Annual Report 2006

NOVA ENERGY LIMITED ANNUAL REPORT 2006

// ANNUAL REPORT 2006

Vivid_9765 CONTENTS C

COMPANY STRATEGY ...... 2 N A 2005/2006 HIGHLIGHTS ...... 2 M CHAIRMAN’S LETTER TO SHAREHOLDERS ...... 3 D URANIUM OUTLOOK ...... 4 M M PROJECT LOCATIONS & TENEMENT SCHEDULE ...... 8 M M DEVELOPMENT PROJECT ...... 10 R EXPLORATION PROJECTS ...... 15 N SAFETY & ENVIRONMENT ...... 20 L 1 COMMUNITY ...... 20 W A FINANCIALS ...... 21 P P W A

T F E W

NOVA ENERGY LIMITED CORPORATE DIRECTORY

Nova Energy Limited Share Registry ABN 92 111 5999 154 Computershare Investor Services Level 5 Ms Erica Smyth, Chairman 115 Grenfell Street Dr Tim Sugden, Managing Director Adelaide SA 5000 Mr Richard Pearce, Non-Executive Director Australia Mr Peter Bowler, Non-Executive Director Mr Greg Barrett, Company Secretary ASX Code: NEL Mr Burkhard Eisenlohr, Exploration Manager Issues Capital: 57,050,001 shares

Registered Ofﬁ ce Auditors Nova Energy Limited KPMG Level 2 Central Park 16 Ord Street 152-158 St Georges Terrace West Perth WA 6005 Perth WA 6000 Australia Australia

Postal Address Annual General Meeting PO Box 584 10am Tuesday 14 November 2006 West Perth WA 6872 Rydges Hotel Australia Cnr Hay Street & King Street Perth WA 6000 Telephone: +61 8 9321 1411 Australia Facsimile: +61 8 9226 2958 Email: [email protected] Website: novaenergy.com.au

ANNUAL REPORT 2006 1 COMPANY STRATEGY

Nova Energy Limited will generate wealth for its shareholders by becoming a signiﬁ cant uranium miner; supplying clean, responsibly produced and marketed energy to the world’s electrical utilities.

The Company will pursue development of its Lake Way and Centipede project while lobbying for political change in the State of Western Australia.

In parallel, the Company will focus exploration and acquisition activities in jurisdictions that are favourably disposed towards uranium mining, including South Australia, the Northern Territory and parts of Africa.

The Company’s activities will be characterised by transparency, public consultation and an unwavering commitment to safety and responsible environmental management.

2005/2006 HIGHLIGHTS

In the 2006 ﬁ nancial year, the Company achieved the following signiﬁ cant milestones:

• Listed on the ASX on 23 August 2005 and raised $6.0 million

• Established JORC-compliant resources at the Lake Way and Centipede uranium deposits

• Completed a scoping study that conﬁ rmed the ﬁ nancial viability of the Lake Way and Centipede uranium deposits

• Acquired exploration properties in Western Australia, South Australia and the Northern Territory

• Commenced land access negotiations for a number of properties

• Acquired exploration properties in Guinea, West Africa

• Assessed uranium exploration and development opportunities at a number of global locations

2 NOVA ENERGY LIMITED CHAIRMAN’S LETTER TO THE SHAREHOLDERS

Dear Shareholder,

It is my pleasure to present Nova Energy’s ﬁ rst Annual Report. The Company was listed on the Australian Stock Exchange in August 2005 with the stated intention of developing uranium deposits in Western Australia and exploring for other uranium deposits throughout Australia and overseas.

In only nine months there have been a number of encouraging developments. The Company established a JORC-compliant uranium resource at Lake Way and Centipede and conﬁ rmed the ﬁ nancial viability of this resource as a mining project; negotiated land access agreements and acquired new exploration projects in the Northern Territory and Africa. Ms Erica Smyth, Chairman Meanwhile, the Federal Leader of the Opposition announced his intention to review and potentially overturn the Australian Labor Party’s ‘Three Mines Policy” in 2007. It is widely expected that this will provide an opportunity for the Labor Governments of Queensland and Western Australia to modify their policies.

Since Nova’s listing the spot price of uranium has risen from US$29/lb to US$52/lb, reﬂ ecting increasingly competitive bidding by electrical utilities due to both rising consumption and the beginning of a decline in secondary supplies. As indicated in the Uranium Outlook section of this report, prices are expected to remain robust for many years as the uranium market transforms to a production-based supply system.

In the new fi nancial year Shareholders can look forward to a continued fl ow of positive news. The Company anticipates substantial increases in uranium resources at Lake Way-Centipede will fl ow from its September / October 2006 drilling campaign, the commencement of drilling at several of its exploration projects, and perhaps most importantly for near-term shareholder value, further steps towards policy change at both federal and state levels. Nova Energy will continue to engage with Stakeholders in this uranium mining debate.

Erica Smyth

Chairman

ANNUAL REPORT 2006 3 URANIUM OUTLOOK

A Nuclear Renaissance

Nuclear energy is emerging as a key component of many nations’ energy strategies because it offers large-scale base load electricity generation, very low CO2 emissions, long term energy security and diversity, and stable and increasingly competitive electricity prices. Throughout the world, concerns about climate change, spiralling gas and oil prices and geopolitical issues are positively inﬂ uencing public attitudes towards nuclear power.

According to the World Nuclear Association (http://www.world-nuclear. org) in 2006 there were 442 reactors operating in 30 countries. Another 30 reactors were under construction, 56 ﬁ rmly planned and a further 150 proposed. By 2015 the number of operating reactors is expected to rise to 506. Nuclear Energy’s share of global electricity Mock-up of completed Olkiluoto 3, 1.6 GWa nuclear reactor in Finland, expected to be operating in 2009. Image courtesy of TVO (www.tvwo.ﬁ ) production is expected to remain around 16 per cent.

In the United States of America, licence renewals for many of the country’s 103 reactors have been approved and up to 27 new reactors are under consideration. France, with close to 80 per cent of its electricity already generated by 59 plants, has conﬁ rmed its long term commitment to nuclear energy with approval of a new generation of reactors. Finland is currently constructing its ﬁ fth reactor, a large third generation pressurised water unit.

The UK has given its clearest signal yet that it will consider replacing ageing reactors with new models. Japan, with 29 per cent of its electricity being supplied by 53 reactors has ﬁ rm plans to increase the nuclear share to 40 per cent by 2030. South Korea aims to increase Daya Bay Reactors 5 & 6 under construction in Guangdong Province, the nuclear share of electricity from 38 per cent to 60 per cent by 2035. Southern China, June 2006. Russia plans to build another 40 reactors by 2030, partly because of an anticipated peak in gas production by 2030. To meet their burgeoning energy demands, China and India plan to build 56 new plants by 2020. 195 780

Indonesia, Malaysia, Vietnam and Turkey have also signalled their 180 Net Generation 720 intentions to construct nuclear plants. 165 660 150 600 Improving Reactor Efﬁ ciencies 135 540 120 480 While net capacity continues to rise through new reactor builds, the 105 420 efﬁ ciency of existing reactors is also improving. Average load factors 90 360 have steadily increased from around 68% in 1990 to 75.5% in 2000 75 300 BkWH

Number of Units 60 240 (World Nuclear Association, 2005), with many United States reactors 45 Units Operating 180 achieving 90% or more. 30 120 15 60

0 0 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02

Number of reactors operating in United States and annual energy output in billion kilo-watt hours. Source: United States Energy Information Agency.

4 NOVA ENERGY LIMITED URANIUM OUTLOOK (CONTINUED)

Rising Demand for Uranium

Extended licensing periods, new reactor builds and increased efﬁ ciencies are driving increased demand for uranium. The World Nuclear Association’s reference case sees uranium demand rising from 65,478 tonnes in 2006 to 78,003 tonnes in 2015 and 110,776 tonnes in 2030. Secondary Supply Forecast to Decline

Since 1985, primary mine supply has provided 60 to 70 per cent of reactor demand. The supply gap has been ﬁ lled by inventory derived from stockpiles of highly enriched uranium (HEU), low-enriched uranium (LEU), re-enriched tailings and mixed-oxide fuels (MOX). These secondary sources are forecast to decline markedly over the Projected uranium demand to 2030. next 10 years, exacerbated by the termination of Russian HEU supplies World Nuclear Association reference case, 2005 in 2013 (which currently provide around 10 per cent of United States electricity). Declining Reactor Inventories

United States reactor inventories have declined considerably since the mid-1980s. Reactor requirements are now equivalent to one year of inventory. Meanwhile, domestic production has slumped and imports of primary and secondary uranium have surged.

Falling inventories and domestic production and will make the United States, by far the world’s largest consumer of uranium, increasingly dependent on imports. Source: United States Energy Information Agency

ANNUAL REPORT 2006 5 URANIUM OUTLOOK (CONTINUED)

1940-1969 1970-1984 1985- Transition back to Production-based Weapons Procurement Commercial Inventory Inventory Liquidation Supply System 80 Tonnes U x 1,000 ? 70 HEU, Prolonged supply of inventoried uranium 60 LEU, MOX, etc has suppressed primary uranium prices and 50 Inventory discouraged exploration and mine development 40 for 20 years. As reactor demand rises and 30 secondary supplies decline, the projected gap 20 Reactor Requirements between uranium demand and primary mine 10 Mine Supply supply is set to widen markedly. 1948 1953 1958 1963 1968 1973 1978 1983 1988 1993 1998 2003 2008 2013 This is likely to drive prices signiﬁ cantly higher as the market transitions to a production- Uranium Supply and Reactor Requirements, 1948-2018. Based on Thomas Neff, MIT 2004, Insights into the future: Uranium Prices & Price Formation based supply system. 1947-2004

Higher Uranium Prices are Anticipated

Increasing competition for secure uranium supplies pushed spot uranium prices to record highs, reaching US$52/lb in September 2006. However, in current dollar terms, these prices are still far below the highs of the 1970s.

Historical trends suggest that price spikes may persist for at least ﬁ ve years before increased supply, stimulated by higher prices, meets or exceeds demand. Uranium price trends in 1970s and 1940s, recast in 2004 dollars, and recent price trend. Based on Thomas Neff, MIT 2004, Insights into the future: Uranium Prices & Price Formation 1947-2004 & UxC Data (www.uxc.com) Impact of Uranium Price on Cost of Electricity

Higher uranium prices will have minor impact on the cost of nuclear electricity. Unlike coal and gas plants, the cost of fuel represents a small proportion of nuclear power costs. It is estimated that a tripling of the price of uranium will increase electricity costs by only 7.5%.

Uranium represents only a minor component of the cost of nuclear electricity production. Tripling the price of uranium oxide (from US$25/lb) increases the cost of electricity by approximately 7.5%. Based on Royal Academy of Engineering, UK;The Cost of Generating Electricity, 2004. & TradeTech (www.uranium.info)

6 NOVA ENERGY LIMITED URANIUM OUTLOOK (CONTINUED)

Importance of Australian Supply

Australia holds 40% of the world’s known uranium resources and is currently the second largest producer after Canada. With further expansion and/or development of projects in South Australia, the Northern Territory and other states, it is widely anticipated that within 10 years Australia will become the world’s largest primary uranium producer. This will ensure that Australia has a pivotal role in reinforcing the safe and responsible use of uranium. Political Considerations

The Australian Labor Party intends to debate the issue of uranium mining at its national conference in April 2007. It is widely expected that the “Three Mines Policy” will be dropped in favour of a more progressive approach based on the world’s strongest safeguards. Queensland’s Labor Premier has indicated that uranium mining will be allowed if national policy changes in favour of an expansion of the industry.

The situation with Western Australia is less clear, but Nova Energy remains optimistic that a policy shift will occur before the next State election.

Currently the incumbent Western Australian State Labor Party maintains a policy of a ban on the mining of uranium, while the Opposition Liberal-National Party Coalition favours development of a uranium mining industry.

ANNUAL REPORT 2006 7 PROJECT LOCATIONS & TENEMENT SCHEDULE

Tenement No. Prospect Status Area Area type Grant Date WESTERN AUSTRALIA URANIUM RIGHTS (Tenements held by Wiluna Operations Ltd) E 53/609 Camel Soak LIVE 9 Blocks 1/12/1995 E 53/735 Lake Uramurdah West LIVE 3 Blocks 28/07/1997 E 53/912 Monavale LIVE 6 Blocks 28/09/2001 M 53/113 Lake Way South LIVE 480.00 ha 26/01/1989 M 53/121 Lake Way West LIVE 658.50 ha 3/03/1989 M 53/122 Lake Way West LIVE 913.25 ha 3/03/1989 M 53/123 Lake Way LIVE 931.55 ha 3/03/1989 M 53/147 Lake Way South LIVE 720.00 ha 5/10/1989 M 53/224 Lake Way LIVE 840.00 ha 9/06/1992 M 53/253 Lake Way LIVE 970.40 ha 14/10/1992 M 53/45 Lake Way West LIVE 659.20 ha 9/03/1987 M 53/49 Lake Way West LIVE 539.95 ha 9/03/1987 M 53/796 Lake Way LIVE 955.45 ha 21/11/2001 M 53/797 Lake Way LIVE 950.83 ha 21/11/2001 M 53/798 Lake Way LIVE 569.45 ha 21/11/2001 M 53/910 Lake Way LIVE 211.55 ha 23/05/2002 P 53/1023 Monavale LIVE 182.00 ha 26/10/2005 P 53/833 Lakes LIVE 177.70 ha 11/08/1993 P 53/834 Lakes LIVE 174.86 ha 11/08/1993 P 53/835 Lakes LIVE 191.68 ha 11/08/1993 P 53/836 Lakes LIVE 191.44 ha 11/08/1993 P 53/837 Lakes LIVE 144.00 ha 11/08/1993 P 53/838 Lakes LIVE 191.68 ha 11/08/1993 P 53/839 Lakes LIVE 185.52 ha 11/08/1993 P 53/840 Lakes LIVE 183.94 ha 11/08/1993 M 53/628 Lakes PENDING 732.00 ha M 53/629 Lakes PENDING 697.00 ha M 53/795 Lakes PENDING 483.00 ha M 53/832 Lake Way PENDING 713.00 ha M 53/912 Lake Uramurdah West PENDING 923.00 ha M 53/997 Camel Soak PENDING 642.82 ha M 53/998 Camel Soak PENDING 540.85 ha

