ROX RESOURCES LIMITED ABN REPORT FOR THE HALF-YEAR ENDED 31 DECEMBER 2005

Transcription

1 REPORT FOR THE HALF-YEAR ENDED 31 DECEMBER 2005

2 Contents Half-Year Report Page No. Directors Report 1 Financial Statements 6 Declaration by Directors 18 Independent Review Report 19 i

3 DIRECTORS REPORT FOR THE HALF-YEAR ENDED 31 DECEMBER 2005 Your directors submit the financial report of the Company for the half-year ended 31 December DIRECTORS The names of the Company s directors in office during the financial period and until the date of this report are: Dr Alistair Cowden Mr Michael Blakiston Mr Ian Mulholland Directors have been in office since the start of the financial period to the date of the report unless otherwise stated. REVIEW OF OPERATIONS The loss for the half-year ended 31 December 2005 was $1,119,026. Introduction During 2005, Rox added two new projects to its portfolio. In Laos, a joint-venture was formed with local Lao company, First Pacific Mining, to acquire a 60% interest in the sulphide portion of the Pha Luang lead-zinc-silver project. In South Africa, Rox acquired the interests of private South African diamond exploration company Nyala Resources and has added a number of kimberlite projects since. Initial diamond drilling in Laos during 2005 produced encouraging results, with a best intercepts of 17.5 metres grading 18.5% zinc, 5.3% lead and 28 g/t silver; and 4.3 metres grading 45.9% zinc, 6.6% lead and 30 g/t silver. A RC drilling campaign is planned to further test several targets. During 2005 in South Africa, a portfolio of kimberlite projects was added to the alluvial projects owned by Nyala and bulk sampling of one of these was undertaken. An agreement with De Beers made during the December quarter gives Rox access to a highly prospective area, with two diamond-bearing kimberlites already known. Further evaluation of these kimberlite projects and drilling on the alluvial projects is planned. RRL-HalfYearly-Dec05.doc 1

4 Laos - Zinc Geological mapping, sampling and prospecting work has been undertaken at the Nam Yen, Bon Noi and Pha Daeng prospects (Figure 1) in preparation for RC drilling. This work has also resulted in the discovery of a number of new lead-zinc oxide outcrops (assays pending), and the confirmation of the prospectivity of additional known but previously unsampled oxide occurrences at Pha Sod and Pha Jom. Remote Sensing and New Pegging A remote sensing study was undertaken by Remote Sensing and Geological Services and covered the Pha Luang Mining Concession area, plus the surrounding region for about 25 km. Four distinct units of carbonate rocks occur in the region, which have the potential to host lead-zinc mineralisation. The oxide deposits at Pha Luang lie within one of these carbonate units and show correlation with well-developed east-trending and north-trending structures. As a result of this work two new exploration areas covering 527km 2 have been applied for, though there is no certainty the application will be successful. Figure 1: Pha Luang Project Prospect Locations Figure 2: Pha Luang area showing new pegging RRL-HalfYearly-Dec05.doc 2

5 South Africa - Diamonds Cyrus Kimberlite Project As reported on 21 December 2005, approximately 1,900 tonnes were treated from five pits across the main Cyrus kimberlite pipe. A total of carats from 30 diamonds were recovered giving an overall grade of 1.04 cpht and an average stone size of 0.65 carat. Independent valuation by the South African Diamond Board s Government Diamond Valuer yielded an average price of US$90/carat. The largest individual diamond recovered was 4.3 carats. The bulk sample was processed through a rotary pan plant, owned and operated by a local contractor. The concentrate was passed over a grease table twice and then through an X-ray flow sort machine. Density tracers were also inserted at regular intervals into the treatment plant to test rotary pan efficiency and 99% recovery rate was achieved. While the results indicate that Cyrus may be uneconomic, there are other kimberlites within the diamond-bearing cluster on the Cyrus property that warrant further exploration. Zoutpansfontein and Langleg Kimberlite Projects A data licensing agreement was signed with De Beers which allows Rox to acquire an exclusive licence to use De Beers exploration data over a 38 square kilometre area near Kimberley over which Rox will have tenure. Once fully evaluated, the data can also be used to acquire further tenements in the area. The Zoutpansfontein project area hosts a 2-5 hectare kimberlite pipe with a fissure extension and a number of unresolved magnetic anomalies. The pipe is rich in diamond-indicator (G10) garnets and has produced micro-diamonds from drill sampling, but no bulk sampling has been undertaken. The Langleg project area hosts an 800 metre long, metre wide, diamond-bearing kimberlite dyke, that apart from limited drilling for micro-diamond analysis has not been fully evaluated or bulk sampled. All areas under consideration have been covered by an airborne magnetic survey at 250 metre line spacing and a helicopter-borne EM survey at 125 metre line spacing. The area covered by the agreement (Zoutpansfontein, Langleg and Droogfontein) has a number of unresolved geophysical targets in favourable structural settings. These geophysical anomalies need to be tested for kimberlite and their diamond potential. Alluvial Projects The Vlakfontein Prospecting Right was granted on 9 November A RAB drilling program at Vlakfontein is scheduled for February This drilling will test the RRL-HalfYearly-Dec05.doc 3

