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ABN 12 114 561 732

PLUTONP L U T O N R E S O U R C E S L I M I T E D

ANNUAL REPORT 2012

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PLUTONP L U T O N R E S O U R C E S L I M I T E D

Front cover photo (top): “Mining on Irvine will provide significant benefits for the Mayala People.”

Front cover photo (bottom) “Hardstaff Peninsula on Irvine Island with Cockatoo Island in the

immediate background.”

DirectorsMalcolm MacphersonAnthony James SchoerRussell George WilliamsChenxi Wang

Company secretaryAndrew Metcalfe

Notice of annual general meetingThe annual general meeting of Pluton Resources Limited:

Will be held at The Westin Hotel205 Collins StreetMelbourne VIC 3000

Time: 10:30 AMDate: Thursday 29 November 2012

Registered officeLevel 4, 468 St Kilda RoadMelbourne VIC 3004Head office number: +61 (0) 3 9867 8283

Principal place of businessLevel 4, 468 St Kilda RoadMelbourne VIC 3004

Share registerBoardroom LimitedLevel 7, 207 Kent StreetSydney NSW 2000Investor phone number: (Aus) 1300 737 760Investor phone number: (Overseas) +61 (0) 2 9290 9600

AuditorDeloitte Touche Tohmatsu550 Bourke StreetMelbourne VIC 3000

Stock exchange listingPluton Resources Limited shares are listed on the Australian Securities Exchange (ASX code: PLV)

Website address www.plutonresources.com

Contents

Chairman’s Letter 02

CEO’s Review 04

Financial Report 11

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Top photo: “Mayala employees undergoing training with Pluton’s operations supervisor

Ben Carpenter.”

Bottom photo:

“Mayala employees assemble the Universal Drilling Platform at the Isthmus.”

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The 6th annual general meeting is taking place just as your company is establishing itself as a producer of high

grade iron ore.

This is despite the totally unexpected setback in late June when a major backer of our potential joint venture

partner withdrew their support. Weeks of uncertainty followed as the Managing Director, Tony Schoer and his

team worked tirelessly to find alternative financers and were successful.

The acquisition of the Cockatoo Island iron ore project was completed in September, 2012 and the

management handover occurred on October 1, 2012. We see plenty of potential to extend the life of the

open-cut operations on Cockatoo and will be examining the possibility of an underground mine.

Our largest shareholder, Wise Energy, have given the Company great support over the past few months. They

were there when we needed urgent funding to complete the Cockatoo purchase, and to date have successfully

raised US$12.7 million by pre-selling Cockatoo ore to fund the acquisition as well as for working capital.

Moreover they negotiated a 1 million tonne off-take agreement that includes a $20 million pre-payment to fund

the environmental bonds.

Cockatoo and Irvine offer significant infrastructure synergies. Irvine will benefit from utilising Cockatoo

infrastructure thereby eliminating duplication, while lowering our environmental footprint. In addition, lower

grade Cockatoo ore could be processed through the Irvine pre-concentrator, extending the operational lives of

both islands.

Our success will be shaped by the quality of our people. To that end we have recruited experienced

professionals from the iron ore industry.

It is also pleasing to have the opportunity to provide more jobs for the indigenous people of the Kimberley.

Our primary goal in 2013 will be to achieve production targets on Cockatoo, carry out drilling to extend the life

of the open-cut operations; and further assess the feasibility of an underground operation. Also we will continue

the process of seeking environmental approvals for the Irvine Project.

I would like to extend my thanks to you our shareholders for your support during the year, my fellow Directors,

and to Tony and the management team for their continued hard work during some difficult times.

Malcolm Macpherson – Chairman

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“Mayala elders and employees during a recent heritage visit to Irvine Island.”


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CEO’s Review 04

Overview

Pluton has made significant progress over the past 12 months. The acquisition of the Cockatoo Island iron

ore project has transformed the Company from an explorer to a producer. The Company commenced mining

activities in October and will load its maiden shipment in November.

This has been achieved despite a difficult few months when a major financial backer of joint venture partner Wise

Energy Group withdrew its support.

With the support of Wise Energy, Pluton has pre-sold shipments of Cockatoo ore to fund the acquisition of

Cockatoo and provide funding for the environmental bonds and working capital.

Cockatoo is an exciting project for the Company. There is significant potential to increase the mine life for the

open-cut operation as well as potential for a significant long-life underground operation.

“Location of Pluton tenements in the Kimberley, Western Australia.”

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CEO’s Review 05

“Cockatoo Island operations with Irvine Island in the background.” “Schematic showing previous drilling into Cockatoo underground.”

The Irvine Island project also continues to progress well. The main focus has been on final data collection

required for submission of the Public Environmental Review. This is a slow and tedious process but one that is

important to gain the required approvals to commence development of the island.

Importantly, timing of development on Irvine Island ties in with the Cockatoo operations. Significant synergistic

opportunities exist to share infrastructure, process Cockatoo low grade ore through the Irvine pre-concentrator

and create employment and business opportunities for the indigenous people of the region.

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CEO’s Review 06

Table 1: Yampi Member Mineral Resource, Hardstaff Peninsula, Irvine Island, Western Australia (E04/1172) as at 31 August 2012.

Classification

In-Situ Mineralisation Magnetite Mineralisation

COG

Fe (%)

Tonnes

(Mt)

Total Wt Rec*

(%)

Iron (%)

SiO2

(%)

LOI at 950° C

Wt Rec

(%)

Fe by DTR

(%)

SiO2 by DTR (%)

Indicated >40% iron (Lens 1) 40 5 49.2 45 32.5 1.2 34.2 69 2.4

Indicated >50% iron (Lens 2) 50 59 55.1 51 25.6 0.7 37.7 70 1.9

Indicated >30% and <50% Iron (Lens 2) 30 43 39.2 33 47.5 1.0 30.8 69 3.2

Sub Total Indicated (Lens 1 and 2) 107 48.5 43 34.7 0.8 34.8 70 2.5

Indicated >10% iron and < 30% iron 10 68 23.0 18 62.6 1.8 20.5 68 5.2

Total Indicated - 175 38.6 33 45.5 1.2 29.3 69 3.6

Supporting Notes for Table 1.

1 The Mineral Resource is reported in accordance with the JORC Code¹.

2 All resources have been rounded to the nearest 1 million tonnes.

3 CoG is defined as cut-off grade.

4 *Total weight recovery includes both the magnetite and hematite mineralisation. A 50% recovery for hematite is based on metallurgical test work.

Irvine Island Iron Ore Project

During the past 12 months, Pluton completed all exploration activities on Irvine Island. Drilling high priority holes on

Hardstaff Peninsula enabled the expected mine life to increase from 11 years to 21 years (see tables 1-4 below), to

produce an estimated 72 million tonnes of high grade concentrate averaging 67.5% iron (Fe).

Further test work on the optimum grind size for the pre-concentrate to be produced at Irvine confirms a 3mm product

will provide initial capital savings of $54 million, lowering capital spend previously advised in the Pre-feasibility Study.

Significant further capital savings are expected by manufacturing the plant, including the pre-concentrator, in China.

These savings will be quantified during the Definitive Feasibility Study (“DFS”). Much of the data capture for the DFS is

on-going and will be finalised for an investment decision to be made well before final statutory approval of the project.

The Company has spent considerable time in the 2012 year finalising environmental data capture through multiple

land and marine surveys, including drilling of environmental holes to capture data on subterranean fauna and flora,

for the Public Environmental Review (“PER”) submission. This is a tedious process covering several dry and wet

seasons. It is expected the PER will be lodged by the 2nd quarter of calendar year 2013, which will commence the

formal environmental review process.

On 6th July 2012 a mining lease was granted over Irvine Island (M04/452). The mining lease replaces the previous

exploration lease and is a step forward in the approvals process.

The Company continues to meet its commitments to employ and train indigenous people of the Kimberley, particularly

members of the Mayala People. The purchase of the Cockatoo Island iron ore project allows Pluton the opportunity to

increase the number of indigenous people into the work force. Initially, nine positions have been created on Cockatoo

Island for indigenous people and we expect that number to grow significantly over time.

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CEO’s Review 07

Table 2: Wonganin Sandstone Mineral Resource, Hardstaff Peninsula, Irvine Island, Western Australia

(E04/1172) as at 31 August 2012.

Classification COG Fe

(%)

Tonnes

(Mt)

Total Wt Rec (%)

Iron

(%)

SiO2

(%)

Al2O3

(%)

S

(%)

P

(%)

LOI at 950° C

Indicated Wonganin Sandstone - 368 19.7 21 61.0 4.20 0.09 0.032 1.9



2 All resources have been rounded to the nearest 1 million tonnes.


4 No cut-off grade has been applied to the Wonganin Sandstone Indicated Mineral Resource estimation.

Table 3: Yampi Member Mineral Resource, Isthmus Region, Irvine Island, Western Australia (E04/1172)

as at 31 August, 2012.

Classification COG Fe

(%)

Tonnes

(Mt)

Iron

(%)

SiO2

(%)

Al2O3 S

(%)

P

(%)

LOI 950°C

(%)

Inferred - 18.5 33 43.4 4.7 0.04 0.03 1.5

Total Inferred - 18.5 33 43.4 4.7 0.04 0.03 1.5



2 All resources have been rounded to the nearest 1 million tones.


4 No cut-off grade has been applied to the Yampi Member Inferred Mineral Resource.

Irvine Ore Reserve

A maiden Ore Reserve estimate for the Hardstaff Peninsula at the Irvine Island Project has been completed.

The delineation of the Ore Reserve at the Hardstaff Peninsula is in line with the Company’s development strategy and

represents a key milestone in the development of the project. The open-pit Ore Reserve estimate for the Hardstaff

Peninsula as reported in accordance with the JORC Code is summarised in Table 4.

“It is almost impossible to find areas where drilling occurred”“Pluton’s patented Universal Drilling Platform minimises ground disturbance during exploration drilling”

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CEO’s Review 08

Mineral Resources have been converted to Ore Reserves recognising the level of confidence in the Mineral Resource

estimate and reflecting any modifying factors. The Ore Reserve Estimate is based on the Mineral Resource estimate

for the Hardstaff Peninsula that was previously compiled and announced to the Australian Stock Exchange on

27th April, 2011.

The Ore Reserve includes that part of the Mineral Resource contained within the open pit mine design. Indicated

Mineral Resources within the design convert to Probable Ore Reserves, after consideration of all mining, metallurgical,

social, environmental, statutory and financial aspects of the project.

Cockatoo Island Iron Ore Project

On 7th September 2012, Pluton completed the purchase of the Cockatoo Island iron ore project. Mining operations

commenced in October 2012 with the first ore shipment scheduled in November.

Included in the consideration for purchasing the project, Pluton assumes responsibility for rehabilitation of the island.

The total cost of rehabilitating Cockatoo Island is not expected to be materially greater than the $20 million, submitted

as environmental bonds. At time of writing, funding for the bonds has been arranged via a prepayment of $20 million

against an off-take agreement for 1 million tonnes of ore.

The Company has entered into a 50/50 unincorporated joint venture, subject to shareholder and regulatory approvals,

with Wise Energy Group Limited (“WEG”), a major shareholder. Pluton is Manager of the Joint Venture and

responsible for all operational activities. WEG is responsible for shipping and marketing of Cockatoo ore.

¹Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, 2004 Edition, prepared by the Joint Ore Reserves Committee of the Australian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia.

Table 4: Ore Reserve Statement, Hardstaff Peninsula, Irvine Island, Western Australia (E04/1172).

Classification Tonnes Total Wt Rec

Mineralisation Magnetite Wt Rec

Hermatite Wt Rec

(Mt)

(%)

Fe (%)

SiO2 AI203 S (%)

P (%)

LOI at 950˚ C

(%)

(%)

Probable Yampi 51 40 38 42.1 1.7 0.1 0.03 0.9 27 14

Probable Wonganin 93 22 23 57.9 3.7 0.1 0.03 1.9 11 11

Total 143 28 28 52.3 3.0 0.1 0.03 1.5 17 12

Notes for Table 4: The Ore Reserve Estimate is based on Indicated Mineral Resources contained within mine designs above an economic cut-off. The economic cut-off is based on the value of each minable block incorporating the processing, grade control, rehabilitation, and ore rehandle costs. The figures presented were rounded and include mining dilution and ore loss.

The Ore Reserve Estimate has been derived as a result of a pre-feasibility mining study prepared to a level of accuracy with estimates prepared within ± 30%. The mining study is based on an operation and associated higher costs for processing a final concentrate product on Irvine Island mine design, production and cash flow schedules were prepared. The economic assessment achieved a positive cash flow for a range of downside sensitivities, of both prices and costs. All Fe prices were supplied by Pluton Resources and based upon the Macquarie Commodities Research (18 May 2011), and pricing outlook prepared by Ferrum Consultants. Capital and operating costs for processing were provided together with Port, G&A by Pluton and Calibre Projects. Costs and modifying factors used in the mining study assume mining by conventional open pit methods utilising hydraulic excavators and haul trucks. Modifying factors applied include mining dilution (5%) and ore loss of (5%). A cut-off grade of 15% Fe was applied to the Wonganin Sandstone. No cut-off grade was applied to the Yampi Member. The schedule is based on a maximum plant feed rate of 17.0 Mtpa with the expected project life of over 10 years. The project remains subject to environmental approval. Wt Rec = Weight recovery of ore to final concentrate product if the ROM was processed to a final concentrate as per design at Irvine Island as provided by Calibre Projects.

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CEO’s Review 09

Table 5: Cockatoo Island Seawall Hematite Mineral Resources as at 31 July 2012

Classification Tonnage (Mt)

COG Fe (%)

Fe (%)

SiO2 (%)

Al2O3 (%)

S (%)

P (%)

Indicated 1.3 67.0 68.3 1.0 0.5 0.01 0.01

Indicated 2.6 65.5 69.0 0.6 0.3 0.003 0.004

Total Indicated 3.9 68.8 0.7 0.4 0.005 0.006

Inferred 1.4 67.0 68.2 0.9 0.01 0.01 0.01

Inferred 0.4 67.0 68.3 0.9 0.5 0.01 0.02

Inferred 0.8 67.0 68.3 1.0 0.6 0.01 0.01

Inferred 1.3 65.5 69.0 0.5 0.3 0.003 0.005

Total Inferred 3.9 68.5 0.8 0.3 0.008 0.009

Notes:

1: Mineral Resources 2350E to 2950E are exclusive of Stage 4 Probable Ore Reserve.

2: Tonnage is rounded to the nearest 100,000 tonnes.

Pluton has appointed Watpac Civil & Mining (“Watpac”) as the preferred mining contractor. Agreements are expected

to be finalised and executed by 29th October 2012. Watpac have mobilised personnel and equipment to site and are

responsible for all operational activities from mining through to ship loading. In addition many of the skilled Cockatoo

Island employees have joined Watpac, e ensuring continuity of operations.

As announced on the 10th September, Pluton commences mining operations with an opening inventory of 12 million

tonnes of direct shipping ore (see Tables 5-7 below). The available tonnage on Cockatoo gives the project an initial

3 year life of open-cut operations. Under the current mine plan, FOB operating costs (excluding statutory royalties)

are estimated at $51/tonne. Total capital costs are expected to be approximately $16 million and will be funded by

cash flow.

Pluton will begin drilling in early 2013 and is aiming to convert resources into reserves to extend the open-cut mine

life. Pluton will also commence a campaign of drilling to assess the viability of an underground operation. Previous

historic drilling has returned very high grade ore at depth. Pluton has engaged underground consultants to prepare a

conceptual study and initial results suggest an underground operation is feasible.

The Cockatoo project provides significant synergies and benefits for the Irvine project. These include eliminating

the need for duplicate infrastructure which not only reduces capital expenditure, but also reduces our environmental

footprint on Irvine. Additionally, there may be opportunities to process low grade ore from Cockatoo through the Irvine

pre-concentrator, increasing the commercial life of both islands.

Table 6: Cockatoo Island Highwall Mineral Resource as at 31 July 2012


COG Fe (%)

Fe (%)

SiO2 (%)

Al2O3 (%)

S (%)

P (%)

Inferred 3.0 - 60.0 7.0 4.9 0.03 0.009

Total Inferred 3.0 - 60.0 7.0 4.9 0.03 0.009

Notes:

1: Mineral Resources 2350E to 2950E are exclusive of Stage 4 Probable Ore Reserve.

2: Tonnage is rounded to the nearest 100,000 tonnes.

3: Mineralisation is composed of Seawall Hematite and Footwall Schist.

