view - Western Desert Resources

WESTERNDESERTRESOURCESlimitedANNUAL REPORT 2010

CONTENTSPageChairman’s Report 1A B N 4 8 1 2 2 3 0 1 8 4 8Managing Director’s Report 2Review of Exploration Projects 4Schedule of Tenements 15Financial Report 16Directors’ Declaration 72Independent Auditor’s Report 73ASX Additional Information 75Corporate Directoryinside cover

CHAIRMAN’SREPORTWESTERN DESERT RESOURCES LIMITEDDear fellow shareholders,The past year has been one ofcontrolled growth and consolidationfor your Company.As a result of Mick Billing’sresignation in January 2010, I wasasked to step up, in a caretaker’s role,to the position of Non ExecutiveChairman of the Company. It is a roleI have enjoyed immensely and I amgrateful for the support given by eachof the Directors. On behalf of theBoard, I wish to thank Mick Billing forhis contribution in assisting in theearly developmental stages of ourCompany as we began to establishcredibility in the market-place.In June of this year WDR furtherstrengthened our Board of Directorswith the appointment of Phil Lockyerwho brings to our company a wealthof experience, particularly in theestablishment of mining proceduresand infrastructure in new miningoperations. Welcome to Phil.During the year your Board has beenencouraged by the results of ourexploration activities, particularly atthe Roper Bar project, NorthernTerritory, cumulating in ourannouncement in the latter part of2009 in which an inaugural JORCcompliant mineral resource wasestablished from a very limiteddrilling season. It is expected to buildsolidly upon those results over thenext few months as further areas atRoper Bar are drilled and infilldrilling takes place.The major structural event that hasoccurred in the company’s operationsduring the year has been the buy-outof our Joint Venture partner, Itochu,in what is Western Desert Resourcesmajor focus, the Roper Bar project.We believe the buy-back will prove tobe of significant benefit to ourshare-holders as our drillingprograms continue to indicatematerial growth in our already proveniron ore resource. Somewhatunfortunately, the value of the buyback in our Balance Sheet does notreflect the exploration monies spentby Itochu on the project, due to theexisting Accounting Standards,however I feel sure that WesternDesert shareholders will certainlyreap the benefit of the low priced buyback in years to come.These are exciting times for ourcompany and we are now welladvanced in developing ourpre-feasibility study with initialprojections looking very good. OurManaging Director, Norm Gardnerwill elaborate on progress madeduring the year on both Roper Barand our other projects.To ensure your Company has thenecessary cash resources to meet itson-going commitments, amountstotalling $11.9 million, before costs,were raised during the year as newcapital. The make-up of this total wasthe successful renounceable rightsissue at 40 cents realizing $8.6 million,which closed in December 2009, withthe balance comprising the exerciseof options throughout the yearamounting to $2 million and aplacement to sophisticated investorsof $1.3 million during July, 2009.The Company is currently consideringoptions for new capital raisings to fundfurther exploration activity and thedevelopment of the Roper Bar projectfor 2011.The Company also raised $0.75 millionfrom the sale of its Manganesetenements during the year.Looking forward, the Company is alsoexamining the feasibility of splittingout our non iron ore projects fromWDR to enable WDR to concentrate onits primary objective of becoming amajor iron ore producer and exporter.This is still a work in progress and willultimately require shareholderapproval if it is to proceed.I wish to take this opportunity ofthanking our loyal and patientshareholders for your continuedsupport as the Company endeavoursto bring to you a worthy investmentproject.Finally, I wish to formally recognisethe outstanding contribution by ourMD, Norm Gardner, for his energeticendeavours in steering the companytowards its major goal of establishinga significant iron ore mine in the NT.My thanks also go to our explorationsupport team led by our ExplorationManager, John Fabray, and to ourCompany Secretary/Chief FinancialOfficer, Laurie Ackroyd and his team,for their tireless input behind thescenes.David ClokeActing Chairperson.1

MANAGINGDIRECTOR’SREPORTNorm GardnerManaging Director2010 is proving to be more of thesame as far as the market sentimentis concerned. However at WesternDesert Resources we are becomingvery confident in the ability of ourRoper Bar Iron Ore project to deliverup a mining prospect in the near future.We finished last calendar year with abang including excellent drillingresults and ultimately 3 resourcestotalling over 115,000,000 tonsincluding 7,000,000 tons of DirectShipping Ore from a very limiteddrilling program.WDR had a very successful underwrittencapital raising (renounceablerights issue) late last year offeringcurrent shareholders the opportunityto participate; the Company wasdelighted with the response andsupport shown with nearly 90%participation. Our timing was mostfortunate; for little did we know thenthat the Mining Industry as a wholewould get embroiled in the politicalturmoil surrounding the Government’splans to introduce significanttax imposts on the industry as itsreward for aiding the country insurviving the Global Financial Crisisvirtually unscathed. This has had astrong negative effect towardsinvestment across our industry. To bepositive however, I firmly believe thata solid project will receive marketsupport and I strongly feel that RoperBar will fall into that category.It was a long wait for WDR to get backinto our Roper Bar project area dueto an unusually long and late wetseason. However we have madehuge progress behind the scenes withdesktop studies. We have finalised andpresented a robust scoping study andfinancial model and are continuing tomake further progress relating tometallurgical test work.We have also secured additionalground adjacent to our MountainCreek iron ore project through a JointVenture with Tianda Resources(Australia) Pty Ltd.The big news for WDR this year is thebuyback of Roper Bar from Itochu;regaining 100% control enables us toconsolidate the Iron Ore assets andoffer a significantly larger package topotential investors. WDR has alsosecured the Marketing rights to theoff take which adds potentiallysignificant value to our project. Itwould be remiss of me not to publiclythank Itochu for their involvement ingetting the project underway and fortheir assistance by way of significantlyfunding the exploration costs alongthe way.This year we expect to prove upenough Direct Shipping Ore to give theconfidence to move full steam intoFeasibility Studies and progress fromexploration to development.Because of the high expectation fromdrilling we have committed toEnvironmental Studies and negotiationswith Traditional Owners forcompensation have started.Applications for Mining Leases havealso been submitted.2

WESTERN DESERT RESOURCES LIMITEDI would like to thank all of ourshareholders for their loyalty; it canbe a long time waiting for resultshowever we are using our bestendeavours to ensure we maintainsome continuity of news flow.I would also like to thank our staffand contractors who have continuedto provide great results during oftentrying times.For now it will be onwards andupwards as we continue to bring ourRoper Bar project towardsdevelopment and ultimately miningand export.ROPER BAR IRON ORE PROJECT - OUTCROP OF IRONSTONE AT AREA DNorm GardnerManaging DirectorAs at the time of writing this reportwe are starting to get an influx ofdrilling results that will ultimatelyextend all of our resource bases andadd new resources to areas previouslyuntested.There is no doubt that our project stillhas significant areas untested and wedo not yet know if we have tested allof the best areas of mineralisation;we have concentrated on outcroppingareas and will be looking at magneticdata from field work this year to plandrilling for the coming months.The Company is also looking forwardto further testing of Area’s A, B, C andthe Mountain Creek/ Tianda areas.There is expectation that these areas,as well as some under cover locations,have the capacity to significantlyenhance our resource base.WDR is also reviewing a number ofcorporate options to ensure ourshareholders get the best possibleexposure to value through our currentprojects. We will continue to look forprojects that will enhance our portfolioand investigate all opportunities forpotential growth in our main projectsRoper Bar and Mountain Creek.3

REVIEW OFEXPLORATIONPROJECTSROPER BARIRON ORE PROJECT(IRON ORE – NORTHERN TERRITORY)WDR Iron Ore Pty Ltd 100%The Roper Bar project consists of sixtenements (EL 24307, EL 24655, EL24944, EL 25672, EL 26759 and EL26992), which are located about300km east of Katherine and 40kmfrom the Gulf of Carpentaria.In July 2010 WDR purchased theItochu 20% interest for a cashconsideration of $2.75 million. Itochualso relinquished its marketing rightsas a result of the transaction. WDRcurrently owns 100% of the project.Hematite mineralisation occurswithin the Sherwin Formation (SIM)of the Mesoproterozoic Roper BarGroup. The mineralisation is hostedby oolitic sandstones and the SIM canbe up to 20m thick.LOCATION OF PRINCIPAL COMPANY INTERESTSLOCATION OF THE ROPER BAR IRON ORE PROJECT – NORTHEN TERRITORYThe micrograph shows a typicalsection from a hematitic mineralisedzone. The round oolitic grains areclearly visible surrounded by a matrixconsisting of quartz, fine hematiteand siderite.4

WESTERN DESERT RESOURCES LIMITEDThe exploration program for 2009included airborne magnetic surveys,gravity surveys, geological mappingand resource drilling.RC drilling commenced in the projectarea on 2nd July 2009 and finishedduring October 2009 with 303 holescompleted for a total of 10,760 metres.Drilling was carried out in Areas D, Eand F and resource estimates for theseareas were carried out by AMCConsultants Pty Ltd.The results of this work indicated thatthere was an Inferred Mineral Resourceof 117Mt at a grade of 39%Fe in thethree areas tested (see table below).Within the Inferred Mineral Resourceof 14Mt at 49%Fe at area F East thereis a higher grade DSO component of7Mt at 59%Fe.DEFINED MINERAL RESOURCES AT ROPER BAR PROJECTThe 2010 exploration program wasdelayed for a number of weeks due tolate heavy wet season rainfall whichdamaged the main unsealed accessroute to the site along the SavannahWay. Field activities commenced in lateJuly and drilling started in early August.Two RC percussion drilling rigs havebeen drilling resource definition holesin Area E South and on the westernend of Area F West.Gravity surveying has been completedover Area F West and Area E East. Theresults from the work in Area E Eastindicate that there is a prospective highgrade zone in the area which will betested by drilling this year.5

ROPER BARIRON ORE PROJECT(IRON ORE – NORTHERN TERRITORY)The planned drilling program ofapproximately 25,000 metres includesresource definition drilling in Areas FEast, E East, E South and D, andexploration drilling in Areas B, C andG. It is hoped that this work will lead toresource estimates in all of theseareas. The current exploration targetfor the Roper Bar project is 600-800 Mtat a grade of greater than 40%Fe.PROPOSED ROPER BAR EXPLORATION TARGETS FOR 20106

WESTERN DESERT RESOURCES LIMITEDROPER BAR IRON ORE PROJECT -TOWARDS THE FUTUREWhilst the study currently utilisesgrades and recovery as at the time ofwriting our report we expect that therewill be continuous improvement of theprocess which will significantly enhanceand optimise the financial modelassociated with the project.WDR is also progressing a number ofitems in parallel to ensure we canmeet our time lines; long lead itemssuch as Environmental Impact Studyhave commenced as have applicationsfor mineral leases over the mine siteand infrastructure areas. WDR willcontinue to keep shareholdersinformed as we meet milestone datesand further progress is achieved.A scoping study has been finalisedwhich defines the project into2 development stages.(a) Mining and trans-shipment ofDirect Shipping Ore (“DSO”) hasbeen determined and therequirements for site preparationand regional infrastructureidentified. Western Desert is nownegotiating compensationarrangements with the TraditionalOwners in conjunction with theNorthern Land Council. We havehigh expectation that timelines canbe reached with DSOexported within 2 years.(b) Initial capital and operating costsindicate a robust low capital entryinto the Iron Ore market.Infrastructure developed duringthis stage will be further utilisedwith the concept of introducing anIron Ore concentrate from lateryears during project development.The concept for ore beneficiation iscurrently undergoing trials. Individualcomponents of the process includinggravity separation and flotation havebeen applied with encouraging results.This process will be continually refinedover the next 6 months.MINERAL RESOURCEAt 30th June 2010 Inferred MineralResources at the Roper Bar Iron OreProject stood at:The Mineral Resources were calculatedat a lower 30% Fe cut-off.DEPOSIT TONNES Fe SiO2 P Al2O3 LOI(Mt) (%) (%) (%) (%) (%)Area D 90.7 37.2 31.5 0.008 3.15 9.6Area E 12.3 44.0 24.6 0.01 1.8 8.8Area F 14.2 49.5 22.0 0.01 3.2 2.5TOTAL 117.2 39.4 29.6 0.01 3.0 8.6The Mineral Resources statement is based on information compiled by SharronSylvester who is a full-time employee of AMC Consultants Pty Ltd and aMember of the Australian Institute of Geoscientists and has sufficientexperience that is relevant to the style of mineralisation and type of depositunder consideration to qualify as a Competent Person as defined in the JORCCode (2004). Sharron Sylvester consents to the inclusion of this information inthe form and context in which it appears.7

MOUNTAIN CREEKPROJECT(IRON ORE – NORTHERN TERRITORY)WDR Iron Ore Pty Ltd – 100% EL 27143,earning up to 70% in EL 25688 from TiandaResources (Australia) Pty LtdThe Mountain Creek Project liesimmediately to the north west of theRoper Bar Iron Ore Project andconsists of one granted tenement (EL27143) owned 100% by WDR and EL25688 owned by Tianda Australia PtyLtd (Tianda) in which WDR can earn a70% interest.LOCATION OF MOUNTAIN CREEK AND TIANDA PROJECTSWork commenced on this new projectduring 2009. A detailed airbornemagnetic survey was flown and agravity survey was completed adjacentto the Hells Gate Hinge Line. A programof reconnaissance rock chip samplingand geological mapping was alsocarried out. Sherwin Formation (SIM)was identified and rock chip sampledin the south eastern part of EL 27143.Samples from zones of hematiticmineralisation returned values of up to62% Fe. The SIM was also identified bythe gravity and magnetic data.8

WESTERN DESERT RESOURCES LIMITEDAREA PROSPECTIVE FOR IRON ORE – MOUNTAIN CREEK PROJECTFurther work is planned for 2010 including an airborne magnetic survey over theTianda EL, extending the gravity surveys and exploratory RC percussion drilling ofthe SIM adjacent to the Hells Gate Hinge Line.9

ROVER PROJECT(GOLD/COPPER – NORTHERN TERRITORY)TNG Ltd 49% – WDR Base Metals Pty Ltd51% currently earning 80%The Rover Project is a joint venturebetween WDR Base Metals Pty Ltd(WDR) and Tennant Creek Gold Pty Ltd(TNG), in which WDR has currentlyearned 51% and has the right to earn80%. It covers an area of 3,100 squarekilometres south-west of TennantCreek, and includes granted licencesEL 24471 and EL 25581.During 2009 and 2010 explorationactivities were concentrated on EL25581 which is located immediatelyeast of the Rover 1 prospect owned byWestgold Resources Ltd.DIAMOND DRILLING AT EAST ROVER – JUNE 2010Rover 1 is a significant gold and copperdiscovery with a current JORC resourceof 2.4Mt (Indicated and Inferred) at4g/t Au and 1.5% Cu.Adelaide Resources Ltd are alsoexploring the Rover 4 prospect andhave recently announced intersectionsof 3m at 7.8 g/t Au and 1.3%Cu, and 3mat 1.4%Cu. The primary targets for theRover joint venture are ironstonedeposits similar to Rover 1 and Rover 4containing gold and copper.10

WESTERN DESERT RESOURCES LIMITEDLOCATION OF DRILLHOLES – EAST ROVERA drilling programme consisting ofseven RC percussion holes wascompleted in February 2010. Poorweather led to the work beingterminated early. Seven holes werecompleted with only three reaching theplanned target depths (holes ERRC001,3 and 7). The remaining 4 holesencountered very strong water flows inWiso Basin sediments which overliethe prospective Proterozoic rocks andcould not be finished to the planneddepths. Three holes (ERRC002, 005and 006) were deepened by diamonddrilling during May/June 2010. All ofthe holes intersected a similarsequence of volcanic or volcaniclasticorigin probably belonging to the FlynnSubgroup which is younger than theprospective Warramunga Formation.Interesting phosphate values werereported from the basal MontejinniLimestone in the Wiso Basin sequencewhich overlies the basement rocks inthis area. Values of up to 7m at 4.5%P2O5 from a downhole depth of 97m inhole ERRC005 were found. Furtherwork will be undertaken to discoverwhether economic zones of phosphatemineralisation occur close to thesurface within the Rover project.11

SPRING HILL PROJECT(GOLD – NORTHERN TERRITORY)WDR Gold Pty Ltd – 100%Gold Price - $Aus/Oz& $US/Oz16001400120010008006004002000Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10GOLD PRICE12The project consists of two grantedtenements (EL22957 and ML23812) andis located about 200km south east ofDarwin in the Top End of theNorthern Territory.Interest in the Spring Hill project hasincreased with the rise in the price ofgold to historical highs. Historicaltestwork suggested a reasonablerecovery using heap leach with orecrushed to 12mm. As new processes ingold leach technology evolve, the companycontinues to review the options for optimalcommercialisation of the deposit.A program of reconnaissancescintillometer traversing wasundertaken over the Spring Hill project.Further work is warranted given theproximity of Spring Hill to theThundelarra discoveries and thesimilarity in the geology of the two areas.

