ANNUAL REPORT - Australian Securities Exchange · feasibility studies, commercialization and...

ABN 27 103 782 378

ANNUAL REPORT

For the Year Ended

30 June 2011

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CORPORATE DIRECTORY

NON-EXECUTIVE DIRECTORS

Wayne Gregory Loxton Ian David Love Leon Davies

COMPANY SECRETARY Neville Bassett

PRINCIPAL & REGISTERED OFFICE Level 9, 190 St Georges Terrace

PERTH WA 6000 Telephone: (08) 9486 7066 Facsimile: (08) 9486 8066

AUDITORS HLB Mann Judd

Level 4, 130 Stirling Street PERTH WA 6000

SHARE REGISTRAR

Computershare Investor Services Pty Ltd Level 2, Reserve Bank Building

45 St Georges Terrace PERTH WA 6000 Ph 08 9323 2000 Fax 08 9323 2033

SECURITIES EXCHANGE LISTING Australian Securities Exchange

(Home Exchange: Perth, Western Australia) Code: GLN

BANKERS National Australia Bank

1232 Hay Street WEST PERTH WA 6005

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Annual Report 2011 Gleneagle Gold Limited

DIRECTORS’ REPORT

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Your directors present their report on the Company for the financial year ended 30 June 2011.

DIRECTORS

The names of the directors who held office during or since the end of the year and until the date of

this report are as below. Directors were in office for this entire period unless otherwise stated:

Wayne Gregory Loxton Non-Executive Director

Ian David Love Non-Executive Director

Leon Davies Non-Executive Director Appointed 20 April 2011

Gregory Denis O‟Reilly Non-Executive Director Resigned 15 June 2011

COMPANY SECRETARY

Mr Neville Bassett held the position of company secretary at the date of this report. Mr Bassett, is a

chartered accountant with over 30 years experience and has been involved with a diverse range of

Australian public listed companies in directorial, company secretarial and financial roles.

PRINCIPAL ACTIVITIES

The principal continuing activities of the company during the year was mineral exploration,

principally gold and base metals.

RESULTS

The profit from continuing operations before income tax for the year ended 30 June 2011 was

$7,025 (2010: $1,687,993 loss). Additional information on the operations and financial position of the

Company and its business strategies and prospects is set out in this directors‟ report and the financial

report.

DIVIDENDS PAID OR RECOMMENDED

The directors do not recommend the payment of a dividend and no amount has been paid or declared

by way of a dividend to the date of this report.

REVIEW OF OPERATIONS

Mineral Interests

The Company has two gold/base metal Exploration Licences (E52/1641 and P52/1166 -“the

tenements”). The tenements are located immediately west and north-northwest of Peak Hill, Western

Australia. Peak Hill is some 130km north-northeast of Meekatharra and 850km north of Perth.

The Peak Hill goldfield is located along the southern margin of the Proterozoic belt and the northern

edge of the Yilgarn Craton and lies within the western part of the Palaeoproterozoic Bryah Basin.

The area comprises mafic and ultramafic volcanic rocks (Narracoota Formation), and turbiditic

metasedimentary rocks, banded iron formation (BIF) and associated clastic rocks (Horseshoe and

Ravelstone Formations).

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At Peak Hill the deposits are hosted by mylonitic schist, metasedimentary and/or metavolcanic rocks

of the Peak Hill Schist (Palaeoproterozoic or Archaean), whilst to the north-northwest of Peak Hill the

deposits are hosted in the mafic volcanic rocks of the Narracoota Formation.

P52/1166 lies approximately 2km due west of the abandoned Fiveways Pit at Peak Hill, whilst

E52/1641 lies approximately 2.5km northeast of the abandoned Horseshoe Pit (previously Horseshoe

Lights) gold-copper-silver deposit and immediately north of the Saturn gold prospect.

During the year, the company completed ground reconnaissance work covering leases E52/1641 and

P52/1166, including geochemical sampling. Following a review of the geochemical sampling program

a number of follow up targets are anticipated to be further refined. The company is assessing the

results to determine the next stage of work on the tenements.

Corporate

The Board is actively seeking new project and investment opportunities and reviewed a number of

potential projects during the year, conducting due diligence on a number of prospective opportunities.

SIGNIFICANT CHANGES IN STATE OF AFFAIRS

Significant changes in the state of affairs of the company during the financial year are detailed under

Review of Operations.

In the opinion of the directors, there were no other significant changes in the state of affairs of the

company that occurred during the financial year under review not otherwise disclosed in this report or

in the financial report.

AFTER BALANCE DATE EVENTS

No matters or circumstances have arisen, since the end of the financial year, 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 subsequent financial years, other than as outlined in the Review

of Operations.

FUTURE DEVELOPMENTS

The company will continue to pursue its principal activity of exploration and evaluation, particularly

in respect to the Projects as more particularly outlined in the Review of Operations. The company

will also continue to pursue other potential investment opportunities to enhance shareholder value.

ENVIRONMENTAL ISSUES

The Company is aware of its environmental obligations with regards to its exploration and mining

activities and ensures that it complies with all applicable state and federal regulations when carrying

out any exploration and mining operations.

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INFORMATION ON DIRECTORS

Wayne Gregory Loxton Non-Executive Director

Qualifications BSc (Eng) MAusIMM

Experience Mr Loxton is an experienced Mining Engineer with a broad range

of experience including formulating strategy, completing

feasibility studies, commercialization and entrepreneurial start-

ups, commercial and strategic due diligence, capital raisings,

merges and acquisitions, asset divestiture and introduction of best

practices.

Interest in Shares Ordinary 41,352,016

Interest in Options 15 cents expiring 31 May 2013 23,600,000

10 cents expiring 22 December 2013 17,400,000

10 cents expiring 30 November 2013 8,000,000

Special Responsibilities None

Ian David Love Non-Executive Director

Experience Mr Love is a Perth based businessman who has served on the

boards of numerous public companies. He has interests in

hospitality, mining and financial sectors.



Leon Davies Non-Executive Director (Appointed 20 April 2011)

Experience Mr Davies, a mechanical engineering graduate from Derby

University in England, with a wealth of business expertise across

a number of industries. Mr Davies established one of the UK‟s

premier specialised recruitment agencies before selling the

business after a decade of significant growth and emigrating to

WA where he has continued to forge new business opportunities.

Since arriving in 1996 he has established two successful property

development companies, and the national support service agency

ATS Workforce.

Interest in Shares Ordinary 230,000


Gregory Denis O’Reilly Non-Executive Director (Resigned 15 June 2011)

Qualifications BSc MBA ACIS

Experience Mr O‟Reilly has considerable corporate and operational

experience in a mining environment. He is a former senior

executive with Gold Fields Australia & WMC. He has also been a

CFO and company secretary for other ASX listed entities.


Special Responsibilities None F

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Directorships of other listed companies

Directorships of other listed companies held by directors in the 3 years immediately before the end of the financial year are as follows:

Name Company Period of directorship

Wayne Gregory Loxton Mr Loxton does not hold any Directorships in other listed companies.

N/A

Ian David Love Mr Love does not hold any Directorships in other listed companies.

N/A

Leon Davies Mr Davies does not hold any Directorships in other listed companies.

N/A

Gregory Denis O‟Reilly GSF Corporation Limited (GSF) 13 July 2009 to present

REMUNERATION REPORT (AUDITED)

This report outlines the remuneration arrangements in place for the key management personnel of the

Company for the financial year ended 30 June 2011. The information provided in this remuneration

report has been audited as required by Section 308(3C) of the Corporations Act 2001.

The remuneration report details the remuneration arrangements for key management personnel

(“KMP”) who are defined as those persons having authority and responsibility for planning, directing

and controlling the major activities of the Company, directly or indirectly, including any Director

(whether executive or otherwise) of the company, and includes the five executives (where applicable)

in the company receiving the highest remuneration.

Key Management Personnel

Directors

Wayne Gregory Loxton

Ian David Love

Leon Davies (Appointed 20 April 2011)

Gregory Denis O‟Reilly (Resigned 15 June 2011)

Remuneration philosophy

The performance of the Company depends upon the quality of the Directors and executives. The

philosophy of the Company in determining remuneration levels is to:

set competitive remuneration packages to attract and retain high calibre employees;

link executive rewards to shareholder value creation; and

establish appropriate, demanding performance hurdles for variable executive remuneration.

Remuneration committee

While the Company does not currently have a formal Remuneration Committee, the Board has

adopted a Remuneration Committee Charter, which determines payments to the non-executive

directors and reviews their remuneration annually, based on market practice, duties and

accountability. Independent external advice is sought when required.

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Remuneration structure

In accordance with best practice Corporate Governance, the structure of non-executive director and

executive remuneration is separate and distinct.

Non-executive Director remuneration

The Board seeks to set aggregate remuneration at a level that provides the company with the ability to

attract and retain Directors of the highest calibre, whilst incurring a cost that is acceptable to

shareholders.

The ASX Listing Rules specify that the aggregate remuneration of non-executive Directors shall be as

determined from time to time by a general meeting. The latest determination was at the meeting held

on 27 November 2008 when shareholders approved an aggregate remuneration of $300,000 per

annum.

