AUSTRALIAN MINING INVESTMENTS LIMITED & CONTROLLED ENTITIES A.B.N HALF YEAR REPORT 31 DECEMBER 2005 CONTENTS

Transcription

1 A.B.N HALF YEAR REPORT 31 DECEMBER 2005 CONTENTS Page Directors' Report 1 Auditor s Independence Declaration 4 Financial Information 5 Directors' Declaration 17 Independent Review Report to the Members 18

2 DIRECTORS' REPORT Your directors present their report on the consolidated entity consisting of Australian Mining Investments Limited and the entities it controlled at the end of, or during, the half-year ended 31 December Directors The following persons were directors of Australian Mining Investments Limited during the half-year and up to the date of this report: Results W McCrae P Hutchison T Koitka T Pickett (resigned 29 July 2005) The result for the six months ended December 2005 was a loss after tax of $243,077 (2004: $697,054). Review of Operations During the six months to 31 December 2005 the Company completed the construction and loading of 25,000 tonnes of copper ore into the new Vat No. 5. The introduction of Vat 5 into the process circuit, coupled with a heavy acid cleaning programme and recirculation of high-grade copper solution has stabilised leach rates of the existing vats. The vat has been designed to hold another 35,000 tonnes of ore (i.e. a total capacity of 60,000 tonnes), which will be supplied from mining at Mt Norma. Installation and commissioning of a water supply pipeline occurred during the period eliminating the costly carting of water to Mt Norma. Sales for the period were 378,000 kilogrammes of copper sulphate. During the period there has been a firming of prices locally, but not commensurate with the large gains in copper prices during the same period and inferior quality imports continue to hamper the Company s sales activity. Production for the period was 480,000 kilogrammes. Production days were reduced during the final quarter due to a number of reasons including commencement of installation of a bag house (to reduce dust in the dryer), relaying of concrete in the production area, change over and installation of larger generators, mandatory shutdown for internal inspection of crystallizer and thickeners, cleaning of Marley tower due to calcium build up, installation of water softener and the commissioning of Vat 5. Drilling at Mt Norma A total of 13 RC and RAB holes were drilled at Mt Norma. Holes MNRC 1 to 4 were drilled at RL 281 and all intersected sulphides indicating the ironstone hosted mineralization at depth. Deeper holes are planned below the transition zone and along the 1200m strike. 1

3 DIRECTORS' REPORT (continued) Review of Operations (continued) Holes 5-13 were drilled at RL 308 and all intersected oxide copper mineralization. The holes are consistent with previous drilling and assaying over the supergene zone along 140 metres of strike where the mining operation is located. Mining at Mt Norma is expected to commence after the wet season although the Company has stockpiles of oxide ore and easy access to copper oxide at other locations. Copper Exploration Acquisition In November 2005 the Company was successful in acquiring the EPM containing the Rocklands Group of Mines located approx 14km north west of Cloncurry near Mt Isa. The EPM encompasses numerous old mines including the highly prospective copper project The Double Oxide. The Rocklands area is hosted by a sub parallel north westerly trending set of sub vertical shears within a folded Mitakoodi quartzite. The principle structure the Double Oxide shear is traceable over 2,000 metres of strike and at least five subordinate shears within a width of 500 metres have been identified on the Double Oxide. The aggregate length of the various shears within the Double Oxide appears to be at least 6,000 metres (6 km) and collectively present a significant exploration target. Based on geological data to date including drilling, ground, aeromagnetic surveys, geochemical soil survey costeaning and rock sampling a target tonnage has been set. There are considerable gold and cobalt credits. Since the acquisition of the Rocklands Group Project, exploration has been primarily around the Double Oxide area. On the basis of surface geological survey, evaluation and geobotanical indicators the bedrock geochemical survey area was expanded from 500m in width to 800m. Consequently the 400 hole program was increased to a 600 hole program, which was recently completed. A 3,000 metre reverse circulation drill programme is underway as at the date of this report. Corporate At a meeting held on 20 July 2005, shareholders approved a capital consolidation on the basis of 1 new share for every 10 shares held. Consequently, options on issue at that date were also consolidated on a 1 for 10 basis, with the exercise price increasing from 10 cents to 1 dollar. Convertible notes on issue were also consolidated on a 1 for 10 basis. In August 2005, the Company issued 2,002,500 shares and 1,001,250 attaching options at an issue price of cents each as consideration for the cancellation of 111,250 convertible notes. During the six months to 31 December 2005 the Company raised $1,193,353 from the placement issues of shares and free attaching options. The price of the issues varied between 16 to 17.5 cents. The Company also raised $537,901 from a non-renounceable entitlement offer of two options for every three shares held by shareholders at an issue price of two cents per option. The Company issued 1,000,000 fully paid ordinary shares at 15 cents each as part consideration for the purchase of EPM13049 and ML