WESTERN DESERT RESOURCES LIMITEDLIMBA PROJECT(URANIUM AND BASE METALS – NORTHERN TERRITORY)Red Desert Minerals Pty Ltd – 100%Red Desert Minerals Pty Ltd – 100%This project consists of one grantedexploration licences (EL 25402). Twotenements (EL 25373 and EL 25554)were surrendered during the year. Thearea is prospective for uranium andbase metals.An EM survey was flown with ahelicopter-based GeosolutionsREPTEM time domain system onnorth-south lines spaced at 200m overthe northern part of EL 25402. Theaim of the survey was to delineate anybedrock conductors associated withsulphide mineralisation within theIllogwa Schist Zone. This major shearzone is located in the northern part ofthe EL and is 3km wide and strikeseast-west for a distance of morethan 25km.Mithril Resources Ltd have used EMmethods to locate zones of sulphidemineralisation on their adjoiningtenements to the east of EL 25402.Further work is required to test the EMtargets delineated by the survey.13

MUSGRAVE PROJECT(BASE METALS/GOLD – NORTHERN TERRITORY)Joint venture with various partiesThe Musgraves project consists offarm-in agreements over six explorationlicence applications owned by TNG Ltdand Ferrum Crescent Ltd (formerlyWashington Resources Ltd). Thesetenements are located on AboriginalFreehold land in the south westerncorner of the Northern Territory.Initial meetings were held with theTraditional Owners at Mutitjulu andDocker River during the year andpreliminary indications are that therewill be approval for access negotiationsto take place.Unless otherwise stated the informationin this report that relates to ExplorationResults, Mineral Resources or OreReserves is based on informationcompiled by John Fabray who is amember of the Australasian Instituteof Mining and Metallurgy. Mr Fabray isa full time employee of Western DesertResources Ltd and has sufficientexperience relevant to the styles ofmineralisation under considerationand to the subject matter of the reportto qualify as a Competent Person asdefined in the 2004 edition of theAustralasian Code for the Reporting ofExploration Results, Mineral Resourcesand Ore Reserves (JORC code). MrFabray consents to the inclusion in thereport of the matters based on hisinformation in the form and context inwhich they occur.Information in this report describinghistorical production figures andassays has been derived from open filecompany reports in the public domain.14

WESTERN DESERT RESOURCES LIMITEDProject Name Tenement Tenement Name Area Registered Holder or Nature & % JointSq km Applicant Company's Interest Venture PartnerRoper Bar EL 24307 Roper Bar North 278.50 WDR Iron Ore Pty Ltd 100%Roper Bar EL 24665 Roper Bar Ext. 610.00 WDR Iron Ore Pty Ltd 100%Roper Bar EL 24944 Roper Bar East 392.30 WDR Iron Ore Pty Ltd 100%Roper Bar EL 25672 Roper Bar 1 129.20 WDR Iron Ore Pty Ltd 100%Roper Bar EL 26759 St.Vidgeon Sth 767.90 WDR Iron Ore Pty Ltd 100%Roper Bar EL 26992 Roper Bar South 99.19 WDR Iron Ore Pty Ltd 100%Mountain Creek EL 27143 Mountain Creek 1026.94 WDR Iron Ore Pty Ltd 100%Tianda JV EL 25688 Tianda 99.47 Tianda Resources (Aust) 0 (a) Tianda Resources (Aust)Pty LtdPty LtdRover JV EL 24471 Explorer 913.43 TNG Limited 51% (b) TNG LimitedRover JV EL 25581 Rover 1170.00 TNG Limited 51% (b) TNG LimitedRover JV ELA 25882 McLaren Creek 1207.00 TNG Limited 51% (b) TNG LimitedRover JV ELA 25587 Gosse River 82.00 TNG Limited 51% (b) TNG LimitedNuPower JV EL 25338 Burt Plain 405.80 WDR Base Metals Pty Ltd 100% NuPower Resources LtdNuPower JV EL 25657 Clough's Dam 672.40 WDR Base Metals Pty Ltd 100% NuPower Resources LtdLimbla EL 25402 Limbla 4 364.80 Red Desert Minerals Pty Ltd 100%Spring Hill MLN 23812 Spring Hill ML 10.35 WDR Gold Pty Ltd 100%Spring Hill EL 22957 Spring Hill EL 36.57 WDR Gold Pty Ltd 100%Tennant Creek MLC 624 Hopeful Star 0.05 WDR Gold Pty Ltd 100%Tennant Creek MLC 632 Hopeful Star 0.03 WDR Gold Pty Ltd 100%Tennant Creek MLC 625 Golden Mile 0.08 WDR Gold Pty Ltd 100%Tennant Creek MCC 1035 M18 0.18 WDR Gold Pty Ltd 100%Tennant Creek MCC 1112 M19 0.34 WDR Gold Pty Ltd 100%Tennant Creek MCC 1113 M19 0.40 WDR Gold Pty Ltd 100%Tennant Creek MCC 1117 M19 0.40 WDR Gold Pty Ltd 100%Tennant Creek MCC 1118 M19 0.36 WDR Gold Pty Ltd 100%Tennant Creek MCC 1119 M19 0.16 WDR Gold Pty Ltd 100%Tennant Creek MCC 1120 M19 0.25 WDR Gold Pty Ltd 100%Tennant Creek MCC 1040 M20 0.20 WDR Gold Pty Ltd 100%Tennant Creek MCC 1041 M20 0.30 WDR Gold Pty Ltd 100%Tennant Creek MCC 1089 M29 0.36 WDR Gold Pty Ltd 100%Tennant Creek MCC 1090 M29 0.40 WDR Gold Pty Ltd 100%Tennant Creek MCC 1091 M29 0.40 WDR Gold Pty Ltd 100%Tennant Creek MCC 1092 M29 0.40 WDR Gold Pty Ltd 100%Tennant Creek MCC 1093 M29 0.40 WDR Gold Pty Ltd 100%Tennant Creek MCC 1094 M29 0.40 WDR Gold Pty Ltd 100%Tennant Creek MCC 1095 M29 0.40 WDR Gold Pty Ltd 100%Antrim 5 EL 27458 Beetaloo 544.00 WDR Base Metals Pty Ltd 100%Antrim 5 EL 27459 Toudinny Creek 544.00 WDR Base Metals Pty Ltd 100%Antrim 5 EL 27475 Bundara Creek 543.00 WDR Base Metals Pty Ltd 100%Antrim 8 EL 27472 Larrimah East 395.00 WDR Gold Pty Ltd 100%Antrim 8 EL 27473 Maryfield East 297.00 WDR Gold Pty Ltd 100%(a) The company has the right to earn up to a 70% interest in the project.(b) The Company is earning the right to earn an 80% interest and has met the 51% milestone target and that interest is to transferred to the company.15

FINANCIALREPORTFor year ended 30 June 2010CONTENTSPageDirectors’ Report 17Auditor’s Independence Declaration 32Corporate Governance Statements 33Consolidated Statementof Comprehensive Income 37Consolidated Statement of Financial Position 38Consolidated Statement of Change in Equity 39Consolidated Statement of Cash Flows 41Notes to Financial Statements 42Directors’ Declaration 72Independent Auditor’s Report 73ASX Additional Information 7516

WESTERN DESERT RESOURCES LIMITEDDIRECTORS’ REPORTThe Directors present this directors report and theattached annual financial report of Western DesertResources Limited for the financial year ended 30 June2010. In order to comply with the provisions of theCorporations Act 2001, the Directors report as follows:Directors and OfficersThe names and details of the directors and officers ofthe company during or since the end of the financialyear are:David John Cloke FCA - Non-Executive Director andappointed Chairman 20th January 2010David is a founding Director of the company, and wasCompany Secretary until June 2007. He was a partnerwith Deloitte’s for 30 years and has had over 40 years’experience in the accounting profession in Australia andCentral Africa. He was Managing Partner of Deloitte’sthree offices in the Northern Territory and a member ofthat partnership’s national management board inAustralia. He has a strong audit background and was thelead partner responsible for the audits of national andinternational mining companies.He is Finance Director for a substantial propertycompany in the Northern Territory.Norm has an in depth knowledge of the constructionrequirements of the mining industry. He has also beeninvolved in a number of successful property developments.He is also a director of AIM and ASX listed company ThorMining PLC.Graham John Bubner BSc (Hons)Non-Executive DirectorGraham is a founding Director of the company. Grahamgraduated from Adelaide University with a doublegeology/geophysics degree in 1976, and a first classHonors’ degree in geophysics the following year. Hegained experience in exploration for multiple commoditiesincluding base metals, precious metals, uranium,diamonds, iron ore and coal throughout west-centralAustralia with CRA Exploration Pty Ltd for 16 years.During this time he participated in major discoveries,such as diamonds at Argyle and uranium at Kintyre.Four years in the Middleback Ranges on Eyre Peninsulawith first BHP Billiton Limited and then Onesteel Limitedafforded specific experience in exploration for iron ore.He is a member of the Australian Society of ExplorationGeophysicists, Society of Economic Geologists and theAustralian Institute of GeoscientistsMichael Robert Billing BBus ASANon-Executive Chairman (Resigned 13th January, 2010)Mick Billing was appointed a director in February 2007.Mr Billing resigned his position as a director andChairman on 13th January, 2010.Norman Wayne GardnerManaging DirectorNorm Gardner is a founding Director of the company,which was incorporated in October 2006. Norm establishedand is sole owner of a concrete construction businessbased in the Northern Territory. His company has beeninvolved in significant mining projects in the NorthernTerritory, South Australia and Western Australia,including development and operation of the backfillplant at the Granites Gold Mine.17

DIRECTORS’ REPORTMichael Kevin AshtonNon-Executive DirectorMick was a founding Director of the company and heldthis position until April 2007. He was appointed analternate Director of the company in May 2007, and wassubsequently appointed a Director of the company inAugust 2008. He owns a timber manufacturing businesslocated in South Australia and is a major shareholder ina successful exploration drilling company located inVictoria, which has both Australian and internationalactivities. Mick has extensive knowledge and experiencein the exploration and mining industries, which datesback 40 years.He is also a director of AIM and ASX listed companyThor Mining PLC.Phillip Clive LockyerNon Executive Director (Appointed 1st June, 2010)Phil Lockyer has more than 40 years experience in theminerals industry and has held managerial positions innickel, gold, lead and zinc operations, includingmanagerial positions with WMC Resources Limited; asExecutive Director of Operations and Projects forDominion Mining Limited; and as Executive Director ofOperations for Resolute Limited. A graduate from theWA School of Mines (Mining Engineering) and the formerBallarat School of Mines (Metallurgy), Mr Lockyer iscurrently Chairman of the Minerals and Energy ResearchInstitute of W.A. and is non-executive Director ofSt Barbara Limited, Focus Minerals Limited, CGA MiningLimited and Swick Mining Services Limited.Laurie AckroydChief Financial Officer/Company SecretaryMr. Laurie Ackroyd was appointed as Chief FinancialOfficer and Company Secretary in April 2009. Laurie is anaccountant with over 45 years experience in the buildingservices, manufacturing and transportation industrieswhere he has held Director and Senior financial executiveand Company Secretarial positions.Mr Ackroyd also carries out the role of Chief FinancialOfficer and Company Secretary for Thor Mining PLC,which is listed on the United Kingdom AlternativeInvestment Market (“AIM”) and the ASX, pursuant to aservices agreement between the Western DesertResources Limited and Thor Mining PLC.Directorships of other listed companiesName Company Period of DirectorshipN W Gardner Thor Mining PLC Since April 2008M K Ashton Thor Mining PLC Since April 2008P C Lockyer St Barbara Limited Since December 2006Focus Minerals Limited Since December 2005CGA Mining Limited Since January 2009Swick Mining Services Limited Since February 2008Mr Lockyer is a Chartered Professional (Management) ofthe Australian Institute of Mining and Metallurgy and aFellow of the Australian Institute of Company Directors.He will stand for election as a Director of WDR at theCompany’s AGM to be held in November, 2010.18

WESTERN DESERT RESOURCES LIMITEDPrincipal ActivitiesThe principal continuing activity of the consolidated entityis the exploration for iron ore, gold, base metals, uraniumand other economic mineral deposits, and thedevelopment of Mining Operations at the Roper Barproject, Northern Territory.Financial ResultsThe net result of operations for the year was a loss afterincome tax of $2,034,540 (2009: $7,078,377).DividendsNo dividends were paid or declared since the start of thefinancial year, and the Directors do not recommend thepayment of dividends in respect of the financial year.Review of Operationsa) OverviewDuring the year the consolidated entity carried outexploration on its tenements and applied for oracquired additional tenements with the objective ofidentifying iron ore, manganese, uranium, gold,base metals and other economic mineral deposits.In respect of the Roper Bar, Northern Territory ironore project the consolidated entity has sought toquantify the level of resources located to date at theproject site and to commence preliminary work todevelop a mining and exporting operation.b) Review of Operations durring the yearIn August 2009 the consolidated entity announcedthe first of a number of Drill results which confirmedextensive hematitic Ironstone mineralisation fromArea D at the Roper Bar project, Northern Territory.A few days later the consolidated entity furtherannounced significant high grade assay results fromArea F, Roper Bar project which gave the firstindication of possible Direct Shipping Ore from withinthe project area.In September 2009 the consolidated entity advisedthat new drill results from Area D confirmed acontinuation of the extensive hematitic ironstonemineralisation at the Roper Bar Iron Ore project andfurther intersections of Direct Shipping Ore.The same month the consolidated entity announced amajor expansion of its Northern Territory Iron Orefootprint which had been expanded by the gaining ofthe 1,000 square kilometer Mountain Creek explorationlicense EL27143 which is situated to the north west ofthe emerging Roper Bar project, on the Western edgeof the Gulf of Carpentaria.During October 2009, the consolidated entityannounced new drilling and assay results that againextended the high grade mineralisation in Area F ofthe Roper Bar project. Further good news followedfrom the initial results obtained from Area E of theproject with the locating of significant intersections ofhematite mineralisation which demonstrated a levelof thickness greater than observed in previousdrilling. In a most successful month for the companyon 20th October 2009 the consolidated entityannounced a 90 million tonne inaugural JORCcompliant mineral resource estimate from the verylimited areas drilled and assayed to date. Additionalannouncements to the market kept investorsinformed of additional drilling results through toDecember, 2009.In late December, 2009 the combined JORC compliantresource from Areas D, E and F was increased to 116million tones.The consolidated entity announced that it would sellits 45% interest in Manganese exploration tenementsat Gladstone, Queensland and at McArthur River,Northern Territory to Genesis Resources Limited fora cash consideration of $750,000 concluding the saleon 26th November 2009.19

DIRECTORS’ REPORTb) Review of Operations ... continuedWith the need to develop the Roper Bar project areaadditional funding of the consolidated entity wasrequired. The consolidated entity announced itsintentions to the market on 9th November 2009 byinforming that a renounceable pro-rata rights issueentitlement would be made to all shareholders onthe basis of one new share for every five shares heldon the record date. Pricing was set at 40 cents pershare which represented a 32% discount to thevolume weighted average price during the 5 tradingdays prior to the announcement. Documents toshareholders were mailed on 30th November2009.The rights issue was most successful in that21,380,713 new shares were issued pursuant to therights issue raising over $8.5 million. In addition, topermit the holders of options to participate in therights issue, further monies were received for theexercise price. All monies were received prior to theChristmas break and the new shares were listed fortrading immediately after Christmas. The Directorsappreciated the level of support shown by existingshareholders with valid acceptances for over 85% ofthe rights entitlements. Western Desert ResourcesLimited also received a significant number ofapplications for the shortfall comprising of 8,249,282shares. Due to the high level of support for the rightsissue the shortfall applications were largely unableto be accommodated and the additional monies werereturned to shareholders just prior to Christmas.In December 2009 the consolidated entity announcedthat significant rock chip results had been receivedfrom the Mountain Creek project giving furtherencouragement to increasing the level of resourcewithin the Roper Bar iron ore province.Work commenced on the East Rover Gold/Copperproject near Tennant Creek during December 2009 inpreparation for drilling late January 2010.Subsequently, adverse weather conditions led to anearly termination of the program following thetesting of seven magnetic targets. A further diamonddrilling program commenced in June, 2010.20The New Year brought the resignation of theconsolidated entity’s inaugural chairman Mr. MickBilling who wished to pursue personal interestselsewhere. The Board of Directors conveyed theirthanks and appreciation to Mick for his guidance andleadership over the previous 3 years and in particularthe transition of the consolidated entity through theIPO process.The consolidated entity announced in February, 2010that it has entered into a contractual relationship withTianda Resources (Australia) Pty Ltd for a farm-inand joint venture over Exploration License 25688. TheTianda tenement is strategically close to WDR’sMountain Creek iron ore project. The agreementprovides for WDR to spend $850,000 on explorationwithin 3 years. On successful completion of the farm-inWDR will acquire a 70% interest in the tenement anda joint venture is to be formed.In early May, 2010 Western Desert Resourcesannounced a significant step in its history in that ithad negotiated to buy back the 20% interest owned byItochu of the Roper Bar iron ore project tenementsallowing WDR to regain 100% control. Theconsideration of $2.75 million was payable in cashand subsequently settled on 16th June, 2010.During the year of review the consolidated entity hascontinued exploration for gold, base metals anduranium on tenements at its Spring Hill and Limblaproject areas in the Northern Territory.Mr. Phil Lockyer, a highly experienced metallurgistand mining executive, was appointed to the Board on1st June, 2010 as a non-executive Director and willtake a special interest in the development of theRoper Bar iron ore project.The consolidated entity continues to hold itsinvestment in Thor Mining PLC. While Thor continuesto hold its flagship project, the Molyhil molybdenum/tungsten deposit some 220 kilometres north east ofAlice Springs, it has added to its portfolio with a 51%interest in the Dundas Gold project situated withinthe Albany-Fraser Province at the margin of WesternAustralia’s gold rich Archaean Yilgarn Craton.The Chairman’s report and the Managing Director’s reportare contained in the Annual Report and contain acomprehensive review of operations.

WESTERN DESERT RESOURCES LIMITEDChanges in State of AffairsDuring the financial year there was no significant changein the state of affairs of the consolidated entity other thanthat referred to in the financial statements or notesthereto.Subsequent EventsIn late July, 2010 the Company informed the market ofits drilling plans for the season ahead at the Roper Barand Mountain Creek iron ore projects. The drillingprogram had been considerably delayed due to extremewet conditions earlier in the year which washed outroads and restricted access to site.At the date these financial statements were approved,the Directors were not aware of any significant postbalance sheet events other than those set out in thenotes to the financial statements. The company hasmade announcements since the close of the financialyear of drilling activities and results in the normalcourse of business and as required pursuant to the ASXrules and disclosure obligations.Environmental DevelopmentsThe consolidated entity carries out exploration activitieson its properties in the Northern Territory. No miningactivity has been conducted by the consolidated entity onits properties. The consolidated entity’s exploration operationsare subject to environmental regulations underthe various laws of, the Northern Territory and theCommonwealth. While its exploration activities to datehave had minimal environmental impact, the consolidatedentity has adopted a best practice approach in satisfactionof the regulations of relevant government authorities.Future DevelopmentsDisclosure of information regarding likely developmentsin the operations of the consolidated entity in futurefinancial years and the expected results of thoseoperations is likely to result in unreasonable prejudice tothe consolidated entity. Accordingly, this information hasnot been disclosed in this report.Directors and Officers ShareholdingsThe following table sets out each director and officer’srelevant interest in shares in the company as at the dateof this report.Listed Options Unlisted OptionsFully paid to acquire to aquireDirectors & ordinary shares ordinary shares ordinary sharesOfficers Number Number NumberD J Cloke 2,426,998 126,363 1,000,000-N W Gardner 6,621,966 - 1,000,000G J Bubner 4,209,191 249,760 1,000,000P C Lockyer - - -M K Ashton 14,056,440 354,611 1,000,000L Ackroyd - - 700,00027,314,595 730,734 4,700,000The above table includes shares held by related parties of directors.Share options granted to directors and seniormanagementDuring and since the end of the financial year anaggregate 1,200,000 share options were granted to thefive highest remunerated officers of the company(Directors: nil) as part of their remuneration:Number ofDirectors Number ordinaryand Senior of options shares undermanagement granted Issuing entity optionSenior ManagementJ F Fabray 200,000 Western Desert Resources Ltd 200,000R Howard 500,000 Western Desert Resources Ltd 500,000B Sando 200,000 Western Desert Resources Ltd 200,000C Gaughan 100,000 Western Desert Resources Ltd 100,000L Ackroyd 200,000 Western Desert Resources Ltd 200,000Remuneration Report (Audited)This report outlines the remuneration arrangements inplace for directors and other key management personnelof Western Desert Resources Limited.21

