company and is prepared on the historical cost basis. The following standards, amendments to standards and interpretations have been identified as those which may impact the entity in the period of initial application. They are available for early adoption at 30 June 2009, but have not been applied in preparing this financial report:

• Revised AASB 3 Business Combinations changes the application of acquisition accounting for business combinations and the accounting for non-controlling (minority) interests. Key changes include: the immediate expensing of all transaction costs; measurement of contingent consideration at acquisition date with subsequent changes through the income statement; measurement of non-controlling (minority) interests at full fair value or the proportionate share of the fair value of the underlying net assets; guidance on issues such as reacquired rights and vendor indemnities; and the inclusion of combinations by contract alone and those involving mutuals. The revised standard becomes mandatory for the Group’s 30 June 2010 financial statements. The Group has not yet determined the potential effect of the revised standard on the Group’s financial report.

• AASB 8 Operating Segments introduces the “management approach” to segment reporting.

AASB 8, which becomes mandatory for the Group’s 30 June 2010 financial statements, will require the disclosure of segment information based on the internal reports regularly reviewed by the Group’s Chief Operating Decision Maker in order to assess each segment’s performance and to allocate resources to them. Currently the Group presents segment information in respect of its business and geographical segments (see note 3(o)).

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Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2009

Basis of preparation (continued) • Revised AASB 101 Presentation of Financial Statements introduces as a financial statement

(formerly “primary” statement) the “statement of comprehensive income”. The revised standard does not change the recognition, measurement or disclosure of transactions and events that are required by other AASBs. The revised AASB 101 will become mandatory for the Group’s 30 June 2010 financial statements. The Group has not yet determined the potential effect of the revised standard on the Group’s disclosures.

• Revised AASB 123 Borrowing Costs removes the option to expense borrowing costs and

requires that an entity capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. The revised AASB 123 will become mandatory for the Group’s 30 June 2010 financial statements and will constitute a change in accounting policy for the Group. In accordance with the transitional provisions the Group will apply the revised AASB 123 to qualifying assets for which capitalisation of borrowing costs commences on or after the effective date. The Group has not yet determined the potential effect of the revised standard on future earnings.

• Revised AASB 127 Consolidated and Separate Financial Statements changes the accounting

for investments in subsidiaries. Key changes include: the remeasurement to fair value of any previous/retained investment when control is obtained/lost, with any resulting gain or loss being recognised in profit or loss; and the treatment of increases in ownership interest after control is obtained as transactions with equity holders in their capacity as equity holders. The revised standard will become mandatory for the Group’s 30 June 2010 financial statements. The Group has not yet determined the potential effect of the revised standard on the Group’s financial report.

• AASB 2008-1 Amendments to Australian Accounting Standard - Share-based Payment: Vesting

Conditions and Cancellations changes the measurement of share-based payments that contain non-vesting conditions. AASB 2008-1 becomes mandatory for the Group’s 30 June 2010 financial statements. The Group has not yet determined the potential effect of the amending standard on the Group’s financial report.

Judgements made by management in the application of Australian Accounting Standards that have significant effect on the financial report and estimates with a significant risk of material adjustment in the next year are discussed in note 3.

3. Significant accounting policies

(a) Basis of consolidation

(i) Subsidiaries

Subsidiaries are entities controlled by the company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Investments in subsidiaries are carried at their cost of acquisition in the company’s financial statements.

(ii) Joint ventures

Joint Ventures are those entities over whose activities the consolidated entity has joint control, established by contractual agreement.

In the consolidated financial statements, investments in jointly controlled entities are accounted for using equity accounting principles. Investments in joint venture entities are carried at the lower of the equity accounted amount and recoverable amount.

The consolidated entity’s share of the jointly controlled entity’s net profit or loss is recognised in the consolidated income statement from the date joint control commenced until the date joint control

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Significant accounting policies (continues)

ceases. Other movements in reserves are recognised directly in the consolidated reserves. In the Company’s financial statements, investments in joint venture entities are carried at cost.

(iii) Associates and jointly controlled entities (equity accounting investees)

Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies. Significant influence is presumed to exist when the Group holds between 20 to 50 percent of the voting power of another entity. Jointly controlled entities are those entities over whose activities the Group has joint control, established by contractual agreement and requiring unanimous consent for strategic financial and operating decisions.

Associates and jointly controlled entities are accounted for using the equity method (equity accounted investees) and are initially recognised at cost. The Group’s investment includes goodwill identified on acquisition, net of any accumulated impairment losses. The consolidated financial statements include the Group’s share of the income and expenses and equity movements of equity accounted investees, after adjustments to align the accounting policies with those of the Group, from the date that significant influence or joint control commences until the date that significant influence or joint control ceases. When the Group’s share of losses exceeds its interest in an equity accounted investee, the carrying amount of that interest (including any long term investments) is reduced to nil and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee.

(iv) Transactions eliminated on consolidation

Intra group balances and transactions, and any unrealised gains and losses or income and expenses arising from intragroup transactions, are eliminated in preparing the consolidated financial statements.

(b) Foreign currency

(i) Foreign currency transactions Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of

the transaction. Monetary assets and liabilities denominated in foreign currencies at balance sheet date are translated to Australian dollars at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognized in the income statement. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated to Australian dollars at foreign exchange rates ruling at the dates the fair value was determined.