4 DIRECTORS' REPORT (Continued) Auditors Independence Declaration Section 307C of the Corporations Act 2001 requires our auditors, BDO Kendalls, to provide the directors of the Company with an Independence Declaration in relation to the review of the half-year financial report. This Independence Declaration is set out on page 4 and forms part of this directors report for the half-year ended 31 December This report is signed in accordance with a resolution of the Board of Directors. W McCrae Director Signed this 16 th day of March

5 AUDITOR S INDEPENDENCE DECLARATION As lead auditor for the review of Australian Mining Investments Limited for the half-year ended 31 December 2005, 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 review; and (b) no contraventions of any applicable code of professional conduct in relation to the review. BDO Kendalls Chartered Accountants C J Skelton Partner Brisbane Dated: 16 March

6 CONSOLIDATED INCOME STATEMENT For the half-year ended 31 December 2005 Consolidated Half-Year Ended 31 Dec 31 Dec $ $ Interest income 20,360 11,800 Sales of copper sulphate 373,748 26,400 Research and development tax concession 438,284 - Revenue 832,392 38,200 Expenses Changes in inventories of finished goods and work in progress 319, ,366 Raw materials used (289,130) (152,544) Production costs (284,063) (752,305) Repairs and maintenance plant (67,911) (94,808) Consultant and employee expenses (260,523) (188,673) Shareholder expenses (26,674) (51,295) Depreciation and amortisation expenses (192,921) (60,495) Borrowing costs expense (146,130) (27,104) Occupancy expenses (43,421) (47,987) Brokerage costs expense - (137,500) Other expenses (84,257) (73,909) Expenses (1,075,469) (735,254) Loss before related income tax benefit (243,077) (697,054) Income tax benefit - - Net loss attributable to members of the Company (243,077) (697,054) Cents Cents Basic earnings / (loss) per share (0.62) (2.16) The above financial statement should be read in conjunction with the accompanying notes. 5

7 CONSOLIDATED BALANCE SHEET As at 31 December 2005 Note Consolidated 31 Dec Jun 2005 $ $ CURRENT ASSETS Cash and cash equivalents 666,517 92,537 Trade and other receivables 353,485 77,264 Inventories 4 1,019, ,608 TOTAL CURRENT ASSETS 2,039,211 1,020,409 NON CURRENT ASSETS Cash and cash equivalents 460, ,195 Trade and other receivables 29,625 29,625 Inventories 4 1,000, ,013 Property, plant and equipment 3,220,401 2,893,668 Exploration expenditure 3,168,028 3,014,360 TOTAL NON-CURRENT ASSETS 7,878,410 7,056,861 TOTAL ASSETS 9,917,621 8,077,270 CURRENT LIABILITIES Trade and other payables 740, ,366 Short-term provisions 21,979 20,231 TOTAL CURRENT LIABILITIES 762, ,597 NON CURRENT LIABILITIES Interest bearing liability 1,805,000 2,250,000 TOTAL LIABILITIES 2,567,029 2,778,597 NET ASSETS 7,350,592 5,298,673 EQUITY Contributed equity 5 27,538,594 25,791,110 Reserves 21,319,331 20,771,819 Accumulated losses (42,156,578) (41,913,501) Total parent entity interest 6,701,347 4,649,428 Outside equity interests 649, ,245 TOTAL EQUITY 7,350,592 5,298,673 The above financial statement should be read in conjunction with the accompanying notes. 6

