ANNUAL REPORT 2012 1 Financial Year Highlights 2 Asia Pacific Operations 4 Reflections & Directions 5 Strategic Priorities for 2013 6 Year in Review 8 Corporate 10 Coal 14 Lithium 17 Exploration Services 18 Iron Ore 20 Other Opportunities & Prospects 21 Competent Persons Statements 22 Financial Report FINANCIAL YEAR HIGHLIGHTS

Coal tenement 89% holdings at Tabalong increase in mineral 18% 17,200 expanded by resource estimate increase in JORC hectares of confirms Altura Lithium’s Reserve at the Mt prospective high 290% world class status Webber JV DSO Project grade thermal coal

More than 22% 95% revenue growth from of options exercised Mining & Exploration Services

Near term coal production with mine construction likely to start in 2012

Transitioning from Australian explorer to South East Asia coal $20 million cash position with virtually no debt producer ASIA PACIFIC OPERATIONS

5

PHILIPPINES

4 8 9

3 INDONESIA

12

11 610

AUSTRALIA 1

2 7

2 ALTURA MINING LIMITED ANNUAL REPORT 2012 Corporate Coal Lithium

1 4 6 Head Office Tabalong Coal Altura Lithium Brisbane South Kalimantan Pilgangoora Queensland Indonesia Western Australia

2 5 7 Perth Office Altura Mining Philippines Inc Lithium Perth Manila Smithfield Western Australia Philippines Western Australia

3 Altura Asian Office Jakarta Indonesia

Exploration Iron Ore Other

8 10 11 Asiadrill Mt Webber Gold Balikpapan Pilbara Tanami Indonesia Western Australia Northern Territory

9 12 Velseis Base Metals Balikpapan Shoobridge Indonesia Northern Territory

ANNUAL REPORT 2012 ALTURA MINING LIMITED 3 REFLECTIONS AND DIRECTIONS

From strategically expanding our coal presence in key South East OTHER ACHIEVEMENTS FOR 2012 Asian target markets to progressing our world class lithium project, 2012 marks a year of clear focus and confidence for Altura. Altura is also pleased to report a number of significant In a volatile market, Altura is well placed to take advantage of achievements in its other mineral projects and corporate activities opportunities created by the global economic climate. The for the year, including: Company has been making substantial and methodical gains • Project development scoping studies are underway at towards our 2015 strategy to become a significant global coal Pilgangoora and recent positive drill results have delivered producer in South East Asia’s growth markets. The result of a substantial 89% resource increase – from 13.3 million this strategy will be the creation of independently sustainable tonnes @ 1.21% Li2O to 25.2 million tonnes @ 1.23% Li2O – businesses that will deliver profitability, liquidity and growth to the confirming Altura Lithium’s world class size and quality. group and our shareholders. • Exercise of more than 95% of options by shareholders It has been a difficult year for many companies and for the in August 2011, reflecting shareholder confidence in exploration and mining industry as a whole. Those who will survive Altura’s strategy and providing certainty for the and prosper will be companies with strong base fundamentals, Company’s projects. as well as clear direction and strategy – companies like Altura. • Cash reserves to $20 million with virtually no debt. 2015 COAL STRATEGY • Growing the mining services business and revenue by 22%. • Increasing JORC Ore Reserve estimates by 18% at the Altura’s board and executive management have extensive experience and a proven history of success in the development Mt Webber DSO Project (a joint venture with Atlas Iron of coal resources through to mine production. The Company has Limited), with production planned to commence in late utilised these strengths to formulate a clear strategy to build an 2013 at an initial production rate of 3 million tonnes per international coal business in South East Asia by 2015. annum (Mtpa). This strategy has focussed on identifying opportunities which will grow the Company and deliver profits with ongoing cash flows. Certainty in an uncertain market The main target of this plan to date has been to acquire high value coal tenements and the past year has seen several key Altura is on the precipice of an exciting roll-out and operational accomplishments, including: phase. • Advancing our Tabalong coal project in South Kalimantan And while no one is immune to the unpredictability of the market, where final approvals are pending so that coal mine one thing that we can be sure of is that Altura is continuing to construction may commence later this year, targeting first coal capitalise on opportunities only afforded to companies with strong to be mined and sold in early 2013. leadership, financial strength and a clear vision. • Expanding tenement holdings at Tabalong by 290% with three The Company’s focus is on high value and cost competitive coal, neighbouring and nearby IUPs (Exploration Permits), adding with market conditions validating this approach. South Kalimantan a further 12,800 hectares (to more than 17,200 hectares in enjoys a freight cost benefit to key markets over Australian coal. total) of prospective high grade thermal coal to the Company’s This year we have achieved several milestones, maximising the portfolio and laying the foundation for a significant Indonesian benefits of doing business in South East Asia and positioning the coal business for Altura. Company as a market leader in the development of the region’s • Formalising the joint venture agreement and working relationship coal assets. with our local Indonesian partner, PT Unitras Jaya Investama. 2012 has been a year of market extremes – with great highs and • Executing the Agreement to acquire – on behalf of the joint great lows – and I am confident that 2013 will be an exhilarating venture – 80% equity in the PT Kodio Multicom and PT and extraordinary breakthrough year for Altura. Marangkayu Bara Makarti coal projects, strategically located We have much to be excited about. From expanding our global nearby to Tabalong in South Kalimantan. coal footprint in Indonesia and the Philippines to the next steps for • The formation of Altura Mining Philippines Inc and the our world class lithium project, Altura will continue to make strong subsequent submission of three coal area tenders. and solid progress towards our strategic goals.

4 ALTURA MINING LIMITED ANNUAL REPORT 2012 Thank you key mining projects both in South East Asia and Australia. The systematic development of these projects will provide Altura with a I would like to extend a sincere thank you to the hardworking diverse and enviable income stream from 2013 onwards. team at Altura and to our loyal shareholders. It is a privilege to be part of such a talented and committed group and without Sincerely our shareholders’ ongoing support, we would not be in such as enviable position. Your board of directors and management are committed to the growth of your Company by developing and operating our James Brown.

STRATEGIC PRIORITIES FOR 2013

Scaling up production Increasing our coal With mine construction to commence in late 2012 and resources and footprint production anticipated to start early next year, Altura is focussed on growing production at Tabalong Coal Continuing to expand the size of the high value coal resource throughout 2013. at Tabalong, as well as seeking out other projects.

Further expansion into Developing our lithium project South East Asia Actively engaging end users, continuing resource upgrades Progressing Altura Mining Philippines Inc exploration and and progressing pre-development studies including mining, development opportunities and pursuing new projects in the infrastructure, development and costing options, and a South East Asian region. decision to mine.

Looking at emerging opportunities Altura’s prospective gold tenement applications in the Mt Webber DSO next steps Granites Tanami Orogen are adjacent to ABM Resources’ 3 million ounce Old Pirate/Buccaneer and Tanami Gold’s Working with our JV partner, Atlas Iron Limited, to determine 2 million ounce Central Tanami/Ground Rush, and nearby strategy and timing for development of the project. to Newmont’s Callie 10 million ounce Mine.

ANNUAL REPORT 2012 ALTURA MINING LIMITED 5 6 ALTURA MINING LIMITED ANNUAL REPORT 2012 YEAR IN REVIEW

ANNUAL REPORT 2012 ALTURA MINING LIMITED 7 CORPORATE

8 ALTURA MINING LIMITED ANNUAL REPORT 2012 Financial affairs In August 2012, Altura executed a formal Sale and Purchase Agreement to acquire equity in two further coal projects located in In July and August 2011, Altura received $18.5 million on the South Kalimantan, Indonesia. This is in addition to formalising its exercise of listed 15 cent options that were issued as part of a joint venture agreement with a local Indonesian coal partner earlier rights issue in September 2010. in the year which included a neighbouring tenement to Altura’s Tabalong Coal project. The Company currently has cash reserves of $20 million arising from previous rights issues, including a remarkable 95% take up In March 2012, Altura Mining Philippines Inc submitted of listed options that were to expire on 31 August 2011. applications for three coal areas under tender and the outcome is pending. In addition, Altura has been able to partially offset its exploration and development costs with funds contributed by the Company’s mining exploration and services division which Ready for the next stage of growth returned US$2.7 million in operating profit in the past year. Altura is now entering an exciting new phase as the Company’s With prudent financial management, solid cash flow from projects move toward mine development and coal production. its services arm and strong shareholder support, Altura is securely placed to progress its five year strategy to become The 2011–12 financial year has seen significant advancements a major coal operator in South East Asia, despite difficult with Altura’s three key projects: market conditions. • The Tabalong coal project in South Kalimantan is pending final approval, with coal mine construction anticipated later this year – and the first coal to be mined and sold during the first From Australian explorer to half of 2013. South East Asia producer • The Pilgangoora lithium project, also located in the Pilbara region On the eve of final approval to commence coal production and of Western Australia, has been significantly increased in size, and along with the formal acquisition of three new coal projects in project development scoping studies are well under way. Indonesia and the creation of Altura Mining Philippines Inc, Altura • The Mt Webber iron ore project (joint ventured with Atlas Iron has successfully transitioned from an Australian exploration house Limited) in the Pilbara region of Western Australia is planned to to an international coal company. commence production in late 2013 at an initial production rate of 3 Mtpa. And in doing so, Altura has strategically increased its land holding of high quality coal targets. Already on the ground in Indonesia, These projects, together with the team’s experience in coal Altura has proven its Asian credentials and successful track production and Asia focus will help the Company grow and record in operating in the region. deliver profits with sustainable operating cash flows.

ANNUAL REPORT 2012 ALTURA MINING LIMITED 9 COAL

Something big is happening About Tabalong Coal • High calorie, low ash and low sulphur thermal coal • Low capital and a staged production model to provide positive cash flow • Third party infrastructure sharing options for coal haulage, processing and vessel loading • Port location on the Barito River • Low shipping costs to key Asian customers with a freight advantage over Australian Coal • Operation Production granted and Forestry Permit anticipated in coming months

Towards production • First coal to be mined and sold in early 2013 • Initial production of 500,000 tpa ultimately increasing to 1,500,000 tpa • A new exploration program is planned for the three newly acquired IUPs • Existing estimated JORC resource of 13.4 million tonnes • Exploration target of 30 to 35 million tonnes exclusive of current Coal Resources (see Exploration Target Statement on page 13) • Staged development of each IUP to provide coal production increase

New developments • Acquisition of three new neighbouring tenements (IUPs), increasing Altura’s coal tenure in Kalimantan to 17,221 hectares • New Indonesian joint venture partner to support the Company on a local level • Coal mine construction scheduled to commence later this year

10 ALTURA MINING LIMITED ANNUAL REPORT 2012 Project summary The Tabalong Project initially comprised two mining permits – or Izin Usaha Pertambangan (IUPs) – which are held by Altura’s international coal business starts with its Tabalong Coal PT Suryaraya Permata Khatulistiwa (SPK) and PT Suryaraya Project in South Kalimantan, Indonesia. Cahaya Cemerlang (SCC) and cover 1,993 and 4,315 hectares respectively. This region of Kalimantan has been the focus of intense exploration for coal, with numerous occurrences of high grade During the year Altura acquired a further three IUPs held by coking coal products, as well as high energy thermal coals – both PT Suryaraya Pusaka (SP), PT Kodio Multicom (KM) and PT of which are in high demand and can attract strong market prices. Marangkayu Bara Makarti (MBM). The Tabalong Coal Resource indicates a highly marketable product These three new IUPs include an additional 12,800 hectares, with high energy, low ash and low to medium sulphur characteristics. bringing the total area of coal tenure in Kalimantan to over And while there has been a reduction in coal prices worldwide during 17,200 hectares. 2012, higher energy thermal coals equivalent to Tabalong remain in Operation Production approval has been granted for the SPK, the US$85–US$90 per tonne FOB vessel price range. SCC and SP tenements and the final set of Forestry Permits for Tabalong is planned to commence production in early 2013 all three IUPs anticipated by the last quarter of 2012. (subject to regulatory and government approvals) and initially Tabalong has a current JORC compliant Coal Resource will produce 500,000 tpa (tonnes per annum) of premium grade Estimate of 13.4 million tonnes of high grade thermal coal. thermal coal ramping up to 1,500,000 tpa. This is set to increase by a further 30 to 35 million tonnes Current plans are for an open pit operation and a simply beneficiated with the addition of the new IUPs (see Exploration Target product delivered to an off-take point to the west on the Barito River. Statement on page 13).

1° 30’ 5° 20’ 5° 25’ 5° 30’ 5° 35’ 5° 40’ 11 11 11 11 11

SURYARAYA PERMATA KHATULISTIWA

SURYARAYA CAHAYA CEMERLANG SURYARAYA BLOCK 1 PUSAKA SURYARAYA CAHAYA CEMERLANG BLOCK 2 1° 35’

Missim River

KODIO Tutui MULTICOM River

To Pendang

IUP

1° 40’ Road River

0 2.5 5 km

MARANGKAYU Tabalong Coal Project – IUP Locations BARA MAKARTI To Tanjung

ANNUAL REPORT 2012 ALTURA MINING LIMITED 11 IN DEPTH prospective coal ground. The geological setting of SP is similar to SPK and SCC and is located in the sought after Tanjung Formation. Mining approvals The IUP is approved for Operation Production for a period of The approvals process has continued throughout the year, firstly for 20 years from 31 December 2009 with a further 10 years extension Operation Production approval for SPK and SCC and now for the option. Forestry Permits have been lodged and are currently Forestry Permits. following the approval process, along with permits sought for SPK and SCC. The process includes the lodgement of prerequisite documentation with the Regency Councillor, the Mines Department and the Under the terms of the joint venture agreement, Altura will hold Ministry of Forestry. 70% of the Tabalong Coal Project, with PT Unitras Jaya Investama (UJI) holding the remaining 30%. The joint venture formation was a Altura is pleased to report that during the year it received Operation non-cash based transaction with each party responsible for their Production approval for the SPK and SCC tenements, both for a own share of expenditure. term of 20 years with 2 x 10 year renewal options. Ministry of Forestry approval for Forestry Land Use Permits (Pinjam Project expansion – Second stage Pakai) is now pending. And despite a significant backlog of forestry permitting in Indonesia – resulting from growth in the mining sector In August 2012, Altura entered into a formal sale and purchase and the introduction of new mining laws – Altura anticipates the agreement on behalf of the Joint Venture to purchase 80% equity Pinjam Pakai will be granted during the last quarter of 2012. in the IUPs held by PT Kodio Multicom (KM) and PT Marangkayu Bara Makarti (MBM). Project expansion – First stage These two new IUPs are located immediately south of the three IUPs which comprise the Tabalong joint venture – and provides In March 2012, Altura formally signed an agreement to acquire Altura with an additional 9,560 hectares of prospective high value the IUP held by SP through the formation of a joint venture with coal properties. the owners of SP. The financial consideration for the acquisition is US$1 million per This new IUP is located approximately 15 kilometres east of the project, plus a royalty to the vendors of US$2.50 per tonne of main Tabalong Project and comprises 3,250 hectares of highly coal mined and sold from each area.

Tabalong Coal Resource Estimates

Resource Tonnes TM IM Ash VM FC TS CV_ar CV_adb CV_daf RD

Measured 3,989,000 16.4 7.7 4.0 40.7 47.4 0.98 6,432 7,097 8,018 1.29

Indicated 5,796,000 16.6 8.2 5.4 40.2 46.3 1.34 6,292 6,924 7,979 1.31

9,785,000 16.5 8.0 4.8 40.4 46.7 1.19 6,349 6,994 7,995 1.30

Inferred 3,600,000 ------

Total 13,385,000 ------

Note: TM = Total Moisture %, IM = Inherent Moisture %, VM = Volatile Matter %, FC = Fixed Carbon %, TS = Total Sulphur %, CV = Calorific Value in kilocalories per kilogram, RD = Relative Density, ar = as received basis, adb = air dried basis, daf = dry ash free basis weighted averages not provided for Inferred Resource category due to data limitations

12 ALTURA MINING LIMITED ANNUAL REPORT 2012 The vendors will also be provided with a loan facility of up to This comprises a Measured Resource of 3.989 million tonnes, US$4 million to provide long-term transport solutions to the an Indicated Resource of 5.796 million tonnes and an Inferred Tabalong region. The loan will be repaid from royalties payable to Resource of 3.600 million tonnes. the vendors for coal mined and sold from KM and MBM. Tabalong also has an Exploration Target of 30 to 35 million tonnes for the three IUPs comprising the Tabalong JV covering SPK, Mine development SCC and SP (see statement below).

Initial mining development will commence in SPK, the most With more than 50% of the project relatively unexplored, Altura northern IUP, and progress south into SCC and potentially east to intends to further explore all five (5) IUPs – providing substantial SP as coal resources are defined. scope to increase the Mineral Resource estimate. Coal will be mined from SPK and hauled some 110 kilometres to Further field exploration (including drilling) will focus on delineating a port site on the Barito River. Coal will be loaded on barges and further resources in the high energy coal measures of the Tanjung transported down the Barito River to an offshore anchorage point Formation, which is well known for its low ash and medium for vessel loading. sulphur coal seams. Third party use of 55 kilometres of haul road, crushing plant and barge loading facility is currently being negotiated and the successful outcome of these negotiations will substantially reduce start-up capital and development lead time. Altura is aiming to commence construction of the mine during the last Exploration Target Statement quarter of 2012, with first coal production in early 2013 subject to Tabalong Exploration Target of 30 to 35 million tonnes based on the following receipt of statutory approvals. Initial coal production will be at a rate of coal quality ranges: 500,000 tpa ramping up to 1,500,000 tpa. Specific Energy (kcal/kg) – 6,300 to 7,000 (As Received Basis), Ash (%) – 4.0% to 10.0% and Sulphur (%) – 0.4% to 1.0%. The potential quantities and grades are conceptual in nature and there has been insufficient Coal resource/Exploration targets exploration to date to define a Coal Resource. It is not certain that further exploration will result in the determination of a Coal Resource. The Tabalong has a current Coal Resource Estimate (JORC Exploration Target of 30 to 35 Mt is exclusive of the current coal resources. compliant) of 13.385 million tonnes of high grade thermal coal.