The amount of aggregate remuneration sought to be approved by shareholders and the manner in

which it is apportioned amongst directors is reviewed annually. The Board considers advice from

external shareholders as well as the fees paid to non-executive directors of comparable companies

when undertaking the annual review process.

The remuneration of non-executive Directors for the year ended 30 June 2011 is detailed in Note 4 in

the Notes to the Financial Statements in this Annual Report.

Senior manager and executive Director remuneration

Remuneration consists of fixed remuneration and variable remuneration (comprising short-term and

long-term incentive schemes).

Fixed remuneration

Fixed remuneration is reviewed annually by the Board of Directors. The process consists of a review

of relevant comparative remuneration in the market and internally and where appropriate, external

advice on policies and practices. The Board of Directors has access to external, independent advice

where necessary.

Senior managers are given the opportunity to receive their fixed (primary) remuneration in a variety

of forms including cash and fringe benefits such as motor vehicles and expense payment plans. It is

intended that the manner of payment chosen will be optimal for the recipient without creating undue

cost for the Company.

The Company currently does not have any executives.

Variable remuneration

The objective of the short term incentive program is to link the achievement of the Company's

operational targets with the remuneration received by the executives charged with meeting those

targets. The total potential short term incentive available is set at a level so as to provide sufficient

incentive to the senior manager to achieve the operational targets and such that the cost to the

company is reasonable in the circumstances.

Executive Directors and executives may also be paid performance based bonuses based on set

monetary figures, rather than proportions of their salary. This may lead to the proportions of

remuneration related to performance varying between individuals. These bonuses will generally be set

to encourage achievement of specific goals that have been given a high level of importance in relation

to the future growth and profitability of the company.

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The Board will review the performance bonuses to gauge their effectiveness against achievement of

the set goals, and adjust future years' incentives as they see fit to ensure use of the most cost effective

and efficient methods.

Employment Contracts

The employment arrangements of the directors are not formalised in a contract of employment.

Directors have determined that remuneration will be accrued and not paid until such time as either a project is acquired, exploration success is achieved in its tenements or a significant capital raising is undertaken. The company intends to preserve as much cash as possible to give the greatest likelihood of achieving either of these objectives.

Details of the nature and amount of emoluments of key management personnel

are shown at Note 4 in the Notes to Financial Statements in this Annual Report.

MEETINGS OF DIRECTORS

The number of directors' meetings (including committees) held during the financial year and the

number of meetings attended by each director are:

Directors Meetings

Director

Number Eligible to

Attend

Meetings

Attended

Wayne Gregory Loxton 5 5

Ian David Love 5 5

Leon Davies 1 1

Gregory Denis O‟Reilly 5 4

INDEMNIFYING OFFICERS

The Company has in place an insurance policy insuring Directors and Officers of the Company against

any liability arising from a claim brought by a third party against the Company or its Directors and

officers, and against liabilities for costs and expenses incurred by them in defending any legal

proceedings arising out of their conduct while acting in their capacity as a Director or officer of the

Company, other than conduct involving a wilful breach of duty in relation to the Company.

In accordance with a confidentiality clause under the insurance policy, the amount of the premium

paid to the insurers has not been disclosed. This is permitted under Section 300(9) of the

Corporations Act 2001.

PERFORMANCE BASED REMUNERATION

There was no performance based remuneration paid to directors during the financial year. F

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SHARE OPTIONS

The following options over unissued ordinary shares were outstanding at the date of this report:

4,500,000 options expiring 31 October 2013, exercisable at 15 cents each

20,000,000 options expiring 30 November 2013, exercisable at 10 cents each

60,000,000 options expiring 22 December 2013, exercisable at 10 cents each

90,000,000 options expiring 31 May 2013, exercisable at 15 cents each

4,500,000 options expiring 31 March 2013, exercisable at 15 cents each

No options over ordinary shares in the Company were issued during the year.

AUDITOR’S INDEPENDENCE DECLARATION

The lead auditor‟s independence declaration for the year ended 30 June 2011 has been received and

can be found on page 45 of the Annual Report.

NON AUDIT SERVICES

The Company paid an amount of $15,500 to the auditors, HLB Mann Judd, during the year ended 30

June 2011 for the provision of taxation compliance services. The directors are satisfied that the

provision of non-audit services is compatible with the general standard of independence for auditors

imposed by the Corporations Act 2001.

The directors are of the opinion that the services do not compromise the auditor‟s independence as all

non-audit services have been reviewed to ensure that they do not impact the integrity and objectivity

of the auditor and none of the services undermine the general principles relating to auditor

independence as set out in Code of Conduct APES 110 Code of Ethics for Professional Accountants

issued by the Accounting Professional and Ethics Standard Board.

PROCEEDINGS ON BEHALF OF THE COMPANY

No person has applied for leave of Court to bring proceedings on behalf of the company or intervene

in any proceedings to which the company is a party for the purpose of taking responsibility on behalf

of the company for all or any part of those proceedings.

On behalf of the Board

W Loxton

Director Perth, 28 September 2011 For

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CORPORATE GOVERNANCE STATEMENT

The Board of Directors of Gleneagle Gold Limited (“Gleneagle” or “Company”) is responsible for the

establishment of a corporate governance framework that has regard to the best practice

recommendations set by the ASX Corporate Governance Council. Gleneagle‟s objective is to achieve

best practice in corporate governance, having due regard to the practicality of implementation of the

best practice recommendations given the current nature and scale of the Company‟s activities, and the

Company‟s Board, senior executives and employees are committed to achieving this objective.

This statement summarises the corporate governance practices that have been adopted by the Board.

In addition to the information contained in this statement, the Company‟s website contains additional

details of its corporate governance procedures and practices.

ASX Best Practice Recommendations

The ASX Listing Rules require listed companies to include in their Annual Report a statement

disclosing the extent to which they have complied with the ASX best practice recommendations in the

reporting period. The recommendations are not prescriptive and if a company considers that a

recommendation is inappropriate having regard to its particular circumstances, the company has the

flexibility not to adopt it. Where the Company considered it was not appropriate to presently comply

with a particular recommendation the reasons are set out in the relevant section of this statement.

Board of Directors

Role of the board

The Board‟s primary role is the protection and enhancement of long-term shareholder value.

To fulfil this role, the Board is responsible for the overall corporate governance of the Company

including formulating its strategic direction, approving and monitoring capital expenditure, setting

remuneration, appointing, removing and creating succession policies for directors and senior

executives, establishing and monitoring the achievement of management‟s goals and ensuring the

integrity of internal control and management information systems. It is also responsible for approving

and monitoring financial and other reporting.

Board Processes

The Board has established a framework for the management of the Company including a system of

internal control, a business risk management process and appropriate ethical standards.

The full Board schedules meetings, including strategy meetings and any extraordinary meetings, as

necessary to address any specific significant matters that may arise. The agenda for meetings is

prepared in conjunction with the Board and Company Secretary. Standing items include the

management report, financial reports, strategic matters, governance and compliance. Submissions are

circulated in advance.

The Company is not currently considered to be of a size, nor is its affairs of such complexity to justify

the establishment of separate board committees, including a Nomination Committee, Remuneration

Committee or an Audit Committee. Accordingly, all matters that may be considered by such

committees are dealt with by the full board. Details of the board‟s procedures in respect to each of

these areas are further outlined within the Corporate Governance Statement below - see Nomination

Committee, Remuneration Committee and Audit Committee respectively.

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Director Education

The Company has a formal process to educate new directors about the nature of the business, current

issues, the corporate strategy and the expectations of the Company concerning performance of

directors. Directors also have the opportunity to visit Company sites and, where applicable, meet with

management to gain a better understanding of business operations. Directors are given access to

continuing education opportunities to update and enhance their skills and knowledge.

Independent Professional Advice and Access to Company Information

Each Director has the right of access to all relevant company information and to the Company‟s

executives and, subject to prior consultation with at least one other Non-Executive Director, may seek

independent professional advice from a suitably qualified adviser at the Company‟s expense. The

director must consult with an advisor suitably qualified in the relevant field, and obtain the Board‟s

approval of the fee payable for the advice before proceeding with the consultation. A copy of the

advice received by the director is made available to all other members of the board.

Composition of the Board

The names of the Directors of the Company in office at the date of this report are set out in the

Directors‟ Report on pages 2 to 8 of the Annual Report.

The composition of the Board is determined using the following principles:

A minimum of three directors, with a broad range of expertise both nationally and

internationally;

Directors having extensive knowledge of the Company‟s industries, and those which do not,

have extensive expertise in significant aspects of auditing and financial reporting, or risk

management and financing of public companies;

Although there is no appointed Chairman or Managing Director, at present, the roles of

Chairman and Managing Director are not to be exercised by the same individual; and

A maximum period of three years service, subject to re-election every three years (except for

the Managing Director).

Board members have experience in the management of public companies. The Board has at all times

during the year had a majority of independent directors as recommended by the ASX Corporate

Governance Council. The directors consider that the current number of independent directors in the

Company is appropriate for the effective execution of the board‟s responsibilities. The directors

periodically monitor the need to appoint additional independent directors.

