GME Annual Report

A N N U A L R E P O R T

1 9 9 9A N N U A L R E P O R T

1 9 9 9

GME RESOURCES NLA.C.N. 009 260 315

A N N U A L R E P O R T1 9 9 9

GME RESOURCES NLA.C.N. 009 260 315

Annual Report 1999GME

1

C o n t e n t s

PAGE

CORPORATE DIRECTORY 2

REVIEW OF OPERATIONS 3

DIRECTORS’ REPORT 10

FINANCIAL INFORMATION 16

DIRECTORS’ DECLARATION 33

INDEPENDENT AUDIT REPORT 34

SHAREHOLDER INFORMATION 35

TENEMENT DIRECTORY 37

Cover Photo: Lake Raeside by Robert Garvey


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1. CORPORATE DIRECTORY

DIRECTORS

Chairman

Michael Delaney PERROTT B.Com

Managing Director

Peter Ross SULLIVAN B.E., MBA

Technical Director

Geoffrey Mayfield MOTTERAM B.Met. E(Hons),

M.Aus.I.M.M.

Company Secretary

Niels J KROYER

REGISTERED OFFICE

Level 2, Troika House

129 Melville Parade

Como WA 6152

Locked Bag 4

Como WA 6952

Telephone: (08) 9474 1799

Facsimile: (08) 9474 2281

E-Mail: [email protected]

Web Site: www.gme-resources.com.au

AUDITORS

HLB Mann Judd

Chartered Accountants

15 Rheola Street

West Perth WA 6005

SHARE REGISTRY

Computershare Registry Services Pty Ltd

Level 2, Reserve Bank Building

45 St George’s Terrace

Perth WA 6000

GPO Box D 182

Perth WA 6000

Telephone: (08) 9323 2000

Facsimile: (08) 9323 2033

STOCK EXCHANGE LISTING

The Company’s shares are quoted on the

Official List of Australian Stock Exchange Limited

STATE OF INCORPORATION

Western Australia


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2. REVIEW OF OPERATIONS

2.1 INTRODUCTION

During 1998/99, GME Resources NL more thantrebled its lateritic nickel resources, moved tofull ownership of the Ilgarari copper projectand farmed out three of its gold explorationprojects to leading regional explorers.

The Company’s primary exploration activitiescontinued to focus on the Leonora-Lavertonregion of Western Australia, and on nickellaterite exploration in particular, along with alower key focus on other commodities andregions.

Key developments for the company during theyear included:

• The granting of the Mt Kilkenny explorationlicence in November 1998, and thesubsequent RC drilling delineation of asignificant lateritic nickel resource on theproperty.

• Completion of construction of the $1.1billionMurrin Murrin nickel laterite treatment plantby its owners .

• Negotiation of an option to purchaseprospective lateritic nickel tenements northand south of the Company’s Waite Kauriproject.

• Farm-out of the Oberwyl – Mt Ida, MtMarven and Mt Morgans South gold projects.

• Attainment of 100% ownership of the Ilgararicopper project through the acquisition of a52.5% interest held by a former jointventurer partner.

The successful reverse circulation drillingprogram at Mt Kilkenny, which outlined a 27.6Mt lateritic nickel resource, increased theCompany’s directly owned lateritic nickelresource base to 39.2 Mt averaging 1.03% Niand 0.08% Co, at a 0.7% Ni lower cut-offgrade.

All of the lateritic nickel resources lie within a35km radius of the Murrin Murrin treatmentplant of Anaconda Nickel Ltd and GlencoreInternational AG. Construction of this $1.1billion plant was completed during the yearand the commissioning and ramp up phasesare expected to be completed over the nexttwelve months.

As well, the plant owners have committed to

expand the plant from 4Mt per annum to 10Mtper annum.

The establishment of this plant is significant forGME as it provides a low cost low riskdevelopment option for its resources. Thequantum and timing of returns from thisapproach are driven by the differential oregrade and cost structure between the plantowners ore feed and that which could besupplied by GME.

The laterite nickel industry is in its infancy andcan be expected to evolve further as thetechnical and economic aspects of treatmentplants are better understood.

Further exploration by GME is expected toidentify additional resources, and progress ittowards a target of at least 50 Mt (using a0.7%Ni cut-off grade) in the region, whichwould allow a stand alone venture to beincluded in the options for development.

The farm-out of the Oberwyl – Mt Ida goldexploration project to Acacia Resources Ltdand of the Mt Marven and Mt Morgans Southprojects to Metex Resources NL, in theSeptember 1998 quarter, has helped to reduceGME’s expenditure commitments duringtroubled times for the gold sector whilst at thesame time advancing the projects.

Acquisition of former joint venture partnerWest Australian Metals NL’s 52.5% interest inthe Ilgarari copper project means that GMEnow has full ownership and control of thefuture exploration and possible eventualdevelopment of the prospect.

GME raised $680,000 through placementsduring the year, in what was a difficult fundraising environment for junior resourcecompanies. The funds have been used toadvance the company’s laterite nickel positionin the Murrin Murrin area. The levels of capitalraising have been modest to ensureshareholders best benefit from explorationsuccess.

2.2 LEONORA-LAVERTON NICKEL-COBALT

PROJECTS

Mt Kilkenny

E39/688

The Mt Kilkenny licence covers an area ofapproximately 200 sq km. It is centred 35 km


4

10km

WAITE KAURI2.1MT @ 1.07% Ni

MURRIN MURRIN3.68MT @ 1.0% Ni

MERTONDALE2.23MT @ 1.08%Ni

MURRIN MURRINNORTH

3.56MT @ 1.05% Ni

MACEY HILL

MT KILKENNY27.6MT @ 1.03% Ni

LEONORA LAVERTONLATERITIC NICKEL PROJECTS

LOCATION MAP

Murrin Murrrin

6 780 000mN

6 810 000mN

6 840 000mN

380 000mE

Eulaminna

"Mertondale"

"Yundamindera"

Laverton

Leonora

Road

Old Leonora - Laverton Road

Mertondale

GMEGMEGME Resources NL

ACN 009 260 315

ROYALTY PAYMENTS

PLANT SITE

MURRIN MURRIN PROJECT

GME RESOURCES

LEGEND


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SSE of the Murrin Murrin JV plant and adjoinsthat project’s Murrin Murrin South tenements.GME holds a two year option to purchase theproperty.

Following a review of previous explorationover the area and granting of the explorationlicence in early November, GME conducted re-sampling and nickel-cobalt assaying of mid-nineties gold exploration RAB drill holes whichencountered ultramafic bedrock.

The assay results indicated the presence ofsignificant lateritic nickel mineralisationassociated with the eastern-most of threeultramafic units defined from aeromagneticdata and geological mapping. The eastern unithas a north-south strike extent ofapproximately 10 km and an average width ofaround 500m.

In December 1998, a limited program ofvertical RC drilling of 3 holes for 145m (av.48.3m) successfully confirmed the results ofthe earlier RAB re-sampling in the northernhalf of the eastern ultramafic unit.

Subsequently, during the first half of 1999, twoprograms of RC drilling totalling 152 verticalholes for 5,465 (av. 36m) systematically testedthe weathering profile of the three ultramaficunits. Ground magnetic surveys were useful inoutlining the units, particularly in areas ofsuperficial cover, prior to the drilling. The resultsof the drilling programs indicate that economicgrade lateritic nickel mineralisation is essentiallyconcentrated in the northern half of the easternultramafic unit. Resource calculations using a0.7% lower cut-off grade quantified an inferredresource of 27.6 Mt at 1.03% Ni and 0.08% Co. Ata 1% Ni cut-off grade there is 11.4 Mt of highergrade material averaging 1.33% Ni and 0.12% Co.

Waite Kauri

P37/4149, 5264, 5555 and PLA37/5821-24,MLA37/580

During August 1998, GME secured a 2 yearoption to purchase P37/5821-5824 which cover5km of strike extensions of an ultramaficsequence to the north and south of GME’sexisting tenements which contain economicgrade lateritic mineralisation.

The tenement package now covers a total areaof 10 sq km. It is located approximately 45 kmnortheast of Leonora.

Extensive RC drilling and minor RAB drilling in1996-97 outlined Ni-Co mineralisation over astrike length of 1,500 m and widths of 100m to400m on GME’s existing tenements. Quantifiedresources include a measured resource of 1.4 Mtgrading 1.09% Ni and 0.06% Co and an inferredresource of 0.8 Mt at 1.04% Ni and 0.07% Co.

Field reconnaissance was carried out over theextended project area during 1998 and the fullextent of mineralisation is to be tested over thenext twelve months.

Murrin Murrin

P39/3366-75, MLA 39/717-718

The Murrin Murrin Group of ten prospectinglicences covers approximately 13 sq km ofground centred 42km east of Leonora. Thetenement block lies between the Company’sAbednego West and Murrin Murrin(Anaconda/Golden Cliffs) projects.