8 NOVA ENERGY LIMITED PROJECT LOCATIONS & TENEMENT SCHEDULE (CONTINUED)

WESTERN AUSTRALIA (Lake Way - Centipede Uranium Rights) E 53/1132 Lake Way LIVE 15 Blocks 12/7/2005 E 51/1106 Meekatharra LIVE 32 Blocks 12/04/2006 E 53/1168 Lake Way LIVE 9 Blocks 12/04/2006 E 08/1640 Gilba Bore PENDING 38 Blocks E 59/1198 Lake Moore PENDING 23 Blocks E 63/1008 Grass Patch PENDING 69 Blocks E 63/1009 Grass Patch PENDING 70 Blocks E 63/1010 Grass Patch PENDING 33 Blocks E 63/1011 Grass Patch PENDING 70 Blocks E 63/1012 Grass Patch PENDING 66 Blocks E 63/1013 Grass Patch PENDING 70 Blocks E 63/1014 Grass Patch PENDING 70 Blocks E 63/1015 Grass Patch PENDING 61 Blocks E 80/3483 Lake Mackay 1 PENDING 13 Blocks E 80/3484 Lake Mackay 2 PENDING 69 Blocks E 80/3485 Lake Mackay 3 PENDING 69 Blocks E 80/3486 Lake Mackay 4 PENDING 69 Blocks E 80/3519 Lake Mackay 5 PENDING 70 Blocks E 80/3580 Lake Mackay PENDING 69 Blocks E 80/3581 Lake Mackay PENDING 70 Blocks E 80/3582 Lake Mackay PENDING 63 Blocks E 80/3583 Lake Mackay PENDING 45 Blocks E 80/3584 Lake Mackay PENDING 68 Blocks E 80/3585 Lake Mackay PENDING 68 Blocks E 80/3586 Lake Mackay PENDING 65 Blocks E 80/3587 Lake Mackay PENDING 70 Blocks E 80/3588 Lake Mackay PENDING 70 Blocks E 80/3589 Lake Mackay PENDING 70 Blocks SOUTH AUSTRALIA EL 3475 Lake Eyre West LIVE 599 km2 05/12/2005 EL 3488 Cooinchina Crk LIVE 815 km2 18/01/2006 EL 3437 Coober Pedy LIVE 911 km2 20/10/2005 NORTHERN TERRITORY EL 25045 Amadeus PENDING 475 Blocks EL 25046 Amadeus PENDING 246 Blocks EL 25047 Amadeus PENDING 238 Blocks EL 25048 Amadeus PENDING 476 Blocks EL 25049 Amadeus PENDING 30 Blocks EL 25050 Amadeus PENDING 499 Blocks EL 25051 Amadeus PENDING 494 Blocks EL 25052 Amadeus PENDING 438 Blocks Note: 1 Block = 1 minute latitude by 1 minute longitude (approx. 280 hectares) GUINEA, WEST AFRICA (Mineral Tenements) 2006/079 Permis de recherches minières LIVE 119.00 km2 10/05/06 2006/080 Permis de recherches minières LIVE 179.00 km2 10/05/06 2006/153 Permis de recherches minières LIVE 354.00 km2 06/09/06 2006/154 Permis de recherches minières LIVE 206.00 km2 06/09/06

ANNUAL REPORT 2006 9 DEVELOPMENT PROJECT

Lake Way – Centipede

Western Australia’s Most Advanced Uranium Project

Geology

The Lake Way and Centipede uranium deposits straddle the northern extremity of the Archaean Norseman-Wiluna greenstone belt of Western Australia. The deposits are associated with the broad deltas of tributary palaeo-channels that empty into the Lake Way Cross-section 9400N through Centipede Deposit hyper-saline playa, which itself represents the (Orange > 500ppm, Red >1000ppm) remnants of a major primary palaeo-drainage system of predominantly Tertiary age.

Uranium mineralisation is hosted by sheet-like superﬁ cial calcrete deposits, developed at a depth of 2m to 10m at or immediately below the present water table.

Mineralisation is dominated by the readily soluble hydrated potassium-uranium vanadate mineral, carnotite, which has been precipitated out of solution and preserved within the lower reaches of tributary palaeo-channels following subtle changes in groundwater chemistry and evaporation. This style of mineralisation is similar in many respects to the larger Yeelirrie deposit, held by BHPB, 60km to the southwest of Wiluna, and Paladin’s Langer Heinrich deposit in Namibia. Uranium Resources

The resource estimates are based on a large volume of historical assay data that have been fully validated, following QAQC procedure, and incorporated into new digital databases. Surpac software was used to construct wire frames and block grades were calculated by ordinary kriging. The methodologies used to calculate the resources have been veriﬁ ed by resource consultants, Hellman and Schoﬁ eld Pty Ltd. At the time of reporting, new drilling and down hole assay data were not incorporated into the estimates.

Lake Way area

10 NOVA ENERGY LIMITED DEVELOPMENT PROJECT (CONTINUED)

Uranium Resources (continued)

INFERRED MINERAL RESOURCES (@ 0.3 kg/t U3O8 cut-off grade)

Tonnes % kg/t lb/t Contained U3O8 Contained (t) (m) U3O8 U3O8 U3O8 U3O8 (lb) Lake Way 8.51 0.054 0.54 1.19 4,600 10,120,000 Centipede 7.00 0.063 0.63 1.38 4,400 9,680,000 Total 15.51 0.058 0.58 1.27 9,000 19,800,000

The information in this report relating to mineral resources is based on information compiled by Ashley Jones BSc (Hons), MAusIMM and David Princep BSc, MAusIMM, both of whom have more than fi ve years experience in estimation of mineral resources and ore reserves. Mr Jones is a full time employee of Kamili Geology. At the time of estimation Mr Princep was a full-time employee of Hellman and Scofi eld Pty Ltd. Mr Princep has suffi cient experience relevant to assessment of this style of mineralisation to qualify as a Competent Person as defi ned in the “Australian Code for Reporting of Mineral Resources and Ore Reserves”. Each of the above named consents to the inclusion of the information in the report in the form and context in which it appears.

Resource Drilling in 2006/2007

Following completion of an Aboriginal heritage survey by the Sir Samuel Claimant Group, inﬁ ll and extensional aircore drilling commenced at Centipede in September 2006. The aim of the drilling was to reduce drill hole spacing to an average of 40 metres, allowing resources to be classiﬁ ed as Indicated or Proven, as well as extend the overall resource into poorly drilled areas beneath large sand dunes and the lake margin.

Many older holes, drilled in the 1970s but missing down hole radiometric Drill hole logging at Centipede, September 2006 logs, were re-logged using a modern gamma probe. The new data conﬁ rmed the presence of high grade mineralisation (eg. 4.12 metres

@ 0.12% U3O8) within known areas of mineralisation and resource extensions to the northeast. Revisions will be reported through the 2006/2007 year.

Drilling at Centipede, September 2006

Nova Energy Limited e U3O8 Grades from Calibrated Total Count Radiometric Probe S792 Deconvolved_ U3O8 NVCT0098

ANNUAL REPORT 2006 11 DEVELOPMENT PROJECT (CONTINUED)

Scoping Parameters

GRD Minproc were engaged to conduct a scoping study of a mining project at Lake Way and Centipede the result of which were realised in July 2006. Key considerations in scoping were scale, throughput rate, project longevity, plant location and community and environmental impacts. The minimum project life is expected to be 10 years, rising to 15 or more with further resource additions. Regional consolidation of more distal uranium resources may enable the life of the project to exceed 20 years.

SCOPING PARAMETERS Life-of-mine 10 -15 years* *Range dependent on anticipated resource additions Ore mining rate pa 1.5 million

Cut-off grade 0.3 kg/t U3O8** **Based on uranium price of US$37.5/lb; falls to 0.25kg/t U3O8 @ $US46/lb Mining grade 0.50 – 0.62 kg/t U3O8 Recovery 85%

Annual U3O8 production 510 – 800 t (1.1 – 1.76 million lb) Transport & Selling Cost A$1,000/t U3O8 Exchange rate US$ / A$ 0.74

Mining

The barren overburden, waste and ore zones can be dug freely without the use of explosives. The average stripping ratio is 1.23 tonnes of waste to each tonne of ore. The basic mining ﬂ eet would comprise an 80t hydraulic excavator and four 50t haul trucks. The average mining cost is approximately A$6.25 per tonne of ore (inclusive of waste cost). Processing

The Wiluna South (Matilda) mine site is the preferred location for the processing plant. This location has the advantages of being an already disturbed site with extensive pit volumes (that could be utilised for tailings disposal if approved); is away from the Lake Way shore, equidistant (~15 km) between the Lake Way and Centipede deposits; and is close to the Wiluna-Kalgoorlie Highway and water, power and communications infrastructure.

Conceptual Flowchart

The conceptual ﬂ ow sheet incorporates a 1.5Mtpa crushing and milling circuit, slurry heating to 90°C, alkali leaching, counter-current decantation, precipitation, thickening, centrifuging, drying and packaging. A recovery factor of 85% has been applied in the preliminary study.

12 NOVA ENERGY LIMITED DEVELOPMENT PROJECT (CONTINUED)

Workforce

The operation will employ approximately 135 operators, supervisors, managers and scientists, including a permanent radiation ofﬁ cer. In the scoping study mining is undertaken by a contractor, but an owner- operator option will be considered in subsequent feasibility studies. It is expected that the majority of employees will work standard FIFO rosters from urban centres such as Perth, but Nova Energy will favour employment of Indigenous people from the Wiluna Community. It is anticipated that the existing Wiluna Gold Operations village would be expanded to accommodate the additional employees. Operating Costs

ESTIMATED ANNUAL PROCESS OPERATING COSTS ( ±30% nominal accuracy) Description Cost A$Million pa % of Total Costs Contract Mining & Supervision 8.3 18.0 Ore Rehandle 1.2 2.6 Process Labour 6.9 15.0 Power 4.1 9.0 Reagents 14.0 30.0 Consumables 2.0 4.3 Maintenance Materials 1.8 4.0 Product Transport 0.2 0.4 Environmental Monitoring 1.5 3.3 Water Supply 0.7 1.5 Dewatering & Water Disposal 1.5 3.3 Tailings Storage 0.8 1.8 General & Administration 3.0 6.5 Total 46.0 100%

Operating Cost @ 750t U3O8/y A$28/lb

Infrastructure

The Lake Way and Centipede uranium deposits are located close to signifi cant regional infrastructure including the Goldfi elds Highway, the Goldfi elds Gas Pipeline, and the bituminised Wiluna air strip.

A 12MW gas power house, processing facilities, supply facilities and water bores are operating at the Wiluna gold mine, approximately 15 kilometres north of the uranium deposits.

Nova Energy has an agreement with Agincourt Resources Limited to use these facilities on commercial terms, provided capacity is available. Capital

CAPITAL COSTS ( ±30% nominal accuracy) Item A$ Million Plant 64.3 Power & Water Infrastructure 10.7 Environmental Permitting 1.0 Roads, Village Expansion etc 3.0 Temporary Facilities 3.0 Engineering, procurement & contract management (EPCM) @ 17% 15.6 Contingency @ 20% 18.4 Mine pre-strip & contractor set-up 3.7 Total 119.7

ANNUAL REPORT 2006 13 DEVELOPMENT PROJECT (CONTINUED)

Tailings Management

A number of options have been considered for tailings storage facilities (TSF). These include:

A In-pit disposal at Wiluna South plus new TSF – no liner

B Expansion of existing TSF at Wiluna South plus new TSF – no liner

C Expansion of existing TSF at Wiluna South plus new TSF – both with liner

The feasibility study will examine the physical and geochemical characteristics of the tailings, along with detailed assessment of the geotechnical and hydrogeological aspects of the selected containment areas, in order to select the most appropriate option. Capital costs range from A$10.6 million for option A, to A$40.3 million for option C. Community

The Company has commenced an engagement process with traditional owners and the Wiluna Community with particular focus on:

Economic beneﬁ ts

Education, training and employment opportunities

Development of Indigenous businesses to support the mining project

Environmental and cultural impacts

Heritage site assessment, awareness and management Plan for 2006-2007

Lake Way – Centipede is one of the most advanced and readily developed uranium projects in Western Australia. A softening of Western Australian State Labor Party uranium mining policy is anticipated if the Australian Labor Party approves a national policy shift in April 2007. Therefore the Nova Energy Board moved to approve a feasibility study, initially focused on long-lead items such as tailings management and groundwater analysis.

14 NOVA ENERGY LIMITED EXPLORATION PROJECTS

Meekatharra (152 km²) E53/1106

Regional radiometric and geomorphic data has deﬁ ned a Yeelirrie-type valley-calcrete target. Following completion of a heritage survey in August 2006, reconnaissance ground surveys conﬁ rmed the presence of radiometrically anomalous calcretes, partially covered by younger alluvium and thick vegetation.

Drilling will take place early in the 2006/2007 year. Grass Patch (1,379 km²) E63/1008, 10009, 1010, 1011, 1012, 1013, 1014, 1015

The Grass Patch Basin contains continental and marginal marine Tertiary and possibly Cretaceous aged sediments which on-lap and overlay Mesoproterozoic gneisses and granitic bedrock. Channel facies ﬂ uvial sediments, containing lignitic sands and silts, have been identiﬁ ed by previous drilling. Basement lithologies include attractive uranium source rocks.

The ﬂ uvial channels may provide host facies for roll-front redox Calcrete (yellow outline) and associated uranium anomalies (red outline) in controlled uranium deposits similar to those in the Lake Frome area E53/1106 (Meekatharra) of South Australia.

The Company is planning an airborne electromagnetic program late in 2006 to assist with the identiﬁ cation of buried channels in the Grass Patch district. Lake Mackay (2,332 km²) ELAs 80/3483, 3484, 3485, 3486, 3519, 3580, 3581, 3582, 3583, 3584, 3585, 3586, 3587, 3588, 3589

The Company continued to evaluate the potential for roll-front mineralisation in Paleozoic sediments and iron-copper-gold type uranium targets in the Lake Mackay region. High grade uranium mineralisation has been intersected in similar stratigraphic and Grass Patch exploration area structural environments at Bigrlyi and Walbiri, 300km to the east.

Two meetings were held with the Kiwirrkurra people, the Traditional Owners and Native Title holders, and limited progress was made towards a land access agreement.

Lake MacKay Region

ANNUAL REPORT 2006 15 EXPLORATION PROJECTS (CONTINUED)

Gilba Bore, Gascoyne (120.3 km²) ELA 08/1640

An application was made for an exploration licence in the Gascoyne region of northwest Australia, covering ca. 1.6Ga Proterozoic vein complexes.

Gilba Bore Project, Gascoyne

SOUTH AUSTRALIA Coober Pedy (911 km²) EL 3437

This area is prospective for Olympic Dam Breccia Complex (ODBC) copper-uranium mineralisation. The tenement lies on a signiﬁ cant north-northeast structural corridor that contains Olympic Dam, Prominent Hill and more recent discoveries at Cairn Hill and Black Hills. The target is covered by about 100 metres of late Proterozoic and Palaeozoic sediments. A heritage survey was recently completed by the Antakirinja Land Management Corporation (ALMAC) and the target area has been cleared for drilling in October 2006.

South Australia IOCG trend

16 NOVA ENERGY LIMITED EXPLORATION PROJECTS (CONTINUED)

NORTHERN TERRITORY Amadeus Basin (9,325 km²) ELAs 25045, 25046, 25047, 25048, 25049, 25050, 25051, 25052

Preliminary ﬁ eld investigations were undertaken in the Amadeus region. The Amadeus Basin and its associated outliers contain continental piedmont and ﬂ uvial sediments belonging to the upper Devonian to Lower Carboniferous Pertnjara and Finke Groups. Grey beds within this stratigraphy may host uranium mineralisation at the contacts with oxidized red beds or at channel related redox fronts. High grade uranium mineralisation occurs in the near-by Pamela and Angela deposits.

A draft exploration deed is being negotiated with the Central Lands Council. Should agreement be reached, ground work will commence in 2007.