6 hypothesis that diamonds from the rich Jagersfontein diamond pipe have been eroded and deposited in the Vlakfontein area. The grant of the Pampoene Pan prospecting right is expected in the first quarter of Menzies Figure 3: Vaal Kimberlite Project With the rapid rise in the gold price over the last 3 months from A$550/oz to over A$720/oz the Company is reviewing options to realise value from this project. RRL-HalfYearly-Dec05.doc 4

7 AUDITORS INDEPENDENCE DECLARATION Section 307C of the Corporations Act 2001 requires our auditors, Ernst & Young, to provide the directors of Rox Resources Limited with an Independence Declaration in relation to the review of the half-year financial report. This Independence Declaration is attached to the Independent Review Report to Members. Signed in accordance with a resolution of the Directors. M BLAKISTON Director Perth, Western Australia Dated this 3 rd day of March 2006 RRL-HalfYearly-Dec05.doc 5

8 CONDENSED INCOME STATEMENT FOR THE HALF-YEAR ENDED 31 DECEMBER 2005 Note 31 December 2005 ($) 31 December 2004 ($) Revenue from continuing operations 2(a) 45,362 73,095 Other income 2(b) Depreciation and amortisation expense 2(c) (3,690) (3,185) Other expenses 2(d) (1,160,698) (289,492) Loss from continuing operations before (1,119,026) (219,082) income tax expense Income tax expense - - Loss from continuing operations after related income tax expense (1,119,026) (219,082) Net Loss attributable to members (1,119,026) (219,082) Basic loss per share (cents per share) (3.4) (0.7) Diluted loss per share (cents per share) (3.4) (0.7) RRL-HalfYearly-Dec05.doc 6

9 CONDENSED STATEMENT OF CHANGES IN EQUITY FOR THE HALF-YEAR ENDED 31 DECEMBER 2005 Issued Share Capital ($) Accumulated (Losses) ($) Total ($) Balance at 1 July ,626,327 (64,431) 4,561,896 Total income/expense recognised directly in equity (Loss) for period - (219,083) (219,083) Total recognised income and expense for the period - (219,083) (219,083) Shares issued during the period Balance as at 31 December ,626,327 (283,514) 4,342,813 Balance as at 1 July ,626,327 (1,653,516) 2,972,811 Total income/expense recognised directly in equity Loss for the period - (1,119,026) (1,119,026) Total recognised income and expense for the period - (1,119,026) (1,119,026) Shares issued during the period 1,000,000-1,000,000 Capital raising costs (65,000) - (65,000) Balance as at 31 December ,561,327 (2,772,542) 2,788,785 The accompanying Statement of Changes in Equity should be read in conjunction with the accompanying notes. RRL-HalfYearly-Dec05.doc 7

10 CONDENSED BALANCE SHEET AS AT 31 DECEMBER December 2005 ($) 30 June 2005 ($) CURRENT ASSETS Cash Assets 1,747,119 1,891,384 Trade and other receivable 14,825 - Other 16,283 1,159 TOTAL CURRENT ASSETS 1,778,227 1,892,543 NON-CURRENT ASSETS Other financial assets 104, ,500 Property, Plant & Equipment 12,722 16,412 Other - capitalised exploration expenditure 1,099,265 1,057,347 TOTAL NON-CURRENT ASSETS 1,216,487 1,178,259 TOTAL ASSETS 2,994,714 3,070,802 CURRENT LIABILITIES Trade and other payables 197,461 88,111 Provisions 8,468 9,880 TOTAL CURRENT LIABILITIES 205,929 97,991 TOTAL LIABILITIES 205,929 97,991 NET ASSETS 2,788,785 2,972,811 EQUITY Issued capital 5,561,327 4,626,327 Accumulated losses (2,772,542) (1,653,516) TOTAL EQUITY 2,788,785 2,972,811, RRL-HalfYearly-Dec05.doc 8