DIRECTORS’ REPORTDirector and other Key Management Personnel DetailsThe following persons acted as Directors of the companyduring the financial year:D J Cloke (Non-executive Director and appointedActing Chairman 20th January 2010)M R Billing (Non-executive Chairman)Resigned 13th January, 2010N W Gardner (Managing Director)G J Bubner (Non-executive Director)P C Lockyer (Non-executive Director)Appointed 1st June, 2010M K Ashton (Non-executive Director)The following persons are Key Management Personnel ofthe Company:J F Fabray (Exploration Manager)R L Howard (Project Manager – Iron Ore)Appointed 23rd November 2009B G Sando (Supervising Geologist)C J Gaughan (Senior Project Geologist)L Ackroyd (Chief Financial Officer / CompanySecretaryRelationship between the Remuneration Policy andCompany PerformancesThere is no link between the consolidated entity’sperformance and the setting of remuneration except asdiscussed below in relation to options granted to directorsand key management personnel. No bonuses have beenpaid by the consolidated entity during the year.Remuneration PhilosophyThe performance of the consolidated entity relies on thequality of its Directors and other key managementpersonnel and therefore the consolidated entity mustattract, motivate and retain appropriately qualifiedindustry personnel.The consolidated entity embodies the following principleswithin its remuneration framework:• provide industry competitive rewards to attract andretain high calibre Directors and key managementpersonnel;• link executive rewards to shareholder value (by thegranting of options); and• ensure total remuneration is competitive by marketstandards.Performance is measured through the monitoring ofachievement goals set by the Directors from time to timewhich include, but are not limited to, financial budgets,exploration work carried out and other key strategicoutcomes.Compensation PolicyDue to its size, the consolidated entity does not have aremuneration committee. The compensation of executivesand non-executive Directors is reviewed by the Boardwith the exclusion of the Director concerned. Thecompensation of other key management personnel isreviewed by the Board.The Board assesses the appropriateness of the natureand amount of remuneration of such persons on a periodicbasis by reference to relevant employment marketconditions with the overall objective of ensuring maximumshareholder benefit from retention of high quality directorsand other key management personnel. External adviceon remuneration matters is sought whenever the Boarddeems it necessary.Performance ConditionsPerformance conditions are determined by the Directorsin consultation with the Managing Director. The Directorshave determined that after consideration of industrypractice in circumstances where recognition of soundachievement should not only be recognised but alsowarrants further incentive, the Board considers thegranting of non-listed options to Directors and other keymanagement personnel as responsible practice.22

WESTERN DESERT RESOURCES LIMITEDThe table below sets out summary information about theconsolidated entity’s earnings and movements inshareholders wealth for the four years since incorporation.30 June 2010 30 June 2009 30 June 2008 30 June 2007Revenue - - - -Net loss before tax $2,034,540 $7,078,377 $3,025,962 $68,859Net loss after tax $2,034,540 $7,078,377 $3,229,820 $68,859Share price at start of year $0.12 $0.22 $0.24 -Share price at end of year $0.31 $0.12 $0.22 $0.24Basic earnings per share in cents (1.60) (8.40) (4.93) (2.03)Diluted earnings per share in cents (1.60) (8.40) (4.93) (2.03)Non-executive Director RemunerationThe Board seeks to set remuneration of non-executiveDirectors at a level which provides the company with theability to attract and retain high calibre Directors, whilstincurring a cost which is appropriate at this stage of thecompany’s development. Currently, the Directors fee isset at $45,000 per annum plus the statutory superannuationcontribution. In addition certain Directors receiveamounts as set out in consultancy agreements with theconsolidated entity and a related entity associated withthose Directors. Details of service agreements with allnon-executive Directors are set out below.In addition, non-executive Directors are entitled to be paidreasonable travelling, accommodation and other expensesincurred as a consequence of their attendance at meetingsof Directors or otherwise in the execution of their dutiesas Directors.Managing Director and RemunerationThe company aims to reward the Managing Director witha level and mix of remuneration commensurate with hisposition and responsibilities within the consolidatedentity to:• align the interests of the Managing Director withthose of shareholders; and• ensure total remuneration is competitive by marketstandards.standards.The company also has a services agreement with arelated entity associated with and controlled byMr. N W Gardner, detail of which is set out in the ServicesAgreement section.23

DIRECTORS’ REPORTSummary of amounts paid to Key Management PersonnelThe following table discloses the compensation of thekey management personnel of the Group during the year.2010 Consultancy Salary and Post Employment Share Options Exercise Price Expiry Date Options Totalfor Personal Fees. Superannuation Granted during (based upon Benefit.Services the year* Black-Scholesformula)*$ $ $ No. $ Date $ $Directors:M R Billing 92,750 25,229 2,271 - - - - 120,250N W Gardner 184,575 45,128 3,545 - - - - 233,248G J Bubner 169,464 38,555 3,470 - - - - 211,489D J Cloke - 39,055 3,515 - - - - 42,570M K Ashton - 38,555 3,470 - - - - 42,025P C Lockyer - 3,750 338 - - - - 4,088Key Personnel:J F Fabray - 187,500 16,875 200,000 0.60 31/12/12 38,340 242,715R Howard - 97,026 8,732 500,000 0.60 31/12/12 95,300 201,058B Sando - 96,667 8,700 200,000 0.60 31/12/12 45,100 150,467C Gaughan - 146,991 13,229 100,000 0.60 31/12/12 19,170 179,390L Ackroyd - 157,500 14,175 200,000 0.60 31/12/12 38,340 210,0152010 Total 446,789 875,956 78,320 1,200,000 236,250 1,637,315*Options are granted at an exercise price above the existing share price as at the dateof grant. The value of options granted during the period has been calculated byreference to the Black-Scholes formula method.Amounts paid to Directors in the above table include amounts paid pursuant to ServiceAgreements which is also identified separately under the heading of “Service Agreements”and which is paid to related parties of the Directors.No Director or Senior Management person appointed during the period received apayment as part of their consideration for agreeing to hold the position.24

WESTERN DESERT RESOURCES LIMITED2009 Consultancy Salary and Post Employment Share Options Exercise Price Expiry Date Value of Options TotalFees. Superannuation Granted during (based upon Benefitthe year*Black-Scholesformula)*$ $ $ No. $ Date $ $Directors:M R Billing 96,520 47,800 4,541 - - - 188,798 337,659N W Gardner 190,650 - - - - - 188,798 379,448A W Mackie 60,000 2,676 241 - - - - 62,917G J Bubner 133,125 32,110 2,890 - - - 188,798 356,923D J Cloke 3,500 36,190 2,890 - - - 188,798 231,378M K Ashton - 29,434 2,650 - - - 188,798 220,882Key Personnel:J F Fabray - 175,000 15,750 500,000 0.18 30/09/11 63,650 254,400R Howard - - - - - - - -B Sando - - - - - - - -C Gaughan - 102,050 9,184 400,000 0.18 30/09/11 17,920 129,154L Ackroyd - 31,417 2,828 500,000 0.11 23/04/12 43,650 77,895M J Kitchin 54,225 - - - - - - 54,2252009 Total 538,020 456,677 40,974 1,400,000 1,069,210 2,104,881*Options are granted at an exercise price above the existing share price as at the dateof grant. The value of options granted during the period has been calculated by theBlack-Scholes formula method.Amounts paid to Directors in the above table included amounts paid pursuant toService Agreements which are also identified separately under the heading of “ServiceAgreements” and which is paid to related parties of the Directors.Service AgreementsThe consolidated entity entered into service agreementswith Messrs Billing, Gardner, Bubner, Mackie, Kitchenand Cloke on 2 May 2007. These agreements have no fixedterm and may be terminated by either party giving threemonths notice in writing. There are no minimum paymentsspecified in the agreements.Details of payments, which are made to related entitiescontrolled by Director and Officers, pursuant to serviceagreements during the year are set out below:Director Current Terms Amount paid or Amount paid orpayablepayable2010 2009$ $M R Billing $1000 per day for each day in excess of 2 days within a month 92,750 96,520N W Gardner $1200 per day for each day in excess of 2 days within a month 184,575 190,650G J Bubner $1200 per day for each day in excess of 2 days within a month 169,464 133,125D J Cloke $1200 per day for each day in excess of 2 days within a month - 3,500A W Mackie - - 60,000SecretaryM J Kitchin - - 54,225Total 446,789 538,020The payments reported above are also shown inNote 26 – Related party disclosures25

DIRECTORS’ REPORTEmployee share option planWestern Desert Resources Limited operates anownership-based scheme for executives and senioremployees of the consolidated entity. In accordance withthe provision of the plan, as approved by shareholders ata previous annual general meeting, executives and senioremployees with the consolidated entity may be grantedoptions to purchase parcels of ordinary shares at anexercise price as determined at the time by the directors.Each employee share option converts into one ordinaryshare of Western Desert Australia Limited on exercise.No amounts are paid or payable by the recipient onreceipt of the option. The options carry neither rights todividend nor voting rights. Options may be exercised atany time from the date of vesting to the date of their expiry.The number of options granted is calculated in accordancewith the performance based formula approved byshareholders at a previous annual general meeting. Theoptions granted expire within 2 to 4 years of their issue,or one month of the resignation of the executive or senioremployee, whichever is the earlier.During the financial year, the following share-basedpayment arrangements were in existence.Options series Grant date Expiry date Quantity Grant date Vesting datefair value(1) Issued 31 March 2009 31 March 2009 30 September 2011 300,000 0.0448 Vests at date of grant(2) Issued 27 April 2009 27 April 2009 23 April 2012 500,000 0.0873 Vests at date of grant(3) Issued 20 November 2009 20 November 2009 31 December 2012 200,000 0.2255 Vests at date of grant(4) Issued 16 December 2009 16 December 2009 31 December 2012 500,000 0.1906 Vests at date of grant(5) Issued 20 January 2010 20 January 2010 31 December 2012 600,000 0.1917 Vests at date of grantThere are no further services or performance criteriathat need to be met in relation to options granted underservices (1) - (5) before the benefit interest vests inthe recipient.26

WESTERN DESERT RESOURCES LIMITEDThe following grants of share-based payment compensation to senior management relate to the current financial year:During the financial year% ofName Option series No. granted No. vested % of grant % of grant compensation forvested forfeited the yearconsistingof optionsJ F Fabray (5) Issued 20 January 2010 200,000 200,000 100 0 15.8%R Howard (4) Issued 16 December 2009 500,000 500,000 100 0 47.4%B Sando (3) Issued 20 November 2009 200,000 200,000 100 0 30.0%C Gaughan (5)Issued 20 January 2010 100,000 100,000 100 0 10.7%L Ackroyd (5)Issued 20 January 2010 200,000 200,000 100 0 18.3%During the year, the following directors and senior management exercised options that were granted to them as part oftheir compensation. Each option converts into one ordinary share of Western Desert Resources Limited.Name No. of options exercised No. of ordinary shares Amount paid Amount unpaidof Western Desert ResourcesLimited issuedDirectors:M R Billing 1,583,334 1,583,334 $ 283,924 $nilG J Bubner 583,333 583,333 $121,774 $nilD J Cloke 583,333 583,333 $121,774 $nilM K Ashton 583,333 583,333 $145,833 $nilNW Gardner 963,599 963,599 $214,282 $nilKey Personnel:J F Fabray 700,000 700,000 $111,075 $nilC Gaughan 100,000 100,000 $18,000 $nil27

DIRECTORS’ REPORTThe following table summarises the value of optionsgranted, exercised or lapsed during the financial yearto directors and senior management:Value of options Value of options Value of optionsgranted at the exercised at lapsed at thegrant date (i) the exercise date of lapsedate $DirectorsM R Billing $Nil 283,924 $NilN W Gardner $Nil 214,282 $NilD J Cloke $Nil 121,774 $NilM K Ashton $Nil 145,833 $NilG J Bubner $Nil 121,774 $NilKey PersonnelJ F Fabray $38,340 111,075 $NilR Howard $95,300 $Nil $NilB Sando $45,100 $Nil $NilC Gaughan $19,170 18,000 $NilL Ackroyd $38,340 $Nil $NilOptions Issued as Remuneration for the Year Ended30 June 2010The company issued options to key managementpersonnel during the year as part of their remuneration.No ordinary shares were issued during the year toDirectors or other key management personnel other thanas a consequence of exercising options.Movement in options granted to Directors and keypersonnel during the year were:-(i) The value of options granted during the period is recognised incom pensation at the date of the grant, in accordance with Australianaccounting standards.(ii) No options granted to directors and senior management lapsedduring the year.28

WESTERN DESERT RESOURCES LIMITEDMovement in options granted to Directors and key personnel during the year were:-Opening Balance 01/07/2009 Options Exercised during the year Options Granted during the year 2 Balance Held30/06/2010 2Listed Unlisted Quantity Expiry Date Price 3 Quantity Expiry Date Price Listed UnlistedDirectors:M R Billing 1 33,667 1,583,334 1,583,334 30/06/10 0.208755 1 -M K Ashton 354,611 1,583,333 583,333 30/06/10 0.25 354,611 1,000,000N W Gardner 380,265 1,583,334 583,334 30/06/10 0.25 - 1,000,000380,265 30/11/11 0.18P C Lockyer - - - -G J Bubner 249,760 1,583,333 583,333 30/06/10 0.208755 249,760 1,000,000D J Cloke 126,363 1,583,333 583,333 30/06/10 0.208755 126,363 1,000,000Sub-Total 1,144,666 7,916,667 4,296,932 730,734 4,000,000Key Personnel:J F Fabray - 500,000 500,000 30/09/11 0.142150 200,000 31/12/12 0.60 - 200,000200,000 200,000 30/06/11 0.20000 - - -R Howard - - - - - 500,000 31/12/12 0.60 - 500,000B Sando - - - - - 200,000 31/12/12 0.60 - 200,000C Gaughan - 400,000 100,000 30/09/11 0.180000 100,000 31/12/12 0.60 - 400,000L Ackroyd - 500,000 - - - 200,000 31/12/12 0.60 - 700,000Sub-Total - 1,600,000 800,000 1,200,000 2,000,000Total Directors &Key Personnel 1,144,666 9,516,667 5,096,932 1,200,000 730,734 6,000,0001 As Mr M Billing resigned as a Director 13th January, 2010 the balance of listed options has not been included in the Sub Totaland Total columns above.No options granted to Directors or Senior Management lapsed during the year.2 Options granted during the year and those held by Directors and Senior Management vest in the individual at date of grant.3 The exercise price of options has been reduced as a result of the terms of the Renounceable Rights issue of December 2009which was not available to option holders.Meetings of DirectorsThe number of meetings of the company’s Board of Directors attended by each director during the year ended30 June 2010 was:2010 Meetings held while Meetings attended Meetings held while Meetings attendedin office 2009/2010 yearin office 2008/2009 yearM R Billing 1 6 6 11 11N W Gardner 14 14 11 11P C Lockyer 2 1 1 - -G J Bubner 14 14 11 11D J Cloke 14 12 11 11M K Ashton 14 14 11 111 Mr M R Billing resigned as a Director 13th January, 2010.2 Mr P C Lockyer was appointed 1st June, 2010.Due to its size and activities the company does nothave any separate board committees.29

DIRECTORS’ REPORTNon-Audit ServicesThe Board of Directors is satisfied that the provision ofthe non-audit services during the year is compatible withthe general standard of independence for auditorsimposed by the Corporations Act 2001. The directors aresatisfied that the services disclosed below did notcompromise the external auditor’s independence for thefollowing reasons:• All non-audit services are reviewed and approved bythe board prior to commencement to ensure they donot adversely affect the integrity and objectivity of theauditor; and• The nature of the services provided do not compromisethe general principles relating to auditor independencein accordance with APES 110: Code of Ethics forProfessional Accountants set by the AccountingProfessional and Ethical Standards Board.The following fees for non-audit services were paid to theexternal auditors during the period ended 30 June 2010:• Strategic Development Review.$58,800 (2009: Nil)• Advice concerning grant of options to Directors$ 3,150 (2009: Nil)Options on issue at date of this report:(a) Unlisted Options:Grant Date Date of Expiry Face Exercise Adjusted Exercised Lapsed during 2010 Quantity 2009 QuantityPrice Exercise Price 1 during the year the year under option under Option30- Apr-2007 30-Jun-2010 $0.25 $0.208755 3,275,000 475,000 - 3,750,00028-May-2007 30-Jun-2010 $0.25 $0.208755 2,000,000 - - 2,000,00023-Jul-2007 30-Jun-2011 $0.25 $0.208755 1,500,000 - - 1,500,00025-Feb-2008 30-Jun-2011 $0.20 $0.208755 220,000 - - 220,00025-Sep-2008 30-Nov-2013 $0.20 $0.162150 1,000,000 - 4,000,000 5,000,00025-Sep-2008 30-Sep-2011 $0.18 $0.142150 850,000 100,000 - 950,00031-Mar-2009 30-Sep-2011 $0.18 $0.142150 100,000 - 400,000 500,00027-Apr-2009 23-Apr-2012 $0.11 $0.072150 50,000 - 500,000 550,00020-Aug-2009 30-Nov-2011 $0.18 $0.18 100,000 - 400,000 -20-Nov-2009 31-Dec-2012 $0.60 $0.60 - - 200,000 -16-Dec-2009 31-Dec-2012 $0.60 $0.60 - - 500,000 -20-Jan-2010 31-Dec-2012 $0.60 $0.60 - - 600,000 -1 The exercise price of options has been reduced as a result of the termsof the Renounceable Rights issue of December 2009, which was notavailable to option holders.9,095,000 575,000 6,600,000 14,470,00030

WESTERN DESERT RESOURCES LIMITEDChanges in State of Affairs(b) Listed Options:Grant Date Date of Expiry Face Exercise Adjusted Exercised Lapsed during 2010 Quantity 2009 QuantityPrice Exercise Price 1 during the year the year under option under Option18-Jul-2008 30-Nov-2011 $0.18 $0.142150 924,515 0 1,465,402 2,389,9171 The exercise price of options has been reduced as a result of the termsof the Renounceable Rights issue of December 2009, which was notavailable to option holders.Indemnification of Officers and AuditorsDuring the period the company arranged insurancecover and paid a premium for directors, the CompanySecretary and all executive offers of the company and ofits related body corporates in respect of indemnityagainst third party liability. In accordance with theterms and conditions of the insurance policy, theamount of the premium paid has not been disclosed onthe basis of confidentiality, as is permitted underSection 300 (9) of the Corporations Act 2001.Auditor’s Independence DeclarationThe auditor’s independence declaration is included onpage 32 of the financial report.Signed at Adelaide this 29th day of September 2010 inaccordance with a resolution of the directors madepursuant to S298(2) of the Corporations Act 2001.The company has not otherwise, during or since thefinancial period, indemnified or agreed to indemnify anofficer or auditor of the company or of any related bodycorporate against a liability incurred by an officer orauditor.D J ClokeActing ChairpersonN W GardnerDirectorProceedings on Behalf of the CompanyNo person has applied for leave of Court to bringproceedings on behalf of the company or intervene inany proceedings to which the company is a party for thepurpose of taking responsibility on behalf of the companyfor all or part of those proceedings. The company wasnot a party to such proceedings during the year.31