Exploration applications in Amadeus Basin sediements, NT.

ANNUAL REPORT 2006 17 EXPLORATION PROJECTS (CONTINUED)

Guinea (858km2) 2006/079,080,153,154

The Company was granted four exploration tenements over known uranium occurrences covering an area of 858km2 in Guinea, West Africa. The tenements are located in northern Guinea, bounded to the north and east by the Senegal and Mali borders, respectively.

Location of Nova Energy project area in Guinea

Uranium mineralisation was identiﬁ ed in northern Guinea in the late 1970s by an exploration joint venture between Cogema, Agip, PNC and ENUSA.

Exploration tenements in northern Guinea

18 NOVA ENERGY LIMITED EXPLORATION PROJECTS (CONTINUED)

Information on previous exploration in the area is fragmentary but historical reports acquired by Nova Energy indicate that uranium mineralisation occurs in at least three units within a Neoproterozoic clastic sequence - a lower sandstone, a middle mudstone and an upper sandstone. Uranium mineralisation up to 7.5 metres thick with grades ranging from 0.01 to 0.79% U were reportedly intersected by previous reconnaissance drilling, but this requires veriﬁ cation.

Cross-section through the Upper Proterozoic stratigraphy of project area in northern Guinea

It is Nova Energy’s intention to identify mineralised units in the ﬁ eld and follow thorough with ground radiometric and geochemical surveys. It is expected that inﬁ ll drilling of high grade zones will be undertaken in 2007.

ANNUAL REPORT 2006 19 SAFETY AND ENVIRONMENT

Nova Energy is committed to high standards of safety and environmental management. During the year the Company established the following policies and plans:

• Health & Safety Policy

• Radiation Management Plan*

• Fieldwork Safety Manual

• Environment Policy

* approved by the WA Department of Industry & Resources (DOIR)

COMMUNITY

During the year, the Company established a Community Policy which incorporates open communication about uranium exploration and mining. Nova Energy produced a booklet called “Guide to Uranium Exploration” and made several presentations to remote area Communities about uranium exploration and mining. The Company was also active in Perth-based Community forums and discussion groups, advocating for an expansion of the Australian uranium mining industry.

The Sir Samuel native title group meeting with the directors of Nova Energy at the Centipede Project, August 2006.

20 NOVA ENERGY LIMITED FINANCIALS DIRECTORS’ REPORT

The Directors of Nova Energy Limited (“Nova” or “the Company”) present their report for the ﬁ nancial year ended 30 June 2006 and the auditor’s report thereon.

1. DIRECTORS

The Directors of the Company at any time during or since the end of the ﬁ nancial year are:

Ms Erica Smyth Non Executive Chairperson – BSc (Hons), MSc (Appl), FAICD. Appointed 20 April 2006

Ms Smyth has over 30 years experience in the mineral and petroleum industries. She was Principal Geologist for BHP Minerals Ltd and BHP-Utah Minerals International’s Beenup Project Manager; Manager Gas Market Development WA for BHP Petroleum; and more recently General Manager – Corporate Affairs for Woodside Petroleum Limited. She is currently the Principal of Voice4U, a consultancy focused on community and government consultation, sustainability, regional development, and strategic planning. Ms Smyth is a Fellow of the Australian Institute of Company Directors and a Trustee of the Committee for Economic Development Australia. She is a director of Azumah Resource Ltd, the Cooperative Research Centre for Sustainable Resource Processing and the Swan Care Group. She is also the Pro-Chancellor at the University of Western Australia

Dr Timothy Sugden Managing Director – BSc (Hons), PhD Appointed 12 August 2005 Chairperson from 12 August 2005 to 20 April 2006 Managing Director from 24 January 2006 to present.

Dr Sugden has over nineteen years experience in mine geology, mineral exploration, metallurgy, research & development, operations management, and company management. He has previously worked at BHP Billiton’s Olympic Dam Project, one of the world’s largest uranium mines, and held senior management positions with Wiluna Mines Limited, Great Central Mines Limited, Normandy Mining Limited, Newmont Australia Limited, and Agincourt Resources Limited. Dr Sugden is currently a director of Agincourt Resources Limited, from 4 December 2003 to present.

Mr Peter Bowler Non-Executive Director - Dip Farm Management (Hons) Appointed 12 August 2005

Mr Bowler has been involved with the Wiluna Gold Mine for more than ten years and worked in the gold industry for over twenty years. He has extensive business management experience having owned businesses in the earthmoving and ore handling industry as well as commercial property, agricultural and pastoral businesses. Mr Bowler has also been involved in successful contract negotiations, overseeing the full feasibility of open pit projects, completion of very sensitive heritage clearances with local Indigenous communities and completion of regulatory clearances. Mr Bowler is currently a director of Agincourt Resources Limited, from 4 December 2003 to present.

Mr Richard Pearce Non-Executive Director – BSc (Hons), MBA Appointed 20 April 2005 Non-Executive Director from 20 April 2005 to 23 August 2005 Managing Director from 23 August 2005 to 20 October 2005 Non-Executive Director from 20 October 2005 to present.

Mr Pearce has been a Managing Director of WildHorse Energy since November 2005 to present. WildHorse Energy is a company focused on development of uranium mining assets in North America and Europe. Mr Pearce was also a co-founder of Oyster Consulting, a management consulting business developing strategy and operational improvement programs for the natural resources industries. Mr Pearce has been a Director of OzOne Investments Pty Ltd since March 2006 to present. OzOne Investments Pty Ltd is a private company investing in land and the rural industry sector in Australia. He has previously worked with KPMG Consulting in Australia and South America, as a leader in the energy and Natural Resources practice, focused on business strategy and business improvement. Earlier, Mr Pearce worked in a number of operational, commercial and strategic roles in the Rio Tinto organisation in the UK, the US and Australia, and Accenture in the Middle East and Europe. Mr Pearce received an MBA from the Australian Graduate School of Management. He studied Geophysics at the University of Exeter, UK, graduating with honours. Mr Pearce also studied Project Finance at the Royal School of Mines, Imperial College, London and geostatistics at the Ecole de Geostatistique, Fontainebleau.

22 NOVA ENERGY LIMITED DIRECTORS’ REPORT (CONTINUED)

2. DIRECTOR RESIGNATIONS

Dr Vanessa Guthrie Non-Executive Director - Appointed 20 April 2005, Resigned 20 April 2006 Mr Kent Hunter Non-Executive Director - Appointed 29 October 2004, Resigned 12 August 2005 Company Secretary - Appointed 29 October 2004, Resigned 12 August 2005 Mr Edward Rigg Executive Director - Appointed 29 October 2004, Resigned 01 July 2005

3. COMPANY SECRETARY

The Company Secretary of the Company at the end of the fi nancial year is: Mr Gregory Barrett CA, FFin, B Comm Appointed 12 August 2005 Mr Barrett is a Chartered Accountant, a Fellow of the Financial Services Institute of Australasia and holds a Bachelor of Commerce degree. He worked for KPMG, a large international Chartered Accounting fi rm, before specialising in the mining industry. He has over fi fteen years management, corporate advisory, fi nance and accounting experience working for several listed and unlisted public companies for which he has held the role as Company Secretary for the past ten years.

ANNUAL REPORT 2006 23 DIRECTORS’ REPORT (CONTINUED)

4. DIRECTORS’ MEETINGS

Refer to the Directors’ section above for details of when directors were appointed and resigned.

Meetings of Directors The number of meetings of the Company’s Directors held and attended during the year ended 30 June 2006 were:

Number of Meetings Board of Directors Held + Attended

Ms Erica Smyth 2 2 Dr Tim Sugden 8 8 Mr Peter Bowler 8 6 Mr Richard Pearce 9 9 Dr Vanessa Guthrie 7 7 Mr Kent Hunter 1 - Mr Edward Rigg 1 1

Meetings of Audit Committee The number of meetings of the Company’s Audit Committee held and attended during the year ended 30 June 2006 were:

Number of Meetings Audit Committee Held + Attended

Mr Peter Bowler 1 1 Mr Richard Pearce (appointed to audit committee – 1/06/06) - - Dr Tim Sugden (resigned from audit committee – 1/06/06) 1 1

Meetings of Remuneration and Nomination Committee The number of meetings of the Company’s Remuneration and Nomination Committee held and attended during the year ended 30 June 2006 were:

Number of Meetings Remuneration and Nomination Committee Held + Attended

Ms Erica Smyth 2 2 Mr Peter Bowler 2 2

+ Number of meetings held during the year whilst the Director held ofﬁ ce.

24 NOVA ENERGY LIMITED DIRECTORS’ REPORT (CONTINUED)

5. CORPORATE GOVERNANCE STATEMENT

This statement outlines the main corporate governance practices in place throughout the ﬁ nancial year, which comply with the ASX Corporate Governance Council recommendations unless otherwise stated.

5.1. BOARD OF DIRECTORS 5.1.1. ROLE OF THE BOARD AND MANAGEMENT The Board of Directors of Nova Energy Limited is responsible for its corporate governance, that is, the system by which the Company and its subsidiaries are managed. In carrying out its responsibilities, the Board undertakes to serve the interests of shareholders, employees and the broader community honestly, fairly, diligently and in accordance with applicable laws.

The Board represents shareholders’ interests in managing the Company’s business, which seeks to optimise medium to long-term ﬁ nancial gains for shareholders. By not focusing on short-term gains for shareholders, the Board believes that this will ultimately result in the interests of all stakeholders being appropriately addressed when making business decisions.

The Board is responsible for ensuring that the Company is managed in such a way to best achieve this desired result. The Board is responsible for evaluating and setting the strategic directions for the Company, establishing goals for management and monitoring the achievement of these goals. The Managing Director is responsible to the Board for the day-to-day management of the Company.

The Board’s role and the Company’s corporate governance practices are being continually reviewed and improved as the Company’s business develops.

5.1.2. COMPOSITION OF THE BOARD AND NEW APPOINTMENTS The names of the Directors of the Company in ofﬁ ce at the date of this report are set out in this Directors’ Report.

The Company’s Constitution provides that the number of directors shall not be less than three and not more than ten. There is no requirement for any share holding qualiﬁ cation. The Board considers the appointment of additional Non-Executive Directors. The Board believes that the individuals on the Board can make, and do make, quality and independent judgments in the best interests of the Company on all relevant issues.

If the Company’s activities increase in size, nature and scope the size of the Board will be reviewed periodically and the optimum number of directors required for the Board to properly perform its responsibilities and functions.

A Remuneration and Nomination Committee meets regularly to assess and make recommendations to the Board regarding the membership of the Board, including proposed new appointments. Where appropriate, independent consultants are engaged to identify possible new candidates for the Board.

The membership of the Board, its activities and composition is subject to periodic review. The criteria for determining the identiﬁ cation and appointment of a suitable candidate for the Board shall include quality of the individual, background of experience and achievement, compatibility with other Board members, credibility within the Company’s scope of activities, intellectual ability to contribute to Board’s duties and physical ability to undertake Board’s duties and responsibilities.

Directors are initially appointed by the full Board subject to election by shareholders at the next general meeting. Under the Company’s Constitution the tenure of directors (other than Managing Director, and only one Managing Director where the position is jointly held) is subject to reappointment by shareholders not later than the third anniversary following his last appointment. Subject to the requirements of the Corporations Act 2001, the Board does not subscribe to the principle of retirement age and there is no maximum period of service as a director. A Managing Director may be appointed for any period and on any terms the directors think ﬁ t and, subject to the terms of any agreement entered into, the Board may revoke any appointment.

5.1.3. COMMITTEES OF THE BOARD To assist the Board in carrying out its responsibilities, the Board has the following committees:

• Audit Committee • Remuneration and Nomination Committee

5.1.4. CONFLICT OF INTEREST In accordance with the Corporations Act and the Company’s Constitution, Directors must keep the Board advised, on an ongoing basis, of any interest that could potentially confl ict with those of the Company. Where the Board believes that a signifi cant confl ict exists, the Director concerned does not receive the relevant Board papers and is not present at the meeting whilst the item is considered.

ANNUAL REPORT 2006 25 DIRECTORS’ REPORT (CONTINUED)

5. CORPORATE GOVERNANCE STATEMENT (CONTINUED)

5.1.5. INDEPENDENT PROFESSIONAL ADVICE The Board has determined that individual Directors have the right in connection with their duties and responsibilities as Directors, to seek independent professional advice at the Company’s expense. The engagement of an outside adviser is subject to prior approval of the Chairperson and this will not be withheld unreasonably. If appropriate, any advice so received will be made available to all Board members.

5.2. ETHICAL STANDARDS The Board acknowledges the need for continued maintenance of the highest standard of corporate governance practice and ethical conduct by all Directors and employees of the Company.

5.2.1. CODE OF CONDUCT FOR DIRECTORS The Board has adopted a Code of Conduct for Directors to promote ethical and responsible decision-making by the Directors. The code is based on a code of conduct for Directors prepared by the Australian Institute of Company Directors.

The principles of the code are:

• A director must act honestly, in good faith and in the best interests of the Company as a whole. • A director has a duty to use due care and diligence in fulfi lling the functions of offi ce and exercising the powers attached to that offi ce. • A director must use the powers of offi ce for a proper purpose, in the best interests of the Company as a whole. • A director must recognise that the primary responsibility is to the Company’s shareholders as a whole but should, where appropriate, have regard for the interest of all stakeholders of the Company. • A director must not make improper use of information acquired as a director. • A director must not take improper advantage of the position of director. • A director must not allow personal interests, or the interests of any associated person, to confl ict with the interests of the Company. • A director has an obligation to be independent in judgment and actions and to take all reasonable steps to be satisfi ed as to the soundness of all decisions taken as a Board. • Confi dential information received by a director in the course of the exercise of directorial duties remains the property of the Company and it is improper to disclose it, or allow it to be disclosed, unless that disclosure has been authorised by the Company, or the person from whom the information is provided, or is required by law. • A director should not engage in conduct likely to bring discredit upon the Company. • A director has an obligation at all times, to comply with the spirit, as well as the letter of the law and with the principles of the Code.

The principles are supported by guidelines as set out by the Australian Institute of Company Directors for their interpretation. Directors are also obliged to comply with the Company’s Code of Ethics and Conduct, as outlined below.

5.2.2. CODE OF ETHICS AND CONDUCT The Company has implemented a Code of Ethics and Conduct, which provides guidelines aimed at maintaining high ethical standards, corporate behaviour and accountability within the Company. All employees and directors are expected to:

• respect the law and act in accordance with it; • respect conﬁ dentiality and not misuse Company information, assets or facilities; • value and maintain professionalism; • avoid real or perceived conﬂ icts of interest; • act in the best interests of shareholders; • by their actions contribute to the Company’s reputation as a good corporate citizen which seeks the respect of the community and environment in which it operates; • perform their duties in ways that minimise environmental impacts and maximise workplace safety; • exercise fairness, courtesy, respect, consideration and sensitivity in all dealings within their workplace and with customers, suppliers and the public generally; and • to act with honesty, integrity, decency and responsibility at all times.