Tabalong Coal Resource Estimates

Resource Tonnes TM IM Ash VM FC TS CV_ar CV_adb CV_daf RD

Measured 3,989,000 16.4 7.7 4.0 40.7 47.4 0.98 6,432 7,097 8,018 1.29

Indicated 5,796,000 16.6 8.2 5.4 40.2 46.3 1.34 6,292 6,924 7,979 1.31

9,785,000 16.5 8.0 4.8 40.4 46.7 1.19 6,349 6,994 7,995 1.30

Inferred 3,600,000 ------

Total 13,385,000 ------

Note: TM = Total Moisture %, IM = Inherent Moisture %, VM = Volatile Matter %, FC = Fixed Carbon %, TS = Total Sulphur %, CV = Calorific Value in kilocalories per kilogram, RD = Relative Density, ar = as received basis, adb = air dried basis, daf = dry ash free basis weighted averages not provided for Inferred Resource category due to data limitations

ANNUAL REPORT 2012 ALTURA MINING LIMITED 13 LITHIUM

Changing the landscape of lithium production and supply globally About Altura Lithium • Shallow, thick, low strip ratio, high yielding deposit • One of the largest high grade deposits of hard rock lithium ore in the world • Road linkage to the bulk port of Geraldton • Only a limited number of known resources where lithium can be economically extracted • Hard rock spodumene has proven metallurgical properties and proven extraction flow sheets

Towards production • The capacity to produce over 100,000 tonnes per annum of lithium oxide concentrate • Current JORC resource is 25.16 million tonnes at 1.23% lithium oxide • Previously stated exploration target of 18 to 25 million tonnes @ 1.3% to 1.6% lithium oxide has now been achieved with minor reduction in lithium grade oxide • Operations could commence as early as 2014 • Actively seeking customers and end users

New developments • Exciting drill and metallurgical results increase the resource estimate in size and grade, delivering an impressive 89% increase in tonnage • Scoping studies underway covering infrastructure and development options – where a positive decision to mine will result in fast tracked production • Further potential to increase the estimate and grade by drilling identified and sampled areas of pegmatite outcrops along strike

14 ALTURA MINING LIMITED ANNUAL REPORT 2012 Project summary world’s needs. Western Australia has solid credentials in mining and processing spodumene at Talison Lithium’s Greenbushes Altura Lithium is one of the largest high grade deposits of hard rock mine near Bunbury, including the pending acquisition of Talison by lithium ore discovered in the world to date. The project, located at specialist US chemical company, Rockwood Holdings – at a 53% Pilgangoora in Western Australia, lies just off the Turner River East premium (C$724 million or approximately A$700 million). in Western Australia – 1,250 km north-northeast of Perth, 120 km south of Port Hedland and with road linkages to the bulk port of Geraldton on the Mid-West coast. It is ideally positioned as an IN DEPTH export gateway for road hauled lithium concentrate. During the financial year, the Pilgangoora Lithium project has been the Maiden Lithium Ore Resource focus of extensive ongoing drilling to determine the full extent and size Following an extensive drilling program in the second half of 2010, of what is already an impressive resource estimate. Recent positive drill Altura announced an initial JORC Mineral Resource estimate of results now confirm an upgraded JORC Mineral Resource Estimate of 10.54 million tonnes of mineralised spodumene pegmatite at 1.25% 25.2 million tonnes @ 1.23% Li2O, replacing the previous estimate of lithium oxide containing 132,000 tonnes of lithium oxide (Li O). 13.3 million tonnes @ 1.21% Li O in November 2011. 2 2 The maiden Mineral Resource estimate was calculated from With only a limited number of known resources where lithium can 114 drill holes located in the C1, E1 and N1 target areas and be economically extracted, the project has already achieved the announced in August 2011. This exciting result led to a further upper estimate of its previous resource target of 25 million tonnes revision of the then existing exploration target of 10 to 15 million and an estimated 310,000 tonnes of contained lithium oxide. tonnes @ 1.5 to 1.7% Li2O to a new increased exploration target of 18 to 25 million tonnes @ 1.3 to 1.6% Li O. The shallow nature of the deposit gives the project potential to 2 deliver high yields and low strip ratios, considerably enhancing the economics and competitive advantage of the project. Lithium Ore Resource – First upgrade

Demand for lithium continues to grow by up to 10% per annum In November 2011, the Company announced a revised JORC and at its current resource size, Altura Lithium is already the compliant Mineral Resource estimate of 13.29 million tonnes of fourth largest known resource and could still grow to become spodumene mineralised pegmatites at 1.21% Li2O (containing one of the largest and lowest cost lithium producers globally. 161,000 tonnes of lithium oxide). This represented a 26% Many lithium projects have been progressed on the basis of increase (2.75 million tonnes) on the previous estimate with the increase solely confined to the S1 target area. uncertain metallurgy and optimistic market projections for demand and pricing. Shallow, hard rock spodumene is the proven, reliable Both resource estimates were completed internally by utilising a and low cost ore that currently supplies the vast majority of the Minescape (Mincom) 3D computer model to produce pegmatite

80 350 70 72.40 300 60 250 50 200 40 47.02 150 30 20 29.48 100 25.16 22.22 18.18 10 14.90 50 0 0 Talison Canada Nemaska Altura Mining Galaxy Galaxy Reed 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Lithium Lithium Exploration Limited Resources Resources Resources Demand Optimistic scenario Conservative scenario Greenbushes Quebec Whabouchi Pilgangoora James Bay Mt Cattlin Mt Marion Australia Canada Canada Australia Canada Australia Australia World Forecast Demand for Lithium 2011–2020 (000t LCE) World Hard Rock Lithium Deposits Mineral Resources (Mt) Source: Roskill 4th Lithium Markets and Supply Conference Source: Company Reports January 2012 Buenos Aires, Argentina

ANNUAL REPORT 2012 ALTURA MINING LIMITED 15 zone correlations from geological and assay drillhole intercepts. Altura has already completed Phase 1 of the detailed metallurgical The assay results have been integrated to produce the resource test work on the representative diamond core sections of ore. The mass and grade estimates from the resource block model. results of Phase 1 were positive with no major issues for crushing or milling of the ore. Subsequent beneficiation testing of the core delivered promising results with a lithium oxide concentrate Lithium Ore Resource – second upgrade between 6.89% and 7.12% and successful magnetic separation In October 2012, Altura announced an 89% increase to its new of other elements. Mineral Resource estimate (JORC compliant) of 25.2 million The test work was completed under the supervision of Mineral tonnes @ 1.23% Li O. Altura’s previously stated Exploration 2 Engineering Technical Services Pty Ltd (METS), an independent Target of 18–25 million tonnes @ 1.3 to 1.6% Li2O has now been specialist consulting group based in Western Australia. achieved with only a minor reduction in the lithium oxide grade declared in the exploration target. All phases are scheduled for completion by the end of 2012. This new estimate replaces the previous estimate of 13.3 million Worldwide comparison tonnes @ 1.21% Li2O in November 2011 and is the result of an extensive reverse circulation (RC) drill program completed by Altura’s Pilgangoora Lithium project is now confirmed as a Altura’s in-house exploration team. The JORC compliant Mineral significant new major discovery, ranking alongside the best hard Resource estimate was completed by Altura’s geological team via rock lithium deposits in the world, with the added advantage of the construction of a three-dimensional geological model using ease of accessibility to infrastructure and port facilities. The rapid Micromine software. progression from identification to mineral resource estimate has Further increases in the Mineral Resource estimate and lithium grade been achieved in less than two years. are anticipated following more drilling of pegmatite outcrops that have been identified and surface sampled but not yet tested with drilling. Pilgangoora Lithium Achieved Exploration Targets Scoping and development Lithium Target Area Tonnes (Mt) Li Grade % Li O Altura has made significant progress. In addition to ground 2 exploration, the scoping work covers three phases: Area C1 5–7 1.3–1.5 • Phase 1 to determine the physical and metallurgical properties Area E1 4–5 1.3–1.5 of the ore, along with separation and recovery of the lithium Area N1 4–5 1.3–1.5 bearing spodumene Area S1 5–8 1.4–1.6 • Phase 2 to deliver the process design, mass balance and grade of the lithium oxide concentrate product Total 18–25 1.3–1.6 Note: The potential quantities and grades are conceptual in nature and there has • Phase 3 is aimed at providing designs, mining and capital been insufficient exploration to date to define a Mineral Resource. It is not certain that cost parameters further exploration will result in the determination of a Mineral Resource.

Pilgangoora Li2O resource – october 2012

Zone Resource Tonnes Li2O % Li2O tonnes Indicated 14,992,600 1.27 190,783 C1, E1, N1 Inferred 7,239,155 1.22 88,173 Indicated 2,295,335 1.11 25,374 S1 Inferred 630,175 0.95 6,012 Indicated 17,287,935 1.25 216,157 Subtotal Inferred 7,869,330 1.20 94,185 Total All Resources 25,157,265 1.23 310,342

Note: Based on 0.7% Li2O cut-off grade

16 ALTURA MINING LIMITED ANNUAL REPORT 2012 EXPLORATION SERVICES

Altura’s mining and exploration services division has had a record year, delivering more than US$9 million in revenue and year on year growth up 22% from the previous financial year. With a prominent and profitable drilling and wire line operation, both Asiadrill and Velseis are trusted providers of exploration services in Indonesia with enviable safety records.

About PT Asiadrill Bara Utama Based in Indonesia, Asiadrill is a 100 per cent Altura-owned mining services company. Asiadrill has long-term contracts with a number of major mining companies and owns, operates and maintains 16 large drill rigs including truck and track mounted rigs, heli-lift equipment, portable units, and associated support vehicles. In addition to the larger fleet, Asiadrill also operates up to 18 man portable units for use in remote and sensitive locations where a smaller footprint is required. Drill rig deployment has remained consistent throughout the year, with high rig unit utilisation levels of approximately 25 individual units (consisting of track and skid mounted and man portable units) operating at any one time. The company is predominantly focussed on coal exploration and development, and currently employs a permanent workforce of 130 people and up to 180 additional contractors.

About PT Velseis Indonesia Altura also owns a 50% interest in Velseis, which conducts geophysical services including seismic and wireline logging. The company is a joint venture between Altura and Brisbane- based wireline and seismic service provider, Velseis Pty Ltd. Velseis currently has 11 wireline units and regularly partners with Asiadrill on coal exploration and drilling programs to provide clients with greater flexibility and project control. The company is one of Indonesia’s premium shallow well logging service providers and is renowned for its skilled staff, local knowledge and modern equipment.

ANNUAL REPORT 2012 ALTURA MINING LIMITED 17 IRON ORE

A strong foothold with low risk exposure to Pilbara’s iron ore

About Mt Webber DSO • Joint venture (30%) with current DSO producer Atlas Iron Limited • Located in the world’s premier iron ore province approximately 150 km from Port Hedland • Under the terms of the agreement, Altura remains the owner of the Mt Webber and other tenements, totalling 333 km2

Towards production • Mt Webber mining development targeted for second half of 2013 • Planned initial production of 3 million tonnes per annum • Current JORC Ore Reserve estimate compiled by Atlas of 29.6 million tonnes @ 57.3% Fe contained in the Gibson, Fender and Ibanez deposits

New developments • 18% increase in Ore Reserve estimates • The potential to increase the Ore Reserve by an additional 35% or 10 million tonnes via a small reduction (1.2%) in iron ore grade – potentially only impacting the selling price in the order of $2.50 to $3.00 per tonne

18 ALTURA MINING LIMITED ANNUAL REPORT 2012 Project summary Importantly, the JORC estimate now comprises both the Proved category (19.797 million tonnes at 58.0% Fe) and the Probable The Mt Webber Iron Ore Project remains an important investment category (9.826 million tonnes at 56.0% Fe). The Mineral for Altura, with a 29.6 million tonne Direct Shipping Ore Resource estimate has also been revised to a total of 42.1 million (DSO) reserve at 57.3% Fe that offers a near-term production tonnes at 56.3% Fe (an increase of 2.2 million tonnes) utilising a opportunity into the iron ore market. cut-off grade of 50% Fe. The Mt Webber Iron Ore project is located 150 km south-east of The Ore Reserve estimates were compiled by Atlas and then Port Hedland in the world’s premier iron ore province, the Pilbara. independently reviewed by Western Australian mine planning It is approximately 40 km east of the Fortescue Metals Group consulting firm, Orelogy Group Pty Ltd. railway line and immediately north of Woodstock Road, which At Altura’s request, Orelogy completed a separate review of the connects Marble Bar to the Great Northern Highway. Mt Webber JV deposits which highlighted the potential for an As a joint venture operation with DSO miner Atlas Iron Limited additional 35% of reserve inventory with the inclusion of the lower (ASX: AGO), Mt Webber provides Altura with expertise and low grade ore within the pits. risk exposure to the iron ore industry. The Company owns a The addition of this material would require a reduction in the cut-off 30 per cent share of Mt Webber and five other highly prospective grade from 54.0% – 54.4% Fe to 50% Fe and product marketing Pilbara tenements under the joint venture – retaining 100% title marginally below the 57.5% Fe (planned by Atlas) to 56.3% Fe. ownership in all of the joint venture tenements and all rights to other minerals on those tenements. Altura is requesting a further review to upgrade Altura’s Mt Webber reserves, applying the lower cut-off grade of 50% Fe to the Production is likely to commence in late 2013, subject to resource estimate. approvals including the Joint Venture Committee’s final sign off for the project to proceed. Mine development When fully operational, Mt Webber will have an initial production rate of 3 Mtpa before increasing to 6 Mtpa. The Mt Webber DSO Project will represent 40% of Atlas’ planned 15 Mtpa production from the Horizon 1 project – with production IN DEPTH planned for late 2013. Altura has continued discussions with Atlas to progress and finalise the Joint Operations Agreement (JOA) for the development August 2012 Iron Ore Reserve update and mining of the Mt Webber JV deposit. Altura announced in August 2012 a further upgraded JORC A unanimous decision to mine is a prerequisite for the Compliant Ore Reserve estimate for Mt Webber of 29.623 million development of the project and consequently the negotiation tonnes at 57.3% Fe contained in the Ibanez, Gibson and Fender and signing of the JOA is essential for both parties to arrive deposits. This estimate has been compiled by Atlas and was at this decision. Agreement for Altura to access Atlas owned calculated using a cut-off grade of 54.0%–54.5% Fe. infrastructure, including port facilities, will also be required prior to proceeding with mine development. This latest Ore Reserve estimate represents an 18% increase (4.39 million tonnes) on the previous upgrade announced in Atlas is currently planning initial production at Mt Webber at the August 2011. The upgrade is the result of an infill and evaluation rate of 3 million tonnes per annum (Mtpa) then rapidly increasing drilling program by Atlas focussed on the Gibson and Fender to 6 Mtpa, providing Altura with a 0.9 Mtpa – 1.8 Mtpa share of deposits. the annual production.

ANNUAL REPORT 2012 ALTURA MINING LIMITED 19 OTHER OPPORTUNITIES & PROSPECTS

In addition to its key priorities in coal and lithium, Altura continues to explore and review its other tenements to develop opportunities for the Company and shareholders. From mining through to joint ventures, farm in/farm outs and sale, the Company is always looking to maximise value by strategically investigating a wide range of projects and options.

Prospect developments in 2011–12 • Progress has been made to convert three highly prospective gold Tanami tenements from application to granted status. They are located adjacent to ABM Resources’ 3 million ounce Old Pirate/Buccaneer and Tanami Gold’s 2 million ounce Central Tanami/Ground Rush, and nearby to Newmonts Callie 10M ounce Mine. Further desk and field research is scheduled for 2013. • A significant exploration program has been planned at Smithfield, with environmental approvals now received and exploration to commence in the summer. • Following the successful negotiation of native title heritage agreements, several Altura tenements in the Pilbara region have converted from application to granted status in the past 12 months. Initial exploration work on these tenements is planned for the coming year. • The five exploration licences at Shoobridge have been amalgamated into one exploration licence and project.

20 ALTURA MINING LIMITED ANNUAL REPORT 2012 COMPETENT PERSONS STATEMENTS

TABALONG COAL who is a member of the Australasian Institute of Mining and Metallurgy. Steve Warner is a full time employee of Atlas. The information in this report that relates to Exploration Results, He has sufficient experience which is relevant to the style of Coal Resources or Coal Reserves is based on information mineralisation and type of deposit under consideration and to compiled by Stephen Barber, who is a Member of the the activity which he has undertaken to qualify as a Competent Australasian Institute of Mining and Metallurgy. Stephen Barber is Person as defined in the 2004 Edition of the ‘Australasian Code a full-time employee of PT Altura Indonesia. Stephen Barber has for Reporting of Exploration Results, Mineral Resources and sufficient experience which is relevant to the style of mineralization Ore Reserves’. Steve Warner consents to the inclusion in this and type of deposit under consideration and to the activity which announcement of the matters based on his information in the he is undertaking to qualify as a Competent Person as defined form and context in which it appears. in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Coal Resources and Coal Reserves’. Stephen Barber consents to the inclusion in the report of the PILGANGOORA LITHIUM matters based on his information in the form and context in which it appears. Stephen Barber has over 10 years’ experience in Ore Reserve Estimation exploration and mining of coal deposits. The information in this report that relates to the Pilgangoora exploration results is based on information compiled by Mr MT WEBBER IRON ORE Bryan Bourke, who is a member of the Australian Institute of Geoscientists and a full-time employee of Altura Mining Limited. Ore Reserve Estimation Bryan Bourke has sufficient experience, which is relevant to the style of mineralisation and type of deposit under consideration The information in this report that relates to Ore Reserve and to the activity he is undertaking, to qualify as a Competent estimations for the Mt Webber JV Area is based on information Person in terms of the ‘Australasian Code for Reporting of compiled by employees of Atlas Iron Limited and Audited by Mr Exploration Results, Mineral Resources and Ore Reserves’ Steve Craig, who is a member of the Australasian Institute of (JORC Code 2004 Edition). Bryan Bourke consents to the Mining and Metallurgy. Steve Craig is a full time employee and inclusion of such information in this Report in the form and Managing Director of Orelogy Pty Ltd. Steve Craig has sufficient context in which it appears. experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he Metallurgical Test Results is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Mr Damian Connelly, Fellow AusIMM, Chartered Professional Results, Mineral Resources and Ore Reserves’. Steve Craig (MET), MMICA, MSME was responsible for the preparation consents to the inclusion in the report of the matters based on his of the metallurgical test work results reported herein. Mr information in the form and context in which it appears. Connelly has sufficient experience to the activity which he is undertaking to qualify as a Competent Person as defined in Geological Data, Interpretation the 2004 Edition of the “Australasian Code for Reporting of the and Resource Estimation Exploration Results, Mineral Resources and Ore Reserves. Mr Connelly consents to the inclusion in the report of the matters The information in this report that relates to mineral resource based on his information in the form and context in which is results is based on information compiled by Mr Steve Warner appears.