Independent Directors

The Board has accepted the following definition of an independent director:

“An independent director is a director who is not a member of management, is a non-executive

director and who:

1. is not a substantial shareholder (under the meaning of the Corporations Act 2001) of the

Company or an officer of, or otherwise associated, directly or indirectly, with a substantial

shareholder of the Company;

2. has not within the last three years been employed in an executive capacity by the Company or

another group member, or been a director after ceasing to hold any such employment;

3. is not a principal of a professional adviser to the Company or another group member;

4. is not a significant consultant, supplier or customer of the Company or another group

member, or an officer of or otherwise associated, directly or indirectly, with a significant

consultant, supplier or customer;

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5. has no significant contractual relationship with the Company or another group member other

than as a director of the Company;

6. is free from any interest and any business or other relationship which could, or could

reasonably be perceived to, materially interfere with the director‟s ability to act in the best

interests of the Company.”

Remuneration of Directors

The Board is responsible for determining and reviewing compensation arrangements for themselves,

which may also include share option schemes, superannuation and professional indemnity and

liability policies. Any equity based remuneration will only be made with the prior approval of

shareholders in general meeting.

When setting fees and other compensation for non-executive Directors, the Board will seek

independent advice, if considered necessary, and apply Australian benchmarks.

Nomination Committee

The Board considers that a formally constituted Nomination Committee is not appropriate as the

Board, as part of its usual role, oversees the appointment and induction process for directors, and the

selection, appointment and succession planning process of the Company‟s executive officers. The

Board considers the appropriate skill mix, personal qualities, expertise and diversity of each position.

When a vacancy exists or there is a need for particular skills, the Board determines the selection

criteria based on the skills deemed necessary. The Board identifies potential candidates and may take

advice from an external consultant. The Board then appoints the most suitable candidate. Board

candidates must stand for election at the next general meeting of shareholders.

When a Chairman is appointed, it is anticipated that he/she would continually review the effectiveness

of the Board, individual directors, and senior executives. The other directors have an opportunity to

contribute to the review process. The reviews generate recommendations to the Board, which votes

on them. Directors displaying unsatisfactory performance are required to retire.

Remuneration Committee

The Board considered that a formally constituted Remuneration Committee is not appropriate as the

Board, as part of its usual role, oversees the appointment and remuneration of directors and the

Company‟s executive officers. Remuneration levels are competitively set to attract and retain

appropriately qualified and experienced directors and senior executives. The Board may seek

independent advice on the appropriateness of remuneration packages, given trends in comparative

companies both locally and internationally. Remuneration packages may include a mix of fixed

remuneration, performance-based remuneration, and equity-based remuneration.

The remuneration structures explained below are designed to attract suitably qualified candidates, and

to affect the broader outcome of maximising the Company‟s profitability. The remuneration

structures take into account:

Overall level of remuneration for each director and executive;

The executive‟s ability to control the performance of the relevant area; and

The amount of incentives within each executive‟s remuneration.

Shares and options can only be issued to Company Directors under a resolution at a general meeting

of shareholders.

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Non-Executive Directors may receive a base fee and can be remunerated by way of share and option

issues approved under a resolution at a general meeting of shareholders. Non-Executive Directors do

not receive performance based bonuses.

The Board has no established retirement or redundancy schemes.

Audit Committee


the establishment of a separate Audit Committee. Whilst the Company does not have a formally

constituted Audit Committee, the Board, as part of its usual role, undertakes audit related

responsibilities including:

Reviewing the annual and interim financial reports and other financial information distributed

externally. This includes approving new accounting policies to ensure compliance with Australian

Accounting Standards and generally accepted accounting principles, and assessing whether the

financial information is adequate for shareholders needs;

Assessing corporate risk assessment processes;

Assessing whether non-audit services provided by the external auditor are consistent with

maintaining the external auditor‟s independence. The external auditor provides an annual

declaration of independence which is consistent with APES110 Code of Ethics for Professional

Accountants.

Addressing any matters outstanding with auditors, Australian Taxation Office, Australian

Securities and Investments Commission, Australian Securities Exchange and financial

institutions.

Reviewing the nomination and performance of the external auditor. The external audit

engagement partner will be rotated every five years;

Assessing the adequacy of the internal control framework and the Company‟s code of ethical

standards;

Monitoring the procedures to ensure compliance with the Corporations Act 2001 and the ASX

Listing Rules and all other regulatory requirements; and

The directors review the performance of the external auditors on an annual basis and normally meet

with them during the year to:

Discuss the external audit plans, identify any significant changes in structure, operations, internal

controls or accounting policies likely to impact the financial statements and to review the fees

proposed for the audit work to be performed;

Review the annual and half-year reports prior to lodgement with the ASX, and any significant

adjustments required as a result of the auditor‟s findings, and to recommend board approval of

these documents, prior to announcement of results;

Finalise annual and half-year reporting to:

Review the results and findings of the auditor, the adequacy of accounting and financial

controls, and to monitor the implementation of any recommendations made;

Review the draft financial report and recommend board approval of the financial report;

and

As required, to organise, review and report on any special reviews or investigations deemed

necessary by the Board.

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The Board monitors the need to form an Audit Committee on a periodic basis.

Risk Management

Overview of the Risk Management System

The Board adopts practices designed to identify significant areas of business risk and to effectively

manage those risks in accordance with the Company‟s risk profile. This includes assessing,

monitoring and managing operational, financial reporting, and compliance risks for the Company.

The Company is not of a size nor is its affairs of such complexity to justify the establishment of a

formal system for reporting risk management and associated compliance and controls. Instead, a

director, in accordance with company policy, approves all expenditure, is intimately acquainted with

all operations and reports all relevant issues to the other directors at the directors‟ meetings. The

company secretary has declared to the Board, that the aforementioned system is working efficiently

and effectively.

The operational and other compliance risk management have also been assessed and found to be

operating efficiently and effectively. All risk assessments covered the entire part of the financial year

that the Company operated and the period up to the signing of the annual financial report for all

material operations in the Company.

Risk Profile


the establishment of a separate Risk Management Committee. Instead, the Board, as part of its usual

role and through direct involvement in the management of the Company‟s operations ensures risks are

identified, assessed and appropriately managed. Where necessary, the Board draws on the expertise

of appropriate external consultants to assist in dealing with or mitigating risk.

Major risks arise from such matters as actions by competitors, government policy changes, difficulties

in sourcing raw materials, the robustness of the technologies being used or proposed to be used,

environment, occupational health and safety, financial reporting and the purchase, development and

use of information systems.

Risk Management, Compliance and Control

The Board is responsible for the overall risk management, compliance and control.

Practices have been established to ensure:

Capital expenditure and revenue commitments above a certain size obtain prior Board approval;

Financial exposures are controlled, including the potential use of derivatives;

Occupational health & safety standards and management systems are monitored and reviewed to

achieve high standards of performance and compliance with regulations;

Business transactions are properly authorised and executed;

The quality and integrity of personnel (see below);

Financial reporting accuracy and compliance with the financial reporting regulatory framework

(see below); and

Environmental regulation compliance (see below).

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Quality and Integrity of Personnel

The Company conducts a comprehensive review of the ability and experience of potential employees

prior to appointment. Informal appraisals will be conducted regularly with continuous feedback and

on the job monitoring and training for all employees. Formal appraisals will be conducted at least

annually for all employees. Training and development and appropriate remuneration and incentives

with regular performance reviews will create an environment of co-operation and constructive

dialogue with employees and senior management.

Financial Reporting

The company secretary has declared, to the Board that the Company‟s financial reports are founded

on a sound system of risk management and internal compliance and control which implements the

policies adopted by the board.

Environmental Regulation

The Company‟s operations are subject to significant environmental regulation in relation to its

operational activities. The Company is committed to achieving a high standard of environmental

performance. The Board is responsible for the regular monitoring of environmental exposures and

compliance with environmental regulations.

The Board believes that the Company has adequate systems in place for the management of its

environmental requirements and is not aware of any breach of those environmental requirements as

they apply to the Company.

Internal Audit

The Company does not have a formally established internal audit function. The Board ensures

compliance with the internal controls and risk management procedures previously mentioned.

Internal Control Framework

The Board acknowledges that it is responsible for overall internal control framework, but recognises

that no cost effective internal control system will preclude all errors and irregularities.

To assist in discharging this responsibility, the Board instigates an internal control framework that can

be described under two headings:

Financial Reporting – Quarterly actual results are reported and reviewed by the Board. The

consolidated entity reports to shareholders half-yearly.

Continuous disclosure – the Company has a policy that all shareholders and investors have

equal access to the Company‟s information and has procedures to ensure that all price

sensitive information is disclosed to the ASX in accordance with the continuous disclosure

requirements of the Corporations Act 2001 and ASX Listing Rules. A comprehensive process

is in place to identify matters that may have a material effect on the price of the Company‟s

security to ensure that any such matters are disclosed to the ASX. The Board and the

Company Secretary are responsible for all communications with the ASX.

External auditors

The auditors of Gleneagle have open access to the Board of Directors at all times.

The nomination of external auditors is the annual responsibility of the Board.