An employee that breaches the Code of Ethics and Conduct may face disciplinary action. If an employee suspects that a breach of the Code of Ethics and Conduct has occurred or will occur, he or she must report that breach to management. No employee will be disadvantaged or prejudiced if he or she reports in good faith a suspected breach. All reports will be acted upon and kept conﬁ dential.

26 NOVA ENERGY LIMITED DIRECTORS’ REPORT (CONTINUED)

5. CORPORATE GOVERNANCE STATEMENT (CONTINUED)

5.2.3. DEALINGS IN COMPANY SECURITIES The Company’s share trading policy applies to all Employees and Contractors employed by the Company with “inside information” and imposes trading restrictions. Additional trading restrictions apply to Directors of the Company.

‘Inside information’ is information that:

• is not generally available; and • if it were generally available, it would, or would be likely to inﬂ uence investors in deciding whether to buy or sell the Company’s securities.

If an Employee or Contractor possesses inside information, the person must not trade in the Company’s securities;

• advise others or procure others to trade in the Company’s securities; or • pass on the inside information to others – including colleagues, family or friends – knowing (or where the employee or Director should have reasonably known) that the other persons will use that information to trade in, or procure someone else to trade in, the Company’s securities.

This prohibition applies regardless of how the Employee, Contractor or Director learns the information, (eg. even if the Employee, Contractor or Director overhears it or is told in a social setting).

Directors must notify the Company Secretary as soon as possible after they have bought or sold the Company’s securities or exercised options. In accordance with the provisions of the Corporations Act and the Listing rules of the ASX, the Company on behalf of the Directors must advise the ASX of any transactions conducted by them in the securities of the Company.

Breaches of this policy will be subject to disciplinary action, which may include termination of employment.

5.2.4. INTERESTS OF OTHER STAKEHOLDERS The Company is committed to managing its activities in a socially and environmentally responsible manner. The Company strives to build mutually beneﬁ cial and sustainable relationships with the local community and key stakeholders.

To assist in meeting its objective, the Company conducts its business within the Code of Ethics and Conduct, as outlined in 5.2.2 above.

5.3. DISCLOSURE OF INFORMATION 5.3.1. CONTINUOUS DISCLOSURE TO ASX The continuous disclosure policy requires all executives and Directors to inform the Managing Director or in his absence the Company Secretary of any potentially material information as soon as practicable after they become aware of that information.

Information is material if it is likely that the information would inﬂ uence investors who commonly acquire securities on ASX in deciding whether to buy, sell or hold the Company’s securities.

Information is not material and need not be disclosed if:

• A reasonable person would not expect the information to be disclosed or is material but due to a specifi c valid commercial reason is not to be disclosed; or • The information is confi dential; or • One of the following applies: • It would breach a law or regulation to disclose the information; • The information concerns an incomplete proposal or negotiation; • The information comprises matters of supposition or is insuffi ciently defi nite to warrant disclosure; • The information is generated for internal management purposes; • The information is a trade secret; or • It would breach a material term of an agreement, to which the Company is a party, to disclose the information.

The Managing Director is responsible for interpreting and monitoring the Company’s disclosure policy in consultation with the Board. The Company Secretary is responsible for all communications with ASX.

ANNUAL REPORT 2006 27 DIRECTORS’ REPORT (CONTINUED)

5. CORPORATE GOVERNANCE STATEMENT (CONTINUED)

5.3.2. COMMUNICATION WITH SHAREHOLDERS The Company places considerable importance on effective communications with shareholders.

The Company’s communication strategy requires communication with shareholders and other stakeholders in an open, regular and timely manner so that the market has sufﬁ cient information to make informed investment decisions on the operations and results of the Company. The strategy provides for the use of systems that ensure a regular and timely release of information about the Company is provided to shareholders.

Mechanisms employed include:

• Announcements lodged with ASX; • ASX Quarterly Reports; • Half Yearly Report; • Presentations at the Annual General Meeting/General Meetings; and • Annual Report.

The Board encourages full participation of shareholders at the Annual General Meeting to ensure a high level of accountability and understanding of the Company’s strategy and goals. The Company also posts all reports, ASX and media releases and copies of signiﬁ cant business presentations on the Company’s website.

5.4. RISK MANAGEMENT 5.4.1. IDENTIFICATION OF RISK The Board is responsible for the oversight of the Company’s risk management and control framework. Responsibility for control and risk management is delegated to the appropriate level of management within the Company with the Managing Director and Company Secretary having ultimate responsibility to the Board for the risk management and control framework.

Arrangements put in place by the Board to monitor risk management include:

• monthly reporting to the Board in respect of operations and the ﬁ nancial position of the Company; • quarterly rolling forecasts prepared; and • circulate minutes of the Audit Committee and Remuneration and Nomination Committee to the Board and the Chairperson of each respective committee and provide a report to the Board on an annual basis.

5.4.2. INTEGRITY OF FINANCIAL REPORTING The Company’s Managing Director and Company Secretary report in writing to the Board that:

• the statements of the Company for each half and full year present a true and fair view, in all material aspects, of the Company’s ﬁ nancial condition and operational results and are in accordance with accounting standards; • the above statement is founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the Board; and • the Company’s risk management and internal compliance and control framework is operating efﬁ ciently and effectively in all material respects.

5.4.3. ROLE OF AUDITOR The auditor attends the Annual General Meeting and will be available to answer shareholder questions about the conduct of the audit and the preparation and content of the auditor’s report.

5.5 PERFORMANCE REVIEW The Board has adopted a self-evaluation process to measure its own performance and the performance of its committees during each ﬁ nancial year. Also, an annual review is undertaken in relation to the composition and skills mix of the directors of the Company.

Arrangements put in place by the Board to monitor the performance of the Company’s executives include:

• a review by the Board of the Company’s ﬁ nancial performance; • annual performance appraisal meetings incorporating analysis of key performance indicators with each individual; • and regular reporting from the Chairperson of the Remuneration and Nomination Committee which monitors the performance of the Company’s executives to ensure that the level of reward is aligned with respective responsibilities and individual contributions made to the success of the Company.

28 NOVA ENERGY LIMITED DIRECTORS’ REPORT (CONTINUED)

5. CORPORATE GOVERNANCE STATEMENT (CONTINUED)

5.6 COMPLIANCE WITH ASX CORPORATE GOVERNANCE RECOMMENDATIONS The Board and Management of Nova Energy Limited are committed to good corporate governance and have adopted the ASX Corporate Governance Council’s Best Practice Recommendations (“Recommendations”) except as noted in the table below. The Recommendations are available on the Australian Stock Exchange website at www.asx.com.au. The Company provides up to date information on Corporate Governance and details its conformity with the Recommendations on the Company’s website at www.novaenergy.com.au.

Principle Ref. Recommendation Ref. Notiﬁ cation of Departure Explanation for Departure

2. 2.1 The majority of the Board The Company currently has three Non-Executive Directors, Composition of are not Independent two are considered by the Board to be independent in terms the Board Directors. of the ASX Corporate Governance Council’s deﬁ nition of independent in accordance with Recommendation 2.1, however the Board believes that the individuals of the Board can make, and do make, quality and independent judgements in the best interests of the Company on all relevant issues.

2. 2.2 The Chairperson should be During the year Dr Tim Sugden held the position of Composition of an independent Director. Chairperson and Managing Director from 24 January the Board 2006 to 20 April 2006. This was an interim phase while the Board searched for a qualiﬁ ed independent chairperson. The Board believes that during this time the ability to make quality and independent judgements in the best interests of the Company on all relevant issues was not compromised. However, the Chairperson of the Company has been an independent Director since 20 April 2006.

4. 4.3 The Audit Committee The Audit Committee does not consist of a majority of Integrity of are not all Independent independent Directors, and does not have at least three Financial Reports Directors members in accordance with the Recommendations. As there are only two independent Directors on the Board of the Company it is not possible to fully comply with this Recommendation, however the Board believes the individuals on the Audit Committee can make, and do make, quality and independent judgements in the best interests of the Company on all ﬁ nancial report related issues. However, the Chairperson of the Audit Committee has been an independent Director since 20 April 2006.

ANNUAL REPORT 2006 29 DIRECTORS’ REPORT (CONTINUED)

6. AUDIT COMMITTEE

The Audit Committee has a documented charter, approved by the Board. The committee advises on the establishment and maintenance of a framework of internal control and appropriate ethical standards for the management of the Company.

The members of the Audit Committee during the year were:

• Mr Peter Bowler, Dip Farm Management (Hons) – Non-Executive Director • Mr Richard Pearce, BSc (Hons), MBA – Non-Executive Director (appointed to audit committee 1/06/06) • Dr. Tim Sugden, BSc, (Hons), PhD – Non-Executive Director (resigned from audit committee 1/06/06)

The external auditors, and the Company Secretary, are invited to Audit Committee meetings at the discretion of the committee. The committee met one time during the year and committee members’ attendance record is disclosed in the table of Directors’ Meetings.

The Managing Director and Company Secretary declared in writing to the Board that the fi nancial records of the Company for the fi nancial year have been properly maintained, the Company’s fi nancial reports for the fi nancial year ended 30 June 2006 comply with accounting standards and present a true and fair view of the Company’s fi nancial condition and operational results. This statement is required annually.

7. RISK MANAGEMENT

Financial Reporting The Managing Director and the Company Secretary have declared, in writing to the Board that the Company’s ﬁ nancial reports are founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the Board.

Monthly actual results are reported against budgets approved by the directors and revised forecasts for the year are prepared regularly.

Convergence with Australian equivalents to International Financial Reporting Standards (AIFRS) has been a key ﬁ nancial reporting project during the ﬁ nancial year ended 30 June 2006. The Board established a formal project to ensure a smooth transition to AIFRS reporting.

Details of the impact of transition from previous Australian Generally Accepted Accounting Principles (AGAAP) to AIFRS on the fi nancial report for the fi nancial year ended 30 June 2006 is included in note 22 to the fi nancial statements.

Environmental Regulation The Company holds various environmental licences and authorities to regulate its exploration activities in Australia and Guinea. These licences include conditions and regulations which specify limits on discharges to the environment and rehabilitation of areas disturbed during the course of mining and exploration activities.

So far as the Directors are aware there has been no known breach of the Company’s licence conditions and all exploration activities comply with all relevant environmental regulations.

30 NOVA ENERGY LIMITED DIRECTORS’ REPORT (CONTINUED)

8. PRINCIPAL ACTIVITIES

The principal activities of the Company during the course of the ﬁ nancial year were to explore for and develop uranium deposits in Australia and Africa.

Objectives

The Company’s Principle Objective is to become a signiﬁ cant and proﬁ table uranium producer. This will be achieved by:

• Mining uranium resources in Western Australia, requiring;

• Completing a Bankable Feasibility Study at Lake Way and Centipede,

• Gaining State and Federal Government approval for mining uranium, and

• Promoting uranium as an environmentally-friendly energy source.

• Conducting exploration activities in jurisdictions that are favourably disposed towards uranium in Australia and Africa, and

• Acquiring additional uranium resources and/or exploration properties.

In order to achieve these objectives, the following targets have been set for the 2007 and later ﬁ nancial years:

• Completion of inﬁ ll drilling and re-logging of old holes at Centipede and Lake Way,

• Pursuing negotiations to acquire additional resources in the Wiluna area,

• Re-optimising ore resources,

• Commencing long-lead components of feasibility study (including tailings management and groundwater studies),

• Drilling exploration targets at Meekatharra, Western Australia and Coober Pedy, South Australia,

• Undertaking various geophysical programmes and on ground activities in Western Australia and the Northern Territory,

• Commencing a drill program in Guinea, and

• Reviewing new project opportunities throughout Australia and Africa.

9. OPERATING AND FINANCIAL REVIEW

Overview of the Company

The Income Statement shows a loss before tax of $670,000 (2005: $60,000). The income tax beneﬁ t of Nil (2005 expense: Nil) resulted in a net loss after tax of $670,000 (2005: $60,000).

Milestones In the 2006 ﬁ nancial year, the Company achieved the following signiﬁ cant milestones:

• Listed on the ASX on 23 August 2005 and raised $6.0 million,

• Established a JORC-compliant resources at the Lake Way and Centipede uranium deposits,

• Completed a scoping study of aforementioned uranium deposits,

• Acquired exploration properties in Western Australia, South Australia and the Northern Territory,

• Commenced land access negotiations at a number of properties,

• Acquired exploration properties in Guinea, West Africa, and

• Reviewed uranium exploration and development opportunities at a number of global locations.

ANNUAL REPORT 2006 31 DIRECTORS’ REPORT (CONTINUED)

9. OPERATING AND FINANCIAL REVIEW (CONTINUED)

Review of Financial Condition Capital Structure and Treasury Policy The Company has no bank debt. Funds surplus to operating requirements are invested in high yielding A credit rated commercial bills and term deposits.

Liquidity and Funding As at the 30 June 2006 the Company had a cash position of $3,282,000.

Cash Flows from Operations Operations produced a cash outﬂ ow for the year, before capital and exploration, of $554,000.

Impact of Legislation and Other External Requirements From 1 July 2005 the Company is required to comply with Australian equivalents to International Financial Reporting Standards (AIFRS) issued by the Australian Accounting Standards Board. The expected impact of the resulting changes in accounting policies are disclosed in Note 22 of the ﬁ nancial report.

Review of Principal Businesses Lake Way & Centipede Development Project

A considerable volume of historical drilling and assay data was used to determine a JORC-compliant Inferred Mineral Resource of 15.5 million tonnes @ 0.06%

U3O8 for the Lake Way and Centipede uranium deposits. Further resource defi nition work was inhibited by missing data or land access delays. A heritage survey was undertaken in the southern area in July 2006, allowing infi ll and extensional work to commence in the fi rst quarter of the 2007 fi nancial year. GRD Minproc completed a scoping study that confi rmed that a mining project is economically viable. At a mining and milling rate of 1.5 million tonnes per annum, the project would produce about 750 tonnes U3O8 per annum at an operating cost of $28/lb. Capital costs (with a nominal accuracy of +/- 30%) were estimated to be $119.7 million. Tailings costs range from $10.6 million to $40.3 million depending on the management option selected. Broad project parameters were presented to the local Wiluna community in July 2006. The project cannot be developed while the State Labor Government maintains a prohibition on uranium mining. However, there are positive developments at the Federal level, and it is widely anticipated that at the Australian Labor Party Conference in April 2007, the “No New Mines” Policy will be abandoned in favour of a more progressive policy.

Regional Exploration

On-ground activities on all the Company’s Australian exploration tenements were delayed by land access issues. A heritage survey was completed at the Coober Pedy Project in South Australia, allowing drilling to commence in the fi rst quarter of the 2007 fi nancial year. An objection in the Grass Patch area, north of Esperance, delayed the grant of exploration tenements, but it is expected that aerial EM surveys can commence in October 2006. Heritage surveys are planned for the Meekatharra exploration target in September 2006, allowing reconnaissance RAB drilling to commence soon after. Land access negotiations in the Lake Mackay area in central Australia are expected to continue until at least early 2007. Signifi cant progress was made towards an Exploration Deed in the Amadeus Basin in the Northern Territory. Ground work in Guinea, West Africa will commence in late 2006.