Reconnaissance RAB drilling by GME during1996/1997 outlined an inferred nickel-cobaltresource of 3.7 Mt grading 1.00% Ni and 0.08%Co, using a 0.7% Ni lower cut-off grade.

During 1998/99 mining lease applications werelodged to cover the area held under prospectinglicences.

Murrin Murrin North

P39/3515-22

The Murrin Murrin North group of prospectinglicences lies 53 km ENE of Leonora. It abuts partsof the Murrin Murrin Joint Venture lateritic nickel-cobalt project to the south and east.

Following the acquisition of the tenements inOctober 1997, GME Resources carried out a RABdrilling program to test a series of aeromagnetichighs interpreted to reflect underlying ultramaficrocks.

The program outlined an inferred resource at theTomahawk prospect of 3.6 Mt of lateritic nickelmineralisation in the weathering profile, with agrade of 1.05% Ni and 0.08% Co, using a 0.7% Nilower cut-off grade. Encouraging intercepts werealso obtained from the bottom of some holes, atthe Wedge prospect, which were amongst anumber of holes that were not able to fullypenetrate the weathered zone. Deeper RC drillingwill ultimately be required to complete resourcedefinition at the Wedge prospect.


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Mertondale

P37/4201-05, MLA 37/591

The 8 km long by 0.5 to 1.5 km wideMertondale tenement block lies approximately33 km northeast of Leonora. It covers anultramafic sequence with nickel enrichment inthe lateritic weathering profile.

Based on systematic RAB drilling and localisedRC drilling by GME during 1996-97 commercialgrade lateritic nickel mineralisation wasoutlined over a strike length of 6.5 km andwidths of up to 125m. Subsequent calculationsdefined an inferred resource of 2.2Mt grading1.08% Ni and 0.08% Co, or 1.39% Ni Eq, usinga 0.7% Ni lower cut-off grade.

Macey Hill

P39/3814-15

These two adjacent prospecting licences lie42km ESE of Leonora and cover a combinedarea of 228ha. They are surrounded by theMurrin Murrin South tenements of the MurrinMurrin Joint Venture.

Aeromagnetic interpretation of largely lateritecovered terrain indicates the presence of anultramafic unit 1,400 m long andapproximately 500m wide within the MaceyHill licences. It is considered prospective forlateritic nickel-cobalt mineralisation.

The prospecting licences were granted duringAugust 1998 and subsequent fieldreconnaissance has been carried out.

NICKEL RESOURCE SUMMARY

Deposit Category Tonnes Ni% Co% NiEq%

Waite Kauri Measured 1,416,000 1.09 0.06 1.35

Inferred 758,000 1.04 0.07 1.33

SUB-TOTAL 2,174,000 1.07 0.07 1.34

Murrin Murrin Inferred 3,680,000 1.00 0.08 1.32

Murrin Murrin

Nth Inferred 3,570,000 1.05 0.08 1.37

Mertondale Inferred 2,228,000 1.08 0.08 1.39

Mt Kilkenny Inferred 27,558,000 1.03 0.08 1.35

TOTAL 39,210,000 1.03 0.08 1.35

(Ni Eq% = Ni% + 4Co%)Within these deposits there are zones of higher grademineralisation which, at a 1.0% Ni lower cut-off grade,

amount to 16.4 million tonnes at 1.32% Ni and 0.11% Co.

Eucalyptus

ELA 39/703

GME is the priority applicant for this 11 sq kmtenement. Aeromagnetic interpretation of thesoil covered terrain indicates the presence of anultramafic unit approximately 2,000 m long and400 m wide.

The Company is awaiting grant of the tenement.

Murrin Murrin (Anaconda)

P39/3158-71, 3176-79 and 3281, MLA39/426,456, 552, 553 and 569

Anaconda Nickel Ltd has rights to nickel-cobaltlaterite mineralisation on the tenements. GMEretains the right to any precious metals or otherbase metals discovered on these tenements,including nickel sulphides. Whilst Anacondaretains the right to the lateritic nickel-cobaltresources, it pays GME a fee of $100,000 p.a. Inaddition, it will pay GME $0.20 per tonne on allnickel laterite ore that is mined and treated.

Anaconda Nickel has successfully outlined thefollowing nickel resources on the tenements asa result of its exploration efforts to the end of1997.

During the March 1999 quarter Golden Cliffs NL,a 100% subsidiary of GME issued a writ ofsummons against each of Anaconda Nickel,Murrin Murrin Holdings Pty Ltd, Glenmurrin PtyLtd, ANZ Capel Court Limited, Chase SecuritiesAustralia Limited and the Minister for Mines.

Golden Cliffs alleges that Anaconda Nickel hasentered into agreements over these tenementswithout complying with specific conditionscontained in its agreement with Golden Cliffsthat protect Golden Cliffs interest.

The action is listed on the expedited list of theSupreme Court and is proceeding to trial. TheCompany and the various parties involved areattempting to settle the matter prior to the trial.

Deposit Million Ni% Co% Resource

Tonnes Status

MM4 5.6 1.03 0.07 Measured

MM4 4.8 0.97 0.07 Indicated

MM4E 3.8 1.07 0.09 Inferred

MM13 7.2 1.11 0.07 Inferred

Total 21.4 1.05 0.07


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2.3 LEONORA-LAVERTON GOLD PROJECTS

Linden

P39/3417-18 GME 100%

P39/2974-76, MLA 39/500 HaomaMining NL 90%, GME 10%

The Linden tenements cover a total area of 479 ha near the southern margin of LakeCarey, some 75 km south of Laverton.

Prospecting licences 39/3417 and 3418encompass the old Devon, Olympic andDanube mines. Based on a 1997 assessment of1980’s drilling of the main quartz-sulphide lodeat Devon by previous explorers, GMEcalculated an inferred resource of 240,000tonnes grading 7.15 gpt Au.

Bindah

M39/1, 198 and 286, P39/3758

The tenements cover a total area of 75 ha onthe southern margin of Lake Carey, about12 km southeast of Linden.

A shallow, high grade, gold ore body wasmined on the tenements in 1985/86 by WMCResources Ltd. Approximately 70,000 tonnes atan average grade of about 7 gpt Au was minedfrom the pit and treated at the Windara plant.Mining was conducted to approximately 50mdepth. GME acquired the project with a viewto investigating the potential for both along-strike and deeper mineralisation.

Following the modest success of an RC Drillingprogram conducted in June 1998 quarter,Acacia Resources Ltd has subsequentlywithdrawn from an option to purchase thetenements. The best drill results were 12mgrading 1.93 ppm Au from 80m to 102m inhole BNRC006, including 2m at 3.75 ppm Aufrom 94m to 96m. Acacia completed technicalreporting on the project in November 1998.

Mt Morgans South and Mt Marven

P39/2753, 3347-56, 3531-32, M39/162, 325and MLA 39/481, 702 and 703

GME 100%, Metex Resources NL earning 75%

The project areas lie about 80km east ofLeonora and some 10km SE and 12 km SSErespectively from the Mt Morgans mine. Theycover a combined area of 18 sq km at thenorth end of Lake Carey.

Metex Resources NL entered into a jointventure with GME, during the September 1998quarter, to explore the tenements for their goldpotential. Under the terms of the agreement,designated the Mt Morgans Joint Venture,Metex can progressively earn up to a 75%interest in the properties by expending a totalof $250,000 over 3 years, including a minimumexpenditure of $40,000 in the first 12 months.

Metex carried out field geologicalreconnaissance, an assessment of historicaldata, outcrop mapping and a regolithinterpretation in late 1998 and early 1999.Subsequently it curtailed its explorationactivities in general, including the Mt Morgansjoint venture. It is currently seeking additionaljoint venture partners to carry out furtherevaluation of the project.

Other Leonora-Laverton Gold Projects

No substantial field activities were conductedon the Abednego West, Chain Bore, HawksNest, Leonora East and Murrin Murrin (GoldenCliffs) projects during 1998/99.

The 71 sq km Ghan Well exploration licence39/679 and the 68 sq km Pyke Hill EL 39/633on the northwestern margin of Lake Carey areawaiting grant of title.

2.4 OTHER REGIONAL WA PROJECTS

Ilgarari

M52/539, 540 and E52/1003

The Ilgarari Project is located in the BangemallBasin north of Meekatharra. It covers an underexplored area of similar geology to the Zairianand Zambian copper belts, with potential for alarge tonnage stratiform base metal deposit.Work to date has identified a major structuralshear 7 km long that has anomalous coppergeochemistry along its entire length. The lastmajor exploration program on the tenementswas conducted in 1990 and targeted shallowcopper oxide mineralisation on this sheararound the old Ilgarari mine. An inferredresource of 255,000 tonnes at 3.3% Cu wasdefined by this program.