ANNUAL REPORT 2012 ALTURA MINING LIMITED 21 22 ALTURA MINING LIMITED ANNUAL REPORT 2012 FINANCIAL REPORT

Corporate Directory 24 Directors’ Report 25 Auditors’ Independence Declaration 34 Corporate Governance Statement 35 Consolidated Income Statement 39 Consolidated Statement of Comprehensive Income 40 Consolidated Balance Sheet 41 Consolidated Statement of Changes in Equity 42 Consolidated Statement of Cash Flows 43 Notes to the Financial Statements 44 Directors’ Declaration 77 Independent Auditor’s Report to the Members 78 Additional ASX Information 80

ANNUAL REPORT 2012 ALTURA MINING LIMITED 23 CORPORATE DIRECTORY

DIRECTORS James Brown – Managing Director Paul Mantell – Executive Director Allan Buckler – Non-Executive Director Dan O’Neill – Non-Executive Director Beng Teik Kuan – Non-Executive Director

COMPANY SECRETARIES Noel Young Damon Cox

REGISTERED OFFICE Building 8, 22 Magnolia Drive BROOKWATER QLD 4300 Telephone: +61 7 3814 6900 Facsimile: +61 7 3814 6911 Email: [email protected] Website: www.alturamining.com

AUDITORS Crowe Horwath Perth Level 6, 256 St. Georges Terrace PERTH WA 6000

SHARE REGISTRY Link Market Services Limited Level 15, 324 Queen Street BRISBANE QLD 4000

AUSTRALIAN SECURITIES EXCHANGE Code: AJM

24 ALTURA MINING LIMITED ANNUAL REPORT 2012 Altura Mining Limited and Controlled Entities DIRECTORS’ REPORT Directors’ Report FOR THE YEAR ENDED 30 JUNE 2012 FOR THE YEAR ENDED 30 JUNE 2012

Your directors have pleasure in presenting the annual financial report of Altura Mining Limited ("Altura" or "the Company") and its controlled entities (“the Group”) for the financial year ended 30 June 2012.

DIRECTORS

The names of the directors in office at any time during or since the end of the financial year are:

Mr James Brown Mr Paul Mantell Mr Allan Buckler Mr Dan O’Neill Mr Beng Teik Kuan

PRINCIPAL ACTIVITIES

The principal activities of the consolidated entity during the financial year were:

 Provision of mining services, including drilling and geologging services; and  Exploration for coal, iron ore, lithium, garnet, uranium and other minerals, principally within Australia and Indonesia.

OPERATING RESULTS

The consolidated entity’s operating loss after providing for income tax and minority equity interests for the year ended 30 June 2012 was $1,919,347 (2011: loss $1,773,079).

DIVIDENDS

There were no dividends paid or declared during the year ended 30 June 2012 (2011: Nil).

REVIEW OF OPERATIONS

The prime activities of the consolidated entity during the 2012 financial year were the provision of mining services, and exploration for coal, iron ore, lithium, garnet, uranium and other minerals on its tenements located in Australia and Indonesia.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

In July and August 2011, $18.5 million was received by the Company on the exercise of listed 15 cent options that were issued as part of the rights issue in September 2010.

There were no other significant changes in the nature of the consolidated entity’s principal activities during the financial year, other than as discussed in the financial report and elsewhere in this Directors Report.

MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR

In August 2012, Altura executed a formal Sale and Purchase Agreement to purchase equity in two further coal projects located in South Kalimantan, Indonesia. Altura had originally signed an agreement in principle to purchase the two Mining Permits in April 2012, and had been working since then to complete the due diligence process and documentation.

No other matters have arisen since the end of the financial year which have significantly affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in subsequent financial years.

FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES

The Group will focus on the development of the Tabalong Coal Project subject to receipt of final approvals, progressing the Mt Webber DSO project (30% owned) to a decision to mine stage in conjunction with Atlas Iron Limited, continued exploration and pre‐feasibility of the Pilgangoora Lithium Project and exploration of its tenements in Western Australia and the Northern Territory. Altura will also continue to actively seek out coal and other mineral opportunities in South East Asia including Indonesia.

2 ANNUAL REPORT 2012 ALTURA MINING LIMITED 25 DIRECTORS’ REPORT Altura Mining Limited and Controlled Entities

Directors’ Report

FOR THE YEAR ENDED 30 JUNE 2012 (CONTINUED)

ENVIRONMENTAL PERFORMANCE

The Group is committed to achieving a high standard of environmental performance. The Board is responsible for regular monitoring of environmental exposures and compliance with environmental regulations. The Group complied with its environmental performance obligations during the year.

INFORMATION ON DIRECTORS

Mr James Brown (Managing Director)

Qualifications Graduate Diploma in Mining from University of Ballarat

Experience Mr Brown is a mining engineer with more than 25 years' experience in the coal mining industry in Australia and Indonesia, including 22 years at New Hope Corporation. He was appointed as Managing Director of Altura in September 2010 and was previously Altura’s Group General Manager since December 2008. His coal development and operations experience includes the New Acland and Jeebropilly mines in South East Queensland, the Adaro and Multi Harapan Utama operations in Indonesia and Blair Athol in the Bowen Basin in Central Queensland.

Other current directorships in listed entities None

Former directorships in last 3 years None

Special responsibilities None

Interests in shares and options 3,442,262 ordinary shares in Altura Mining Limited 2,000,000 options over ordinary shares in Altura Mining Limited

Mr Paul Mantell (Executive Director)

Qualifications Bachelor of Commerce from the University of Queensland and a Fellow of CPA Australia

Experience Mr Mantell is an accountant with more than 30 years corporate experience in the mining and associated industries. He has been involved in all aspects of accounting and finance, financial reporting, taxation and administration, including the responsibilities of an ASX listed entity. His responsibilities have included arranging finance for mining and infrastructure projects both in Australia and Indonesia and for setting up corporate, administrative and financial systems to support new and expanding mining operations. He was appointed a director on 25 May 2009.

Other current directorships in listed entities None

Former directorships in last 3 years None

Special responsibilities None

Interests in shares and options 9,233,083 ordinary shares in Altura Mining Limited 2,000,000 options over ordinary shares in Altura Mining Limited

3 26 ALTURA MINING LIMITED ANNUAL REPORT 2012 Altura Mining Limited and Controlled Entities DIRECTORS’ REPORT

Directors’ Report

FOR THE YEAR ENDED 30 JUNE 2012 (CONTINUED)

INFORMATION ON DIRECTORS (continued)

Mr Allan Buckler (Non Executive Director)

Qualifications Certificate in Mine Surveying and Mining, First Class Mine Managers Certificate and a Mine Surveyor Certificate issued by the Queensland Government’s Department of Mines

Experience Mr Buckler has over 35 years experience in the mining industry and has taken lead roles in the establishment of several leading mining and port operations in both Australia and Indonesia. Significant operations such as PT Adaro Indonesia, PT Indonesia Bulk Terminal and New Hope Coal Australia have been developed under his leadership. Mr Buckler was appointed a director on 18 December 2008.

Other current directorships in listed entities Interra Resources Limited

Former directorships in last 3 years None

Special responsibilities Member of the Audit Committee

Interests in shares and options 82,146,845 ordinary shares in Altura Mining Limited 1,000,000 options over ordinary shares in Altura Mining Limited

Mr Dan O’Neill (Non Executive Director)

Qualifications Bachelor of Science in geology from the University of Western Australia

Experience Mr O’Neill was appointed a director on 18 December 2008. He has held positions with a number of Australian and multinational exploration companies and has managed exploration programs in a diverse range of environments and locations including Botswana, North America, South East Asia, North Africa and Australasia. During his 30 years experience he has held executive management positions with ASX listed companies and has worked on a range of commodities including diamonds, gold, base metals, coal, oil and gas.

Other current directorships in listed entities DiamonEx Limited

Former directorships in last 3 years Orocobre Limited – resigned 2009

Special responsibilities Chairman of the Remuneration & Nomination Committee

Interests in shares and options 1,166,668 ordinary shares in Altura Mining Limited 1,000,000 options over ordinary shares in Altura Mining Limited

4 ANNUAL REPORT 2012 ALTURA MINING LIMITED 27 DIRECTORS’ REPORT Altura Mining Limited and Controlled Entities

Directors’ Report

FOR THE YEAR ENDED 30 JUNE 2012 (CONTINUED)

INFORMATION ON DIRECTORS (continued)

Mr Beng Teik Kuan (Non Executive Director)

Qualifications Bachelor of Engineering (University of Malaya)

Experience Mr Kuan is an engineer with considerable experience in bulk handling and terminal operations, including responsibility for the development and management of the Pulau Laut Coal Terminal in South Kalimantan, Indonesia. He also has experience in Indonesia, Malaysia and Singapore with tin dredging operations, managing rubber, palm oil and cocoa processing factories, and managing palm oil bulk terminals. He was appointed a director on 28 November 2007.

Other current directorships in listed entities None

Former directorships in last 3 years None

Special responsibilities Chairman of the Audit Committee Member of the Remuneration & Nomination Committee

Interests in shares and options 1,882,968 ordinary shares in Altura Mining Limited 1,000,000 options over ordinary shares in Altura Mining Limited

COMPANY SECRETARIES

Mr Noel Young Mr Young is a Fellow of the Institute of Public Accountants. He has over 25 years experience in the mining industry and holds the dual role of Group Financial Controller and Company Secretary.

Mr Damon Cox Mr Cox is a Chartered Secretary, a CPA and a Fellow of the Financial Services Institute of Australasia. He has over 20 years experience in various roles including corporate governance, compliance, treasury and strategic policy advice.

5 28 ALTURA MINING LIMITED ANNUAL REPORT 2012 Altura Mining Limited and Controlled Entities DIRECTORS’ REPORT

Directors’ Report

FOR THE YEAR ENDED 30 JUNE 2012 (CONTINUED)

REMUNERATION REPORT (Audited)

This report details the nature and amount of remuneration for directors and other key management personnel.

Remuneration Policy

The Company’s policy is to remunerate fairly and in line with companies of similar size, operations and in the same industry. Individual remuneration decisions are made by the Remuneration & Nomination Committee taking into account the following factors:

 The responsibility of the role;  Experience of the employee;  Past performance and future expectations; and  Industry conditions and trends.

In order to retain and attract key management personnel of sufficient calibre to facilitate the efficient and effective management of the Company’s operations, the Remuneration & Nomination Committee may seek the advice of external advisors in connection with the structure of remuneration packages.

Remuneration packages may contain the following key elements:

a) Primary benefits – salary/fees, bonuses and non monetary benefits including the provision of a motor vehicle; b) Post‐employment benefits – including superannuation and prescribed retirement benefits; and c) Equity – share options granted under the Employee Share Option Plan as disclosed in Note 22 to the financial statements.

None of the Company’s personnel remuneration packages are linked directly to the Company’s profitability or other measure of performance. The Company maintains an Employee Share Option Plan under which employees may be granted options which vest subject to service conditions being met. Directors may also be allocated options as an incentive that could be realised if the Company’s share price increases.

Performance‐based remuneration

The Company currently has no performance based remuneration in place.

Company Performance, Shareholder Wealth and Director and Executive Remuneration

The Company has recorded the following earnings over the last five years:

2012 2011 2010 2009 2008 Revenues 10,424,210 9,047,665 10,067,199 14,768,403 10,898,857 EBITDA * (1,719,227) (997,721) 835,909 (1,206,055) (1,598,404) NPBT * (1,580,280) (1,235,695) (198,719) (5,062,253) (1,991,853) NPAT * (1,919,347) (1,773,079) (914,326) (5,833,243) (2,329,547) Dividends paid ‐ ‐ ‐ ‐ ‐ W. Av. No. of Shares on issue 429,586,620 301,125,914 168,235,764 126,913,765 113,724,652 EPS * (0.45) (0.59) (0.54) (4.60) (2.05)

* Definitions: EBITDA = Earnings before interest, tax, depreciation and amortisation NPBT = Net profit before tax NPAT = Net profit after tax & minority interest EPS = Earnings per share (calculated based on the weighted average number of shares on issue)

Key Management Personnel Remuneration Policy

The Remuneration & Nomination Committee reviews the remuneration packages of all directors and key management personnel on an annual basis. Remuneration packages are reviewed and determined with due regard to relevant market conditions and individual’s experience and qualification and are benchmarked against comparable industry salaries.

Payment of bonuses and share based compensation benefits is discretionary.

6 ANNUAL REPORT 2012 ALTURA MINING LIMITED 29 DIRECTORS’ REPORT Altura Mining Limited and Controlled Entities

Directors’ Report

FOR THE YEAR ENDED 30 JUNE 2012 (CONTINUED)

REMUNERATION REPORT (Audited) (continued)

Employment Contracts of Key Management Personnel

Contracts of employment are given to key management personnel at time of employment. Details are as follows:

James Brown, Managing Director ‐ the agreement is of no fixed term and allows for payment of a monthly cash salary in US dollars, reviewed each year. The agreement includes provision of a motor vehicle and other non cash allowances including housing, travel and dependent children’s education. Three months notice of termination by either party is required, with a separation allowance equivalent to one year’s salary and entitlements to be paid if employment is terminated by the Company.

Paul Mantell, Executive Director ‐ the agreement is of no fixed term and allows for payment of an annual cash salary, reviewed each year, and superannuation. Provision of a motor vehicle or equivalent allowance and other non cash benefits is included. Three months notice of termination by either party is required, with a separation allowance equivalent to one year’s gross salary to be paid if employment is terminated by the Company.

Noel Young, Group Financial Controller & Company Secretary ‐ the agreement is of no fixed term and allows for payment of an annual cash salary, reviewed each year, and superannuation. Provision of a motor vehicle is included. One month’s notice of termination by either party is required, with a separation allowance equivalent to three month’s gross salary to be paid if employment is terminated by the Company.

Damon Cox, Company Secretary ‐ the agreement is of no fixed term and allows for payment of an annual cash salary, reviewed each year, and superannuation. Provision of a motor vehicle is included. One month’s notice of termination by either party is required.

Key Management Personnel Remuneration 2012 Short‐term benefits Post Long‐term Share based Termination employment benefits payments payments Non‐ Long Options as a Name Cash salary Bonus monetary Super‐ service Options Total percentage and fees ** benefits annuation leave of total $ $ $ $ $ $ $ $ % Non‐executive

directors A Buckler 45,000 ‐ ‐ 4,050 ‐ 33,610 ‐ 82,660 40.7 D O’Neill 54,000 78,196 ‐ 4,860 ‐ 33,610 ‐ 170,666 19.7 B Kuan 39,000 78,196 ‐ 19,860 ‐ 33,610 ‐ 170,666 19.7 Sub total non‐executive 138,000 156,392 ‐ 28,770 ‐ 100,830 ‐ 423,992 23.8 directors Managing

directors J Brown * 282,319 156,392 69,760 ‐ ‐ 67,220 ‐ 575,691 11.7 Executive

directors P Mantell 255,727 117,294 28,298 50,000 ‐ 67,220 ‐ 518,539 13.0 Other key management personnel N Young 132,549 39,098 24,011 12,038 ‐ 10,409 ‐ 218,105 4.8 D Cox 122,500 39,098 16,525 11,025 ‐ 10,409 ‐ 199,557 5.2 Total for key management 793,095 351,882 138,594 73,063 ‐ 155,258 ‐ 1,511,892 10.3 personnel compensation Total 931,095 508,274 138,594 101,833 ‐ 256,088 ‐ 1,935,884 13.2 compensation

* No superannuation is applicable as Mr Brown is based in Indonesia. ** The bonus was paid by way of the issue of company shares. Details of these transactions are disclosed later in this note.

7 30 ALTURA MINING LIMITED ANNUAL REPORT 2012 Altura Mining Limited and Controlled Entities DIRECTORS’ REPORT

Directors’ Report

FOR THE YEAR ENDED 30 JUNE 2012 (CONTINUED)

REMUNERATION REPORT (Audited) (continued)

2011 Short‐term benefits Post Long‐term Share based Termination employment benefits payments payments Non‐ Long Options as a Name Cash salary Bonus monetary Super‐ service Options Total percentage and fees benefits annuation leave of total $ $ $ $ $ $ $ $ % Non‐executive

directors A Buckler 36,000 ‐ ‐ 3,240 ‐ 18,416 ‐ 57,656 31.9 D O’Neill 36,000 ‐ ‐ 3,240 ‐ 18,416 ‐ 57,656 31.9 B Kuan 36,000 ‐ ‐ 3,240 ‐ 18,416 ‐ 57,656 31.9 Sub total non‐executive 108,000 ‐ ‐ 9,720 ‐ 55,248 ‐ 172,968 31.9 directors Managing

directors J Brown * 214,044 ‐ 78,106 ‐ ‐ 36,833 ‐ 328,983 11.2 Executive

directors P Mantell 258,700 ‐ 32,024 23,283 ‐ 36,833 ‐ 350,840 10.5 Other key management personnel N Young 125,000 ‐ 19,057 11,250 ‐ 7,785 ‐ 163,092 4.8 D Cox 115,000 ‐ 6,145 10,350 ‐ 7,785 ‐ 139,280 5.6 Total for key management 712,744 ‐ 135,332 44,883 ‐ 89,236 ‐ 982,195 9.1 personnel compensation Total 820,744 ‐ 135,332 54,603 ‐ 144,484 ‐ 1,155,163 12.5 compensation

*No superannuation is applicable as Mr Brown is based in Indonesia.

Shares

Shares were issued to certain Directors (following approval at the Annual General Meeting in November 2011), key management personnel and other senior staff as part of their remuneration for the year ended 30 June 2012.

The following shares were issued to directors and key management personnel during the year ended 30 June 2012:

Number Issue Value per issued date share at issue date $ J Brown 1,000,000 16/12/11 0.1564 P Mantell # 750,000 16/12/11 0.1564 D O’Neill 500,000 16/12/11 0.1564 B Kuan 500,000 16/12/11 0.1564 N Young 250,000 16/12/11 0.1564 D Cox 250,000 16/12/11 0.1564 3,250,000

# Mr Mantell received an offer of 750,000 shares, and assigned 500,000 of the shares to a nominee, in accordance with the resolution approved at the Annual General Meeting in November 2011.

The value per share is calculated from the volume weighted average price (VWAP) for the five trading days preceding 16 December 2011.

8 ANNUAL REPORT 2012 ALTURA MINING LIMITED 31 DIRECTORS’ REPORT Altura Mining Limited and Controlled Entities

Directors’ Report

FOR THE YEAR ENDED 30 JUNE 2012 (CONTINUED)

REMUNERATION REPORT (Audited) (continued)

Options

There were no new options issued to directors and key management personnel as part of their remuneration for the year ended 30 June 2012.

The following options were on issue to directors and key management personnel as at 30 June 2012:

Granted Grant date Value per Vested Exercise First Last number option at number price exercise exercise grant date date date $ $ J Brown 2,000,000 13/12/10 0.0942 ‐ 0.20 01/10/13 30/09/15 P Mantell 2,000,000 13/12/10 0.0942 ‐ 0.20 01/10/13 30/09/15 A Buckler 1,000,000 13/12/10 0.0942 ‐ 0.20 01/10/13 30/09/15 D O’Neill 1,000,000 13/12/10 0.0942 ‐ 0.20 01/10/13 30/09/15 BT Kuan 1,000,000 13/12/10 0.0942 ‐ 0.20 01/10/13 30/09/15 N Young 350,000 01/10/10 0.0893 ‐ 0.20 01/10/13 30/09/15 D Cox 350,000 01/10/10 0.0893 ‐ 0.20 01/10/13 30/09/15 7,700,000 Nil

MEETINGS OF DIRECTORS

The following table sets out the number of directors’ meetings (including meetings of committees of directors) held during the financial year and the number of meetings attended by each director (while they were a director or committee member). During the financial year there were 5 Directors’ meetings, 3 Audit Committee meetings and 2 Remuneration and Nomination Committee meetings held.