8 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the half-year ended 31 December 2005 Consolidated Issued Capital Accumulated Option Premium Minority Total Losses Reserve Other Reserves Interest Equity $ $ $ $ $ $ Balance at 1 July ,175,711 (39,972,799) 20,194, , ,270 5,648,001 Shares issued during the year 1,270, ,270,000 Profit attributable to members of the parent entity - (697,054) (697,054) Profit attributable to minority interest Total income and expense for the period recognised directly in equity Share issue expenses (48,401) (48,401) Balance at 31 December ,397,310 (40,669,853) 20,194, , ,270 6,172,546 Balance at 1 July ,791,110 (41,913,501) 20,244, , ,245 5,298,673 Shares/options issued during the year 1,788, , ,326,257 Profit attributable to members of the parent entity - (243,077) (243,077) Profit attributable to minority interest Total income and expense for the period recognised directly in equity Share/option issue expenses (40,872) - (6,005) - - (46,877) Cost of share based payments , ,616 Balance at 31 December ,538,594 (42,156,578) 20,792, , ,245 7,350,592 The above financial statement should be read in conjunction with the accompanying notes. 7

9 CONSOLIDATED CASH FLOW STATEMENT For the half-year ended 31 December 2005 CASH FLOWS FROM OPERATING ACTIVITIES Consolidated 31 Dec 31 Dec $ $ Cash receipts in the course of operations 433,893 26,400 Cash payments in the course of operations (1,059,746) (1,328,043) Cash payments for exploration and development (35,787) (292,344) Interest received 21,412 11,800 Research & development tax concession 183,656 - Net cash flows used in operating activities (456,572) (1,582,187) CASH FLOWS RELATED TO INVESTING ACTIVITIES Payments for plant and equipment (488,092) (683,464) Increase in deposits (180,500) (21,400) Loan to other entity (12,881) - Net cash flows used in investing activities (681,473) (704,864) CASH FLOWS RELATING TO FINANCING ACTIVITIES Proceeds from issue of shares & options 1,728,257 1,270,000 Share issue costs and borrowing costs (186,232) (135,901) Proceeds of borrowings 270,000 2,250,000 Repayment of borrowings (100,000) (8,000) Net cash flows provided by financing activities 1,712,025 3,376,099 Net increase in cash held 573,980 1,089,048 Cash at the beginning of the period 92, ,104 Cash at the end of the period 666,517 1,466,152 The above financial statement should be read in conjunction with the accompanying notes. 8

10 NOTES TO THE FINANCIAL STATEMENTS For the half-year ended 31 December Statement of significant accounting policies (a) Basis of preparation of half-year financial report The half-year consolidated financial statements are a general purpose financial report prepared in accordance with the requirements of the Corporations Act 2001, applicable accounting standards including AASB 134: Interim Financial Reporting, Urgent Issues Group Interpretations and other authoritative pronouncements of the Australian Accounting Standards Board. This half-year financial report is to be read in conjunction with the 30 June 2005 Annual Financial Report and any public announcements by Australian Mining Investments Limited and its Controlled Entities during the half-year in accordance with the continuous disclosure obligations arising under the Corporations Act It has been prepared on the basis of historical costs and, except where stated, does not take into account changing money values or fair values of non-current assets. The half-year report does not include full note disclosures of the type normally included in an annual financial report. The same accounting policies and methods of computation have generally been followed in this interim financial report as compared with the most recent annual financial report. AASB 134: Interim Financial Reporting generally only requires disclosure of accounting policies that have changed from those used in the prior annual reporting period. However, as this is the first published financial report prepared in compliance with Australian equivalents to IFRS (AIFRSs), all applicable accounting policies have been noted below, with reference to where these have changed from the prior annual period. Converting to AIFRS has not resulted in any changes to what has previously been reported. Going Concern The financial report has been prepared on the going concern basis, which contemplates continuity of normal business activities and the realisation of assets and liabilities in the normal course of business. The ability of the entity to continue to pay its debts as and when they fall due is dependent upon the Company being able to operate its copper sulphate plant at intended levels, to generate sufficient revenues and, when required, raise sufficient capital to meet any short fall in operating cashflows. Having regard to the consolidated entity s current financial position, likely trading conditions and the completion of the recent capital raising, the directors believe the going concern basis of preparation is appropriate. In the event that the consolidated entity is unable to continue as a going concern, it may be required to realise its assets at amounts different to those currently recognised, settle liabilities other than in the ordinary course of business and make provisions for other costs which may arise as a result of cessation or curtailment of normal business operations. Principles of consolidation The consolidated financial report comprises the financial statements of Australian Mining Investments Limited and its controlled entities. A controlled entity is any entity controlled by Australian Mining Investments Limited whereby Australian Mining Investments Limited has the power to control the financial and operating policies of an entity so as to obtain benefits from its activities. 9