(ii) Financial statements of foreign operations

The assets and liabilities of foreign operations are translated to Australian dollars at foreign

exchange rates ruling at the balance sheet date. The revenues and expenses of foreign operations are translated to Australian dollars at rates approximating the foreign exchange rates ruling at the dates of the transactions. Foreign exchange differences arising on retranslation are recognised directly in a separate component of equity.

(c) Property, plant and equipment

(i) Owned assets Items of property, plant and equipment are stated at cost less accumulated depreciation (see below)

and impairment losses (see accounting policy 1h). Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment.

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Significant Accounting Policies (continued) (ii) Subsequent costs

The consolidated entity recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when that cost is incurred if it is probable that the future economic benefits embodied within the item will flow to the consolidated entity and the cost of the item can be measured reliably. All other costs are recognised in the income statement as an expense as incurred.

(iii) Depreciation Depreciation is charged to the income statement on a straight-line basis over the estimated useful

lives of each part of an item of property, plant and equipment. Land is not depreciated. The estimated useful lives in the current and comparative periods are as follows:

• Buildings 40 years • Plant and equipment 2 ½ to 8 years • Fixtures and fittings 2 ½ to 8 years

The residual value, the useful life and the depreciation method applied to an asset is reassessed at least annually.

(d) Intangible assets

(i) Goodwill Business combinations

All business combinations are accounted for by applying the purchase method. Goodwill represents the difference between the cost of an acquisition and the fair value of the net identifiable assets acquired. Goodwill is stated at cost less accumulated impairment losses. Goodwill is allocated to cash generating units and is no longer amortised but is tested annually for impairment (see accounting policy 1h).

Negative goodwill arising on an acquisition is recognised directly in profit or loss.

(ii) Research and development

Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognised in the income statement as an expense as incurred.

Expenditure on development activities, whereby research findings are applied to a plan or design for the production of new or substantially improved products and processes, is capitalised if the product or process is technically and commercially feasible and the consolidated entity has sufficient resources to complete development. The expenditure capitalised includes the cost of materials, direct labour and an appropriate proportion of overheads. Other development expenditure is recognised in the income statement as an expense as incurred. Capitalised development expenditure is stated at cost less accumulated amortisation (see below) and impairment losses (see accounting policy 1h).

(iii) Subsequent expenditure

Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred.

(e) Exploration and evaluation assets

Exploration and evaluation costs, including the costs of acquiring licences, are capitalised as exploration and evaluation assets on an area of interest basis. Costs incurred before the consolidated entity has obtained the legal rights to explore an area are recognised in the income statement.

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Significant Accounting Policies (continued) Exploration and evaluation assets are only recognised if the rights of the area of interest are current and either:

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

(2) activities in the area of interest have not at the reporting date, reached a state 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 of interest are continuing.

Exploration and evaluation assets are assessed for impairment if (i) sufficient data exists to determine technical feasibility and commercial viability, and (ii) facts and circumstances suggest that the carrying amount exceeds the recoverable amount (see impairment, accounting policy 1h). For the purposes of impairment testing, exploration and evaluation assets are allocated to cash-generating units to which the exploration activity relates. The cash-generating unit shall not be larger than the area of interest.

Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are demonstrable, exploration and evaluation assets attributable to that area of interest are first tested for impairment and then reclassified from intangible assets to mining property and development assets within property, plant and equipment.

(f) Trade and other receivables Trade and other receivables are stated at their cost less impairment losses (see accounting policy 1h).

(g) Cash and cash equivalents Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the consolidated entity’s cash management are included as a component of cash and cash equivalents for the purposes of the statement of cash flows.

(h) Impairment The carrying amounts of the consolidated entity’s assets, other than deferred tax assets (see accounting policy 1n), are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated.

Recoverable amounts are estimated at each balance sheet date for intangible assets that are not yet available for use and for assets that have an indefinite useful life.

An impairment loss is recognised where the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the income statement, unless an asset has previously been revalued, in which case the impairment loss is recognised as a reversal to the extent of that previous revaluation with any excess recognised through the Income statement.

(i) Calculation of recoverable amount The recoverable amount of assets is the greater of their fair value less costs to sell and value in

use. In assessing value in use, the estimated future 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. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

An impairment loss is reversed if there has been a change in the estimates used to determine

the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Impairment losses in respect of goodwill are not reversed.

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Significant Accounting Policies (continued)

(i) Employee benefits

(i) Share-based payment transactions The share option program allows consolidated entity executives to acquire shares of the Company. The fair value of options granted is recognised as an employee expense with a corresponding increase in equity. Fair value is measured at grant date and spread over the period during which the employees become unconditionally entitled to the options. The fair value of the options granted is measured using the Black Scholes model, taking into account the terms and conditions upon which the options were granted. The amount recognised as an expense is adjusted to reflect the actual number of share options that vest except where forfeiture is only due to share prices not achieving the threshold for vesting.

(ii) Employee benefits Liabilities for employee entitlements for wages, salaries and annual leave that are expected to be settled within twelve months of the reporting date represent present obligations resulting from employees’ services up to reporting date, calculated on undiscounted amounts based on current wage and salary rates, including related on-costs. Obligations for contributions to employee superannuation plans are recognized as an expense in the income statement as incurred. Non-accumulating non-monetary benefits, such as medical care, housing or cars, are expensed based on the net marginal cost to the consolidated entity as the benefits are taken by the employees.