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The Board will ensure the establishment of an effective internal control framework to safeguard the

Company's assets, maintain proper accounting records and ensure the reliability of financial

information compiled by the Company.

Ethical Standards

All directors, managers and employees are expected to act with the utmost integrity and objectivity,

striving at all times to enhance the reputation and performance of the Company.

Conflict of Interest

Directors must keep the Board advised, on an ongoing basis, of any interest that could potentially

conflict with those of the Company. The Board has developed procedures to assist directors to

disclose potential conflicts of interest.

Where the Board believes that a significant conflict exists for a director on a board matter, the director

concerned is not present at the meeting whilst the item is considered.

Code of conduct

The Company is not currently considered to be of a size, nor are its affairs of such complexity to

justify the establishment of a formalised Code of Conduct. The Company has adopted certain

induction procedures to inform newly appointed directors, managers and employees of their rights and

their duty to act with utmost integrity and objectivity.

Trading in Company securities by directors and employees

The Board has adopted a Securities Trading Policy which complies with the requirements of Listing

Rule 12.12 which regulates dealings by Directors, officers and employees in securities issued by the

Company.

The policy, which is available on the Company‟s website, includes the Company‟s closed periods,

restrictions on trading that apply to the Company‟s key management personal, trading that is not

subject to the policy, exceptional circumstances in which key management personnel may be

permitted to trade during a prohibited period with prior written clearance and the procedure for

obtaining written clearance. The policy provides that employees, directors and officers must not enter

into transactions or arrangements which operate to limit the economic risk of their security holding in

the Company without first seeking and obtaining written acknowledgement from the Board.

Communication with Shareholders

Whilst the Board has not formally documented the Company‟s continuous disclosure procedures, the

Board, as part of its usual role, provides shareholders with information using comprehensive

continuous disclosure processes which includes identifying matters that may have a material effect on

the price of the Company‟s securities, notifying them to the ASX and issuing media releases.

In summary, the continuous disclosure processes operate as follows:

The Board and the company secretary are responsible for all communications with the ASX.

Matters that may have an effect on the price of the Company‟s securities are advised to the ASX

on the day they are discovered. Senior executives monitor all areas of the group‟s internal and

external environment;

The full annual financial report is made available to all shareholders, and includes relevant

information about the operations of the Company during the year, changes in the state of affairs

and details of future developments;

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The half-yearly report contains summarised financial information and a review of the operations

of the Company during the period. The half-year reviewed financial report is lodged with the

ASX, and sent to any shareholder who requests it;

Proposed major changes in the Company which may impact on share ownership rights are

submitted to a vote of shareholders;

All announcements made to the market, and related information (including information provided

to analysts and the media), are released to the ASX;

Transcripts of any address to shareholders at the Company‟s Annual General Meeting are lodged

with the ASX; and

The external auditor attends the Annual General Meeting to answer any questions concerning the

audit and the content of the Auditor‟s Report.

The Board encourages full participation of shareholders at the Annual General Meeting, to ensure a

high level of accountability and identification with the Company‟s strategy and goals. Important

issues are presented to the shareholders as single resolutions.

The shareholders are requested to vote on the appointment and aggregate remuneration of directors,

the granting of options and shares to directors and changes to the constitution. Copies of the

constitution are available to any shareholder who requests it.

BEST PRACTICE

RECOMMENDATION

COMMENT

1 Lay solid foundations for management and oversight

1.1 Companies should establish the

functions reserved to the board and

those delegated to senior executives

and disclose those functions.

The Company's Corporate Governance Policy includes a

Board Charter, which discloses the specific responsibilities of

the Board. The Company has not established the functions

delegated to senior executives at this time, as there are no

other senior executives at this time other than the directors.

1.2 Companies should disclose the

process for evaluating the

performance of senior executives.

The Board will monitor the performance of senior

management, including measuring actual performance against

planned performance. The Board has also adopted a policy to

assist in evaluating Board performance.

1.3 Companies should provide the

information indicated in the Guide to

reporting on Principle 1.

The Company will explain any departures (if any) from best

practice recommendations 1.1 and 1.2 in its annual reports.

An evaluation of senior executives did not take place in the

financial year as there are no executives other than the

directors.

A copy of matters reserved for the Board, including the Board

Charter, is maintained at the Company‟s registered office.

2 Structure the board to add value

2.1 A majority of the board should be

independent

directors.

A majority of the Board are independent Directors.

2.2 The chair should be an independent

director.

The Company does not have a Chairperson at this time and

when the Company has a suitable project an appropriate

Chairperson will be appointed.

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2.3

The roles of chair and chief executive

officer should not be exercised by the

same individual.

The Company will appoint a chief executive when a suitable

project is identified.

2.4 The board should establish a

nomination committee.

No formal nomination committee has been adopted by the

Company as yet. The Board, as a whole, currently serves as a

nomination committee. The Board considers that the

Company is not yet of a size that warrants the establishment

of a nomination committee.

2.5 Companies should disclose the

process for evaluating the

performance of the board, its

committees and individual directors.

The Chairman will review the composition of the Board and

the performance of each Director to ensure that it continues to

have a mix of skills and experience necessary for the conduct

of the Company's activities. A new Director will receive an

induction appropriate to his or her experience.




The Company will provide details of each Director, such as

their skills, experience and expertise relevant to their position,

together with an explanation of any departures (if any) from

best practice recommendations 2.1, 2.2, 2.3, 2.4 and 2.5 in its

annual reports.

A description of the skills and experience of each director and

their period of office is contained within the Directors‟

Report.

A description of the procedure for the selection and

appointment of new directors and re election of incumbents is

contained within the Board Charter which is maintained at the

Company‟s registered office.

3 Promote ethical and responsible decision-making

3.1 Companies should establish a code of

conduct and disclose the code or a

summary of the code as to:

the practices necessary to maintain

confidence in the company's integrity

the practices necessary to take into

account their legal obligations and

the reasonable expectations of their

stakeholders

the responsibility and

accountability of individuals for

reporting and investigating reports of

unethical practices.


Code of Conduct for Directors and Key Executives, which

provides a framework for decisions and actions in relation to

ethical conduct in employment.

The Code of Conduct states that all stakeholders are entitled

to expect the highest professional standards from employees,

directors and officers of the Company. Compliance with the

Code and the Company‟s other policies will ensure

compliance with the Corporations Act and will contribute to

the good corporate governance of the Company.

3.2 Companies should establish a policy

concerning trading in company

securities by directors, senior

executives and employees, and

disclose the policy or a summary of

that policy.

The Corporate Governance Policy includes a Securities

Trading Policy that provides comprehensive guidelines on

trading in Company securities. The Securities Trading Policy

sets out the Company‟s policy regarding the trading in

Company securities. The policy is separate from and

additional to the legal constraints imposed by the common

law, the Corporations Act and the ASX Listing Rules.





practice recommendations 3.1, 3.2 and 3.3 in its annual

reports. The trading policy is available on the Company‟s

website.

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4 Safeguard integrity in financial reporting

4.1 The board should establish an audit

committee.

No formal audit committee has been adopted by the Company

as yet. The Board, as a whole, currently serves as an audit

committee. The Board considers that the Company is not yet

of a size that warrants the establishment of an audit

committee.

4.2 The audit committee should be

structured so that it:

consists only of non-executive

directors

consists of a majority of

independent directors

is chaired by an independent chair,

who is not chair of the board





committee.

4.3 The audit committee should have a

formal charter.





committee.





practice recommendations 4.1, 4.2 and 4.3 in its annual

reports.

5 Make timely and balanced disclosure

5.1 Companies should establish written

policies designed to ensure

compliance with ASX Listing Rule

disclosure requirements and to ensure

accountability at a senior executive

level for that compliance and disclose

those policies or a summary of those

policies.

The Company has a continuous disclosure program in place

designed to ensure the compliance with ASX Listing Rule

disclosure and to ensure accountability at a Board level for

compliance and factual presentation of the Company's

financial position.

The Company has a policy that all shareholders and investors

have equal access to the Company‟s information and has

procedures to ensure that all price sensitive information is

disclosed to the ASX in accordance with the continuous

disclosure requirements of the Corporations Act 2001 and

ASX Listing Rules. The Directors are to identify matters that

may have a material effect on the price of the Company‟s

security. The Board and the Company Secretary are

responsible for all communications with the ASX. This role

includes responsibility for ensuring compliance with the

continuous disclosure requirements in the ASX Listing Rules

and overseeing and co-ordinating information disclosures to

the ASX, analysts, brokers, shareholders, the media and the

public.


information indicated in Guide to

Reporting on Principle 5.

The Company will provide an explanation of any departures

(if any) from best practice recommendation 5.1 in its annual

reports.

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6 Respect the rights of shareholders

6.1 Companies should design a

communications policy for promoting

effective communication with

shareholders and encouraging their

participation at general meetings and

disclose their policy or a summary of

that policy.


Shareholder Communications Policy, which aims to ensure

that the shareholders are informed of all major developments

affecting the Company's state of affairs.