11 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the half-year ended 31 December 2005 (continued) 1. Statement of significant accounting policies (continued) The financial statements of controlled entities are prepared for the same reporting period as the parent company, using consistent accounting policies. Accounting policies of controlled entities have been changed where necessary to ensure consistencies with those policies applied by the parent entity. All inter-company balances and transactions between entities in the consolidated entity, including any unrealised profits or losses, have been eliminated on consolidation. Where controlled entities have entered or left the consolidated entity during the year, their operating results have been included/excluded from the date control was obtained or until the date control ceased. Income tax The income tax expense is based on the profit for the year adjusted for any non-assessable or disallowed items. It is calculated using tax rates that have been enacted or are substantively enacted by the balance sheet 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. Property, plant and equipment Each class of property, plant and equipment is carried at cost less, where applicable, any accumulated depreciation and impairment losses. Plant and equipment Plant and equipment are measured on the cost basis less depreciation and impairment losses. The cost of fixed assets constructed within the economic entity includes the cost of materials, direct labour, borrowing costs and an appropriate proportion of fixed and variable overheads. 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. 10

12 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the half-year ended 31 December 2005 (continued) 1. Statement of significant accounting policies (continued) Impairment Carrying values of assets are reviewed at each balance date to determine whether there are any objective indicators of impairment that may indicate the carrying values may not be recoverable in whole or in part. Where an asset does not generate cash flows that are largely independent it is assigned to a cash generating unit and the recoverable amount test applied to the cash generating unit as a whole. Recoverable amount is determined as the greater of fair value less costs to sell and value in use. The assessment of value in use considers the present value of future cash flows discounted using an appropriate pre-tax discount rate reflecting the current market assessments of the time value of money and risks specific to the asset. If the carrying value of the asset is determined to be in excess of its recoverable amount, the asset or cash generating unit is written down to its recoverable amount. 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 consolidated 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. Estimated useful lives of between three and ten years have been used in the calculation of depreciation for plant and equipment. The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. 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. Exploration and Evaluation Expenditure Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that the consolidated entity s rights of tenure to that area of interest are current and that the costs 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 profit 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. 11

13 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the half-year ended 31 December 2005 (continued) 1. Statement of significant accounting policies (continued) Recoverable amount of assets and impairment testing The consolidated entity assesses at each reporting date whether any objective indications of impairment are present. Where such an indicator exists, a formal assessment of recoverable amount is then made and where this is in excess of carrying amount, the asset is written down to its recoverable amount. Recoverable amount is the greater of fair value less costs to sell and value in use. Value in use is the present value of the future cash flows expected to be derived from the asset or cash generating unit. In estimating value in use, a pre-tax discount rate is used which reflects current market assessments of the time value of money and the risks specific to the asset. Any resulting impairment loss is recognised immediately in the income statement unless it reverses a previous impairment loss that was recognised in prior periods in the income statement. Employee benefits Provision for Employee Benefits Provision is made for the consolidated entity 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. Share-Based Payments The Company provides benefits to directors, executives and employees of the economic entity in the form of share-based payment transactions, whereby directors, executives and employees render services in exchange for options to purchase shares in the company. The cost of these share-based payment transactions is measured by reference to the fair value at the date at which they are granted. Fair values at grant date are determined using a binomial option pricing model that takes into account the exercise price, the life of the option, the current price of the underlying instrument, the price volatility of the underlying instrument, the expected dividend yield, and the risk-free interest rate for the life of the option. The assessed fair value at grant date is recognised as an expense in the income statement, together with a corresponding increase in equity, pro rata over the life of the option from grant date to expected vesting date. Upon exercise of the options, the balance in the options reserve is transferred to contributed equity. The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of the diluted earnings per share. The Company has applied the requirements of AASB 1 in respect of share-based payment transactions and has applied AASB 2 Share-Based Payments only to equity instruments granted after 7 November 2002 that had not vested on or before 1 January Provisions Provisions are recognised when the consolidated entity 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. 12