(j) Provisions Provisions are recognised in the balance sheet when the consolidated entity has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, when appropriate, the risks specific to the liability.

(k) Trade and other payables Trade and other payables are stated at cost.

(l) Revenue

(i) Goods sold and services rendered Revenue from the sale of goods is recognised in the income statement when the significant risks and rewards of ownership have been transferred to the buyer. No revenue is recognized if there are significant uncertainties regarding recovery of the consideration due, there is a risk of return of goods or there is continuing management involvement with the goods.

(ii) Government grants A Government grant is recognised in the balance sheet initially as deferred income when there is reasonable assurance that it will be received and that the consolidated entity will comply with the conditions attaching to it. Grants that compensate the consolidated entity for expenses incurred are recognised as revenue in the income statement on a systematic basis in the same periods in which the expenses are incurred.

(m) Expenses

(i) Net financing income & expense Interest income and expense are recognised in the income statement as they accrue, using the effective interest method.

(ii) Operating lease payments Payments made in operating leases are recognised in the income statement on a straight line basis over the term of the lease. Lease incentives received are recognised in the income statement as an integral part of the total lease expense and are spread over the term of the lease.

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Significant Accounting Policies (continued)

(n) Tax

Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items realised directly in equity, in which case it is recognised in equity.

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

Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: initial recognition of goodwill, the initial recognition of assets or liabilities that affect neither accounting nor

taxable profit and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted at the balance sheet date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Tax consolidation

Head Entity

The Company is the head entity in a tax-consolidated group comprising the Company and all of its Australian wholly owned subsidiaries. The implementation date of the tax consolidation system for the tax-consolidated group was 1 July 2003.

The members of the tax-consolidated group have not entered into tax funding arrangements or a tax sharing agreement dealing with the allocation of income tax liabilities should the head entity default on its obligations. Tax funding or sharing agreements are not considered to be currently relevant to the operations of the tax-consolidated group given the tax losses available to the group.

(o) Segment reporting

A segment is a distinguishable component of the consolidated entity that is engaged either in providing products or services, or in providing products or services within a particular economic environment.

(p) Goods and services tax

Revenue, expenses and assets are recognized net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the taxation authority. In these circumstances the GST is recognized as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from the ATO is included as a current asset in the statement of financial position.

Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from the ATO are classified as operating cash flows.

4. Accounting estimates and judgements

Management discussed with the Board the development, selection and disclosure of the consolidated entity’s critical accounting policies and estimates and the application of these policies and estimates.

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5. Other Income

Consolidated The Company 2009 2008 2009 2008 $ $ $ $ Net gain on sale of property, plant and equipment 28,267 - 28,267 - Total Other Income 28,267 - 28,267 -

Loss on Plant & equipment disposal of $nil (2008: $20,155) has been recorded in Other Expenses

6. Segment reporting

The company operates in one segment only, being the Asia-Pacific mining industry.

7. Employment expenses

Consolidated The Company 2009 2008 2009 2008 $ $ $ $ Directors fees 40,000 40,000 40,000 40,000 Superannuation 3,600 3,600 3,600 3,600 Other employment expenses 369 427 369 427 Total employment expenses 43,969 44,027 43,969 44,027

Employment expenses exclude consulting fees of $415,061 for 2009 (2008: $652,647)

8. Auditors remuneration

Consolidated The Company Statutory audit 2009 2008 2009 2008 Auditors of the Company $ $ $ $ Audit and review of financial reports 45,990 42,000 45,990 42,000 Auditors remuneration 45,990 42,000 45,990 42,000

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9. Net financing costs

Consolidated The Company 2009 2008 2009 2008 Financial income $ $ $ $ Interest income 168,603 334,924 168,603 334,924 Interest expense - - - - Net financing income 168,603 334,924 168,603 334,924

10. Income tax expense

Consolidated The Company Reconciliation between tax expense and pre 2009 2008 2009 2008 Tax loss $ $ $ $ Loss before tax (672,624) (1,059,344) (542,427) (1,221,500) Income tax benefit @ 30% (201,787) (317,803) (162,728) (366,450) Deferred tax assets not recognised (201,787) (317,803) (162,728) (366,450) Income tax expense on pre-tax losses - - - -

Deferred tax assets have not been recognised in respect of the following items: Consolidated The Company 2009 2008 2009 2008 $ $ $ $ Tax losses 11,011,000 10,809,213 4,348,165 4,185,437

Deductible tax losses do not expire under current income tax legislation.

The claimability of deferred tax assets against future profits is subject to the parent entity passing either of the continuity of ownership or continuity of business tests under current income tax legislation requirements. Deferred tax assets have not been recognised in respect of these items because it is not considered probable that future taxable profits will be available against which the consolidated entity can utilise the benefits there from.