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CEO’s Review 10

Table 7: Cockatoo Island Seawall Hematite Ore Reserves as at 31 July 2012


COG Fe (%)

Fe (%)

SiO2 (%)

Al2O3 (%)

S (%)

P (%)

Probable Stage 4 Onshore Seawall 1.2 65.5 68.5 1.0 0.5 0.003 0.005

Total Probable 1.2 65.5 68.5 1.0 0.5 0.003 0.005

Notes:

1: Ore Reserves are in addition to 2350E to 2950E Mineral Resources.

2: Tonnage is rounded to nearest 100,000 tonnes.

Dove River & Cethana – Tasmania

The Irvine and Cockatoo Island projects have been the key focus of activity for Pluton in 2012 with little work carried

out at the Dove River and Cethana tenements.

The Company continues to review its options regarding these tenements.

Priorities for 2013

In 2013 our priorities include the following:

Cockatoo Island

• Bring production and shipments to a steady state at the expected operating cost.

• Increase expected open-cut mine life by conversion of resources through drilling.

• Assess the underground potential and feasibility through drilling and technical studies.

• Increase indigenous participation through employment, training and business opportunities.

Irvine Island

• Finalise remaining environmental data capture and submit the Public Environmental Review to commence formal

environmental approval process.

• Commence formal Definitive Feasibility Study.

Tony Schoer

Managing Director & CEO

The information in this report that relates to Mineral Resource and Ore Reserve estimates for the Cockatoo Island and Irvine Island Iron Ore Deposits – is based on information compiled by Mr A Griffith, who is a member of The Australasian Institute of Mining and Metallurgy and a full time employees of Pluton Resources Ltd. Mr Griffith has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity, which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’

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General informationThe financial report covers Pluton Resources Limited as a consolidated entity consisting of Pluton Resources Limited and the entities it controlled. The financial report is presented in Australian dollars, which is Pluton Resources Limited’s functional and presentation currency.

The financial report consists of the financial statements, notes to the financial statements and the directors’ declaration.

Pluton Resources Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is:

Level 4, 468 St Kilda Road, Melbourne, VIC 3004.

A description of the nature of the consolidated entity’s operations and its principal activities are included in the directors’ report, which is not part of the financial report.The financial report was authorised for issue, in accordance with a resolution of directors, on 27 September 2012. The directors have the power to amend and reissue the financial report.

Contents

Directors’ report 12

auditor’s independence Declaration 20

Corporate Governance statement 21

statement of Comprehensive income 27

statement of financial Position 28

statement of Changes in equity 29

statement of Cash flows 30

notes to the financial statements 31

Directors’ Declaration 60

independent auditor’s report 61

asX additional information 63

Financial Report 2012 11

Pluton ResouRces limited ABn 12 114 561 732

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The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the ‘consolidated entity’) consisting of Pluton Resources Limited (referred to hereafter as the ‘company’ or ‘parent entity’) and the entities it controlled for the year ended 30 June 2012.

DireCtorsThe following persons were directors of Pluton Resources Limited during the whole of the financial year and up to the date of this report, unless otherwise stated:

Malcolm Macpherson Anthony James Schoer Russell George Williams Chenxi (Elly) Wang (appointed on 20 April 2012)

PrinCiPal aCtivitiesThe principal activity of the consolidated entity during the financial year was the exploration of mineral assets within Australia.

DiviDenDsThere were no dividends paid or declared during the current or previous financial year.

review of oPerationsThe loss for the consolidated entity after providing for income tax amounted to $2,883,341 (30 June 2011: $5,640,307).

The consolidated entity continued its exploration activities on Irvine Island, located northwest of Broome, Western Australia. Work also continued during the year on environmental surveys and data collection for inclusion in the Public Environmental Review (‘PER’) document that the company will lodge as part of the Ministerial approvals process.

On 22 July 2011, the consolidated entity issued 10,244,697 fully paid ordinary shares at $0.831 per share and 14,342,576 options with a strike price 83.1 cents, expiring 22 July 2017. The issue was made following shareholder approval received on 23 June 2011 and pursuant to the signing of the Wonganin Project Co-existence Agreement (Native Title Agreement).

In August 2011, under a binding term sheet with Timeone Holdings Limited, the first and second tranche totalling $10,504,688 was received for an issue of 29,590,671 ordinary shares at $0.355 per share. Funds received were used to fund the on-going exploration and environmental work program, regulatory approvals of the Irvine Island project and the commencement of the Definitive Feasibility Study.

On 27 September 2011, the consolidated entity announced that assay results from continued exploration activities significantly increased the 11 year mine life on Irvine Island as defined in the PFS stage 1 valuation.

On 8 November 2011 the consolidated entity announced an update from Inferred to Indicated Mineral resource for Hardstaff Peninsular, on Irvine Island.

On 10 November 2011, the consolidated entity issued 476,872 ordinary shares to KRED Enterprises Pty Ltd as trustee of the Mayala People, being an issue in consideration for commitments given by the Mayala People to allow the consolidated entity to undertake exploration activities on Irvine Island.

On 22 December 2011, the consolidated entity announced that it had entered into a commercial hire agreement with Winmax Drilling for two company patented Universal Drilling Platforms.

On 11 January 2012, the consolidated entity held an extraordinary general meeting of shareholders and received approval of the issue of 84,507,041 ordinary shares to Timeone Holdings Limited over four tranches at $0.355 per share.

On 22 February 2012, under a binding term sheet with Timeone Holdings Limited, the third tranche totalling $1,835,312 was received for an issue of 5,169,892 ordinary shares at $0.355 per share.

On 11 April 2012, under a binding term sheet with Timeone Holdings Limited, tranche 4A totalling $3,000,000 was received for an issue of 8,450,704 ordinary shares at $0.355 per share.

On 12 April 2012, the consolidated entity agreed to a binding Term Sheet with key commercial terms for a proposed 50/50 unincorporated joint venture with its strategic partner, Timeone Holdings Limited over the mining operations on Cockatoo Island; whereby Timeone and its funding partner SS&T Group Limited, a leading Shanghai based mining, logistics and commodities trading company, would provide funding of $70 million, the proceeds of which would be used to fund the remainder of tranche 4 at 35.5 cents a share, the proposed acquisition of the Cockatoo Island project (including the provision of a $20 million bank guarantee to use for statutory environmental bonds for the Cockatoo Island project) and the initial development of stage 4 mining on the island.

On 10 May 2012, under a binding term sheet with Timeone Holdings Limited, tranche 4B totalling 2,000,000 was received for an issue of 5,633,803 ordinary shares at $0.355 per share.

The scheduled Extraordinary General Meeting for 29 June 2012 was postponed after the company was officially notified that potential Cockatoo partner Timeone/SST Group would not complete the transaction under the terms of the binding Term Sheet announced in April 2012.

siGnifiCant ChanGes in the state of affairsOn 4 August 2011, the consolidated entity announced that it entered into a binding term sheet with Timeone Holdings Limited, a company owned by private Chinese investors holding a contractual relationship with Rizhao Port Group, operator of the world’s largest iron ore import terminal, located in Shandong Province, China. Under the terms of the binding term sheet Timeone would invest up to $30,000,000 for a 30 per cent stake in the capital of the company (post investment) to be satisfied by the issue of fully paid ordinary shares at $0.355 per share, in four tranches.

On 2 September 2011, the consolidated entity announced that it had signed a legally binding term sheet with Cliffs Asia Pacific Iron Ore and HWE Mining in relation to the acquisition of 100% of the Cockatoo Island iron ore assets in the Kimberley Iron Ore Hub. The consolidated entity expects to complete the acquisition of Cockatoo Island operations after the current mining stage has been completed in 2012. The consolidated entity will be responsible for the environmental rehabilitation of Cockatoo Island when it concludes mining.

On 23 December 2011, the consolidated entity announced that after the completion of due diligence for the company’s acquisition of the iron ore assets on Cockatoo Island, it advised the Cockatoo Island vendors of the consolidated entity’s intention to continue with the acquisition.

There were no other significant changes in the state of affairs of the consolidated entity during the financial year.

Directors’ Report 12

30 JUNE 2012

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30 June 2012

matters subsequent to the enD of the finanCial yearOn 6 July 2012, the consolidated entity was granted a mining lease over Irvine Island. The lease (M04/452) replaces exploration licence E04/1172. The issue of the mining lease is a significant step forward in the approvals process towards commercialisation of Irvine.

Following the withdrawal of the Extraordinary General Meeting of shareholders, the Board put the company’s securities into voluntary suspension on 2 July 2012 and embarked on an urgent review of the consolidated entity’s existing and future operations (including a review of its ability to acquire the Cockatoo Island project) to determine the future strategy of the consolidated entity; and pursued discussions with a number of parties who expressed interest in supporting the consolidated entity’s activities to acquire the Cockatoo Island Project from the Cockatoo Island vendors; Cliffs Asia Pacific Iron Ore Holdings Pty Limited and HWE Cockatoos Pty Ltd.

The Cockatoo Island vendors agreed to extend the acquisition execution date to 31 July 2012 to enable the consolidated entity to find a replacement funding partner.

On 31 July 2012 an Asset Sales agreement between Pluton Resources Ltd and the Cockatoo Island vendors was signed with completion of all condition precedent under the agreement taking place on 10th September 2012, and final completion of the acquisition of Cockatoo Island to take place on 28 September 2012. Cockatoo Island vendors have security over the consolidated entity’s interest in both Cockatoo Island and Irvine Island in the event the consolidated entity does not meet its financial obligations under the Asset Sale agreement.

On 1 August, the consolidated entity agreed to a binding term sheet for a proposed 50/50 unincorporated joint venture with Wise Energy Group Limited (‘WEG’).

On 13 August 2012, the consolidated entity completed an initial pre-sale agreement of ore from Cockatoo Island whereby a loan of US$2.5 million was received from WEG. On 30 August 2012 the consolidated entity completed a second pre-sale agreement of ore from Cockatoo Island whereby a loan of US$3 million was received from WEG.

On 31 August 2012, the consolidated entity announced that a binding term sheet has been agreed and executed for the proposed 50/50 unincorporated joint venture with WEG over the mining operations on Cockatoo Island.

Pursuant to the term sheet, WEG has provided a $3 million interest free loan.

WEG is considered a related party in that Chenxi Wong, a non-executive director of the company, is also a director of WEG.

No other matter or circumstance has arisen since 30 June 2012 that has significantly affected, or may significantly affect the consolidated entity’s operations, the results of those operations, or the consolidated entity’s state of affairs in future financial years.

likely DeveloPments anD eXPeCteD results of oPerationsThe consolidated entity is expecting to commence production from Cockatoo Island in October 2012. The ore will be sold under a sales and marketing agreement with Wise Energy Group Limited, the consolidated entity’s proposed joint venture partner.

environmental reGulationThe consolidated entity’s operations are subject to environmental regulation under the law of the Commonwealth and State for Western Australia and Tasmania. The consolidated entity has continued studies directed towards obtaining environmental approvals for the Irvine Island project. The consolidated entity, as part of its operations, maintains strict adherence to environmental rehabilitation and protection of flora and fauna in its areas of interest.

information on DireCtorsName: malcolm macphersonTitle: Non-Executive ChairmanQualifications: B.Sc. FAICD, F.AusIMM

Experience and expertise: Malcolm Macpherson has broad mining industry experience and built a successful career as Chief Executive of Iluka Resources Limited, growing it from a $50 million market cap in 1978 to a $1 billion company by 2001. He has a strong interest in research and innovation and has served on CSIRO advisory committees and the Murdoch University Senate.

Other current directorships: Non-Executive Director of Bathurst Resources Limited, Non-Executive Director of Canadian listed Titanium Corporation.Former directorships (in the last 3 years): Range River Gold Limited (resigned February 2011), Minara Resources Limited (resigned December 2011)Special responsibilities: NoneInterests in shares: 240,289 ordinary sharesInterests in options: None

Name: anthony James schoerTitle: Managing Director and Chief Executive OfficerQualifications: BBus, FCPA

Experience and expertise: Tony Schoer has 28 years’ experience in the mining and oil and gas industries, including direct experience in commodities such as iron ore, coal, gold, manganese, nickel and oil and gas. Tony was the Chief Financial Officer of Portman Ltd. until the takeover offer by Cleveland Cliffs Inc. He previously worked for WMC Ltd and was employed by BHP Co Ltd for 20 years commencing as a Commercial Trainee. He held various senior roles including Vice President Commercial for BHP Minerals, and was a member of the BHP Minerals Executive Committee. He represented BHP on several Boards and Ownership Committees. He has operating experience in three countries and has worked on three mine sites as well as in several regional and head offices.

Other current directorships: NoneFormer directorships (in the last 3 years): NoneSpecial responsibilities: NoneInterests in shares: 1,189,971 ordinary sharesInterests in options: 5,231,694 options over ordinary sharesF

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Name: russell George williamsTitle: Non-Executive DirectorQualifications: BSc. Eng

Experience and expertise: Russell Williams trained as a mechanical engineer at the University of Manchester and has spent 30 years with Alcoa Inc. He was first involved in all facets of alumina production and then became involved in bauxite production managing Alcoa’s West Australian bauxite mining operations, then had oversight of all of Alcoa’s global mining activity in Brasil, Jamaica and Suriname. Russell spent his final years with Alcoa in Pittsburgh, USA, and was responsible for all activity at the Alcoa JV in Guinea, Company Bauxite de Guinee (CBG), the third largest export bauxite producer in the world.

Other current directorships: Non-Executive Director of Anglo Aluminium Corp., listed on the Toronto Stock Exchange, Canada, and Queensland Bauxite LimitedFormer directorships (in the last 3 years): NoneSpecial responsibilities: NoneInterests in shares: 456,021 ordinary sharesInterests in options: None

Name: Chenxi (elly) wang (appointed 20 April 2012)Title: Non-Executive DirectorQualifications: Dip. Ed.

Experience and expertise: Ms Wang is an executive director of Timeone Holdings Limited (‘Timeone’) and WiseEnergy Group Limited (‘WEG’)

Other current directorships: NoneFormer directorships (in the last 3 years): NoneSpecial responsibilities: NoneInterests in shares: 48,845,070 ordinary sharesInterests in options: None

‘Other current directorships’ quoted above are current directorships for listed entities only and excludes directorships in all other types of entities, unless otherwise stated.

‘Former directorships (in the last 3 years)’ quoted above are directorships held in the last 3 years for listed entities only and excludes directorships in all other types of entities, unless otherwise stated.

ComPany seCretaryAndrew Metcalfe (B.Bus, CPA, FCIS) is a qualified accountant with over 25 years’ experience across a variety of industry sectors, holding the position of Company Secretary and CFO for a number of ASX listed entities and unlisted public entities for property, retail, energy, media and technology industries. Andrew is employed by Accosec Consultants and assists the consolidated entity in Company Secretarial practice and procedures and governance issues.

meetinGs of DireCtorsThe number of meetings of the company’s Board of Directors held during the year ended 30 June 2012, and the number of meetings attended by each director were:

full board

attended held

Malcolm Macpherson 12 12 Anthony James Schoer 12 12 Russell George Williams 12 12 Chenxi Wang 1 3

Held: represents the number of meetings held during the time the director held office.

remuneration rePort (auDiteD)The remuneration report, which has been audited, outlines the director and executive remuneration arrangements for the company and consolidated entity, in accordance with the requirements of the Corporations Act 2001 and its Regulations.

The remuneration report is set out under the following main headings:

A Principles used to determine the nature and amount of remunerationB Details of remunerationC Service agreementsD Share-based compensationE Additional information

A Principles used to determine the nature and amount of remuneration

The performance of the company and consolidated entity depends upon the quality of its directors and executive officers. To prosper, the company and consolidated entity must attract, motivate and retain highly skilled personnel. To this end, the company and consolidated entity:

• Works to attract the appropriate staff by providing a competitive remuneration structure and a productive working environment.

• Reviews and recommend remuneration, HR policies, performance management and procedures for the company and consolidated entity, including:

- directors of each subsidiary;- the chief executive officer; and- executive and senior management.

• Assures that all compliance, governance, accounting, legal approvals and disclosure requirements associated with company’s employment practices are satisfied.

The Board of Directors (the ‘Board’) has not established a Remuneration and Nomination Committee. Therefore the Board is responsible for determining and reviewing compensation arrangements for the directors and the executive officers. The Board assesses the appropriateness of the nature and amount of emoluments of such officers on a periodic basis by reference to relevant market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of an experienced and high quality Board and executive team. Such officers are given the opportunity to receive their base emolument in a variety of forms including cash and superannuation salary sacrifice. The directors’ emoluments are comparable to similar sized companies in the resources industry.