CORPORATE GOVERNANCE STATEMENTWestern Desert Resources LimitedABN 48 122 301 848In March 2003 the Australian Stock Exchange CorporateGovernance Council (“ASXCGC”) released its best practicerecommendations based on ten core principles forcorporate governance. These recommendations werenot intended to be prescriptions to be followed by all ASXlisted companies, but rather guidelines designed toproduce an efficiency, quality or integrity outcome. TheCorporate Governance Council has recognised that a“one size fits all” approach to Corporate Governance isnot required. Instead, it states aspirations of best practicefor optimising corporate performance and accountabilityin the interests of shareholders and the broader economy.A company may consider that a recommendation is notappropriate to its particular circumstances and hasflexibility to not adopt it and explain why.Western Desert Resources Limited to date has notadopted the ASXCGC best practice recommendationsother than those specifically identified and disclosedbelow because the Board believes that it cannot justifythe necessary cost given the size and early stage of itslife as a listed exploration company. However the Boardis committed to ensuring that appropriate CorporateGovernance practices are in place for the proper directionand management of the Company.This statement outlines the main Corporate Governancepractices of the Company disclosed under the principlesoutlined in the ASXCGC including those that comply withbest practice that, unless otherwise disclosed, were inplace during the whole of the financial year ended 30June 2010.Principle 1: Lay solid foundations for managementand oversightRole of the BoardThe Board is governed by the Corporations Act 2001, ASXlisting rules and a formal constitution.The Board’s primary role is the protection andenhancement of shareholder value.Board processes and managementThe Board has an established framework for themanagement of the company including a system of internalcontrol, a business risk management process andappropriate ethical standards.The Board appoints a Managing Director with responsibilityfor the day to day management of the Company includingmanagement of financial, physical, and human resources,development and implementation of risk management,internal control and regulatory compliance policies andprocedures, recommending strategic direction and planningfor the operations of the business and the provision ofrelevant information to the Board.Principle 2: Structure the Board to add valueComposition of the BoardThe names of the Directors of the Company and terms inoffice at the date of this Statement together with theirexperience and expertise are set out in the Directors’Report section of this report. The directors’ terms in officeare considered appropriate in view of the fact that thecompany listed in July 2007.The composition of the Board consists of five directors ofwhom four, including the Chairman, are non-executives.Mr Cloke’s role as acting Chairman of the Board is separatefrom that of the managing Director, Mr Gardner who isresponsible for the day to day management of theCompany and is in compliance with the ASXCGC bestpractice recommendation that these roles not be exercisedby the same individual.The Company’s constitution stipulated that the number ofdirectors must be at least three. The Board may at anytime appoint a director to fill a casual vacancy. Directorsappointed by the Board are subject to election byshareholders at the following annual general meeting andthereafter Directors (other than the Managing Director)are subject to re-election at least every three years.The Board takes responsibility for the overall CorporateGovernance of the Company including its strategicdirection, management goal setting and monitoring,internal risk control, risk management and financialreporting.33

CORPORATE GOVERNANCE STATEMENTThe Board has not established a nominations committeebecause of the small size of both the Board and theCompany. The Board believes however in the renewal ofmembers to ensure the ongoing vitality of the Company,and will seek to recruit additional members as appropriate.All Directors are entitled to take such legal advice asthey require at any time, and from time to time, on anymatter concerning or in relation to their rights, duties,and obligations as directors in relation to the affairs ofthe Company.Principle 3: Promote ethical and responsibledecision makingEthical standardsThe Company aims for a high standard of corporategovernance and ethical standard by Directors andemployees.Directors are expected to use skills commensurate withtheir knowledge and experience to increase the value ofCompany assets. Directors must also maintain strictconfidentiality in relation to Company mattersAll Directors are required to provide the Company withdetails of all securities registered in the Director’s nameor an entity in which the Director has a relevant interestwithin the meaning of section 9 of the Corporations Act2001 and details of all contracts, other than contracts towhich the Company is a party to which the Director is aparty or under which the Director is entitled to a benefit,and that confer a right to call for or deliver shares in theCompany and the nature of the Director’s interest underthe contract.Directors are required to disclose to the Board anymaterial contract in which they may have an interest.In accordance with section 195 of the Corporations Act2001, a director having a material personal interest inany matter to be dealt with by the Board, will not bepresent when that matter is considered by the Boardand will not vote on that matter.available to the market. Section 1043A of the CorporationsAct 2001 also prohibits the acquisition and disposal ofsecurities where a person possesses information that isnot readily available and which may reasonably beexpected to have a material effect on the price of thesecurities if the information was generally available. Inparticular, trading in Company securities is prohibitedwithin 3 days prior to, and one day following materialannouncements to ASX.Principle 4:Financial ReportsSafeguard integrity in financial reportingThe Managing Director and Chief Financial Officer providea certificate to the Board regarding the Financial Reportsproviding a true and fair view in accordance with accountingstandards.Audit CommitteeWestern Desert Resources Limited was not a Companyrequired by ASX Listing Rule 12.7 to have an AuditCommittee during the year, although it is a best practicerecommendation of the ASXCGC. Those activities,normally the responsibility of an audit committee, areundertaken by the Board as a whole.Principle 5:Continuous DisclosureMake timely and balanced disclosureThe Company operates under the continuous disclosurerequirements of the ASX Listing Rules and ensures thatall information, apart from information which isconfidential, and ASX has not formed the view that theinformation has ceased to be confidential, which may beexpected to affect the value of the Company’s securitiesor influence investment decisions is released to the marketin order that all investors have equal and timely access tomaterial information concerning the Company. Thisinformation is made publicly available on the Company’swebsite following release to the ASX.Trading in the Company’s SecuritiesDirectors, officers and employees are not permitted totrade in securities of the Company at any time whilst inpossession of price sensitive information not readily34

WESTERN DESERT RESOURCES LIMITEDPrinciple 6:Respect the rights of shareholdersPrinciple 7:Recognise and manage riskCommunication with shareholdersThe Board aims to ensure that shareholders are informedof all major developments affecting the Company’s state ofaffairs. In accordance with the ASXCGC best practicerecommendations, information is communicated toshareholders as follows:• The annual financial report which includes relevantinformation about the operations of the Companyduring the year, changes in the state of affairs of theentity and details of future developments, in additionto other disclosures required by the CorporationsAct 2001;• The half yearly financial report is to be lodged withthe Australian Stock Exchange and AustralianSecurities and Investments Commission and sent toall shareholders who request it;• Notifications relating to any proposed majorchanges in the Company which may impact on shareownership rights that are submitted to a vote ofshareholders;• Notices of all meetings of shareholders;• Publicly released documents including the full textof notices of meetings and explanatory materialmade available on the Company’s internet web-siteat www.westerndesertresources.com.au ; and• Disclosure of the Company’s Corporate Governancepractices and communications strategy on theinternet web-site.The Board encourages full participation of shareholdersat the Annual General Meeting to ensure a high level ofaccountability and identification with the Company’sstrategy and goals. Important issues are presented tothe shareholders as single resolutions. The externalauditor of the Company is also invited to the AnnualGeneral Meeting of shareholders and is available toanswer any questions concerning the conduct,preparation and content of the auditor’s report.Pursuant to Section 249K of the Corporations Act 2001the external auditor is provided with a copy of the noticeof meeting and related communications received byshareholders.Risk Assessment and ManagementThe Board recognises that there are inherent risksassociated with the Company’s operations includingmineral exploration, environmental, title, native title, legal,and other operational risks. The Board endeavours tomitigate such risks by continually reviewing the activities ofthe Company in order to identify key business andoperational risks and ensuring that they are appropriatelyassessed and managed.Principle 8:Performance EvaluationEncourage enhanced performanceThe Board evaluates the performance of the ManagingDirector on a regular basis and encourages continuingprofessional development.Principle 9:Remuneration PolicyRemunerate fairly and responsiblyThe Company’s Constitution specifies that the total amountof remuneration of non-executive Directors shall be fixedfrom time to time by a general meeting. The currentmaximum aggregate remuneration of non-executivedirectors is set at $250,000 per annum. Directors mayapportion any amount up to this maximum amountamongst the non- executive directors as they determine.Directors are also entitled to be paid reasonable travelling,accommodation and other expenses incurred inperforming their duties as directors.The remuneration of the Managing Director is determinedby the Board as part of the terms and conditions of hisengagement which are subject to review from time to time.The remuneration of employees is determined by theManaging Director subject to the approval of the BoardFurther details of Directors’ and executives/officers’remuneration, superannuation and retirement paymentsare set out in the Directors’ Report.35

CORPORATE GOVERNANCE STATEMENTPrinciple 10:stakeholdersCode of ConductRecognise the legitimate interests ofThe Company requires all its directors and employees toabide by the highest standards of behaviour, businessethics, and in accordance with the law. In dischargingtheir duties, Directors of the Company are required to:• Act in good faith and in the best interests of theCompany;• Exercise care and diligence that a reasonable personin that role would exercise;• Exercise their powers in good faith for a properpurpose and in the best interests of the Company;• Not improperly use their position or informationobtained through their position to gain a personaladvantage or for the advantage of another person tothe detriment of the Company;• Disclose material personal interests and avoidactual or potential conflicts of interests;• Keep themselves informed of relevant Companymatters;• Keep confidential the business of all directorsmeetings; and• Observe and support the Board’s CorporateGovernance practices and procedures.Departures from the Principles and RecommendationsIn accordance with ASX Listing Rule 4.10.3, this CorporateGovernance Statement discloses the extent to whichWestern Desert Resources Limited has followed thePrinciples and Recommendations by detailing thePrinciples and Recommendations that have not beenadopted by the consolidated entity and the reasons whythey have not been adopted. With the exception of thedepartures detailed below, the corporate governancepractices of Western Desert were compliant with thePrinciples and Recommendations throughout the Period.Recommendation Notification of Departure Explanation for Departure2.4 The board should The Western Desert Resources The Western Desert Resources Board considers that aestablish a nomination Board has not established a separate nomination committee is not necessary for thecommittee. nomination committee. consolidated entity given its current size and complexity.The full Board is responsible for the duties and responsibilitiestypically delegated to a nomination committee.4.2 The audit committee should be The Western Desert Resources Board has not The Western Desert Resources Board considers that astructured so that it: not established an audit committee. separate audit committee is not necessary for the• consists only of non-executive consolidated entity given its current size and complexity.directors;The full Board is responsible for the duties and• consists of a majority of responsibilities typically delegated to a audit committee.independent directors;• is chaired by an independentchair, who is not chair of theboard; and• has at least 3 members8.1 The board should establish The Western Desert Resources Board has At this early stage of the consolidated entity’s developmenta remuneration committee. not established a remuneration committee the full Board acts as the consolidated entity’sremuneration committee.36

WESTERN DESERT RESOURCES LIMITEDConsolidated statement of comprehensive income for the year ended 30 June 2010ConsolidatedCompany2010 2009 2010 2009NOTE $ $ $ $Continuing operationsRevenue 5 750,000 2,008,390 - 2,008,390Less Cost of sales - (433,327) - (433,327)750,000 1,575,063 - 1,575,063Other Income and expenditures:Other income 6 350,068 300,833 350,068 300,833Interest on bank deposits 7 302,848 65,716 302,848 65,716Exploration expense written off/ (recovered) (682,251) (4,102,405) 210,900 (2,227,555)Impairment of intercompany loans - - (143,151) (1,874,850)Salaries and wages (400,260) (355,762) (400,260) (355,762)Directors fees (158,207) (148,964) (158,207) (148,964)Shareholder relations (300,427) (168,935) (300,427) (168,935)Corporate consulting expenses (546,652) (697,219) (546,652) (697,219)Other administration expenses (134,304) (187,425) (134,304) (187,425)Occupancy expenses (158,331) (138,897) (158,331) (138,897)Depreciation (146,373) (49,668) (146,373) (49,668)Share based payments (268,720) (1,014,423) (268,720) (1,014,423)Impairment of investments (188,200) (1,768,644) (339,677) (2,140,222)Share of associates loss (453,731) (387,647) - -Loss before income tax expense 8 (2,034,540) (7,078,377) (1,732,286) (7,062,308)Income tax expense/ (benefit) 9 - - (944,000) -Loss for the period attributable to members (2,034,540) (7,078,377) (788,286) (7,062,308)Other Comprehensive IncomeShare of the comprehensive income of associate 302,254 16,069 - -Other Comprehensive Income for the Period (Net of Tax) 302,254 16,069 - -Total Comprehensive Loss for the Period (Net of Tax)attributable to members (1,732,286) (7,062,308) (788,286) (7,062,308)Earnings per shareBasic (cents per share) 10 (1.60) (8.40)Diluted (cents per share) (1.60) (8.40)The above income statement should be read in conjunction with the accompanying notes.37

Consolidated statement of financial position at 30 June 2010ConsolidatedCompany2010 2009 2010 2009NOTE $ $ $ $Current assetsCash and cash equivalents 6,365,217 901,735 6,365,217 901,735Trade and other receivables 11 269,611 338,016 269,611 338,016Other current assets 12 118,615 47,412 118,615 47,412Total current assets 6,753,443 1,287,163 6,753,443 1,287,163Non - current assetsPlant and equipment 13 579,190 118,436 579,190 118,436Exploration and evaluation expenditure 14 7,976,606 4,039,953 197,905 -Amounts due from subsidiaries 15 - - 6,388,281 4,039,533Deposits for performance bonds 16 308,003 68,003 308,003 68,003Other financial assets 17 - - 385,134 574,811Equity accounted investments 18 384,714 574,391 - -Deferred tax asset - - 2,334,000 -Total non - current assets 9,248,513 4,800,783 10,192,513 4,800,783Total assets 16,001,956 6,087,946 16,945,956 6,087,946Current liabilitiesTrade and other payables 19 531,499 754,453 531,499 754,453Finance leases 20 38,120 - 38,120 -Employee benefit provisions 55,030 19,981 55,030 19,981Total current liabilities 624,649 774,434 624,649 774,434Non - current liabilitiesFinance leases 20 77,979 - 77,979 -Total non - current liabilities 77,979 - 77,979 -Total liabilities 702,628 774,434 702,628 774,434Net assets 15,299,328 5,313,512 16,243,328 5,313,512EquityIssued capital 21 26,477,372 14,436,253 26,477,372 14,436,253Share options reserve 22 915,229 1,238,246 915,229 1,238,246Share of reserves of associates 23 318,323 16,069 - -Accumulated losses (12,411,596) (10,377,056) (11,149,273) (10,360,987)Total equity 15,299,328 5,313,512 16,243,328 5,313,51238

WESTERN DESERT RESOURCES LIMITEDConsolidated statement of changes in equity for the year ended 30 June 2010Share Capital Share Options Accumulated Share of Reserve ofReserve Losses Associates Total$ $ $ $ $Balance at 1 July 2008 11,159,766 223,823 (3,298,679) - 8,084,910Loss attributable to the members ofparent entity - - (7,078,377) - (7,078,377)Exchange differences arising on translation offoreign operations (equity accounted investments) - - - 16,069 16,069Total Comprehensive Income for the Period - - (7,078,377) 16,069 (7,062,308)Shares issued during the period 3,314,458 - - - 3,314,458Cost of capital raising (net of tax) (37,971) - - - (37,971)Fair value of share options issued - 1,014,423 - - 1,014,423Balance at 30 June 2009 14,436,253 1,238,246 (10,377,056) 16,069 5,313,512Balance at 1 July 2009 14,436,253 1,238,246 (10,377,056) 16,069 5,313,512Loss attributable to the members of parententity - - (2,034,540) - (2,034,540)Exchange differences arising on translationof foreign operations (equity accountedinvestments) - - - 302,254 302,254Total Comprehensive Income for the Period - - (2,034,540) 302,254 (1,732,286)Shares issued during the period 11,948,858 - - - 11,948,858Transfers on lapse of options (and all vesting 591,737 (591,737) - - -conditions met)Cost of capital raising (net of tax) (499,476) - - - (499,476)Fair value of share options issued - 268,720 - - -Balance at 30 June 2010 26,477,372 915,229 (12,411,596) 318,323 15,299,32839

Company statement of changes in equity for the year ended 30 June 2010Share Share Options AccumulatedCapital Reserve Losses Total$ $ $ $Balance at 1 July 2008 11,159,766 223,823 (3,298,679) 8,084,910Loss attributable to the members of parent entity - - (7,062,308) (7,062,308)Total Comprehensive Loss for the Period - - (7,062,308) (7,062,308)Shares issued during the period 3,314,458 - - 3,314,458Cost of capital raising (net of tax) (37,971) - - (37,971)Fair value of share options issued - 1,014,423 - 1,014,423Balance at 30 June 2009 14,436,253 1,238,246 (10,360,987) 5,313,512Balance at 1 July 2009 14,436,253 1,238,246 (10,360,987) 5,313,512Loss attributable to the members of parent entity - - (788,286) (788,286)Total Comprehensive Loss for the Period - - (788,286) (788,286)Shares issued during the period 11,948,858 - - 11,948,858Transfers on lapse of options (and all vesting 591,737 (591,737) - -conditions met)Cost of capital raising (net of tax) (499,476) - - (499,476)Fair value of share options issued - 268,720 - 268,720Balance at 30 June 2010 26,477,372 915,229 (11,149,273) 16,243,32840

WESTERN DESERT RESOURCES LIMITEDConsolidated statement of cash flows for the year ended 30 June 2010ConsolidatedCompany2010 2009 2010 2009$ $ $ $Cash flows from operating activitiesReceipts from customers 1,416,820 2,053,865 666,820 2,053,865Payments to suppliers and employees (1,944,294) (2,118,865) (1,944,294) (2,118,865)Net cash used in operating activities (527,474) (65,000) (1,277,474) (65,000)Cash flows from investing activitiesPayments for exploration expenditure (7,773,973) (3,357,291) - (933,712)Interest received 72,501 69,962 72,501 69,962Re-imbursement from joint venture partner 3,142,074 1,491,530 - 1,491,530Payments for plant and equipment (491,028) (45,715) (491,028) (45,715)Deposits for security of performance bonds (240,000) - (240,000) -Investment in associate (150,000) - (150,000) -Loans to controlled entities - - (3,881,899) 2,423,579)Net cash used in investing activities (5,440,426) (1,841,514) (4,690,426) (1,841,514)Cash flows from financing activitiesProceeds from share issues 11,930,858 866,058 11,930,858 866,058Payments for capital raising costs (499,476) (37,971) (499,476) (37,971)Net cash from financing activities 11,431,382 828,087 11,431,382 828,087Net (decrease)/ increase in cash held 5,463,482 (1,078,427) 5,463,482 (1,078,427)Cash at beginning of year 901,735 1,980,162 901,735 1,980,162Cash at end of year 6,365,217 901,735 6,365,217 901,735Note (a): Reconciliation of loss for the year to net cashflow from ordinary activities.Loss for the period (2,034,540) (7,078,377) (788,286) (7,062,308)Share based remuneration 268,720 1,014,423 268,720 1,014,423Depreciation and loss on asset disposal 146,373 49,668 146,373 49,668Exploration written off 682,251 4,102,405 (210,900) 2,211,486Impairment of intercompany loan - - 143,151 1,874,850Loss incurred by associated entity 453,731 371,578 - -Impairment of investment in associated entity 188,200 1,768,644 339,677 2,140,222Deferred Income Tax Asset - - (944,000) -Increase/(decrease) in provisions 35,049 12,456 35,049 12,456Increase/(decrease) in payables (209,959) 34,484 (209,959) 34,484(Increase)/decrease in receivables (57,299) (274,305) (57,299) (274,305)(Increase)/decrease in prepayments - (65,976) - (65,976)Net operating cash flows (527,474) (65,000) (1,277,474) (65,000)41