11. Loss per share

Basic loss per share The calculation of the basic and diluted loss per share at 30 June 2009 was based on the loss attributable to ordinary shareholders of $672,624 (2008: $1,059,344) and a weighted average number of ordinary shares outstanding during the year ended 30 June 2009 of 159,698,641 (2008: 145,631,366), calculated as follows:

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11. Loss per share (continue)

Consolidated

2009 2008 $ $

Loss attributable to ordinary shareholders (672,624) (1,059,344) Weighted average number of ordinary shares Numbers Numbers Issued shares at 1 July 159,698,641 40,540,170 Effect of shares issued 14 July 2007 - 2,967,213 Effect of shares issued 17 July 2007 - 18,465,594 Effect of shares issued 24 July 2007 - 73,042,610 Effect of shares issued 8 August 2007 - 3,238,730 Effect of shares issued 2 January 2008 - 7,377,049 Weighted average number at 30 June 159,698,641 145,631,366 Basic and diluted loss per share, cents (0.42) (0.73)

12. Cash and cash equivalents

Consolidated The Company 2009 2008 2009 2008 $ $ $ $ Bank balances 99,784 99,389 99,784 99,317 Call deposits 2,300,000 3,550,000 2,300,000 3,550,000 Cash and cash equivalents in the statement of cash flows 2,399,784 3,649,389 2,399,784 3,649,317

13. Trade and other receivables

Consolidated The Company 2009 2008 2009 2008 Current $ $ $ $ Trade receivables 11,000 22,000 11,000 22,000 Intercompany receivables - - 800,848 46,288 Other receivables 154,347 221,577 36,534 158,326 165,347 243,577 848,382 226,614

14. Investments

Consolidated The Company 2009 2008 2009 2008 $ $ $ $ Investments - - 2,805,469 2,805,469 - - 2,805,469 2,805,469

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15. Property, plant & equipment

Consolidated The Company

Land Buildings

Plant & Equip-

ment Total Land Buildings

Plant & Equip-

ment Total Cost $ $ $ $ $ $ $ $ Balance at 1 July 2007 - - 508,744 508,744 - - 263,152 263,152 Additions - - 442 442 - - 442 442 Disposals - - (245,592) (245,592) - - - - Foreign exchange movements - - - - - - - - Balance at 30 June 2008 - - 263,594 263,594 - - 263,594 263,594 Balance at 1 July 2008 - - 263,594 263,594 - - 263,594 263,594 Additions - - 10,070 10,070 - - 10,070 10,070 Disposals - - - - - - - - Foreign exchange movements - - - - - - - - Balance at 30 June 2009 - - 273,664 273,664 - - 273,664 273,664

Consolidated The Company

Land Buildings

Plant & Equip-

ment Total Land Buildings

Plant & Equip-

ment Total

$ $ $ $ $ $ $ $ Depreciation and impairment losses Balance at 1 July 2007 - - (441,154) (441,154) - - (245,562) (245,562) Depreciation charge for the year - - (10,411) (10,411) - - (10,411) (10,411) Disposals - - 195,592 195,592 - - - Balance at 30 June 2008 - - (255,973) (255,973) - - (255,973) (255,973)

Balance at 1 July 2008 - - (255,973) (255,973) - - (255,973) (255,973) Depreciation charge for the year - - (7,710) (7,710) - - (7,710) (7,710) Disposals - - - - - - - - Balance at 30 June 2008 - - (263,683) (263,683) - - (263,683) (263,683)

Carrying amounts At 1 July 2007 - - 67,590 67,590 - - 17,590 17,590

At 30 June 2008 - - 7,621 7,621 - - 7,621 7,621

At 1 July 2008 - - 7,621 7,621 - - 7,621 7,621

At 30 June 2009 - - 9,981 9,981 - - 9,981 9,981

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16. Trade and other payables

Consolidated The Company 2009 2008 2009 2008 $ $ $ $ Trade payables 160,772 180,965 150,770 180,965 Amounts due to controlled entities - - 450,404 503,187 Amounts due to related parties - Titan Mines Limited 7,741 493,185 - - - Titan Metals Limited 422,660 700,000 - - 591,173 1,374,150 601,174 684,152

17. Employee benefits

Employee benefits expense is recognised in the “employment costs” line in the Income Statement.

Summary of options on issue

Grant Date Number of options Exercise Price Vesting conditions Expiry Date

01/09/2004 600,000 $1.34 Financial Close 30/6/2011

01/09/2004 300,000 $1.46 Financial Close 30/6/2011

31/03/2005 100,000 $1.20 Financial Close 30/6/2011

31/05/2005 190,200 $1.20 On issue 31/5/2010

19/09/2005 650,000 $1.34 - $1.50 Financial Close 30/6/2011

31/10/2005 150,000 $2.00 On issue 31/10/2012

31/10/2005 100,000 $1.16 On issue 30/6/2011

2,090,200

Financial Close Financial Close is defined for the purposes of these options as the date upon which the Board resolves that commitments for equity and debt funding suitable and sufficient for the Company’s magnesium smelter project have been accepted. The Financial Close has not been achieved as at 30 June 2009.

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17. Employee Benefits (continued) Summary of Options

The number and weighted average exercise prices of share options are as follows:

Weighted average

Number of options

Weighted average

Number of options

‘000 2009 2008 Outstanding at the beginning of the year $1.32 2,090,200 $1.53 2,240,000 Forfeited during the year - - $3.00 (150,000) Exercised during the year - - - - Granted during the year - - - - Outstanding at the end of the year $1.32 2,090,200 $1.32 2,090,200 Options exercisable 440,200 440,200

The options outstanding at 30 June 2009 have exercise prices in the range from $1.16 to $2.00 and a weighted average contractual life of 3.79 years. No share options were exercised during the year. The fair value of services received in return for share options granted is 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 Black-Scholes model.