11 CONDENSED CASH FLOW STATEMENT FOR THE HALF-YEAR ENDED 31 DECEMBER December 2005 $ 31 December 2004 $ CASH FLOWS FROM OPERATING ACTIVITIES Payments to suppliers and employees (409,163) (254,205) Interest received 45,362 73,095 Payments for exploration (780,464) (569,975) Net cash used in operating activities (1,144,265) (751,085) CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of non-current assets Purchase of non-current assets - (9,707) Net cash used in investing activities - (9,207) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares 1,000,000 - Security bonds paid - (104,500) Net cash provided by financing activities 1,000,000 (104,500) Net increase (decrease) in cash held (144,265) (864,792) Cash at 1 July 1,891,384 3,362,372 Cash at 31 December 1,747,119 2,497,580 RRL-HalfYearly-Dec05.doc 9

12 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2005 NOTE 1: BASIS OF PREPARATION OF THE HALF-YEAR FINANCIAL REPORT The half-year financial report does not include all notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the Company as the full financial report. The half-year financial report should be read in conjunction with the Annual Financial Report of Rox Resources Limited as at 30 June 2005, which was prepared based on Australian Accounting Standards applicable for financial years beginning before 1 January 2005 ( AGAAP ). It is also recommended that the half-year financial report be considered together with any public announcements made by Rox Resources Limited during the half-year ended 31 December 2005 in accordance with the continuous disclosure obligations arising under the Corporations Act (a) Basis of accounting The half-year financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, applicable Accounting Standards including AASB 134 Interim Financial Reporting and other mandatory professional reporting requirements. The half-year financial report has been prepared in accordance with the historical cost convention. For the purpose of preparing the half-year financial report, the half-year has been treated as a discrete reporting period. (b) Statement of compliance The half-year financial report complies with the Corporations Act 2001 and AASB 134 Interim Financial Reporting. Compliance with AASB 134 ensures that the half-year financial report, comprising the financial statements and notes thereto, complies with International Financial Reporting Standards IAS 34 Interim Financial Reporting. This is the first half half-year financial report prepared based on AIFRS and comparatives for the half-year ended 31 December 2004 and full-year ended 30 June 2005 have been restated accordingly. A summary of the significant accounting policies of the Group under AIFRS are disclosed in Note 1 (c) below. Reconciliations of: - AIFRS equity as at 1 July 2004, 31 December 2004 and 30 June 2005; and - AIFRS profit for the half-year 31 December 2004 and full year 30 June 2005, to the balances reported in the 31 December 2004 half-year report and 30 June 2005 full-year financial report prepared under AGAAP are detailed in Note 1 (e) below. (c) (i) Summary of significant accounting policies Cash and cash equivalents Cash and short-term deposits in the balance sheet comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less. For the purposes of the Cash Flow Statement, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts. RRL-HalfYearly-Dec05.doc 10

13 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2005 NOTE 1: BASIS OF PREPARATION OF THE HALF-YEAR FINANCIAL REPORT (Continued) (ii) Deferred Exploration and Evaluation Expenditure Costs arising from exploration and evaluation activities are carried forward provided such costs are expected to be recouped through successful development, or by sale, or where exploration and evaluation activities have not, at balance date, reached a stage to allow a reasonable assessment regarding the existence of economically recoverable reserves. Costs carried forward in respect of area of interest that is abandoned are written off in the year in which the decision to abandon is made. (iii) Trade and other payables Liabilities are carried at cost, which is the fair value of the consideration to be paid in the future for goods and services received whether or not billed. Payables to related parties are carried at the principal amount. (iv) Issued capital Ordinary share capital is recognised at the fair value of the consideration received by the Company. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received. (v) Income Tax Deferred income tax is provided on all temporary difference at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are recognised for all taxable temporary differences: except where the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and in respect of taxable temporary differences associated with investments in subsidiaries, associates and interest in joint ventures, except where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilised: except where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and in respect of deductible temporary differences associated with investments in subsidiaries, associates and interest in joint ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised. RRL-HalfYearly-Dec05.doc 11