The Annual Report is distributed to all Shareholders who

have requested a copy. The Board ensures that the Annual

Report includes relevant information about the operations of

the Company during the year, changes in the state of affairs of

the Company and details of future developments, in addition

to the other disclosures required by the Corporations Act

2001.

The Half-yearly Report contains summarised financial

information and a review of the operations of the Company

during the period. Half-yearly reviewed Financial Statements

prepared in accordance with the requirements of Accounting

Standards and the Corporations Act 2001 are lodged with the

Australian Securities Exchange. The Financial Statements are

sent to any Shareholder who requests them.





(if any) from best practice recommendation 6.1 in its future

annual reports.

The Shareholder Communications Policy is available at the

Company‟s registered office.

7 Recognise and manage risk

7.1 Companies should establish policies

for the oversight and management of

material business risks and disclose a

summary of those policies.

The Board determines the Company's "risk profile" and is

responsible for overseeing and approving risk management

strategy and policies, internal compliance and internal

control.

The Board monitors areas of operational and financial risk,

and considers strategies for appropriate risk management

arrangements.

Where necessary, the Board will draw on the expertise of

appropriate external consultants to assist in dealing with or

mitigating areas of risk which are identified.

The Board is responsible for ensuring there are adequate

policies in relation to risk management, compliance and

internal control systems. The Company‟s policies are

designed to ensure strategic, operational, legal, reputation and

financial risks are identified, assessed, effectively and

efficiently managed and monitored to enable achievement of

the consolidated entity‟s business objectives.

Control procedures cover management accounting, financial

reporting, project appraisal, environment, IT security,

compliance and other risk management issues.

The Company's main areas of risk include:

economic risks

market conditions

operating risks

ongoing capital requirements

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7.2 The board should require

management to design and implement

the risk management and internal

control system to manage the

company's material business risks and

report to it on whether those risks are

being managed effectively. The board

should disclose that management has

reported to it as to the effectiveness

of the company's management of its

material business risks.

The Board is responsible for the design and implementation

of risk management and internal control systems and to

provide a report at the relevant time.

On the future appointment of executive directors the Board

will require that the executive are responsible for the design

and implementation of risk management and internal control

systems.

7.3 The board should disclose whether it

has received assurance from the chief

executive officer (or equivalent) and

the chief financial officer (or

equivalent) that the declaration

provided in accordance with section

295A of the Corporations Act is

founded on a sound system of risk

management and internal control and

that the system is operating

effectively in all material respects in

relation to financial reporting risks.

The Board will seek this relevant assurance from any

individuals appointed to perform the role of Chief Executive

Officer and the Chief Financial Officer.


information indicated in Guide to

Reporting on Principle 7.

The Company will provide an explanation of any departures (if

any) from best practice recommendations 7.1, 7.2 and 7.3 in

its annual reports.

The Company's policies on risk oversight and management of

material business risks are available at the registered office.

8. Remunerate fairly and responsibly

8.1 The board should establish a

remuneration committee.

No formal remuneration committee has been adopted by the

Company as yet. The Board, acting without the affected

Director participating in the decision making process,

currently serves as a remuneration committee.

8.2 Companies should clearly distinguish

the structure of non-executive

directors' remuneration from that of

executive directors and senior

executives.

The Board distinguishes the structure of non executive

Director's remuneration from that of executive Directors and

senior executives. Relevantly, the Company's Constitution

provides that the remuneration of non-executive Directors will

be not be more than the aggregate fixed sum determined by a

general meeting.

The Board is responsible for determining the remuneration of

any Director or senior executives (without the participation of

the affected Director).





(if any) from best practice recommendations 8.1 and 8.2 in its

future annual reports.

No formal remuneration committee has been adopted by the

Company as yet. The Board, acting without the affected

Director participating in the decision making process,

currently serves as a remuneration committee.

There are no schemes for retirement benefits other than

superannuation, for non executive directors.

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DIRECTORS' DECLARATION

In the opinion of the directors:

a) The financial statements, notes and additional disclosures included in the directors‟ report

designated as audited, are in accordance with the Corporations Act 2001, including:

i) giving a true and fair view of the Company‟s financial position as at 30 June 2011 and of

its performance for the year ended on that date; and

ii) complying with Accounting Standards (including the Australian Accounting

Interpretations) 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.

c) the financial statements and notes thereto are in accordance with International Financial

Reporting Standards issued by the International Accounting Standards Board.

This declaration has been made after receiving the declarations required to be made to the directors in

accordance with Section 295A of the Corporations Act 2001 for the financial year ended 30 June

2011.

This declaration is signed in accordance with a resolution of the Board of Directors.

W Loxton

Director

Dated at Perth this 28th day of September 2011.

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STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 JUNE 2011

2011 2010

NOTE

$ $

Revenues 2 498,420 157,449

Impairment of investments - (347,652)

Office and administration costs (23,046) (58,976)

Employee benefits expense (5,889) (108,731)

Depreciation and amortisation expense (11,544) (16,965)

Legal fees (39,480) (157,990)

Consultancy expenses (86,798) (332,528)

Compliance and regulatory expenses (20,093) (126,501)

Occupancy expenses (5,984) (86,829)

Directors‟ fees (187,500) (109,526)

Insurance expenses (14,291) (29,214)

Exploration and evaluation expenditure (44,334) (45,941)

Write-off costs incurred on Mauritania project - (81,855)

Foreign exchange (losses)/gains (28,313) (252,682)

Loss on disposal of assets - (12,937)

Other expenses (24,123) (77,115)

Profit/(Loss) from continuing operations before

income tax expense

7,025 (1,687,993)

Income tax expense

3

-

-

Profit/(Loss) for the year 7,025 (1,687,993)

Other Comprehensive Income - -

Total Comprehensive Income/(Loss) for the Year 7,025 (1,687,993)

Earnings / (loss) per share:

Basic earnings (loss) per share (cents per share) 14 - (0.69)

The accompanying notes form part of these financial statements.

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STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2011

2011 2010

NOTE

$ $

CURRENT ASSETS

Cash and cash equivalents 5 787,960 343,355

Trade and other receivables 6 16,895 86,703

TOTAL CURRENT ASSETS 804,855 430,058

NON CURRENT ASSETS

Plant and equipment 7 19,509 31,053

Exploration and evaluation expenditure 8 50,930 36,982

Financial assets 9 - 196,861

TOTAL NON CURRENT ASSETS 70,439 264,896

TOTAL ASSETS 875,294 694,954

CURRENT LIABILITIES

Trade and other payables 10 213,941 40,626

TOTAL CURRENT LIABILITIES 213,941 40,626

TOTAL LIABILITIES 213,941 40,626

NET ASSETS 661,353 654,328

EQUITY

Issued capital 11 14,947,129 14,947,129

Reserves 12 3,905,201 3,905,201

Accumulated losses (18,190,977) (18,198,002)

TOTAL EQUITY 661,353 654,328


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STATEMENT OF CHANGES IN EQUITY


Issued

Capital

Accumulated

Losses Reserves Total

$ $ $ $

Balance as at 1 July 2009 14,947,129 (16,510,009) 4,041,089 2,478,209

Loss for the year - (1,687,993) - (1,687,993)

Total comprehensive income for the year

-

(1,687,993) - (1,687,993)

Conversion of convertible note - - (135,888) (135,888)

Balance at 30 June 2010 14,947,129 (18,198,002) 3,905,201 654,328

Balance as at 1 July 2010 14,947,129 (18,198,002) 3,905,201 654,328

Profit for the year - 7,025 - 7,025

Total comprehensive income for the year - 7,025 - 7,025

Balance at 30 June 2011 14,947,129 (18,190,977) 3,905,201 661,353


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STATEMENT OF CASH FLOWS


2011 2010

NOTE

$ $

Cash Flows from Operating Activities

Reimbursement of expenses from advisors 345,249 -

Payments to suppliers and employees (236,085) (1,169,231)

Interest received 29,440 32,549

Exploration and evaluation expenditure (36,679) (45,941)

Net cash provided by/(used in) operating activities 15 101,925 (1,182,623)

Cash Flows From Investing Activities

Payments for exploration and evaluation (13,949) (128,426)

Payments for plant and equipment - (3,198)

Loans repaid by FSE - 102,014

Proceeds from sale of shares 384,942 480

Net cash provided by/(used in) investing activities 370,993 (29,130)

Cash Flows from Financing Activities

Convertible notes redeemed - (900,000)

Net cash (used in) financing activities - (900,000)

Net increase/(decrease) in cash and cash equivalents 472,918 (2,111,753)

Cash and cash equivalents at beginning of financial

year

343,355

2,707,790

Effect of exchange rate movements on cash (28,313) (252,682)

Cash and cash equivalents at end of financial year 15 787,960 343,355


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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

26

1. SUMMARY OF ACCOUNTING POLICIES

(a) Statement of significant accounting policies

The 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, Australian Accounting

Interpretations and other mandatory professional reporting requirements.

Gleneagle Gold Limited is a listed public company, incorporated and domiciled in Australia.

The financial report complies with Australian Accounting Standards, which include Australian equivalents

to International Financial Reporting Standards („AIFRS‟). Compliance with AIFRS ensures that the

financial report, comprising the financial statements and notes thereto, complies with International

Financial Reporting Standards („IFRS‟).