Directors’ Meetings Audit Committee Remuneration & Nomination Committee Number Number Number Number Number Number eligible to attended eligible to attended eligible to attended attend attend attend J Brown 5 5 ‐ ‐ ‐ ‐ P Mantell 5 5 ‐ ‐ ‐ ‐ A Buckler 5 5 3 3 ‐ ‐ D O’Neill 5 5 ‐ ‐ 2 2 B Kuan 5 5 3 3 2 2

INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS

The Company has entered into Deeds of Indemnity with all of its directors in accordance with the Company’s Constitution. During the financial year the Company paid a premium to insure the directors, officers and managers of the Company and its controlled entities. The insurance contract requires that the amount of the premium paid is kept confidential.

OPTIONS

At the date of signing this report, the unissued ordinary shares of Altura Mining Limited under option are as follows:

Exercise Price Number under Issue Date Date of Expiry $ Option 1 October 2010 30 September 2015 0.20 2,900,000 13 December 2010 30 September 2015 0.20 7,000,000 23 December 2011 22 December 2016 0.20 375,000 10,275,000

9 32 ALTURA MINING LIMITED ANNUAL REPORT 2012 Altura Mining Limited and Controlled Entities DIRECTORS’ REPORT

Directors’ Report

FOR THE YEAR ENDED 30 JUNE 2012 (CONTINUED)

OPTIONS (continued)

During the year ended 30 June 2012, the following ordinary shares of Limited Altura Mining were issued on the exercise of options. No amounts are unpaid on any of the shares.

Exercise Price Number of Shares Issue Date $ Issued 5 August 2011 0.15 2,173,325 15 August 2011 0.15 401,273 19 August 2011 0.15 242,233 26 August 2011 0.15 519,931 2 September 2011 0.15 2,753,213 5 September 2011 0.15 117,532,293 123,622,268

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

PROCEEDINGS ON BEHALF OF THE COMPANY

No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the C ompany is a party for the purpose of taking responsibility on behalf of the ompany C for all or any part of those proceedings.

The C ompany was not party to any such proceedings during the year.

NON-­‐AUDIT SERVICES

The Company’s auditor, Crowe Horwath Perth, did not provide -­‐ any non audit services to the Company during the year ended 30 June 2012.

ROUNDING OF AMOUNTS

The Company is an entity to which ASIC Class Order 98/100 applies and, accordingly, amounts in the financial statements and directors’ report have been rounded to the nearest thousand dollars.

AUDITOR’S INDEPENDENCE DECLARATION

The auditor’s independence declaration for the year 1 ended 30 June 20 2 has been received and is included on page 11 of the annual report.

Signed in accordance with a resolution of the directors made pursuant to Section 298(2) Corporations of the Act 2001.

On behalf of the Directors,

BT Kuan Director Signed at Singapore this 11th day of September 2012

10 ANNUAL REPORT 2012 ALTURA MINING LIMITED 33 AUDITOR’S INDEPENDENCE DECLARATION

AUDITOR’S INDEPENDENCE DECLARATION

In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Altura Mining Limited for the year ended 30 June 2012, I declare that, to the best of my knowledge and belief, there have been:

(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in AUDITOR’S INDEPENDENCE DECLARATION relation to the audit; and

In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for (b) no contraventions of any applicable code of professional conduct in relation to the audit. the audit of Altura Mining Limited for the year ended 30 June 2012, I declare that, to the best of my

knowledge and belief, there have been:

(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in

relation to the audit; and

CROWE HORWATH PERTH (b) no contraventions of any applicable code of professional conduct in relation to the audit.

SEAN MCGURK CROWE HORWATH PERTH Partner

Signed at Perth, 11 September 2012

SEAN MCGURK Partner

Signed at Perth, 11 September 2012

Crowe Horwath Perth is a WHK Group Firm and a member of Crowe Horwath International, a Swiss verein. Each member firm of Crowe Horwath is a separate and independent legal entity.

34 ALTURA MINING LIMITED ANNUAL REPORT 2012

Crowe Horwath Perth is a WHK Group Firm and a member of Crowe Horwath International, a Swiss verein. Each member firm of Crowe Horwath is a separate and independent legal entity. CORPORATEAltura Mining Limited GOVERNANCE and Controlled Entities STATEMENT

Corporate Governance Statement

This report sets out the key corporate governance practices of the Company during the Reporting Period, providing disclosure to the extent recommended by the ASX in accordance with its "Corporate Governance Principles and Recommendations 2nd Edition” (the "ASX Principles") issued in August 2007.

The Company has followed the Recommendations to the extent the board considered was practicable and likely to genuinely improve the Company’s internal processes and accountability to external stakeholders.

The Company’s practices for each of the ASX principles are discussed in detail below, with any departures from the Recommendations separately reported.

ASX CORPORATE GOVERNANCE PRINCIPLES

Principle 1 Lay solid foundations for management and oversight

The Company has a Statement of Board and Management Functions which sets out the roles and responsibilities of the board, the non‐executive directors, the Managing Director and management generally. The Statement also addresses materiality thresholds and the organisation of the board.

It is the role of the board to protect and enhance long‐term shareholder value, provide strategic direction for the Company, establish goals for management and monitor the achievement of those goals.

The board’s responsibilities include:

• Supervising the Company's framework of control and accountability systems to enable risk to be assessed and managed; • Ensuring the Company is properly managed; • Approving of the annual budget, major capital expenditure, capital management, and acquisitions and divestments; • Monitoring the financial performance of the Company; • Approving and monitoring financial and other reporting; • Liaising with the Company's external auditors and Audit Committee; and • Monitoring the environmental and the occupational health and safety performance of the Company.

In addition, the non‐executive directors are responsible for reviewing and challenging executive performance.

The Managing Director is responsible for running the affairs of the Company under delegated authority from the board and to implement the policies and strategy set by the board. The role of management is to support the Managing Director and implement the running of the general operations and financial business of the Company.

The Remuneration & Nomination Committee undertakes an annual review of the performance of senior executive staff.

Principle 2 Structure the board to add value

The Company places a high priority on having the requisite mix of skills and experience amongst its directors to enable it to properly undertake its duties and responsibilities.

The Company considers that it has the necessary collective expertise in exploration, mine development, mine management, infrastructure development and operation, finance and organisational management to enable it to develop projects from exploration through to production.

Details of the skills, experience and term of office of each director are contained in their respective profiles in the Directors' Report.

At this point in the Company’s evolution, it is not considered necessary to have a permanent board chairman, with the role at board meetings being rotated between the non‐executive directors.

The Company has a Remuneration & Nomination Committee with its own established charter. The Committee undertakes an annual review of the composition and performance of the board prior to the nomination for election of directors at the annual general meeting.

If a director considers it necessary to obtain independent professional advice in order to properly discharge their responsibility as a director then, provided the director first obtains approval for incurring such expense from the other directors, the Company will pay the reasonable expenses associated with obtaining such advice.

ANNUAL REPORT 2012 ALTURA MINING LIMITED 35 12 CORPORATE GOVERNANCE STATEMENT Altura Mining Limited and Controlled Entities

Corporate Governance Statement (continued)

Principle 3 Promote ethical and responsible decision making

The Company has a code of conduct designed to promote ethical business conduct, compliance with laws and regulations, high standards of professional behaviour and avoid conflicts of interest.

The code applies to directors, managers and employees. It covers compliance with the law, conflicts of interest, corporate opportunities, confidentiality, intellectual property, safe work practices, alcohol and drug usage, equal opportunity and outside employment.

Whilst there is no separate policy on diversity, the code of conduct recognises the diversity of the Company’s workforce and the commitment to equal opportunity for its employees. The code further supports diversity through its statements on discrimination and harassment.

The Company has a total of thirteen (13) employees in Australia, of which four (4) are women. The Company does not currently have any women on the board or in senior executive positions.

In addition to the ASX Corporate Governance requirements, the Company has an Anti Corruption Policy. This policy was developed to promote compliance with the Criminal Code Amendment (Bribery of Foreign Public Officials) Act 1999, which creates an offence of bribery.

Principle 4 Safeguard integrity in financial reporting

The Company has an Audit Committee comprising BT Kuan (Chairman) and Allan Buckler. Details on the number of meetings held and the attendance at those meetings can be found in the Directors’ Report.

The Audit Committee has a charter which sets out its objectives, composition, responsibilities, functions and powers. The Committee’s responsibilities include reviewing and evaluating the external audit function, the Company’s financial reporting, the internal control system, the assessment of risk and compliance with legislation.

The Committee has the power to communicate directly with the appointed auditor, the right to meet the auditors without management being present and the authority to take independent professional advice as it considers necessary.

Principle 5 Make timely and balanced disclosure

The Company has an approved Policy for Compliance with Continuous Disclosure Requirements. This policy is supported by internal processes to review information in order to ensure that the Company complies with its continuous disclosure obligations.

Principle 6 Respect the rights of shareholders

The Company has a Corporate Communications Strategy which covers shareholder communications through the publication of ASX announcements and research reports on the Company’s website, the provision of an email information update service, participation at annual general meetings and direct mail to shareholders.

The policy also covers the processes for the handling of investor, media and broker communications and other shareholder queries.

Principle 7 Recognise and manage risk

The Company has policies and processes in place to address the material business risks arising from its exploration and mining services operations. The Company also has an appropriate internal control framework to govern the management of financial risk.

The board’s Audit Committee has the prime responsibility for the oversight of the risk management and internal control environment.

The board through the Audit Committee has received the written declarations from the Managing Director and the Executive Director under section 295A of the Corporations Act that the Company’s financial reports are founded on a sound system of risk management, internal compliance and control, and that the system is operating efficiently and effectively in all material aspects.

Principle 8 Remunerate fairly and responsibly

The Company has a Remuneration & Nomination Committee with its own established charter.

36 ALTURA MINING LIMITED ANNUAL REPORT 2012 13 CORPORATE GOVERNANCE STATEMENT Altura Mining Limited and Controlled Entities

Corporate Governance Statement (continued)

The Committee comprises Dan O’Neill (Chairman) and BT Kuan. Details on the number of meetings held and the attendance at those meetings can be found in the Directors’ Report.

Details of remuneration, including the Company’s policy on remuneration, are contained in the “Remuneration Report” which forms part of the Directors’ Report.

DEPARTURES FROM BEST PRACTICE RECOMMENDATIONS

As at the end of the Reporting Period, there were seven (7) Recommendations that the Company did not follow during the Reporting Period. These are:

Recommendation 2.1 A majority of the board shall be independent directors. Notification of departure: During the reporting period two (2) of the five (5) directors were independent, and as such, this does not constitute an absolute majority. Explanation for departure: Three (3) of the five (5) current directors are non‐executive directors, and the board considers that it has an appropriate balance between executive and non‐executive directors as well as a complementary mix of skills and experience.

Recommendation 2.2 The chair should be an independent director. Notification of departure: The Company does not have a permanent chairman, with the role at board meetings being rotated between the non‐executive directors on a meeting by meeting basis. Explanation for departure: The board considers that this arrangement is appropriate in the context of the current structure of the board and that the board is able to function effectively and efficiently on this basis.

Recommendation 3.2 Companies should establish a policy concerning diversity and disclose the policy or a summary of that policy. The policy should include requirements for the board to establish measurable objectives for achieving gender diversity for the board to assess annually both the objectives and progress towards achieving them. Notification of departure: The Company has not established a diversity policy. Explanation for departure: Given the Company’s size and stage of development, the implementation of a specific policy on diversity is not considered appropriate. The Company will continue to recruit and manage employees on the basis of competence and performance, irrespective of their backgrounds and individual circumstances.

Recommendation 3.3 Companies should disclose in each annual report the measurable objectives for achieving gender diversity set by the board in accordance with the diversity policy and progress towards achieving them. Notification of departure: The Company has not established a diversity policy. Explanation for departure: Given the Company’s size and stage of development, the implementation of a specific policy on diversity is not considered appropriate. The Company will continue to recruit and manage employees on the basis of competence and performance, irrespective of their backgrounds and individual circumstances.

Recommendation 4.2 The audit committee should be structured so that it: • consists only of non‐executive directors • consists of a majority of independent directors • is chaired by an independent, who is not chair of the board • has at least three members. Notification of departure: The Audit Committee did not meet the requirements for composition during the Reporting Period. Explanation for departure: The Committee comprises two (2) non‐executive directors of which one (1) is an independent director. Given the current size of the board, it is considered that this arrangement is appropriate.

ANNUAL REPORT 2012 ALTURA MINING LIMITED 37 14 CORPORATE GOVERNANCE STATEMENT Altura Mining Limited and Controlled Entities

Corporate Governance Statement (continued)

Recommendation 8.2 The remuneration committee should be structured so that it: • consists of a majority of independent directors • is chaired by an independent chair • has at least three members. Notification of departure: The Remuneration & Nomination Committee did not meet the requirements for composition during the Reporting Period. Explanation for departure: The Committee comprises two (2) non‐executive directors, both of whom are independent. Given the current size of the Board, it is considered that this arrangement is appropriate.

Recommendation 8.3 Companies should clearly distinguish the structure of non‐executive directors’ remuneration from that of executive directors and senior executives. Notification of departure: The Company has issued shares to directors, with shareholder approval, during the Reporting Period. Explanation for departure: The Directors are of the view that at this stage of the Company’s development it is far better for Directors of the Company to be compensated by way of securities in the Company, rather than by way of cash.

DISCLOSURE ON COMPANY WEBSITE

The following corporate governance policies can be found on the Company's website at www.alturamining.com

• Audit Committee Charter • Remuneration & Nomination Committee Charter • Statement of Board and Management Functions • Code of Conduct • Anti Corruption Policy • Policy on Trading in Company Securities • Policy for Compliance with Continuous Disclosure Requirements • Corporate Communication Strategy • Statement on Risk Management Practices

ALTURA MINING LIMITED 38 ANNUAL REPORT 2012 15 Altura Mining Limited and Controlled Entities

CONSOLIDATEDConsolidated Income Statement INCOME STATEMENT

FOR THE YEAR ENDED 30 JUNE 2012FOR THE YEAR ENDED 30 JUNE 2012

Note 2012 2011 $’000 $’000

Continuing operations Revenue 5(a) 9,443 7,955 Cost of sales 5(c) (6,688) (5,986)

Operating profit 2,755 1,969

Other income 5(b) 982 1,093

Expenses Administration costs 5(g) (2,606) (1,731) Employee benefits expense 5(f) (2,376) (1,633) Other expenses 5(d) (509) (98) Foreign exchange movement 216 (631) Financing costs 5(e) (42) (204)

Profit / (loss) before income tax (1,580) (1,235)

Income tax expense 7(a) (255) (439) Profit / (loss) for the year (1,835) (1,674)

Profit / (loss) attributable to: Members of the parent entity (1,919) (1,773) Non‐controlling interest 84 99 (1,835) (1,674)

The above Consolidated Income Statement should be read in conjunction with the accompanying notes.

16

ANNUAL REPORT 2012 ALTURA MINING LIMITED 39 Altura Mining Limited and Controlled Entities

CONSOLIDATEDConsolidated STATEMENT Statement of Comprehensive Income / (Loss)

OF COMPREHENSIVE INCOME/(LOSS)FOR THE FOR YEAR ENDEDTHE 30 YEAR JUNE 2012 ENDED 30 JUNE 2012

Note 2012 2011 $’000 $’000

Profit / (loss) for the year (1,835) (1,674)

Other comprehensive income / (loss) Exchange differences on translation of foreign controlled entities 251 (841)

Other comprehensive income / (loss) for the year, net of tax 251 (841) Total comprehensive income / (loss) for the year (1,584) (2,515)

Total comprehensive income / (loss) attributable to: Members of the parent entity (1,641) (2,520) Non‐controlling interest 57 5 (1,584) (2,515)

Earnings per share for profit / (loss) from continuing operations Basic earnings / (loss) per share (cents per share) 6 (0.45) (0.59) Diluted earnings / (loss) per share (cents per share) 6 (0.45) (0.59)

The above Consolidated Statement of Comprehensive Income / (Loss) should be read in conjunction with the accompanying notes.

17

40 ALTURA MINING LIMITED ANNUAL REPORT 2012 Altura Mining Limited and Controlled Entities

CONSOLIDATEDConsolidated Balance Sheet BALANCE SHEET

AS AT 30 JUNE 2012 AS AT 30 JUNE 2012

Note 2012 2011 $’000 $’000 Current assets Cash and cash equivalents 8 17,221 5,455 Trade and other receivables 9 2,797 1,875 Held to maturity investments 11 6,375 8,750 Inventories 10 8 ‐ Current tax prepaid 19(b) ‐ 195 Other current assets 12 457 491 Total current assets 26,858 16,766

Non‐current assets Property, plant and equipment 13 3,409 3,633 Exploration and evaluation 14 27,276 19,991 Intangible assets 15 4,529 4,529 Deferred tax asset 19(b) 8,052 5,860 Total non‐current assets 43,266 34,013 Total assets 70,124 50,779

Current liabilities Trade and other payables 16 3,004 1,387 Interest bearing liabilities 17 69 2,186 Current tax payable 19(a) 53 ‐ Short term provisions 18 485 442 Total current liabilities 3,611 4,015

Non‐current liabilities Interest bearing liabilities 20 21 46 Deferred tax liability 19(a) 7,772 5,816 Total non‐current liabilities 7,793 5,862 Total liabilities 11,404 9,877 Net assets 58,720 40,902

Equity Contributed equity 21 74,517 55,239 Option reserve 518 308 Foreign currency translation reserve (716) (967) Accumulated losses (15,874) (14,069) Parent interest 58,445 40,511 Non‐controlling interest 275 391 Total equity 58,720 40,902

The above Consolidated Balance Sheet should be read in conjunction with the accompanying notes.

18

ANNUAL REPORT 2012 ALTURA MINING LIMITED 41 Altura Mining Limited and Controlled Entities

CONSOLIDATEDConsolidated STATEMENT Statement of Changes in Equity

OF CHANGES IN EQUITY FOR THE FORYEAR THE YEAR ENDED ENDED 30 J30UNE 2012JUNE 2012

Contributed Accumulated Option Foreign Non‐ Total Equity Losses reserve Currency controlling Translation interests reserve $’000 $’000 $’000 $’000 $’000 $’000

Balance as at 30 June 2010 38,781 (12,339) 135 (126) 292 26,743

Total comprehensive income for the year ‐ (1,773) ‐ (841) 99 (2,515)

Transactions with owners in their capacity as

owners: Issue of shares on exercise of options 95 ‐ ‐ ‐ ‐ 95 Issue of shares 16,363 ‐ ‐ ‐ ‐ 16,363 Option reserve on recognition of bonus ‐ ‐ 216 ‐ ‐ 216 element of options Transfer from option reserve on expiry of ‐ 43 (43) ‐ ‐ ‐ options Sub‐Total 16,458 (1,730) 173 (841) 99 14,159

Balance as at 30 June 2011 55,239 (14,069) 308 (967) 391 40,902

Balance as at 30 June 2011 55,239 (14,069) 308 (967) 391 40,902

Total comprehensive income for the year ‐ (1,920) ‐ 251 85 (1,584)

Transactions with owners in their capacity as

owners: Issue of shares 19,278 ‐ ‐ ‐ ‐ 19,278 Dividend paid to minority shareholder from ‐ ‐ ‐ ‐ (201) (201) subsidiary Option reserve on recognition of bonus ‐ ‐ 325 ‐ ‐ 325 element of options Transfer from option reserve on expiry of ‐ 115 (115) ‐ ‐ ‐ options Sub‐Total 19,278 (1,805) 210 251 (116) 17,818

Balance as at 30 June 2012 74,517 (15,874) 518 (716) 275 58,720

The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.