32 NOVA ENERGY LIMITED DIRECTORS’ REPORT (CONTINUED)

10. SIGNIFICANT CHANGES IN STATE OF AFFAIRS

Nova was admitted to the ofﬁ cial list of the Australian Stock Exchange on 19 August 2005. Ofﬁ cial quotation of securities commenced on 23 August 2005.

On 12 August 2005, the Company issued 15 million fully paid ordinary shares at $0.40 each to raise a total of $6,000,000, before the costs of capital raising.

On 12 August 2005, the Company exercised its option over the Lake-Way tenement by the payment of 1,500,000 fully-paid ordinary shares and $150,000 to Allarrow Pty Ltd (“Allarrow”).

On 12 August 2005, the Company paid a further $100,000 and issued a further 1,500,000 shares to Allarrow as settlement upon achievement of the First Milestone Event (conversion of the Exploration Licence Application to a granted Exploration Licence) pursuant to the terms of the sale agreement between Nova and Allarrow.

On 12 August 2005, the Company issued 32,500,000 shares to Agincourt Resources Limited in accordance with the Rights and Usage Agreement, for the acquisition of the Uranium Rights over the Centipede tenements and certain rights to infrastructure at the Wiluna Gold Mine.

11. EVENTS SUBSEQUENT TO REPORTING DATE

There has not arisen in the interval between the end of the fi nancial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors of the Company, to affect signifi cantly the operations of the Company, the results of those operations, or the state of affairs of the Company, in future fi nancial years.

12. LIKELY DEVELOPMENTS

Likely developments are the continued exploration and evaluation of uranium projects on the tenements owned or controlled by the Company; signiﬁ cant resource increases as a result of drilling, remodelling and ground or uranium rights acquisitions; and, new exploration projects in Australia and Africa. Disclosure of any further information has not been included in this Directors’ report because, in the opinion of the Directors, to do so would result in unreasonable prejudice to the Company.

13. DIRECTORS’ INTERESTS

The relevant interest of each Director in the shares or options within the Company or any related body corporate, as notiﬁ ed by the Directors to the Australian Stock Exchange in accordance wwth S205G(1) of the Corporations Act 2001, at the date of this report is as follows:

Director Note Ordinary Shares

Ms Erica Smyth - Dr Tim Sugden (i) 32,750,000 Mr Peter Bowler (i) 33,000,000 Mr Richard Pearce 400,000

(i) 32,500,000 of these shares are held by Agincourt Resources Limited of which Dr Tim Sugden and Mr Peter Bowler are directors.

There were no options granted to Directors during the year.

14. SHARE OPTIONS

Options Granted to Directors’ and Ofﬁ cers of the Company

During or since the end of the ﬁ nancial year, the Company did not grant any options over unissued ordinary shares in Nova Energy Limited.

Unissued Shares of the Company Under Option At the date of this report there were no unissued ordinary shares of the Company under option.

Shares Issued on Exercise of Options During or since the end of the ﬁ nancial year, the Company did not issue any ordinary shares as a result of the exercise of options.

ANNUAL REPORT 2006 33 DIRECTORS’ REPORT (CONTINUED)

15. DIRECTORS AND OFFICERS’ INDEMNIFICATION AND INSURANCE

The Company provides insurance to cover legal liability and expenses for the Directors and Executive Offi cers of the Company. The Directors’ and Offi cers’ liability insurance provides cover against all costs and expenses that may be incurred in defending civil or criminal proceedings that fall within the scope of the indemnity and that may be brought against the offi cers in their capacity as offi cers. Disclosure of the nature of the liability cover and the amount of the premium is subject to a confi dentiality clause under the insurance policy.

The Company has entered into an agreement with the Directors and certain ofﬁ cers to indemnify these individuals against any claims and related expenses, which arise as a result of their work in their respective capacities.

The Company has not provided any insurance or indemnity for the auditor of the Company.

16. NON-AUDIT SERVICES

During the year KPMG, the Company’s auditor, has performed certain other services in addition to their statutory duties.

The Board has considered the non-audit services provided during the year by the auditor and is satisﬁ ed that the provision of those non-audit services during the year by the auditor is compatible with, and did not compromise, the auditor independence requirements of the Corporations Act 2001, for the following reasons:

• all non-audit services were subject to the corporate governance procedures adopted by the Company and have been reviewed by the audit committee to ensure they do not impact the integrity and objectivity of the auditor; and

• the non-audit services provided do not undermine the general principles relating to auditor independence as set out in Professional Statement F1 Professional independence, as they did not involve reviewing or auditing the auditor’s own work, acting in a management or decision making capacity for the Company, acting as an advocate for the Company or jointly sharing risks and rewards.

A copy of the auditors’ independence declaration as required under Section 307C of the Corporation Act is included in the Directors’ Report.

Details of the amounts paid to the auditor of the Company, KPMG, and its related practices for audit and non-audit services provided during the year are set out below.

2006 2005 $$

Audit Services Auditors of the Company Audit and review of ﬁ nancial reports (KPMG Australia) 19,000 7,750 19,000 7,750

Services other than statutory audit Auditors of the Company Taxation advisory and compliance services (KPMG Australia) 3,500 - 3,500 -

34 NOVA ENERGY LIMITED DIRECTORS’ REPORT (CONTINUED)

17. REMUNERATION REPORT

17.1. PRINCIPLES OF REMUNERATION - AUDITED

The broad remuneration policy is to ensure that remuneration properly refl ects the relevant person’s duties and responsibilities, and that the remuneration is competitive in attracting, retaining and motivating people of the highest quality. The Board believes that the best way to achieve this objective is to provide Executive Directors and Executives with a remuneration package consisting of a fi xed component and a variable component that together refl ect the person’s responsibilities, duties and personal performance. Executive Director’s remuneration includes an equity-based incentive formula.

The remuneration of Non-Executive Directors is determined by the Board as a whole having regard to the level of fees paid to Non-Executive Directors by other companies of similar size in the industry.

The Board has established a Remuneration and Nomination Committee responsible for making recommendations to the Board on remuneration arrangements for Directors and Executives of the Company.

17.1.1. FIXED REMUNERATION - AUDITED Fixed remuneration consists of base remuneration as well as employer contributions to superannuation funds. Remuneration levels are reviewed annually through a process that considers individual, segment and overall performance of the Company.

17.1.2. PERFORMANCE LINKED REMUNERATION - AUDITED Performance linked remuneration includes short-term cash incentives and long-term equity-based incentives and is designed to reward employees for meeting or exceeding their ﬁ nancial and personal objectives.

17.1.3. SHORT-TERM INCENTIVE BONUS - AUDITED The short-term incentive is an “at risk” bonus in the form of cash which is calculated based on an assessment of key performance indicators, including share price performance, business growth, exploration success and safety, environment and community issues.

17.1.4. LONG-TERM INCENTIVE - AUDITED The long-term incentive is in the form of options. An Employee Option Scheme will be established by the Company at the next General Meeting. During the ﬁ nancial year no options were issued.

17.1.5. SERVICE AGREEMENTS – AUDITED

17.1.5.1. EXECUTIVE DIRECTORS - AUDITED It is the Company’s policy that the contract for the Managing Director, Dr Tim Sugden, is for an initial term of three years and extendable by mutual consent for additional periods. If the Company does not intend to extend the contract, at least one month written notice will be provided. He has a Service Agreement dated 24 January 2006.

Dr Sugden receives a base salary and a performance bonus is determined at the end of each ﬁ nancial year. The maximum value of the bonus shall be ﬁ fty per cent of base salary. Dr Sugden may elect to receive the bonus in cash or as Nova Energy options, or a combination of both.

Contracts may be terminated by the Company forthwith if the Managing Director breaches duties connected with the performance of services; commits an act of bankruptcy; engages in misconduct; is of ill health or of unsound mind. If the Managing Director elects to terminate the contract, three months written notice will be provided to the Company. Under such circumstances the Company will pay an amount equal to the aggregate of unpaid salary, annual leave and long service leave accrued to the date of termination.

ANNUAL REPORT 2006 35 DIRECTORS’ REPORT (CONTINUED)

17. REMUNERATION REPORT (CONTINUED)

17.1.5.1. EXECUTIVE DIRECTORS – AUDITED (CONTINUED) If the Managing Director and the Company agree to terminate the contract by mutual consent, or if the Managing Director is removed, or if the Company enters into a deed of arrangement with creditors, placed under the control of receivers or is in breach of regulations, and provided that the contract has operated for three years or more the Company will pay a sum to the Managing Director calculated in accordance with Section 200G9(3) of the Corporations Act. In the event that the contract has operated for less than three years, the Company will pay to the Managing Director an amount equal to one year’s salary.

The Company provides insurance for Executive Directors for any liability arising from statute or common law and public indemnity insurance in respect of shareholder or third party actions. The Company also provides for Executive Directors, life insurance, disablement insurance and salary continuance insurance.

The Remuneration and Nomination Committee undertakes to review Directors’ remuneration on an annual basis to take into account changes to the cost of living and changes in the scope of the Directors’ roles and responsibilities. If warranted, the Remuneration and Nomination Committee may approve bonus payments up to a reasonable limit for exceptional performance.

17.1.5.2. EXECUTIVE OFFICERS - AUDITED It is the Company’s policy not to enter Service Agreements with Executive Ofﬁ cers. Dr Burkhard Eisenlohr has a common law contract of employment with the Company. The standard employment contract is for a twelve month term and may be terminated with four weeks written notice.

17.2. DIRECTORS’ AND EXECUTIVE OFFICERS’ REMUNERATION - AUDITED

Details of the nature and amount of each major element of the remuneration of each Director of the Company and each of the named Company executives and relevant group executives who receive the highest remuneration are:

Nature and amount of remuneration for the year ended 30 June 2006 Post- Short – term employment Other Proportion of Remuneration Salary & Insurance Performance Directors’ Fees Bonus Super Premiums Total Related $$$$$%

Non-Executive Directors Ms E Smyth - Chairperson(a) 8,887 - 800 284 9,971 - Mr P Bowler (b) 22,917 - 2,063 1,242 26,222 - Mr R Pearce (c) 58,708 - - 1,242 59,950 - Dr V Guthrie (d) 17,968 - 1,617 1,174 20,759 - Mr K Hunter (e) ------Mr E Rigg (f) ------

Executive Directors Dr T Sugden - Managing Director (g) 104,010 30,000 9,361 1,242 144,613 20.7

Executives Dr B Eisenlohr – Exploration Manager (h) 70,833 - 6,375 1,218 78,426 - Mr G Barrett – Company Secretary (b) 21,000 - - 1,242 22,242 -

Total Compensation: Key Management Personnel 304,323 30,000 20,216 7,644 362,183 8.3

36 NOVA ENERGY LIMITED DIRECTORS’ REPORT (CONTINUED)

17. REMUNERATION REPORT (CONTINUED)

17.2. DIRECTORS’ AND EXECUTIVE OFFICERS’ REMUNERATION - AUDITED (CONTINUED)

Notes in relation to the table of directors’ and executive ofﬁ cers’ remuneration – Audited

(a) Ms Erica Smyth was appointed on 20 April 2006.

(b) Mr Peter Bowler and Mr Gregory Barrett were appointed on 12 August 2005. As of 1st July 2006 these key management personnel will no longer receive remuneration. An arms length management fee will be charged from Agincourt Resources Limited.

(c) Mr Richard Pearce was appointed as a Non-Executive Director on 20 April 2005, until 23 August 2005, he then became the Managing Director from 23 August 2005, until 20 October 2005. Currently he is appointed as a Non-Executive Director from 20 October 2005 to present. Remuneration for all positions held by Mr Richard Pearce is included under Non-Executive Directors above.

(d) Dr Vanessa Guthrie was appointed on 20 April 2005 and resigned on 20 April 2006.

(e) Mr Kent Hunter was appointed on 29 October 2004 and resigned on 12 August 2005.

(f) Mr Edward Rigg was appointed on 29 October 2004 and resigned on 1 July 2005.

(g) Dr Tim Sugden was appointed as a Chairperson from 12 August 2005 to 20 April 2006. He then became the Managing Director of Nova Energy Ltd. Remuneration for all positions held by Dr. Tim Sugden is included under Executive Directors above.

(h) Dr Burkhard Eisenlohr was appointed on 1 February 2006.

There were no remuneration payments to Director’s of the Company, or Company executives, and relevant group executives from the date of incorporation 29 October 2004 to 30 June 2005.

The short-term incentive bonus is for performance during the 30 June 2006 ﬁ nancial year using the criteria set out on the page 16. The amount was determined on 29 June 2006 after performance reviews were completed and approved by the Remuneration and Nomination Committee.

17.3. EQUITY INSTRUMENTS – AUDITED

All options refer to options over ordinary shares of Nova Energy Limited, which are exercisable on a one-for-one basis under the equity-based remuneration arrangement for key executives.

17.3.1. OPTIONS AND RIGHTS OVER EQUITY INSTRUMENTS GRANTED AS COMPENSATION - AUDITED

No options were granted during the period 1 July 2005 to 30 June 2006 or during the comparative period, from the date of incorporation 29 October 2004 to 30 June 2005.

No options have been granted in Nova Energy Ltd since the end of the ﬁ nancial year.

17.3.2. MODIFICATION OF TERMS OF EQUITY-SETTLED SHARE BASED PAYMENT TRANSACTIONS - AUDITED

No terms of equity-settled share-based payment transactions (including options and rights granted as compensation to a key management person) have been altered or modiﬁ ed by the issuing entity during the reporting period.

17.3.3. EXERCISE OF OPTIONS GRANTED AS COMPENSATION - AUDITED

During the reporting period, no options were exercised in regards to previously granted compensation.

17.4. PRINCIPLES OF REMUNERATION - UNAUDITED 17.4.1 CONSEQUENCES OF PERFORMANCE ON SHAREHOLDER WEALTH - UNAUDITED

In considering the Company’s performance and beneﬁ ts for shareholder wealth, the Remuneration and Nomination Committee take into account proﬁ tability, and share price movements of the Company when setting the total amount of bonuses.

ANNUAL REPORT 2006 37 DIRECTORS’ REPORT (CONTINUED)

17. REMUNERATION REPORT (CONTINUED)

17.4.2. SERVICE AGREEMENTS – UNAUDITED

17.4.2.1 NON-EXECUTIVE DIRECTORS - UNAUDITED

Total remuneration for all Non-Executive Directors, to be voted upon by shareholders at the 2006 AGM, is not to exceed $200,000 per annum and is set with reference to fees paid to other Non-Executive Directors of comparable companies. Directors’ base fees are presently up to $55,000 per annum.

The Chairperson and Non-Executive Directors do not receive performance related remuneration. Directors’ fees cover all main Board activities and membership of committees.

17.5. EQUITY INSTRUMENTS – UNAUDITED

17.5.1. ANALYSIS OF MOVEMENTS IN OPTIONS - UNAUDITED

There were no options granted, exercised or forfeited during the year or the previous year.

18. ROUNDING OFF

The Company is of a kind referred to in ASIC Class Order 98/100 dated July 1998 and in accordance with that Class Order, amounts in the ﬁ nancial report and directors’ report have been rounded off to the nearest thousand dollars, unless otherwise stated.