A review of all project data including feasibilitystudies, was undertaken during the June 1999quarter.


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Oberwyl – Mt Ida

E29/159, MLA29/252-253 (Acacia ResourcesLtd earning 80%)

E29/199 and P29/1561

The Oberwyl – Mt Ida tenements are locatedapproximately 100km northwest of Menzies inthe Mt Ida greenstone belt. They cover an areaof approximately 28 sq km and encompass soilgeochemical anomalies, outlined by a formerjoint venturer during 1996/1997, some ofwhich are either untested or have been onlypartially drill tested by GME and previousexplorers.

During the September 1998 quarter GMEentered into a joint venture agreement withAcacia Resources Ltd, designated the Mt IdaJoint Venture. Acacia may acquire an interestof 80% in EL29/159 and MLA29/252-253 byexpending a total of $400,000 over the nextfour years, with a minimum commitment of$100,000 in the first 12 months.

Acacia carried out data compilation andinterpretation, surveying of drill hole positionsand tracks, detailed field mapping, rock chipsampling and initial RAB drilling.

A total of fifty vertical RAB holes were drilledfor 1,845 m (av 37m) to infill old drill lines andtest the extent of an auger soil gold anomaly(peak 99 ppb, average 30 ppb) that is locatedover the hinge zone of the Kurrajong Anticline,and in a possible pressure shadow of theCopperfield Granite. The drilling intersectedvariably foliated basalt with little alteration butcommon quartz veining. Assay results ofcomposite samples returned a number ofgeochemically anomalous intercepts from 11 ofthe 50 holes.

An environmental audit was completed andrehabilitation advanced with the capping ofapproximately 150 historical drill holes.

Towards the end of the financial year, planningof a second program of RAB drilling wascompleted with a view to testing 3 goldgeochemical anomalies with 7,000 m of drilling.

Stophanis Well Joint Venture

E31/90, 97, 129, 165, 202 and 223,P31/1453-58, MLA 31/168-170, 233-235,260-262

ELA 31/420 and 421, 427 and 428

GME 50%, Capricorn Resources NL 50%

The project area lies approximately 145kmnortheast of Kalgoorlie-Boulder and 150kmsouth of Laverton. It covers part of the PinjinFault and adjacent terrain in the vicinity of theold Patricia and Pinjin mining centres in thenorth and south respectively.

Project activities during 1998/99 includedtechnical assessments, reporting and tenementmaintenance. The joint venturers won theballots for three of the four Pinjin explorationlicence applications (ELA31/420, 421 & 428)and are the second priority applicant forELA31/427 behind Mt Kersey Mining NL. Grantof title for the first priority applications isawaited.

Bullabulling Joint Venture

M15/513 (Resolute Ltd, GME 10% free-carried interest)

No field work was carried out on the 160 halease during 1998/99. Resolute helddiscussions with a number of other companieswith a view to divesting the project.

2.5 QUEENSLAND GOLD PROJECT

Clermont Joint Venture

EPM5741, 10455, 11235-236, EPMA 11575,11793, 11806 and 12164

(GME 40% contributing interest, AustralianGold Fields NL 60% and manager)

The Company’s joint venturer at Clermont(AGF) was placed into administration duringthe March 98 quarter. As a result GME hasbeen reviewing its position under the JointVenture Agreement.

No field work was conducted on the projectduring the year. Minor expenditure wasincurred on tenement maintenance and generaladministration.


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GME Resources NLA.C.N. 009 260 315

FINANCIALS T A T E M E N T S


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3. DIRECTORS’ REPORT

Your directors present their report of GME Resources NL and its controlled entities

for the financial year ended 30 June 1999.

3.1 DIRECTORS

The names of directors in office at the date of this report are:

Michael Delaney Perrott (Chairman)

Peter Ross Sullivan (Managing Director)

Geoffrey Mayfield Motteram (Technical Director)

3.2 PRINCIPAL ACTIVITIES

The principal activities of the consolidated entity are mineral exploration and investment.

No significant change in the nature of these activities occurred during the year.

3.3 OPERATING RESULT

The consolidated loss after income tax for the year ended 30 June 1999 was $1,019,270 (1998: $1,083,795)

3.4 DIVIDENDS

No dividends have been paid or declared since the start of the financial year. No recommendation is made as to

dividends.

3.5 REVIEW OF OPERATIONS

A detailed review of operations for the financial year and up to the date of this report is included in the annual

report and should be read with this directors’ report.

3.6 SIGNIFICANT CHANGES IN STATE OF AFFAIRS

The significant changes in the state of affairs of the consolidated entity during the financial year were:

(1) On 8 July 1998 the Company resolved to issue 2 million shares at 6.5 cents each to raise $130,000 to be used

to repay debt.

(2) On 30 July 1998 the Company resolved to enter into an agreement with Mr John Flint for an option for two

years over additional Waite Kauri lateritic nickel tenements around the Company’s existing resource and to

pay an option fee of $20,000 with a $300,000 payment on exercise of the option to be satisfied by 50% in

cash and 50% issue of company shares.

(3) On 1 September 1998 the Company entered into an agreement with Acacia Resources on the Company’s

Oberwyl tenements whereby Acacia Resources can earn 80% by spending $400,000 over 4 years.

(4) On 1 October 1998 the Company resolved to enter into a joint venture agreement with Metex Resources on

the Company’s Mt Morgan South and Mt Marven tenements whereby Metex Resources can earn 60% by

spending $250,000 over three years and up to 75% by spending an additional $150,000.

(5) On 2 November 1998 the Company issued and allotted 1,000,000 Shares at 6 cents each as a part payment

due under the Purchase Agreement of the Murrin Murrin North tenements.

(6) In January 1999 a controlled entity instigated legal proceedings against Anaconda Nickel Limited and number

of other companies for breach of contract in relation to certain tenements.

(7) On 12 February 1999 the Company made a placement of 4,891,666 Shares at 6 cents to various parties to

raise $293,500 to be used for exploration at Mt Kilkenny and as working capital.

(8) On 22 March 1999 the Company issued and allotted 1,500,000 Shares at an issue price of 13 cents and paid

$9,863 in cash to Western Australian Metals NL as consideration for their remaining 52.5% interest of the

Ilgarari Project. The Company now owns 100% of the project.

(9) On 28 April 1999 the Company made a placement of 4,000,000 Shares at 6.5 cents to various parties to raise

$260,000 to be used for exploration at Mt Kilkenny and as working capital.


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3.7 AFTER BALANCE DATE EVENTS

No matter or circumstance has arisen since 30 June 1999 that has significantly affected, or may

significantly affect:

(a) the consolidated entity’s operations in future financial years, or

(b) the results of those operations in future financial years, or

(c) the consolidated entity’s state of affairs in future financial years.

3.8 LIKELY DEVELOPMENTS

The consolidated entity will continue its mineral exploration and investment with the object of finding a

mineralised resource.


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3.9 INFORMATION ON DIRECTORS

Michael Delaney Perrott

B.Com

(Director)

53 Years

Qualifications and Experience

Mr Perrott has been involved in the construction and contracting industry since 1969. He is currently a director of

a number of private and public listed companies and he is on the boards of Notre Dame University and West

Coast Eagles.

Peter Ross Sullivan

B.E., MBA

(Engineer)

43 years


Mr Sullivan is an engineer and has been involved in the development of resource companies and projects for

more than 15 years.

His project engineering experience was followed by four years in corporate finance with an investment bank and

two years in a corporate development role with an Australian resource group. Mr Sullivan has considerable

experience in the management and strategic development of resource companies.

Geoffrey Mayfield Motteram

B.Met E(Hons) M.Aus.I.M.M.

(Metallurgical Engineer)

50 years


Mr Motteram is a metallurgical engineer with over 25 years experience in the development of projects in the

Australian resources industry.

He has extensive experience in gold and base metals having been involved with WMC’s Kwinana Nickel Refinery

and Kalgoorlie Nickel Smelter. He subsequently joined BHP, and later Metals Exploration, where he was involved

in the evaluation of gold and base metal projects. Since 1989 he has acted as a Mining Project and Metallurgical

Consultant. He was involved in the formation of Anaconda Nickel Limited in 1994 and controlled the technical

development of the Anaconda Nickel Ltd Murrin Murrin Joint Venture until the end of 1997. He is a former

director of Anaconda Nickel Limited and is currently a director of Black Range Minerals NL (ACN 009 079 047),

responsible for the Syerston Nickel Cobalt Laterite Project.