Share based payment expense in the period to 30 June 2009 was $nil (2008: nil), due to the fact that no options were issued or was exercisable in the financial year. This cost excludes 1,800,000 options granted where it is not possible to ascribe a share price to future periods when certain options are exercisable, or the options do not vest until Financial Close.

18. Capital and reserves

Share Capital

The Company

Ordinary Shares

(numbers) Ordinary Shares

($) 2009 2008 2009 2008 On issue at 1 July 159,698,641 40,540,170 96,990,077 91,202,475 Non- Renounceable Issue - 104,158,471 - 4,817,421 Shares issued on acquisition (see note 23) - 15,000,000 - 970,181 On issue at 30 June 159,698,641 159,698,641 96,990,077 96,990,077

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18. Capital and reserves (continued) The Group has also issued share options (see note 17) The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company.

Translation reserve The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign operations where their functional currency is different to the presentation currency of the reporting entity.

Value of options issued The value of options issued represents the cost of shares held by an equity compensation plan that the Group is required to include in the consolidated financial statements. Share compensation expense for 2009 was $nil (2008: $311,250). This reserve will be reversed against share capital when the underlying shares are exercised under share options.

Dividends No dividends were paid or proposed in 2009 (2008 $: nil).

19. Financial instruments

Exposure to credit, interest rate and currency risks arises in the normal course of the consolidated entity’s business. Derivative financial instruments or hedging contracts are not used. At balance sheet date there were concentrations of credit risk as cash and cash equivalents were deposited in Australian Government guaranteed deposit accounts with only two financial institutions. This concentration of credit risk is monitored on an ongoing basis.

Effective interest rates

2009 2008

Consolidated

Effective interest rate Total

6 months or less

Effective interest rate Total

6 months or less

$ $ $ $ Cash & Cash Equivalents 5.21% 2,399,784 2,399,784 7.1% 3,649,389 3,649,389 5.21% 2,399,784 2,399,784 7.1% 3,649,389 3,649,389

The effective interest rates for the cash and cash equivalents of the Company were 5.2% (2008: 7.1%).

Foreign currency risk The consolidated entity has no material foreign currency risk. New Guinea Iron Pty Ltd which is a subsidiary of the Company has invested in Titan Mines Limited and Titan Metals Limited and are treated in these accounts as associates, Their financial statements are prepared in Papua New Guinea Kina. The amounts payable to Titan Mines Limited and Titan Metals Limited are denominated in Australian dollars therefore the foreign exchange movements are accounted for in the financial statements of these associates.

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19. Financial instrument (continued)

Estimation of fair values The following summarises the major methods and assumptions used in estimating the fair values of financial instruments reflected in the table.

Fair values 2009 2008

Consolidated Carrying amount Fair value

Carrying amount Fair value

Note $ $ $ $ Trade and other receivables 13 165,347 165,347 243,577 243,577 Cash & Cash Equivalents 12 2,399,784 2,399,784 3,649,389 3,649,389 Trade and other payables 16 (591,173) (591,173) (1,374,150) (1,374,150) 1,973,958 1,973,958 2,518,816 2,518,816 Unrecognised (losses)/ gains - -

All of the Company’s financial instruments are stated at fair value.

Liquidity Risk The following are the contractual maturities of financial liabilities: Consolidated 30 June 2009 Carrying

amount

Contract-ual cash

flow

6 Mths or less

6-12 mths 1-5 years

$ $ $ $ $ Trade and other payables 591,173 591,173 591,173 - - 591,173 591,173 591,173 - - The Company 30 June 2009 Carrying

amount

Contract-ual cash

flow

6 Mths or less

6-12 mths 1-5 years

$ $ $ $ $ Trade and other payables 601,174 601,174 601,174 - - 601,174 601,174 601,174 - -

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20. Operating leases

Non-cancellable operating lease rentals are payable as follows:

Consolidated The Company 2009 2008 2009 2008 $ $ $ $ Less than one year 31,923 54,725 31,923 54,725 Between one and five years - 31,923 - 31,923 More than five years - - - - 31,923 86,648 31,923 86,648

During the year ended 30 June 2009, $54,861 was recognised as an expense in the income statement in respect of operating leases (2008: $147,245).

21. Consolidated entities

2009 2008

Parent entity: Incorporated Ownership interest

MIL Resources Limited Australia

Significant subsidiaries:

MagSheet Pty Ltd Australia 100 100

SAMAG Pty Limited* Australia 100 100

Magnesium Developments Pty Ltd* Australia 100 100

New Guinea Iron Pty Ltd Australia 100 100

• SAMAG Limited and Magnesium Developments Ltd have changed corporate status to proprietary companies which became effective 16 July 2009. As a result the company’s names are now SAMAG Pty Limited and Magnesium Developments Pty Ltd

22. Acquisition of subsidiary and associates

There have been no acquisitions in the year to 30 June 2009. A further $700,000 has been invested by the Company in New Guinea Iron Pty Ltd in meeting its commitments in accord with its contractual obligations to Titan Mines Limited and Titan Metals Limited in the period to 30 June 2009.