19. LEAD AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001

The lead auditor’s independence declaration is set out on page 43 and forms part of the directors’ report for the ﬁ nancial year ended 30 June 2006.

Signed in accordance with a resolution of the Directors.

Dated at Perth this 22 September 2006

DR TIM SUGDEN

Managing Director

38 NOVA ENERGY LIMITED INCOME STATEMENT For the year ended 30 June 2006

2006 2005* Note $’000 $’000

Interest received 205 - Employee expenses 3 (312) - Consultants and professional fees (158) (47) Compliance expenses (74) (8) Incorporation fees - (1) Public relations (92) - Exploration tenements written off (47) - Depreciation and amortisation expense 10 (9) - Management fees 21 (106) - Other expenses (77) (4) Loss before tax (670) (60)

Income tax (expense) beneﬁ t 5 - -

Loss for the period (670) (60)

Loss per share attributable to ordinary equity holders Basic and diluted loss per share – cents 6 (1.32) (1.84)

* The comparative period is from the date of incorporation 29 October 2004 to 30 June 2005

The income statement is to be read in conjunction with the notes of the ﬁ nancial statements.

ANNUAL REPORT 2006 39 STATEMENT OF RECOGNISED INCOME AND EXPENSE For the year ended 30 June 2006

2006 2005* Note $’000 $’000

Net income recognised directly in equity 16 - - Loss for the period (670) (60) Total recognised income and expense for the period 16 (670) (60)

Attributable to: Equity holders of the parent (670) (60)

Total recognised income and expense for the period 16 (670) (60)

* The comparative period is from the date of incorporation 29 October 2004 to 30 June 2005

Other movements in equity arising from transactions with owners as owners are set out in note 16.

The statement of recognised income and expense is to be read in conjunction with the notes of the ﬁ nancial statements.

40 NOVA ENERGY LIMITED BALANCE SHEET For the year ended 30 June 2006

2006 2005 Note $’000 $’000

Current Assets Cash and cash equivalents 7 3,282 4 Other receivables 8 51 28 Total Current Assets 3,333 32

Non-Current Assets Property, plant and equipment 10 54 - Exploration and evaluation 11 15,918 62 Other non-current assets 12 - 209 Total Non-Current Assets 15,972 271

Total Assets 19,305 303

Current Liabilities Trade and other payables 13 128 310 Employee beneﬁ ts 14 55 - Provisions 15 52 - Total Current Liabilities 235 310

Total Liabilities 235 310

Net Assets 19,070 (7)

Equity Issued capital 16 19,800 53 Retained earnings 16 (730) (60) Total equity 16 19,070 (7)

The balance sheet is to be read in conjunction with the notes of the ﬁ nancial statements.

ANNUAL REPORT 2006 41 STATEMENT OF CASH FLOWS For the year ended 30 June 2006

2006 2005* Note $’000 $’000

Cash ﬂ ows from operating activities Cash paid to suppliers and employees (719) (23) Interest received 166 -

Net cash outﬂ ow from operating activities 20 (553) (23)

Cash ﬂ ows from investing activities Acquisition of property, plant and equipment (63) - Payment for exploration and evaluation (1,652) (27)

Net cash outﬂ ow from investing activities (1,715) (27)

Cash ﬂ ows from ﬁ nancing activities Proceeds from the issue of share capital 16 6,250 53 Proceeds received and held awaiting the issue of ordinary shares or to be refunded (7) 7 Payment for deferred share issue costs - (6) Payment for share issue costs (697) -

Net cash inﬂ ow from ﬁ nancing activities 5,546 54

Net increase in cash and cash equivalents 3,278 4 Cash and cash equivalents at beginning of period 4 -

Cash and cash equivalents at 30 June 7 3,282 4

* The comparative period is from the date of incorporation 29 October 2004 to 30 June 2005

The statement of cash ﬂ ows is to be read in conjunction with the notes of the ﬁ nancial statements.

42 NOVA ENERGY LIMITED NOTES TO THE FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES

Nova Energy Limited (“Nova” or “the Company”) is a Company domiciled in Australia.

The ﬁ nancial report was authorised for issue by the directors on 22 September 2006.

The comparative reporting period is from the date of incorporation 29 October 2004 to 30 June 2005.

(a) Statement of Compliance The ﬁ nancial report is a general purpose ﬁ nancial report which has been prepared in accordance with Australian Accounting Standards (“AASBs”), adopted by the Australian Accounting Standards Board (“AASB”) and the Corporations Act 2001.

Australian Accounting Standards include Australian equivalents to International Financial Reporting Standards (AIFRSs). Compliance with AIFRSs ensures that the ﬁ nancial statements and notes of the Company’s ﬁ nancial report comply with International Financial Reporting Standards (IFRSs).

These fi nancial statements are the fi rst Nova Energy Limited full year fi nancial statements to be prepared in compliance with requirements of AIFRSs. AASB 1 First-Time Adoption of Australian Equivalents to International Financial Reporting Standards has been applied in preparing these fi nancial statements. Until 30 June 2005, fi nancial statements of the Company had been prepared in accordance with previous Australian Generally Accepted Accounting Principles (AGAAP). AGAAP differs in certain respects from AIFRS.

When preparing the Nova Energy Limited ﬁ nancial statements for the year ended 30 June 2006, management assessed the need to amend certain accounting and valuation methods applied in the previous AGAAP ﬁ nancial statements to comply with AIFRSs.

An explanation of how the transition to AIFRS has affected the reported fi nancial position, fi nancial performance and cash fl ows of the Company is provided in note 22.

(b) Basis of Preparation The ﬁ nancial report is presented in Australian dollars.

The following standards and amendments were available for early adoption from 1 July 2005 but have not been applied by the Company in these ﬁ nancial statements:

Accounting Standard Note Issue Date AASB Ref. Application Date AASB 1: First Time Adoption of AIFRS (iii) Dec 2004 2004-3 1 Jan 06 (ii) Jun 2005 2005-4 1 Jan 06 (iii) Jun 2005 2005-5 1 Jan 06 (ii) Sep 2005 2005-10 1 Jan 07 (iii) Mar 2006 2006-2 30 Jun 06 AASB 3: Business Combinations (iii) Jun 2005 2005-6 1 Jan 06 AASB 4: Insurance Contracts (iii) Sep 2005 2005-9 1 Jan 06 (iii) Sep 2005 2005-10 1 Jan 06 AASB 7: Financial Instruments Disclosure (i) Aug 2005 AASB 7 1 Jan 07 AASB 101: Presentation of Financial Statements (iii) Dec 2004 2004-3 1 Jan 06 (ii) Sep 2005 2005-10 1 Jan 07 AASB 1023: General Insurance Contracts (iii) Jun 2005 2005-4 1 Jan 06 (iii) Sep 2005 2005-9 1 Jan 06 (iii) Sep 2005 2005-10 1 Jan 07 AASB 1038: Life Insurance Contracts (iii) Jun 2005 2005-4 1 Jan 06 (iii) Sep 2005 2005-10 1 Jan 07 AASB 114: Segment Reporting (iii) Sep 2005 2005-10 1 Jan 07 AASB 117: Leases (iii) Sep 2005 2005-10 1 Jan 07 AASB 119: Employee Beneﬁ ts (iii) Dec 2004 AASB 119 1 Jan 06 (iii) Jun 2005 2005-3 1 Jan 05 AASB 121: The Effects of Changes in Foreign Exchange Rates (iii) Jan 2006 2006-01 31 Dec 06

ANNUAL REPORT 2006 43 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(b) Basis of Preparation (CONTINUED)

Accounting Standard Note Issue Date AASB Ref. Application Date AASB 124: Related Party Disclosures (iii) Dec 2004 2004-3 1 Jan 06 AASB 132: Financial Instruments Disclosure and (ii) Jun 2005 2005-4 1 Jan 06 Presentation (iii) Sep 2005 2005-9 1 Jan 06 (ii) Sep 2005 2005-10 1 Jan 07 AASB 133: Earnings per Share (ii) Sep 2005 2005-10 1 Jan 07 AASB 139: Financial Instruments Recognition (iii) May 2005 2005-1 1 Jan 06 and Measurement (ii) Jun 2005 2005-4 1 Jan 06 (iii) Jun 2005 2005-5 1 Jan 06 (iii) Sep 2005 2005-9 1 Jan 06 (ii) Sep 2005 2005-10 1 Jan 07 UIG 4 Determining whether an Arrangement contains a Lease (iii) - UIG 4 1 Jan 06 UIG 5 Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds (iii) - UIG 5 1 Jan 05 UIG 7 Applying the Restatement Approach under AASB 129 Financial Reporting in Hyperinﬂ ationary Economies (iii) - UIG 7 1 Jan 05

AASB 2005-10 Amendments to Accounting Standards (September 2005) includes amendments to AASB 139: Financial Instruments Recognition and Measurement effective from 1 January 2007. The amendments restrict the application of “at fair value through proﬁ t and loss”. Early adoption of the standard has no ﬁ nancial impact on the Company.

The initial application of these amendments and standards is not expected to have an impact on the ﬁ nancial results of the Company as the standard and the amendment are concerned only with disclosures.

The standards, and therefore the amendments, are not relevant to the Company.

The ﬁ nancial report is prepared on the historical cost basis.

The Company is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 (updated by CO 05/641 effective 28 July 2005 and CO 06/51 effective 31 January 2006) and in accordance with the Class Order, amounts in the ﬁ nancial report and Directors’ Report have been rounded off to the nearest thousand dollars, unless otherwise stated.

The preparation of a ﬁ nancial report in conformity with Australian Accounting Standards requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses.

The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

The accounting policies set out below have been applied consistently in the ﬁ nancial report from the date of incorporation 29 October 2004.

44 NOVA ENERGY LIMITED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(c) Property, Plant and Equipment (i) Owned Assets Items of property, plant and equipment are stated at cost less accumulated depreciation and impairment losses (see accounting policy g).

(ii) Subsequent costs The Company recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when that cost is incurred if it is probable that the future economic beneﬁ ts embodied within the item will ﬂ ow to the Company and the cost of the item can be measured reliably. All other costs are recognised in the income statement as an expense as incurred.

(iii) Depreciation Assets are depreciated over their estimated useful lives using the straight line method.

The estimated useful lives in the current periods are as follows:

Plant and Equipment 3 to 20 years

The Company did not depreciate any assets in the comparative period.

Assets are depreciated or amortised from the date of acquisition or from the time an asset is completed and held ready for use.

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

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

Exploration and evaluation assets are only recognised if the rights of the area of interest are current and either:

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

(ii) activities in the area of interest have not at the reporting date, reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves and active and signiﬁ cant operations in, or in relation to, the area of interest are continuing.

Exploration and evaluation assets are assessed for impairment if;

(i) sufﬁ cient data exists to determine technical feasibility and commercial viability, and (ii) facts and circumstances suggest that the carrying amount exceeds the recoverable amount (see accounting policy g).

For the purposes of impairment testing, exploration and evaluation assets are allocated to cash-generating units to which the exploration activity relates. The cash generating unit shall not be larger than the area of interest.

In the event that an area of interest is abandoned or if the Directors consider the expenditure to be of reduced value, accumulated costs carried forward are written off in the period in which that assessment is made. Each area of interest is reviewed at the end of each accounting period and accumulated costs are written off to the extent that they will not be recoverable in the future.

ANNUAL REPORT 2006 45 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(e) Receivables (i) Other Debtors Other debtors are stated at amortised cost. Receivables are usually settled within no more than 30 days.

Other debtors are reviewed on an ongoing basis. An impairment loss is recognised for debts which are known to be uncollectible. An impairment provision is raised for any doubtful accounts (see accounting policy g).

(ii) Sale of Non-Current Assets

The net gain (loss) on the sale of goods is included as revenue or expense at the date control of the assets passes to the buyer. The gain or loss on disposal is calculated as the difference between the carrying amount of the asset at the time of disposal and the net proceeds on disposal (including incidental costs).

(f) Cash and Cash Equivalents Cash and cash equivalents comprise cash balances and call deposits with an original maturity of three months or less.

(g) Impairment The carrying amounts of the Company’s assets, other than exploration and evaluation (see accounting policy d); and deferred tax assets (see accounting policy n (i)) are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists the asset’s recoverable amount is estimated (see accounting policy g).

Impairment losses recognised in respect of cash-generating units are allocated ﬁ rst to reduce the carrying amount of any goodwill allocated to cash-generating units (group of units) and then, to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis.

(i) Calculation of Recoverable Amount The recoverable amount of the Company’s receivables carried at amortised cost is calculated as the present value of estimated future cash ﬂ ows, discounted at the original effective interest rate (i.e. the effective interest rate computed at initial recognition of these ﬁ nancial assets). Receivables with a short duration are not discounted.

Impairment of receivables is not recognised until objective evidence is available that a loss event has occurred. Signifi cant receivables are individually assessed for impairment. Impairment testing of signifi cant receivables that are not assessed as impaired individually is performed by placing them into portfolios of signifi cant receivables with similar risk profi les and undertaking a collective assessment of impairment. Non-signifi cant receivables are not individually assessed. Instead, impairment testing is performed by placing non-signifi cant receivables in portfolios of similar risk profi les, based on objective evidence from historical experience adjusted for any effects of conditions existing at each balance sheet date.

The recoverable amount of other assets is the greater of their fair value less costs to sell and value in use. In assessing value in use, the estimated future cash fl ows are discounted to their present value using a pre-tax discount rate that refl ects current market assessments of the time value of money and the risks specifi c to the asset. For an asset that does not generate largely independent cash infl ows the recoverable amount is determined for the cash-generating unit to which the asset belongs.

(ii) Reversals of Impairment An impairment loss in respect of a receivable carried at amortised cost is reversed if the subsequent increase in recoverable amount can be related objectively to an event occurring after the impairment loss was recognised.

Impairment losses, in respect of other assets, are reversed when there is an indication that the impairment loss may no longer exist and there has been a change in the estimates used to determine the recoverable amount.

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

46 NOVA ENERGY LIMITED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(g) Impairment (CONTINUED) (iii) De-recognition of Financial Assets and Liabilities (i) Current Accounting Policy A fi nancial asset (or, where applicable, a part of a fi nancial asset or part of a group of similar fi nancial assets) is de-recognised when:

• the rights to receive cash ﬂ ows from the asset have expired;

• the Company retains the right to receive cash ﬂ ows from the asset, but has assumed an obligation to pay them in full without material delay to a third party; or

• the Company has transferred its rights to receive cash ﬂ ows from the asset and either:

• has transferred substantially all the risks and rewards of the asset, or

• has neither transferred nor retained substantially all the risks and rewards of the, but has transferred control of the asset.

A fi nancial liability is de-recognised when the obligation under the liability is discharged, cancelled or expired. When an existing fi nancial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modifi ed, such an exchange or modifi cation is treated as a de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in profi t and loss.

(ii) Comparative Period Policy A ﬁ nancial asset was derecognised when the contractual right to receive or exchange cash no longer existed. A ﬁ nancial liability was derecognised when the contractual obligation to deliver or exchange cash no longer existed

(h) Share Capital Transaction costs of an equity transaction are accounted for as a deduction from equity, net of any related income tax beneﬁ t.