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3.10 DIRECTORS’ INTERESTS

The relative interest of directors either directly or through entities controlled by the directors in the share capital

of the company as at the date of this report is:

Director Ordinary Shares 31/8/2000 Options

Exercisable at 20 cents

Michael D Perrott 3,026,580 –

Peter R Sullivan 4,943,264 975,000

Geoffrey M Motteram 1,164,052 500,000

3.11 MEETINGS OF DIRECTORS

During the year, eight meetings of directors were held. Attendances were:

Name Number Number

Eligible to Attend Attended

Michael D Perrott 8 8

Peter R Sullivan 8 8

Geoffrey M Motteram 8 8

3.12 SHARE OPTIONS

At the end of the financial year the Company had on issue the following options to acquire ordinary shares:-

Number of Options Exercise Price Exercisable Dates

3,500,000 20 cents Before 31 August 2000

No person entitled to exercise any of the above options has any right, by virtue of the option, to participate in

any share issue of any other corporation.

No options were issued during, or have been issued since the end of, the financial year.

3.13 AUDIT COMMITTEE

The Company does not have an audit committee as, in the opinion of the directors, the scope and size of the

Company’s operations do not warrant it.


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3.14 CORPORATE GOVERNANCE

The board of directors consisting of three directors is responsible for corporate governance of the Company.

Mr Sullivan has been appointed Managing Director of the Company. The other two directors are non-executive

directors of the Company. Mr M D Perrott is the non-executive chairman of the Company. The maximum number

of directors shall not exceed 10 without the approval of shareholders at a meeting of shareholders.

Directors appointed by the board hold office only until the next Annual General Meeting and are eligible for re-

election. One third of the directors, including executive directors, but excluding the managing director, shall

retire by rotation at each Annual General Meeting. The managing director is not required to retire by rotation.

The directors are not required to hold any qualifying shares.

Directors of the Company may be proposed by shareholders at the Annual General Meeting in accordance with

the Constitution of the Company. However, in most cases, the board of directors nominates and appoints new

directors with due regard to the Company’s needs and skills and the contribution which a proposed director can

bring to the Company. Each director has the right to seek independent professional advice at the Company’s

expense for which the prior approval of the Chairman is required and is not unreasonably withheld.

Directors fees are only paid subject to shareholders’ approval.

Generally the directors are remunerated for the services they render the Company and such services are normally

carried out under normal commercial terms and conditions. Engagement and payment for such services are

approved by the other directors with no interest in the engagement of services.

The board of directors receives and reviews exploration programs, operational reports and monitors the

operational and financial performance of the consolidated entity, its operations and its risks.

The board of directors approves budgets, operational plans, strategic plans and all major business strategies. The

board of directors also review the adequacy and quality of the external audit and expenditure.

3.15 DIRECTORS BENEFITS

Other than as disclosed in Note 21 (Related Party Disclosures) during or since the financial year, no Director of

the Company has received or become entitled to receive a benefit because of a contract that the Director or a

firm of which the Director is a member or an entity in which the Director has a substantial financial interest

made with the Company or an entity that the Company controlled, or a body corporate that was related to the

Company, when the contract was made or when the Director received, or became entitled to receive the benefit

other than a benefit included in the aggregate amount of emoluments received or due and receivable by the

Directors shown in Note 17 to the financial statements.


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3.16 INDEMNIFYING OFFICERS OR AUDITORS

The company has not, during or since the financial year, in respect of any person who is or has been an officer

or the auditor of the Company or of a related body corporate:

◆ indemnified or made any relative agreement for indemnifying against a liability incurred as an officer or

auditor, including costs and expenses in defending legal proceedings; or

◆ paid or agreed to pay a premium in respect of a contract insuring against a liability incurred as an officer or

auditor for the costs or expenses to defend legal proceedings.

3.17 YEAR 2000

The consolidated entity has completed a review to ensure, as far as possible, that business operations will not be

adversely affected by the year 2000 systems issue.

Key computer software and embedded systems have been checked for year 2000 compatibility, and adequate

contingency plans have been developed to help ensure continuity of supply to the consolidated entity. No

significant costs have been or are expected to be incurred in relation to the review.

3.18 ENVIRONMENTAL REGULATION

The consolidated entity’s exploration and mining tenements are located in Western Australia and Queensland.

There are significant regulations under the Western Australian Mining Act 1978 and the Queensland Mineral

Resources Act 1989 and both states Environmental Protection Act’s that apply. Licence requirements relating to

ground disturbance, rehabilitation and waste disposal exist for all tenements held.

The directors are not aware of any significant breaches during the period covered by this report.

This report is signed in accordance with the Resolution of Directors.

__________________________________________

PR Sullivan

Managing Director

Dated 16 September 1999

Perth, Western Australia


16

PROFIT AND LOSS STATEMENTS

f o r t h e y e a r e n d e d 3 0 J u n e 1 9 9 9

Note Consolidated Parent Entity

1999 1998 1999 1998

$ $ $ $

Operating revenue 2(a) 111,206 119,751 11,206 19,751___________ ___________ ___________ ______________________ ___________ ___________ ___________

Operating loss 2(b) 1,019,270 1,083,795 1,083,709 1,183,593

Income tax expense attributable

to operating loss 3 - - - -

___________ ___________ ___________ ___________

Operating loss after income tax 1,019,270 1,083,795 1,083,709 1,183,593

Accumulated losses at the

beginning of the financial year 9,240,819 8,157,024 9,424,454 8,240,861___________ ___________ ___________ ___________

Accumulated losses at the end

of the financial year 10,260,089 9,240,819 10,508,163 9,424,454___________ ___________ ___________ ___________

The accompanying notes form part of these financial statements.


17

BALANCE SHEETS

a s a t 3 0 J u n e 1 9 9 9


1999 1998 1999 1998

$ $ $ $

CURRENT ASSETS

Cash 14 182,888 353,578 182,888 353,578

Receivables 4 3,495 33,426 3,264 33,194___________ ___________ ___________ ___________

Total Current Assets 186,383 387,004 186,152 386,772___________ ___________ ___________ ______________________ ___________ ___________ ___________

NON CURRENT ASSETS

Receivables 5 - - - 6,568

Investments 6 - - 615,600 615,600

Plant and equipment 7 1,163 1,979 1,163 1,979

Exploration costs carried forward 8 5,898,427 5,609,365 5,044,021 4,803,794___________ ___________ ___________ ___________

Total Non Current Assets 5,899,590 5,611,344 5,660,784 5,427,941___________ ___________ ___________ ______________________ ___________ ___________ ___________

TOTAL ASSETS 6,085,973 5,998,348 5,846,936 5,814,713___________ ___________ ___________ ______________________ ___________ ___________ ___________

CURRENT LIABILITIES

Accounts payable 9 772,427 455,897 781,464 455,897

Borrowings 10 220,000 350,000 220,000 350,000___________ ___________ ___________ ___________

Total Current Liabilities 992,427 805,897 1,001,464 805,897___________ ___________ ___________ ______________________ ___________ ___________ ___________

NON CURRENT LIABILITIES

Borrowings 11 500,000 500,000 500,000 500,000___________ ___________ ___________ ___________

Total Non-Current Liabilities 500,000 500,000 500,000 500,000___________ ___________ ___________ ___________

Total Liabilities 1,492,427 1,305,897 1,501,464 1,305,897___________ ___________ ___________ ___________

NET ASSETS 4,593,546 4,692,451 4,345,472 4,508,816___________ ___________ ___________ ______________________ ___________ ___________ ___________

EQUITY

Issued capital 12 13,434,532 12,036,322 13,434,532 12,036,322

Reserves 13 1,419,103 1,896,948 1,419,103 1,896,948

Accumulated losses (10,260,089) (9,240,819) (10,508,163) (9,424,454)___________ ___________ ___________ ___________

TOTAL EQUITY 4,593,546 4,692,451 4,345,472 4,508,816___________ ___________ ___________ ______________________ ___________ ___________ ___________

The accompanying notes form part of these financial statements


18

STATEMENTS OF CASH FLOWS

f o r y e a r e n d e d 3 0 J u n e 1 9 9 9


1999 1998 1999 1998

$ $ $ $

CASH FLOWS FROM OPERATING ACTIVITIES

Payments for:

Exploration and evaluation (425,814) (591,997) (341,419) (469,432)

Administration (183,161) (466,560) (183,161) (465,542)

Proceeds from facilitation fee for

prospecting rights 100,000 100,000 - -

Interest received 11,342 8,615 11,342 8,615

Borrowing costs - (45,695) - (45,695)

Other 1,000 10,000 1,000 10,000___________ ___________ ___________ ___________

Net Operating Cash Flows 14(a) (496,633) (985,637) (512,238) (962,054)___________ ___________ ___________ ______________________ ___________ ___________ ___________

CASH FLOWS RELATED TO INVESTING ACTIVITIES

Payments for:

Prospects (209,422) (240,761) (209,422) (225,330)___________ ___________ ___________ ___________

Net Investing Cash Flows (209,422) (240,761) (209,422) (225,330)___________ ___________ ___________ ______________________ ___________ ___________ ___________