19

42 ALTURA MINING LIMITED ANNUAL REPORT 2012 Altura Mining Limited and Controlled Entities

CONSOLIDATEDConsolidated STATEMENT Statement of Cash Flows OF CASH FLOWS

FOR THE YEAR ENDED 30 JUNE 2012FOR THE YEAR ENDED 30 JUNE 2012

Note 2012 2011 $’000 $’000

Cash flows from operating activities Receipts from customers 8,640 8,058 Sundry income 57 75 Interest received 948 532 Interest paid (42) (204) Payments to suppliers and employees (10,312) (8,539) Income tax (344) (602) Net cash provided by (used in) operating activities 26(b) (1,053) (680)

Cash flows from investing activities Expenditure on exploration and evaluation (6,007) (2,697) Expenditure on property, plant and equipment (426) (545) Proceeds from / (payments for) held to maturity investments 2,375 (8,750) Proceeds from sale of property, plant and equipment 52 ‐ Net cash provided by (used in) investing activities (4,006) (11,992)

Cash flows from financing activities Issue of shares 18,544 17,030 Payments for issue of equity securities ‐ (572) Proceeds from hire purchase liabilities 63 50 Payment of hire purchase liabilities (204) (119) Dividend paid to minority (200) ‐ Loans funds repaid (2,000) ‐ Reduction / (increase) in performance bond ‐ 29 Net cash provided by (used in) financing activities 16,203 16,418

Net increase / (decrease) in cash and cash equivalents held 11,144 3,746

Cash and cash equivalents at the beginning of year 5,455 1,873

Effect of exchange rates on cash holdings in foreign currencies 622 (164) Cash and cash equivalents at the end of year 26(a) 17,221 5,455

The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.

20

ANNUAL REPORT 2012 ALTURA MINING LIMITED 43 Altura Mining Limited and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JNotesUNE 2012to the Financial Statements (continued) FOR THE YEAR ENDED 30 JUNE 2012

This financial report includes the consolidated financial statements and notes of Altura Mining Limited and controlled entities (‘Consolidated Group’ or ‘Group’). Altura Mining Limited is a company limited by shares, incorporated and domiciled in Australia, whose shares are publically traded on the Australian Securities Exchange Limited.

The separate financial statements of the parent entity, Altura Mining Limited, have not been presented within this financial report as permitted by amendments made to the Corporations Act 2001.

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.

Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards.

The following is a summary of the material accounting policies adopted by the Consolidated Group in the preparation of the financial report. The financial report has been prepared on an accruals basis. The accounting policies have been consistently applied, unless otherwise stated.

Accounting policies

a. Principles of consolidation

A controlled entity is any entity Altura Mining Limited has the power to control the financial and operating policies of so as to obtain benefits from its activities.

A list of controlled entities is contained in Note 25 to the financial statements. All Australian controlled entities have a June financial year‐end and all other controlled entities have a December financial year‐end.

All inter‐company balances and transactions between entities in the economic entity, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistencies with those policies applied by the parent entity.

Where controlled entities have entered or left the economic entity during the year, their operating results have been included from the date control was obtained or until the date control ceased.

Non‐controlling interests, being that portion of the profit or loss and net assets of subsidiaries attributable to equity interests held by persons outside the Group, are shown separately within the equity section of the Consolidated Balance Sheet and in the Consolidated Income Statement.

b. Business combinations

Business combinations occur where control over another business is obtained and results in the consolidation of its assets and liabilities. All business combinations, including those involving entities under common control, are accounted for by applying the purchase method.

The purchase method requires an acquirer of the business to be identified and for the cost of the acquisition and fair values of identifiable assets, liabilities and contingent liabilities to be determined as at acquisition date, being the date that control is obtained. Cost is determined as the aggregate of fair values of assets given, equity issued and liabilities assumed in exchange for control.

Goodwill is recognised initially at the excess of cost over the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. If the fair value of the acquirer’s interest is greater than cost, the surplus is immediately recognised in profit or loss.

21 44 ALTURA MINING LIMITED ANNUAL REPORT 2012 Altura Mining Limited and ControlledNOTES Entities TO THE FINANCIAL STATEMENTS

Notes to the Financial Statements (continued)

FOR THE YEAR ENDED 30 JUNE 2012

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

c. Income tax

The charge for current income tax expense is based on the result for the year adjusted for any non‐assessable or disallowed items. It is calculated using the tax rates that have been enacted or are substantially enacted by the balance date.

Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the income statement except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.

Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised.

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the economic entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

Altura Mining Limited and some of its wholly‐owned Australian subsidiaries have formed an income tax consolidated group under the tax consolidation regime. Each entity in the group recognises its own current and deferred tax liabilities, except for any deferred tax liabilities resulting from unused tax losses and tax credits, which are immediately assumed by the parent entity. The current tax liability of each group entity is then subsequently assumed by the parent entity. The group notified the Australian Tax Office that it had formed an income tax consolidated group to apply from 1 July 2005. The tax consolidated group has entered a tax sharing agreement whereby each company in the group contributes to the income tax payable in proportion to their contribution to the net profit before tax of the tax consolidated group.

d. Segment reporting

The Group has applied AASB 8 Operating Segments from 1 July 2009. AASB 8 requires a management approach under which segment information is presented on the same basis as that used for internal reporting purposes. Operating segments are reported in a manner that is consistent with the internal reporting provided to the chief operating decision‐maker, which in the Group’s case is the Board of Directors.

e. Property, plant and equipment

Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and impairment losses.

Property

Freehold land and buildings are measured on the cost basis.

The carrying amount of land and buildings is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets.

Plant and equipment

Plant and equipment are measured on the cost basis.

The carrying amount of plant and equipment is reviewed annually to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the asset’s employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts.

22 ANNUAL REPORT 2012 ALTURA MINING LIMITED 45 NOTES TO THE FINANCIAL STATEMENTSAltura Mining Limited and Controlled Entities

Notes to the Financial Statements (continued)

FOR THE YEAR ENDED 30 JUNE 2012

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

Each year the difference between depreciation based on the re‐valued carrying amount of the asset charged to the income statement and depreciation based on the asset’s original cost is transferred from the revaluation reserve to retained earnings.

Depreciation

The depreciable amount of all fixed assets including building and capitalised lease assets, but excluding freehold land, is depreciated on a straight‐line basis over their useful lives to the economic entity commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.

The depreciation rates used for each class of depreciable assets are:

Class of Fixed Asset Depreciation Rate

Plant and equipment 5‐50% Leased plant and equipment 5‐33%

The asset’s residual values and useful lives are reviewed, and adjusted if appropriate, at each balance date.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the income statement. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings.

f. Exploration and evaluation expenditure

Exploration, evaluation and development expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves.

Accumulated costs in relation to an abandoned area are written off in full against the result in the year in which the decision to abandon the area is made.

When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves.

A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest.

Costs of site restoration are provided over the life of the facility from when exploration commences and are included in the costs of that stage. Site restoration costs include the dismantling and removal of mining plant, equipment and building structures, waste removal, and rehabilitation of the site in accordance with clauses of the mining permits. Such costs have been determined using estimates of future costs, current legal requirements and technology on an undiscounted basis.

Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of site restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations and future legislation. Accordingly the costs have been determined on the basis that the restoration will be completed within one year of abandoning the site.

23 46 ALTURA MINING LIMITED ANNUAL REPORT 2012 Altura Mining Limited and ControlledNOTES Entities TO THE FINANCIAL STATEMENTS

Notes to the Financial Statements (continued)

FOR THE YEAR ENDED 30 JUNE 2012

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

g. Leases

Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal ownership that is transferred to entities in the Consolidated Group entity, are classified as finance leases.

Finance leases are capitalised by recording an asset and a liability at the lower of the amounts equal to the fair value of the leased property or the present value of the minimum lease payments, including any guaranteed residual values. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period.

Leased assets are depreciated on a straight‐line basis over the shorter of their estimated useful lives or the lease term.

Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses in the periods in which they are incurred.

Lease incentives under operating leases are recognised as a liability and amortised on a straight‐line basis over the life of the lease term.

h. Impairment of assets

At each reporting date, the Group reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being in the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the income statement.

Impairment testing is performed annually for goodwill and intangible assets with indefinite lives.

Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash‐generating unit to which the asset belongs.

i. Trade and Other Receivables

Trade and other receivables include amounts due from customers for goods sold and services performed in the ordinary course of business. Receivables expected to be collected within 12 months of the end of the reporting period are classified as current assets. All other receivables are classified as non‐current assets.

Trade and other receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any provision for impairment. Refer to Note 1(h) for further discussion on the determination of impairment losses.

j. Trade and Other Payables

Trade and other payables represent the liabilities for goods and services received by the entity that remain unpaid at the end of the reporting period. The balance is recognised as a current liability with the amounts normally paid within 30 days of recognition of the liability.

24 ANNUAL REPORT 2012 ALTURA MINING LIMITED 47 NOTES TO THE FINANCIAL STATEMENTSAltura Mining Limited and Controlled Entities

Notes to the Financial Statements (continued)

FOR THE YEAR ENDED 30 JUNE 2012

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

k. Employee benefits

Provision is made for the Group’s liability for employee benefits arising from services rendered by employees to balance date. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled, plus related on‐costs. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits.

The amount recognised is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.

Equity‐settled compensation

The Group operates an employee share ownership plan. Share‐based payments to employees are measured at the fair value of the instruments issued and amortised over the vesting periods. Share‐based payments to non‐employees are measured at the fair value of goods or services received or the fair value of the equity instruments issued, if it is determined the fair value of the goods or services cannot be reliably measured, and are recorded at the date the goods or services are received. The corresponding amount is recorded to the option reserve. The fair value of options is determined using the Black‐Scholes pricing model. The number of shares and options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognised for services received as consideration for the equity instruments granted is based on the number of equity instruments that eventually vest.

l. Provisions

Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.

m. Cash and cash equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks, other short‐term highly liquid investments with original maturities of three months or less, and bank overdrafts.

n. Revenue

Revenue is measured at the fair value of consideration received or receivable, the Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and the specific criteria below have been met.

Revenue from the sale of goods is recognised upon the delivery of goods to the customer.

Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets.

Dividend revenue is recognised when the right to receive a dividend has been established. Dividends received from associates and joint venture entities are accounted for in accordance with the equity method of accounting.

All revenue is stated net of the amount of goods and services tax (GST).

o. Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a substantial period of time to prepare for their intended use or sale, are added to the cost of those assets, until such times as the assets are substantially ready for their intended use or sale.

All other borrowing costs are recognised in the income statement in the period in which they are incurred.

25 48 ALTURA MINING LIMITED ANNUAL REPORT 2012 Altura Mining Limited and ControlledNOTES Entities TO THE FINANCIAL STATEMENTS

Notes to the Financial Statements (continued)

FOR THE YEAR ENDED 30 JUNE 2012

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

p. Goods and services tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the balance sheet are shown inclusive of GST.

Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.

q. Foreign operations

The financial performance and position of foreign operations whose functional currency is different from the Group’s presentation currency are translated as follows:

 assets and liabilities are translated at exchange rates prevailing at balance sheet date; and  income and expenses are translated at monthly average exchange rates for the period.

Exchange differences arising on translation of foreign operations are transferred directly to the Group’s foreign currency translation reserve as a separate component of equity. These differences are recognised in the income statement upon disposal of the foreign operation.

r. Foreign currency transactions and balances

The functional currency of each of the Group’s entities is measured using the currency of the primary economic environment in which the entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity’s functional and presentation currency.

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the period end exchange rate. Non‐monetary items measured at historical cost continue to be carried at the exchange rate at the date when fair values were determined.

Exchange differences arising on the translation of monetary items are recognised in the income statement, except where deferred in equity as a qualifying cash flow or net investment hedge.

Exchange differences arising on the translation of non‐monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity, otherwise the exchange difference is recognised in the income statement.

26 ANNUAL REPORT 2012 ALTURA MINING LIMITED 49 NOTES TO THE FINANCIAL STATEMENTSAltura Mining Limited and Controlled Entities

Notes to the Financial Statements (continued)

FOR THE YEAR ENDED 30 JUNE 2012

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

s. Financial instruments

Recognition

Financial instruments are initially measured at cost on trade date, which includes transaction costs, when the related contractual rights or obligations exist. Subsequent to initial recognition these instruments are measured as set out below.

Loans and receivables

Loans and receivables are non‐derivative financial assets with fixed or determinable payments that are not quoted in an active market and are stated at amortised cost using the effective interest rate method.

Held to maturity investments

Held to maturity investments are non‐derivative financial assets with fixed or determinable payments and fixed maturities that the Group’s management has the positive intention and the ability to hold to maturity. Held to maturity investments are carried at amortised cost using the effective interest rate method.

Available‐for‐sale financial assets

Available‐for‐sale financial assets include any financial assets that are not financial assets at fair value through profit or loss, held to maturity or loans and receivables. Available‐for‐sale financial assets are reflected at fair value. Unrealised gains and losses arising from changes in fair value are taken directly to equity.

t. Goodwill and intangibles

Goodwill and goodwill on consolidation are initially recorded at the amount by which the purchase price for a business or for an ownership interest in a controlled entity exceeds the fair value attributed to its net assets at date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to an entity sold.

u. Comparative figures

When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.

v. Inventories

Inventories of consumable supplies and spare parts expected to be used in the supply of services are valued at cost.

27 50 ALTURA MINING LIMITED ANNUAL REPORT 2012 Altura Mining Limited and ControlledNOTES Entities TO THE FINANCIAL STATEMENTS

Notes to the Financial Statements (continued)

FOR THE YEAR ENDED 30 JUNE 2012

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

w. New Accounting Standards for Application in the Future Periods

The AASB has issued a number of new and amended Accounting Standards and Interpretations that have mandatory application dates for future reporting periods, some of which are relevant to the Group. The Group has decided not to early adopt any of the new and amended pronouncements. The Group’s assessment of the new and amended pronouncements that are relevant to the Group but applicable in future reporting periods is set out below:

(i) AASB 9: Financial Instruments (December 2010) and AASB 2010–7: Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) [AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 120, 121, 127, 128, 131, 132, 136, 137, 139, 1023 & 1038 and Interpretations 2, 5, 10, 12, 19 & 127] (applicable for annual reporting periods commencing on or after 1 January 2013).

These Standards are applicable retrospectively and include revised requirements for the classification and measurement of financial instruments, as well as recognition and derecognition requirements for financial instruments.

The key changes made to accounting requirements include:

- Simplifying the classifications of financial assets into those carried at amortised cost and those carried at fair value; - Simplifying the requirements for embedded derivatives - Removing the tainting rules associated with held‐to‐maturity assets; - Removing the requirements to separate and fair value embedded derivatives for financial assets carried at amortised cost; - Allowing an irrevocable election on initial recognition to present gains and losses on investments in equity instruments that are not held for trading in other comprehensive income. Dividends in respect of these investments that are a return on investment can be recognised in profit or loss and there is no impairment or recycling on disposal of the instrument; - Requiring financial assets to be reclassified where there is a change in an entity’s business model as they are initially classified based on: (a) the objective of the entity’s business model for managing the financial assets; and (b) the characteristics of the contractual cash flows; - Requiring an entity that chooses to measure a financial liability at fair value to present the portion of the change in its fair value due to changes in the entity’s own credit risk in other comprehensive income, except when that would create an accounting mismatch. If such a mismatch would be created or enlarged, the entity is required to present all changes in fair value (including the effects of changes in the credit risk of the liability) in profit or loss.

The Group has not yet been able to reasonably estimate the impact of these pronouncements on its financial statements.

(ii) AASB 2010–8: Amendments to Australian Accounting Standards: Deferred Tax: Recovery of Underlying Assets [AASB 112] (applies to periods beginning on or after 1 January 2012).

This Standard makes amendments to AASB 112: Income Taxes and incorporates Interpretation 121: Income Taxes – Recovery of Revalued Non‐Depreciable Assets into AASB 112.

Under the current AASB 112, the measurement of deferred tax liabilities and deferred tax assets depends on whether an entity expects to recover an asset by using it or by selling it. The amendments introduce a presumption that an investment property is recovered entirely through sale. This presumption is rebutted if the investment property is held within a business model whose objective is to consume substantially all of the economic benefits embodied in the investment property over time, rather than through sale.

The amendments are not expected to significantly impact the Group.

28 ANNUAL REPORT 2012 ALTURA MINING LIMITED 51 NOTES TO THE FINANCIAL STATEMENTSAltura Mining Limited and Controlled Entities

Notes to the Financial Statements (continued)

FOR THE YEAR ENDED 30 JUNE 2012

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(iii) AASB 10: Consolidated Financial Statements, AASB 11: Joint Arrangements, AASB 12: Disclosure of Interests in Other Entities, AASB 127: Separate Financial Statements (August 2011), AASB 128: Investments in Associates and Joint Ventures (August 2011) and AASB 2011–7: Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangements Standards [AASB 1, 2, 3, 5, 7, 9, 2009–11, 101, 107, 112, 118, 121, 124, 132, 133, 136, 138, 139, 1023 & 1038 and Interpretations 5, 9, 16 & 17] (applicable for annual reporting periods commencing on or after 1 January 2013).

AASB 10 replaces parts of AASB 127: Consolidated and Separate Financial Statements (March 2008, as amended) and Interpretation 112: Consolidation – Special Purpose Entities. AASB 10 provides a revised definition of control and additional application guidance so that a single control model will apply to all investees. The Group has not yet been able to reasonably estimate the impact of this Standard on its financial statements.

AASB 11 replaces AASB 131: Interests in Joint Ventures (July 2004, as amended). AASB 11 requires joint arrangements to be classified as either “joint operations” (where the parties that have joint control of the arrangement have rights to the assets and obligations for the liabilities) or “joint ventures” (where the parties that have joint control of the arrangement have rights to the net assets of the arrangement). Joint ventures are required to adopt the equity method of accounting (proportionate consolidation is no longer allowed).

AASB 12 contains the disclosure requirements applicable to entities that hold an interest in a subsidiary, joint venture, joint operation or associate. AASB 12 also introduces the concept of a “structured entity”, replacing the “special purpose entity” concept currently used in Interpretation 112, and requires specific disclosures in respect of any investments in unconsolidated structured entities. This Standard will affect disclosures only and is not expected to significantly impact the Group.