(i) Employee Beneﬁ ts (i) Wages, Salaries, Annual Leave and Sick Leave Liabilities for employee beneﬁ ts for wages, salaries and annual leave that are expected to be settled within twelve months of the reporting date represent present obligations resulting from employees’ services provided to reporting date, are calculated at undiscounted amounts based on remuneration wage and salary rates that the Company expects to pay as at reporting date including related on-costs, such as workers compensation insurance and payroll tax.

(ii) Share-Based Payments

Employee options are, from time to time, granted to executives. The fair value of options granted is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and spread over the period during which the employees become unconditionally entitled to the options. The fair value of the options granted is measured using the Black Scholes option pricing model, taking into account the terms and conditions upon which the options were granted. The amount recognised as an expense is adjusted to reﬂ ect the actual number of share options that vest except where forfeiture is only due to share prices not achieving the threshold for vesting.

(j) Provisions A provision is recognised in the balance sheet when the Company has a present legal or constructive obligation as a result of a past event, and it is probable that an outfl ow of economic benefi ts will be required to settle the obligation. Provisions are determined by discounting the expected future cash fl ows at a pre-tax rate that refl ects current market assessments of the time value of money and, where appropriate, the risks specifi c to the liability.

(k) Trade and Other Payables Liabilities are recognised for amounts to be paid in the future for goods and services provided to the Company prior to the end of the reporting period and are stated at amortised cost. The amounts are unsecured and are usually paid within 30 days of recognition.

ANNUAL REPORT 2006 47 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(l) Revenue Recognition Revenue is recognised in the income statement when the signiﬁ cant risks and rewards of ownership have been transferred to the buyer. No revenue is recognised if there are signiﬁ cant uncertainties regarding recovery of the consideration due.

Revenues are recognised at fair value of the consideration received net of the amount of GST. Exchanges of goods or services of the same nature and value without any cash consideration are not recognised as revaluations. The following speciﬁ c recognition criteria must also be met before revenue is recognised:

(i) Interest

Interest income is recognised as it accrues using the effective interest method.

(m) Expenses (i) Net ﬁ nancing costs Net ﬁ nancing costs comprise interest receivable on funds invested.

(n) Tax (i) Income taxes Income tax on the proﬁ t or loss for the year comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

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

Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for ﬁ nancial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for, the initial recognition of assets or liabilities that affect neither accounting nor taxable proﬁ t. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.

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

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

Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the balance sheet.

Cash fl ows are included in the statement of cash fl ows on a gross basis. The GST components of cash fl ows arising from investing and fi nancing activities which are recoverable from, or payable to, the ATO are classifi ed as operating cash fl ows.

(o) Segment Reporting A segment is a distinguishable component of the Company that is engaged either in providing products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments.

(p) Critical Accounting Estimates and Judgements Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by deﬁ nition, seldom equal the related actual results.

Management discussed with the Audit Committee the development, selection and disclosure of the Company’s critical accounting policies and estimates and the application of these policies and estimates. Management believe there are no estimates and judgements that have a signiﬁ cant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next ﬁ nancial year.

48 NOVA ENERGY LIMITED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

2. SEGMENT REPORTING

The Company operates predominantly in one geographical segment, being Australia, and in one industry, uranium and other minerals exploration.

3. EMPLOYEE EXPENSES 2006 2005* $’000 $’000

Wages and salaries 203 - Other associated personnel expenses 95 - Increase in liability for annual leave 14 - Total Employee Expenses 312 -

4. AUDITORS’ REMUNERATION 2006 2005* $$

Audit services Auditors of the Company

KPMG Australia Audit and review of ﬁ nancial reports 19,000 7,750 Total Audit Services 19,000 7,750

Other services Auditors of the Company

KPMG Australia Taxation services 3,500 - Total Other Services 3,500 -

5. INCOME TAX EXPENSE 2006 2005* $’000 $’000 Numerical reconciliation between tax expense and pre-tax net (loss) proﬁ t Loss before tax (670) (60)

Income tax using the domestic corporation tax rate of 30% (2005: 30%) (201) (18)

Increase in income tax expense due to : Non–deductible expenses 26 -

Decrease in income tax expense due to : Costs treated as capital for tax (42) - Tax losses not bought to account 217 18

Total Income tax expense (beneﬁ t) on pre-tax net proﬁ t - -

* The comparative period is from the date of incorporation 29 October 2004 to 30 June 2005

ANNUAL REPORT 2006 49 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

6. LOSS PER SHARE Basic Loss per Share The calculation of basic earnings (loss) per share (EPS) at 30 June 2006 was based on the loss of $670,000 (2005: $60,000) and a weighted average number of ordinary shares outstanding during the ﬁ nancial year ended 30 June 2006 of 50,752,056 (2005: 3,266,532), calculated as follows:

Note 2006 2005* $’000 $’000

Loss Attributable to Ordinary Shareholders Loss attributable to ordinary shareholders (670) (60)

Weighted average number of Ordinary Shares Issued ordinary shares at 1 July * 16 5,300,001 - Effect of shares issued on 29 October 2004 - 1 Effect of shares issued on 31 January 2005 - 3,266,531 Effect of shares issued on 4 July 2005 1,239,726 - Effect of shares issued on 12 August 2005 28,760,274 - Effect of shares issued on 15 August 2005 2,630,137 - Effect of shares issued on 23 August 2005 12,821,918 - Weighted average number of ordinary shares at 30 June 50,752,056 3,266,532

Diluted Loss per Share The calculation of diluted earnings (loss) per share at 30 June 2006 is the same as basic earnings per share.

2006 2005*

Loss per Share Basic loss per share – cents (1.32) (1.84) Diluted loss per share – cents (1.32) (1.84)

7. CASH AND CASH EQUIVALENTS 2006 2005* $’000 $’000

Bank Balances 3,282 4 Total Cash and Cash Equivalents in the statement of cash ﬂ ows 3,282 4

8. OTHER RECEIVABLES

Current Other Receivables 51 28 Total Current Trade and Other Receivables 51 28

* The comparative period is from the date of incorporation 29 October 2004 to 30 June 2005

50 NOVA ENERGY LIMITED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

9. DEFERRED TAX ASSETS AND LIABILITIES

Recognised deferred tax assets and liabilities Assets Liabilities Net 2006 2005* 2006 2005* 2006 2005* $’000 $’000 $’000 $’000 $’000 $’000 Deferred tax assets and liabilities are attributable to the following: Exploration and evaluation - - (4,791) (18) (4,791) (18) Current trade and other payables - 2 - - - 2 Other items - - (1) - (1) - Tax value of loss carry-forwards recognised 4,792 16 - - 4,792 16

Net tax assets / (liabilities) 4,792 18 (4,792) (18) - -

2006 2005* $’000 $’000

Unrecognised deferred tax assets and liabilities Net deferred tax assets have not been recognised in respect of the following Tax losses 233 1 Total tax assets / (liabilities) not recognised 233 1

The deductible temporary differences and tax losses do not expire under current tax legislation. Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable proﬁ t will be available against which the Company can utilise the beneﬁ ts from.

Movement in temporary differences during the year

Balance 29 Recognised Recognised Balance October 04* In income In equity 30 June 05 $’000 $’000 $’000 $’000

Exploration and evaluation - (18) - (18) Current trade and other payables - 2 - 2 Tax value of loss carry-forwards recognised - 16 - 16 --- -

Balance Recognised Recognised Balance 1 July 05 In income In equity 30 June 06 $’000 $’000 $’000 $’000

Exploration and evaluation (18) (4,773) - (4,791) Current trade and other payables 2 (2) - - Other items - (1) - (1) Tax value of loss carry-forwards recognised 16 4,776 - 4,792 --- -

* The comparative period is from the date of incorporation 29 October 2004 to 30 June 2005

ANNUAL REPORT 2006 51 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

10. PROPERTY, PLANT AND EQUIPMENT

2006 2005* $’000 $’000

Cost Balance at 1 July * -- Acquisitions 63 - Disposals -- Balance at 30 June 63 -

Depreciation and Amortisation Balance at 1 July * -- Depreciation charge for the year 9 - Disposals -- Balance at 30 June 9-

Carrying Amounts At 1 July * -- At 30 June 54 -

11. EXPLORATION AND EVALUATION

Note 2006 2005* $’000 $’000

Cost Balance at 1 July * 62 - Acquisitions (i) 14,450 50 Additions 1,453 12 Expenditure written off (47) - Balance at 30 June 15,918 62

Amortisation and impairment losses Balance at 1 July * -- Balance at 30 June --

Carrying Amounts At 1 July * 62 - At 30 June 15,918 62

Exploration and Evaluation The recoverability of the carrying amounts of exploration and evaluation assets is dependent on the successful development and commercial exploitation or sale of the respective area of interest.

* The comparative period is from the date of incorporation 29 October 2004 to 30 June 2005

52 NOVA ENERGY LIMITED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

11. EXPLORATION AND EVALUATION (CONTINUED)

(i) During the ﬁ nancial year ended 30 June 2006, the Company acquired signiﬁ cant exploration and evaluation assets totalling $14,450,000 (2005: $50,000) as follows:

No of Fair Value of 2006 2005* Shares Issued Shares Issued $’000 $’000

Allarrow Pty Ltd (1) N/A N/A - 50 Allarrow Pty Ltd (2) N/A N/A 250 - Allarrow Pty Ltd (2) 3,000,000 $0.40 1,200 - Agincourt Resources Limited (3) 32,500,000 $0.40 13,000 - Total 14,450 50

(1) – Allarrow Pty Ltd (30 June 2005) On 7 February 2005, the Company entered into an Option For Purchase Of Mining Tenement agreement (“Option Agreement”), with Allarrow Pty Ltd (“Allarrow”) pertaining to a single exploration licence application (“ELA”) known as the Lake Way Prospect. Under the Option Agreement, Nova had an option to acquire ELA53/1132 before 30 June 2005, which was extended in writing to 30 September 2005 by the further payment of $25,000. The initial option fee was $25,000 and this was paid prior to 31 May 2005, with a further $25,000 paid in June 2005.

(2) – Allarrow Pty Ltd (30 June 2006) The purchase consideration for the ELA was subject to Nova achieving an ASX listing and comprised of an initial payment (Tranche 1) of $150,000 and the issue of 1,500,000 shares in Nova. A Tranche 2 consideration was also due on the date of grant of a mining tenement from an ELA to an exploration licence. The Tranche 2 consideration was the payment of $100,000 and the issue of a further 1,500,000 shares in Nova. This payment was effected on 12 August 2005 being the date of conﬁ rmation of ASX listing. In the event that the exploration licence converts to a mining lease status a Tranche 3 consideration is payable, being the issue of a further 1,500,000 shares in Nova.

In the event the exploration licence does not convert to a mining lease within 5 years of the execution of the Option Agreement and Allarrow does not serve an Allarrow Exercise Notice, Nova will have deemed to have satisﬁ ed its Tranche 3 obligation by (at Nova’s discretion) the issue of 1,500,000 shares in Nova or the payment of a royalty on any production of uranium at the rate of 0.5%. If within ﬁ ve years of the execution of the Option Agreement a mining lease is not granted, the issue of the Tranche 3 consideration is subject to an Allarrow Call Option to reacquire the exploration licence from Nova for $250,000. The ELA is subject to native title claim.

(3) – Agincourt Resources Limited (30 June 2006) Pursuant to an Agreement for Rights and Usage (“Rights and Usage Agreement”) of April 2005, the Company acquired the exclusive right to explore, mine and treat uranium on various mining tenements and exclusive ownership of all uranium mined, stockpiled or otherwise taken from various mining tenements owned or controlled by Agincourt Resources Limited (“Agincourt”). In addition, the Company has certain usage rights that give Nova a right to negotiate for the use of infrastructure assets and utilise other site assets. The consideration paid by Nova was 32,500,000 ordinary fully paid shares in Nova.

12. OTHER NON–CURRENT ASSETS 2006 2005* $’000 $’000

Non – current Deferred expenditure – Share Issue Costs (i) - 209 Total other non-current assets - 209

(i) The Company incurred an amount of Nil (2005: $209,000), representing transaction costs arising on the issue of equity instruments relating to the Initial Public Offering (IPO). The recognition of transaction costs in equity has been deferred to the date the Company ofﬁ cially listed on the Australian Stock Exchange. Nova was admitted to the ofﬁ cial list of the Australian Stock Exchange on 19 August 2005 and subsequently the transaction costs have been recognised in equity.

* The comparative period is from the date of incorporation 29 October 2004 to 30 June 2005

ANNUAL REPORT 2006 53 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

13. TRADE AND OTHER PAYABLES 2006 2005* $’000 $’000

Current Trade payables 128 269 Other trade payables and accrued expenses - 41 Total current trade and other payables 128 310

14. EMPLOYEE BENEFITS

Current Liability for annual leave 14 - Other current liability 41 - Total current employee beneﬁ ts 55 -

15. PROVISIONS - STAMP DUTY 2006 2005* $’000 $’000

Current Balance at 1 July * -- Provisions made during the year 748 - Provisions used during the year (696) - Balance at 30 June 52 -

Stamp Duty The provision for stamp duty relates to the purchase of uranium and usage rights and exploration licences (refer note 11) made by the Company during the ﬁ nancial years ended 30 June 2005* and 2006.

16. CAPITAL AND RESERVES

Reconciliation of movement in capital and reserves

Share Capital Retained Earnings Total Equity $’000 $’000 $’000

Balance as at 29 October 2004 * - - - Total recognised income and expense - (60) (60) Shares issued (1 @ $1.00) - - - Shares issued (5,300,000 @ $0.01) 53 - 53 Balance at 30 June 2005 53 (60) (7)

Balance as at 1 July 2005 53 (60) (7) Total recognised income and expense - (670) (670) Shares issued (1,250,000 @ $0.20) 250 - 250 Shares issued (32,500,000 @ $0.40) 13,000 - 13,000 Shares issued (3,000,000 @ $0.40) 1,200 - 1,200 Shares issued (15,000,000 @ $0.40) 6,000 - 6,000 Transaction costs of shares issued (703) - (703) Balance at 30 June 2006 19,800 (730) 19,070

* The comparative period is from the date of incorporation 29 October 2004 to 30 June 2005

54 NOVA ENERGY LIMITED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

16. CAPITAL AND RESERVES (CONTINUED)

Issued Capital

The Company recorded the following amounts within shareholder’s equity as a result of the issuance of ordinary shares. Ordinary Shares 2006 2005* 2006 2005* Note Number Number $’000 $’000

On issue at 1 July * 5,300,001 - 53 - Share placement at $1.00 per share for cash - 1 - - Share placement at $0.01 per share for cash - 5,300,000 - 53 Share placement at $0.20 per share for cash 1,250,000 - 250 - Share placement at $0.40 per share (Agincourt Resources Ltd) 11(3) 32,500,000 - 13,000 - Share placement at $0.40 per share (Allarrow Pty Ltd) 11(2) 3,000,000 - 1,200 - Share placement at $0.40 per share for cash 15,000,000 - 6,000 - Transaction costs of share issue - - (703) - On Issue at 30 June 57,050,001 5,300,001 19,800 53

The holders of ordinary shares are entitled to one vote per share at meetings of the Company. All shares rank equally with regard to the Company’s residual assets.