NOTES TO FINANCIAL STATEMENTS for the financial year ended 30 June 20101. GENERAL INFORMATIONWestern Desert Resources Limited (the company) isa listed public company, incorporated and domiciledin Australia.The principal activities of the company involveexploration for iron ore, gold, base metals, uraniumand other economic mineral deposits, and thedevelopment of Mining Operations at the Roper Barproject, Northern Territory.Western Desert Resources Limited’s registeredoffice and its principal place of business are asfollows:Level 1, 26 Greenhill RoadWayvilleSouth Australia 50342. ADOPTION OF NEW AND REVISED ACCOUNTINGSTANDARDS:2.1 Standards and interpretations affectingamounts reported in the current period (and/orprior periods).The following new and revised standards andinterpretations have been adopted in the currentperiod and have affected the amounts reported inthese financial statements. Details of otherStandards and Interpretations adopted in thesefinancial statements but that have had no effect onthe amounts reported are set out in section 2.2.Standards affecting presentation and disclosurei) AASB101 Presentation of Financial Statements(as revised in September 2007),AASB 2007-8Amendments to Australian Accounting Standardsarising from AASB101 and AASB 2007-10 Furtheramendments to Australian Accounting Standardsarising from AASB101.The amendments to AASB 7 expand the disclosuresrequired in respect of fair value measurements andliquidity risk.Standards and Interpretations affecting the reportedresults or financial position.The adoption of the changes described in this sectiondid not result in substantial changes to theConsolidated Entity’s accounting policies or anysignificant impact on these financial statements orany significant impact on earnings per share.2.2 Standards and Interpretations adopted with noeffect on financial statements.The following new and revised Standards andInterpretations have also been adopted in thesefinancial statements. Their adoption has not had anysignificant impact on the amounts reported in thesefinancial statements but may affect the accountingfor future transactions or arrangements.i) AASB 2008-7 Amendments to AustralianAccounting Standards-Cost of an investment in aSubsidiary, Jointly Controlled Entity or Associate.The amendments deal with the measurement of thecost of investments in subsidiaries, jointly controlledentities and associates when adopting A-IFRS for thefirst time and with the recognition of dividend incomefrom subsidiaries in a parent’s separate financialstatements.ii)AASB 2008-1 Amendments to AustralianAccounting Standards – Share-based Payments:Vesting Conditions and Cancellations.The amendments clarify the definition of vestingconditions for the purpose of AASB 2, introduce theconcept of “non-vesting’ conditions, and clarify theaccounting treatment for cancellations.AASB101 (September 2007) has introducedterminology changes (including revised titles for thefinancial statements) and changes in the format andcontent of the financial statements.ii)AASB 2009-2 Amendments to Australian AccountingStandards – Improving Disclosures about FinancialInstruments.42

WESTERN DESERT RESOURCES LIMITEDiii)iv)AASB 2008-5 Amendments to Australian AccountingStandards arising from the Annual ImprovementsProject and AASB 2008-6 Further Amendments toAustralian Accounting Standards arising from theAnnual Improvement ProjectIn addition to the changes affecting amountsreported in the financial statements described at 2.1above, the amendments have led to a number ofchanges in the detail of the Group’s accountingpolicies-some of which are changes in terminologyonly, and some of which are substantive but havehad no material effect on amounts reported.AASB 2009-4 Amendments to AustralianAccounting Standards arising from the AnnualImprovement Project and AASB 2009-5 FurtherAmendments to Australian Accounting Standardsarising from the Annual Improvement Project.In addition to the amendments to AASB 5 and AASB107 described earlier in this section, the amendmentshave led to a number of changes in the details of theGroup’s accounting policies – some of which arechanges in terminology only, and some of which aresubstantive but have had no material effect onamounts reported. Except as noted in 2.3 below, thechanges in AASB 2009-5 have been adopted inadvance of their effective dates of 1 January 2010.v) AASB 8 Operating SegmentsAASB 8 is a disclosure Standard that has resulted inno change to the Group’s reportable segments (seeNote 29).2.3 Standards and Interpretations in issue not yetadoptedAt the date of authorisation of the financialstatements, the Standards and Interpretations listedbelow were in issue but not yet effective.STANDARD / INTERPRETATION EFFECTIVE FOR ANNUAL EXPECTED TO BE INITIALLYREPORTING PERIODSAPPLIED IN THE FINANCIALBEGINNING ON OR AFTER YEAR ENDING• AASB 2009-5 FURTHER AMENDMENTS TO AUSTRALIAN ACCOUNTINGSTANDARDS ARISING FROM THE ANNUAL IMPROVEMENTS PROJECT * 1 JANUARY 2010 30 JUNE 2011• AASB 2009-8 AMENDMENTS TO AUSTRALIAN ACCOUNTINGSTANDARDS – GROUP CASH-SETTLED SHARE-BASED PAYMENT TRANSACTIONS 1 JANUARY 2010 30 JUNE 2011• AASB 2009-10 AMENDMENTS TO AUSTRALIAN ACCOUNTING STANDARDS –CLASSIFICATION OF RIGHTS ISSUES 1 FEBRUARY 2010 30 JUNE 2011• AASB 124 RELATED PARTY DISCLOSURES (REVISED DECEMBER 2009),AASB 2009-12 AMENDMENTS TO AUSTRALIAN ACCOUNTING STANDARDS 1 JANUARY 2011 30 JUNE 2012• AASB 9 FINANCIAL INSTRUMENTS, AASB 2009-11 AMENDMENTS TOAUSTRALIAN ACCOUNTING STANDARDS ARISING FROM AASB 9 1 JANUARY 2013 30 JUNE 2014• AASB 2010-3 AMENDMENTS TO AUSTRALIAN ACCOUNTING STANDARDSARISING FROM THE ANNUAL IMPROVEMENTS PROJECT 1 JANUARY 2010 30 JUNE 2011• AASB 2010-4 FURTHER AMENDMENTS TO AUSTRALIAN ACCOUNTINGSTANDARDS ARISING FROM THE ANNUAL IMPROVEMENTS PROJECTS 1 JANUARY 2011 30 JUNE 201243

NOTES TO FINANCIAL STATEMENTS for the financial year ended 30 June 20103. SIGNIFICANT ACCOUNTING POLICIES3.1 Statement of complianceThese financial statements are general purposefinancial statements which have been prepared inaccordance with the Corporations Act 2001,Accounting Standards and Interpretations, andcomply with other requirements of the law.The financial statements comprise the consolidatedfinancial statements of the Group.Accounting Standards include Australianequivalents to International Financial ReportingStandards (‘A-IFRS’). Compliance with A-IFRSensures that the financial statements and notes ofthe company and the Group comply with InternationalFinancial Reporting Standards (‘IFRS’).The financial statements were authorised for issueby the Directors on 29th September 2010.3.2 Basis of preparationThe financial report has been prepared on the basisof historical cost, except for the revaluation ofcertain non-current assets and financial instruments.Cost is based on the fair values of the considerationgiven in exchange of assets. All amounts arepresented in Australian dollars, unless otherwisenoted.The following significant accounting policies havebeen adopted in the preparation and presentation ofthe financial report:3.3 Basis of consolidationThe consolidated financial statements incorporatethe financial statements of the Company and entities(including special purpose entities) controlled by theCompany (its subsidiaries). Control is achievedwhere the Company has the power to govern thefinancial and operating policies of an entity so as toobtain benefits from its activities.Where necessary, adjustments are made to thefinancial statements of subsidiaries to bring theiraccounting policies into line with those used byother members of the Group.All intra-group transactions, balances, income andexpenses are eliminated in full on consolidation.Changes in the Group’s interests in subsidiaries thatdo not result in a loss of control are accounted for asequity transactions. The carrying amounts of theGroup’s interests and the non-controlling interestsare adjusted to reflect the changes in their relativeinterests in the subsidiaries. Any difference betweenthe amount by which the non-controlling interestsare adjusted and the fair value of the considerationpaid or received is recognised directly in equity andattributed to owners of the Company.When the Group loses control of a subsidiary, theprofit or loss on disposal is calculated as thedifference between (i) the aggregate of the fair valueof the consideration received and the fair value ofany retained interest and (ii) the previous carryingamount of assets (including goodwill), and liabilitiesof the subsidiary and any non-controlling interests.Amounts previously recognised in othercomprehensive income in relation to the subsidiaryare accounted for (i.e. reclassified to profit or loss ortransferred directly to retained earnings) in the samemanner as would be required if the relevant assetsor liabilities were disposed of. The fair value of anyinvestment retained in the former subsidiary at thedate when control is lost is regarded as the fair valueon initial recognition for subsequent accountingunder AASB 139 Financial Instruments: Recognitionand Measurement or, when applicable, the cost oninitial recognition of an investment in an associate orjointly controlled entity.3.4 Business combinationsAcquisitions of subsidiaries and businesses areaccounted for using the acquisition method. Theconsideration of each acquisition is measured at theaggregate of the fair values (at the date of exchange)of assets given, liabilities incurred or assumed, andequity instruments issued by the Group in exchangefor control of the acquiree. Acquisition-related costsare recognised in profit or loss as incurred.44

WESTERN DESERT RESOURCES LIMITED3.5 Investment in associatesAn associate is an entity over which the Group hassignificant influence and that is neither a subsidiarynor an interest in a joint venture. Significant influenceis the power to participate in the financial andoperating policy decisions of the investee but is notcontrol or joint control over those polices.The results and assets and liabilities of associatesare incorporated in these financial statements usingthe equity method of accounting, except when theinvestment is classified as held for sale, in whichcase it is accounted for in accordance with AASB 5Non-Current Assets held for Sale and DiscontinuedOperations. Under the equity method, investmentsin associates are carried in the consolidatedstatement of financial position at cost as adjustedfor post-acquisition changes in the Group’s share ofthe net assets of the associate, less any impairmentin the value of individual investments. Losses of anassociate in excess of the Group’s interest in thatassociate (which includes any long-term intereststhat, in substance, form part of the Group’s netinvestment in the associate) are recognised only tothe extent that the Group has incurred legal orconstructive obligations or made payments onbehalf of the associate.Any excess of the cost of acquisition over theGroup’s share of the net fair value of the identifiableassets, liabilities and contingent liabilities of theassociate recognised at the date of acquisition isrecognised as goodwill. The goodwill is includedwithin the carrying amount of the investment and isassessed for impairment as part of that investment.Any excess of the Group’s share of the net fair valueof the identifiable assets, liabilities and contingentliabilities over the cost of the acquisition, afterreassessment, is recognised immediately in profitor loss.When a group entity transacts with an associate ofthe Group, profit and losses are eliminated to theextent of the Group’s interest in the relevant associate.3.6 Interests in joint venturesA joint venture is a contractual arrangement wherebythe Group and other parties undertake an economicactivity that is subject to joint control (i.e. when thestrategic financial and operating policy decisionsrelating to the activated of the joint venture requirethe unanimous consent of the parties sharing control).When a group entity undertakes its activities underjoint venture arrangements directly, the Group’sshare of jointly controlled assets and any liabilitiesincurred jointly with other venturers are recognisedin the financial statements of the relevant entity andclassified according to their nature. Liabilities andexpenses incurred directly in respect of interest injointly controlled assets are accounted for on anaccruals basis, income from the sale or use of theGroup’s share of the output of jointly controlledassets, and its share of joint venture expenses, arerecognised when it is probable that the economicbenefits associated with the transaction will flowto/from the Group and their amount can be measuredreliably.3.7 Cash and cash equivalentsCash and cash equivalents comprise cash on hand,cash in banks and bank deposits.3.8 Employee benefitsA liability is recognised for benefits accruing toemployees in respect of wages and salaries, annualleave, long service leave, and sick leave when it isprobable that settlement will be required and theyare capable of being measured reliably.Liabilities recognised in respect of long termemployee benefits are measured as the presentvalue of the estimated future cash outflows to bemade by the consolidated entity in respect ofservices provided by employees up to reporting date.Contributions to defined contribution retirementbenefit plans are recognised as an expense whenemployees have rendered service entitling them tothe contributions.45

NOTES TO FINANCIAL STATEMENTS for the financial year ended 30 June 20103.9 Revenue RecognitionRevenue is measured at the fair value of theconsideration received or receivable. Revenue isreduced for estimated customer returns, rebatesand other similar allowances.3.9.1 Rendering of servicesRevenue from a contract to provide services isrecognised be reference to the stage of completionof the contract.3.9.2 Interest revenueInterest revenue is recognised when it is probablethat the economic benefits will flow to the Groupand the amount of revenue can be measuredreliably. Interest revenue is accrued on a time basis,by reference to the principal outstanding and at theeffective interest rate applicable, which is the ratethat exactly discounts estimated future cash receiptsthrough the expected life of the financial assetto that asset’s net carrying amount on initialrecognition.3.10 ProvisionsProvisions are recognised when the Group has apresent obligation (legal or constructive) as a resultof a past event, it is probably that the Group will berequired to settle the obligation, and a reliableestimate can be made of the amount of the obligation.The amount recognised as a provision is the bestestimate of the consideration required to settle thepresent obligation at the end of the reporting period,taking into account the risks and uncertaintiessurrounding the obligation. Where a provision ismeasured using the cash flows estimated to settlethe present obligation, its carrying amount is thepresent value of those cash flows.When some or all of the economic benefits requiredto settle a provision are expected to be recoveredfrom a third party, a receivable is recognised as anasset it if is virtually certain that reimbursement willbe received and the amount of the receivable can bemeasured reliably.3.11 LeasingLeases are classified as finance leases whenever theterms of the lease transfer substantially all the risksand rewards of ownership to the lessee. All otherleases are classified as operating leases.3.12 The Group as lesseeAssets held under finance leases are initiallyrecognised as assets of the Group at their fair valueat the inception of the lease or, if lower, at thepresent value of the minimum lease payments. Thecorresponding liability to the lessor is included in thestatement of financial position as a finance leaseobligation.Lease payments are apportioned between financeexpenses and reduction of the lease obligation so asto achieve a constant rate of interest on the remainingbalance of the liability. Finance expenses arerecognised immediately in profit or loss, unless theyare directly attributable to qualifying assets, in whichcase they are capitalised in accordance with theGroup’s general policy on borrowing costs. Contingentrentals are recognised as expenses in the periods inwhich they are incurred.Operating lease payments are recognised as anexpense on a straight-line basis over the lease term,except where another systematic basis is morerepresentative of the time pattern in which economicbenefits from the leased asset are consumed.Contingent rentals arising under operating leasesare recognised as an expense in the period in whichthey are incurred.In the event that lease incentives are received toenter into operating leases, such incentives arerecognised as a liability. The aggregate benefit ofincentives is recognised as a reduction of rentalexpense on a straight-line basis, except whereanother systematic basis is more representative ofthe time pattern in which economic benefits from theleased asset are consumed.46

WESTERN DESERT RESOURCES LIMITED3.13 TaxationTax consolidationThe company and all its wholly-owned Australianresident entities are part of a tax-consolidatedgroup under Australian taxation law. WesternDesert Resources Limited is the head entity in thetax-consolidated group. Tax expense/income,deferred tax liabilities and deferred tax assetsarising from temporary differences of the membersof the tax-consolidated group are recognised in theseparate financial statements of the members ofthe tax-consolidated group using the ‘separatetaxpayer within group’ approach. Current taxliabilities and assets and deferred tax assets arisingfrom unused tax losses and tax credits of themembers of the tax-consolidated group arerecognised by the company (as head entity in thetax-consolidated group).Due to the existence of a tax funding arrangementbetween the entities in the tax-consolidated group,amounts are recognised as payable to or receivableby the company and each member of the group inrelation to the tax contribution amounts paid orpayable between the parent entity and the othermembers of the tax-consolidated group in accordancewith the arrangement. Where the tax contributionamount recognised by each member of the taxconsolidatedgroup for a particular period isdifferent to the aggregate of the current tax liabilityor asset and any deferred tax asset arising fromunused tax losses and tax credits in respect of thatperiod, the difference is recognised as a contributionfrom (or distribution to) equity participants.Income tax expense represents the sum of the taxcurrently payable and deferred tax.3.13.1 Current TaxThe tax currently payable is based on taxable profitfor the year. Taxable profit differs from the profit asreported in the consolidated statement ofcomprehensive income because of items of incomeor expense that are taxable or deductible. TheGroup’s liability for current tax is calculated usingtax rates that have been enacted or substantivelyenacted by the end of the reporting period.3.13.2 Deferred TaxDeferred tax is recognised on temporary differencebetween the carrying amounts of assets and liabilitiesin the financial statements and the correspondingtax bases used in the computation of taxable profit.Deferred tax liabilities are generally recognised forall taxable temporary differences. Deferred tax assetsare generally recognised for all deductible temporarydifferences to the extent that it is probable that taxableprofits will be available against which those deductibletemporary differences can be utilised. Such deferredtax assets and liabilities are not recognised if thetemporary difference arises from goodwill or fromthe initial recognition (other than a businesscombination) of other assets and liabilities in atransaction that effects nether the taxable profit northe accounting profit.Deferred tax liabilities are recognised for taxabletemporary differences associated with investmentsin subsidiaries and associates, and interest in jointventures, except where the Group is able to controlthe reversal of the temporary difference and it isprobable that the temporary difference will notreverse in the foreseeable future. Deferred tax assetsarising from deductible temporary differencesassociated with such investments and interests areonly recognised to the extent that it is probable thatthere will be sufficient taxable profits against whichto utilise the benefits of the temporary differencesand they are expected to reverse in the foreseeablefuture.The carrying amount of deferred tax assets isreviewed at the end of each reporting period andreduced to the extent that it is no longer probablethat sufficient taxable profits will be available toallow all or part of the asset to be recovered.Deferred tax assets and liability is settled or theasset realised, based on tax rates (and tax laws) thathave been enacted or substantively enacted by theend of the reporting period. The measurement ofdeferred tax liabilities and assets reflects that taxconsequences that would follow from the manner inwhich the Group expects, at the end of the reportingperiod, to recover or settle the carrying amount of itsassets and liabilities.Deferred tax assets and liabilities are offset whenhere is a legally enforceable right to set off currenttax assets against current tax liabilities and whenthey relate to income taxes levied by the same taxationauthority and the Group intends to settle its currenttax assets and liabilities on a new basis.47