CASH FLOWS RELATING TO FINANCING ACTIVITIES

Proceeds from issue of

shares/options 665,365 787,834 665,365 787,834

Proceeds from borrowings - 500,000 - 500,000

Repayment of borrowings (130,000) (116,536) (130,000) (116,536)

Loans from wholly owned entity - - 100,000 101,051

Loans repaid to wholly owned entity - - (84,395) (138,997)___________ ___________ ___________ ___________

Net Financing Cash Flows 535,365 1,171,298 550,970 1,133,352___________ ___________ ___________ ______________________ ___________ ___________ ___________

Net Decrease in Cash Held (170,690) (55,100) (170,690) (54,032)

Cash at the Beginning of the Year 353,578 408,678 353,578 407,610___________ ___________ ___________ ___________

CASH AT THE END OF THE YEAR 14(b) 182,888 353,578 182,888 353,578___________ ___________ ___________ ______________________ ___________ ___________ ___________

The accompanying notes form part of these financial statements


19

NOTES TO THE FINANCIAL STATEMENTS


1. STATEMENT OF ACCOUNTING POLICIES

The following is a summary of the significant accounting policies adopted by the Company in the preparation of the

financial statements:

(a) Basis of Preparation

The financial report is a general purpose financial report that has been prepared in accordance with

applicable Accounting Standards and other mandatory professional reporting requirements and the

Corporations Law. The financial report has also been prepared on the basis of historical costs and does not

take into account changing money values or, except where stated, current valuations of non current assets.

Cost is based on fair values of the consideration given in exchange for assets. The accounting policies have

been consistently applied, unless otherwise stated.

(b) Principles of Consolidation

The consolidated financial statements have been prepared by combining the financial statements of all the

entities that comprise the consolidated entity, being the Company (the parent entity) and its controlled

entities as defined in AASB1024, “Consolidated Accounts”. A list of controlled entities appears in Note 6.

Consistent accounting policies have been employed in the preparation and the presentation of the

consolidated financial statements.

The consolidated financial statements include the information and results of each controlled entity from the

date on which the Company obtains control and until such time as the Company ceases to control such

entity.

In preparing the consolidated financial statements, all inter Company balances and transactions, and

unrealised profits arising within the consolidated entity are eliminated in full.

(c) Exploration and Development 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

which permits reasonable assessment of the existence of economically recoverable reserves.

Accumulated costs in relation to an abandoned area are written off in full to the profit and loss account 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. Any costs of site

restoration are provided for during the relevant production stage and included in the costs of that stage.

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.


20



c o n t i n u e d

(d) Income Tax

The consolidated entity adopts the liability method of tax-effect accounting whereby the income tax expense

shown in the profit and loss account is based on the operating result before income tax adjusted for any

permanent differences.

Timing differences which arise due to the different accounting periods in which items of revenue and expense are

included in the determination of operating result before income tax and taxable income are brought to account as

either a provision for deferred income tax or an asset described as future income tax benefit at the rate of income

tax applicable to the period in which the benefit will be received or the liability will become payable.

Future income tax benefits are not brought to account unless realisation of the asset is assured beyond reasonable

doubt. Future income tax benefits in relation to tax losses are not brought to account unless there is virtual

certainty of realisation of the benefit.

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 consolidated entity will

derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of

deductibility imposed by law.

(e) Plant and Equipment

The depreciable amount of plant and equipment is depreciated over their estimated useful lives commencing from

the time the asset is held ready to use. Predominantly, the straight line method of depreciation has been used.

Class of fixed assets: Depreciation rate:

Plant and equipment 20-27%

(f) Investments

The consolidated entity’s interests in entities which are not controlled are brought to account at cost or directors’

valuation or in accordance with AASB 1016 “Accounting for Investments in Associates”.

Marketable securities held as inventory are valued at the lower of cost and net realisable value as determined in

respect of each security holding.

The recoverable amount of non-current marketable securities is reviewed at balance date in relation to each

security holding. The excess of carrying value over recoverable amount is charged to the profit and loss account

except to the extent that it reverses a previous revaluation increment still included in the asset revaluation reserve,

in which case it is treated as a reduction in that reserve.

(g) Cash

For the purpose of the statements of cash flows, cash includes deposits which are readily convertible to cash on

hand and which are used in the cash management function on a day to day basis, net of outstanding bank

overdrafts.

(h) Comparative Figures

Where required by accounting standards comparative figures have been adjusted to conform with changes in

presentation for the current financial year.


21



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(i) Going Concern

These financial statements have been prepared on a going concern basis, notwithstanding the deficit in working

capital. The directors believe that the going concern basis is appropriate for the following reasons:

(a) The directors believe that further capital raisings from the finance market are possible.

(b) The directors are of the opinion that under existing loan arrangements, the repayment of all current

borrowings can, if necessary, at the option of the lender, be converted to equity, or be deferred.

(c) The directors are prepared, subject to shareholders’ approval to convert half of the amounts outstanding to

director related entities, as detailed in Note 21(c), to shares in the Company and accept that the remaining

half of the amounts outstanding, to director related entities, may not be paid until the Company is in a

financial position to do so.

(j) Revenue Recognition

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

financial assets.

Other revenue is recognised when all obligations by the consolidated entity has been fulfilled and the right to the

revenue has been established.


22



c o n t i n u e d

Consolidated Parent Entity

1999 1998 1999 1998

$ $ $ $

2. OPERATING LOSS

(a) Operating revenue

Included in the operating loss are the

following items of operating revenue:

Interest received

- other persons 10,206 9,751 10,206 9,751

Proceeds from:

Facilitation fee for prospecting rights 100,000 100,000 - -

Other revenue 1,000 10,000 1,000 10,000___________ ___________ ___________ ___________

111,206 119,751 11,206 19,751___________ ___________ ___________ ______________________ ___________ ___________ ___________

(b) Operating loss before income tax

has been determined after:

Crediting as income

Interest received – other persons 10,206 9,751 10,206 9,751

Charging as an expense

Depreciation of plant & equipment 816 816 816 816

Mineral exploration expenditure

written off 658,370 628,363 622,811 628,179

Interest Paid – other persons 86,032 92,468 86,032 92,468___________ ___________ ___________ ______________________ ___________ ___________ ___________


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c o n t i n u e d


1999 1998 1999 1998

$ $ $ $

3. TAX NOTE

Income Tax

(a) The prima facie tax on operating

result is reconciled to the income tax

provided in the financial statements

as follows:

Prima facie tax benefit on

operating loss before income

tax at 36% (366,937) (390,166) (390,136) (426,093)

Tax effect of permanent differences:

Non-deductible expenditures

Regarding capital raising, corporate

advice etc. 83 21,424 83 21,424

Option application reserve re:

expired options - 373,433 - 373,433

Exploration expenditures written off 237,013 226,211 224,212 226,144

Exploration expenditures incurred (174,539) (170,302) (144,458) (126,179)___________ ___________ ___________ ___________

(304,380) 60,600 (310,299) 68,729

Tax effect of timing differences (17,992) 11,384 (17,992) 11,744___________ ___________ ___________ ___________

(322,372) 71,984 (328,291) 80,473

Future Income tax benefits

brought to account - 71,984 - 80,473

Tax losses transferred - - 5,918 -

Future Income tax benefits not brought

to account (322,372) - (322,373) -___________ ___________ ___________ ___________

Income tax expense –- –- – –___________ ___________ ___________ ______________________ ___________ ___________ ___________

(b) The directors estimate that the potential

future income tax benefits not brought to

account are:

Revenue losses 801,639 434,395 753,837 301,611

Section 330-15 exploration expenses 1,529,822 1,393,854 1,529,822 1,385,364

Capital losses 9,606 285,059 - 285,059___________ ___________ ___________ ___________

2,341,067 2,113,308 2,283,659 1,972,034___________ ___________ ___________ ______________________ ___________ ___________ ___________

These taxation benefits will only be obtained if:

(i) the consolidated entity derives future assessable income of a nature and of an amount sufficient to enable

the benefit from the deduction for the losses to be realised, or

(ii) the losses are transferred to an eligible entity in the consolidated entity, and

(iii) the consolidated entity continues to comply with the conditions for deductibility imposed by tax legislation; and

(iii) no changes in tax legislation adversely affect the consolidated entity in realising the benefits for the

deductions for the losses.