Consolidated entity performance and link to remunerationThere is no formal link between the company’s and consolidated entity’s performance and the directors’ emoluments as the company’s and consolidated entity’s exploration operations represent no guarantee of their future value.

Key management personnel performance rights issued in 2010 that vested this year:

• 240,000 performance rights vesting from 31 March 2012 when the share price reaches $1.25. The performance rights expire 31 March 2014.

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These performance rights are issued as part of remuneration and are not linked to performance hurdles of individual employees.

All directors and executives have the opportunity to qualify for participation in the Executive Share Scheme, which provides for a salary sacrifice of directors fees to acquire shares in the company.

Remuneration structureIn accordance with corporate governance principles and recommendations, the company substantially complies with the guidelines for executive remuneration packages and non-executive director remuneration.

Non-executive directors remunerationThe Constitution and the ASX Listing Rules specify that the aggregate remuneration of non-executive directors shall be determined from time-to-time by a general meeting. The latest determination was at the Annual General Meeting held 20 October 2006 when shareholders approved an aggregate remuneration of $400,000 per annum to be apportioned amongst non-executive directors.

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

On appointment, non-executive directors are advised of their directors duties and responsibilities and the remuneration fee to be paid to that director in carrying out their individual duties. This fee covers the Board position where the non-executive director is a member.

Non-executive directors aggregate emoluments are detailed in section B below. The non-executive directors do not receive retirement benefits, nor do they participate in any incentive programs.

Executive remunerationThe company and consolidated entity aims to reward its executives with a level and mix of remuneration commensurate with their position and responsibilities within the company and consolidated entity, so as to reward executives for meeting or exceeding targets set by reference to appropriate benchmarks; align the interests of executives with those of shareholders; and ensure remuneration is competitive by market standards.

Remuneration consists of the following key elements:

• fixed remuneration (base salary, superannuation and non-monetary benefits)

• variable remuneration - short-term incentive (‘STI’)

Fixed remuneration - objective:Fixed remuneration is reviewed at the end of each contract term by the Board. The process consists of a review of the consolidated entity and individual performance, relevant comparative remuneration externally and internally and, where appropriate external advice on policies and practices.

Fixed remuneration - structure:Executives receive their fixed (primary) remuneration in form of cash payments to their nominated accounts (with appropriate PAYG tax deducted) and superannuation funds. The level of fixed remuneration is set so as to provide a base level of remuneration which is both appropriate to the position and is competitive in the market. Fixed remuneration is reviewed annually by the Board as part of an assessment on that executive’s performance. The Board has access to external independent advice if necessary.

Variable remuneration (short term incentive) - objective:The objective of a short term incentive programme is to link the achievement of the consolidated entity’s operational targets with the remuneration received by the executives charged with meeting those targets. The total potential short term incentive available is set at a level so as to provide sufficient incentive to the executive to achieve the operational targets and such that the cost to the consolidated entity is reasonable in the circumstances.

The company and consolidated entity seeks to attract and retain high calibre executives into key leadership positions and to align its executive reward with the delivery of strategic objectives and the creation of value for security holders.

The variable remuneration framework provides long term incentives, delivered through participation in the Employee Share Option Plan, to those executives who have the capacity to influence the overall performance of the consolidated entity.

Variable remuneration (short term incentive) - structure:At the 2009 Annual General Meeting the shareholders approved the establishment of an Employee Share Option Plan (‘ESOP’) to provide short-term incentives for executive directors and employees.

Use of remuneration consultantsDuring the financial year ended 30 June 2012, the company did not engage the use of remuneration consultants.

Voting and comments made at the company’s 2011 Annual General Meeting (‘AGM’)At the last AGM 75% of the shareholders voted to adopt the remuneration report for the year ended 30 June 2011. The company did not receive any specific feedback at the AGM regarding its remuneration practices.

B Details of remunerationAmounts of remunerationDetails of the remuneration of key management personnel of Pluton Resources Limited are set out in the following tables. Key management personnel are defined as those who have the authority and responsibility for planning, directing and controlling the major activities of the consolidated entity.

The key management personnel of the consolidated entity consisted of the directors of Pluton Resources Limited and the following executives:

• Brett Clark - Chief Operating Officer (appointed 1 February 2012)

• Pamela Kaye - General Counsel

• Anson Griffiths - Project Manager

• Cedric Davies - Community and Environment Advisor

• Diane Dowdell - Environment Manager (appointed 15 November 2011)

• Reece Power - General Manager Corporate (appointed 20 February 2012)

• John McDougall - Senior Geologist

• Ben Carpenter - Project Manager

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2012 short-term benefits Post-employment benefits

long-term benefits

share-based payments

name Cash salary and fees

$

bonus $

non-monetary $

superannuation $

long service leave

$

equity-settled $

total $

Non-Executive Directors:Malcolm Macpherson (Chairman) 94,802 - - 8,532 - - 103,334

Russell Williams 55,922 - - 1,362 - - 57,284

Executive Directors:Anthony Schoer 477,310 - - 42,958 - - 520,268

Other Key Management Personnel:

Brett Clark 220,930 - - 12,383 - - 233,313

Pamela Kaye 218,400 - - 8,379 - - 226,779

Anson Griffiths 218,400 - - 6,577 - - 224,977

Cedric Davies 162,240 - - 7,488 - - 169,728

Diane Dowdell 136,425 - - 3,750 - - 140,175

Reece Power 117,213 - - 5,674 - - 122,887

John McDougall 86,833 - - 7,815 - - 94,648

Ben Carpenter 81,667 - - 7,350 - - 89,017

1,870,142 - - 112,268 - - 1,982,410

Chenxi Wang received no remuneration during the year.

2011 short-term benefits Post-employment benefits

long-term benefits

share-based payments

name Cash salary and fees

$

bonus $

non-monetary $

superannuation $

long service leave

$

equity-settled $

total $

Non-Executive Directors:Malcolm Macpherson (Chairman) 91,743 - - 8,257 - - 100,000

Russell Williams 41,284 - - 3,716 - - 45,000

Raymond Schoer * 40,875 - - - - - 40,875

Executive Directors:Anthony Schoer 428,260 - - 18,327 - - 446,587

Other Key Management Personnel:Pamela Kaye 243,750 - - 21,937 - 10,643 276,330

Anson Griffiths 210,000 - - 18,900 - 10,643 239,543

Cedric Davies 156,000 - - 14,040 - 8,514 178,554

John McDougall 135,200 - - 10,140 - 8,514 153,854

Ben Carpenter 130,000 - - 11,700 - 8,514 150,214

1,477,112 - - 107,017 - 46,828 1,630,957

* Raymond Schoer resigned as a director on 15 February 2011.

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C Service agreementsRemuneration and other terms of employment for key management personnel are formalised in service agreements. Details of these agreements are as follows:

Name: Anthony James SchoerTitle: Managing Director and Chief Executive OfficerAgreement commenced: 1 July 2006Term of agreement: No end date

Details: Anthony James Schoer’s fixed remuneration is $520,268 which includes car allowance and superannuation) and his variable remuneration is any executive share scheme or executive share option scheme or cash bonus payment as may be determined by the Board.

Key management personnel have no entitlement to termination payments in the event of removal for misconduct.

D Share-based compensationIssue of sharesThere were no shares issued to directors and other key management personnel as part of compensation during the year ended 30 June 2012.

However, 240,000 performance rights issued to key management personnel on 31 March 2010 vested on 31 March 2012 into fully paid ordinary shares.

OptionsThere were no options issued to directors and other key management personnel as part of compensation that were outstanding as at 30 June 2012.

There were no options granted to or exercised by directors and other key management personnel as part of compensation during the year ended 30 June 2012.

Performance rightsThe terms and conditions of each grant of performance rights affecting remuneration of directors and other key management personnel in this financial year or future reporting years are as follows:

Grant date vesting date expiry date share price target for vesting

fair value per right at grant date

31 March 2010 (ESOP-T2) From 31 March 2012 31 March 2014 $1.250 $0.2900

ESOP Tranche 2 (‘ESOP-T2’) have a performance hurdle of the company share price being at least $1.25 by 31 March 2014 for each performance right to be convertible into an ordinary share.

Performance rights granted carry no dividend or voting rights.

Details of performance rights over ordinary shares issued to directors and other key management personnel as part of compensation during the year ended 30 June 2012 are set out below:

number of rights granted during the year number of rights vested during the year

name 2012 2011 2012 2011

John McDougall * - - - 40,000

John McDougall ** - - 40,000 -

Pamela Kaye * - - - 50,000

Pamela Kaye ** - - 50,000 -

Ben Carpenter * - - - 40,000

Ben Carpenter ** - - 40,000 -

Anson Griffiths * - - - 50,000

Anson Griffiths ** - - 50,000 -

Cedric Davies * - - - 40,000

Cedric Davies ** - - 40,000 -

Johari Bin Demin * - - - 20,000

Johari Bin Demin ** - - 20,000 -

* Performance rights vested under ESOP-1

** Performance rights vested under ESOP-2

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18Directors’ Report

30 June 2012

Values of performance rights over ordinary shares granted, exercised and lapsed for directors and other key management personnel during the year ended 30 June 2012 are set out below:

name value of rights granted during the year

$

value of rights vested during the year

$

value of rights lapsed during the year

$

remuneration consisting of rights for the year

%

John McDougall - 8,514 - - Pamela Kaye - 10,643 - - Ben Carpenter - 8,514 - - Anson Griffiths - 10,643 - - Cedric Davies - 8,512 - -

E Additional informationThe earnings of the consolidated entity for the five years to 30 June 2012 are summarised below:

2008 2009 2010 2011 2012 $ $ $ $ $

Revenue and other income 390,340 162,957 566,222 595,783 787,870

Loss before interest and tax (1,453,754) (1,502,101) (1,753,174) (5,640,307) (2,883,341)

Loss after income tax (1,453,754) (1,502,101) (1,753,174) (5,640,307) (2,883,341)

The factors that are considered to affect total shareholders return (‘TSR’) are summarised below:

2008 2009 2010 2011 2012

Share price at financial year end ($A) 2.050 0.715 0.395 0.280 0.170

Basic earnings per share (cents per share) (1.930) (1.930) (1.350) (3.269) (1.280)

This concludes the remuneration report, which has been audited.

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19

shares unDer PerformanCe riGhtsThere were no unissued ordinary shares of Pluton Resources Limited under performance rights outstanding as at 30 June 2012.

shares issueD on the eXerCise of oPtionsThere were no shares of Pluton Resources Limited issued on the exercise of options during the year ended 30 June 2012.

inDemnity anD insuranCe of offiCersThe company has indemnified the directors and executives of the company for costs incurred, in their capacity as a director or executive, for which they may be held personally liable, except where there is a lack of good faith.

During the financial year, the company arranged Directors and Officers Liability Insurance for its directors and officers. The premium paid was $51,148 and insured each of the directors and officers against liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in the capacity of director or officer of the company, other than conduct involving a wilful breach of duty in relation to the company. The insurance policy had a liability limit of $10 million on any one claim and in the aggregate. The nature of the liabilities covered was Official Investigation, Inquiries and Proceedings, Occupational Health and Safety, Mitigation Costs and Civil Awards.

inDemnity anD insuranCe of auDitorThe company has not, during or since the financial year, indemnified or agreed to indemnify the auditor of the company or any related entity against a liability incurred by the auditor.

During the financial year, the company has not paid a premium in respect of a contract to insure the auditor of the company or any related entity.

ProCeeDinGs on behalf of the ComPanyNo person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the company, or to intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for all or part of those proceedings.

non-auDit serviCesThere were no non-audit services provided during the financial year by the auditor.

offiCers of the ComPany who are former auDit Partners of Deloitte touChe tohmatsuThere are no officers of the company who are former audit partners of Deloitte Touche Tohmatsu.

auDitor’s inDePenDenCe DeClarationA copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on the following page.

auDitorDeloitte Touche Tohmatsu continues in office in accordance with section 327 of the Corporations Act 2001.

This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001.

On behalf of the directors

Tony SchoerDirector

27 September 2012Melbourne

Directors’ Report

30 June 2012

shares unDer oPtionUnissued ordinary shares of Pluton Resources Limited under option at the date of this report are as follows:

Grant date expiry date exercise price number under option

3 October 2006 3 October 2016 $0.300 23,396,572 22 July 2011 22 July 2017 $0.831 14,342,576

37,739,148

No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of the company or of any other body corporate.

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20Auditor’s Independence Declaration

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Corporate Governance Statement 21

The Board of Directors of Pluton Resources Limited is responsible for the corporate governance of the company and consolidated entity. The Board guides and monitors the business and affairs of Pluton Resources Limited on behalf of the shareholders by whom they are elected and to whom they are accountable.

The table below summarises the company’s compliance with the ASX Corporate Governance Council’s Revised Principles and Recommendations.

Principles and recommendations Compliance Comply

Principle 1 – lay solid foundations for management and oversight

1.1 Establish the functions reserved to the Board of Directors (‘Board’) of Pluton Resources Limited (‘company’) and those delegated to manage and disclose those functions.

The Board is responsible for the overall corporate governance of the company.

The Board has adopted a Board charter that formalises its roles and responsibilities and defines the matters that are reserved for the Board and specific matters that are delegated to management.

The Board has adopted a Delegations of Authority that sets limits of authority for senior executives.

On appointment of a director, the company issues a letter of appointment setting out the terms and conditions of appointment to the Board.

Complies.

1.2 Disclose the process for evaluating the performance of senior executives.

Senior executives prepare strategic objectives that are signed off by the Board. These objectives must then be met by senior executives as part of their performance targets. The CEO then reviews the performance of the senior executives against those objectives. The Board reviews the CEO’s compliance against his and the company’s objectives. These reviews occur annually.

Complies.

1.3 Provide the information indicated in Guide to reporting on Principle 1.

A Board charter has been disclosed on the company’s website and is summarised in this Corporate Governance Statement.

A performance evaluation process is included in the Board Charter, which has been disclosed on the company’s website and is summarised in this Corporate Governance Statement.

The Board conducted a formal performance evaluation for senior executives in the financial year.

Complies.

Complies.

Complies.

Principle 2 – structure the board to add value

2.1 A majority of the Board should be independent directors.

As at the date of this statement, the Board comprises two independent directors, one executive director and one non-executive director of the company.

Mr Malcolm Macpherson and Mr Russell Williams are both independent, non-executive directors.

Ms Chenxi Wang is a non-executive director.

Mr Tony Schoer is an executive director.

Complies.

2.2 The chair should be an independent director.

Malcolm Macpherson (Chair) is an independent, non-executive director of the Board. Complies.

2.3 The roles of chair and chief executive officer should not be exercised by the same individual.

Malcolm Macpherson is the chairman and Tony Schoer the chief executive officer. Complies.

2.4 The Board should establish a Nomination Committee.

The nomination committee should comprise two non-executive directors and the CEO as an ex-officio member. Given the size of the Board, it was determined that the Board will execute the functions of a nomination committee and that a separate nomination committee is unnecessary.

Does not comply.

Given the size of the Board, the directors determined that it will execute the functions of a nomination committee and that a separate nomination committee is unnecessary. The Board considers the skills and experience of both independent non-executive directors allows the Board to act in the best interests of shareholders.

2.5 Disclose the process for evaluating the performance of the Board, its committees and individual directors.

The company conducts the process for evaluating the performance of the Board, its Committees and senior executives/management as outlined in the Board Charter, which is available on the company’s website. This includes supporting ongoing education of directors for the benefit of the company.

Complies.

2.6 Provide the information indicated in the Guide to reporting on Principle 2.

The skills and experience of each director has been disclosed (where applicable) in the Directors’ Report attached to this Corporate Governance Statement.

The Board has undertaken a review of the mix of skills and experience on the Board in light of the company’s principal activities and direction, and has considered diversity in succession planning. The Board considers the current mix of skills and experience of members of the Board and its senior management is sufficient to meet the requirements of the company.

A director is considered independent when he substantially satisfies the test for independence as set out in the ASX Corporate Governance Recommendations.

Members of the Board are able to take independent professional advice at the expense of the company.

The Board supports the nomination and re-election of non-executive directors at the company’s forthcoming Annual General Meeting.

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Principle 3 – Promote ethical and responsible decision making

3.1 Establish a code of conduct and disclose the code or a summary of the code.

The Board has adopted a code of conduct. The code establishes a clear set of values that emphasise a culture encompassing strong corporate governance, sound business practices and good ethical conduct.

The code is available on the company’s website.

Complies.