To facilitate the application of AASBs 10, 11 and 12, revised versions of AASB 127 and AASB 128 have also been issued. The Group has not yet been able to reasonably estimate the impact of these pronouncements on its financial statements.

(iv) AASB 13: Fair Value Measurement and AASB 2011–8: Amendments to Australian Accounting Standards arising from AASB 13 [AASB 1, 2, 3, 4, 5, 7, 9, 2009–11, 2010–7, 101, 102, 108, 110, 116, 17, 118, 119, 120, 121, 128, 131, 132, 133, 134, 136, 138, 139, 140, 141, 1004, 1023 & 1038 and Interpretations 2, 4, 12, 13, 14, 17, 19, 131 & 132] (applicable for annual reporting periods commencing on or after 1 January 2013).

AASB 13 defines fair value, sets out in a single Standard a framework for measuring fair value, and requires disclosures about fair value measurement.

AASB 13 requires:

- Inputs to all fair value measurements to be categorised in accordance with a fair value hierarchy; - Enhanced disclosures regarding all assets and liabilities (including, but not limited to, financial assets and financial liabilities) to be measured at fair value.

(v) AASB 2011–9: Amendments to Australian Accounting Standards – Presentation of Items of Other Comprehensive Income [AASB 1, 5, 7, 101, 112, 120, 121, 132, 133, 134, 1039 & 1049] (applicable for annual reporting periods commencing on or after 1 July 2012).

The main change arising from this Standard is the requirement for entities to group items presented in other comprehensive income (OCI) on the basis of whether they are potentially reclassifiable to profit or loss subsequently.

This Standard affects presentation only and is therefore not expected to significantly impact the Group.

29 52 ALTURA MINING LIMITED ANNUAL REPORT 2012 Altura Mining Limited and ControlledNOTES Entities TO THE FINANCIAL STATEMENTS

Notes to the Financial Statements (continued)

FOR THE YEAR ENDED 30 JUNE 2012

2. FINANCIAL RISK MANAGEMENT

The Group’s principal financial instruments comprise receivables, payables, loans, finance leases, cash and short term deposits. These activities expose the Group to a variety of financial risks: market risk (which includes currency risk, interest rate risk and price risk), credit risk and liquidity risk. The Group manages these risks in accordance with the Group’s financial risk management policy. The Group uses different methods and assumptions to measure and manage different types of risks to which it is exposed at each balance date.

The Board reviews and approves policies for managing each of the Group’s financial risk areas. The Group holds the following financial instruments:

2012 2011

$’000 $’000

FINANCIAL ASSETS Cash and cash equivalents 17,221 5,455 Trade and other receivables 2,797 1,875 Other current assets 382 491 Held to maturity investments 6,375 8,750 26,775 16,571

FINANCIAL LIABILITIES Trade and other payables 3,004 864 Interest bearing liabilities 90 2,232 3,094 3,096

a. Market risk

(i) Foreign currency risk The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily in respect to the US dollar.

The Group’s overseas subsidiaries have a US dollar functional currency. This exposes the Group to foreign exchange fluctuations upon conversion to AUD.

At 30 June 2012, the Group held funds in foreign currency amounting to US$13.2 million (2011: US$2.7million).

The Group does not enter into any hedging arrangements.

Foreign currency risk sensitivity analysis

At 30 June 2012, the effect on profit and equity as a result of changes in the value of the Australian Dollar to the US Dollar that management considers to be reasonably possible, with all other variables remaining constant is as follows:

2012 2011 $’000 $’000 Change in profit — Improvement in AUD to USD by 11% (121) (89) — Decline in AUD to USD by 11% 121 89 Change in equity — Improvement in AUD to USD by 11% 121 (89) — Decline in AUD to USD by 11% (121) 89

(ii) Price risk The Group has no current exposure to commodity and equity securities.

30 ANNUAL REPORT 2012 ALTURA MINING LIMITED 53 NOTES TO THE FINANCIAL STATEMENTSAltura Mining Limited and Controlled Entities

Notes to the Financial Statements (continued)

FOR THE YEAR ENDED 30 JUNE 2012

2. FINANCIAL RISK MANAGEMENT (Continued)

(iii) Interest rate risk At balance date the Group’s debt was fixed rate. For further details on interest rate risk refer to Note 2e.

Interest rate sensitivity analysis

At 30 June 2012, the effect on profit and equity as a result of changes in the interest rate that management considers to be reasonably possible, with all other variables remaining constant would be as follows:

2012 2011 $’000 $’000 Change in profit — Increase in interest rate by 1% 236 142 — Decrease in interest rate by 1% (107) (117) Change in equity — Increase in interest rate by 1% 236 142 — Decrease in interest rate by 1% (107) (117)

Term deposits have been treated as a floating rate due to the short term nature of the deposits.

b. Credit risk

Credit risk refers to the risk that a third party will default on its contractual obligations resulting in financial loss to the Consolidated Group. The Consolidated Group has adopted the policy of only dealing with credit worthy counterparties and obtaining sufficient collateral or other security where appropriate, as a means of mitigating the risk of financial loss from defaults.

The carrying amount of financial assets recorded in the financial statements, net of any provisions for losses, represents the Company's maximum exposure to credit risk.

c. Liquidity risk

The Group manages liquidity risk by monitoring forecast cash flows and ensuring that adequate unutilised borrowing facilities are maintained.

d. Fair value estimation

The carrying amounts of financial assets and liabilities equal their estimated net fair value.

e. Financial instrument composition and maturity analysis

The tables on the next page reflect the undiscounted contractual settlement terms for financial instruments of a fixed period of maturity, as well as management’s expectations for the settlement period for all other financial instruments. As such the amounts may not reconcile to the balance sheet.

31 54 ALTURA MINING LIMITED ANNUAL REPORT 2012 Altura Mining Limited and ControlledNOTES Entities TO THE FINANCIAL STATEMENTS

Notes to the Financial Statements (continued)

FOR THE YEAR ENDED 30 JUNE 2012

2. FINANCIAL RISK MANAGEMENT (Continued)

Consolidated Group Weighted Floating Fixed interest rate maturing average interest rate Within 1 year 1 to 5 years Over 5 years Non‐interest Total effective bearing interest rate 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 % % $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 Financial

assets: Cash & cash 1.03 4.04 14,721 4,955 2,500 6,500 ‐ ‐ ‐ ‐ ‐ ‐ 17,221 11,455 equivalents Trade and other ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 2,797 1,875 2,797 1,875 Receivables Investments 5.24 6.00 ‐ ‐ 6,375 2,750 ‐ ‐ ‐ ‐ 382 491 6,757 3,241 Total financial 14,721 4,955 8,875 9,250 ‐ ‐ ‐ ‐ 3,179 2,366 26,775 16,571 assets

Financial

liabilities: Trade & sundry ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 3,004 864 3,004 864 payables Lease liabilities 10.25 9.02 ‐ ‐ 69 186 21 46 ‐ ‐ ‐ ‐ 90 232 Related party ‐ 8.75 ‐ ‐ ‐ 2,000 ‐ ‐ ‐ ‐ ‐ ‐ ‐ 2,000 loan Total financial ‐ ‐ 69 2,186 21 46 ‐ ‐ 3,004 864 3,094 3,096 liabilities

Trade and sundry payables are expected to be paid as follows:

2012 2011 $’000 $’000

Less than 6 months 3,004 864 6 months to 1 year ‐ ‐ 1 ‐ 5 years ‐ ‐ Over 5 years ‐ ‐ 3,004 864

32 ANNUAL REPORT 2012 ALTURA MINING LIMITED 55 NOTES TO THE FINANCIAL STATEMENTSAltura Mining Limited and Controlled Entities

Notes to the Financial Statements (continued)

FOR THE YEAR ENDED 30 JUNE 2012

3. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS

The directors evaluate estimates and judgements incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Group.

Management has identified the following significant accounting policies for which significant judgements, estimates and assumptions are made.

a. Significant accounting estimates and assumptions

Share‐based payment transactions

From time to time the Company has issued options to directors and employees. The Company measures fair value of share‐based payments using the Black‐Scholes Pricing Model, using the assumptions detailed in note 22. This formula takes into account the terms and conditions under which the instruments were granted.

Impairment of goodwill and productive assets

The Group tests goodwill and productive assets for impairment annually. Goodwill is allocated to cash generating units and the carrying value of goodwill and productive assets is assessed based on budgeted cash flows over a five year period, discounted at a rate of 17%, taking into account risks associated with each unit. No impairment has been recognised in respect of goodwill at the end of the reporting period.

b. Significant accounting judgements

Taxation

The Group is subject to income taxes in Australia and jurisdictions where it has foreign operations. Significant judgement is required in determining the worldwide provision for income taxes. Judgement is also required in assessing whether deferred tax assets and certain deferred tax liabilities are recognised on the balance sheet. Deferred tax assets are only recognised where it is considered more likely than not that they will be recovered through the utilisation of future tax losses.

Exploration expenditure

During the year the Group capitalised various items of expenditure to the exploration and evaluation expenditure asset account. The relevant items of expenditure were deemed to be part of the capital cost of developing future mining operations, which would then be amortised over the useful life of the mine. The key judgement applied in considering whether the costs should be capitalised, is whether costs are expected to be recovered through either successful development of the project or sale of the relevant mining interests. Such judgements are undertaken by appropriately qualified persons and are based on estimates of commodity prices, foreign exchange rates, capital requirements, production costs and geological assumptions and judgements in estimating the size and grade of the ore body. Capitalised exploration expenditure of $27 million was carried forward at the end of the reporting period.

33 56 ALTURA MINING LIMITED ANNUAL REPORT 2012 Altura Mining Limited and ControlledNOTES Entities TO THE FINANCIAL STATEMENTS

Notes to the Financial Statements (continued)

FOR THE YEAR ENDED 30 JUNE 2012

4. SEGMENT INFORMATION

The Group reports the following operating segments to the chief operating decision maker, being the Board of Directors of Altura Mining Limited, in assessing performance and determining the allocation of resources.

Unless otherwise stated, all amounts reported to the Board are determined in accordance with accounting policies that are consistent to those adopted in the annual financial statements of the Group.

Services Minerals Eliminations Total $’000 $’000 $’000 $’000 2012 Revenue External sales 8,680 763 ‐ 9,443 Other income 101 881 ‐ 982 Other segments 1,263 1,486 (2,749) ‐ Total segment revenue 10,044 3,130 (2,749) 10,425

Unallocated revenue ‐ Total consolidated revenue 10,425

Segment result Other segments 1,537 (3,075) ‐ (1,538) Unallocated expenses net of unallocated revenue ‐ ‐ ‐ ‐ Profit / (loss) before income tax and finance costs (1,538) Finance costs (42) Share of profit of non‐controlling interest (84) Profit / (loss) before income tax (1,664) Income tax expense (255) Net profit / (loss) for the year (1,919)

Assets and Liabilities Segment assets 14,919 47,153 ‐ 62,072 Unallocated assets ‐ ‐ ‐ 8,052 Total assets 70,124

Segment liabilities 1,378 2,254 ‐ 3,632 Unallocated liabilities ‐ ‐ ‐ 7,772 Total liabilities 11,404

Other segment information Capital expenditure 354 73 ‐ 427 Exploration expenditure ‐ 7,285 ‐ 7,285 Impairment of exploration expenditure ‐ 373 ‐ 373 Depreciation and amortisation (624) (67) ‐ (691)

Cash flow information Net cash flow from operating activities (103) (950) ‐ (1,053) Net cash flow from investing activities (354) (3,652) ‐ (4,006) Net cash flow from financing activities (404) 16,607 ‐ 16,203

34 ANNUAL REPORT 2012 ALTURA MINING LIMITED 57 NOTES TO THE FINANCIAL STATEMENTSAltura Mining Limited and Controlled Entities

Notes to the Financial Statements (continued)

FOR THE YEAR ENDED 30 JUNE 2012

4. SEGMENT INFORMATION (Continued)

Services Minerals Eliminations Total

$’000 $’000 $’000 $’000 2011 Revenue External sales 7,702 254 ‐ 7,956 Other income 419 673 ‐ 1,092 Other segments 435 210 (645) ‐ Total segment revenue 8,556 1,137 (645) 9,048

Unallocated revenue ‐ Total consolidated revenue 9,048

Segment result 1,250 (2,281) ‐ (1,031) Other segments ‐ ‐ ‐ ‐ Unallocated expenses net of unallocated revenue ‐ Profit / (loss) before income tax and finance costs (1,031) Finance costs (204) Share of profit of non‐controlling interest (99) Profit / (loss) before income tax (1,334) Income tax expense (439) Net profit / (loss) for the year (1,773)

Assets and Liabilities Segment assets 10,063 34,856 44,919 Unallocated assets 5,860 Total assets 50,779

Segment liabilities 1,218 2,843 4,061 Unallocated liabilities 5,816 Total liabilities 9,877

Other segment information Capital expenditure 482 63 545 Exploration expenditure ‐ 3,049 3,049 Depreciation and amortisation 633 72 705

Cash flow information Net cash flow from operating activities 49 (729) (680) Net cash flow from investing activities (482) (5,510) (5,992) Net cash flow from financing activities (57) 16,475 16,418

35 58 ALTURA MINING LIMITED ANNUAL REPORT 2012 Altura Mining Limited and ControlledNOTES TO Entities THE FINANCIAL STATEMENTS

Notes to the Financial Statements (continued)

FOR THE YEAR ENDED 30 JUNE 2012

4. SEGMENT INFORMATION (Continued)

Geographical segments The Group’s geographical segments are determined based on the location of the Group’s assets.

Australia Indonesia Other Eliminations Total

$’000 $’000 $’000 $’000 $’000 2012 Revenue External sales ‐ 9,443 ‐ ‐ 9,443 Other income 930 34 18 ‐ 982 Other segments 1,486 1,263 ‐ (2,749) ‐ Total segment revenue 2,416 10,740 18 (2,749) 10,425

Unallocated revenue ‐ Total revenue 10,425

Segment assets 44,422 11,118 6,532 ‐ 62,072 Unallocated assets ‐ ‐ ‐ ‐ 8,052 Total assets 70,124

Capital expenditure 72 355 ‐ ‐ 427 Exploration expenditure 6,633 652 ‐ ‐ 7,285

2011 Revenue External sales 53 7,903 ‐ ‐ 7,956 Other income 732 360 ‐ ‐ 1,092 Other segments ‐ ‐ ‐ ‐ ‐ Total segment revenue 785 8,263 ‐ ‐ 9,048

Unallocated revenue ‐ Total revenue 9,048

Segment assets 33,041 11,878 ‐ ‐ 44,919 Unallocated assets 5,860 Total assets 50,779

Capital expenditure 173 372 ‐ ‐ 545 Exploration expenditure 3,049 ‐ ‐ ‐ 3,049

The Group has a number of customers to whom it provides services. The Group supplies three external customers in the services segment who account for 26% ($2,539,000), 25% ($2,455,000) and 11% ($1,060,000) of external revenue (2011: 79%).

36 ANNUAL REPORT 2012 ALTURA MINING LIMITED 59 NOTES TO THE FINANCIAL STATEMENTSAltura Mining Limited and Controlled Entities

Notes to the Financial Statements (continued)

FOR THE YEAR ENDED 30 JUNE 2012

5. PROFIT / (LOSS) FROM ORDINARY ACTIVITIES

2012 2011

$’000 $’000

(a) Revenue Revenue from sales 9,443 7,955 Total sales revenues from ordinary activities 9,443 7,955

(b) Other revenues Interest received from other corporations 872 670 Profit / (loss) on sale of assets 17 ‐ Other revenue 93 423 Total other revenues from ordinary activities 982 1,093 Total revenue 10,425 9,048

(c) Cost of sales Drilling costs 6,097 5,380 Depreciation ‐ plant & equipment 550 606 Depreciation ‐ plant & equipment leased 41 ‐ Total cost of sales 6,688 5,986

(d) Other expenses Depreciation ‐ plant & equipment 99 98 Exploration – expensed 37 ‐ Exploration – written off 373 ‐ Total other expenses from ordinary activities 509 98

(e) Financing costs Hire purchase interest expense 7 22 Interest expense 35 182 Total borrowing costs 42 204

(f) Employee benefits expense Employee share scheme expense 325 216 Bonus paid by way of issue of shares to Directors and staff 735 ‐ Other employee benefits expense 1,316 1,417 Total employee benefits expense 2,376 1,633

(g) Administration costs 2,606 1,731 Administration costs in 2012 includes Philippines corporate establishment costs,and application fees for three coal tenements in the Philippines of $409,752 (2011: nil).

37 60 ALTURA MINING LIMITED ANNUAL REPORT 2012 Altura Mining Limited and ControlledNOTES Entities TO THE FINANCIAL STATEMENTS

Notes to the Financial Statements (continued)

FOR THE YEAR ENDED 30 JUNE 2012

6. EARNINGS / (LOSS) PER SHARE

2012 2011

cents per share cents per share

Basic earnings / (loss) per share (0.45) (0.59)

Basic earnings per share: The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows: 2012 2011

$’000 $’000

Earnings (a) (1,919) (1,773)

2012 2011

number number

Weighted average number of ordinary shares (b) 429,586,620 301,125,914

(a) Earnings used in the calculation of basic earnings per share reconciles to net profit in the income statement as follows: 2012 2011

$’000 $’000

Net profit / (loss) (1,919) (1,773) Earnings used in the calculation of basic EPS (1,919) (1,773)

(b) As at 30 June 2012, Management options on issue had an exercise price in excess of the market price and are therefore anti‐dilutive. There were 10,275,000 share options outstanding at the end of the year, these potential ordinary shares would reduce the loss per share from continuing ordinary

operations on conversion, and hence these potential ordinary shares are not dilutive.

(c) As at 30 June 2012, there were no listed share options outstanding.