This financial report was authorised for issue by the Board on 28 September 2011.

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

of the financial report. The accounting policies have been consistently applied, unless otherwise stated.

The financial report has been prepared on an accruals basis and is based on historical costs modified by the

revaluation of selected non-current assets, financial assets and financial liabilities for which the fair value

basis of accounting has been applied.

(b) Adoption of new and revised standards

Changes in accounting policies on initial application of Accounting Standards

In the year ended 30 June 2011, the Company has reviewed all of the new and revised Standards and

Interpretations issued by the AASB that are relevant to its operations and effective for the current annual

reporting period.

It has been determined by the Company that there is no impact, material or otherwise, of the new and revised Standards and Interpretations on its business and therefore no change is necessary to Company accounting policies.

The Company has also reviewed all new Standards and Interpretations that have been issued but are not

yet effective for the year ended 30 June 2011. As a result of this review the Directors have determined that

there is no impact, material or otherwise, of the new and revised Standards and Interpretations on its

business and, therefore, no change necessary to Company accounting policies.

(c) Cash and Cash Equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term highly

liquid investments that are readily convertible to known amounts of cash and which are subject to an

insignificant risk of changes in value. Bank overdrafts are shown within short-term borrowings in current

liabilities on the statement of financial position.

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1. SUMMARY OF ACCOUNTING POLICIES (continued)

(d) Income Tax

The charge for current income tax expenses is based on the profit/loss for the year adjusted for any non-

assessable or disallowed items. It is calculated using tax rates that have been enacted or are substantively

enacted by the balance date.

Deferred income tax is provided on all temporary differences at the balance date between the tax bases of

assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised

or liability is settled. Deferred tax is credited in the statement of comprehensive income except where it

relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly

against equity.

Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be

available against which deductible temporary differences can be utilised.

The amount of benefits brought to account or which may be realised in the future is based on the

assumption that no adverse change will occur in income taxation legislation and the anticipation that the

Company will derive sufficient future assessable income to enable the benefit to be realised and comply

with the conditions or deductibility imposed by the law.

(e) Other Taxes

Revenues, expenses and assets are recognised net of the amount of GST except:

when 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, which 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 statement of financial position.

Cash flows are included in the statement of cash flows 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 of the amount of GST recoverable from, or payable to,

the taxation authority.

(f) Mineral Exploration and Evaluation and Development Expenditure

Mineral exploration expenditures and acquisition costs in relation to areas of interest have been written off

in the period in which they are incurred on projects except where exploration and evaluation activities in

the area have not yet reached a stage that permits reasonable assessment of the existence or otherwise of

economically recoverable reserves.

Exploration and evaluation costs, including the costs of acquiring licenses, are capitalised as exploration

and evaluation assets on an area of interest basis. Costs incurred before the Company has obtained the

legal rights to explore an area are recognised in the statement of comprehensive income.

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(f) Mineral Exploration and Evaluation and Development Expenditure (continued)

Exploration and evaluation assets are only recognised if the rights of the area of interest are current and

either:

(i) The expenditures are expected to be recouped through successful development and exploitation of

the area of interest; or

(ii) Activities in the area of interest have not at the reporting date, reached a stage which permits a

reasonable assessment of the existence or otherwise of economically recoverable reserves and

active and significant operations in, or in relation to, the area of interest are continuing.

Exploration and evaluation assets are assessed for impairment if (i) sufficient data exists to determine

technical feasibility and commercial viability, and (ii) facts and circumstances suggest that the carrying

amount exceeds the recoverable amount (see impairment accounting policy). For the purposes of

impairment testing, exploration and evaluation assets are allocated to cash-generating units to which the

exploration activity relates. The cash-generating unit shall not be larger than the area of interest.

When production commences, carried forward exploration and evaluation costs are transferred to mine

development cost at carrying value, and are amortised from the date on which commercial production

begins. Restoration costs expected to be incurred are provided for as part of exploration & evaluation

phases that give rise to the need for restoration.

When rights to tenure are held and expenditures have been expected to be recouped through development

and economic exploitation of the area of interest, the exploration costs are capitalised and amortised

against the estimated economical mine life once mining commences.

Costs of site restoration are provided over the life of the facility from when exploration commences and

are included in the costs of that stage. Site restoration costs include the dismantling and removal of mining

plant, equipment and building structures, waste removal, and rehabilitation of the site in accordance with

clauses of the mining permits. Such costs will be determined using estimates of future costs, current legal

requirements and technology on an undiscounted basis.

Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs

of site restoration, there is uncertainty regarding the nature and extent of the restoration due to community

expectations and future legislation. Accordingly the costs have been determined on the basis that the

restoration will be completed within one year of abandoning the site.

(g) Plant and Equipment

Plant and equipment are measured on the cost basis less depreciation and impairment losses.

The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess

of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the

expected net cash flows that will be received from the assets employment and subsequent disposal. The

expected net cash flows have been discounted to their present values in determining recoverable amounts.

The cost of fixed assets constructed within the Company will include the cost of materials, direct labour,

borrowing costs and an appropriate proportion of fixed and variable overheads.

Subsequent costs are included in the asset‟s carrying amount or recognised as a separate asset, as

appropriate, only when it is probable that future economic benefits associated with the item will flow to

the Company and the cost of the item can be measured reliably. All other repairs and maintenance are

charged to the statement of comprehensive income during the financial period in which they are incurred.

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(g) Plant and Equipment (continued)

Depreciation

The depreciation amount of all fixed assets including building and capitalised lease assets is depreciated

on a straight line basis over their useful lives to the Company commencing from the time the asset is held

ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of

the lease or the estimated useful lives of the improvements.

The depreciation rates used for each class of depreciable assets in the current year was:

Class of Fixed Asset Depreciation Rate

2011 2010

Plant and Equipment 25% 40%

Office Furniture and Equipment 25% 18%

The assets‟ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance date.

An asset‟s carrying amount is written down immediately to its recoverable amount if the asset‟s carrying

amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These

gains and losses are included in the statement of comprehensive income. When re-valued assets are sold,

amounts included in the revaluation reserve relating to that asset are transferred to retained earnings.

(h) Impairment of Assets

At each reporting date, the Company reviews the carrying values of tangible assets and intangible assets to

determine whether there is any indication that those assets have been impaired. If such an indication exists,

the recoverable amount of the asset, being the higher of the asset‟s fair value less costs to sell and value in

use, is compared to the asset‟s carrying value. Any excess of the asset‟s carrying value over its recoverable

amount is expensed to the statement of comprehensive income.

Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates

the recoverable amount of the cash-generating unit to which the asset belongs.

(i) Employee Benefits

Provision is made for the company‟s liability for employee benefits arising from services rendered by

employees to balance date. Employee benefits that are expected to be settled within one year have been

measured at the amounts expected to be paid when the liability is settled plus related on costs. Employee

benefits payable later than one year have been measured at the present value of the estimated future cash

outflows to be made for those benefits.

(j) Trade and other receivables

Trade receivables are measured on initial recognition at fair value and are subsequently measured at amortised cost using the effective interest rate method, less provision for impairment. Trade receivables are generally due for settlement within periods ranging from 15 days to 30 days.

Impairment of trade receivables is continually reviewed and those that are considered to be uncollectible are written off by reducing the carrying amount directly. An allowance account is used when there is objective evidence that the Company will not be able to collect all amounts due according to the original contractual terms. Factors considered by the Company in making this determination include known significant financial difficulties of the debtor, review of financial information and significant delinquency in making contractual payments to the Company.

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1. SUMMARY OF ACCOUNTING POLICIES (continued) (j) Trade and other receivables (continued) The impairment allowance is set equal to the difference between the carrying amount of the receivable and the present value of estimated future cash flows, discounted at the original effective interest rate. Where receivables are short-term, discounting is not applied in determining the allowance.

The amount of the impairment loss is recognised in the statement of comprehensive income within other

expenses. When a trade receivable for which an impairment allowance had been recognised becomes

uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries

of amounts previously written off are credited against other expenses in the statement of comprehensive

income.

(k) Financial assets

Financial assets in the scope of AASB 139 Financial Instruments: Recognition and Measurement are

classified as either financial assets at fair value through profit or loss, loans and receivables, held-to-

maturity investments, or available-for-sale investments, as appropriate. When financial assets are

recognised initially, they are measured at fair value, plus, in the case of investments not at fair value

through profit or loss, directly attributable transactions costs. The Company determines the classification

of its financial assets after initial recognition and, when allowed and appropriate, re-evaluates this

designation at each financial year-end.

All regular way purchases and sales of financial assets are recognised on the trade date i.e. the date that the Company commits to purchase the asset. Regular way purchases or sales are purchases or sales of financial assets under contracts that require delivery of the assets within the period established generally by regulation or convention in the marketplace Financial assets at fair value through profit or loss Financial assets classified as held for trading are included in the category „financial assets at fair value through profit or loss‟. Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term. Derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on investments held for trading are recognised in profit or loss.

(l) Revenue Recognition

Revenue from the sale of goods and disposal of other assets is recognised when the Company has passed

control of the goods or other assets to the buyer.

