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1 ABN Financial statements for the half year ended 30 June 2011

2 Corporate directory Corporate directory Board of Directors Mr Murray McDonald Mr Ian Cowden Ms Emma Gilbert Company Secretary Mr Frank Campagna Registered Office 13 Colin Street West Perth WA 6005 Principal Office 13 Colin Street West Perth WA 6005 Auditor Stantons International Level 1, 1 Havelock Street West Perth WA 6005 Executive Director and Chairman Non Executive Director Non Executive Director Share Registry Advanced Share Registry Services Pty Ltd 150 Stirling Highway Nedlands WA 6009 Stock Exchange Listing Australian Securities Exchange (Home Exchange: Perth, Western Australia) Code: GTR Website

3 Contents Financial statements for the half year ended 30 June 2011 Page Directors report 1 Auditor s independence declaration 4 Independent review report 5 Directors declaration 7 Condensed statement of comprehensive income 8 Condensed statement of financial position 9 Condensed statement of changes in equity 10 Condensed statement of cash flows 11 Notes to the condensed financial statements 12

4 Directors report Directors report The Directors of (Company) submit herewith the financial statement for the half year ended 30 June In order to comply with the provisions of the Corporations Act 2001, the Directors report as follows: Name of directors The names of the Directors of the Company who have held office during and since the end of the half year and up until the date of this report are: Murray McDonald Executive Chairman Ian Cowden Non Executive Director Emma Gilbert Non Executive Director Review of operations GTI is seeking to add significant value to the Company by pursuing an acquisition strategy aimed primarily at identifying advanced projects in a number of targeted overseas countries. In addition, exploration of GTI s existing projects in Western Australia has continued and new tenure at a grass roots exploration stage has been both applied for and granted during the reporting period. SILVER-LEAD MINERALISATION SILVER KING MINE International project evaluation The exploration team has continued its efforts in identification and evaluation of advanced project opportunities for potential acquisition, with a focus on gold, copper, iron ore, coal and nickel. A number of other mineral projects perceived to have suitable economic potential have also been investigated. The Company has been active particularly in the Asia Pacific region, but continues to search world wide for projects with favourable technical and commercial aspects

5 Directors report In the first half of 2011, a number of significant opportunities were subjected to detailed evaluation. However, the Company has not yet been successful in securing a suitable project. Shareholders and the market will be informed when negotiations on any acquisition progress past the preliminary phase. Western Australian projects GTI s portfolio of gold, silver, base metal and uranium projects in Western Australia was expanded during The Company s minority interest in Yangibana was sold to an overseas company, with a retained royalty. At Silver King (GTI 100%) an additional exploration licence was granted, more than doubling the exploration area, and a further licence is awaiting approval. Results from multi element geochemical sampling are pending, and exploration is continuing. Old mine workings at Silver King 38,927 ounces of silver production Silver, copper, lead and zinc occurrences are widespread within the project area, with historical shallow workings on many small higher grade concentrations. GTI s exploration objective is evaluate the overall mineralisation setting, investigate metal zoning patterns and to identify larger potential targets for drill evaluation. Exploration at Bali Hi (GTI 20%) tested a 4km strike length with reconnaissance mapping and an initial rock sampling programme. Potentially economic grades of copper and silver were returned from 62 selected mineralised samples, with best results >10% Cu reported by the JV operator as follows: 12% Cu, 746g/t Ag (BH122) 12% Cu, 14g/t Ag (BH129) 12% Cu, 11g/t Ag (BH156) 33% Cu, 259g/t Ag (BH159) 14% Cu, 75g/t Ag (BH160) Further work is planned during the remainder of At Henry River (GTI 100%) an exploration licence has recently been granted over more than 64km 2 adjacent to the Cambridge Creek JV (GTI 30%). Field work has been planned to investigate potential base metal and uranium targets

6 Directors report Exploration tenure at Conical Hill (GTI 100%) was consolidated by application for a larger 111 block single licence, extending the area previously held under application by three separate EL s to more than 342km 2. GTI s minority interest in the Yangibana project was recently sold to an overseas company for 0.5 million cash, with a further payment of 0.5 million due after completion of a bankable feasibility study. GTI also retains a royalty interest of 1/tonne of ore mined within the project area. Auditor s independence declaration The auditor s independence declaration is included on page 4 and forms part of the Directors report for the half year ended 30 June Signed in accordance with a resolution of Directors made pursuant to s.306(3) of the Corporations Act On behalf of the Directors Murray McDonald Executive Chairman Perth, 04 August 2011 Competent Person: The contents of this report that relate to geology and exploration results are based on information compiled by consulting geologist Ian Cowden of Iana Pty Ltd, who is a Fellow of the Australasian Institute of Mining and Metallurgy, a Chartered Professional Geologist and a Member of the Australian Institute of Geoscientists. He has sufficient experience relevant to the styles of mineralisation and types of deposit under consideration and to the activity being undertaken to qualify as a Competent Person, as defined in the 2004 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Ian Cowden consents to the inclusion in this report of the matters compiled by him in the form and context in which they appear