The following are acquisitions completed in the year to 30 June 2008

New Guinea Iron Pty Ltd On 24 October 2007 the Shareholders approved the agreement to acquire 100% of New Guinea Iron Pty Ltd (NGI), which owns 25% of Titan Mines Limited shares. The purchase of these shares was completed on 2 January 2008, at which stage NGI became a 100% own subsidiary of MIL. At the time of acquisition NGI had an associate investment in Titan Mines Limited of $10,024. On acquisition the fair value of the associate investment was $2,805,469.

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(a) Titan Mines Limited Under the above agreement, the Company acquired 25% interest in Titan Mines Limited, which has interests in the Amazon Bay ironsands (titaniferous magnetite) project in Papua New Guinea. This opportunity represents an early stage resource investment for the Company that is expected to provide the Company with entry into supplying the iron and steel industry.

Potential for hardrock deposits also exit in the 1565km2 exploration licence with historical rockchip sampling showing copper and gold indications.

The key terms of the agreement are;

• MIL to acquire an initial 25% shareholding in Titan Mines Limited for;

(i) 15,000,000 MIL fully paid ordinary shares and 7,500,000 MIL Primary Options. Each primary option has an exercise price of $0.10 and an expiry date of 31 May 2012. Upon exercise of a primary option, a primary option converts into a fully paid ordinary share and the holder will be automatically granted a secondary option for no cash consideration. Each secondary option has an exercise price of $0.15 and an expiry date of 31 May 2015. Upon exercise of a secondary option, a secondary option converts into a fully paid ordinary share.

(ii) Cash payment of $300,000 to reimburse past expenses;

(iii) MIL is committed to fund stage 1 evaluation program up to A$1.25 million;

• If MIL, at its election, funds a further $1.25 million on a subsequent Stage 2 evaluation and development program MIL’s interest in Titan Mines will increase to 51%;

• MIL can then elect to fund a further $10 million to increase its interest to 75% on a pro rata basis;

• MIL can then elect to fund a further $10 million to increase its interest to 90%, on a pro rata basis.

As 30 June 2009, $7,741 of the stage 1 commitment had not been spent. During the year $422,695 was invested in accordance with the agreement.

(b) Titan Metals Limited

On 13 June 2008 the New Guinea Iron Pty Ltd reached agreement to acquire 50% of Titan Metals Limited, a private PNG registered company which holds 8 Exploration Licence Applications (ELAs) covering over 10,000 sq km in PNG and hosting potential for significant discoveries of gold, copper, nickel and molybdenum deposits in the period to 30 June 2009. Two Exploration Licences were granted. The ELs and ELAs, located within coastal Central Province, and the eastern island provinces of New Britain and New Ireland have all had previous work undertaken from as far back as the 1960’s and largely remain under explored. Previous explorers included BHP, CRA, ESSO, AOG, SAMAUST and Elders.

The consideration for the acquisition is the expenditure of A$700,000 on the ELAs and the issuance of 6 million fully paid MIL shares to interests associated with Titan Metals conditional upon the achievement of certain milestones:

(i) MIL shares trade above 12.5 cents for a continuous period of 30 days, or;

(ii) A JORC compliant resource (including some in the Indicated Category) with an “in-ground” value in excess of US$500 million arising from at least one of the Titan Metals current ELAs, or

(iii) Titan Metals undertakes an IPO or listing prior to MIL expending A$700,000 that provides MIL with shares to a value of at least 200% of the sum of MIL’s expenditure plus $300,000.

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The Company’s intention is to bring several of the Titan Metals projects to “drill-ready” status soon after the Exploration Licences are granted.

New Guinea Iron Pty Ltd which is a 100% owned subsidiary has acquired the Titan Metals Limited shares.

During the year to 30 June 2009, $277,340 was provided in accordance with the terms of the agreement and as at 30 June 2009, $422,660 of the initial funding commitment remained unspent.

23. Equity accounting investees

The Group’s share of loss in its equity accounted investees for the year was $130,125 (2008: $15,864).

Details of investments in associates are as follows;.

Consolidated 2009 Ownership

interest Share of net (loss)

Equity accounted investment

carrying amount

Associates Principal activity

Place of Incorporat

-ion

Reporting date

% $ $

Titan Mines Limited Exploration PNG 31 Dec 25% (27,023) 2,764,149 Titan Metals Limited Exploration PNG 31 Dec 50% (103,102) 595,175 Total - - - - (130,125) 3,359,324

Consolidated 2008

Ownership interest

Share of net

(loss)

Equity accounted investment

carrying amount

Associates Principal activity

Place of Incorporat

-ion

Reporting date

% $ $

Titan Mines Limited Exploration PNG 31 Dec 25% (14,142) 2,791,172 Titan Metals Limited Exploration PNG 31 Dec 50% (1,722) 698,278 Total - - - - (15,864) 3,489,450

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Consolidation 2009 2008 $ $ Results of associate Share of associates’ loss before income tax

(130,125) (15,864)

Income Tax - - Share if associates’ net loss (130,125) (15,864) Summary of balance sheet of associates