38 ANNUAL REPORT 2012 ALTURA MINING LIMITED 61 NOTES TO THE FINANCIAL STATEMENTSAltura Mining Limited and Controlled Entities

Notes to the Financial Statements (continued)

FOR THE YEAR ENDED 30 JUNE 2012

7. INCOME TAX EXPENSE

2012 2011

$’000 $’000

(a) The components of tax expense comprise:

Current Tax Current Year 400 198 Adjustments in respect of prior periods 92 131

Deferred Tax Current year deferred tax (237) 110 Adjustments in respect of prior periods ‐ ‐ Total income tax expense per income statement 255 439

(b) The prima facie tax on profit / (loss) before income tax is reconciled to the

income tax as follows:

Profit / (loss) before tax (1,580) (1,235)

Income tax calculated at the Australian rate of 30% (474) (370)

Increase in income tax due to: Non‐deductible expenses 355 93 Share compensation costs 318 65 Effect of current year tax losses derecognised 433 649 Effect of prior year tax losses derecognised (155) (56) Under / (over) provision in prior year 92 131 Difference in overseas tax rates (43) (73) Recognition of previously unrecognised deferred tax assets (271) ‐ Income tax expense 255 439

Deferred tax assets arising from tax losses are only recognised to the extent that there are equivalent deferred tax liabilities. The remaining tax losses have not

been recognised as an asset because recovery of the losses is not regarded as probable:

Tax losses not recognised ‐ revenue 4,022 4,148

(c) Tax effects relating to each component of other comprehensive income 2012 2011 Tax Tax Before tax (Expense) Net of tax Before tax (Expense) Net of tax Amount Benefit Amount Amount Benefit Amount $000 $000 $000 $000 $000 $000 Exchange differences on translating foreign controlled entities 359 (108) 251 (1,201) 360 (841) Non‐controlling interests 120 (36) 84 141 (42) 99

479 (144) 335 (1,060) 318 (742)

39 62 ALTURA MINING LIMITED ANNUAL REPORT 2012 Altura Mining Limited and ControlledNOTES Entities TO THE FINANCIAL STATEMENTS

Notes to the Financial Statements (continued)

FOR THE YEAR ENDED 30 JUNE 2012

7. INCOME TAX EXPENSE (Continued)

(d) Tax consolidation system

Legislation to allow groups, comprising a parent entity and its Australian resident wholly‐owned entities, to elect to consolidate and be treated as a single entity for income tax purposes was substantively enacted on 21 October 2002.

Altura Mining Limited and certain of its wholly‐owned Australian subsidiaries are eligible to consolidate for tax purposes and have elected to form an income tax group under the Tax Consolidation Regime effective 1 July 2005. The implementation of the tax consolidation group was formally recognised by the ATO on 22 July 2005 with start date for income tax consolidation 1 July 2005 and Altura Mining Limited as the head entity of the group.

Entities within the tax‐consolidated group have entered into a tax‐sharing agreement with the head entity. Under the terms of this agreement, Altura Mining Limited and each of the entities in the tax consolidated group has agreed to pay a tax equivalent payment to or from the head entity, based on standalone tax payer basis. Such amounts are reflected in amounts receivable from or payable to other entities in the tax consolidated group.

8. CASH AND CASH EQUIVALENTS

2012 2011 $’000 $’000

Cash at bank and on hand 17,221 5,455

Reconciliation to Statement of Cash Flows

For the purposes of the Statement of Cash Flows, cash and cash equivalents comprise the following at 30 June:

Cash at bank and on hand 14,721 4,780 Deposits held in trust * ‐ 175 Short‐term deposits 2,500 500 Cash at bank and on hand 17,221 5,455

* The Group was in the process of incorporating a subsidiary in the Philippines in the 2011 financial year and these funds were held in trust until incorporation was completed and the banking facility was established.

9. CURRENT TRADE & OTHER RECEIVABLES

Trade and other receivables 2,797 1,875

2,797 1,875

At 30 June, the ageing analysis of trade receivables is as follows: 0‐30 31‐60 61‐90 90+ days days days days $000 $000 $000 $000

2012 Consolidated 2,056 403 334 4

2011 Consolidated 1,473 307 31 64

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

40 ANNUAL REPORT 2012 ALTURA MINING LIMITED 63 NOTES TO THE FINANCIAL STATEMENTSAltura Mining Limited and Controlled Entities

Notes to the Financial Statements (continued)

FOR THE YEAR ENDED 30 JUNE 2012

10. INVENTORIES

2012 2011

$’000 $’000

Consumables and stores – at cost 8 ‐ 8 ‐

11. HELD TO MATURITY INVESTMENTS

Term deposits 6,375 8,750 6,375 8,750

The term deposits are held to their maturity of less than one year and carry a weighted average fixed interest rate of 5.24% (2011 6.00%). Due to their short term nature their

carrying value is assumed to approximate their fair value. Information about the Group’s exposure to credit risk is disclosed in note 2.

12. OTHER CURRENT ASSETS

Financial assets (security deposits) 75 226 Prepayments 382 265 457 491

13. PROPERTY, PLANT AND EQUIPMENT

Motor Office Plant and Land Exploration Plant and Total vehicles equipment equipment equipment under lease $’000 $’000 $’000 $’000 $’000 $’000 $’000 2012 Gross carrying amount Balance at 30 June 2011 673 406 4,828 640 138 723 7,408 Additions 63 42 258 ‐ ‐ 63 426 Transfer (218) ‐ 218 ‐ ‐ ‐ ‐ Exchange difference 36 22 169 1 ‐ ‐ 228 Disposals (43) (16) ‐ ‐ ‐ (46) (105) Balance at 30 June 2012 511 454 5,473 641 138 740 7,957

Accumulated depreciation Balance at 30 June 2011 434 219 2,690 ‐ 87 345 3,775 Depreciation expense 49 63 558 ‐ 14 5 689 Transfer (199) ‐ 199 ‐ ‐ ‐ ‐ Exchange difference 20 2 98 ‐ ‐ ‐ 120 Disposals (7) (14) ‐ ‐ ‐ (15) (36) Balance at 30 June 2012 297 270 3,545 ‐ 101 335 4,548 Net book value 214 184 1,928 641 37 405 3,409 as at 30 June 2012

41 64 ALTURA MINING LIMITED ANNUAL REPORT 2012 Altura Mining Limited and ControlledNOTES Entities TO THE FINANCIAL STATEMENTS

Notes to the Financial Statements (continued)

FOR THE YEAR ENDED 30 JUNE 2012

13. PROPERTY, PLANT AND EQUIPMENT (Continued)

Motor Office Plant and Land Exploration Plant and Total vehicles equipment equipment equipment under lease $’000 $’000 $’000 $’000 $’000 $’000 $’000 2011 Gross carrying amount Balance at 30 June 2010 625 343 5,382 643 131 790 7,914 Additions 210 81 247 ‐ 7 ‐ 545 Exchange difference (126) (17) (792) (3) ‐ (9) (947) Disposals (36) (1) (9) ‐ ‐ (58) (104) Balance at 30 June 2011 673 406 4,828 640 138 723 7,408

Accumulated depreciation Balance at 30 June 2010 503 169 2,600 ‐ 65 286 3,623 Depreciation expense 62 57 494 ‐ 22 70 705 Exchange difference (96) (6) (402) ‐ ‐ ‐ (504) Disposals (35) (1) (2) ‐ ‐ (11) (49) Balance at 30 June 2011 434 219 2,690 ‐ 87 345 3,775 Net book value 239 187 2,138 640 51 378 3,633 as at 30 June 2011

14. EXPLORATION and EVALUATION

2012 2011 $’000 $’000

Exploration and evaluation expenditure at cost: Carried forward from previous year 19,991 16,942 Incurred during the year 7,658 3,049 Disposed during year ‐ ‐ 27,649 19,991 Written off during the year (373) ‐ Total exploration expenditure 27,276 19,991

The recovery of expenditure carried forward is dependent upon the discovery of commercially viable mineral and other natural resource deposits, their development and exploitation, or alternatively their sale.

The Company's title to certain mining tenements is subject to Ministerial approval and may be subject to successful outcomes of native title issues.

During the 2012 year, previously capitalised exploration costs relating to the Groups Finniss Range tenements were written off, and the tenements have since been surrendered.

42 ANNUAL REPORT 2012 ALTURA MINING LIMITED 65 NOTES TO THE FINANCIAL STATEMENTSAltura Mining Limited and Controlled Entities

Notes to the Financial Statements (continued)

FOR THE YEAR ENDED 30 JUNE 2012

15. INTANGIBLE ASSETS

2012 2011

$’000 $’000

Goodwill Cost 4,529 4,529 Accumulated impairment loss ‐ ‐ 4,529 4,529

Goodwill Balance at beginning of year 4,529 4,529 Additions ‐ ‐ Disposals ‐ ‐ Impaired losses ‐ ‐ Closing balance at end of year 4,529 4,529

After initial recognition, goodwill acquired in a business combination is measured at cost less any accumulated impairment losses. Goodwill is allocated at recognition to its associated cash generating units. Goodwill is not amortised but is subject to impairment testing on an annual basis or whenever there is an indication of impairment. (Refer Note 3(a)).

16. TRADE AND OTHER PAYABLES

Trade payables 3,004 1,376 Goods and services tax payable ‐ 11 3,004 1,387

17. CURRENT INTEREST BEARING LIABILITIES

Hire purchase liabilities (Note 31) 69 186 Related party loan (Note 25) ‐ 2,000 Total interest bearing liabilities 69 2,186

Hire purchase liabilities are effectively secured as the rights to the assets revert to the

owner in the event of default.

18. CURRENT PROVISIONS

Employee benefits 485 442 485 442

Movements in Provisions Short term employee benefits Opening balance 442 524 Additional provision 165 98 Expense incurred (122) (180) Balance at year end 485 442

The aggregate employee entitlement liability recognised and included in the financial

statements is as follows:

Provision for employee entitlements: Current 485 442 Total 485 442

43 66 ALTURA MINING LIMITED ANNUAL REPORT 2012 Altura Mining Limited and ControlledNOTES Entities TO THE FINANCIAL STATEMENTS

Notes to the Financial Statements (continued)

FOR THE YEAR ENDED 30 JUNE 2012

19. CURRENT TAXATION & DEFERRED TAX LIABILITIES & ASSETS

2012 2011

$’000 $’000

(a) Liabilities Current Income tax payable (53) ‐

Non‐Current Deferred tax liability comprises: Unrealised foreign exchange gain 42 ‐ Tax allowances relating to exploration 7,730 5,816 7,772 5,816

(b) Assets Current Income tax refundable ‐ 195

Non‐Current Deferred assets comprises: Provisions 310 319 Revenue losses 11,357 9,524 Revenue losses not recognised (4,022) (4,148) Property, plant and equipment ‐ ‐ Prepayments 77 ‐ Other 330 165 8,052 5,860

(c) Reconciliation of: Gross movements The overall movement in the deferred tax account is as follows: Opening balance – net deferred taxes 44 154 (Charge) / credit to income statement 237 (110) Closing balance – net deferred taxes 281 44

Net deferred tax assets for the Indonesian entities are carried forward as it is probable that future tax profits will be available against which temporary differences can be utilised.

20. NON‐CURRENT INTEREST BEARING LIABILITIES

Hire purchase liabilities (Note 31) 21 46 21 46

Hire purchase liabilities are effectively secured as the rights to the assets revert to the

owner in the event of default.

44 ANNUAL REPORT 2012 ALTURA MINING LIMITED 67 NOTES TO THE FINANCIAL STATEMENTSAltura Mining Limited and Controlled Entities

Notes to the Financial Statements (continued)

FOR THE YEAR ENDED 30 JUNE 2012

21. CONTRIBUTED EQUITY

Issued capital

2012 2011 $’000 $’000 2012: 454,272,181 (2011: 326,249,913) ordinary shares issued and fully paid 74,517 55,239

2012 2011 Number $’000 Number $’000 Fully paid ordinary shares Balance at the beginning of the financial year 326,249,913 55,239 195,351,787 38,781 Share issue costs (1) (572) Rights issue ‐ ‐ 82,391,322 10,711 Issue as private placement ‐ ‐ 47,843,201 6,219 Issue on exercise of options 123,622,268 18,543 663,603 100 Issue of shares to Directors and staff # 4,400,000 736 ‐ ‐ Balance at the end of the financial year 454,272,181 74,517 326,249,913 55,239

# 3,250,000 shares were issued to key management personnel. Fully paid ordinary shares carry one vote per share and carry the rights to dividends. Ordinary shares have no par value.

Reserves

Option reserve The option reserve records items recognised as expenses on the valuation of share options.

Foreign currency translation reserve The foreign currency translation reserve records exchange differences arising on translation of a foreign controlled subsidiary.

Capital management

The Board's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. There were no changes to the consolidated entity's approach to capital management during the year. Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements. The Board effectively manages the Group’s capital by assessing the Group’s financial risks and adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of debt levels and by share issues.

22. SHARE BASED PAYMENTS

Options

The Company has in place an Employee Share Option Plan (ESOP) under which employees and directors of the Consolidated Group may be issued on a discretionary basis with options over ordinary shares of Altura Mining Limited.

The purpose of this plan is to:

 recognise the ability and efforts of employees and directors of the Company who have contributed to the success of the Company;  provide an incentive to employees and directors to achieve the long term objectives of the Company and improve the performance of the Company; and  attract persons of experience and ability to the Company and foster and promote loyalty between the Company and its employees.

The options automatically lapse if they are not exercised before the expiry date, or when employment ceases with Altura Mining Limited.

45 68 ALTURA MINING LIMITED ANNUAL REPORT 2012 Altura Mining Limited and ControlledNOTES Entities TO THE FINANCIAL STATEMENTS

Notes to the Financial Statements (continued)

FOR THE YEAR ENDED 30 JUNE 2012

22. SHARE BASED PAYMENTS (continued)

The employee share options expiring on 30 September 2015 and 22 December 2016 were issued for no consideration. Under the rules of the ESOP there is a three‐year vesting period from the issue date before they can be exercised.

All options subject to the carry no rights to dividends and no voting rights, until converted into ordinary shares.

Historical volatility has been used as the basis for determining expected share price volatility as it assumed that this is indicative of future trends, which may not eventuate.

The Company had the following options on issue under the employee share option plan as at 30 June 2012:

Number Issue date Exercise price Expiry date 2,900,000 1 October 2010 $0.20 30 September 2015 7,000,000 13 December 2010 $0.20 30 September 2015 375,000 23 December 2011 $0.20 22 December 2016

2012 2011 Number of Weighted Number of Weighted options average options average exercise price exercise price $ $

Outstanding at the beginning of the year 11,250,000 0.23 1,550,000 0.48 Granted 375,000 0.20 11,050,000 0.20 Forfeited / expired (1,350,000) 0.42 (1,350,000) 0.31 Exercised ‐ ‐ ‐ ‐ Outstanding at year‐end 10,275,000 0.20 11,250,000 0.23

Exercisable at year‐end ‐ ‐ 1,150,000 0.46

During the year ended 30 June 2012, a total of 375,000 options were issued to senior staff on 23 December 2011 under the Company’s ESOP.

The options have an exercise price of $0.20 with an expiry date of 22 December 2016. The options have a vesting date of 23 December 2014 and are designed as a long‐term incentive to reward performance.

Options

When options are issued, they are valued at grant date using a Black‐Scholes option pricing model. The inputs and assumptions for options currently on issue at 30 June 2012 were:

Granted on Granted on Granted on

1 Oct 2010 13 Dec 2010 23 Dec 2011

Option exercise price ($) $0.20 $0.20 $0.20 Expected volatility (%) 105.66% 105.66% 87.3% Dividend yield (%) 0% 0% 0% Risk‐free interest rate (%) 4.95% 5.42% 3.32% Expected life of option (years) 5 5 5 Weighted average fair value at grant date $0.0893 $0.0942 $0.0755

Total expenses arising from share‐based payment transactions recognised during the period as part of employee benefit expense were $325,242 (2011: $215,579).

46 ANNUAL REPORT 2012 ALTURA MINING LIMITED 69 NOTES TO THE FINANCIAL STATEMENTSAltura Mining Limited and Controlled Entities

Notes to the Financial Statements (continued)

FOR THE YEAR ENDED 30 JUNE 2012

23. AUDITORS’ REMUNERATION

2012 2011

$’000 $’000

Amount paid or payable for the audit or review of the financial report 104 134 104 134

24. KEY MANAGEMENT PERSONNEL COMPENSATION

(a) Names and positions held of key management personnel in office at any time during the financial year are:

Directors

James Brown Managing Director Paul Mantell Executive Director Allan Buckler Non‐Executive Director Dan O’Neill Non‐Executive Director BT Kuan Non‐Executive Director

Key Management Personnel

Noel Young Group Financial Controller and Company Secretary Damon Cox Company Secretary

(b) Key management personnel remuneration

2012 2011 $’000 $’000

Short‐term employee benefits 1,577,963 956,076 Long‐term employee benefits ‐ ‐ Post employment benefits 101,833 54,603 Termination benefits ‐ ‐ Share based payments 256,088 144,484 1,935,884 1,155,163

(c) Option holdings

Number of options held by key management personnel

2012 Balance at Granted as Exercised / Purchased in Balance at Vested and Unvested the start of compen‐ lapsed rights issue end of the exercisable the year sation year J Brown 2,600,000 ‐ 600,000 ‐ 2,000,000 ‐ 2,000,000 P Mantell 5,423,738 ‐ 3,423,738 ‐ 2,000,000 ‐ 2,000,000 A Buckler 28,613,384 ‐ 27,613,384 ‐ 1,000,000 ‐ 1,000,000 D O’Neill 1,333,334 ‐ 333,334 ‐ 1,000,000 ‐ 1,000,000 B Kuan 1,395,134 ‐ 395,134 ‐ 1,000,000 ‐ 1,000,000 N Young 859,832 ‐ 509,832 ‐ 350,000 ‐ 350,000 D Cox 450,000 ‐ 100,000 ‐ 350,000 ‐ 350,000

Details of options granted as compensation and shares issued on the exercise of such options, together with terms and conditions of the options, can be found in the Directors’ Report and under Note 22.

47 70 ALTURA MINING LIMITED ANNUAL REPORT 2012 Altura Mining Limited and ControlledNOTES Entities TO THE FINANCIAL STATEMENTS

Notes to the Financial Statements (continued)

FOR THE YEAR ENDED 30 JUNE 2012

24. KEY MANAGEMENT PERSONNEL COMPENSATION (Continued)

2011 Balance at Granted as Exercised / Purchased in Balance at Vested and Unvested the start of compen‐ lapsed rights issue end of the exercisable the year sation year J Brown 200,000 2,000,000 ‐ 400,000 2,600,000 600,000 2,000,000 P Mantell ‐ 2,000,000 ‐ 3,423,738 5,423,738 3,423,738 2,000,000 A Buckler ‐ 1,000,000 ‐ 27,613,384 28,613,384 27,613,384 1,000,000 D O’Neill ‐ 1,000,000 ‐ 333,334 1,333,334 333,334 1,000,000 B Kuan 250,000 1,000,000 (250,000) 395,134 1,395,134 395,134 1,000,000 N Young ‐ 350,000 ‐ 509,832 859,832 509,832 350,000 D Cox 100,000 350,000 ‐ ‐ 450,000 100,000 350,000

(d) Share holdings

Number of shares held by key management personnel The number of shares in the Company held during the financial year by each director of Altura Mining Limited and other key management personnel of the Group, including their personally related parties, are set out below. Other changes during the year include the bonus issue of shares to directors (following approval at the 2011 AGM) and other key management personnel.