17. FINANCIAL INSTRUMENTS

Exposure to credit risk and interest rate risks arises in the normal course of the Company’s business.

Credit risk Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. The Company does not require collateral in respect of ﬁ nancial assets.

At the balance sheet date there were no signiﬁ cant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each ﬁ nancial asset in the balance sheet.

Fair Values The ﬁ nancial assets and ﬁ nancial liabilities included in assets and liabilities approximate net fair values.

Effective interest rates and repricing analysis

In respect of income-earning ﬁ nancial assets and interest-bearing ﬁ nancial liabilities, the following table indicates their effective interest rates at the balance sheet date and the periods in which they reprice.

Effective Interest Floating 1 year or 1-2 Note Rate Total Rate less years $’000 $’000 $’000 $’000

2006 Cash and cash equivalents 7 5.0% 3,282 3,282 - - 3,282 3,282 - - 2005 Cash and cash equivalents 7 2.6% 4 4 - - 44--

* The comparative period is from the date of incorporation 29 October 2004 to 30 June 2005

ANNUAL REPORT 2006 55 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

18. CAPITAL AND OTHER COMMITMENTS

Exploration Expenditure Commitments In order to maintain current rights of tenure to exploration tenements, the Company is required to perform minimum exploration work to meet the minimum expenditure requirements speciﬁ ed by various State governments. These obligations are subject to renegotiation when application for a mining lease is made and at other times. These obligations are not provided for in the ﬁ nancial report and are payable:

2006 2005* $’000 $’000

Within one year 232 - 232 -

Employee Compensation Commitments Commitments under non-cancellable employment contracts not provided for in the ﬁ nancial statements and payable:

2006 2005* $’000 $’000

Within one year 218 - 218 -

19. CONTINGENCIES The directors are of the opinion that provisions are not required in respect of these matters, as it is not probable that a future sacriﬁ ce of economic beneﬁ ts will be required or the amount is not capable of reliable measurement.

Native Title Native Title legislation may have an adverse impact on the Company’s exploration activities and its ability to fund those activities. It is impossible at this stage, to quantify the impact, if any, that the legislation may have on the operations of the Company.

The Company is aware of Native Title claims in respect of areas in which the Company has interests. It is possible that further claims could be made in the future. However the Company cannot determine whether any current or future claims, if made, will succeed and, if so, what the implications would be for the Company

20. RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES 2006 2005* $’000 $’000

Cash ﬂ ows from operating activities Loss for the period (670) (60) Adjustments for non cash items: Depreciation 9- Exploration expenditure written off 47 - Operating proﬁ t before changes in working capital and provisions (614) (60)

(Increase) / decrease in trade and other receivables (21) (231) (Decrease) / increase in trade and other payables (25) 268 (Decrease) / Increase in provisions and employee beneﬁ ts 107 -

Net cash from operating activities (553) (23)

* The comparative period is from the date of incorporation 29 October 2004 to 30 June 2005

56 NOVA ENERGY LIMITED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

21. KEY MANAGEMENT PERSONNEL DISCLOSURES

The following were key management personnel of the Company at any time during the reporting period and unless otherwise indicated were key management personnel for the entire period:

Non-executive directors Ms E Smyth Chairperson - appointed 20 April 2006. Mr P Bowler Appointed 12 August 2005. Mr R Pearce Appointed as Non-executive Director from 20 April 2005 to 23 August 2005 Appointed as Managing Director from 23 August 2005 until 20 October 2005. Appointed as Non-executive Director from 20 October 2005 to present. Dr V Guthrie Appointed 20 April 2005, resigned 20 April 2006. Mr K Hunter Appointed 29 October 2004, resigned 12 August 2005. Mr E Rigg Appointed 29 October 2004, resigned 1 July 2005. Executive directors Dr T Sugden Managing Director Appointed as Chairperson from 12 August 2005 to 20 April 2006. Appointed as Managing Director from 24 January 2006 to present. Executives Dr B Eisenlohr Exploration Manager Appointed 1 February 2006. Mr G Barrett Company Secretary Appointed 12 August 2005.

There have been no changes in key management personnel between 1 July 2006 and the date of this report.

The key management personnel compensation included in ‘employee expenses’ (see note 3) and ‘exploration and evaluation” (see note 11) are as follows: 2006 2005* $’000 $’000

Short-term employee beneﬁ ts 342 Post-employment beneﬁ ts 20 - 362 -

Individual directors and executives compensation disclosures Information regarding individual directors and executives compensation is provided in the Remuneration Report section of the Directors’ report on pages 16 to 19.

Apart from the details disclosed in this note, no director has entered into a material contract with the Company since the end of the previous fi nancial year and there were no material contracts involving directors’ interests existing at year-end. Other key management personnel transactions with the Company A number of key management persons, or their related parties, hold positions in other entities that result in them having control or signifi cant infl uence over the fi nancial or operating policies of those entities. A number of these entities transacted with the Company in the reporting period. The terms and conditions of the transactions with management persons and their related parties were no more favourable than those available, or which might reasonably be expected to be available, on similar transactions to non-director related entities on an arm’s length basis.

The aggregate amounts recognised during the year relating to key management personnel and their related parties were as follows: Note 2006 2005* $’000 $’000

Key Management Persons Transactions Mr R Pearce Consulting (i) - 34,650 Mr K Hunter Consulting (ii) 50,961 32,068 Mr E Rigg, Mr P Carter, & Mr C Fear Consulting (iii) 350,000 80,000 Dr T Sugden & Mr P Bowler Management Fee (iv) 106,000 -

* The comparative period is from the date of incorporation 29 October 2004 to 30 June 2005

ANNUAL REPORT 2006 57 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

21. KEY MANAGEMENT PERSONNEL DISCLOSURES (CONTINUED)

(i) Oyster Consulting Pty Ltd has been engaged to provide advisory services on commercial terms. Mr R Pearce holds a 25% interest in Oyster Consulting Pty Ltd.

(ii) Mining Corporate Advisory Services Pty Ltd, a company controlled by Mr K Hunter, is an advisor of Nova and a provider of corporate secretarial services.

(iii) Argonaut Capital Limited, a company in which Mr E Rigg, Mr P Carter, and Mr C Fear has an interest, acted as a corporate advisor to the Company.

(iv) Agincourt Resources Limited charged management fees on commercial terms. Dr T Sugden and Mr P Bowler are directors of Agincourt Resources Limited.

Amounts receivable from and payable to key management personnel at reporting date arising from these transactions were as follows:

2006 2005* $’000 $’000 Assets and liabilities arising from the above transactions Current payables Trade creditors 13,250 -

Movements in shares The movement during the reporting period in the number of ordinary shares in Nova Energy Limited held, directly, indirectly or beneﬁ cially, by each key management person, including their related parties, is as follows:

Held at Held at Held at 1 July 30 June Resignation 2006 Note 2005 Purchases Sales 2006 Date

Directors Ms E Smyth - - - - N/A Dr T Sugden (i) - 32,750,000 - 32,750,000 N/A Mr P Bowler (ii) - 33,000,000 - 33,000,000 N/A Mr R Pearce (iii) 400,000 - - 400,000 N/A Dr V Guthrie 100,000 - - - 100,000 Mr K Hunter 250,000 - - - 250,000 Mr E Rigg (v) 3,600,001 - - - 3,600,001

Executives Dr B Eisenlohr - 2,000 - 2,000 N/A Mr G Barrett (iv) 100,000 190,000 - 290,000 N/A

Held at Held at Held at 29 October 30 June Resignation 2005 Note 2004* Purchases Sales 2005 Date

Directors Mr R Pearce (iii) - 400,000 - 400,000 N/A Dr V Guthrie - 100,000 - 100,000 N/A Mr K Hunter - 250,000 - 250,000 N/A Mr E Rigg (v) - 3,600,001 - 3,600,001 N/A Mr C Fear - 3,600,001 - - 3,600,001 Mr P Carter - 3,600,001 - - 3,600,001

* The comparative period is from the date of incorporation 29 October 2004 to 30 June 2005

58 NOVA ENERGY LIMITED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

21. KEY MANAGEMENT PERSONNEL DISCLOSURES (CONTINUED)

No shares were granted to key management personnel during the reporting period as compensation.

(i) 32,500,000 are held indirectly by Agincourt Resources Limited. Dr Sugden is a director of Agincourt Resources Limited

(ii) 32,500,000 are held indirectly by Agincourt Resources Limited. Mr Bowler is a director of Agincourt Resources Limited.

(iii) Held indirectly by Richard J Pearce as Trustee for the Pearce Family Trust. Mr Pearce is a beneﬁ ciary of the Pearce Family Trust.

(iv) 265,000 are held indirectly by Hookipa Pty Ltd as Trustee for the Barrett Family Trust, the remaining are held by Mbili Nominees Pty Ltd. Mr Barrett is a Director of Mbili Nominees Pty Ltd.

(v) Mr Rigg resigned as a director on 1 July 2005. 2,600,001 are held indirectly by Argonaut Capital Limited and 1,000,000 by Argonaut Investments Pty Ltd. Mr Rigg is a Director of Argonaut Capital Limited and Argonaut Investments Pty Ltd.

Rights and Usage Agreement - Agincourt Resources Ltd On 27 April 2005, Nova entered into a Rights and Usage Agreement with Agincourt Resources Limited (“Agincourt”) and its wholly owned subsidiary, Wiluna Operations Ltd (“Wiluna”), under which Agincourt and Wiluna granted Nova certain rights in respect to speciﬁ c Wiluna Tenements (“Wiluna Tenements”). Dr Tim Sugden and Mr Peter Bowler are directors of Agincourt.

The agreement contains the following material terms and conditions:

Infrastructure Assets Usage

• Agincourt has agreed to grant Nova access to various infrastructure assets owned by Agincourt and/or Wiluna for the purpose of Nova Energy undertaking its exploration, mining and treating activities on the Wiluna Tenements.

Uranium Rights

• Exclusive right to explore, mine and treat any uranium on the Wiluna Tenements;

• Exclusive ownership of all uranium mined, stockpiled or otherwise taken from the Wiluna Tenements;

• Exclusive right to all relevant mining information owned by Wiluna with respect to the Wiluna Tenements.

See Note 11(3) for disclosure of consideration in regards to the Rights and Usage Agreement.

22. EXPLANATION OF TRANSITION TO AIFRSs

Explanation of transition to Australian equivalents to IFRS

As stated in signifi cant accounting policies note 1, these are the Company’s fi rst fi nancial statements prepared in accordance with Australian Accounting Standards - AIFRS.

The policies set out in the signifi cant accounting policies section of this report have been applied in preparing the fi nancial statements for the fi nancial year ended 30 June 2006, the comparative information presented in these fi nancial statements for the fi nancial year ended 30 June 2005 and in the preparation of an opening AIFRS balance sheet at 29 October 2004* (the Company’s date of transition).

In preparing its opening AIFRS balance sheet, the Company has not adjusted amounts reported previously in ﬁ nancial statements prepared in accordance with its old basis of accounting (previous AGAAP).

* The comparative period is from the date of incorporation 29 October 2004 to 30 June 2005

ANNUAL REPORT 2006 59 DIRECTORS’ DECLARATION

1 In the opinion of the Directors of Nova Energy Limited (“the Company”):

a) the ﬁ nancial statements and notes (including the remuneration disclosures that are contained in sections 17.1, 17.2 and 17.3 of the Remuneration report in the Director’s report) are in accordance with the Corporations Act 2001, including:

i) giving a true and fair view of the fi nancial position of the Company as at 30 June 2006 and of its performance, as represented by the results of its operations and its cash fl ows for the fi nancial year ended on that date; and

ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and

b) the remuneration disclosures that are contained in section 17.1, 17.2, and 17.3 of the Remuneration report in the Director’s report comply with Australian Accounting Standard AASB 124 Related Party Disclosures and ASIC Class Order 06/105 Calculation of director and executive remuneration / Corporations Act Regulation 2M.6.04:

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

2 The directors have been given the declarations required by Section 295A of the Corporations Act 2001, by the Managing Director and Company Secretary for the ﬁ nancial year ended 30 June

Signed in accordance with a resolution of the directors:

Dr TIM SUGDEN Managing Director Perth, 22 September 2006

60 NOVA ENERGY LIMITED AUDITORS INDEPENDENCE DECLARATION

ANNUAL REPORT 2006 61 INDEPENDENT AUDIT REPORT

62 NOVA ENERGY LIMITED INDEPENDENT AUDIT REPORT (CONTINUED)

ANNUAL REPORT 2006 63 ADDITIONAL SHAREHOLDER INFORMATION

As at 4 October 2006 a) Substantial Shareholders lodged with the Company Number of Shares Name of Ordinary Shareholder % of Shares Held Held Agincourt Resources Limited 32,500,000 56.97 Argonaut Ltd 3,400,001 5.96 Allarrow Pty Ltd 2,881,240 5.05 b) Listing of 20 Largest Shareholders Number of Shares Rank Name of Ordinary Shareholder % of Shares Held Held 1 Agincourt Resources Limited 32,500,000 56.97 2 ANZ Nominees Limited (Cash Income A/C) 3,280,222 5.75 3 Allarrow Pty Ltd 2,881,240 5.05 4 National Nominees Limited 2,551,174 4.47 5 Argonaut Capital Limited 2,400,001 4.21 6 Argonaut Investments Pty Ltd 1,000,000 1.75 7 Westpac Custodian Nominees Limited 810,951 1.42 8 Arredo Pty Ltd 500,000 0.88 9 Braidwood Investments WA Pty Ltd 500,000 0.88 10 Mr Jason Charles Lawrence 500,000 0.88 11 Richard J Pearce (Pearce Family A/C) 400,000 0.70 12 Citicorp Nomineers Pty Limited 309,400 0.54 13 Kumbhalgarh Pty Ltd 250,000 0.44 14 Mining Corporate Advisory Services Pty Ltd 250,000 0.44 15 Westpac Custodian Nominees Limited 250,000 0.44 16 CPA Financial Services Pty Ltd 225,000 0.39 17 IE Properties Pty Ltd 205,000 0.36 18 Mr Robert J Chapman (Chapman Family A/C) 200,000 0.35 19 Equity Trustees Limited (SGH Micro Cap Trust A/C) 200,000 0.35 20 Dean B Felton (Felton Family A/C) 200,000 0.35 49,412,988 86.62 c) Distribution of Shareholders Range Total Holders Units % Issued Capital 1 - 1,000 85 59,681 0.10 1,001 - 5,000 308 995,417 1.74 5,001 – 10,000 111 954,646 1.67 10,001 - 100,000 138 4,479,162 7.85 100,001 - over 28 50,561,095 88.64 Total 670 57,050,001 100.00 d) Number of Shareholders Holding Less than a Marketable Parcel is 11. e) Voting Rights (i) Ordinary Shares On a show of hands every shareholder present in person or by proxy shall have one vote and upon a poll, each share shall have one vote. f) Stock Exchange Listing Nova Energy Limited shares are listed on the Australian Stock Exchange. The Company’s ASX code is NEL.

64 NOVA ENERGY LIMITED NOVA ENERGY LIMITED ANNUAL REPORT 2006

// ANNUAL REPORT 2006

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