NOTES TO FINANCIAL STATEMENTS for the financial year ended 30 June 20103.13.3 Current and deferred tax for the periodCurrent and deferred tax are recognised as anexpense or income in profit or loss, except whenthey relate to items that are recognised outsideprofit or loss (whether in other comprehensiveincome or directly in equity), in which case the tax isalso recognised outside profit or loss, or where theyarise from the initial accounting for a businesscombination. In the case of a business combination,the tax effect is included in the accounting for thebusiness combination.3.14 Plant and EquipmentPlant and equipment are stated at cost lessaccumulated depreciation and impairment. Costincludes expenditure that is directly attributable tothe acquisition of the item. In the event that settlementof all or part of the purchase consideration isdeferred, cost is determined by discounting theamounts payable in the future to their present valueas at the date of acquisition.Depreciation is recognised so as to write off the costor valuation of assets (other than freehold land andproperties under construction) less their residualvalues over their useful lives, using the straight-linemethod. The estimated useful lives, residual valuesand depreciation method are reviewed at each yearend, with the effect of any changes in estimateaccounted for on a prospective basis.Assets held under finance leases are depreciatedover their expected useful lives on the same basisas owned assets or, where shorter, the term of therelevant lease.The gain or loss arising on the disposal or retirementof an item of property, plant and equipment isdetermined as the difference between the salesproceeds and the carrying amount of the asset andis recognised in profit or loss.The following estimated useful lives are used in thecalculation of deprecation:• Plant and equipment – at cost 3-10 years483.15 Impairment of tangible and intangible assets(excluding goodwill)At the end of each reporting period, the Group reviewsthe carrying amounts of its tangible and intangibleassets to determine whether there is any indicationthat those assets have suffered an impairment loss.If any such indication exists, the recoverable amountof the asset is estimated in order to determine theextent of the impairment loss (if any). Where it is notpossible to estimate the recoverable amount of anindividual asset, the Group estimates the recoverableamount of the cash-generating unit to which theasset belongs. Where a reasonable and consistentbasis of allocation can be identified, corporate assetsare also allocated to individual cash-generatingunits, or otherwise they are allocated to the smallestgroup of cash-generating units for which a reasonableand consistent allocation basis can be identified.Intangible assets with indefinite useful lives andintangible assets not yet available for use are testedfor impairment at least annually, and whenever thereis an indication that the asset may be impaired.Recoverable amount is the higher of fair value lesscosts to sell and value in use. In assessing value inuse, the estimated future cash flows are discountedto their present value using pre-tax discount ratethat reflects current market assessments of the timevalue of money and the risks specific to the asset forwhich the estimates of future cash flows have notbeen adjusted. If the recoverable amount of anasset (or cash-generating unit) is estimated to beless than its carrying amount, the carrying amount ofthe asset (cash-generating unit) is reduced to itsrecoverable amount. An impairment loss isrecognised in profit or loss immediately, unless therelevant asset is carried at fair value, in which casethe impairment loss is treated as a revaluationdecrease.Where an impairment loss subsequently reverses,the carrying amount of the asset (cash-generatingunit) is increased to the revised estimate of itsrecoverable amount, but only to the extent that theincreased carrying amount does not exceed thecarrying amount that would have been determinedhad no impairment loss been recognised for theasset (cash-generating unit) in prior periods.

WESTERN DESERT RESOURCES LIMITEDA reversal of an impairment loss is recognised inprofit or loss immediately, unless the relevant assetis carried at fair value, in which case the reversal ofthe impairment loss is treated as a revaluationincrease.3.16 Financial assetsAll financial assets are recognised and derecognisedon trade date where the purchase or sale of a financialasset is under a contract whose terms require deliveryof the financial asset within the timeframe establishedby the market concerned, and are initially measuredat fair value, plus transaction costs, except for thosefinancial assets classified as at fair value throughprofit or loss, which are initially measured at fairvalue.Financial assets are classified into the followingspecified categories: financial assets ‘at fair valuethrough profit or loss’ (FVTPL), ‘held-to-maturity’investments, ‘available-for-sale’ (AFS) financialassets and ‘loans and receivables’. The classificationdepends on the nature and purpose of the financialassets and is determined at the time of initialrecognition.Income is recognised on a effective interest basis fordebt instruments other than those financial assetsclassified as a FVTPL.3.16.1 Effective Interest MethodThe effective interest method is a method ofcalculating the amortised cost of a debt instrumentand of allocating interest income over the relevantperiod. The effective interest rate is the rate thatexactly discounts estimated future cash receipts(including all fees on points paid or received thatform an integral part of the effective interest rate,transaction costs and other premiums or discounts)through the expected life of the debt instrument, or(where appropriate) a shorter period, to the netcarrying amount on initial recognition.Income is recognised on an effective interest basisfor debt instruments.3.16.2 Loans and ReceivablesTrade receivables, loans, and other receivables thathave fixed or determinable payments that are notquoted in an active market are classified as ‘loansand receivables’. Loans and receivables are measuredat amortised cost using the effective interestmethod less impairment. Interest income is recognisedby applying the effective interest rate, exceptfor short-term receivable when the recognition ofinterest would be immaterial.3.16.3 Impairment of Financial AssetsFinancial assets, other than those at FVTPL, areassessed for indicators of impairment at the end ofeach reporting period. Financial assets areconsidered to be impaired when there is objectiveevidence that, as a result of one or more events thatoccurred after the initial recognition of the financialasset, the estimated future cash flows of theinvestment have been affected.For certain categories of financial asset, such astrade receivables, assets that are assessed not to beimpaired individually are, in addition, assessed forimpairment on a collective basis. Objective evidenceof impairment for a portfolio of receivables couldinclude the Group’s past experience of collectingpayments, an increase in the number of delayedpayments in the portfolio past the average creditperiod of 60 days, as well as observable changes innational or local economic conditions that correlatewith default on receivables.For financial assets carried at amortised cost, theamount of the impairment loss recognised is thedifference between the asset’s carrying amount andthe present value of estimated future cash flows,discounted at the financial asset’s original effectiveinterest rate.The carrying amount of the financial asset is reducedby the impairment loss directly for all financialassets with the exception of trade receivables, wherethe carrying amount is reduced through the use of anallowance account. When a trade receivable isconsider uncollectible, it is written off against theallowance account. Subsequent recoveries ofamounts previously written off are credited againstthe allowance account. Changes in the carryingamount of the allowance account are recognised inprofit or loss.If, in a subsequent period, the amount of theimpairment loss decreases and the decrease can berelated objectively to an event occurring after theimpairment was recognised, the previouslyrecognised impairment loss is reversed throughprofit or loss to the extent that the carrying amountof the investment at the date the impairment isreversed does not exceed what the amortised costwould have been had the impairment not beenrecognised.49

NOTES TO FINANCIAL STATEMENTS for the financial year ended 30 June 20103.17 Exploration and Evaluation ExpenditureExploration and evaluation expenditures in relationto each separate area of interest are recognised asan exploration and evaluation asset in the year inwhich they are incurred where the followingconditions are satisfied:a) the rights to tenure of the area of interest arecurrent; andb) at least one of the following conditions isalso met:(i)(ii)The exploration and evaluation expendituresare expected to be recouped through successfuldevelopment and exploration of the area ofinterest, or alternatively, by its sale: orExploration and evaluation activities in the areaof interest have not at the reporting datereached a stage which permits a reasonableassessment of the existence or otherwise ofeconomically recoverable reserves, and activeand significant operations in, or in relation to,the area of interest are continuing.Exploration and evaluation assets are initiallymeasured at cost and include acquisition of rights toexplore, studies, exploration drilling, trenching andsampling and associated activities. General andadministrative costs are only included in themeasurement of exploration and evaluation costswhere they are relate directly to operationalactivities in a particular area of interest.Exploration and evaluation assets are assessed forimpairment when facts and circumstances (asdefined in AASB 6 “Exploration for and Evaluation ofMineral Resources”) suggest that the carryingamount of exploration and evaluation assets mayexceed its recoverable amount. The recoverableamount of the exploration and evaluation assets (orthe cash-generating unit(s) to which it has beenallocated, being no larger than the relevant area ofinterest) is estimated to determine the extent of theimpairment loss (if any).Where an impairment loss subsequently reverses,the carrying amount of the asset is increased to therevised estimate of its recoverable amount, but onlyto the extent that the increased carrying amountdoes not exceed the carrying amount that would havebeen determined had no impairment loss beenrecognised for the asset in previous years.Where a decision is made to proceed withdevelopment in respect of a particular area of interest,the relevant exploration and evaluation asset istested for impairment, reclassified to developmentproperties, and then amortised over the life of thereserves associated with the area of interest oncemining operations have commenced.3.18 Goods and service taxRevenues, expenses and assets are recognised netof the amount of goods and services tax (GST),except:(i)(ii)where the amount of GST incurred is not recoverable from the taxation authority, it isrecognised as part of the cost of acquisition ofan asset or as part of an item of expense or;for receivables and payables which arerecognised inclusive of GST.The net amount of GST recoverable from, or payableto, the taxation authority is included as part ofreceivables or payables.Cash flows are included in the cash flow statementon a gross basis. The GST component of cash flowsarising from investing and financing activities whichis recoverable from, or payable to, the taxationauthority is classified as operating cash flows.3.19 PayablesTrade payables and other accounts payable arerecognised when the consolidated entity becomesobliged to make future payments resulting from thepurchase of goods and services.50

WESTERN DESERT RESOURCES LIMITED3.20 Government grantsGovernment grants are assistance by government inthe form of transfers of resources to the consolidatedentity in return for past or future compliance withcertain conditions by the entity.Government grants are not recognised until there isreasonable assurance that the consolidated entity willcomply with the conditions attached to them and thegrant will be received. Government grants whoseprimary condition is to assist with explorationactivities are recognised as deferred income in thebalance sheet and recognised as income on asystematic basis when the related exploration andevaluation is written off or amortised.Other government grants are recognised as incomeover the periods necessary to match them with therelated costs which they are intended to compensateon a systematic basis. Government grants receivableas compensation for expenses or losses alreadyincurred or for the purpose of giving immediatefinancial support to the consolidated entity with nofuture related costs are recognised as income in theperiod in which it becomes receivable.3.21 Comparative FiguresWhen required by Accounting Standards, comparativefigures have been adjusted to conform to changes inpresentation for the current financial year.3.22 Share-based paymentsEquity-settled share-based payments to employeesand others providing similar services are measured atthe fair value of the equity instruments at the grantdate.Equity-settled share-based payment transactionswith parties other than employees are measured atthe fair value of the goods or services received, exceptwhere that fair value cannot be estimated reliably, inwhich case they are measured at the fair value of theequity instruments granted, measured at the date theentity obtains the goods or the counterparty rendersthe service.For cash-settled share-based payments, a liability isrecognised for the goods or services acquired,measured initially at the fair value of the liability. Atthe end of each reporting period until the liability issettled, and at the date the of settlement, the fair valueof the liability is remeasured, with any changes in fairvalue recognised in profit or loss for the year.3.23 Financial liabilities and equity instrumentsissued by the Group3.23.1 Classification as debt or equityDebt and equity instruments are classified as eitherfinancial liabilities or as equity in accordance withthe substance of the contractual arrangement.3.23.2 Equity instrumentsAn equity instrument is any contract that evidences aresidual interest in the assets of an entity afterdeducting all of its liabilities. Equity instrumentsissued by the Group are recognised at the proceedsreceived, net of direct issue costs.3.23.3 Other financial liabilitiesOther financial liabilities, including borrowings, areinitially measured at fair value, net of transactioncosts. Other financial liabilities are subsequentlymeasured at amortised cost using the effectiveinterest method, with interest expense recognisedon an effective yield basis. The effective interestmethod is a method of calculating the amortised costof a financial liability and of allocating interestexpense over the relevant period. The effectiveinterest rate is the rate that exactly discountsestimated future cash payments through the expectedlife of the financial liability, or (where appropriate) ashorter period, to the net carrying amount on initialrecognition.3.23.4 Derecognition of financial liabilitiesThe Group derecognises financial liabilities when,and only when, the Group’s obligations aredischarged, cancelled or they expire.51

NOTES TO FINANCIAL STATEMENTS for the financial year ended 30 June 20104. Critical Accounting Estimates and JudgementIn the application of the Group’s accounting policies,which are described in note 3, the directors arerequired to make judgements, estimates andassumptions about carrying amounts of assets andliabilities that are not readily apparent from othersources. The estimates and associated assumptionsare based on historical experience and other factorsthat are considered to be relevant. Actual results maydiffer from these estimates.The estimates and underlying assumptions arereviews on an ongoing basis. Revisions to accountingestimates are recognised in the period in which theestimate is revised if the revision affects only thatperiod or in the period of the revision and futureperiods if the revision effects both current and futureperiods.4.1 Critical judgements in applying accounting policiesThe following are the critical judgements, apart fromthose involving estimations that the directors havemade in the process of applying the Group’saccounting policies and that have the most significanteffect on the amounts recognised in the financialstatements.The carrying amounts of certain assets and liabilitiesare often determined based on management’sjudgement regarding estimates and assumptions offuture events. The reasonableness of estimates andunderlying assumptions are reviewed on an ongoingbasis. The key judgements, estimates andassumptions that have a significant risk of causing amaterial adjustment to the carrying amount of certainassets and liabilities within the annual reportingperiod are:Exploration and evaluationThe consolidated entity’s policy for exploration andevaluation is discussed at note 3.17. The application ofthis policy requires management to make certainestimates and assumptions as to future events andcircumstances. Any such estimates and assumptionsmay change as new information becomes available. If,after having capitalised exploration and evaluationexpenditure, management concludes that thecapitalised expenditure is unlikely to be recovered byfuture sale or exploitation, then the relevantcapitalised amount will be written off through theincome statement.ConsolidatedCompany2010 2009 2010 2009$ $ $ $5 REVENUESale of tenements 750,000 2,008,390 - 2,008,390750,000 2,008,390 - 2,008,3906 OTHER INCOMEGrant for trainee employment 5,519 - 5,519 -Insurance recovery 336 - 336 -Administration services 344,213 300,833 344,213 300,833350,068 300,833 350,068 300,8337 INTEREST INCOMEInterest on bank deposits 302,848 65,617 302,848 65,617302,848 65,617 302,848 65,61752

WESTERN DESERT RESOURCES LIMITEDConsolidatedCompany2010 2009 2010 2009$ $ $ $8 LOSS FOR THE YEARThe following expenditures were included in the loss for the year:Rental expense on operating leases 81,224 69,749 81,224 69,749Loss on disposal of plant and equipment 451 20,484 451 20,484Interest expense - finance leases 1,760 - 1,760 -Incidental interest on financing facilities 1,055 1,163 1,055 1,163Impairment loss on investment 188,200 1,768,644 339,677 2,140,222Employment related costs:Superannuation guarantee charge 120,035 76,429 120,035 76,429Employee benefits expense 1,534,772 1,000,416 1,534,772 1,000,416Exploration payroll deferred as exploration (1,096,340) (572,119) - -Exploration payroll transferred to subsidiaries - - (1,096,340) (572,119)Share based payments 268,720 1,014,423 268,720 1,014,423Total Employment related costs 827,187 1,519,149 827,187 1,519,1499 INCOME TAX(a) The components of income tax expense comprise:Current tax expense in respect of financial year - - - -Deferred tax expense/(income) relating to the originationand reversal of temporary differences and tax losses - - (944,000) -Total tax expense/(income) - - (944,000) -The prima facie income tax expense on the loss beforeincome tax reconciles to the tax expense/(income) in thefinancial statements as follows:Loss from continuing operations (2,034,540) (7,078,377) (1,732,286) (7,078,377)Income tax income calculated at 30% (610,362) (2,123,513) (520,000) (2,123,513)Add/(less):Effect of share based payments (107,000) - (107,000) -Effect of expenses that are not deductible in determiningtaxable profit 18,000 252,020 196,000 247,199Temporary differences not recognised as a deferred tax asset (150,000) - - -Temporary differences now recognised (2,334,000) (2,334,000)Prior year recognition of deferred tax liability 1,212,000 - - -Tax losses not recognised as a deferred tax asset 1,971,000 1,871,493 1,971,000 1,876,314Prior year tax losses now recognised - - - -Income tax expense (income) - - (944,000) -The tax rate used in the above reconciliation is the corporatetax rate of 30% payable by Australian corporate entities on taxableprofits under Australian tax law. There has been no change in thecorporate tax rate since incorporation.53

NOTES TO FINANCIAL STATEMENTS for the financial year ended 30 June 2010ConsolidatedCompany2010 2009 2010 2009$ $ $ $9 INCOME TAX (continued)(b) Recognised deferred tax assets and liabilitiesTrade and other receivables (69,000) - (69,000) -Exploration and evaluation expenditure (2,394,000) (1,212,000) (59,000) -Trade and other payables - - - -Employee provisions 17,000 6,000 17,000 6,000Share issue costs 129,000 161,000 129,000 161,000(2,317,000) (1,045,000) 17,000 167,000Temporary difference not recognised (17,000) 1,045,000 (17,000) (167,000)Temporary differences now recognised - - - -Tax losses recognised 2,334,000 - 2,334,000 -Tax losses not recognised - - - -- - 2,334,000 -A deferred tax balance has been recognised in the parent entity so as tooffset the DTL recognised in the subsidiaries as a result of theexpenditure incurred on exploration activities. On consolidation the DTAand DTL are net off and give a more accurate picture of what is the overalltax position of the group.(c) Unrecognised tax assets:Deferred tax assets have not been recognised in respectof the following:Recognised deferred tax assets and liabilitiesTemporary Differences 184,000 - 184,000 167,000Tax losses 4,421,000 2,450,000 4,421,000 2,450,0004,605,000 2,450,000 4,605,000 2,617,000Deferred tax assets have not been recognised in respect of these itemsbecause it is not probable that future taxable profit will be availableagainst which the Group and the Company can utilise the benefits.d) Movements in recognised deferred tax balancesBalance at the beginning of the period - - - -Transfer from subsidiaries - - 1,390,000Recognised in income (944,000)Closing balance - - 2,334,000 -54