14 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the half-year ended 31 December 2005 (continued) 1. Statement of significant accounting policies (continued) 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. Bank overdrafts are shown within short-term borrowings in current liabilities on the balance sheet. Revenue Revenue is recognised to the extent that it is probable that the economic benefits will flow to the consolidated entity and the revenue is capable of being reliably measured. Revenue from the sale of goods is recognised upon the delivery of goods to customers. Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets. Revenue from the rendering of a service is recognised upon the delivery of the service to the customers. All revenue is stated net of the amount of goods and services tax (GST). 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 cash flow statement on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows. Comparative figures When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. (b) AASB 1 Transitional Exemptions The consolidated entity has made its election in relation to the transitional exemptions allowed by AASB 1 First-time Adoption of Australian Equivalents to International Financial Reporting Standards as follows: Business Combinations AASB 3 Business Combinations was not applied retrospectively to past business combinations (i.e. business combinations occurring prior to the date of transition to AIFRS). Share based payment transactions AASB 2 Shared-Based Payment is applied only to equity instruments granted after 7 November 2002 that had not vested on or before 1 January

15 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the half-year ended 31 December 2005 (Continued) 2. Individually Significant Items Consolidated 31 Dec 31 Dec $ $ Individually significant items included in the loss from ordinary activities before income tax: - Brokerage cost - (137,500) - Borrowing costs (146,130) (27,104) - Research and development tax concession 438, Non-cash financing and investing activities The Company issued 1,000,000 ordinary shares at $0.15 each as part consideration for the purchase of mining leases. 4. Inventory A portion of inventory has been reclassified as a non-current asset due to the length of time the ore remains leaching in the vats before it is processed into a saleable form. The prior year comparatives have also been adjusted. 5. Contributed equity Issued and paid-up share capital Consolidated 31 Dec Jun 2005 $ $ 44,809,568 (June 2005: 346,736,834) ordinary shares, fully paid 27,538,594 25,791,110 (a) Ordinary shares Balance at beginning of period 25,791,110 24,175,711 Shares issued: 22,750,000 for cash from share placement issue - 910,000 9,000,000 for cash from share placement issue - 360,000 16,400,000 for cash from share placement issue - 410,000 2,002,500 for convertible notes redeemed 445,000-3,667,605 for cash from share placement issue 586,817-3 for cash from conversion of options 3-2,865,921 for cash from share placement 501,536-1,000,000 for purchase of mineral properties 150, ,000 for cash from placement issue 105,000 - Transaction costs from capital raisings (40,872) (64,601) Balance at end of period 27,538,594 25,791,110 14

16 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the half-year ended 31 December 2005 (Continued) 5. Contributed equity (continued) (b) Share Options Options to take up ordinary shares in the capital of the Company have been granted as follows: Exercise Period Exercise Price Opening Balance 1 July 2005 Post Consolidation 20 July 2005 Options Issued 2005 Options Converted 2005 Closing Balance 31 Dec 2005 Number Number Number Number Number On or before 31 July 2006 $ ,420,513 7,641,997 - (3) 7,641,994 On or before 30 June 2008 $ ,595,998-33,595,998 15/12/ /12/2008 $ , ,000 76,420,513 7,641,997 34,495,998 (3) 42,137,992 On 20 July 2005 shareholders approved a 1 for 10 capital consolidation; consequently the exercise price increased to $1 each (previously 10 cents) for the options expiring on 31 July Segment Reporting Mineral Exploration & Production Technology Consolidated Mine Development $ $ $ $ $ $ $ $ Business Segments Segment revenue - 26, , , ,032 26,400 Other unallocated revenue 20,360 11, ,392 38,200 Segment result (66,873) (12,155) (89,177) - 372, ,491 (12,645) Unallocated expenses (net) (459,568) (637,963) Net loss (243,077) (650,608) Depreciation (41,380) (79,759) (133,293) (174,673) (79,759) Unallocated (18,248) (3,292) (192,921) (83,051) Segment assets 3,437,065 3,227,814 4,919, ,628 2,536,885 8,611,552 5,764,699 Unallocated assets 1,306, ,484 Consolidated total assets 9,917,621 6,227,183 Segment liabilities 108, , ,804-42, , ,083 Unallocated liabilities 2,145, ,099 Consolidated total liabilities 2,567, ,182 Geographical segments all geographical segments are within Australia. 15