The consolidated entity’s share of aggregate assets and liabilities of associates are as follows: Current assets 214,346 753,426 Non-current Assets 507,368 - Current Liabilities (63,888) (52,134) Net assets 657,826 701,292

24. Reconciliation of cash flows from operating activities Consolidated The Company

Cash flows from operating activities

2009 $

2008 $

2009 $

2008 $

Operating Loss for the period (672,624) (1,059,344) (542,427) (1,221,500)

Adjustments for:

Net financial income (168,603) (334,924) (168,603) (334,924)

Depreciation and amortisation 7,710 10,411 7,710 10,411

(Profit)/loss on the sale on non-current assets

(28,267) 20,155 (28,267) -

Impairment of loans and investments (non cash)

- - - 183,711

Shares of loss of equity accounted investees, net of income tax

130,125 15,864 - -

Operating cash flow before changes in working capital and provisions

(731,659) (1,347,838) (731,587) (1,362,302)

Decrease/(increase) in trade and other receivables

94,985 (104,975) 104,987 (104,975)

Decrease/(increase) in inventory - (16,911) - (16,911)

Increase/(decrease) in trade and other payables

(20,193) (166,177) (30,195) 61,926

Net cash used in operating activities

(656,867) (1,635,901) (656,795) (1,422,262)

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25. Related party disclosures

The parent entity’s policy for determining the nature and amount of emoluments of board members and senior executives of the company is as follows: The remuneration structure for executive officers and Directors, including executive Directors, seeks to emphasise payment for results through providing individual reward arrangements, for example the use of share options as disclosed in the Directors Report. The objective of the individual reward arrangements is to both reinforce the short and long term goals of the company and to provide a common interest between management and shareholders.

Key management personnel remuneration Key management personnel have authority and responsibility for planning, directing and controlling the activities of the Company and other executives. Key management personnel include the five most highly remunerated S300A directors and executives for the company and the consolidated entity.

Key management personnel remuneration (Company and consolidated)

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

Name Position

PJD Elliott Chairman and Managing Director

JD Beecher Executive Director, Company Secretary

JA Haggman Executive Director

MR Richmond Non-Executive Director

Detailed information regarding key management personnel, including their remuneration, is located in the Director’s report pages 12-19. Interests in shares or options – key management personnel The relevant interest of each Director in the shares and options issued by the companies within the consolidated entity, as notified by the Directors to the Australian Stock Exchange in accordance with S205G(1) of the Corporations Act, 2001, at the date of this report is as follows : Detailed information regarding key management personnel, including their interests in shares or options, is located in the Director’s report pages 12-19. Unlisted share options No share options were granted by MIL Resources Limited to key management personnel during the financial year. No options have been issued since the end of the financial year.

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Listed securities On 2 January 2008 John Haggman was issued 5,000,000 ordinary shares, and 2,500,000 listed options, as part of MIL Resources acquisition of New Guinea Iron Pty Ltd.

Unlisted options over ordinary shares at the date of this report Detailed information regarding key management personnel, including their interests in unlisted options, is located in the Director’s report pages 12-19.

Other related party transactions Loans are made by the company to wholly owned subsidiaries for working capital and operating expense purposes. During the year ended 30 June 2009, such loans to subsidiaries totalled $0 (2008: $183,711).The loans made in 2008 have been subsequently written off by the company. No loans to key management personnel and their related parties were made in the period.

26. Subsequent events The directors are not aware of any significant changes in the state of affairs of the consolidated entity occurring since 30 June 2009 to the date of these financial statements.

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MIL RESOURCES LIMITED AND CONTROLLED ENTITIES ADDITIONAL INFORMATION for Listed Public Companies

Additional information required by the Australian Stock Exchange Listing Rules and not disclosed elsewhere in this report: 1. Shareholding – Ordinary shares (i) Distribution schedule of ordinary shareholdings as at 24th August 2009. 1 – 1,000 347 1,001 – 5000 362 5,001 – 10,000 155 10,001 – 100,000 547 100,001 and over 173 Total number of holders 1,584 (ii) Number of shareholders with less than a marketable parcel 970 (iii) 20 Largest Shareholders – Ordinary Shares Number of

Ordinary Shares Held

% Held 1. ANZ Nominees Limited 6,425,131 4.02% 2. Lippo Securities Nominees (BVI) Ltd 5,000,000 3.13% 3. Blue Lake Resources Pty Limited< The John Haggman Super A/C> 4,900,000 3.07% 4. Berenvy Pty Ltd 4,900,000 3.07% 5. Rogo Investments Pty Ltd < The Rogo Super Fund A/C> 4,900,000 3.07% 6. Captain Ossama Fathi Rabah Al Sharif 4,800,000 3.01% 7. Clapsy Pty Ltd < Baron Super Fund A/C> 4,000,000 2.51% 8. Bestfield Company 3,466,400 2.17% 9. Redcliff Pty Ltd <Superannuation Fund A/C> 3,000,000 1.88% 10. Mrs Jennifer Dayrit Leviste 2,839,790 1.78% 11. Mr Jose Leviste Jnr 2,665,000 1.67% 12. Bestfield Company 2,600,000 1.63% 13. HSBC Custody Nominees (Australia) Limited – GSCO ECA 2,383,333 1.49% 14. Bannaby Investments Pty Ltd <Super Fund A/C> 2,000,000 1.25% 15. Budberth Pty Ltd <Ipseity S/F A/C> 2,000,000 1.25% 16. Locope Pty Ltd 2,000,000 1.25% 17. SKEGGS Goldstein Planners Pty Limited <The Reynolds Family A/C> 2,000,000 1.25% 18. Pethol (Vic) Pty Ltd 1,951,623 1.22% 19. Baron Nominees Pty Ltd 1,925,000 1.21% 20. J P Morgan Nominees Australia Limited 1,681,424 1.05% Percentage held by 20 largest shareholders 65,437,701 40.98%