WESTERN DESERT RESOURCES LIMITED(e) Tax ConsolidationRelevance of tax consolidation to the GroupThe Company, Red Desert Minerals Pty Ltd, WDR Base Metals Pty Ltd, WDR Gold Pty Ltd and WDR Iron Ore have formed a tax-consolidatedgroup with effect from 1 July 2008 and are therefore taxed as a single entity from that date. The head entity within the tax consolidatedgroup is Western Desert Limited. The members of the tax-consolidated group are identified at note 17.Nature of tax funding arrangements and tax sharing agreementsEntities within the tax-consolidated group have entered into a tax funding arrangement and a tax-sharing arrangement with the headentity. Under the terms of the tax funding arrangement, Western Desert Resources Limited and each of the entities in the tax-consolidatedgroup has agreed to pay a tax equivalent payment to or from the head entity, based on the current tax liability or current tax asset of theentity. Such amounts are reflected in amounts receivable from or payable to other entities in the tax-consolidated group.The tax sharing agreement entered into between members of the tax-consolidated group provides for the determination of the allocationof income tax liabilities between the entities should the head entity default on its tax payment obligations or if an entity should leave thetax-consolidated group. The effect of the tax sharing agreement is that each member’s liability for tax payable by the tax-consolidatedgroup is limited to the amount payable to the head entity under the tax funding agreement.10 LOSS PER SHAREConsolidated Consolidated2010 2009Cents per Cents pershareshareBasic earnings per share – loss (1.60) (8.40)Diluted earnings per share – loss (1.60) (8.40)Earnings (2,034,540) (7,078,377)No.No.Weighted average number of ordinary shares 127,545,410 84,227,926The weighted average number of ordinary shares used in thecalculation of diluted earnings per share is the same as the numberused in the calculation of basic earnings per share, as options andperformance shares are considered diluted.ConsolidatedCompany2010 2009 2010 2009$ $ $ $11 CURRENT TRADE AND OTHER RECEIVABLESTrade receivables 39,264 306,180 39,264 306,180Other receivables - 31,836 - 31,836Interest receivable 230,347 - 230,347 -269,611 338,016 269,611 338,016Receivables are on terms of 14 to 30 days – no interest is chargeable.None of the current receivables are impaired or past due not impaired.Interest receivable refers to accumulated bank interest on deposits.There is no allowance for doubtful debts in the current and prior year.55

NOTES TO FINANCIAL STATEMENTS for the financial year ended 30 June 2010ConsolidatedCompany2010 2009 2010 2009$ $ $ $12 OTHER CURRENT ASSETSOther assets 20,723 15,539 20,723 15,539Prepaid expenditures 55,821 31,873 55,821 31,873Quarterly tax refund due (BAS) 42,071 - 42,071 -118,615 47,412 118,615 47,41213 PLANT AND EQUIPMENTGross carrying amount:Opening balance 195,176 178,348 195,176 178,348Additions 484,660 42,062 484,660 42,062Disposals (673) (25,234) (673) (25,234)Closing balance 679,163 195,176 679,163 195,176Accumulated depreciation:Opening balance (76,740) (31,831) (76,740) (31,831)Depreciation this year (142,248) (49,668) (142,248) (49,668)Depreciation on disposals 222 4,759 222 4,759Closing balance (218,766) (76,740) (218,766) (76,740)Net Book Value:Balance at 30 June 460,397 118,436 460,397 118,436VEHICLES UNDER FINANCE LEASEGross carrying amount:Opening balance - - - -Additions 122,918 - 122,918 -Disposals - - - -Closing balance 22,918 - 122,918 -Accumulated depreciation:Opening balance - - - -Depreciation this year (4,125) - (4,125) -Depreciation on disposals - - - -Closing balance (4,125) - (4,125) -Net Book Value:Balance at 30 June 118,793 - 118,793 -Total Net Book Value 579,190 118,436 579,190 118,436The useful life used in the calculation of depreciation for vehicles under finance lease is 4 years.56

WESTERN DESERT RESOURCES LIMITEDConsolidatedCompany2010 2009 2010 2009$ $ $ $14 EXPLORATION AND EVALUATION EXPENDITURECosts brought forward 4,039,953 3,343,325 - 129,314Expenditure incurred during the year 4,618,904 5,188,936 383,089 409,895Costs of projects sold - (433,327) - -Contracted drilling adjusted from previous year 396,083 (1,831,426) - -Expenditure written off (1,078,334) (2,227,555) (185,184) (539,209)7,976,606 4,039,953 197,905 -Expenditure written off relates to exploration and evaluation expenditure associated with tenements or project evaluations which thedirectors consider have no recoverable amount.The recoverability of the carrying of the exploration and evaluation assets is dependent on successful development and commercialexploitation, or alternatively, sale of the respective areas of interest.Contracted drilling adjusted from previous year relates to the recovery of provisions made in 2009.Itochu withdrew from the Roper Bar Joint Venture project during the year. Joint Venture re-imbursements from Itochu of $3,119,313(2009: $1,661,345) have been offset against the expenditure incurred to date on this project.15 LOANS AND RECEIVABLES CARRIED AT AMORTISED COST.Amounts due from subsidiaries - - 10,448,158 6,566,259Allowance for doubtful debts - - (2,669,877) (2,526,726)Recognition of tax losses transferred - - (1,390,000) -- - 6,388,281 4,039,53316 DEPOSITS FOR PERFORMANCE BONDSBank deposits securing bank guarantees 240,840 15,840 240,840 15,840Environmental bonds with Government 67,163 52,163 67,163 52,163Balance at 30 June 2010 308,003 68,003 308,003 68,003Environmental bonds to the value of $67,163 (2009 $52,163) were lodged with the Northern Territory Government to secure environmentalrehabilitation commitments. Bank deposits of $240,840 (2009 $15,840) were pledged to bankers to secure the issuance of bank guarantees.Environmental bonds secured by bank guarantees to the value of $ 103,847 (2009 $0) were lodged with the Northern Territory Government.A bank guarantee to secure the office lease of $15,840 (2009 $15,840) has been lodged with the agent of the lessor.17 OTHER FINANCIAL ASSETSShares in Subsidiaries (at cost) - - 420 420Share in Associate (at cost less impairment) - - 384,714 574,391Balance at 30 June 2010 - - 385,134 574,81157

NOTES TO FINANCIAL STATEMENTS for the financial year ended 30 June 2010Country of IncorporationOwnership interrest2010 2009% %Shares in subsidiaries:Name of EntityParent EntityWestern Desert Resources Limited (i) AustraliaSubsidiaryRed Desert Minerals Pty Ltd (ii),(iii) Australia 100% 100%WDR Base Metals Pty Ltd (ii),(iii) Australia 100% 100%WDR Gold Pty Ltd (ii),(iii) Australia 100% 100%WDR Iron Ore Pty Ltd (ii),(iii) Australia 100% 100%(i) Head entity in tax consolidated group(ii) Members of tax consolidated group(iii) These wholly-owned subsidiaries have entered into a deed of cross guarantee with Western Desert Resources Limited pursuantto ASIC Class Order 98/1418 and are relieved from the requirement to prepare and lodge an audited financial report.The Company has not prepared the Income Statement and statement of financial position of the entities party to the deed of crossguarantee as this is reflected on the face of the financial statements.18 ASSOCIATED COMPANIESShares in associates are accounted for in the consolidated Financial Statements using the equity method of accounting and are carried atcost by the parent entity (refer to note 17)Name of Principal Country of Shares Ownership Carrying AmountEntity Activities Incorporation Interest of Investment2010 2009 2010 2009% % $ $Listed (i)Thor Mining Exploration England and Ord 14.38% 14.56% 384,714 574,391PLCWales384,714 574,391(i) Shares in associates are accounted for in the consolidated Financial Statements using the equity method of accounting and arecarried at cost (less impairment) by the parent entity.(ii) Although the Group holds less than 20% of the equity shares of Thor Mining PLC, and it has less than 20% of the voting power inshareholder meetings, the Group exercises significant influence by virtue of its contractual right to appoint two directors to theboard of directors of that company.58

WESTERN DESERT RESOURCES LIMITED18 ASSOCIATED COMPANIES - Continued Consolidated Consolidated2010 2009$ $shareshareMovement in carrying amountCarrying amount at the beginning of the financial year 574,391 2,714,613Additional investment 150,000 -Share of loss after tax (453,731) (387,647)Share of other reserves after tax 302,254 16,069Diminution in investment value (188,200) (1,768,644)Carrying amount at end if financial year 384,714 574,391Summarised Presentation of Aggregate Assets,Liabilities and Performance of AssociatesTotal Assets 12,548,515 14,477,394Total Liabilities 318,850 341,569Net Assets 12,229,665 14,135,825Group's share of net assets of associates 1,758,500 2,058,678Total revenue - -Loss after income tax of associates (3,155,521) (2,661,786)Group's share of losses of associates (453,731) (387,647)Ownership in Thor Mining PLC at that company’s balance date was 14.38% of ordinary shares. The reporting date of Thor Mining PLC is 30June 2010. This reporting date coincides with the entity’s holding company.Market value of listed investment in associate 384,714 574,39119 CURRENT LIABILITIES – TRADE AND OTHER PAYABLESConsolidatedCompany2010 2009 2010 2009$ $ $ $Trade payables 290,364 439,817 290,364 439,817Accruals 231,054 53,312 231,054 53,312Other 10,081 261,324 10,081 261,324531,499 754,453 531,499 754,453The average credit period on purchases of certain goods is 14-30 days. The Group has financial risk management policies in place toensure that all payables are paid within the pre-agreed credit20 FINANCE LEASESDue not later than one year 38,120 - 38,120 -Due later than one year but not later than five years 77,979 - 77,979 -116,099 - 116,099 -59

NOTES TO FINANCIAL STATEMENTS for the financial year ended 30 June 20102010 2009 2010 2009No. $ No. $21 ISSUED CAPITALIssued share capital:134,511,656 fully paid ordinary shares(2009: 89,711,428) 134,511,656 26,477,372 89,711,428 14,436,253Movement in issued shares for the year:Balance at beginning of financial period 89,711,428 14,436,253 69,720,000 11,159,766Issued at 18 cents (Rights Issue) - - 4,800,929 864,168Issued for consideration of exploration tenements - - 680,000 88,400Issued for consideration of exploration tenements - - 5,000,000 700,000Issued at 20 cents (For drilling services) - - 7,500,000 1,500,000Issued at 18 cents (options exercised) - - 10,501 1,890Issued for consideration of exploration tenements - - 1,999,998 160,000Issued at 10 cents (Placement) 13,400,000 1,340,000 - -Issued at 40 cents (Renounceable Rights Issue) 21,380,713 8,552,285 - -Issued on exercise of options 10,019,515 2,056,573 - -Costs associated with the issue of shares - (674,967) - (37,971)Share premium arising from share options exercised - 591,737 - -Tax effect of transaction costs - 175,491 - -Balance at end of financial period 134,511,656 26,477,372 89,711,428 14,436,253Capital managementFully paid ordinary shares carry one vote per share and carry a right to dividends.Management controls the capital of the group in order to maintain a good debt to equity ratio, and ensure the group continues as agoing concern.There are no externally imposed capital requirements.Management effectively manages the group’s capital by assessing the financial risks and adjusting the capital structure in response tothose risks. These responses include share issues.ConsolidatedCompany2010 2009 2010 2009$ $ $ $22 SHARE OPTION RESERVEBalance at 1 July 2009 1,238,246 223,823 1,238,246 223,823Options exercised and transferred to equity (488,570) - (488,570) -Options cancelled and transferred to equity (103,167) - (103,167) -Share based payments 268,720 1,014,423 268,720 1,014,423Balance at 30 June 2010 915,229 1,238,246 915,229 1,238,246The share option reserve arises on the grant of options to employees, consultants and executives. Amounts are transferred out of thereserve and into issued capital when the options are exercised or lapsed.60

WESTERN DESERT RESOURCES LIMITEDConsolidatedCompany2010 2009 2010 2009$ $ $ $23 SHARE OF RESERVES OF ASSOCIATESBalance at 1 July 2009 16,069 - - -Thor Mining Plc comprehensive income 302,254 16,069 - -Balance at 30 June 2010 318,323 16,069 - -The share of reserves of associates relates to Western Desert Resources Ltd share of comprehensive income of its investmentin Thor Mining Plc24 KEY MANAGEMENT PERSONNEL COMPENSATIONThe key management personnel of Western Desert Resources Limited during the year were:Directors:• M R Billing (Non-Executive chairman), resigned 13 January 2010• N W Gardner (Managing director),• G J Bubner (Non-executive director),• D J Cloke (Non-executive director), appointed Chairperson 20 January 2010• M K Ashton (Non-executive director),• P C Lockyer (Non-executive director), appointed 1 June 2010Key Management• L Ackroyd (Company secretary),• J F Fabray (Exploration Manager),• C J Gaughan (Senior Project Geologist),• B G Sando (Supervising Geologist), appointed 12 November 2009• R L Howard (Project Manager – Iron Ore), appointed 23 November 2009The aggregate compensation of key management personnelof the consolidated entity and the company is set out below:Consolidated Consolidated2010 2009$ $Short-term employee benefits 1,322,745 688,711Post employment benefits 78,320 44,976Share-based payments (1) 236,250 987,6591,637,315 1,721,346Share based payments relate to share options granted during the year to key management personnel at an exercise price above currentmarket value. Share options do not represent cash payments to key management personnel and share options granted may or may not beexercised by the key management personnel.The consolidated entity has applied the exemption under Corporations Amendments Regulations 2005 which exempts listed companiesfrom providing compensation disclosures in relation to their key management personnel in their annual financial reports by AccountingStandard AASB 124 Related Party Disclosures”. These Compensation disclosures are provided in the “Remuneration Report” of theDirectors’ Report and designated as “Audited”.61

NOTES TO FINANCIAL STATEMENTS for the financial year ended 30 June 201024 KEY MANAGEMENT PERSONNEL COMPENSATION ... continuedEquity holdings of key management personnel are detailed below:i) Fully paid ordinary shares issued by Western Desert Resources Limited2010 Balance 30/6/2009 Net Changes (a) Balance 30/6/2010 Balance held NominallyM R Billing (b) 1,420,666 (1,420,666) - -N W Gardner 4,454,703 2,167,263 6,621,966 -G J Bubner 3,229,881 979,310 4,209,191 -D J Cloke 1,536,394 890,604 2,426,998 -M K Ashton (c) 4,255,366 801,074 5,056,440 9,000,000P C Lockyer - - - -(a) Net changes include Director participation in the Renounceable Rights issue, which was available to all shareholders and the exercise of options during the year.(b) Mr M R Billing resigned as a Director 13th January 2010 and therefore changes that have occurred to his balance of ordinary share ownership have been removed.(c) Mr M K Ashton is a part owner of the Company’s major shareholder, Greenstone Property Pty Ltd.2009 Balance 30/6/08 Net Changes Balance 30/6/09 Balance held NominallyM R Billing 1,186,666 234,000 1,420,666 -N W Gardner 3,494,194 960,509 4,454,703 -G J Bubner 2,497,600 732,281 3,229,881 -D J Cloke 1,263,668 272,726 1,536,394 -M K Ashton 3,546,140 709,226 4,255,366 7,500,000ii) Options to acquire fully paid ordinary shares issued by Western Desert Resources Limited2010 Balance at 30/6/09 Granted Date of Grant Exercised Balance 30/6/2010 Vested and exercisableM R Billing (a) 1,583,334 - - 1,583,334 - -N W Gardner 1,583,334 - - 583,334 1,000,000 1,000,000G J Bubner 1,583,333 - - 583,333 1,000,000 1,000,000D J Cloke 1,583,333 - - 583,333 1,000,000 1,000,000M K Ashton 1,583,333 - - 583,333 1,000,000 1,000,000P C Lockyer (b) - - - - - -L Ackroyd 500,000 200,000 20/01/2010 - 700,000 700,000J F Fabray 700,000 200,000 20/01/2010 700,000 200,000 200,000R L Howard - 500,000 16/12/2009 - 500,000 500,000B G Sando - 200,000 20/11/2009 - 200,000 200,000C Gaughan 400,000 100,000 20/01/2010 100,000 400,000 400,000(a) Mr M R Billing resigned as a Director 13th January, 2010.(b) Mr P C Lockyer was appointed as a Director 1st June, 2010.62

WESTERN DESERT RESOURCES LIMITED24 KEY MANAGEMENT PERSONNEL COMPENSATION ... continued2009 Balance at 30/6/08 Granted Date of Grant Exercised Balance 30/6/2009 Vested and exercisableM R Billing 583,334 1,000,000 25/09/2008 - 1,583,334 1,583,334N W Gardner 583,334 1,000,000 25/09/2008 - 1,583,334 1,583,334A W Mackie (a) 583,333 - - - 583,333 583,333G J Bubner 583,333 1,000,000 25/09/2008 - 1,583,333 1,583,333D J Cloke 583,333 1,000,000 25/09/2008 - 1,583,333 1,583,333M K Ashton 583,333 1,000,000 25/09/2008 - 1,583,333 1,583,333L Ackroyd - 500,000 27/04/2009 - 500,000 500,000J Fabray 200,000 500,000 25/09/2008 - 700,000 700,000C Gaughan - 400,000 31/03/2009 - 400,000 400,000(a) Mr A W Mackie resigned as a Director 16th July, 2008(b) All share options issued to key Management were made in accordance with the provisions of the employee share option plan.ConsolidatedCompany2010 2009 2010 2009$ $ $ $25 REMUNERATION OF AUDITORSAuditing the financial report 25,890 21,000 25,890 21,000Provision of taxation services - 47,195 - 47,195Consultancy Services - Corporate Strategy 61,950 2,000 61,950 2,00087,840 70,195 87,840 70,195The auditor of Western Desert Resources Limited is Deloitte Touche Tohmatsu.26 RELATED PARTY DISCLOSURESa) Equity interests in related parties.Equity interests in subsidiariesDetails of the percentage of ordinary shares held in subsidiaries are disclosed in Note 17 to the financial statements.Equity interests in associated companiesDetails of the percentage of ordinary shares held in associated companies are disclosed in Note 18 to the financial statements.b) Key management personnel compensationDetails of key management personnel compensation are disclosed in Note 24.63

NOTES TO FINANCIAL STATEMENTS for the financial year ended 30 June 201026 RELATED PARTY DISCLOSURES continuedc) Transactions with key management personnelThe following transactions occurred with key management personnel or their personally related entities during the year ended30 June 2010:Entity Related Party $ Nature of TransactionASIS Pty Ltd G J Bubner 169,464 Drafting and Geophysical ServicesTiteline Drilling Pty Ltd M K Ashton 696,965 Drilling ServicesBarreta Pty Ltd N W Gardner 184,575 Management ServicesRemote Contracting Services Pty Ltd N W Gardner 325,308 Equipment Hire and Civil worksMBB Trading Pty Ltd M Billing 92,750 Management Servicesd) Transactions within wholly owned groupThe ultimate parent entity in the wholly-owned group is Western Desert Resources Limited. During the financial year Western DesertResources Limited provided accounting and administrative services at no cost to controlled entities and interest free advances.27 COMMITMENTS FOR EXPENDITURE AND CONTINGENT LIABILITIES(a) Exploration Expenditure CommitmentsThe consolidated entity has certain obligations to perform exploration work and expend minimum amounts of money on such workson mineral exploration tenements.These obligations will vary from time to time, subject to statutory approval. The terms of current and future joint ventures, the grant orrelinquishment of licences and changes to licence areas at renewal or expiry, will alter the expenditure commitments of the company.Total expenditure commitments at balance date in respect of minimum expenditure requirements not provided for in the financialstatements are approximately:2010 2009$ $Not later than one year: 1,498,548 1,063,841Later than one year but not later than two years: 1,097,245 1,173,841Later than two years but not later than five years: 1,708,282 1,717,620Later than five years 108,586 -(b) Native TitleNative Title claims have been made with respect to tenements in the Northern Territory in which Western Desert Resources Limited hasinterests. The consolidated entity is unable to determine the prospects for success or otherwise of the claims and, in any event,whether or not and to what extent the claims may significantly affect the company or its projects.(c) Bank GuaranteeAs at 30 June 2010, the consolidated entity has given a bank guarantee of $15,840 (2009: $15,840) to Jones Lang LaSalle as asecurity bond in respect to its office premises.As at 30 June 2010, the consolidated entity has given Bank guarantees in respect of Iron ore projects:-Mountain Creek project security $ 78,847.East Rover Project Security $25,00064