3.2 Companies should establish a policy concerning diversity and disclose the policy or a summary of that policy. The policy should include requirements for the Board to establish measurable objectives for achieving gender diversity and to assess annually both the objectives and progress in achieving them.

The Board has undertaken a review of the mix of skills and experience on the Board in light of the company’s principal activities and direction.

The company has adopted a Diversity Policy that considers the benefits of diversity, ways to promote a culture of diversity, factors to be taken into account in the selection process of candidates for Board and senior management positions in the company, education programs to develop skills and experience in preparation for Board and senior management positions, and processes to include review and appointment of directors.

The Board has not estblished measurable objectives for achieving gender diversity.

Complies.

Does not comply, however measurable objectives are being considered and will be set by the Board as the company expands its operations.


The Board has adopted a code of conduct. The code establishes a clear set of values that emphasise a culture encompassing strong corporate governance, sound business practices and good ethical conduct.

The Board has adopted a Diversity Policy.

The company has included in this Corporate Governance Statement a statement by the company supporting the diversity of employees with differing skills, values, backgrounds and experiences, and a statement of the proportion of women employees and their positions held within the company.

Complies.

Principle 4 – safeguard integrity in financial reporting

4.1 The Board should establish an Audit Committee.

As at the date of this statement the Board does not have an audit committee. Does not comply.

Given the size of the Board, the directors determined that it will execute the functions of an audit committee and that a separate audit committee is unnecessary. The Board considers the skills and experience of both independent non-executive directors and the Managing Director allows the Board to act in the best interests of shareholders.

4.2 The audit committee should be structured so that it consists of only non-executive directors, a majority being independent directors; is chaired by an independent chair who is not chair of the Board; and have at least 3 members.

As at the date of this statement, the company does not comply with Recommendation 4.1 and 4.2 as there was no audit committee.

Does not comply for reasons given above. With respect to this complaince issue, the Board will review its position annually.

4.3 The audit committee should have a formal charter.

The Board has adopted an audit and risk committee charter.

This charter is available on the company’s website.

Complies.


In accordance with the information suggested in Guide to Reporting on Principle 2, this has been disclosed in the Directors’ Report attached to this Corporate Governance Statement and is summarised in this Corporate Governance Statement.

When formally constituted, the members of an audit and risk committee are appointed by the Board and recommendations from the committee are presented to the Board for further discussion and resolution.

There was no audit and risk committee during the year.

The audit and risk committee charter, and information on procedures for the selection and appointment of the external auditor, and for the rotation of external audit engagement partners (which is determined by the audit and risk committee), is available on the company’s website.

Complies.

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Principle 5 – make timely and balanced disclosure

5.1 Establish written policies designed to ensure compliance with ASX Listing Rules disclosure requirements and to ensure accountability at a senior executive level for that compliance and disclose those policies or a summary of those policies.

The company has adopted a continuous disclosure policy, to ensure that it complies with the continuous disclosure regime under the ASX Listing Rules and the Corporations Act 2001.

The company has adopted a securities trading policy

Complies.


The company’s continuous disclosure policy and securities trading policy is available on the company’s website.

The securities trading policy has been released to the Australian Stock Exchange.

Complies.

Principle 6 – respect the rights of shareholders

6.1 Design a communications policy for promoting effective communication with shareholders and encouraging their participation at general meetings and disclose that policy or a summary of that policy.

The company has adopted a shareholder communications policy. The company uses its website (www.plutonresources.com), annual report, market announcements and media disclosures to communicate with its shareholders, as well as encourages participation at general meetings.

This policy is available on the company’s website.

Complies.


The company’s shareholder communications policy is available on the company’s website. Complies.

Principle 7 – recognise and manage risk

7.1 Establish policies for the oversight and management of material business risks and disclose a summary of these policies.

The company has adopted a risk management statement within the audit and risk committee charter. The audit and risk committee is responsible for managing risk; however, ultimate responsibility for risk oversight and risk management rests with the Board.

The audit and risk committee charter is available on the company’s website and is summarised in this Corporate Governance Statement.

Complies.

7.2 The Board should require management to design and implement the risk management and internal control system to manage the company’s material business risks and report to it on whether those risks are being managed effectively. The Board should disclose that management has reported to it as to the effectiveness of the company’s management of its material business risks.

The company has identified key risks within the business. In the ordinary course of business, management monitor and manage these risks.

Key operational and financial risks are presented to and reviewed by the Board at each Board meeting.

Complies.

7.3 The Board should disclose whether it has received assurance from the Chief Executive Officer and Chief Financial Officer that the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound system of risk management and internal control and that the system is operating efficiently and effectively in all material respects in relation to the financial reporting risks.

The Board has received a statement from the Chief Executive Officer and Chief Financial Officer that the declaration provided in accordance with section 295A of the Corporations Act 2001 is founded on a sound system of risk management and internal control and that the system is operating efficiently and effectively in all material respects in relation to the financial reporting risks.

Complies.


A statement of the company’s risk policies is included in the Audit and Risk Committee charter.

This charter is available on the company’s website and is summarised in this Corporate Governance Statement.

The company has identified key risks within the business and has received a statement of assurance from the Chief Executive Officer and Chief Financial Officer in relation to the financial report.

Complies.

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Principle 8 – remunerate fairly and responsibly

8.1 The Board should establish a remuneration committee.

The Board has not established a remuneration committee and has not adopted a remuneration charter. Does not comply.

Given the size of the Board, the directors have determined that it will execute the functions of a remuneration committee and that a separate remuneration committee is unnecessary. With respect to this complaince issue, the Board will review its position annually.

8.2 Clearly distinguish the structure of non-executive directors’ remuneration from that of executive directors and senior executives.

The company complies with the guidelines for executive remuneration packages and non-executive director remuneration.

Complies.


The Board has not adopted a remuneration committee charter.

The company does not have any schemes for retirement benefits other than superannuation for non-executive directors.

Does not comply for reasons given above.

Pluton Resources Limited’s corporate governance practices were in place for the financial year ended 30 June 2012 and to the date of signing the Directors’ Report.

Various corporate governance practices are discussed within this statement. For further information on corporate governance policies adopted by Pluton Resources Limited, refer to our website:

http://www.plutonresources.com

boarD funCtionsThe role of the Board of Pluton Resources Limited is as follows:

• Representing and serving the interests of shareholders by overseeing and appraising the strategies, policies and performance of the company. This includes overviewing the financial and human resources the company has in place to meet its objectives and the review of management performance;

• Protecting and optimising company performance and building sustainable value for shareholders in accordance with any duties and obligations imposed on the Board by law and the company’s constitution and within a framework of prudent and effective controls that enable risk to be assessed and managed;

• Responsible for the overall Corporate Governance of Pluton Resources Limited and its controlled entities, including monitoring the strategic direction of the company and those entities, formulating goals for management and monitoring the achievement of those goals;

• Setting, reviewing and ensuring compliance with the company’s values (including the establishment and observance of high ethical standards); and

• Ensuring shareholders are kept informed of the company’s performance and major developments affecting its state of affairs.

Responsibilities/functions of the Board include:

• selecting, appointing and evaluating from time to time the performance of, determining the remuneration of, and planning for the successor of, the Chief Executive Officer (‘CEO’);

• reviewing procedures in place for appointment of senior management and monitoring of its performance, and for succession planning. This includes ratifying the appointment and the removal of the Chief Financial Officer and Company Secretary;

• input into and final approval of management development of corporate strategy, including setting performance objectives and approving operating budgets;

• reviewing and guiding systems of risk management and internal control and ethical and legal compliance. This includes reviewing procedures in place to identify the main risks associated with the company’s businesses and the implementation of appropriate systems to manage these risks;

• monitoring corporate performance and implementation of strategy and policy;

• approving major capital expenditure, acquisitions and divestitures, and monitoring capital management;

• monitoring and reviewing management processes in place aimed at ensuring the integrity of financial and other reporting;

• monitoring and reviewing policies and processes in place relating to occupational health and safety, compliance with laws, and the maintenance of high ethical standards; and

• performing such other functions as are prescribed by law or are assigned to the Board.

In carrying out its responsibilities and functions, the Board may delegate any of its powers to a Board committee, a director, employee or other person subject to ultimate responsibility of the directors under the Corporations Act.

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Matters which are specifically reserved for the Board or its committees include the following:

• appointment of a Chair;

• appointment and removal of the CEO;

• appointment of directors to fill a vacancy or as additional directors;

• establishment of Board committees, their membership and delegated authorities;

• approval of dividends;

• development and review of corporate governance principles and policies;

• approval of major capital expenditure, acquisitions and divestitures in excess of authority levels delegated to management;

• calling of meetings of shareholders; and

• any other specific matters nominated by the Board from time to time.

struCture of the boarDThe company’s constitution governs the regulation of meetings and proceedings of the Board.

The Board determines its size and composition, subject to the terms of the constitution. The Board does not believe that it should establish a limit on tenure other than stipulated in the company constitution.

While tenure limits can help to ensure that there are fresh ideas and viewpoints available to the Board, they hold the disadvantage of losing the contribution of directors who have been able to develop, over a period of time, increasing insight in the company and its operation and, therefore, an increasing contribution to the Board as a whole. It is intended that the Board should comprise a majority of independent non-executive directors and comprise directors with a broad range of skills, expertise and experience from a diverse range of backgrounds. It is also intended that the Chair should be an independent non-executive director. The Board regularly reviews the independence of each director in light of the interests disclosed to the Board.

The Board only considers directors to be independent where they are independent of management and free of any business or other relationship that could materially interfere with - or could reasonably be perceived to interfere with - the exercise of their unfettered and independent judgment. The Board has adopted a definition of independence based on that set out in the ASX Corporate Governance Recommendations. The Board will review the independence of each director in light of interests disclosed to the Board from time to time.

In accordance with the definition of independence above, and the materiality thresholds set, the following directors of Pluton Resources Limited are considered to be independent:

name Position

Malcolm Macpherson Chairman, Non-executive

Russell Williams Non-executive director

There are procedures in place, agreed by the Board, to enable directors in furtherance of their duties to seek independent professional advice at the company’s expense.

The term in office held by each director in office at the date of this report is as follows:

name Position term in office

Tony Schoer Chief Executive Officer Appointed 1 July 2006

Malcolm Macpherson Non-executive director Appointed 1 January 2009

Russell Williams Non-executive director Appointed 19 May 2010

Ms Chenxi (Elly) Wang Non-executive director Appointed 20 April 2012

Further details on each director can be found in the Directors’ Report attached to this Corporate Governance Statement.

Diversity PoliCyAt the core of the company’s diversity policy is a commitment to equality and respect. The company is committed to providing an inclusive workplace and recognises the value of individuals with diverse skills, values, backgrounds and experiences will bring to the company. Diversity is recognising and valuing the unique contribution people can make because of their individual background and different skills, experiences and perspectives. People differ not just on the basis of race and gender, but also other dimensions such as lifestyle, education, physical ability, age and family responsibility.

The company trains and employs indigenous people to assist in the exploration and development of Pluton’s Irvine Island project located north-west of Broome, WA. Approximately 50% of the workforce on Irvine Island comprise local indigenous Mayala People.

The company employs women across a broad cross-section of the company’s workforce including the Board and senior management positions. As at the date of this statement, the company employed four females in senior executive and administration positions, representing 26% of the company’s full-time workforce, with one female residing as a member of the Board.

seCurities traDinG PoliCyUnder the company’s Guidelines for Dealing in Securities Policy, a director or company employee (‘Relevant Persons’) must not trade in any securities of the company at any time when they are in possession of unpublished price sensitive or ‘inside’ information in relation to those securities.

Relevant Persons are permitted to buy or sell the company’s securities throughout the year except during the period up to 14 days preceding the following:

• the company’s financial results; or

• the holding of a shareholders meeting.

and ending two days after the end of the day of the announcement of the company’s financial results or the holding of the shareholders meeting to allow the market to absorb the contents of the announcement (Non Trading Period).

Outside of the Non Trading Period (before commencing to trade) any person in possession of price sensitive information not released to market is ineligible to trade in any securites of the Company; a director must first obtain the approval of the Chairman to do so; the Chairman must first obtain approval from the Board; and all other employees must inform and receive approval from the Company Secretary.

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26Corporate Governance Statement

As required by the ASX Listing Rules, the company notifies the ASX of any transaction conducted by directors in the securities of the company within five days of the transaction taking place.

The Securities Trading Policy has been issued to ASX and can be found on the company’s website.

auDit anD risk CommitteeAs at the date of this statement the Board does not have a formal audit and risk committee. The company does have a formal Charter approved by the Board and it is the Board’s responsibility to ensure that an effective internal control framework exists within the entity. This includes internal controls to deal with both the effectiveness and efficiency of significant business processes, the safeguarding of assets, the maintenance of proper accounting records, and the reliability of financial information as well as non-financial considerations such as the benchmarking of operational key performance indicators.

riskThe responsibility of overseeing risk falls within the charter of the audit and risk committee. The company identifies areas of risk within the company and continuously undertakes a risk assessment of the company’s operations, procedures and processes. The risk assessment is aimed at identifying the following:

• a culture of risk control and the minimisation of risk throughout the company, which is being done through natural or instinctive process by employees of the company;

• a culture of risk control that can easily identify risks as they arise an amend practices;

• the installation of practices and procedures in all areas of the business that are designed to minimise an event or incident that could have a financial or other effect on the business and its day to day management; and

• adoption of these practices and procedures to minimise many of the standard commercial risks, i.e. taking out the appropriate insurance policies, or ensuring compliance reporting is up to date.

Ceo anD Cfo CertifiCationThe Chief Executive Officer and Chief Financial Officer have provided a written statement to the Board that in their view:

1. the company’s financial report is founded on a sound system of risk management and internal compliance and control which implements the financial policies adopted by the Board; and

2. the company’s risk management and internal compliance and control system is operating effectively in all material respects.

PerformanCeThe performance of the Board, its Committees and key executives is reviewed regularly using both measurable and qualitative indicators.

On an annual basis, directors will provide written feedback in relation to the performance of the Board and its Committees against a set of agreed criteria.

• Each Committee of the Board will also be required to provide feedback in terms of a review of its own performance.

• Feedback will be collected by the chair of the Board, or an external facilitator, and discussed by the Board, with consideration being given as to whether any steps should be taken to improve performance of the Board or its Committees.

• The Chief Executive Officer will also provide feedback from senior management in connection with any issues that may be relevant in the context of Board performance review.

• Where appropriate to facilitate the review process, assistance may be obtained from third party advisers.

remunerationIt is the company’s objective to provide maximum stakeholder benefit from the retention of a high quality Board and executive team by remunerating directors and key executives fairly and appropriately with reference to relevant employment market conditions. To assist in achieving this objective, the Board, in assuming the responsibilities of assessing remuneration to employees, links the nature and amount of executive directors’ and officers’ remuneration to the company’s financial and operational performance. The expected outcomes of the remuneration structure are:

• retention and motivation of key executives;

• attraction of high quality management to the company; and

• performance incentives that allow executives to share in the success of the company.

For a more comprehensive explanation of the company’s remuneration framework and the remuneration received by directors and key executives in the current period, please refer to the Remuneration Report, which is contained within the Directors’ Report.

There is no scheme to provide retirement benefits to non-executive (or executive) directors.

The Board is responsible for determining and reviewing compensation arrangements for the directors themselves and the Chief Executive Officer and executive team.

CorPorate soCial resPonsibilityThe company has, through its own actions, clearly embraced responsibility for the company’s actions and encourages a positive impact through its activities on the environment, employees, communities and stakeholders.

The company has embraced environmental, heritage and indigenous issues and has developed a platform that encourages preservation of flora and fauna, recognises the value of protecting heritage assets in regions that it operates and respects the values and social issues surrounding indigenous communities with whom the company engages.