7 Level 1, 1 Havelock St t: West Perth WA 6005 f: Australia PO Box 1908 w: West Perth WA 6872 e: info@stantons.com.au Australia Stantons International Audit and Consulting Pty Ltd (ABN ) trading as Chartered Accountants and Consultants 4 August 2011 Board of Directors GTI Resources Limited 13 Colin Street WEST PERTH WA 6005 Dear Directors RE: GTI RESOURCES LIMITED In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of GTI Resources Limited. As the Audit Director for the review of the financial statements of GTI Resources Limited for the half year ended 30 June 2011, I declare that to the best of my knowledge and belief, there have been no contraventions of: (i) (ii) the auditor independence requirements of the Corporations Act 2001 in relation to the review; and any applicable code of professional conduct in relation to the review. Yours sincerely STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD (Trading as Stantons International) (An Authorised Audit Company) J P Van Dieren Director Liability limited by a scheme approved under Professional Standards Legislation 4

8 Level 1, 1 Havelock St t: West Perth WA 6005 f: Australia PO Box 1908 w: West Perth WA 6872 e: info@stantons.com.au Australia Stantons International Audit and Consulting Pty Ltd (ABN ) trading as Chartered Accountants and Consultants Report on the Half-Year Financial Report INDEPENDENT AUDITOR S REVIEW REPORT TO THE MEMBERS OF GTI RESOURCES LIMITED We have reviewed the accompanying half-year financial report of GTI Resources Limited, which comprises the condensed statement of financial position as at 30 June 2011, the condensed statement of comprehensive income, condensed statement of changes in equity, and condensed statement of cash flows for the half-year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information, and the directors declaration. Directors Responsibility for the Half-Year Financial Report The directors of GTI Resources Limited are responsible for the preparation and fair presentation of the half-year financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001 and for such control as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standards on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the Company s financial position as at 30 June 2011 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations As the auditor of GTI Resources Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report. A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Whilst we considered the effectiveness of management s internal controls over financial reporting when determining the nature and extent of our procedures, our review was not designed to provide assurance on internal controls. Our review did not involve an analysis of the prudence of business decisions made by the directors or management. Liability limited by a scheme approved under Professional Standards Legislation 5

9 Independence In conducting our review, we have complied with the independence requirements of the Corporations Act We confirm that the independence declaration required by the Corporations Act 2001, has been provided to the directors of GTI Resources Limited on 4 August Conclusion 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 GTI Resources Limited is not in accordance with the Corporations Act 2001 including: (a) (b) giving a true and fair view of the Company s financial position as at 30 June 2011 and of its performance for the half-year ended on that date; and complying with Accounting Standards AASB 134 Interim Financial Reporting and Corporations Regulations STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD (Trading as Stantons International) (An Authorised Audit Company) John P Van Dieren Director West Perth, Western Australia 4 August

10 Directors declaration Directors declaration The Directors declare that: (a) (b) in the Directors opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; and in the Directors opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001, including compliance with accounting standards and giving a true and fair view of the financial position and performance of the Company. Signed in accordance with a resolution of the Directors made pursuant to s.303(5) of the Corporations Act On behalf of the Directors Murray McDonald Executive Chairman Perth, 04 August

11 Condensed statement of comprehensive income Condensed statement of comprehensive income for the half year ended 30 June 2011 Note 30 June June 2010 Revenue 2 482,809 28,521 Employee benefits expense (109,440) (99,249) Exploration expenditure expensed as incurred (48,144) (49,064) Project generation expenditure (175,217) (200,225) Administration expenses 3 (39,514) (35,519) Corporate expenses (34,890) (33,562) Occupancy expenses (35,706) (35,370) Profit/(Loss) before income tax expense 39,898 (424,468) Income tax expense Profit/ (Loss) for the period 39,898 (424,468) Other comprehensive income Net gain/(loss) on revaluation of available for sale financial assets at fair value 231,061 (108,274) Total comprehensive income/(loss) for the period 270,959 (532,742) Loss per share: Basic and diluted (cents per share) 0.10 (1.12) The accompanying notes form part of these financial statements. 8