24



c o n t i n u e d


1999 1998 1999 1998

$ $ $ $

4. RECEIVABLES (Current)

Sundry debtors 3,495 33,426 3,264 33,194___________ ___________ ___________ ___________

3,495 33,426 3,264 33,194___________ ___________ ___________ ______________________ ___________ ___________ ___________

5. RECEIVABLES (Non Current)

Loans to controlled entities (wholly owned) - - 1,322,695 1,329,263

Provision for non recovery - - (1,322,695) (1,322,695)___________ ___________ ___________ ___________

- - - 6,568___________ ___________ ___________ ______________________ ___________ ___________ ___________

6. INVESTMENTS (Non Current)

Unlisted shares (controlled entities) - - 616,893 616,893

Provision for diminution in value - - (1,293) (1,293)___________ ___________ ___________ ___________

- - 615,600 615,600___________ ___________ ___________ ___________

Name/(Country Of Incorporation) Percentage Owned

1999 1998

% %

GME Sulphur Inc (USA) 100 100

GME Investments Pty Ltd (Australia) 100 100

Golden Cliffs NL (Australia) 100 100

All investments comprise ordinary shares and no shares held in related corporations are listed on a prescribed

stock exchange.

The recoverability of the carrying value of shares in controlled entities is dependent on the successful development

and commercial exploration or, alternatively, sale of the respective areas in which those controlled entities have an

interest.


25



c o n t i n u e d


1999 1998 1999 1998

$ $ $ $

7. PLANT AND EQUIPMENT

(Non Current)

Plant and equipment – at cost 3,140 3,140 3,140 3,140

Less provision for depreciation (1,977) (1,161) (1,977) (1,161)___________ ___________ ___________ ___________

Total Plant and Equipment 1,163 1,979 1,163 1,979___________ ___________ ___________ ___________

8. EXPLORATION EXPENDITURE

CARRIED FORWARD

(Non Current)

Deferred exploration expenditure – at cost

Movements:

Balance at beginning of the year 5,609,365 4,926,078 4,803,794 4,258,319

Direct expenditure 947,432 1,311,650 863,038 1,173,654___________ ___________ ___________ ___________

6,556,797 6,237,728 5,666,832 5,431,973

Less exploration expenditure written off (658,370) (628,363) (622,811) (628,179)___________ ___________ ___________ ___________

5,898,427 5,609,365 5,044,021 4,803,794___________ ___________ ___________ ______________________ ___________ ___________ ___________

The ultimate recoupment of the above deferred exploration expenditure is dependent on the successful

development and commercial exploitation or, alternatively, sale of the respective areas.

9. ACCOUNTS PAYABLE (Current)

Sundry creditors 498,963 182,433 498,963 182,433

Loan from related parties (i) 273,464 273,464 273,464 273,464

Amount payable to wholly owned entity - - 9,037 -___________ ___________ ___________ ___________

772,427 455,897 781,464 455,897___________ ___________ ___________ ______________________ ___________ ___________ ___________

(i) The loan from M R, P R, D A and J N Sullivan (“Vendors”) arose as a result of a purchase of a number of

tenements (approved by shareholders on 20 June 1996). P R Sullivan is a director of the company.

The debt may be satisfied by the issue of shares in the Company, should the Company have insufficient

financial resources. However, the Vendors may at their discretion extend the payment date for the loan.

Interest will accrue at 12% p.a. for each period the loan is extended. The interest amount accrued and

unpaid as at 30 June 1999 is $51,426.

10. BORROWINGS (Current)

Unsecured Loan 220,000 350,000 220,000 350,000___________ ___________ ___________ ___________

220,000 350,000 220,000 350,000___________ ___________ ___________ ______________________ ___________ ___________ ___________

The loan carries interest at the Bank Bill Rate plus three per cent per annum. The loan may be satisfied by the

issue of shares in the Company, should the Company have insufficient financial resources. However, the lender

may at its discretion extend the payment date for the loan.


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c o n t i n u e d


1999 1998 1999 1998

$ $ $ $

11. BORROWINGS (Non Current)

Unsecured convertible note 500,000 500,000 500,000 500,000___________ ___________ ___________ ______________________ ___________ ___________ ___________

The convertible note was issued on 30 June 1997 to Retirewise Capital Pty Ltd. Under the terms of the note the

funds are to be advanced unsecured for five years with interest payable half yearly at a rate of 7% per annum.

During the term of the note Retirewise has the option to convert the debt into ordinary fully paid shares in the

Company at a conversion price of 14 cents per share.

12. ISSUED CAPITAL

Issued and fully paid

83,358,403 shares (1998: 69,966,737 shares): 13,434,532 12,036,322___________ ______________________ ___________

Movements in Share Capital

Opening balance 12,036,322 10,632,487

Transfer from Share Premium Reserve (Note 13) 477,845 -___________ ______________________ ___________

12,514,167 10,632,487

Issues during the period ((a) to (e)) 938,500 1,403,835

Less: share issue costs (18,135) -___________ ___________

13,434,532 12,036,322___________ ______________________ ___________

(a) On 8 July 1998 the Company issued 2 million Shares at 6.5 cents each to raise $130,000 to be used to repay

debt.

(b) On 2 November the Company issued 1,000,000 Shares at 6 cents each raising $60,000 as part of a payment

due under the Purchase Agreement of the Murrin Murrin North tenements.

(c) On 12 February 1999 the Company made a placement of 4,891,666 Shares at 6 cents to various parties to

raise $293,500 to be used for exploration at Mt Kilkenny and as working capital.

(d) On 22 March 1999 the Company issued 1,500,000 Shares at an issue price of 13 cents as part consideration

for the remaining 52.5% interest in the Ilgarari Project.

(e) On 28 April 1999 the Company made a placement of 4,000,000 Shares at 6.5 cents to various parties to raise

$260,000 to be used for exploration at Mt Kilkenny and as working capital.

No. of No. ofOptions on Options on

Issue Issue30 June 1999 30 June 1998

Options Over Unissued Capital

At 30 June 1999, the following options were on issue:

Options exercisable at 20 cents before 31/8/2000 3,500,000 3,500,000___________ ______________________ ___________


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c o n t i n u e d


1999 1998 1999 1998

$ $ $ $

13. RESERVES

Forfeited share reserve 83,300 83,300 83,300 83,300

Option application reserve 1,199,815 1,199,815 1,199,815 1,199,815

Share premium reserve (Note 12) - 477,845 - 477,845

Capital reserve 135,988 135,988 135,988 135,988___________ ___________ ___________ ___________

1,419,103 1,896,948 1,419,103 1,896,948___________ ___________ ___________ ______________________ ___________ ___________ ___________

14. STATEMENT OF CASH FLOWS

(a) Reconciliation of the operating loss after tax to the net cash flows from operations

Operating loss after tax (1,019,270) (1,083,795) (1,083,709) (1,183,593)

Depreciation – Plant and Equipment 816 816 816 816

Write off of exploration expenditure 658,370 628,363 622,811 628,179

Exploration costs capitalised

(excluding creditors) (483,008) (473,060) (398,615) (350,495)

Decrease/(Increase) in receivables 29,930 (9,938) 29,930 (9,938)

Increase/(decrease) in sundry creditors 316,529 (48,023) 316,529 (47,023)___________ ___________ ___________ ___________

Net Cash Flows from

Operating Activities (496,633) (985,637) (512,238) (962,054)___________ ___________ ___________ ______________________ ___________ ___________ ___________

(b) Reconciliation of Cash

Cash balance comprises:

Cash at bank 171,888 342,578 171,888 342,578

Deposits at call 11,000 11,000 11,000 11,000___________ ___________ ___________ ___________

182,888 353,578 182,888 353,578___________ ___________ ___________ ______________________ ___________ ___________ ___________

(c) Non Cash Financing and Investing

Activities

Issue of fully paid shares

and options as consideration for the

acquisition of mineral exploration

tenements and as satisfaction

for reducing debt. 255,000 766,000 255,000 766,000___________ ___________ ___________ ______________________ ___________ ___________ ___________


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c o n t i n u e d


1999 1998 1999 1998

$ $ $ $

15. AUDITORS’ REMUNERATION

Amounts received or due and receivable

by the auditors of GME Resources NL for:

◆ an audit or review of the financial

statements of the company and any

other entity in the consolidated entity 6,750 8,218 6,750 8,218

◆ other services in relation to the

company and any other entity in the

consolidated entity 1,750 1,930 1,750 1,930___________ ___________ ___________ ___________

8,500 10,148 8,500 10,148___________ ___________ ___________ ______________________ ___________ ___________ ___________

16. SEGMENT REPORTING

There are no individual segments to be

reported as the Company’s operations are

predominantly in the Mining Industry

in Australia.