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Statement of Comprehensive Income

FoR the yeAR ended 30 June 2012

27

Consolidated

note 2012 2011 $ $

revenue 4 173,495 370,307

Other income 5 614,375 225,476

expensesOccupancy expense (86,959) (115,906)

Employee benefits expense (1,165,880) (848,539)

Tenement management fees - (13,331)

Depreciation and amortisation expense 6 (154,813) (193,008)

Travel expense (60,128) (95,049)

Legal and professional fees (495,727) (520,592)

General and administrative expense (918,821) (1,254,205)

Exploration costs impairment 6 (788,883) (3,195,460)

loss before income tax expense (2,883,341) (5,640,307)

Income tax expense 7 - -

loss after income tax expense for the year attributable to the owners of Pluton resources limited 17 (2,883,341) (5,640,307)

Other comprehensive income for the year, net of tax - -

total comprehensive income for the year attributable to the owners of Pluton resources limited (2,883,341) (5,640,307)

Cents Cents

Basic earnings per share 30 (1.280) (3.269)

Diluted earnings per share 30 (1.280) (3.269)

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28

Consolidated

note 2012 2011 $ $

assets

Current assetsCash and cash equivalents 8 592,452 3,805,412

Trade and other receivables 9 1,106,340 624,019

Total current assets 1,698,792 4,429,431

non-current assetsProperty, plant and equipment 10 556,415 687,908

Intangibles 11 323,257 301,196

Exploration and evaluation 12 72,522,192 48,636,491

Total non-current assets 73,401,864 49,625,595

total assets 75,100,656 54,055,026

liabilities

Current liabilitiesTrade and other payables 13 2,682,628 2,357,988

Provisions 14 369,324 243,737

Total current liabilities 3,051,952 2,601,725

total liabilities 3,051,952 2,601,725

net assets 72,048,704 51,453,301

equityIssued capital 15 81,951,059 62,045,859

Reserves 16 4,114,326 540,782

Accumulated losses 17 (14,016,681) (11,133,340)

total equity 72,048,704 51,453,301

Statement of Financial Position

As At 30 June 2012

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Statement of Changes in Equity


29

issued reserves accumulated total capital losses equity

$ $ $ $

ConsoliDateDBalance at 1 July 2010 44,578,417 648,904 (5,493,033) 39,734,288

Loss after income tax expense for the year - - (5,640,307) (5,640,307)

Other comprehensive income for the year, net of tax - - - -

Total comprehensive income for the year - - (5,640,307) (5,640,307)

Transactions with owners in their capacity as owners:Contributions of equity, net of transaction costs 17,359,320 - - 17,359,320

Conversion of options 108,122 (108,122) - -

Balance at 30 June 2011 62,045,859 540,782 (11,133,340) 51,453,301

issued reserves accumulated total capital losses equity

$ $ $ $

ConsoliDateDBalance at 1 July 2011 62,045,859 540,782 (11,133,340) 51,453,301

Loss after income tax expense for the year - - (2,883,341) (2,883,341)

Other comprehensive income for the year, net of tax - - - -

Total comprehensive income for the year - - (2,883,341) (2,883,341)

Transactions with owners in their capacity as owners:Contributions of equity, net of transaction costs 19,905,200 - - 19,905,200

Issue of options - 3,573,544 - 3,573,544

Balance at 30 June 2012 81,951,059 4,114,326 (14,016,681) 72,048,704

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30

Consolidated

note 2012 2011 $ $

Cash flows from operating activities Payments to suppliers (inclusive of GST) (2,062,357) (477,463)

Interest received 132,822 348,096

Other revenue 61,348 22,211

Government grants received - 225,476

Net cash from/(used in) operating activities 28 (1,868,187) 118,320

Cash flows from investing activitiesPayments for property, plant and equipment 10 (12,879) (197,779)

Payments for intangibles 11 (32,502) (206,229)

Payments for security deposits (55,183) -

Payments for exploration and evaluation (17,636,329) (21,447,700)

Proceeds from release of security deposits - 8,380

Net cash used in investing activities (17,736,893) (21,843,328)

Cash flows from financing activitiesPayment of loans to related parties (48,369) -

Proceeds from issue of shares 17,340,000 18,098,765

Share issue transaction costs (899,511) (739,445)

Net cash from financing activities 16,392,120 17,359,320

Net decrease in cash and cash equivalents (3,212,960) (4,365,688)

Cash and cash equivalents at the beginning of the financial year 3,805,412 8,171,100

Cash and cash equivalents at the end of the financial year 8 592,452 3,805,412

Statement of Cash Flows


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Notes to the Financial Statements 31

30 June 2012

Note 1. Significant accounting policiesThe principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

new, reviseD or amenDinG aCCountinG stanDarDs anD interPretations aDoPteDThe consolidated entity has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (‘AASB’) that are mandatory for the current reporting period.

Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.

Any significant impact on the accounting policies of the consolidated entity from the adoption of these Accounting Standards and Interpretations are disclosed in the relevant accounting policy. The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial performance or position of the consolidated entity.

The following Accounting Standards and Interpretations are most relevant to the consolidated entity:

AASB 2010-4 Amendments to Australian Accounting Standards arising from the Annual Improvements ProjectThe consolidated entity has applied AASB 2010-4 amendments from 1 July 2011. The amendments made numerous non-urgent but necessary amendments to a range of Australian Accounting Standards and Interpretations. The amendments provided clarification of disclosures in AASB 7 ‘Financial Instruments: Disclosures’, in particular emphasis of the interaction between quantitative and qualitative disclosures and the nature and extent of risks associated with financial instruments; clarified that an entity can present an analysis of other comprehensive income for each component of equity, either in the statement of changes in equity or in the notes in accordance with AASB 101 ‘Presentation of Financial Instruments’; and provided guidance on the disclosure of significant events and transactions in AASB 134 ‘Interim Financial Reporting’.

AASB 124 Related Party Disclosures (December 2009)The consolidated entity has applied AASB 124 (revised) from 1 July 2011. The revised standard simplified the definition of a related party by clarifying its intended meaning and eliminating inconsistencies from the definition. A subsidiary and an associate with the same investor are related parties of each other; entities significantly influenced by one person and entities significantly influenced by a close member of the family of that person are no longer related parties of each other; and whenever a person or entity has both joint control over a second entity and joint control or significant influence over a third party, the second and third entities are related to each other.

AASB 1054 Australian Additional DisclosuresThe consolidated entity has applied AASB 1054 from 1 July 2011. The standard sets out the Australian-specific disclosures as a result of Phase I of the Trans-Tasman Convergence Project, which are in addition to International Financial Reporting Standards, for entities that have adopted Australian Accounting Standards.

AASB 2011-1 Amendments to Australian Accounting Standards arising from the Trans-Tasman Convergence ProjectThe consolidated entity has applied AASB 2011-1 amendments from 1 July 2011. These amendments made changes to a range of Australian Accounting Standards and Interpretations for the purpose of closer alignment to International Financial Reporting Standards (’IFRSs’) and harmonisation between Australian and New Zealand Standards. The amendments removed certain guidance and definitions from Australian Accounting Standards for conformity of drafting with IFRSs but without any intention to change requirements.

GoinG ConCernThe financial statements has been prepared on the going concern basis, which assumes the continuity of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business. For reasons described below, there is significant uncertainty whether the company and consolidated entity will continue as going concerns.

The consolidated entity has made commitments to make a number of payments in the near future. These include:

• environmental bonds in relation to Cockatoo Island with an estimated cash outflow of $19,200,000. This payment is anticipated to occur within the coming financial year and is dependent upon the completion of an assessment by the Western Australian government;

• other commitments in relation to Cockatoo Island of $525,000 on 1 October 2012, $500,000 on 1 November 2012.

An amount of $3,000,000 has been paid subsequent to the year end in connection with taking possession of Cockatoo Island;

• funding ongoing operating costs of $1,425,000 per calendar month prior to the commencement of operations at Cockatoo Island in October 2012 and $5,250,000 per calendar month after the commencement of operations at Cockatoo Island; and

• funding the working capital deficiency at 30 June 2012 of $1,353,159.

The consolidated entity has entered into iron ore presale contracts amounting to USD$12,700,000 under which it is to receive payments in advance of providing iron ore. At the date of this report, it has received all amounts due under the presale contracts and has $4,100,000 on deposit.

The consolidated entity needs to fund the estimated future costs of iron ore production estimated to be $13,500,000 to deliver quantities sufficient to complete its obligations under these presale contracts. Upon delivery of this ore, further receipts are expected and these are to be calculated with reference to the prevailing price of iron ore at delivery date. These extra payments are estimated to be an additional $8,000,000.

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30 June 2012

Note 1. Significant accounting policies (continued)In summary of the matters noted above, the consolidated entity’s budgets indicate additional short term operational funding of approximately $3,800,000 will be required in relation to its activities, as well as funding for the environmental bond payments, estimated to be $19,200,000.

Notwithstanding the above, the directors are confident that the company and the consolidated entity will be able to continue as going concerns given the following:

• The consolidated entity has secured iron ore pre sale contracts with advance payments amounting to $12,700,000;

• Subsequent to 30 June 2012 a director-related party has made a short term advance to the consolidated entity of $3,000,000;

• The consolidated entity has signed a binding term sheet for a proposed 50/50 unincorporated joint venture with WiseEnergy Group and is in discussions with other parties seeking to participate in the Cockatoo Island project. It is expected that the introduction of such parties will generate a cash injection sufficient to substantially meet the short term cash requirements of the consolidated entity. At the date of this report, these negotiations are ongoing;

• The company has a successful history of raising cash through capital raising activities and anticipates that this may also provide further funding if required; and

• The consolidated entity anticipates generating positive cash flow from conducting iron ore operations on the Cockatoo Island project once payments in connection with the acquisition and establishment have been made.

The directors anticipate iron ore extraction operations to commence on or around 15 October 2012 and to the period to 30 June 2013 have budgeted sales of $73,000,000 representing 766,000 tonnes.

Notwithstanding this there is material uncertainty whether the company and consolidated entity will continue as going concerns and, therefore, whether they will realise their assets and discharge their liabilities in the normal course of business.

The financial statements does not include adjustments relating to the recoverability and classification of recorded asset amounts, or to the amounts and classification of liabilities that might be necessary should the company and consolidated entity not continue as going concerns.

basis of PreParationThese general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (‘AASB’) and the Corporations Act 2001, as appropriate for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board (‘IASB’).

Historical cost conventionThe financial statements have been prepared under the historical cost convention.

Critical accounting estimatesThe preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the consolidated entity’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 2.

Parent entity informationIn accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity only. Supplementary information about the parent entity is disclosed in note 25.

PrinCiPles of ConsoliDationThe consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Pluton Resources Limited (‘company’ or ‘parent entity’) as at 30 June 2012 and the results of all subsidiaries for the year then ended. Pluton Resources Limited and its subsidiaries together are referred to in these financial statements as the ‘consolidated entity’.

Subsidiaries are all those entities over which the consolidated entity has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. The effects of potential exercisable voting rights are considered when assessing whether control exists. Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated entity. They are de-consolidated from the date that control ceases.

Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the consolidated entity.

The acquisition of subsidiaries is accounted for using the acquisition method of accounting. Refer to the ‘business combinations’ accounting policy for further details. A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent.

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30 June 2012

Note 1. Significant accounting policies (continued)Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The consolidated entity recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or loss.

oPeratinG seGmentsOperating segments are presented using the ‘management approach’, where the information presented is on the same basis as the internal reports provided to the Chief Operating Decision Makers (‘CODM’). The CODM is responsible for the allocation of resources to operating segments and assessing their performance.

revenue reCoGnitionRevenue is recognised when it is probable that the economic benefit will flow to the consolidated entity and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable.

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

Other revenueOther revenue is recognised when it is received or when the right to receive payment is established.

Government grantsGrants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the consolidated entity will comply with all attached conditions.

Government grants relating to costs are deferred and recognised in profit or loss over the period necessary to match them with the costs that they are intended to compensate.

Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as deferred income and are credited to profit or loss on a straight-line basis over the expected lives of the related assets.

inCome taXThe income tax expense or benefit for the period is the tax payable on that period’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and unused tax losses and the adjustment recognised for prior periods, where applicable.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:

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

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

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

The carrying amount of recognised and unrecognised deferred tax assets are reviewed each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset.

Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entity’s which intend to settle simultaneously.

Cash anD Cash equivalentsCash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

traDe anD other reCeivablesOther receivables are recognised at amortised cost, less any provision for impairment.

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30 June 2012

Note 1. Significant accounting policies (continued)investments anD other finanCial assetsInvestments and other financial assets are measured at either amortised cost or fair value depending on their classification. Classification is determined based on the purpose of the acquisition and subsequent reclassification to other categories is restricted. The fair values of quoted investments are based on current bid prices. For unlisted investments, the consolidated entity establishes fair value by using valuation techniques. These include the use of recent arms length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, and option pricing models.

Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the consolidated entity has transferred substantially all the risks and rewards of ownership.

Loans and receivablesLoans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are carried at amortised cost using the effective interest rate method. Gains and losses are recognised in profit or loss when the asset is derecognised or impaired.

Impairment of financial assetsThe consolidated entity assesses at the end of each reporting period whether there is any objective evidence that a financial asset or group of financial assets is impaired. Objective evidence includes significant financial difficulty of the issuer or obligor; a breach of contract such as default or delinquency in payments; the lender granting to a borrower concessions due to economic or legal reasons that the lender would not otherwise do; it becomes probable that the borrower will enter bankruptcy or other financial reorganisation; the disappearance of an active market for the financial asset; or observable data indicating that there is a measurable decrease in estimated future cash flows.

The amount of the impairment allowance for loans and receivables carried at amortised cost is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. If there is a reversal of impairment, the reversal cannot exceed the amortised cost that would have been had the impairment not been recognised and is reversed to profit or loss.

ProPerty, Plant anD equiPmentPlant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment over their expected useful lives as follows:

Plant and equipment 3-15 years

Motor vehicles 3-5 years

The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.

An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the consolidated entity. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.

leasesThe determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.

A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to ownership of leased assets, and operating leases, under which the lessor effectively retains substantially all such risks and benefits.

Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets, or if lower, the present value of minimum lease payments. Lease payments are allocated between the principal component of the lease liability and the finance costs, so as to achieve a constant rate of interest on the remaining balance of the liability.

Leased assets acquired under a finance lease are depreciated over the asset’s useful life or over the shorter of the asset’s useful life and the lease term if there is no reasonable certainty that the consolidated entity will obtain ownership at the end of the lease term.

Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line basis over the term of the lease.

intanGible assetsIntangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Intangible assets are subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss arising from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the carrying amount of the intangible asset. The method and useful lives of finite life intangibles are reviewed annually. Changes in the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation method or period.

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Note 1. Significant accounting policies (continued)SoftwareSignificant costs associated with software are deferred and amortised on a straight-line basis over the period of their expected benefit, being their finite life of 3 to 5 years.

Research costs Research costs are expensed in the period in which they are incurred. Development costs are capitalised when it is probable that the project will be a success considering its commercial and technical feasibility; the consolidated entity is able to use or sell the asset; the consolidated entity has sufficient resources; and intent to complete the development and its costs can be measured reliably. Capitalised development costs are amortised on a straight-line basis over the period of their expected benefit, being their finite life of 10 years.

Exploration and evaluation assets reclassified as development are amortised over the estimated economic life of the mine on a units-of-production basis. Changes in factors such as estimates of proved and probable reserves that affect unit-of-production calculations are dealt with on a prospective basis.

Platform costsCosts in relation to platform expenses are capitalised as an asset and amortised, when available for first use, on a straight-line basis over the period of their expected benefit, being their finite life of 10 years.

eXPloration anD evaluation assetsExploration and evaluation expenditure in relation to separate areas of interest for which rights of tenure are current is carried forward as an asset in the statement of financial position where it is expected that the expenditure will be recovered through the successful development and exploitation of an area of interest, or by its sale; or exploration activities are continuing in an area and activities have not reached a stage which permits a reasonable estimate of the existence or otherwise of economically recoverable reserves. Where a project or an area of interest has been abandoned, the expenditure incurred thereon is written off in the year in which the decision is made.

Exploration and evaluation assets are initially measured at cost and include acquisition of rights to explore, studies, exploratory drilling, trenching and sampling and associated activities and an allocation of depreciation and amortisation of assets used in exploration and evaluation activities. General and administrative costs are only included in the measurement of exploration and evaluation costs where they are related directly to operational activities in a particular area of interest.

Where a decision is made to proceed with development in respect of a particular area of interest, the relevant exploration and evaluation asset is tested for impairment and the balance is then reclassified to development.

imPairment of non-finanCial assetsIntangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying mount exceeds its recoverable amount.

Recoverable amount is the higher of an asset’s fair value less costs to sell and value-in-use. The value-in-use is the resent value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit.

traDe anD other PayablesThese amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts are unsecured and are usually paid within 30 days of recognition.

finanCe CostsFinance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the period in which they are incurred.

ProvisionsProvisions are recognised when the consolidated entity has a present (legal or constructive) obligation as a result of a past event, it is probable the consolidated entity will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time value of money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase in the provision resulting from the passage of time is recognised as a finance cost.