Interest income is recognised on an accrual basis.

(m) Earnings per share

Basic profit (loss) per share

Basic earnings per share (“EPS”) is calculated as net profit or loss, attributable to members, adjusted to

exclude any costs of servicing equity.

Diluted profit (loss) per share

Diluted EPS earnings is calculated by adjusting the basic EPS earnings for the after tax effect of financing

costs and the effect of conversion to ordinary shares associated with dilutive potential ordinary shares,

rather than including the notional earnings on the funds that would have been received by the entity had

the potential ordinary shares been converted.

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(m) Earnings per share (continued)

The diluted EPS weighted average number of shares includes the number of ordinary shares assumed to be

issued for no consideration in relation to dilutive potential ordinary shares, rather that the total number of

dilutive potential ordinary shares. The number of ordinary shares assumed to be issued for no

consideration represents the difference between the number that would have been issued at the exercise

price and the number that would have been issued at the average price.

The identification of dilutive potential ordinary shares is based on net profit or loss from continuing

ordinary operations, not net profit or loss and is applied on a cumulative basis, taking into account the

incremental earnings and incremental number of shares for each series of potential ordinary share.

(n) Share-based payment transactions

The Company provides benefits to employees (including senior executives) of the Company in the form of

share-based payments, whereby employees render services in exchange for shares or rights over shares

(equity-settled transactions).

When provided, the cost of these equity-settled transactions with employees is measured by reference to the

fair value of the equity instruments at the date at which they are granted. The fair value is determined by an

external valuer using the Black-Scholes model or the binomial option valuation model.

In valuing equity-settled transactions, no account is taken of any performance conditions, other than

conditions linked to the price of the shares of Gleneagle Gold Limited (market conditions) if applicable.

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over

the period in which the performance and/or service conditions are fulfilled, ending on the date on which

the relevant employees become fully entitled to the award (the vesting period).

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 Company‟s best estimate of the

number of equity instruments that will ultimately vest. 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. The statement of comprehensive income charge or credit for a period represents the

movement in cumulative expense recognised as at the beginning and end of that period.

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is only

conditional upon a market condition.

If 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 modification that increases the total

fair value of the share-based payment arrangement, or is otherwise beneficial to the employee, as measured

at the date of modification.

If 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 a modification of the original award, as described in the previous

paragraph.

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(o) Provisions

Provisions are recognised when the Company has a legal or constructive obligation, as a result of past

events, for which it is probable that an outflow of economic benefits will results and that outflow can be

reliably measured.

Provisions are measured at the present value of management‟s best estimate of the expenditure required to

settle the present obligation at the balance date. The discount rate used to determine the present value

reflects current market assessments of the time value of money and the risks specific to the liability. The

increase in the provision due to the passage of time is recognized as interest expense.

(p) Fair Value Estimates

The fair value of financial assets and financial liabilities must be estimated for recognition and

measurement or for disclosure purposes.

The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and

trading and available-for-sale securities) is based on quoted market prices at the balance date. The quoted

market price used for financial assets held by the Company is the current bid price; the appropriate quoted

market price for financial liabilities is the current ask price.

The fair value of financial instruments that are not traded in an active market (for example, over the

counter derivatives) is determined using valuation techniques. The Company uses a variety of methods

and makes assumptions that are based on market conditions existing at each balance date. Quoted market

prices or dealer quotes for similar instruments are used for long-term debt instruments held. Other

techniques, such as discounted cash flows, are used to determine fair value for the remaining financial

instruments. The fair value of interest-rate swaps is calculated as the present value of the estimated future

cash flows. The fair value of forward exchange contracts is determined using forward exchange market

rates at the balance date.

The nominal value less estimated credit adjustments of trade receivables and payables are assumed to

approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by

discounting the future contractual cash flows at the current market interest rate that is available to the

Company for similar financial instruments.

(q) Issued Capital

Ordinary shares are classified as equity. Issued and paid up capital is recognised at the fair value of the

consideration received by the Company. Incremental costs directly attributable to the issue of new shares

or options are shown in equity as a deduction, net of tax, from the proceeds.

(r) Critical Accounting Estimates and Judgments

The directors evaluate estimates and judgments incorporated into the financial report based on historical

knowledge and best available current information. Estimates assume a reasonable expectation of future

events and are based on current trends and economic data, obtained both externally and within the

Company.

Key Estimates – Impairment

The Company assesses impairment at each reporting date by evaluating conditions specific to the

Company that may lead to impairment of assets. Where an impairment trigger exists, the recoverable

amount of the asset is determined. Value-in-use calculations performed in assessing recoverable amounts

incorporate a number of key estimates.

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(s) Trade and other payables

Trade payables and other payables are carried at amortised costs and represent liabilities for goods and

services provided to the Company prior to the end of the financial year that are unpaid and arise when the

Company becomes obliged to make future payments in respect of the purchase of these goods and services.

(t) Segment Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief

operating decision maker. The chief operating decision maker, who is responsible for allocating resources

and assessing performance of the operating segments, has been identified as the Board of Directors of

Gleneagle Gold Ltd.

2. 2011 2010

$ $

2. REVENUE AND EXPENSES

(a) Revenue

Interest revenue 29,440 58,767

Fee income - 64,432

Gain on sale of investments 188,081 -

Expense re-imbursement 280,899 34,250

Total Revenue 498,420 157,449

(b) Expenses

Waterberg costs written off - 81,855

Depreciation of non-current assets

- plant and equipment 11,544 16,965

3. INCOME TAX EXPENSE

(a) The prima facie income tax payable (benefit) on pre-tax accounting profit (loss) from operations reconciles to the income tax expense in the financial statements as follows:

Profit/(Loss) 7,025 (1,687,993)

Income tax expense (benefit) calculated at 30% 2,107 (506,398)

Unused tax losses and tax offset not recognised as deferred tax assets

- 506,398

Previously unrecognised tax losses now recouped to reduce

current tax expense (2,107) -

Income tax expense / (benefit) reported in the statement of comprehensive income

-

-

The tax rate used in the above reconciliation is the corporate tax rate of 30% payable by Australian

corporate entities on taxable profits under Australian tax law. There has been no change in the corporate tax

rate when compared with the previous reporting period.

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3. INCOME TAX EXPENSE (continued)

2. 2011 2010

$ $

(b) Deferred tax balances not brought to account (calculated at 30%)

Deferred tax assets comprise:

Tax losses – revenue 1,020,122 965,805

Tax losses – capital 134,446 190,870

1,154,568 1,156,675

Deferred tax liabilities comprise:

Temporary differences - -

Net deferred tax assets/(liabilities) 1,154,568 1,156,675

The Company has tax losses arising in Australia. The tax benefit of these losses of $1,154,568 (2010:

$1,156,675) may be available for offset against future taxable profits.

Deferred tax assets have not been recognised in respect of these items because it is not probable that

future taxable profit will be available against which the Company can utilise the benefits thereof.

The future benefits of these losses will only be obtained if:

The Company derives future assessable income of a nature and at an amount sufficient to enable

the benefit from the deductions for the losses to be realised;

The Company continues to comply with the conditions for deductibility imposed by relevant tax

legislation; and

No changes in tax legislation adversely affect the Company in realising the benefit from the

deductions for losses.

4. KEY MANAGEMENT PERSONNEL

The specified directors of Gleneagle Gold Limited during the year were:

Wayne Gregory Loxton

Ian David Love

Leon Davies (Appointed 20 April 2011)

Gregory Denis O‟Reilly (Resigned 15 June 2011)

There were no specified executives during the year or the comparative period.

Employment Contracts of Directors and Senior Executives

There were no employment contracts in place as at the date of this report.

The Company‟s policy for determining the nature and amount of emoluments of board members and senior

executives of the company is as follows:

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4. KEY MANAGEMENT PERSONNEL (continued)

The remuneration structure for executive officers, including executive directors, is based on a number of factors, including length of service, particular experience of the individual concerned, and overall performance of the Company. Upon retirement key management personnel and executives are paid employee benefit entitlements accrued to date of retirement. The company may terminate any contracts without cause by providing one to three months written notice or making payment in lieu of notice based on the individual‟s annual salary component at industry award redundancy rates.

During the year, directors determined that remuneration will be accrued and not paid until such time as either a project is acquired, exploration success is achieved in its tenements or a significant capital raising is undertaken. The company intends to preserve as much cash as possible to give the greatest likelihood of achieving either of these objectives.