12 Condensed statement of financial position Condensed statement of financial position as at 30 June June Dec 2010 Note Current assets Cash and cash equivalents 1,032, ,012 Trade and other receivables 16,734 19,617 Total current assets 1,049, ,629 Non current assets Trade and other receivables 1,063 1,063 Property, plant and equipment 28,247 24,795 Exploration, evaluation and development 85, ,679 Other financial assets 535, ,994 Total non current assets 650, ,531 Total assets 1,699,475 1,433,160 Current liabilities Trade and other payables 44,226 62,811 Provisions 44,015 30,074 Total current liabilities 88,241 92,885 Total liabilities 88,241 92,885 Net assets 1,611,234 1,340,275 Equity Issued capital 4,809,720 4,809,720 Reserves 479, ,415 Accumulated losses (3,677,962) (3,717,860) Total equity 1,611,234 1,340,275 The accompanying notes form part of these financial statements. 9

13 Condensed statement of changes in equity Condensed statement of changes in equity for the half year ended 30 June 2011 Attributable to Owners Ordinary shares Equity settled employee benefits reserve Investment revaluation reserve Accumulated losses Total equity Balance at 1 January ,809, ,377 24,000 (2,734,304) 2,307,793 Loss for the period (424,468) (424,468) Other comprehensive income Net change in fair value of available for sale financial assets (108,274) (108,274) Total other comprehensive income (108,274) (108,274) Total comprehensive income/(loss) for the period (108,274) (424,468) (532,742) Recognition of share based payments 1,659 1,659 Share issue expenses Balance at 30 June ,809, ,036 (84,274) (3,158,772) 1,776,710 Balance at 1 January ,809, ,036 38,379 (3,717,860) 1,340,275 Profit for the period 39,898 39,898 Other comprehensive income Net change in fair value of available for sale financial assets 231, ,061 Total other comprehensive income/(loss) 231, ,061 Total comprehensive income for the period 231,061 39, ,959 Recognition of share based payments Share issue expenses Balance at 30 June ,809, , ,440 (3,677,962) 1,611,234 The accompanying notes form part of these financial statements. 10

14 Condensed statement of cash flows Condensed statement of cash flows for the half year ended 30 June 2011 Cash flows from operating activities 30 June June 2010 Interest received 16,589 28,521 Payments to suppliers, employees and for exploration activities (441,240) (469,435) Net cash used in operating activities (424,651) (440,914) Cash flows from investing activities Payment for property, plant and equipment (6,885) (1,590) Payment for exploration and evaluation (14,034) Payment for financial assets (49,114) Proceeds from sale of interest in exploration project 500,000 Net cash from (used in) investing activities 493,115 (64,738) Cash flows from financing activities Net increase/( decrease) in cash and cash equivalents 68,464 (505,652) Cash and cash equivalents at the beginning of the half year 964,012 1,885,225 Cash and cash equivalents at the end of the half year 1,032,476 1,379,573 The accompanying notes form part of these financial statements. 11

15 Notes to the condensed financial statements Notes to the condensed financial statements for the half year ended 30 June Accounting policies Statement of compliance The financial statements for the interim half year reporting period ended 30 June 2011 are a general purpose financial statement prepared in accordance with the requirements of the Corporations Act 2001 and Australian Accounting Standards including AASB 134: Interim Financial Reporting. Compliance with Australian Accounting Standards ensures that the financial statements and notes comply with International Financial Reporting Standards ( IFRS ). The half year financial statements do not include full disclosures of the type normally included in an annual financial statement. Therefore, it cannot be expected to provide as full an understanding of the financial performance, financial position and cash flows of the Company as in the full financial statement. It is recommended that these financial statements be read in conjunction with the annual financial statements for the year ended 31 December 2010 and any public announcements made by GTI Resources Ltd during the half year in accordance with continuous disclosure requirements arising under the Corporations Act 2001 and the ASX Listing Rules. Basis of preparation The financial statements have been prepared on the basis of historical cost, except for the revaluation of certain financial instruments. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in Australian dollars, unless otherwise noted. The accounting policies and methods of computation adopted in the preparation of the half year financial statement are consistent with those adopted and disclosed in the Company s most recent annual financial statement except for the adoption of the following new and revised Accounting Standards. Adoption of new and revised accounting standards The Company has adopted all new and revised Australian Accounting Standards issued by the AASB which are mandatory to apply to the current interim period. Disclosures required by these Standards that are deemed material have been included in the financial statements on the basis that they represent a significant change in information from that previously made available and are detailed below. New Accounting Standards and Interpretations The following new standards and amendments to standards are mandatory for the financial year beginning 1 July AASB Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project (AASB 5, 8, 101, 107, 117, 118, 136, and 139) AASB Amendments to Australian Accounting Standards arising from the Annual Improvements Project (AASB 3, 7, 121, 128, 131, 132 and 139) AASB Interpretation 19 Extinguishing Financial Liabilities with Equity Instruments and AASB Amendments to Australian Accounting Standards arising from Interpretation 19. The adoption of these standards did not have any impact in the current period or any prior period and is unlikely to affect future periods. New Accounting Standards and Interpretations that are not yet mandatory Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2011 reporting periods. The Company s assessment of the impact of these new standards and interpretations is set out below. 12