2012 Balance at Purchased / Purchased in Received on Other Balance at the start of (sold) rights issue the exercise changes the end of the the year of options year J Brown 2,012,262 30,000 ‐ 400,000 1,000,000 3,442,262 P Mantell 5,559,345 ‐ ‐ 3,423,738 250,000 9,233,083 A Buckler 55,533,460 (1,000,000) ‐ 27,613,385 ‐ 82,146,845 D O’Neill 533,334 ‐ ‐ 133,334 500,000 1,166,668 B Kuan 987,834 ‐ ‐ 395,134 500,000 1,882,968 N Young 824,579 ‐ ‐ 509,832 250,000 1,584,411 D Cox ‐ ‐ ‐ ‐ 250,000 250,000

2011 Balance at Purchased / Purchased in Received on Other Balance at the start of (sold) rights issue the exercise changes the end of the the year of options year J Brown 1,612,262 ‐ 400,000 ‐ ‐ 2,012,262 P Mantell 2,135,607 ‐ 3,423,738 ‐ ‐ 5,559,345 A Buckler 27,645,752 274,324 27,613,384 ‐ ‐ 55,533,460 D O’Neill 200,000 ‐ 333,334 ‐ ‐ 533,334 B Kuan 592,700 ‐ 395,134 ‐ ‐ 987,834 N Young 314,747 ‐ 509,832 ‐ ‐ 824,579 D Cox ‐ ‐ ‐ ‐ ‐ ‐

48 ANNUAL REPORT 2012 ALTURA MINING LIMITED 71 NOTES TO THE FINANCIAL STATEMENTSAltura Mining Limited and Controlled Entities

Notes to the Financial Statements (continued)

FOR THE YEAR ENDED 30 JUNE 2012

25. RELATED PARTY DISCLOSURE

Country of Ownership interest incorporation 2012 2011 Name of entity % % Parent entity

Altura Mining Limited Controlled entities Altura Exploration Pty Ltd Australia 100 100 Australian Garnet Pty Ltd Australia 100 100 Altura Drilling Pty Ltd Australia 100 100 Altura Lithium Pty Ltd Australia 100 ‐ Minvest Australia Pty Ltd Australia 100 100 Minvest International Corporation Mauritius 100 100 Altura Asia Pte. Ltd. Singapore 100 100 Altura Mining Philippines Inc. * Philippines 40 ‐ PT Asiadrill Bara Utama Indonesia 100 100 PT Velseis Indonesia Indonesia 50 50 PT Altura Indonesia (formerly PT Minvest Trinusa Utama) Indonesia 100 100 PT Minvest Mitra Pembangunan Indonesia 100 100 PT Jasa Tambang Pratama Indonesia 100 100 PT Cakrawala Jasa Pratama Indonesia 100 100 PT Minvest Jasatama Teknik Indonesia 100 100 PT Cybertek Global Utama Indonesia 100 100

Altura Mining Limited, Altura Exploration Pty Ltd and Australian Garnet Pty Ltd are included within the tax consolidation group.

* Altura Mining Limited through its wholly owned subsidiary, Altura Asia Pte. Ltd holds 40% direct equity in Altura Mining Philippines Inc. This entity is considered a subsidiary as the Company has full economic and management rights.

Transactions within the wholly‐owned group

The wholly‐owned group includes:

 the ultimate parent entity in the wholly‐owned group; and  wholly‐owned controlled entities.

The ultimate parent entity in the wholly‐owned Group is Altura Mining Limited.

During the year the parent entity provided financial assistance to its wholly owned controlled entities by way of intercompany loans. The loans are unsecured, interest free and have no fixed term of repayment. Sales and purchases between related parties within the Group have been eliminated upon consolidation. There were no further sales or purchases from related parties during the financial year.

Transactions with directors

At the commencement of financial year the parent entity maintained a loan from Hartco Nominees Pty Ltd (a nominee service company owned by an unrelated company). The loan was unsecured with interest being payable monthly at a commercial interest rate. On 31st August 2011 the balance of $2,000,000 (2011: $2,000,000) was repaid in full and the facility was closed. Allan Buckler, a Director of Altura, holds shares in Altura through Hartco Nominees Pty Ltd. Total interest paid to Hartco during the year was $14,863 (2011: $175,000).

49 72 ALTURA MINING LIMITED ANNUAL REPORT 2012 Altura Mining Limited and ControlledNOTES Entities TO THE FINANCIAL STATEMENTS

Notes to the Financial Statements (continued)

FOR THE YEAR ENDED 30 JUNE 2012

26. NOTES TO STATEMENT OF CASH FLOWS

(a) For the purpose of the statement of cash flows, cash includes cash on hand and in banks, and investments in money market instruments, net of outstanding bank overdrafts. Cash at the end of the financial year as shown in the statements of cash flows is reconciled to the related items in the balance sheet as follows:

2012 2011

$’000 $’000

Cash at bank and on hand (Note 8) 17,221 5,455 Cash per statement of cash flows 17,221 5,455

(b) Reconciliation of operating profit / (loss) after income tax to net cash used in operating activities

Operating profit / (loss) after income tax (1,835) (1,674)

Adjustments for non‐cash income and expense items: Option and share pricing 325 216 Bonus paid in shares 735 ‐ Net gain on debt defeasance ‐ (293) Depreciation of property, plant and equipment 691 705 Exploration expenditure written off 374 ‐ Foreign currency exchange rate movement (159) 439 (Increase) /decrease in current tax liability (248) (166) Increase / (decrease) in deferred tax balances (237) (110)

Changes in assets and liabilities: (Increase) / decrease in receivables (919) 490 (Decrease) / increase in other creditors and accruals 236 (155) (Increase) / decrease in inventories (8) ‐ (Increase) / decrease in deposits and prepayments 34 (50) Increase / (decrease) in current provisions (42) (82) Net cash provided by (used in) operating activities (1,053) (680)

(c) Acquisition of entities

No cash was outlaid for acquisitions.

(d) Non‐cash financing and investing activities

There were no non‐cash financing and investing activities during the year.

50 ANNUAL REPORT 2012 ALTURA MINING LIMITED 73 NOTES TO THE FINANCIAL STATEMENTSAltura Mining Limited and Controlled Entities

Notes to the Financial Statements (continued)

FOR THE YEAR ENDED 30 JUNE 2012

27. PARENT ENTITY DISCLOSURE

Parent 2012 2011

$’000 $’000

(a) Summary of financial information

The individual financial statements for the parent entity show the following

aggregate amounts:

Balance sheet

Current assets 16,553 11,931 Total assets 66,954 51,563 Current liabilities 351 321 Total liabilities 351 2,321 Net assets 66,603 49,242

Equity Contributed equity 74,517 55,239 Reserves 518 308 Retained profits / (accumulated losses) (8,432) (6,305) Total shareholder equity 66,603 49,242

Profit / (loss) for the year (2,241) (2,246)

Total comprehensive income / (loss) for the year (2,241) (2,246)

(b) Contingent liabilities

Contingent liabilities are disclosed in note 29.

(c) Contractual commitments

No later than one year 274 310 Later than one year and not later than five years 439 713 Later than five years ‐ ‐ 713 1,023

28. SUBSEQUENT EVENTS

In August 2012, Altura executed a formal Sale and Purchase Agreement to purchase equity in two further coal projects located in South Kalimantan, Indonesia. Altura had originally signed an agreement in principle to purchase the two Mining Permits in April 2012, and had been working since then to complete the due diligence process and documentation.

No other matters have arisen since the end of the financial year which have significantly affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in subsequent financial years.

51 74 ALTURA MINING LIMITED ANNUAL REPORT 2012 Altura Mining Limited and ControlledNOTES Entities TO THE FINANCIAL STATEMENTS

Notes to the Financial Statements (continued)

FOR THE YEAR ENDED 30 JUNE 2012

29. CONTINGENT LIABILITIES

Details and estimates of maximum amounts of contingent liabilities for which no provision is included in the financial statements are as follows:

2012 2011 $’000 $’000 The bankers of the Consolidated Group and parent entity have issued undertakings 245 251 and guarantees to the Department of Mines and Energy and various other entities.

No losses are anticipated in respect of any of the above contingent liabilities.

30. COMMITMENTS FOR EXPENDITURE

In order to maintain an interest in the mining and exploration tenements in which the Consolidated Group is involved, the Consolidated Group is committed to meet the conditions under which the tenements were granted and the obligations of any joint venture agreements. The timing and amount of exploration expenditure commitments and obligations of the Consolidated Group are subject to the minimum expenditure commitments required by the relevant State Departments of Minerals and Energy, and may vary significantly from the forecast based upon the results of the work performed which will determine the prospectivity of the relevant area of interest.

(a) Exploration work

The Company has certain obligations to perform minimum exploration work and expend minimum amounts on its mining tenements. Obligations for the next 12 months are expected to amount to $438,120 (2011: $509,703). No estimate has been given of expenditure commitments beyond 12 months as this is dependent on the directors’ ongoing assessment of operations and, in certain instances, native title negotiations.

(b) Asset acquisitions

The Consolidated Group has no commitments for asset acquisitions at 30 June 2012.

(c) Operating lease

The Consolidated Group has entered into operating leases for office premises at Brookwater in Qld, at Subiaco in WA, at Jakarta and Balikpapan in Indonesia. The Consolidated Group also has leases in relation to vehicles and office equipment.

The commitment in respect of these leases is:

2012 2011

$’000 $’000

No later than one year 410 491 Later than one year and not later than five years 440 837 Later than five years ‐ ‐ 850 1,328

52 ANNUAL REPORT 2012 ALTURA MINING LIMITED 75 NOTES TO THE FINANCIAL STATEMENTSAltura Mining Limited and Controlled Entities

Notes to the Financial Statements (continued)

FOR THE YEAR ENDED 30 JUNE 2012

31. HIRE PURCHASE COMMITMENTS

Hire purchase agreements The consolidated entity will acquire the plant and equipment at the conclusion of the respective agreements.

2012 2011

$’000 $’000

No later than one year 69 186 Later than one year and not later than five years 21 46 Later than five years ‐ ‐ 90 232

Included in the financial statements as: Current hire purchase liabilities (Note 17) 69 186 Non‐current hire purchase liabilities (Note 20) 21 46 90 232

32. ADOPTION OF NEW AND REVISED ACCOUNTING STANDARDS

None of the new standards and amendments to standards that are mandatory for the first time for the financial year beginning 1 July 2011 affected any of the amounts recognised in the current period or any prior period and are not likely to affect future periods. However, the adoption of AASB 1054 Australian Additional Disclosures and AASB 2011‐1 Amendments to Australian Accounting Standards arising from the Trans‐Tasman Convergence Project enabled the removal of certain disclosures in relation to commitments and the franking of dividends.

53 76 ALTURA MINING LIMITED ANNUAL REPORT 2012 Altura Mining DIRECTORS’ Limited and Controlled DECLARATION Entities

Directors’ Declaration

In the directors ’ opinion:

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

a. comply with Accounting Standards and the Corporations Regulations 2001; and b. give a true and fair view of the consolidated entity’s financial position as at 30 June 2012 and its performance for the financial year ended on that date;

(b) the financial statements and notes also comply with International Financial Reporting Standards as set out in note 1;

(c) the remuneration disclosures that are contained in the remuneration report in the Directors’ report comply with Australian Accounting Standard AASB 124 Related Party Disclosures, the Corporations Act 2001 and the Corporations Regulations 2001; and

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

The directors have been given the declarations by the Chief Executive Officer and the Chief Financial Officer required under section 295A of Corporations the Act 2001.

This declaration is made in accordance with d a resolution of the irectors.

______BT Kuan Director

Signed at Singapore this 11th day of September 2012

ALTURA MINING LIMITED 54 ANNUAL REPORT 2012 77 INDEPENDENT AUDITOR’S REPORT

INDEPENDENT AUDITOR’S REPORT

Report on the Financial Report We have audited the accompanying financial report of Altura Mining Limited, which comprises the consolidated balance sheet as at 30 June 2012, and the consolidated income statement, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the year’s end or from time to time during the financial year.

Directors’ Responsibility for the Financial Report The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In Note1, the directors also state, in accordance with Accounting Standard AASB 101: Presentation of Financial Statements that the financial statements comply with International Financial Reporting Standards

Auditor’s Responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.

Auditor’s Opinion In our opinion, the financial report of Altura Mining Limited is in accordance with the Corporations Act 2001 including:

(a) (i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2012 and of its performance for the year ended on that date; and

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

(b) the consolidated financial report also complies with International Financial Reporting Standards as disclosed in Note 1.

Crowe Horwath Perth is a WHK Group Firm and a member of Crowe Horwath International, a Swiss verein. Each member firm of Crowe Horwath is a separate and independent legal entity.

78 ALTURA MINING LIMITED ANNUAL REPORT 2012 INDEPENDENT AUDITOR’S REPORT

Report on the Remuneration Report We have audited the Remuneration Report included in pages 6 to 9 of the directors’ report for the year ended 30 June 2012. The directors are responsible for the preparation and presentation of the Remuneration Report in accordance with Section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

Auditor’s Opinion In our opinion, the Remuneration Report of Altura Mining Limited for the year ended 30 June 2012 complies with section 300A of the Corporations Act 2001.

CROWE HORWATH PERTH

SEAN MCGURK Partner

Signed at Perth, 11 September 2012

Crowe Horwath Perth is a WHK Group Firm and a member of Crowe Horwath International, a Swiss verein. Each member firm of Crowe Horwath is a separate and independent legal entity.

ANNUAL REPORT 2012 ALTURA MINING LIMITED 79 ADDITIONAL ASX INFORMATION

ADDITIONAL ASX INFORMATION

SCHEDULE OF MINERAL PROPERTIES

Location Tenement Number Holder / Applicant Interest Status

WESTERN AUSTRALIA

Balline E 70/2509 Australian Garnet 100% Granted E 70/2546 Australian Garnet 100% Granted L 70/134 Australian Garnet 100% Granted M 70/1280 Australian Garnet 100% Granted

Pilbara E 45/2244 Attgold 100% Granted E 45/2268 Altura Exploration 100% Granted E 45/2273 REM 100% Granted E 45/2277 Attgold 100% Application (applied 4/12/00) E 45/2287 Altura Exploration 100% Granted E 45/2288 Altura Exploration 100% Application (applied 27/12/00) E 45/2312 Altura Exploration 100% Granted E 45/2346 Altura Exploration 100% Granted E 45/3488 Altura Exploration 100% Granted P 45/2758 Altura Exploration 100% Granted M 45/1209 Altura Exploration 100% Granted

Smithfield E 70/2254 Altura Exploration 100% Granted

NORTHERN TERRITORY

Mt Shoobridge EL 29549 Altura Exploration 100% Granted MCN 60 Altura Exploration 100% Granted MLN 296 Altura Exploration 100% Granted MLN 544 Altura Exploration 100% Granted

Tanami ELA 26626 Altura Exploration 100% Application (applied 04/02/08) ELA 26627 Altura Exploration 100% Application (applied 04/02/08) ELA 26628 Altura Exploration 100% Application (applied 04/02/08)

Key to Tenement Type: Key to Parties:

E, EL Exploration Licence Altura Mining Altura Mining Limited M, ML Mining Lease Altura Exploration Altura Exploration Pty Ltd G General Purpose Lease Australian Garnet Australian Garnet Pty Ltd L Miscellaneous Licence Attgold Attgold Pty Ltd P Prospecting Licence REM REM Pty Ltd MCN Mineral Claim Northern MLN Mineral Lease Northern

80 ALTURA MINING LIMITED ANNUAL REPORT 2012 1 ADDITIONAL ASX INFORMATION

ADDITIONAL ASX INFORMATION (cont.)

ISSUED CAPITAL

The issued capital of the company as at 30 September 2012 consists of 454,272,181 fully paid ordinary shares.

DISTRIBUTION OF SHAREHOLDINGS AND OPTION HOLDER AS AT 30 SEPTEMBER 2012

Fully Paid Ord Shares Number of holders 1,848 Holders of less than a marketable parcel 254

Number of holders in the following distribution categories:

Fully Paid Unlisted Ordinary Shares Options 0 – 1,000 147 - 1,001 – 5,000 225 - 5,001 – 10,000 245 - 10,001 – 100,000 921 - 100,001 and over 310 14 1,848 14

TWENTY LARGEST SHAREHOLDERS – FULLY PAID SHARES

The names of the twenty largest shareholders are as follows:

Rank Holder Name Units % of Issued 1 Hartco Nominees Pty Ltd 82,642,836 18.19% 2 MT Smith 41,710,822 9.18% 3 AC Buckler 40,825,427 8.99% 4 Navibell Services Limited 34,892,128 7.68% 5 Farjoy Pty Ltd 29,227,382 6.43% 6 JR Caldon 13,522,097 2.98% 7 Macquarie Bank Limited (Metals & Energy A/c) 11,300,174 2.49% 8 Crescent Nominees Limited 11,084,563 2.44% 9 PK & MA Mantell 9,163,083 2.02% 10 Rothstein Pty Ltd 6,496,183 1.43% 11 I Preece 4,792,082 1.05% 12 Citicorp Nominees Pty Ltd 4,711,547 1.04% 13 D & H Mason Investments Pty Ltd 4,500,000 0.99% 14 Buttonwood Nominees Pty Ltd 3,850,000 0.85% 15 UOB Kay Hian Private Limited 3,200,014 0.70% 16 PYC Investments Pty Ltd 3,167,885 0.70% 17 Winchester Investments Pty Ltd 3,000,000 0.66% 18 DB Watts 2,986,014 0.66% 19 Aspac Mining Limited 2,600,000 0.57% 20 Sand King Pty Ltd 2,545,834 0.56% TOTAL 316,218,071 69.61%

ANNUAL REPORT 2012 ALTURA MINING LIMITED 81 2 ADDITIONAL ASX INFORMATION

ADDITIONAL ASX INFORMATION (cont.)

SUBSTANTIAL SHAREHOLDERS

The names of substantial shareholders as disclosed in substantial shareholder notices received by the Company are:

Holder Name Shares MT Smith (Hartco Nominees Pty Ltd) 83,032,240 AC Buckler (Hartco Nominees Pty Ltd) 82,146,845 Farjoy Pty Ltd 29,227,382

VOTING RIGHTS ON ORDINARY SHARES

On a show of hands, every person present who is a Shareholder or a proxy, attorney or Representative of a Shareholder has one vote. On a poll, every person present who is a Shareholder or a proxy, attorney or Representative of a Shareholder has one vote for each fully paid share held.

ON MARKET BUY BACK

There is no current on market buy back of Altura shares.

3 82 ALTURA MINING LIMITED ANNUAL REPORT 2012 AUSTRALIAN SECURITIES EXCHANGE CODE: AJM Altura Mining Head Office Altura Mining Perth Office PT Altura Indonesia PT Asiadrill Bara Utama Building 8 Unit 1 13th Floor World Trade Centre 13th Floor World Trade Centre 22 Magnolia Drive 454 Roberts Rd Jl. Jend. Sudirman Kav. 29-31 Jl. Jend. Sudirman Kav. 29-31 Brookwater Qld 4300 Australia Subiaco WA 6008 Australia Jakarta 12920 Indonesia Jakarta 12920 Indonesia Tel +61 7 3814 6900 Tel +61 8 9488 5100 Tel +62 21 521 1438 Tel +62 21 521 1241 Fax +61 7 3814 6911 Fax +61 8 9488 5199 Fax +61 21 521 1463 Fax +61 21 521 1244

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