14 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2005 NOTE 1: BASIS OF PREPARATION OF THE HALF-YEAR FINANCIAL REPORT (Continued) The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date. Income taxes relating to items recognised directly in equity are recognised in equity and not in the income statement. (vi) (vii) Trade and other receivables Trade receivables are recognised and carried at original invoice amount less a provision for any uncollectible debts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred. Plant and equipment All classes of plant and equipment are stated at cost less accumulated depreciation and any impairment in value. Depreciation Depreciation is provided on a straight-line basis on all plant and equipment. Major depreciation periods are: Computers 3 years 3 years Office Equipment 10 years 10 years Vehicles 10 years 10 years Impairment The carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets or cash-generating units are written down to their recoverable amount. The recoverable amount of plant and equipment is the greater of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Derecognition An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the income statement in the period the item is derecognised. RRL-HalfYearly-Dec05.doc 12

15 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2005 NOTE 1: BASIS OF PREPARATION OF THE HALF-YEAR FINANCIAL REPORT (Continued) (viii) Employee Benefits Provision is made for the employee benefits accumulated as a result of employees rendering services up to the reporting date. These benefits include wages and salaries, annual leave, sick leave and long service leave. Liabilities arising in respect of wages and salaries, annual leave, sick leave and other employee benefits expected to be settled within 12 months of the reporting date are measured at the nominal amounts based on remuneration rates which are expected to be paid when the liability is settled. All other employee benefit liabilities are measured at the present value of the estimated future cash outflow to be made in respect of services provided by employees up to the reporting date. In determining the present value of future cash outflows, the market yield as at the reporting date on national government bonds, which have terms to maturity approximating the terms of the related liability, are used. Employee benefit expenses and revenues arising in respect of the following categories: - Wages and salaries, non-monetary benefits, annual leave, long service leave, sick leave and other leave benefits; and - Other types of employee benefits are recognised against profits on a net basis in their respective categories. (ix) Revenue Recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the entity and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised: Interest Revenue is recognised as the interest accrues (using the effective interest method, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial instrument) to the net carrying amount of the financial asset. (x) Leases Leases are classified at the inception as either operating or finance leases, based on the economic substance of the agreement so as to reflect the risks and benefits incidental to ownership. Operating leases The minimum lease payments of operating leases, where the lessor effectively retains substantially all of the risks and benefits of ownership of the leased item, are recognised as an expense on a straightline basis. Contingent rentals are recognised as an expense in the financial year in which they are incurred. (xi) Recoverable Amount At each reporting date, the Company assesses whether there is any indication that an asset may be impaired. Where an indicator of impairment exists, the Company makes a formal estimate of recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount the asset is considered impaired and is written down to its recoverable amount. RRL-HalfYearly-Dec05.doc 13

16 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2005 NOTE 1: BASIS OF PREPARATION OF THE HALF-YEAR FINANCIAL REPORT (continued) Recoverable amount is the greater of fair value less costs to sell and value in use. It is determined for an individual asset, unless the asset s value in use cannot be estimated to be close to its fair value less costs to sell and it does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case, the recoverable amount is determined for the cashgenerating unit to which the asset belongs. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre tax discount rate that reflects current market assessments of the time value of money and the risk specific to the asset. (xii) Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of GST except: where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Balance Sheet. Cash flows are included in the Cash Flow Statement on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows. Commitments and contingencies are disclosed net to the amount of GST recoverable from, or payable to, the taxation authority. (xiii) (xiv) Earnings Per Share (i) Basic Earnings Per Share Basic earnings per share is determined by dividing the profit from ordinary activities after related income tax expense by the weighted average number of ordinary shares outstanding during the financial year. (ii) Diluted Earnings Per Share Diluted EPS is calculated as net profit attributable to members, adjusted for: costs of servicing equity (other than dividends); the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and other discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares; divided by the weighted average of ordinary shares and dilutive potential ordinary shares adjusted for any bonus element. Share-based payment transactions The Company provides benefits to employees (including directors) of the Company in the form of sharebased payment transactions, whereby employees render services in exchange for shares or rights over shares ( equity-settled transactions ). The cost of these equity-settled transactions with employees is measured by reference to the fair value at the date at which they are granted. RRL-HalfYearly-Dec05.doc 14