17. REMUNERATION OF DIRECTORS

(a) Directors’ Remuneration

Amounts paid or due and payable to

the directors of each entity in the

consolidated entity and any related

bodies corporate, from all companies

in the consolidated entity including

insurance premiums to indemnify

liabilities while acting as a director. - - - -___________ ___________ ___________ ______________________ ___________ ___________ ___________

The number of chief entity directors

whose income from the chief entity

and any related bodies corporate was

within the following bands:

0 – 9999 3 3 3 3___________ ___________ ___________ ___________

3 3 3 3___________ ___________ ___________ ______________________ ___________ ___________ ___________

(b) Executive Officers Remuneration

Income received and due and receivable

by executive officers of the consolidated

entity, from all entities in the consolidated

entity and any related entities, whose

income is $100,000 or more. – - - -___________ ___________ ___________ ______________________ ___________ ___________ ___________


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c o n t i n u e d

18. FINANCIAL INSTRUMENT DISCLOSURES

(a) Interest Rate Risk

The consolidated entity’s exposure to interest rate risk, which is the risk that a financial instrument’s value

will fluctuate as a result of changes in market interest rates, and the effective weighted average interest rates

on those financial assets and financial liabilities, is as follows:

Fixed Interest Rate Maturing

1999 Weighted Floating Within 1 year Over 1 year Non-interest Total

Average Interest Rate Bearing

Effective

Interest Rate

Financial Assets $ $ $ $ $

Cash 3.7% 171,888 11,000 - - 182,888___________ ___________ ___________ ___________ ___________

171,888 11,000 - - 182,888___________ ___________ ___________ ___________ ______________________ ___________ ___________ ___________ ___________

Financial Liabilities

Accounts payable 12.0% - 273,464 - 498,963 772,427

Borrowings 7.3% 220,000 - 500,000 - 720,000___________ ___________ ___________ ___________ ___________

220,000 273,464 500,000 498,963 1,492,427___________ ___________ ___________ ___________ ______________________ ___________ ___________ ___________ ___________

Fixed Interest Rate Maturing

1998 Weighted Floating Within 1 year Over 1 year Non-interest Total

Average Interest Rate Bearing

Effective

Interest Rate

Financial Assets $ $ $ $ $

Cash 3.9% 342,578 11,000 - - 353,578___________ ___________ ___________ ___________ ___________

342,578 11,000 - - 353,578___________ ___________ ___________ ___________ ______________________ ___________ ___________ ___________ ___________

Financial Liabilities

Accounts payable 12.0% - 273,464 - 182,433 455,897

Borrowings 7.5% 350,000 - 500,000 - 850,000___________ ___________ ___________ ___________ ___________

350,000 273,464 500,000 182,433 1,305,897___________ ___________ ___________ ___________ ______________________ ___________ ___________ ___________ ___________

(b) Credit Risk

The maximum exposure to credit risk, excluding the value of any collateral or other security, to recognised

financial assets is the carrying amount as disclosed in the balance sheet and notes to the financial statements.

The consolidated entity does not have any material credit risk exposure to any single debtor or group of

debtors under financial instruments entered into by the consolidated entity.

(c) Net Fair Values

The net fair value of the financial assets and financial liabilities approximates their carrying value. No

financial assets and financial liabilities are readily traded on organised markets in standardised form.

The aggregate net fair values and carrying amounts of financial assets and financial liabilities are disclosed in

the balance sheet and in the notes to and forming part of the financial statements.


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19. COMMITMENTS AND CONTINGENT LIABILITIES

There were no capital commitments or contingent liabilities, not provided for in the financial statements of the

consolidated entity as at 30 June 1999, other than:

(a) Mineral Tenement Leases

In order to maintain current rights of tenure to mining tenements, the consolidated entity in its own right or

in conjunction with its joint venture partners may be required to outlay amounts of approximately $743,655

(1997: $987,822) per annum on an ongoing basis in respect of tenement lease rentals and to meet the

minimum expenditure requirements of the Western Australian and Queensland Mines Department. These

obligations are expected to be fulfilled in the normal course of operations by the consolidated entity or its

joint venture partners and are subject to variations dependent on various matters, including the results of

exploration on the mineral tenements.

(b) Claims of Native Title

Legislative developments and judicial decisions (in particular the uncertainty created in the area of Aboriginal

land rights by the High Court decision in the “Mabo” case and native title legislation) may have an adverse

impact on the consolidated entity’s exploration and future production activities and its ability to fund those

activities. It is impossible at this stage to quantify the impact (if any) which these developments may have on

the consolidated entity’s operations.

Native title claims have been made over ground in which the consolidated entity currently has an interest. It

is possible that further claims could be made in the future. However, the Company has not undertaken the

considerable legal, historical, anthropological and ethnographic research which would be necessary to

determine whether any current or future claims, if made, will succeed and, if so, what the implications

would be for the consolidated entity.

(c) In November 1996 the Company entered into an agreement to acquire ten tenements located at Murrin

Murrin from Hepi Exploration Pty Ltd. The purchase price was $50,000 plus an escalated amount calculated

on the number of tonnes in the geological measured resource of lateritic nickel. The escalated amount is

now to be settled in full through the issue of shares in the Company. As at 30 June 1999, the Company has

paid a total of $150,000 of which $100,000 is an advance payment on the escalated amount. Final settlement

is to take place in November 1999. The Company may return the tenements and not make any further

payments. If the Company elects to do so, then the Company’s rights of tenure to the area of interest will be

forfeited. At 30 June 1999 the Company had accumulated expenditure of $286,562 on the area of interest.

(d) In October 1997 the Company entered into an agreement to acquire seven tenements located at Murrin

Murrin North from Hepi Exploration Pty Ltd and John Charles Hocking. The purchase price is based on an

amount calculated on the number of tonnes in the geological measured resource of lateritic nickel. The

purchase price is to be paid with 50% in cash and 50% in issue of shares in the Company. As at 30 June

1999, the Company has paid advances of $230,000 in cash and share issues. Final payment is to take place in

October 1999. The Company may return the tenements and not make any further payments. If the Company

elects to do so, then the Company’s rights of tenure to the area of interest will be forfeited. At the end of 30

June 1999 the Company had accumulated expenditure of $306,823 on the area of interest.


31



c o n t i n u e d

20. SUBSEQUENT EVENTS

No matter or circumstance has arisen since 30 June 1999 that has significantly affected, or may significantly affect:

(a) the consolidated entity’s operations in future financial years, or

(b) the results of those operations in future financial years, or

(c) the consolidated entity’s state of affairs in future financial years.

21. RELATED PARTIES

Related parties of GME Resources NL fall into the following categories:

(a) Directors

(i) The names of persons who were directors of the Company at any time during the financial year are as

follows:

MD Perrott

PR Sullivan

GM Motteram

(ii) Information on the remuneration of directors is set out in note 17.

(b) Directors’ Holdings of Shares and Options

The relevant interests of directors of the reporting entity and their director related entities in shares and

options of entities within the consolidated entity at year end are set out below.

Number Held Number Held

1999 1998

Ordinary shares 9,133,896 8,633,896

Options (unlisted) 1,475,000 1,475,000

Mr Peter Sullivan owns 975,000 unlisted options exercisable at 20 cents on or before 31 August 2000; and

Mr Geoffrey Motteram is the beneficial owner of the 500,000 unlisted options held in the name of a related

entity exercisable at 20 cents each on or before 31 August 2000.

(c) Transactions with Director Related Entities

(All transactions were made under normal commercial terms and conditions unless otherwise stated).

Consultancy services have been provided by Hardrock Capital Pty Ltd, a company of which Mr Sullivan is a

director, to the value of $90,000 (1998:$90,000), of which $75,000 remains unpaid as at 30 June 1999.

Consultancy services have been provided by Geomett Pty Ltd, a company of which Mr Motteram is a

director, to the value of $18,000 (1998:$18,000), of which $13,500 remains unpaid as at 30 June 1999.

Office management services, which includes administration support, office facilities, accounting and company

secretarial services were provided during the year from Perrott Management Services, an entity of which

Mr Perrott is associated, to the value of $180,000 (1998: $180,000). Geological staff services were also

provided by Perrott Management Services to the value of $23,269 (1998: $121,561) along with consultancy

services to the value of $30,000 (1998: $30,000). An amount of $203,700 remains unpaid as at 30 June 1999.


32



c o n t i n u e d

22. INTERESTS IN BUSINESS UNDERTAKINGS – JOINT VENTURES

The Company has entered into a number of agreements with other companies to gain interests in project areas.

These interests will be earned by expending certain amounts of money on exploration expenditure within a

specific time. The Company can however, withdraw from these projects at any time without penalty. The amounts

required to be expended in the next year have been included in note 19 – Commitments and Contingent

Liabilities.

Consolidated

1999 1998

$ $

23. EARNINGS PER SHARE

Basic earning (loss) per share (cents) (1.35) (1.90)

Weighted average number of ordinary

shares outstanding during the year used

in calculation of basic EPS. 75,567,947 57,066,964___________ ______________________ ___________

Options

Options are considered to be potential ordinary shares. However, they are not considered to be dilutive in nature

as their exercise will not result in a diluted earnings per share that shows an inferior view of earnings performance

of the Company than is shown by basic earnings per share. The options have not been included in the

determination of basic earnings per share. Details relating to options are set out in Note 12.