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Note 1. Significant accounting policies (continued)Restoration and rehabilitationThe initial estimate of the restoration and rehabilitation provision relating to exploration development is capitalised into the cost of the related asset and amortised on the same basis as the related asset, unless the present obligation arises from the production of inventory in the period, in which case the amount is included in the cost of production for the period. The estimated future obligations include the costs of removing facilities, abandoning sites and restoring the affected areas.

emPloyee benefitsWages and salaries and annual leaveLiabilities for wages and salaries, including non-monetary benefits, and annual leave expected to be settled within 12 months of the reporting date are recognised in current liabilities in respect of employees’ services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.

Long service leaveThe liability for long service leave is recognised in current and non-current liabilities, depending on the unconditional right to defer settlement of the liability for at least 12 months after the reporting date. The liability is measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

Defined contribution superannuation expenseContributions to defined contribution superannuation plans are expensed in the period in which they are incurred.

Share-based paymentsEquity-settled and cash-settled share-based compensation benefits are provided to employees.

Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the rendering of services. Cash-settled transactions are awards of cash for the exchange of services, where the amount of cash is determined by reference to the share price.

The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using the Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine whether the consolidated entity receives the services that entitle the employees to receive payment. No account is taken of any other vesting conditions.

The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous periods.

The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by applying the Black-Scholes option pricing model, taking into consideration the terms and conditions on which the award was granted. The cumulative charge to profit or loss until settlement of the liability is calculated as follows:

• during the vesting period, the liability at each reporting date is the fair value of the award at that date multiplied by the expired portion of the vesting period.

• from the end of the vesting period until settlement of the award, the liability is the full fair value of the liability at the reporting date.

All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the cash paid to settle the liability.

Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are satisfied.

If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of the share-based compensation benefit as at the date of modification.

If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy the condition is treated as a cancellation. If the condition is not within the control of the consolidated entity or employee and is not satisfied during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.

If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated as if they were a modification.

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Note 1. Significant accounting policies (continued)issueD CaPitalOrdinary shares are classified as equity.

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

business CombinationsThe acquisition method of accounting is used to account for business combinations regardless of whether equity instruments or other assets are acquired.

The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest in the acquiree. For each business combination, the non-controlling interest in the acquiree is measured at either fair value or at the proportionate share of the acquiree’s identifiable net assets. All acquisition costs are expensed as incurred to profit or loss.

On the acquisition of a business, the consolidated entity assesses the financial assets acquired and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic conditions, the consolidated entity’s operating or accounting policies and other pertinent conditions in existence at the acquisition-date.

Where the business combination is achieved in stages, the consolidated entity remeasures its previously held equity interest in the acquiree at the acquisition-date fair value and the difference between the fair value and the previous carrying amount is recognised in profit or loss.

Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent changes in the fair value of contingent consideration classified as an asset or liability is recognised in profit or loss. Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity.

The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling interest in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment in the acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair value of the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a gain directly in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the identification and measurement of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred and the acquirer’s previously held equity interest in the acquirer.

Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional amounts recognised and also recognises additional assets or liabilities during the measurement period, based on new information obtained about the facts and circumstances that existed at the acquisition-date. The measurement period ends on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the information possible to determine fair value.

earninGs Per shareBasic earnings per shareBasic earnings per share is calculated by dividing the profit attributable to the owners of Pluton Resources Limited, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.

Diluted earnings per shareDiluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

GooDs anD serviCes taX (‘Gst’) anD other similar taXesRevenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of financial position.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.

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

rounDinG of amountsAmounts in this report have been rounded off to the nearest dollar.

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Note 1. Significant accounting policies (continued)new aCCountinG stanDarDs anD interPretations not yet manDatory or early aDoPteDAustralian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the consolidated entity for the annual reporting period ended 30 June 2012. The consolidated entity’s assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant to the consolidated entity, are set out below.

AASB 9 Financial Instruments, 2009-11 Amendments to Australian Accounting Standards arising from AASB 9 and 2010-7 Amendments to Australian Accounting Standards arising from AASB 9This standard and its consequential amendments are applicable to annual reporting periods beginning on or after 1 January 2013 and completes phase I of the IASB’s project to replace IAS 39 (being the international equivalent to AASB 139 ‘Financial Instruments: Recognition and Measurement’). This standard introduces new classification and measurement models for financial assets, using a single approach to determine whether a financial asset is measured at amortised cost or fair value. To be classified and measured at amortised cost, assets must satisfy the business model test for managing the financial assets and have certain contractual cash flow characteristics. All other financial instrument assets are to be classified and measured at fair value. This standard allows an irrevocable election on initial recognition to present gains and losses on equity instruments (that are not held-for-trading) in other comprehensive income, with dividends as a return on these investments being recognised in profit or loss. In addition, those equity instruments measured at fair value through other comprehensive income would no longer have to apply any impairment requirements nor would there be any ‘recycling’ of gains or losses through profit or loss on disposal. The accounting for financial liabilities continues to be classified and measured in accordance with AASB 139, with one exception, being that the portion of a change of fair value relating to the entity’s own credit risk is to be presented in other comprehensive income unless it would create an accounting mismatch. The consolidated entity will adopt this standard from 1 July 2013 but the impact of its adoption is yet to be assessed by the consolidated entity.

AASB 10 Consolidated Financial StatementsThis standard is applicable to annual reporting periods beginning on or after 1 January 2013. The standard has a new definition of ‘control’. Control exists when the reporting entity is exposed, or has the rights, to variable returns (e.g. dividends, remuneration, returns that are not available to other interest holders including losses) from its involvement with another entity and has the ability to affect those returns through its ‘power’ over that other entity. A reporting entity has power when it has rights (e.g. voting rights, potential voting rights, rights to appoint key management, decision making rights, kick out rights) that give it the current ability to direct the activities that significantly affect the investee’s returns (e.g. operating policies, capital decisions, appointment of key management). The consolidated entity will not only have to consider its holdings and rights but also the holdings and rights of other shareholders in order to determine whether it has the necessary power for consolidation purposes. The adoption of this standard from 1 July 2013 may have an impact where the consolidated entity has a holding of less than 50% in an entity, has de facto control, and is not currently consolidating that entity.

AASB 11 Joint ArrangementsThis standard is applicable to annual reporting periods beginning on or after 1 January 2013. The standard defines which entities qualify as joint ventures and removes the option to account for joint ventures using proportional consolidation. Joint ventures, where the parties to the agreement have the rights to the net assets will use equity accounting. Joint operations, where the parties to the agreements have the rights to the assets and obligations for the liabilities will account for the assets, liabilities, revenues and expenses separately, using proportionate consolidation. The adoption of this standard from 1 July 2013 will impact the accounting for the joint venture agreement in respect of Cockatoo Island.

AASB 12 Disclosure of Interests in Other EntitiesThis standard is applicable to annual reporting periods beginning on or after 1 January 2013. It contains the entire disclosure requirement associated with other entities, being subsidiaries, associates and joint ventures. The disclosure requirements have been significantly enhanced when compared to the disclosures previously located in AASB 127 ‘Consolidated and Separate Financial Statements’, AASB 128 ‘Investments in Associates’, AASB 131 ‘Interests in Joint Ventures’ and Interpretation 112 ‘Consolidation – Special Purpose Entities’. The adoption of this standard from 1 July 2013 will significantly increase the amount of disclosures required to be given by the consolidated entity such as significant judgements and assumptions made in determining whether it has a controlling or non-controlling interest in another entity and the type of non-controlling interest and the nature and risks involved.

AASB 13 Fair Value Measurement and AASB 2011-8 Amendments to Australian Accounting Standards arising from AASB 13This standard and its consequential amendments are applicable to annual reporting periods beginning on or after 1 January 2013. The standard provides a single robust measurement framework, with clear measurement objectives, for measuring fair value using the ‘exit price’ and it provides guidance on measuring fair value when a market becomes less active. The ‘highest and best use’ approach would be used to measure assets whereas liabilities would be based on transfer value. As the standard does not introduce any new requirements for the use of fair value, its impact on adoption by the consolidated entity from 1 July 2013 should be minimal, although there will be increased disclosures where fair value is used.

AASB 127 Separate Financial Statements (Revised)AASB 128 Investments in Associates and Joint Ventures (Reissued)These standards are applicable to annual reporting periods beginning on or after 1 January 2013. They have been modified to remove specific guidance that is now contained in AASB 10, AASB 11 and AASB 12. The adoption of these revised standards from 1 July 2013 will not have a material impact on the consolidated entity.

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Note 1. Significant accounting policies (continued)AASB 119 Employee Benefits (September 2011) and AASB 2011-10 Amendments to Australian Accounting Standards arising from AASB 119 (September 2011)This revised standard and its consequential amendments are applicable to annual reporting periods beginning on or after 1 January 2013. The amendments eliminate the corridor approach for the deferral of gains and losses; streamlines the presentation of changes in assets and liabilities arising from defined benefit plans, including requiring remeasurements to be presented in other comprehensive income; and enhances the disclosure requirements for defined benefit plans. The amendments also changes the definition of short-term employee benefits, from ‘due to’ to ‘expected to’ be settled within 12 months and will require annual leave that is not expected to be wholly settled within 12 months to be discounted allowing for expected salary levels in the future period when the leave is expected to be taken. The adoption of the revised standard from 1 July 2013 will not have a material impact on the consolidated entity.

AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure RequirementThese amendments are applicable to annual reporting periods beginning on or after 1 July 2013, with early adoption not permitted. They amend AASB 124 ‘Related Party Disclosures’ by removing the disclosure requirements for individual key management personnel (‘KMP’). The adoption of these amendments from 1 July 2013 will remove the duplication of information relating to individual KMP in the notes to the financial statements and the directors report. As the aggregate disclosures are still required by AASB 124 and during the transitional period the requirements may be included in the Corporations Act or other legislation, it is expected that the amendments will not have a material impact on the consolidated entity.

AASB 2011-7 Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangements StandardsThe amendments are applicable to annual reporting periods beginning on or after 1 January 2013. The amendments make numerous consequential changes to a range of Australian Accounting Standards and Interpretations, following the issuance of AASB 10, AASB 11, AASB 12 and revised AASB 127 and AASB 128. The adoption of these amendments from 1 July 2013 will not have a material impact on the consolidated entity.

AASB 2011-9 Amendments to Australian Accounting Standards – Presentation of Items of Other Comprehensive IncomeThese amendments are applicable to annual reporting periods beginning on or after 1 July 2012. The amendments requires grouping together of items within other comprehensive income on the basis of whether they will eventually be ‘recycled’ to the profit or loss (reclassification adjustments). The change provides clarity about the nature of items presented as other comprehensive income and the related tax presentation. The adoption of the revised standard from 1 July 2012 will impact the consolidated entity’s presentation of its statement of comprehensive income.

AASB 2012-2 Amendments to Australian Accounting Standards – Disclosures – Offsetting Financial Assets and Financial LiabilitiesThe amendments are applicable to annual reporting periods beginning on or after 1 January 2013. The disclosure requirements of AASB 7 ‘Financial Instruments: Disclosures’ (and consequential amendments to AASB 132 ‘Financial Instruments: Presentation’) have been enhanced to provide users of financial statements with information about netting arrangements, including rights of set-off related to an entity’s financial instruments and the effects of such rights on its statement of financial position. The adoption of the amendments from 1 July 2013 may increase the disclosures by the consolidated entity.

AASB 2012-3 Amendments to Australian Accounting Standards – Offsetting Financial Assets and Financial LiabilitiesThe amendments are applicable to annual reporting periods beginning on or after 1 January 2014. The amendments add application guidance to address inconsistencies in the application of the offsetting criteria in AASB 132 ‘Financial Instruments: Presentation’, by clarifying the meaning of “currently has a legally enforceable right of set-off”; and clarifies that some gross settlement systems may be considered to be equivalent to net settlement. The adoption of the amendments from 1 July 2014 will not have a significant impact on the consolidated entity.

AASB 2012-5 Amendments to Australian Accounting Standards arising from Annual Improvements 2009–2011 CycleThe amendments are applicable to annual reporting periods beginning on or after 1 January 2013. The amendments affect five Australian Accounting Standards as follows: Confirmation that repeat application of AASB 1 (IFRS 1) Firsttime Adoption of Australian Accounting Standards’ is permitted; Clarification of borrowing cost exemption in AASB 1; Clarification of comprehensive information requirements when an entity provides a third balance sheet in accordance with AASB 101 ‘Presentation of Financial Statements’; Clarification that servicing of equipment is covered by AASB 116 ‘Property, Plant and Equipment’, if such equipment is used for more than one period; AASB 132 Financial Instruments: Presentation’ Clarification of the tax effect of distributions to holders of an equity instrument is recognised in the income statement; and clarification of the financial reporting requirements in AASB 134 ‘Interim Financial Reporting’ and the disclosure requirements of segment assets and liabilities. The adoption of the amendments from 1 July 2013 will not have a significant impact on the consolidated entity.

Interpretation 20 Stripping Costs in the Production Phase of a Surface Mine and AASB 2011-12 Amendments to Australian Accounting Standards arising from Interpretation 20This interpretation and its consequential amendments are applicable to annual reporting periods beginning on or after 1 January 2013 The Interpretation clarifies when production stripping costs should lead to the recognition of an asset and how that asset should be initially and subsequently measured. The Interpretation only deals with waste removal costs that are incurred in surface mining activities during the production phase of the mine. The adoption of the interpretation and the amendments from 1 July 2013 will not have a material impact on the consolidated entity.

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Note 2. Critical accounting judgements, estimates and assumptionsThe preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

Share-based payment transactionsThe consolidated entity measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using the Black-Scholes model taking into account the terms and conditions upon which the instruments were granted. The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact profit or loss and equity.

Estimation of useful lives of assetsThe consolidated entity determines the estimated useful lives and related depreciation and amortisation charges for its property, plant and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical innovations or some other event. The depreciation and amortisation charge will increase where the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down.

Impairment of non-financial assets other than goodwill and other indefinite life intangible assetsThe consolidated entity assesses impairment of non-financial assets other than goodwill and other indefinite life intangible assets at each reporting date by evaluating conditions specific to the consolidated entity and to the particular asset that may lead to impairment. If an impairment trigger exists, the recoverable amount of the asset is determined. This involves fair value less costs to sell or value-in-use calculations, which incorporate a number of key estimates and assumptions.

Income taxThe consolidated entity is subject to income taxes in the jurisdictions in which it operates. Significant judgement is required in determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The consolidated entity recognises liabilities for anticipated tax audit issues based on the consolidated entity’s current understanding of the tax law. Where the final tax outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in which such determination is made.

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Note 3. Operating segmentsIdentification of reportable operating segmentsThe consolidated entity operates in the mineral exploration industry in Australia and reports using two segments, Iron Ore and Base Metals. These operating segments are based on the internal reports that are reviewed and used by the Board of Directors (who are identified as the Chief Operating Decision Makers (‘CODM’)) in assessing performance and in determining the allocation of resources. There is no aggregation of operating segments.

Base metal segmentThe consolidated entity continues to hold Tasmanian Tenement interests in the Base Metals segment. Activity in regard to this segment has been minimal while directors assess strategic options regarding these tenements.

Intersegment receivables, payables and loansIntersegment loans are initially recognised at the consideration received. Intersegment loans receivable and loans payable that earn or incur non-market interest are not adjusted to fair value based on market interest rates. Intersegment loans are eliminated on consolidation.

Major customersDuring the year ended 30 June 2012 there were no major customers (2011: nil).