17 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2005 NOTE 1: BASIS OF PREPARATION OF THE HALF-YEAR FINANCIAL REPORT (continued) In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of Rox Resources Limited ( marker conditions ). The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award ( vesting date ). The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which the vesting period has expired and (ii) the number of awards that, in the opinion of the directors of the Company, will ultimately vest. This opinion is formed based on the best available information at balance date. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date. No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition. Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any increase in the value of the transactions a result of the modification, as measured at the date of modification. Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were modification of the original award, as described in the previous paragraph. The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per share. (d) AASB 1 Transitional exemptions The Company 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: Share-based payment transactions AASB 2 Share-Based Payments is applied only to equity instruments granted after 7 November 2002 that had not vested on or before 1 January Exemption from the requirement to restate comparative information for AASB 132 and AASB 139 The Company has adopted this exemption and has not applied AASB 132 Financial Instruments: Presentation and Disclosure and AASB 139 Financial Instruments: Recognition and Measurement to its comparative information. (e) First time adoption of Australian Equivalents to International Reporting Standards There are no adjustments to the income statement for the six months ended 31 December 2004 or year ended 30 June There are no adjustments to equity as at 1 July 2004, 31 December 2004, 30 June 2005 and 1 July There are no adjustments between the cash flow statements presented under AIFRS and under AGAAP. RRL-HalfYearly-Dec05.doc 15

18 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2005 NOTE 2: LOSS FROM CONTINUING OPERATIONS Loss from ordinary activities before income tax expense includes the following revenue and expenses whose discussion is relevant in explaining the financial performance of the entity: 31 December 2005 $ 31 December 2004 $ (a) (b) (c) Revenues Interest revenue 45,362 73,095 Other Income Gain from sale of non-current assets Expenses Depreciation 3,690 3,185 3,690 3,185 Staff expenses 179,010 70,713 Office operating 48,528 46,602 Corporate expenses 73,105 45,176 Travel expenses 28,038 18,022 Consultants 22,353 8,000 Exploration expenditure 748,884 52,749 Other 60,780 48,230 1,160, ,492 NOTE 3: ISSUED CAPITAL (a) (b) (c) Issued and paid up capital: 42,272,000 fully paid ordinary shares (30 June 2005: 32,272,000) 5,561,327 4,626,327 Option reserve: Nil - - Movements in issued and paid up capital during the past six months were as follows: Date Details Notes Number of Shares Number of Options - - Issue Price (Cents) 1 July 2005 Opening Balance 32,272,000 6,050,000 4,626, Dec 2005 Issue of Shares (i) 10,000, ,000,000 Capital raising costs (65,000) 31 Dec 2005 Closing Balance 42,272,000 6,050,000 5,561,327 Notes (i) Securities issued in accordance with Section 708 of the Corporations Act 2001 $ RRL-HalfYearly-Dec05.doc 16

19 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2005 NOTE 4: EVENTS SUBSEQUENT TO BALANCE DATE Since the end of the half year ended 31 December 2005 the Company reached agreement with Regal Resources Limited to sell its Menzies project. Consideration to be received will be $400,000 cash and 3,000,000 Regal Resources Limited shares on settlement and $200,000 cash six month from settlement. The agreement is subject to Regal Resources Limited completing due diligence to its satisfaction over the next six weeks and a number of standard pre-conditions including Rox shareholder approval if required. No other matter or circumstance has arisen since the half year ended 31 December 2005 which significantly affected or may significantly affect the operations of the Company, the results of those operations, or the state of affairs of the Company in future financial years. NOTE 5: CONTINGENT LIABILITIES There has been no change in contingent liabilities since the last annual reporting date. NOTE 6: SEGMENT INFORMATION The Company operates as a mineral exploration company in Western Australia, South Africa and Laos Australia South Africa Laos Total 31 Dec Dec Dec Dec Dec Dec Dec Dec 2004 Revenue 45,362 73, ,362 73,095 Other income Result (370,142) (219,082) (386,172) - (362,712) - (1,119,026) (219,082) RRL-HalfYearly-Dec05.doc 17

20 DECLARATION In accordance with a resolution of the directors of Rox Resources Limited, I state that: In the opinion of the directors (a) The financial statements and notes of the Company: (i) (ii) give a true and fair view of the financial position as at 31 st December 2005 and the performance for the half year ended on that date of the Company; and comply with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001; and (b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable. On behalf of the Board M BLAKISTON Director Perth, Western Australia Dated this 3 rd day of March 2006 RRL-HalfYearly-Dec05.doc 18

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