33

DIRECTORS’ DECLARATION

The directors declare that the financial statements and notes set out on pages 16 to 32:

(a) comply with Accounting Standards; and

(b) give a true and fair view of the Company’s and consolidated entity’s financial position as at 30 June 1999 and

of their performance for the financial year ended on that date.

In the directors’ opinion:

(a) the financial statements and notes are in accordance with the Corporations Law; 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.

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

________________________________

PR SULLIVAN

Managing Director

Perth, WA

16 September 1999.


34

To the Members of GME RESOURCES NLScope

We have audited the financial report of GME Resources NL (the Company) for the financial year ended 30 June 1999 as

set out on pages 16 to 33. The Company’s directors are responsible for the financial report which includes the financial

statements of the Company and the consolidated financial statements of the consolidated entity comprising the

Company and the entities it controlled at the end of, or during, the financial year. We have conducted an independent

audit of the financial report in order to express an opinion on it to the members of the Company.

Our audit has been conducted in accordance with Australian Auditing Standards to provide reasonable assurance as to

whether the financial report is free of material misstatement. Our procedures included examination, on a test basis, of

evidence supporting the amounts and other disclosures in the financial report, and the evaluation of accounting policies

and significant accounting estimates. These procedures have been undertaken to form an opinion as to whether, in all

material respects, the financial report is presented fairly in accordance with Accounting Standards, other mandatory

professional reporting requirements and the Corporations Law so as to present a view which is consistent with our

understanding of the Company’s and the consolidated entity’s financial position, and performance as represented by the

results of their operations and their cashflows.

The names of the entity controlled during all, or part of, or at the end of, the financial year, but of which we have not

acted as auditor is GME Sulphur Inc. We have, however, received sufficient information and explanations concerning

this controlled entity to enable us to form an opinion on the consolidated financial statements.

The audit opinion, expressed in this report has been formed on the above basis.

Audit opinion

In our opinion, the financial report of the Company is in accordance with:

(a) the Corporations Law, including:

(i) giving a true and fair view of the Company’s and consolidated entity’s financial position as at 30 June 1999

and of their performance for the financial year ended on that date; and

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

(b) other mandatory professional reporting requirements.

HLB MANN JUDD

Chartered Accountants

WM CLARK

PartnerPerth, WA

23 September 1999.

HLB Mann Judd (WA Partnership)

15 Rheola Street West Perth 6005. PO Box 263 West Perth 6872 Western Australia. DX 238 Telephone +61 (08) 9481 0977. Fax +61 (08) 9481 3686

Email: [email protected] Website: http//www.mannjudd.com.au

Partners: Ian H Barsden, Terry M Blenkinsop, Wayne M Clark, Lucio Di Giallonardo, Colin D Emmott, Peter M Forbes, Trevor G Hoddy, Peter Speechley

HLB Mann Judd (WA Partnership) is a member of International and the HLB Mann Judd National Association of Independent accounting firms.


35

SHAREHOLDER

I n f o r m a t i o n

The shareholder information set out below was applicable as at 13 September 1999.

A. Distribution of Securities

(a) Analysis of numbers of shareholders by size and holding:

Category Ordinary

(size of holding) Shares

1 – 1,000 339

1,001 – 5,000 202

5,001 – 10,000 116

10,001 – 100,000 357

100,000 and over 102__________________

1,116____________________________________

(b) There were 543 holders of less than marketable parcel of ordinary shares.

(c) The percentage of the total holding of the twenty largest shareholders are:

Ordinary Shares 61.63%

B. Voting Rights

The voting rights attaching to each class of shares are set out below:

(a) Ordinary Shares:

On a show of hands every member present in person or by proxy shall have one vote and upon a poll each share

shall have one vote.

C. Substantial Shareholders

Substantial shareholders who have notified the Company as at 13 September 1999, are:

Name %

Retirewise Capital Pty Ltd 21.11

Guiness Peat Group plc, Mid-East Minerals Limited

and Retford Resources NL 7.72

Peter Ross Sullivan 5.93


36

SHAREHOLDER

I n f o r m a t i o n

The names of the 20 largest security holders of each class of equity security as at 13 September 1999 are listed below:

TWENTY LARGEST SECURITY HOLDERS

Ordinary Shares

Name Number Issued Shares Held

%

Retirewise Capital Pty Ltd 17,596,011 21.11

Retford Resources NL 6,437,385 7.72

Contours Pty Ltd 3,026,580 3.63

James Noel Sullivan 2,996,875 3.60

Peter Ross Sullivan 2,996,875 3.60

Donald Anthony Sullivan 2,372,083 2.85

Hardrock Capital Pty Ltd 1,946,389 2.33

West Australian Metals NL 1,500,000 1.80

Tunza Holdings Pty Ltd 1,468,888 1.76

Mervyn Ross Sullivan 1,393,750 1.67

Geoffrey Mayfield Motteram 1,164,052 1.40

Gratedock Pty Limited 1,103,601 1.32

Gratedock Pty Ltd 1,011,913 1.31

Bivaru Pty Limited 1,000,000 1.20

Nigel Kirwan 1,000,000 1.20

Townson Holdings Pty Ltd 991,332 1.19

Steven Crome 908,799 1.09

Barlestone Holdings Pty Ltd 875,500 1.05

Mark Nicholaeff 813,105 0.98

Gratedock Pty Ltd 681,870 0.82____________ ________

51,285,008 61.63____________ ____________________ ________


37

TENEMENT

D i r e c t o r y

PROJECT TENEMENTS COMPANY COMMENTSINTEREST

Abednego West P39/2690 – 2691 converted to MLA39/427,

P39/3732-33, PL39/3735-3751 100%

Bindah M39/1, M39/198, M39/286, P39/3758 100%

Bullabulling M15/513 10% Free Carried Joint Venture with Resolute Ltd

Chain Bore P37/4490, 4616-4618 converted

to MLA37/581 100%

Clermont EPM5741, 10455, 11235-236, Contributing 40% Joint Venture with

EPMA11575, 11793, 11806, 12164 Australian Gold Fields NL

Eucalyptus ELA39/703 100%

Ghan Well ELA39/679 100%

Hawks Nest M38/218, P38/2515 converted to

MLA 38/683 100%

Ilgarari M52/539-540, E52/1003 100%

Leonora East P37/4106 converted to MLA37/566, 100%

P37/4807-4811 converted to MLA 37/876,

P37/5330-5333, P37/5477

Linden P39/2974-76 converted to MLA 39/500 10%

P39/3417-18 100%

Macey Hill P39/3814-15 100%

Mertondale P37/4201-05 converted to MLA37/591 100%

Mt Kilkenny ELA39/688 Option for 100%

Mount Marven M39/162, M39/325,

P39/2753 converted to MLA39/481 100% Metex earning 75%

Mt Morgan South P39/3347 – 3352 converted to MLA39/703,

P39/3353 – 3356 converted to MLA 39/702,

P39/3531 – 3532 100% Metex earning 75%

Murrin Murrin P39/3172 – 3175 converted to MLA39/554,

(Golden Cliffs) P39/3180-3183 converted to MLA39/457,

P39/3551-3552 100%

Murrin Murrin P39/3158 – 3171, P39/3176 – 3179 & 100% of Non Anaconda Nickel Ltd has rights

(Anaconda) P39/3281, Converted to MLA39/426, Lateritic Nickel to all lateritic nickel

456, 552, 553 & 569 Mineral Rights

Murrin Murrin P39/3366 – 3375 converted to 100%

MLA39/717, 718

Murrin Murrin P39/3515-22 100%

North

Oberwyl – Mt Ida E29/159, parts converted to M29/252 100% Acacia Resources earning 80%

& 253, E29/199, P29/1561

Patricia Joint E31/90 converted to MLA31/168 & 169, 50% Joint Venture with Capricorn Resources NL

Venture E31/97 converted to MLA 31/170 & 233,

(Stophanis Well) E31/129, parts converted to MLA31/260-262,

E31/165, 202 & 223, P31/1453-58 parts

converted to MLA31/234-235,Pinjin ELA’s

31/420 & 421, 427 & 428

Pyke Hill ELA39/633 100%

Waite Kauri P37/4149 converted to MLA37/580, 100%

P37/5264 & PLA37/5555

PLA37/5821-5824 Option for 100%

E: Exploration Licence P: Prospecting Licence EPM: Exploration Permit for Minerals PLA: Prospecting Licence Application

M: Mining Lease ELA: Exploration Licence EPMA: Exploration Permit for MineralsApplication Application MLA: Mining Lease

Application

LEGEND:


38

N o t e s


39

N o t e s


40

N o t e s

GME Annual Report

Documents

lateritic nickel resources

mt lateritic nickel

r e p o r t1

directors report

gme resources nla

mt kilkenny explorationlicence

oberwyl mt ida

plant owners