16 Notes to the condensed financial statements (i) AASB 9 Financial Instruments, AASB Amendments to Australian Accounting Standards arising from AASB 9 and AASB Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) (effective from 1 January 2013) AASB 9 Financial Instruments addresses the classification, measurement and derecognition of financial assets and financial liabilities. The standard is not applicable until 1 January 2013 but is available for early adoption. When adopted, the standard is not expected to impact on the Company s accounting for financial assets as it does not have any available for sale assets other than equity investments. There will be no impact on the company's accounting for financial liabilities, as the new requirements only affect the accounting for financial liabilities that are designated at fair value through profit or loss and the company does not have any such liabilities. The Company s has decided not to early adopt AASB 9. (ii) Revised AASB 124 Related Party Disclosures and AASB Amendments to Australian Accounting Standards (effective from 1 January 2011) In December 2009 the AASB issued a revised AASB 124 Related Party Disclosures. It is effective for accounting periods beginning on or after 1 January 2011 and must be applied retrospectively. The amendment clarifies and simplifies the definition of a related party. The Company will apply the amended standard from 1 July When the amendments are applied, the Company will need to disclose any transactions between its subsidiaries and its associates. However, there will be no impact on any of the amounts recognised in the financial statements. (iii) AASB 1053 Application of Tiers of Australian Accounting Standards and AASB Amendments to Australian Accounting Standards arising from Reduced Disclosure Requirements (effective from 1 July 2013) On 30 June 2010 the AASB officially introduced a revised differential reporting framework in Australia. Under this framework, a two tier differential reporting regime applies to all entities that prepare general purpose financial statements. GTI Resources Limited is listed on the ASX and is not eligible to adopt the new Australian Accounting Standards Reduced Disclosure Requirements. The two standards will therefore have no impact on the financial statements of the entity. New and revised Standards and Interpretations issued but not yet applicable are not expected to have a significant impact on the financial position or performance of the Company. Significant accounting judgements and key estimates The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expense. Actual results may differ from these estimates. In preparing this half year s financial statements, the significant judgements made by management in applying the Company s accounting policies and the key sources of estimation were the same as those that applied to the financial statements for the year ended 31 December Revenue Interest revenue 16,589 28,521 Gain on sale of tenements 466,220 Total 482,809 28,521 Gain in sale of tenements comprises: Sales proceeds 500,000 Carrying value of tenements sold (33,780) Gain 466,220 13

17 Notes to the condensed financial statements 3. Expenses The following expense items are included in the financial performance for the half year: Depreciation 3,433 3,969 Share based payments 1, Issued capital 30 June 2011 Fully paid ordinary shares No. Balance at 1 January ,000,003 4,809,720 Share issue costs Balance at 30 June ,000,003 4,809, Segment information The Company operates predominately in one geographical segment, being Western Australia, and in one industry, mineral exploration. 6. Contingent liabilities The Company has no contingent liabilities at the date of this report. 7. Related parties Arrangements with related parties continue to be in place. For details of these arrangements, please refer to the 31 December 2010 annual financial report. Key management personnel continue to receive compensation in the form of short term employee benefits, post employment benefits and share based payments. 8. Subsidiaries The Company has a 100% interest in GTI (Australia) Pty Ltd, a company incorporated in Australia with share capital of The Company also has a 75% interest in PT GTRI Mining, a company incorporated in Indonesia. Both GTI (Australia) Pty Ltd and PT GTRI have been dormant since incorporation. As the subsidiaries have no assets or liabilities, consolidated financial statements have not been prepared. 9. Events subsequent to reporting date No material subsequent events have occurred between 1 July 2011 and the date of this report. 14