Operating segment information

2012 iron ore base intersegment Consolidated metals eliminations/ unallocated $ $ $ $

revenueOther revenue - - 787,870 787,870

total revenue - - 787,870 787,870

segment result - - (2,072,467) (2,072,467)

Depreciation and amortisation (154,813)

Interest revenue 132,822

Write-off exploration expenditure (788,883)

loss before income tax expense (2,883,341)

Income tax expense -

loss after income tax expense (2,883,341)

assetsSegment assets 73,074,327 6,800 2,019,529 75,100,656

total assets 75,100,656

Total assets includes:Acquisition of non-current assets 24,678,681 - 41,284 24,719,965

liabilitiesSegment liabilities 2,370,256 - 681,696 3,051,952

total liabilities 3,051,952 For

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Note 3. Operating segments (continued)2011 iron ore base intersegment Consolidated metals eliminations/ unallocated $ $ $ $

revenueOther revenue - - 595,783 595,783

total revenue - - 595,783 595,783

segment result (22,774) - (2,577,162) (2,599,936)

Depreciation and amortisation (193,008)

Interest revenue 348,097

Write-off exploration expenditure (2,048,227)

Loss on investment (1,147,233)

loss before income tax expense (5,640,307)

Income tax expense -

loss after income tax expense (5,640,307)

assetsSegment assets 49,280,932 4,026 4,770,068 54,055,026

total assets 54,055,026

Total assets includes:Acquisition of non-current assets 21,658,066 125,028 68,614 21,851,708

liabilitiesSegment liabilities 2,543,898 402 57,425 2,601,725

total liabilities 2,601,725

Consolidated

2012 2011

$ $

Note 4. Revenueother revenue Interest 132,822 348,096

Other revenue 40,673 22,211

Revenue 173,495 370,307

Note 5. Other incomeResearch and development rebate 534,617 225,476

ATO refund 79,758 -

Other income 614,375 225,476

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Consolidated

2012 2011 $ $

Note 6. ExpensesLoss before income tax includes the following specific expenses:

DepreciationPlant and equipment 139,024 172,780

Motor vehicles 5,348 6,010

Total depreciation 144,372 178,790

AmortisationSoftware 10,441 14,218

Total depreciation and amortisation 154,813 193,008

ImpairmentMining agreements (note 12) - 1,147,233

Exploration and evaluation (note 12) 788,883 2,048,227

Total impairment 788,883 3,195,460

Rental expense relating to operating leasesMinimum lease payments 52,182 48,860

Superannuation expenseDefined contribution superannuation expense 236,785 181,012

Employee benefits expense excluding superannuationEmployee benefits expense excluding superannuation 929,095 667,527

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Consolidated

2012 2011

$ $

Note 7. Income tax expenseNumerical reconciliation of income tax expense and tax at the statutory rateLoss before income tax expense (2,883,341) (5,640,307)

Tax at the statutory tax rate of 30% (865,002) (1,692,092)

Tax effect amounts which are not deductible/(taxable) in calculating taxable income:Entertainment expenses - 3,440

Legal expenses 1,331 -

Capital raising costs (191,664) (120,017)

Exploration expenditure (5,241,356) (5,475,672)

Impairment of assets 254,549 344,350

Research and development expenditure 2,707 14,439

(6,039,435) (6,925,552)

Current year tax losses not recognised 5,994,756 6,894,431

Current year temporary differences not recognised 44,679 31,121

Income tax expense - -

Tax losses not recognisedUnused tax losses for which no deferred tax asset has been recognised 45,418,695 42,594,967

Potential tax benefit @ 30% 13,625,609 12,778,490

The above potential tax benefit for tax losses has not been recognised in the statement of financial position. These tax losses can only be utilised in the future if the continuity of ownership test is passed, or failing that, the same business test is passed.

Deferred tax assets not recognised Deferred tax assets not recognised comprises temporary differences attributable to:

Employee benefits 110,797 73,121

Transaction costs arising on shares issued 468,584 390,671

Total deferred tax assets not recognised 579,381 463,792

The above potential tax benefit, which excludes tax losses, for deductible temporary differences has not been recognised in the statement of financial position as the recovery of this benefit is uncertain.

Deferred tax liabilities, in respect of exploration expenditure, not recognised amounted to $15,416,695 (2011: $10,175,339).

Note 8. Current assets - cash and cash equivalentsCash and cash equivalents 592,452 3,805,412 F

or p

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Consolidated

2012 2011

$ $

Note 9. Current assets - trade and other receivablesOther receivables 681,650 50,629

Deposits and bonds 72,433 17,250

Receivable from Pluton Operations Pty Ltd 8,071 5,678

GST receivable 344,186 550,462

1,106,340 624,019

Deposits and bonds - should the consolidated entity not continue to operate their mining tenements, the bonds may become refundable under the terms and conditions of the agreement with the Commonwealth of Australia.

Pluton Operations Pty Ltd, which is not a related company, is the Trustee of the Pluton Operations Deferred Directors Salary Sacrifice Share Purchase Plan.

Impairment of receivablesThe consolidated entity has recognised a loss of $nil (2011: $nil) in profit or loss in respect of impairment of receivables for the year ended 30 June 2012.

Past due but not impairedAt 30 June 2012 no receivables were past due or impaired (2011: $nil). Consolidated

2012 2011 $ $

Note 10. Non-current assets - property, plant and equipmentPlant and equipment - at cost 1,012,738 999,859

Less: Accumulated depreciation (484,167) (345,143)

528,571 654,716

Motor vehicles - at cost 48,390 48,390

Less: Accumulated depreciation (20,546) (15,198)

27,844 33,192

556,415 687,908

ReconciliationsReconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:

Plant and motor total equipment vehicles $ $ $

ConsolidatedBalance at 1 July 2010 670,695 7,922 678,617

Additions 166,499 31,280 197,779

Transfers in/(out) (9,698) - (9,698)

Depreciation expense (172,780) (6,010) (178,790)

Balance at 30 June 2011 654,716 33,192 687,908

Additions 12,879 - 12,879

Depreciation expense (139,024) (5,348) (144,372)

Balance at 30 June 2012 528,571 27,844 556,415

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Consolidated

2012 2011

$ $

Note 11. Non-current assets - intangiblesPlatform - at cost 291,781 287,684

291,781 287,684

Software - at cost 75,841 47,436

Less: Accumulated amortisation (44,365) (33,924)

31,476 13,512

323,257 301,196


Platform software total $ $ $

ConsolidatedBalance at 1 July 2010 81,455 18,032 99,487

Additions 206,229 - 206,229

Transfers in/(out) - 9,698 9,698

Amortisation expense - (14,218) (14,218)

Balance at 30 June 2011 287,684 13,512 301,196

Additions 4,097 28,405 32,502

Amortisation expense - (10,441) (10,441)

Balance at 30 June 2012 291,781 31,476 323,257

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Consolidated

2012 2011

$ $

Note 12. Non-current assets - exploration and evaluationMining agreements 1,147,233 1,147,233

Less: Impairment (1,147,233) (1,147,233)

- -

Exploration and evaluation 72,522,192 48,636,491

72,522,192 48,636,491

72,522,192 48,636,491


mining exploration total agreements and evaluation $ $ $

ConsolidatedBalance at 1 July 20101,147,233 29,237,018 30,384,251

Additions - 21,447,700 21,447,700

Impairment of assets (1,147,233) (2,048,227) (3,195,460)

Balance at 30 June 2011 - 48,636,491 48,636,491

Additions - 24,674,584 24,674,584

Impairment of assets - (788,883) (788,883)

Balance at 30 June 2012 - 72,522,192 72,522,192

Total exploration and evaluation expenditure capitalised is solely intangible. The directors have performed an impairment review based on the potential for future economic benefits that may arise.

Recoverability of the carrying amount of exploration assets is dependent on the successful exploration and mining of the existing mining agreements, and successful exploration activities. The directors have determined that whilst the Dove River assets have potential, the level of exploration and evaluation activity in connection to this region is no longer significant and active and does not currently qualify to continue to be recognised as an exploration and evaluation asset. Accordingly in 2011 mining agreements of $1,147,233 and exploration and evaluation assets of $2,048,227 were impaired. There was no further impairment during the current financial year.

Capitalised costs have been included in the statement of cash flows as an investing activity.

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Consolidated

2012 2011 $ $

Note 13. Current liabilities - trade and other payablesTrade payables 2,371,766 1,191,512

Other payables 310,862 1,166,476

2,682,628 2,357,988

Refer to note 19 for further information on financial instruments.

Note 14. Current liabilities - provisionsEmployee benefits 369,324 243,737

Note 15. Equity - issued capital Consolidated Consolidated

2012 2011 2012 2011 shares Shares $ $

Ordinary shares - fully paid 246,593,087 187,026,448 81,951,059 62,045,859

Movements in ordinary share capital

Details Date no of shares issue price $

Balance 1 July 2010 156,049,880 44,578,417

Issue of shares 9 November 2010 23,407,482 $0.570 13,342,265

Share purchase plan 19 May 2011 5,329,086 $0.780 4,156,500

Conversion of options 8 February 2011 2,000,000 $0.300 640,008

Conversion of performance rights 1 April 2011 240,000 68,114

Share issue costs - (739,445)

Balance 30 June 2011 187,026,448 62,045,859

Issue of ordinary shares 22 July 2011 10,244,697 3,339,771

Issue of ordinary shares 5 August 2011 8,450,704 $0.355 3,000,000

Issue of ordinary shares 22 August 2011 5,633,803 $0.355 2,000,000

Issue of ordinary shares 6 October 2011 15,506,164 $0.355 5,504,688

Issue of ordinary shares to KRED Enterprises Pty Ltd as Trustee for Mayala People 10 November 2011 476,872 124,940

Issue of ordinary shares 23 February 2012 5,169,892 $0.355 1,835,312

Issue of ordinary shares 12 April 2012 8,450,704 $0.355 3,000,000

Issue of ordinary shares 11 May 2012 5,633,803 $0.355 2,000,000

Share issue costs (899,511)

Balance 30 June 2012 246,593,087 81,951,059

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Note 15. Equity - issued capital (continued)Ordinary sharesOrdinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value.

At the shareholders meetings each ordinary share is entitled to one vote when poll is called, otherwise each shareholder has one vote on a show of hands.

OptionsAt the reporting date there were 23,396,572 (2011: 23,396,572) options on issue with an exercise price of 30 cents and an exercise date any time to 3 October 2016. These options were issued to directors on 3 October 2006 in their capacity as founders of the company prior to listing on the ASX and not as compensation. Each option gives the holder the right to subscribe for one share of the company. Anthony Schoer is the only remaining founder of the company on the Board.

At the reporting date there were 14,342,576 (2011: nil) options on issue with an exercise price of 83.1 cents and an exercise date any time to 22 July 2017. These options have been issued to shareholders on 22 July 2011. Each option gives the holder the right to subscribe for one share of the company.

Performance rightsThere was also nil (2011: 240,000) performance rights on issue with a performance hurdle of $1.25 per share and an exercise date of 31 March 2014. Each performance right gives the holder the right to subscribe for one share of the company.

Share buy-backThere is no current on-market share buy-back.

Capital risk managementThe consolidated entity’s objectives when managing capital are to safeguard its ability to continue as a going concern, so that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost of capital.

Management are constantly adjusting the capital structure to take advantage of favourable costs of capital or high returns on assets. As the market is constantly changing, management may change the amount of dividends to be paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

Management may issue further shares on the market for the purpose of continuing its exploration activities and to ensure an optimum working capital level.

The consolidated entity is not subject to any externally imposed capital requirements.

The capital risk management policy remains unchanged from the 30 June 2011 Annual Report.

Note 16. Equity - reserves Consolidated

2012 2011 $ $

Options reserve 4,114,326 540,782

options totalConsolidated $ $Balance at 1 July 2010 648,904 648,904

Conversion to share capital (108,122) (108,122)

Balance at 30 June 2011 540,782 540,782

Issuance of options * 3,573,544 3,573,544

Balance at 30 June 2012 4,114,326 4,114,326

* On 22 July 2011 the consolidated entity granted 14,342,576 options. The value of these options using a Black-Scholes valuation model calculation was $3,573,544.

Option reserveThe reserve is used to recognise the value of options, including issue of performance rights under the Employee Share Option Plan, provided to employees and directors as part of their remuneration, and other parties as part of their compensation for services.

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Consolidated

2012 2011

$ $

Note 17. Equity - accumulated lossesAccumulated losses at the beginning of the financial year (11,133,340) (5,493,033)

Loss after income tax expense for the year (2,883,341) (5,640,307)

Accumulated losses at the end of the financial year (14,016,681) (11,133,340)

Note 18. Equity - dividendsThere were no dividends paid or declared during the current or previous financial year.

Note 19. Financial instrumentsFinancial risk management objectivesThe consolidated entity’s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The consolidated entity’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the consolidated entity. The Board reviews and agrees policies for managing each of the risks identified.

The consolidated entity uses different methods to measure different types of risk to which it is exposed. These include monitoring levels of exposure to interest rate and foreign exchange risk and assessments of market forecasts for interest rate, foreign exchange and commodity prices. Liquidity risk is monitored through the development of future rolling cash flow forecasts.

The consolidated entity’s principal financial instruments comprise receivables, payables, cash and short-term deposits.

Market riskForeign currency riskThe transactions of the consolidated entity are predominantly in Australian dollars, therefore the consolidated entity’s exposure to foreign exchange risk is minimal.

Price riskThe consolidated entity is not exposed to any significant price risk.

Interest rate riskThe consolidated entity’s main interest rate risk arises from its cash and deposit balances. The consolidated entity incurred no debt liability during the financial year ended 30 June 2012 (2011: $nil). The consolidated entity constantly analyses its interest rate exposure. Within this analysis consideration is given to potential renewals of existing positions, alternative financing, alternative hedging positions and the mix of fixed and variable interest rates.

As at the reporting date, the consolidated entity had the following exposure to interest rate risk:

2012 2011

weighted balance Weighted Balance average average interest rate interest rate

% $ % $

ConsolidatedCash and cash equivalents 2.28 592,452 5.20 3,805,412

Net exposure to cash flow interest rate risk 592,452 3,805,412

An official increase/decrease in interest rates of one (2011: one) percentage point would have a favourable/adverse effect on profit before tax of $5,925 (2011: $38,054) per annum.

The percentage change is based on the expected volatility of interest rates using market data, historical trends over prior years and based on the consolidated entity’s on going relationships with financial institutions.

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Note 19. Financial instruments (continued)Credit riskCredit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the consolidated entity. The consolidated entity trades only with recognised, creditworthy third parties and high rated financial institutions to minimise the risk of default of counterparties. The maximum exposure to credit risk at the reporting date to recognised financial assets, is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the financial statements. The consolidated entity does not hold any collateral.

Liquidity riskVigilant liquidity risk management requires the consolidated entity to maintain sufficient liquid assets (mainly cash and cash equivalents) and available borrowing facilities to be able to pay debts as and when they become due and payable.

The consolidated entity objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, bank loans, preference shares, finance leases and committed available credit lines.

Remaining contractual maturitiesThe following tables detail the consolidated entity’s remaining contractual maturity for its financial instrument liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position.

Consolidated - 2012 weighted average interest rate

%

1 year or less

$

between 1 and 2 years

$


$

over 5 years $

remaining contractual maturities

$

non-derivatives

Non-interest bearing

Trade payables - 2,371,766 - - - 2,371,766

Other payables - 310,861 - - - 310,861

Total non-derivatives 2,682,627 - - - 2,682,627

Consolidated - 2011 weighted average interest rate

%

1 year or less

$


$


$

over 5 years $

remaining contractual maturities

$

non-derivatives

Non-interest bearing

Trade payables - 1,191,512 - - - 1,191,512

Other payables - 1,166,476 - - 1,166,476

Total non-derivatives 2,357,988 - - - 2,357,988

The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above.

Fair value of financial instrumentsUnless otherwise stated, the carrying amounts of financial instruments reflect their fair value. The carrying amounts of trade receivables and trade payables are assumed to approximate their fair values due to their short-term nature. The fair value of financial liabilities is estimated by discounting the remaining contractual maturities at the current market interest rate that is available for similar financial instruments.