17 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the half-year ended 31 December 2005 (Continued) 7. Events Subsequent To Balance Date On 14 February 2006 the Company issued a prospectus offering 6,500,000 fully paid shares and 6,500,000 free attaching options to raise up to $1,625,000. In general, these funds, net of expenses of the issue, will be used for exploration and drilling on various mining leases and exploration permits owned by Australian Mining Investments Ltd. The prospectus was heavily oversubscribed and the Board of Directors allotted the securities on 28 February

18 DIRECTORS' DECLARATION In the opinion of the directors of Australian Mining Investments Limited: 1. the financial statements and notes set out on pages 5 to 16, are in accordance with the Corporations Act 2001, including: (a) giving a true and fair view of the financial position of the consolidated entity as at 31 December 2005 and of its performance, as represented by the results of its operations and its cash flows for the half-year ended on that date; and (b) complying with Accounting Standard AASB 134: Interim Financial Reporting and the Corporations Regulations 2001; and 2. there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. Signed in accordance with a resolution of the directors. W McCrae Director 16th March

19 INDEPENDENT REVIEW REPORT TO THE MEMBERS OF AUSTRALIAN MINING INVESTMENTS LIMITED Scope We have reviewed the financial report comprising the Income Statement, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement, accompanying notes and Director s Declaration of Australian Mining Investments Limited for the half-year ended 31 December The Company s directors are responsible for the financial report. We have performed an independent review of the financial report in order to state whether, on the basis of the procedures described, anything has come to our attention that would indicate that the Financial Report is not presented fairly in accordance with Accounting Standard AASB 134: Interim Financial Reporting, other mandatory professional reporting requirements in Australia and statutory requirements, so as to present a view which is consistent with our understanding of the Company s financial position, and performance as represented by the results of its operations and its cash flows, and in order for the Company to lodge the financial report with the Australian Securities & Investments Commission. Our review has been conducted in accordance with Australian Auditing Standards applicable to review engagements. A review is limited primarily to inquiries of the Company s personnel and analytical procedures applied to the financial data. These procedures do not provide all the evidence that would be required in an audit, thus the level of assurance provided is less than given in an audit. We have not performed an audit and, accordingly, we do not express an audit opinion. Independence In conducting our review, we followed applicable independence requirements of Australian professional pronouncements and the Corporations Act The independence declaration given to the directors in accordance with section 307C would be in the same terms if it had been given at the date of this report. Statement Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Australian Mining Investments Limited is not in accordance with: (a) the Corporations Act 2001, including: (a) giving a true and fair value of the Company s financial position as at 31 December 2005 and of its performance for the half-year ended on that date; and (b) (b) complying with Accounting Standard AASB 134: Interim Financial Reporting and the Corporations Regulations 2001; and other mandatory professional reporting requirements in Australia. 18

20 Emphasis of Matter Regarding Going Concern Without qualification to the statement expressed above, attention is drawn to the following matter. As set out in Note 1, the financial statements have been prepared on a going concern basis. The ability of the entity to continue to meet its debts as and when they fall due is dependent upon the Company being able to operate its copper sulphate plant at intended levels, to generate sufficient revenues and, when required, raise sufficient capital to meet any short fall in operating cashflows. No adjustments have been made to the carrying value of the assets and liabilities should the Company s plans not eventuate. BDO Kendalls Chartered Accountants C J SKELTON Partner Brisbane Dated: 16 March