WESTERN DESERT RESOURCES LIMITED(d) Operating LeaseOperating lease relates to the lease of office space with a remaining lease term of two years. The operating lease contains a marketreview clause in the event that the Group exercises the option to renew. The Group does not have an option to purchase the leasedasset at the expiry of the lease period.ConsolidatedCompany2010 2009 2010 2009$ $ $ $Non-cancellable operating lease commitments:Not longer than 1 year 90,120 84,450 90,120 84,450Longer than 1 year and not longer than 5 years 90,120 7,038 90,120 7,038Longer than 5 years - - - -180,240 91,488 180,240 91,48828 FINANCIAL INSTRUMENTS28.1 Significant accounting policiesDetails of the significant accounting policies and methods adopted (including the criteria forrecognition, the bases of measurement, and the bases for recognition of income and expenses) for each class of financial asset,financial liability and equity instrument are disclosed in note 3.(a) Financial Risk Management PoliciesThe group’s financial instruments consist mainly of deposits with banks, accounts receivable and payable, and loans to andfrom subsidiaries.(i)Treasury Risk ManagementThe board meets on a regular basis and analyses financial risk exposure and evaluates treasury management strategies in thecontext of the most recent economic conditions and forecasts. The board’s overall risk management strategy seeks to assist theconsolidated group in meeting its financial targets whilst minimising potential adverse effects on financial performance. Riskmanagement is reviewed by the board on a regular basis and includes review of the group’s cash flow requirements.(ii)Financial Risk Exposures and ManagementThe main risks the group is exposed to through its financial instruments are liquidity risk, credit risk and interest rate risk.Liquidity riskUltimate responsibility for liquidity risk management rests with the board of directors, which has established an appropriate liquidityrisk management framework for the management of the Group’s short-, medium- and long-term funding and liquidity managementrequirements. The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities,by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.The following tables detail the Group’s remaining contractual maturity for its non-derivative financial liabilities with agreedrepayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliestdate on which the Group can be required to pay. The tables include both interest and principal cash flows. To the extent that interestflows are at floating rate, the undiscounted amount is derived from interest rate curves at the end of the reporting period.The contractual maturity is based on the earliest date on which the Group may be required to pay.65

NOTES TO FINANCIAL STATEMENTS for the financial year ended 30 June 201028 FINANCIAL INSTRUMENTS continuedWeighted Less than 1-3 3 months 1-5 years 5+ years Totalaverage 1 month months to 1 yeareffectiveinterestrate% $ $ $ $ $ $30 June 2010Non-interest bearing - - 531,499 - - - 531,499Finance Lease Liability 7.36 3,071 6,198 32,156 74,674 - 116,09930 June 2009Non-interest bearing - - 493,129 - - - 493,129Finance Lease Liability - - - - - - -The following table details the Group’s expected maturity for its non-derivative financial assets. The table has been drawn up basedon the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets. The inclusionof information on non-derivative financial assets is necessary in order to understand the Group’s liquidity risk management as theliquidity is managed on a net asset and liability basis.Weighted Less than 1-3 3 months 1-5 years 5+ years Totalaverage 1 month months to 1 yeareffectiveinterestrate% $ $ $ $ $ $30 June 2010Non-interest bearing - - 269,611 - - - 269,611Variable interest rateinstruments 5.97 6,365,217 308,003 6,673,220Fixed interest rateinstruments - - - - - - -30 June 2009Non-interest bearing - - 338,016 - - - 338,016Variable interest rateinstruments 6.20 - 917,575 - - 52,163 969,738Fixed interest rateinstruments - - - - - - -The amounts included above for variable interest rate instruments for both non-derivative financial assets and liabilities is subject tochange if changes in variable interest rates differ to those estimates of interest rates determined at the end of the reporting period.66

WESTERN DESERT RESOURCES LIMITEDCredit riskThe maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised financialassets, is the carrying amount, net of any provisions for impairment of those assets as disclosed in the balance sheet and notes to thefinancial reports.There are no material amounts of collateral held as security at 30 June 2010.The consolidated group does not have any material credit risk exposure to any single receivable or group of receivables underfinancial instruments entered into by the consolidated group.(b) Interest Rate RiskThe economic entity’s exposure to interest rate risk, which is the risk that a financial instrument’s value will fluctuate as a result ofchanges in market interest rates. The table details the exposure to interest rate risk at the reporting date. All other financial assets andliabilities are non-interest bearing. The Group’s exposures to interest rates on financial assets and financial liabilities are detailed inthe liquidity risk management section of this note(c) Fair value measurements recognised in the statement of financial positionWhere applicable financial instruments that are measured subsequent to initial recognition at fair value are grouped into Levels 1 to 3based on the degree to which the fair value is observable.• Level 1 fair value measurements are those derived from quoted prices (unadjusted) in activemarkets for identical assets or liabilities.• Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.• Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that arenot based on observable market data (unobservable inputs).(d) Categories of Financial Instruments2010 2009$ $Financial assetsCash and bank balances 6,365,217 917,575Loans and receivables 269,611 337,566Held to Maturity Investments 308,003 52,163Financial liabilitiesAmortised Cost 647,598 493,129(e) Net Fair ValuesThe carrying amount of financial assets and financial liabilities recorded in the financial statements represents their respective net fairvalues, determined in accordance with the accounting policies determined in Note 3 to the financial statements.(f) Other price risksThe Group is exposed to equity price risks arising from equity investments. Equity investments are held for strategic rather thantrading purposes. The Group does not actively trade these investments.(g) Equity price sensitivity analysisThe sensitivity analyses below have been determined based on the exposure to equity price risks at the end of the reporting period.If equity prices had been 5% higher/lower:• net profit for the year ended 30 June 2010 would have been unaffected as the equity investments are classified asavailable-for-sale and no investments were disposed of or impaired; and• The Group’s sensitivity to equity prices has not changed significantly from the prior year.67

WESTERN DESERT RESOURCES LIMITEDThe following share based payment arrangements were in existence during the period:Options – Series No. Grant Date Expiry Date Exercise Adjusted Fair valueExercise at grant datePrice 1Employee Share Option PlanMarch 2009 300,000 31/03/2009 30/09/2011 $0.18 $0.14215 $0.0448April 2009 500,000 23/04/2009 23/04/2012 $0.11 $0.07215 $0.0873January 2010 1,300,000 20/01/2010 31/12/2012 $0.60 $0.60 $0.1965The weighted average fair value of the share options in existence at balance date is $0.15 (2009: 0.17).Inputs into the model:20 January 2010 16 December 2009 20 December 2009 20 August 2009Grant date share price 0.55 0.54 0.59 0.13Exercise price 0.6 0.6 0.6 0.18Expected volatilty 50% 50% 50% 50%Option life 3 years 3 years 3.1 years 2.3 yearsDividend yield - - - -RISK free interest rate 5.22% 5.01% 5.10% 5.28%Historical volatility has been the basis for determining expected share price volatility up to June 2009 as it was assumed thatthis would be indicative of future movements.1 The January 2010 calculated volatility rate has largely been based upon an expected volatility having taken into consideration suchfactors as an increase in the market price of the company’s ordinary shares in the later part of 2009, the influence of the GlobalFinancial Crisis upon the company share price in 2009 and the relative stability in the share price throughout 2010 which followedthe finalisation of the renounceable rights issue in December 2009. The company believes it would be misleading to use a Volatilityrate based upon the historical rate alone and has used one based on the volatility for the last 7 months.The following reconciles the outstanding share options granted under the Plan at the beginning and end of the financial year:Share Option Plan 2010 2009(i) Movements during the year Number Weighted average Number Weighted averageof options exercise price $ of options exercise price $Balance at beginning of financial year 2,120,000 $0.1639 240,000 $0.2000Granted during the financial year 1,300,000 $0.6000 2,600,000 $0.1652Exercised during the financial year (i) (1,220,000) $0.1652 - -Lapsed during the financial year (100,000) $0.1800 (720,000) $0.1805Balance at end of the financial year (ii) 2,100,000 $0.4089 2,120,000 $0.1639(ii) Options exercised during the year Number Weighted average Number Weighted averageof options exercise price $ of options exercise price $Mr C Gaughan 100,000 0.1800 - -Mr J Fabray 500,000 0.1422 - -Mr J Fabray 200,000 0.2000 - -Non-executive staff 420,000 0.1726 - -1,220,000 $0.1652 - -69

NOTES TO FINANCIAL STATEMENTS for the financial year ended 30 June 201030 SHARE OPTION PLAN - Continued(iii) Options outstanding at end of the financial yearOptions – Series No. Grant Date Expiry Date Exercise PriceMarch 2009 300,000 31/03/2009 30/09/2011 $0.1422April 2009 500,000 27/04/2009 23/04/2012 $0.0722January 2010 1,300,000 20/01/2010 31/12/2012 $0.6000OptionsThe company has granted options whereby each option is exercisable for conversion into one ordinary share at a specified exercise priceand expiring on dates as detailed below.Movement in issued options for the year:2010 2009$ $Options on issue at the beginning of period 16,859,917 7,490,000Options issued during the year 1,800,000 10,100,418Options exercised during the year (10,019,515) (10,501)Options cancelled during the year (575,000) (720,000)Options on issue at the end of year 8,065,402 16,859,91731 Cash and cash balancesDetails of Options Granted:Grant Date Date of Expiry Exercise Price Number underOption18-Jul-2008 30-Nov-2011 *$0.142150 1,465,40225-Sep-2008 30-Nov-2013 *$0.162150 4,000,00025-Sep-2008 30-Sep-2011 *$0.142150 300,00031-Mar-2009 30-Sep-2011 *$0.142150 100,00027-Apr-2009 23-Apr-2012 *$0.072150 500,00020-Aug-2009 30-Nov-2011 $0.18 400,00020-Jan-2010 31-Dec-2012 $0.60 1,300,0008,065,402*The exercise price of options has been reduced as a result of the terms of the Renounceable Rights issue of December 2009 whichwas not available to option holders31 Cash and cash balancesFor the purposes of the statement of cash flows, cash and cash equivalents include cash on hand and in banks and investments in moneymarket instruments, net of outstanding bank overdrafts. Cash and cash equivalents at the end of the reporting period as shown in thestatement of cash flows can be reconciled to the related items in the statement of financial position as follows:2010 2009$ $6,365,217 917,57570

WESTERN DESERT RESOURCES LIMITED32 Non cash transactionsDuring the 2010 financial year, the Group entered into the following non-cash investing and financingactivities which are not reflected in the statement of cash flows:• The company recorded an impairment charge of $188,200 (2009:$1,768,644) in relation to its investment in Thor Mining Plc.• The Director’s of the consolidated entity wrote off exploration expenditure of $682,251 (2009: $4,102,405) as these amounts arenot considered recoverable.• The parent entity recorded an impairment charge of $143,151 (2009: $1,874,850) in regards to loans made to subsidiaries.33 Subsequentt eventsAt the date these financial statements were approved, the Directors were not aware of any significant post balance sheet eventsother than those set out in the notes to the financial statements. The company has made announcements since the close of thefinancial year of drilling activities and results in the normal course of business and as required pursuant to the ASX rules anddisclosure obligations.34 APPROVAL OF FINANCIAL STATEMENTSThe financial statements were approved by the Board of Directors and authorised for issue on 29th September 2010.71

Directors’ DeclarationThe directors declare that:a) in the directors’ opinion, there are reasonablegrounds to believe that the company will beable to pay its debts as and when they becomedue and payable;b) the attached financial statements are incompliance with International FinancialReporting Standards, as stated in note 3 to thefinancial statements;c) in the directors’ opinion, the attached financialstatements and notes thereto are in accordancewith the Corporations Act 2001, includingcompliance with accounting standards andgiving a true and fair view of the financialposition and performance of the consolidatedentity; andd) the directors have been given the declarationsrequired by s.295A of the Corporations Act 2001Signed in accordance with a resolution of the directorsmade pursuant to Section 295(5) of the Corporations Act2001.On behalf of the directors:D J ClokeDirector – Acting ChairmanN W GardnerDirectorAt the date of this declaration, the company iswithin a class of companies affected by ASIC ClassOrder 98/1418. The nature of the deed of crossguarantees is such that each company which isparty to the deed guarantees to each creditorpayment in full of any debt in accordance with thedeed of cross guarantee.Adelaide, South Australia29 September 2010In the Directors’ opinion, there are reasonablegrounds to believe that the company and thecompanies to which the ASIC Class Order applies,as detailed in note 17 to the financial statementswill, as a group, be able to meet any obligations orliabilities to which they are, or may become,subject by virtue of the deed of cross guarantee.72

ASX Additional InformationAs at 31 August 2010 the Company had issued the followingsecurities:Fully PaidOptionOrdinary Shares Options Exercise Price Option ExpiryQuoted Securities 134,511,656 1,465,402 $0.14215 30/11/2011Unquoted Securities:Unlisted Employee options 300,000 $0.14215 30/09/2011Unlisted options 100,000 $0.14215 30/09/2011Unlisted Director options 4,000,000 $0.16215 30/11/2013Unlisted Employee options 500,000 $0.07215 23/04/2012Unlisted Employee options 400,000 $0.18 30/11/2011Unlisted Employee options 1,300,000 $0.60 31/12/2012Total all Securities 134,511,656 8,065,402Distribution of ShareholdersFully Paid Listed UnquotedOrdinary Options OptionsSharesRange No. Holders No. Holders No. Holders1 - 1,000 1006 127 -1,001 - 5,000 991 68 -5,001 - 10,000 683 18 -10,001 - 100,000 1546 13 5100,001 - over 174 4 11TOTAL 4400 230 16The number of holders holding less than a marketableparcel of ordinary shares was 1206.Voting Rights of SecuritiesSubject to any rights or restrictions for the time beingattached to any class or classes of Shares (at presentthere is only one class of Shares), at meetings of theShareholders of Western Desert Resources:a) (a) each Shareholder entitled to vote may vote inperson or by proxy, attorney or representative;b) (b) on a show of hands, every person present whois a Shareholder or a proxy, attorney or representativeof the Shareholder has one vote; andc) (c) on a poll, every person present who is aShareholder or a proxy, attorney or representative ofa Shareholder shall, in respect to each Share heldby him, or in respect of which he is appointed aproxy, attorney or representative, have one vote forthe Share, but in respect to partly paid Shares, shallhave such number of votes as bears the sameproportion which the amount paid (not credited) is ofthe total amounts paid and payable (excludingamounts credited).Options do not carry voting rights.75

ASX Additional InformationTwenty largest holders of ordinary shares as at 31 August 2010Name Number of Percentageshares held of issuedshares heldGreenstone Property Pty Ltd 9,000,000 6.69%Mick Ashton Nominees Pty Ltd 4,194,268 3.12%Mr G J Bubner 3,625,858 2.69%Gardner Superannuation Nominees Pty Ltd 3,055,857 2.27%Barreta Pty Ltd 2,519,861 1.87%Mr D J and Mrs A J Cloke 2,426,958 1.80%Wansbone Nominees Pty Ltd 2,283,333 1.70%Genesis Resources Limited 2,095,269 1.56%Mr. Brent Gardner 2,018,643 1.50%Mr Thomas Finlay 1,450,000 1.08%Nefco Nominees Pty Ltd 1,342,970 1.00%M A & J Manning 1,239,201 0.92%Litho Art Pty Ltd 1,200,000 0.89%M R & B Billing 1,150,400 0.86%Mrs R Bartsch 955,251 0.71%K J & J A Faulkner 900,000 0.67%Mrs Nadia Louise Brock 780,000 0.58%Trims Superannuation Fund Pty Ltd 780,000 0.58%Mrs Holdings Pty Ltd 750,000 0.56%Viv Mac Pty Ltd 750,000 0.56%Substantial ShareholdersAs at 31 August 2010 the substantial holderslodged with the company.Number % of OrdinaryBeneficial Owner of Shares Shares HeldN W Gardner 6,621,966 4.92%M K Ashton 14,056,440 10.45%Stock Exchange ListingWestern Desert Resources Limited shares andlisted options are listed on the Australian StockExchange. The company’s ASX codes are WDRand WDRO (Options).TOTAL 42,517,869 31.61%Twenty largest holders of listed options as at 31 August 2010Name Number of Percentageoptions held of issuedoptions heldMr G J Bubner 249,760 17.04%Mick Ashton Nominees Pty Ltd 242,657 16.56%Dash Corp Pty Ltd 130,836 8.93%D J & A J Cloke 126,363 8.62%Mr M A and Mrs J Manning 95,000 6.48%Greenstone Property Pty Ltd 50,687 3.46%Mr David Miles Barrett 39,000 2.66%J R McEwen Pty Ltd 37,500 2.56%Titeline Property Pty Ltd 33,500 2.29%Ziba Pty Ltd 27,600 1.88%Mrs C M Love 20,000 1.36%MBB Trading Pty Ltd 17,667 1.21%M R & B Billing 16,000 1.09%P P & S Blanco 15,000 1.02%Ashton Drilling Services Pty Ltd 13,721 0.94%J R McEwen 12,500 0.85%Ms V M Walkington 11,000 0.75%Morshead Pty Ltd 10,000 0.68%Mr Jonathon Rice 10,000 0.68%Dandia Pty Ltd 9,000 0.61%TOTAL 1,167,791 79.67%76

WESTERN DESERT RESOURCES LIMITEDCorporate DirectoryOffice HoldersDavid John Cloke (Non Executive Director, Acting Chairman)Norman Wayne Gardner (Managing Director)Graham John Bubner (Non Executive Director)Michael Kevin Ashton (Non Executive Director)Phillip Clive Lockyer (Non Executive Director)Laurie Ackroyd (Chief Financial Officer/Secretary)Registered OfficeLevel 126 Greehill RoadWAYVILLE SA 5034Tel: 08 8177 8800Fax: 08 8272 2838email: info@westerndesertresources.com.auweb: www.westerndesertresources.com.auShare RegistrarComputershare Investor Services Pty LtdLevel 5, 115 Grenfell StreetADELAIDE SA 5000(GPO Box 1903 ADELAIDE SA 5001)Tel: 1300 85 05 05AuditorDeloitte Touche Tohmatsu11 Waymouth Street,Adelaide, S.A. 5000Solicitors to the CompanyWatsons LawyersGround Floor60, Hindmarsh SquareAdelaide SA 5000

www.westerndesertresources.com.au