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Note 20. Key management personnel disclosuresDirectorsThe following persons were directors of Pluton Resources Limited during the financial year:

Malcolm Macpherson Non-Executive ChairmanAnthony James Schoer Managing Director and Chief Executive OfficerRussell George Williams Non-Executive DirectorChenxi (Elly) Wang Non-Executive Director

Other key management personnelThe following persons also had the authority and responsibility for planning, directing and controlling the major activities of the consolidated entity, directly or indirectly, during the financial year:

Brett Clark Chief Operating Officer (appointed 1 February 2012)Pamela Kaye General CounselAnson Griffiths Project ManagerCedric Davies Community and Environment AdvisorDiane Dowdell Environment Manager (appointed 15 November 2011)Reece Power General Manager Corporate (appointed 20 February 2012)

CompensationThe aggregate compensation made to directors and other members of key management personnel of the consolidated entity is set out below:

Consolidated

2012 2011 $ $

Short-term employee benefits 1,870,142 1,477,112

Post-employment benefits 112,268 107,017

Share-based payments - 46,828

1,982,410 1,630,957

ShareholdingThe number of shares in the parent entity held during the financial year by each director and other members of key management personnel of the consolidated entity, including their personally related parties, is set out below:

2012 balance at the start of the year

received as part of

remuneration

additions Disposals/other balance at the end of the year

Ordinary sharesMalcolm Macpherson 240,289 - - - 240,289 Anthony James Schoer 493,040 - 696,931 - 1,189,971 Russell George Williams 86,021 - 370,000 - 456,021 Chenxi Wang * - - - 48,845,070 48,845,070 John McDougall ** 40,000 - - (40,000) - Pamela Kaye 65,187 - - - 65,187 Anson Griffiths 54,000 - - - 54,000 Cedric Davies 40,000 - - - 40,000 Ben Carpenter ** 40,000 - - (40,000) -

1,058,537 - 1,066,931 48,765,070 50,890,538

* Other represents individual being a director of an entity holding securities in the consolidated entity

** Other represents individual no longer being a key management personnel and not actual disposal

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Note 20. Key management personnel disclosures (continued)


received as part of

remuneration

additions Disposals/other balance at the end of the year

Ordinary sharesMalcolm Macpherson 221,058 - 19,231 - 240,289Anthony James Schoer * 2,671,790 - 43,250 (2,222,000) 493,040 Russell George Williams - - 86,021 - 86,021 Raymond John Schoer ** 4,530,239 - 36,361 (4,566,600) - John McDougall - - 40,000 - 40,000 Pamela Kaye 7,175 - 58,012 - 65,187 Anson Griffiths - - 54,000 - 54,000 Cedric Davies - - 40,000 - 40,000 Ben Carpenter - - 40,000 - 40,000

7,430,262 - 416,875 (6,788,600) 1,058,537

* Other represents transfer to family superannuation fund not controlled by the director

** Other represents individual no longer being a key management personnel and not actual disposal

Option holdingThe number of options over ordinary shares in the parent entity held during the financial year by each director and other members of key management personnel of the consolidated entity, including their personally related parties, is set out below:


Granted exercised expired/ forfeited/

other

balance at the end of the year

Options over ordinary sharesAnthony James Schoer 5,231,694 - - - 5,231,694

5,231,694 - - - 5,231,694

* Other represents individual no longer being a key management personnel and not actual disposal

All options held at the reporting date are vested and exercisable.


Granted exercised expired/ forfeited/

other


Options over ordinary sharesAnthony James Schoer 5,231,694 - - - 5,231,694

Raymond John Schoer * 4,761,857 - - (4,761,857) -

John McDougall 40,000 - - (40,000) -

10,033,551 - - (4,801,857) 5,231,694

* Other represents individual no longer being a key management personnel and not actual disposal

All options held at the reporting date are vested and exercisable.

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Note 20. Key management personnel disclosures (continued)Performance rights holdingThe number of performance rights over ordinary shares in the parent entity held during the financial year by each director and other members of key management personnel of the consolidated entity, including their personally related parties, is set out below:


Granted vested expired/ forfeited/

other


Performance rights over ordinary shares

John McDougall 40,000 - (40,000) - - Pamela Kaye 50,000 - (50,000) - - Ben Carpenter 40,000 - (40,000) - - Anson Griffiths 50,000 - (50,000) - - Cedric Davies 40,000 - (40,000) - -

220,000 - (220,000) - -


Granted vested expired/ forfeited/

other


Performance rights over ordinary sharesJohn McDougall 80,000 - (40,000) - 40,000 Pamela Kaye 100,000 - (50,000) - 50,000 Ben Carpenter 80,000 - (40,000) - 40,000 Anson Griffiths * - - (50,000) 100,000 50,000

Cedric Davies * - - (40,000) 80,000 40,000

260,000 - (220,000) 180,000 220,000 * Other represents holding when individual becoming a key management personnel

Related party transactionsRelated party transactions are set out in note 24.

Note 21. Remuneration of auditorsDuring the financial year the following fees were paid or payable for services provided by Deloitte Touche Tohmatsu, the auditor of the company:

Consolidated

2012 2011 $ $

Audit services - Deloitte Touche TohmatsuAudit or review of the financial statements 42,000 52,800

Note 22. Contingent liabilitiesContingent consideration payable (Mayala People):

Within one year 2,000,000 2,000,000

One to five years 5,000,000 5,000,000

7,000,000 7,000,000

The contingent consideration is payable to the Mayala People in respect of the Wonganin Project coexistence Agreement signed on 28 June 2011 in relation to the Irvine Island Project. The contingent consideration is subject to meeting agreed milestones through to the commencement of production. These milestones were not met in the year ending 30 June 2012 and hence the consideration owing remains unchanged.

The consolidated entity had no other contingent liabilities at 30 June 2012 and 30 June 2011.

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Consolidated

2012 2011 $ $

Note 23. CommitmentsLease commitments - operating Committed at the reporting date but not recognised as liabilities, payable:

Within one year 7,998 7,992

One to five years 150,400 39,960

158,398 47,952

Granted exploration tenement statutory expenditure commitments (100% owned)Committed at the reporting date but not recognised as liabilities, payable:

Within one year 545,916 59,724

One to five years 2,040,400 18,099

2,586,316 77,823

Operating lease commitments includes contracted amounts for offices and plant and equipment under non-cancellable operating leases expiring within 1 to 5 years with, in some cases, options to extend. On renewal, the terms of the leases are renegotiated.

Note 24. Related party transactionsParent entityPluton Resources Limited is the parent entity.

SubsidiariesInterests in subsidiaries are set out in note 26.

Key management personnelDisclosures relating to key management personnel are set out in note 20 and the remuneration report in the directors’ report.

Transactions with related partiesChenxi Wong (non-executive director) is a director of Timeone Holdings Limited and Wise Energy Group Limited which subscribed for and received 48,845,070 ordinary shares at $0.355 per share. Refer to note 15.

Receivable from and payable to related partiesThere were no trade receivables from or trade payables to related parties at the current and previous reporting date.

Loans to/from related partiesThere were no loans to or from related parties at the current and previous reporting date.

Terms and conditionsAll transactions were made on normal commercial terms and conditions and at market rates.

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Note 25. Parent entity informationSet out below is the supplementary information about the parent entity.

Statement of comprehensive income Parent

2012 2011 $ $

Loss after income tax (2,952,108) (5,652,329)

Total comprehensive income (2,952,108) (5,652,329)

Statement of financial positionTotal current assets 1,691,812 4,429,431

Total assets 75,034,061 54,057,200

Total current liabilities 3,051,950 2,601,724

Total liabilities 3,051,950 2,601,725

Equity

Issued capital 81,951,059 62,045,859

Options reserve 4,114,326 540,782

Accumulated losses (14,083,274) (11,131,166)

Total equity 71,982,111 51,455,475

Guarantees entered into by the parent entity in relation to the debts of its subsidiariesThe parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2012 and 30 June 2011.

Contingent liabilitiesThe parent entity had no contingent liabilities as at 30 June 2012 and 30 June 2011.

Capital commitments - Property, plant and equipmentThe parent entity had no commitments for expenditure at 30 June 2012 and 30 June 2011.

Significant accounting policiesThe accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 1, except for the following:

• Investments in subsidiaries are accounted for at cost, less any impairment. Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an indicator of an impairment of the investment.

• Equity-settled awards by the parent to employees of subsidiaries are recognised as an increase in investment in the subsidiary with a corresponding credit to equity and not as a charge to profit or loss. The investment in subsidiary is reduced by any contribution by the subsidiary.

Note 26. SubsidiariesThe consolidated financial statements incorporate the assets, liabilities and results of the following subsidiary in accordance with the accounting policy described in note 1:

equity holding

Country of 2012 2011name of entity incorporation % %

Dove River Pty Ltd Australia 100.00 100.00 For

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Note 27. Events after the reporting periodOn 6 July 2012, the consolidated entity was granted a mining lease over Irvine Island. The lease (M04/452) replaces exploration licence E04/1172. The issue of the mining lease is a significant step forward in the approvals process towards commercialisation of Irvine.

Following the withdrawal of the Extraordinary General Meeting of shareholders, the Board put the company’s securities into voluntary suspension on 2 July 2012 and embarked on an urgent review of the consolidated entity’s existing and future operations (including a review of its ability to acquire the Cockatoo Island project) to determine the future strategy of the consolidated entity; and pursued discussions with a number of parties who expressed interest in supporting the consolidated entity’s activities to acquire the Cockatoo Island Project from the Cockatoo Island vendors; Cliffs Asia Pacific Iron Ore Holdings Pty Limited and HWE Cockatoos Pty Ltd.

The Cockatoo Island vendors agreed to extend the acquisition execution date to 31 July 2012 to enable the consolidated entity to find a replacement funding partner.

On 31 July 2012 an Asset Sales agreement between Pluton Resources Ltd and the Cockatoo Island vendors was signed with completion of all condition precedent under the agreement taking place on 10th September 2012, and final completion of the acquisition of Cockatoo Island to take place on 28 September 2012. Cockatoo Island vendors have security over the consolidated entity’s interest in both Cockatoo Island and Irvine Island in the event the consolidated entity does not meet its financial obligations under the Asset Sale agreement.

On 1 August, the consolidated entity agreed to a binding term sheet for a proposed 50/50 unincorporated joint venture with Wise Energy Group Limited (‘WEG’).

On 13 August 2012, the consolidated entity completed an initial pre-sale agreement of ore from Cockatoo Island whereby a loan of US$2.5 million was received from WEG. On 30 August 2012 the consolidated entity completed a second pre-sale agreement of ore from Cockatoo Island whereby a loan of US$3 million was received from WEG.

On 31 August 2012, the consolidated entity announced that a binding term sheet has been agreed and executed for the proposed 50/50 unincorporated joint venture with WEG over the mining operations on Cockatoo Island.

Pursuant to the term sheet, WEG has provided a $3 million interest free loan.

WEG is considered a related party in that Chenxi Wong, a non-executive director of the company, is also a director of WEG.

No other matter or circumstance has arisen since 30 June 2012 that has significantly affected, or may significantly affect the consolidated entity’s operations, the results of those operations, or the consolidated entity’s state of affairs in future financial years.

Note 28. Reconciliation of loss after income tax to net cash from/(used in) operating activities Consolidated

2012 2011 $ $

Loss after income tax expense for the year (2,883,341) (5,640,307)

Adjustments for:

Depreciation and amortisation 154,813 193,008

Impairment of exploration and evaluation assets 788,883 3,195,460

Change in operating assets and liabilities:

Decrease/(increase) in trade and other receivables (593,700) 170,660

Increase in trade and other payables 539,571 2,074,013

Increase in other provisions 125,587 125,486

Net cash from/(used in) operating activities (1,868,187) 118,320 For

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Consolidated

2012 2011 $ $

Note 29. Non-cash investing and financing activitiesShares issued on acquisition of exploration and evaluation assets (note 15) 3,464,711 -

Options issued on acquisition of exploration and evaluation assets (note 16) 3,573,544 -

7,038,255 -

Note 30. Earnings per shareLoss after income tax attributable to the owners of Pluton Resources Limited (2,883,341) (5,640,307)

number Number

Weighted average number of ordinary shares used in calculating basic earnings per share 225,315,137 172,527,528

Weighted average number of ordinary shares used in calculating diluted earnings per share 225,315,137 172,527,528

Cents Cents

Basic earnings per share (1.280) (3.269)

Diluted earnings per share (1.280) (3.269)

37,739,148 options over ordinary shares have been excluded from the above calculations as they were anti-dilutive during the period.

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Note 31. Share-based paymentsA director’s share option plan has been established where the consolidated entity may, at the discretion of the Board, grant options over its ordinary shares to directors, senior managers and key suppliers.

An Employee Share Option Scheme has been established where the consolidated entity may, at the discretion of the Board, grant options and other performance rights over its shares to directors and employees.

Set out below are summaries of options granted under the plan:

2011

Grant date expiry date exercise price

balance at the start of the year

Granted exercised expired/forfeited/

other


30/11/08 28/02/11 $2.100 40,000 - - (40,000) -

40,000 - - (40,000) -

Set out below are summaries of performance rights granted under the plan:

2012



Granted vested expired/forfeited/

other


31/03/10 31/03/14 $1.250 240,000 - (240,000) - -

240,000 - (240,000) - -

2011



Granted vested expired/forfeited/

other


31/03/10 31/03/13 $0.750 240,000 - (240,000) - -

31/03/10 31/03/14 $1.250 240,000 - - - 240,000

480,000 - (240,000) - 240,000

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Directors’ Declaration 60

In the directors’ opinion:

• the attached financial statements and notes thereto comply with the Corporations Act 2001, the Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements;

• the attached financial statements and notes thereto comply with International Financial Reporting Standards as issued by the International Accounting Standards Board as described in note 1 to the financial statements;

• the attached financial statements and notes thereto give a true and fair view of the consolidated entity’s financial position as at 30 June 2012 and of its performance for the financial year ended on that date; and

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

The directors have been given the declarations required by section 295A of the Corporations Act 2001.

Signed in accordance with a resolution of directors made pursuant to section 295(5) of the Corporations Act 2001.

On behalf of the directors

Tony SchoerDirector

27 September 2012Melbourne

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Indepent Auditor’s Report 61

to the memBeRs oF Pluton ResouRces limited

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Indepent Auditor’s Report 62

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ASX Additional Information 63

30 June 2012

The shareholder information set out below was applicable as at 30 September 2012.

Distribution of equitable seCuritiesAnalysis of number of equitable security holders by size of holding:

number of holders of ordinary shares

1 to 1,000 391

1,001 to 5,000 658

5,001 to 10,000 458

10,001 to 100,000 1,119

100,001 and over 222

2,848

Holding less than a marketable parcel of 2,500 ordinary shares 636

equity seCurity holDersTwenty largest quoted equity security holdersThe names of the twenty largest security holders of quoted equity securities are listed below:

ordinary shares

number held % of total shares issued

WISE ENERGY GROUP COMPANY LIMITED 48,845,070 19.81

CLIFFS ASIA PACIFIC IRON ORE PTY LTD 19,462,200 7.89

BOND STREET CUSTODIANS LIMITED <OFFICIUM EMERGING RES A/C> 13,600,759 5.52

KRED ENTERPRISES PTY LTD <MAYALA PEOPLE A/C> 8,416,512 3.41

M F CUSTODIANS LTD 6,424,993 2.61

ABN AMRO CLEARING SYDNEY NOMINEES PTY LTD <CUSTODIAN A/C> 5,772,177 2.34

UBS WEALTH MANAGEMENT AUSTRALIA NOMINEES PTY LTD 5,662,828 2.30

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 5,653,359 2.29

J P MORGAN NOMINEES AUSTRALIA LIMITED 4,605,823 1.89

MCNEIL NOMINEES PTY LIMITED 4,000,000 1.62

MR ROBERT JOHN HANCOCK & MRS JULIE WYNN HANCOCK <HANCOCK S/F A/C> 3,492,000 1.42

PERSHING AUSTRALIA NOMINEES PTY LTD <PHILLIP SECURITIES (HK) A/C> 3,014,499 1.22

CITICORP NOMINEES PTY LIMITED 2,537,468 1.03

UBS NOMINEES PTY LTD 2,356,272 0.96

KRED ENTERPRISES PTY LTD <KRED ENTERPRISES CHAR A/C> 2,305,057 0.94

THE AUSTRALIAN NATIONAL UNIVERSITY 1,795,000 0.73

JP MORGAN NOMINEES AUSTRALIA LIMITED <CASH INCOME A/C> 1,738,611 0.71

MR ANTONIO ACETI 1,697,500 0.69

MR NICK NICOLAZZO 1,500,000 0.61

HUNMAR PTY LTD <HUNMAR INVESTMENTS A/C> 1,465,000 0.60

144,345,128 58.54

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ASX Additional Information 64

Unquoted equity securities number number on issue of holders

Options over ordinary shares issued ($0.30 strike price, expire 3 October 2016) 23,396,572 5

Options over ordinary shares issued ($0.831 strike price, expire 22 July 2017) 14,342,576 1

substantial holDersSubstantial holders in the company are set out below:

ordinary shares

% of total shares number held issued

WISE ENERGY GROUP COMPANY LIMITED 48,845,070 19.81

CLIFFS ASIA PACIFIC IRON ORE PTY LTD 19,462,200 7.89

BOND STREET CUSTODIANS LIMITED <OFFICIUM EMERGING RES A/C> 13,600,759 5.52

votinG riGhtsThe voting rights attached to ordinary shares are set out below:

Ordinary sharesAt the shareholders meetings each ordinary share is entitled to one vote when poll is called, otherwise each shareholder has one vote on a show of hands.

There are no other classes of equity securities.

tenementsDescription tenement number interest owned

Irvine Island, WA EL 04/1172 100.00%

West Kimberley, WA PL 04/242 50.00%

Dover River, Tasmania 37km2 EL 14/2006 100.00%

Cethana, Tasmania 9km2 EL 29/2006 60.00%

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