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Additional Information for Listed Public Companies

2. Shareholding – Listed Options (i) Distribution schedule of ordinary shareholdings as at 24th August 2009. 1 – 1,000 179 1,001 – 5000 132 5,001 – 10,000 58 10,001 – 100,000 274 100,001 and over 86 Total number of holders 729 (ii) Number of shareholders with less than a marketable parcel 617 (iii) 20 Largest Option holders Number of Options Held % Held 1. Blue Lake Resources Pty Limited< The Blue Lake A/C> 3,000,000 4.97% 2. Berenvy Pty Ltd <The Paul Joyce S/Fund A/C> 2,500,000 4.14% 3. Rogo Investments Pty Ltd < The Rogo Super Fund A/C> 2,500,000 4.14% 4. Redcliff Pty Ltd Superannuation Fund A/C 2,102,790 3.49% 5. Clapsy Pty Ltd < Baron Super Fund A/C> 2,000,000 3.32% 6 Clapsy Pty Ltd < Baron Super Fund A/C> 1,529,357 2.54% 7. Mr Andew Lenox Hewitt 1,506,259 2.50% 8. Bestfield Company 1,500,000 2.49% 9. Budberth Pty Ltd <Ipseity A/C> 1,307,684 2.17% 10. Dalfam Pty Limited <BFT A/C> 1,200,000 1.99% 11. Suilven Pty Ltd 1,100,000 1.82% 12. Venture Group Equities Pty Ltd 1,050,000 1.74% 13. Locope Pty Ltd 1,011,000 1.68% 14. Bannaby Investments Pty Ltd <Super Fund A/C> 1,000,000 1.66% 15. Bluestar Management Pty Ltd 1,000,000 1.66% 16. Mr Andew Hewitt 1,000,000 1.66% 17. Holtex Pty Limited <Buckeridge SF A/C> 1,000,000 1.66% 18. Holtex Pty Ltd <Buckeridge SF A/C> 1,000,000 1.66%

19. Mr Christopher Gerald Sabin & Mrs Gillian Brigit Sabin <Sabin Family A/c> 1,000,000 1.66% 20. Trifern Pty Ltd 1,000,000 1.66% Percentage held by 20 largest option holders 29,307,090 48.58% (v)

Article 37 of the parent entity’s Constitution stipulates the voting rights of members as follows: Voting Rights

Subject to any rights or restrictions attached to any class of shares and to these Articles: a) at a meeting of Members or class of Members each Member entitled to vote may vote in person

or by proxy or attorney; b) on a show of hands every person present who is a Member or a representative of a Member

shall have (1) vote ; and c) on a poll, every Member present in person or by proxy or by or attorney or representative shall

have in respect of: I. each fully paid share held by him in the parent company, one (1) vote; and II. each contributing share held by him in the parent entity, voting rights pro rata to the amount

paid up on each share.

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Additional Information for Listed Public Companies

1. The address of the principal office in Australia

Suite 2, Level 3, 9-13 Young Street, Sydney NSW 2000. Telephone (02) 9252 1505

is:

2. Registers of securities are held at

:

Registries Limited Level 7, 207 Kent Street, Sydney NSW 2000 Phone: (02) 9290 9600 Facsimile: (02) 9279 0664

3.

The parent entity’s shares are quoted on the Australian Stock Exchange with codes MGK for listed ordinary shares and the listed options code is MGKOA

Stock Exchange Listings

4. Restricted Securities

- there are no restricted securities.

5. Unquoted Securities – 2,090,200 Unlisted Options are on issue.

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ABN 23 003 669 163 CORPORATE DIRECTORY DIRECTORS Patrick Elliott (Chairman and Managing Director)

James Beecher John Haggman Malcolm Richmond

SECRETARY James Beecher REGISTERED OFFICE Suite 2, Level 3

9 – 13 Young Street SYDNEY NSW 2000 Phone: (02) 9252 1505 Facsimile: (02) 9252 1507

HEAD OFFICE Suite 2, Level 3 9 – 13 Young Street SYDNEY NSW 2000 SYDNEY NSW 2000 Phone: (02) 9252 1505 Facsimile: (02) 9252 1507

AUDITORS KPMG 10 Shelley Street SYDNEY NSW 2000

SHARE REGISTRAR Registries Limited Level 7 207 Kent Street Sydney NSW 2000 Phone: (02) 9290 9600 Facsimile: (02) 9279 0664

BANKERS Westpac Banking Corporation Westpac Plaza Branch 273 George Street SYDNEY NSW 2001

WEBSITE www.mgil.com.au

ASX CODE MGK

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http://www.mgil.com.au/�

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