Details of the nature and amount of emoluments of key management personnel are as follows:

2011 Financial Year

PRIMARY

POST

EMPLOYMENT

EQUITY

Key Management Person Salary &

Fees

Non

Monetary

Superannuation

Contribution

Total

$ $ $ $ $

Wayne Gregory Loxton 60,000 - - - 60,000

Ian David Love 60,000 - - - 60,000

Gregory Denis O‟Reilly 57,500 - - - 57,500

Leon Davies 10,000 - - - 10,000

Totals 187,500 - - - 187,500

2010 Financial Year

PRIMARY

POST

EMPLOYMENT

EQUITY

Key Management Person Salary &

Fees

Non

Monetary

Superannuation

Contribution

Total

$ $ $ $ $

Wayne Gregory Loxton - - - - -

Ian David Love - - - - -

Gregory Denis O‟Reilly - - - - -

Edwin Leith Boyd 204,824 - - - 204,824

Malcolm Keith Smartt 64,806 - 3,612 - 68,418

Gavin Angus Rodie 47,917 - 2,250 - 50,167

Christopher Jones 45,805 - - - 45,805

Totals 363,352 - 5,862 - 369,214

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4. KEY MANAGEMENT PERSONNEL (continued)

Shareholdings

Number of shares held by Directors and Executives during the year as follows:-

Balance

01/07/2010

Options

Exercised

Acquired/

(disposed)

Net Change

Other

Balance

30/06/2011

Wayne Loxton 40,500,000 - 852,016 - 41,352,016

Ian Love - - 4,000,000 - 4,000,000

Gregory O‟Reilly - - 4,000,000 4,000,000* -

Leon Davies - - - 230,000* 230,000

* - denotes holdings on date of appointment or resignation

Balance

01/07/2009

Options

Exercised

Acquired/

(disposed)

Net Change

Other

Balance

30/06/2010

Wayne Loxton - - - 40,500,000* 40,500,000

Ian Love - - - -* -

Gregory O‟Reilly - - - -* -

Edwin Boyd 353,636 - - (353,636)* -

Malcolm Smartt 454,546 - - (454,546)* -

Gavin Rodie 454,546 - - (454,546)* -

Christopher Jones - - - - -

* - denotes holdings on date of appointment or resignation

Option Holdings

Balance

01/07/2010

Options

Granted as

Remuneration

Options

Acquired

Net Change

Other #

Balance

30/06/2011

Number vested

and exercisable

Wayne Loxton 17,100,000

10,200,000

-

-

-

-

6,500,000

7,200,000

8,000,000

-

-

-

23,600,0001

17,400,0002

8,000,0003

23,600,000

17,400,000

8,000,000

Ian Love - - - - - -

Gregory O‟Reilly - - - - - -

Leon Davies - - - - - -

Balance

01/07/2009

Options

Granted as

Remuneration

Options

Acquired

Net Change

Other #

Balance

30/06/2010

Number vested

and exercisable

Wayne Loxton -

-

-

-

-

-

17,100,000

10,200,000

17,100,0001

10,200,0002

17,100,000

10,200,000

Ian Love - - - - - -

Gregory O‟Reilly - - - - - -

Edwin Boyd 1,125,0004 - - (1,125,000)* - -

Malcolm Smartt 1,125,0004 - - (1,125,000)* - -

Gavin Rodie 1,125,0004 - - (1,125,000)* - -

Christopher Jones - - - - - -

* - denotes holdings on date of appointment or resignation 1 Options have an exercise price of 15 cents and expire 31 May 2013 2 Options have an exercise price of 10 cents and expire 22 December 2013 3 Options have an exercise price of 10 cents and expire 30 November 2013 4 Options have an exercise price of 15 cents and expire 31 October 2013.

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2. 2011 2010

$ $

5. CASH AND CASH EQUIVALENTS

Cash at bank 787,960 343,355

Cash at bank earns interest at floating rates based on daily bank deposit rates.

6. TRADE AND OTHER RECEIVABLES

Current

Trade debtors - 64,350

GST receivable 16,895 22,353

16,895 86,703

7. PLANT AND EQUIPMENT

Office Furniture and Equipment

At cost 55,959 55,959

Accumulated depreciation (36,450) (24,906)

Net carrying amount 19,509

31,053

Reconciliation

At 1 July, net of accumulated depreciation and impairment 31,053 57,758

Additions - 3,197

Disposals - -

Loss on disposal - (12,937)

Depreciation expense (11,544) (16,965)

At 30 June, net of accumulated depreciation and impairment 19,509 31,053

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2011 2010

8. EXPLORATION AND EVALUATION EXPENDITURE

$ $

Exploration and Evaluation 50,930 36,982

Movement in carrying amounts

Expenditure brought forward 36,982 36,352

Exploration and evaluation expenditure capitalised during the year 13,948 82,485

Write off of exploration expenses - (81,855)

Expenditure carried forward 50,930 36,982

The value of the Company‟s interest in exploration and evaluation expenditure is dependent upon:

the continuance of the Company‟s rights to tenure of the areas of interest;

the results of future exploration; and

the recoupment of costs through successful development and exploitation of the areas of interest, or

alternatively, by their sale.

The Company‟s Australian exploration properties may be subjected to claim(s) under native title, or

contain sacred sites, or sites of significance to Aboriginal people. As a result, exploration properties or

areas within the tenements may be subject to exploration restrictions, mining restrictions and/or claims for

compensation. At this time, it is not possible to quantify whether such claims exist, or the quantum of

such claims.

9. FINANCIAL ASSETS

Listed securities – at fair value - 196,861

Listed securities are readily saleable with no fixed terms. All securities held in listed companies are

valued at their fair value.

10. TRADE AND OTHER PAYABLES

Current (unsecured)

Trade payables and accruals

- Other corporations

- Directors and director related entities

26,441

187,500

40,626

-

213,941 40,626

Terms and conditions relating to the above financial instruments:

Trade payables are non-interest bearing and are normally settled on 30 day terms.

Directors have determined that amounts payable to directors and director related entities will be

accrued and not paid until such time as either a project is acquired, exploration success is achieved in

its tenements or a significant capital raising is undertaken.

Due to the short term nature of these payables, their carrying value is assumed to approximate their

fair value.

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2. 2011 2010

$ $

11. ISSUED CAPITAL

244,906,085 Ordinary shares (2010: 244,906,085) 14,947,129 14,947,129

Value of shares

At the beginning of the reporting period 14,947,129 14,947,129

Shares issued during the year - -

At the end of the reporting period 14,947,129 14,947,129

Number of Shares No. No.

Fully paid ordinary shares

At the beginning of the reporting period 244,906,085 244,906,085

Shares issued during the year - -

At the end of the reporting period 244,906,085 244,906,085

At shareholders‟ meetings each ordinary share is entitled to one vote in proportion to the paid up amount

of the share when a poll is called, otherwise each shareholder has one vote on a show of hands.

Unlisted Options (as at Balance date)

At balance date, the following options over unissued ordinary shares were outstanding:

4,500,000 options expiring 31 October 2013, exercisable at 15 cents each

20,000,000 options expiring 30 November 2013, exercisable at 10 cents each

60,000,000 options expiring 22 December 2013, exercisable at 10 cents each

90,000,000 options expiring 31 May 2013, exercisable at 15 cents each

4,500,000 options expiring 31 March 2013, exercisable at 15 cents each

12. RESERVES

2011

$ 2010

$

Share based payments reserve (a) 3,905,201 3,905,201

(a) Share based payments reserve

Balance at beginning of financial year 3,905,201 3,905,201

Balance at end of financial year 3,905,201 3,905,201

The share based payments reserve records the value of options issued using the Black-Scholes option

pricing model.

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13. FINANCIAL INSTRUMENTS

Financial risk management objectives

The Company did not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes. The use of financial derivatives was governed by the Company‟s policies approved by the Board of directors, which provide written principles on the use of financial derivatives. Compliance with policies and exposure limits is reviewed by the directors on a continuous basis.

(a) Interest rate risk management

The following table details the Company‟s exposure to interest rate risk as at 30 June 2011:

2011

Variable

interest rate

Maturity dates

Non

interest

bearing

Total

Less than

1 year

1 year

1-2

years

$ $ $ $ $

Financial assets:

Cash and cash equivalents 787,960 - - - 787,960

Trade receivables - - - 16,895 16,895

Financial liabilities:

Trade payables - - - 213,941 213,941

2010

Variable

interest rate

Maturity dates

Non

interest

bearing

Total

Less

than 1yr

1 year

1-2

years

$ $ $ $ $

Financial assets:

Cash and cash equivalents 343,355 - - - 343,355

Trade receivables - - - 86,703 86,703

Financial liabilities:

Trade payables - - - 40,626 40,626

(b) Interest rate risk sensitivity analysis

The company is not materially affected by changes in interest rate.

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13. FINANCIAL INSTRUMENTS (continued)

(c) Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the company. The Company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from defaults.

The Company does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies.

(d) Fair value of financial instruments

AASB 7 Financial Instruments: Disclosures requires disclosure of fair value measurements by level of the

following fair value measurement hierarchy:

• quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1)

• inputs other than quoted prices included within level 1 that are observable for the asset or liability,

either directly (as prices) or indirectly ( derived from prices) (level 2), and

• inputs for the asset or liability that are not based on observable market data (unobservable inputs)

(level 3).

2011

Level 1 Level 2 Level 3 Total

$ $ $ $

Assets

Financial assets at fair value through profit or loss - - - -

2010

Level 1 Level 2 Level 3 Total

$ $ $ $

Assets

Financial assets at fair value through profit or loss 196,861 - - 196,861

(e) Liquidity risk management

The company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.

Management monitor the rolling forecasts of the Company‟s liquidity on the basis of expected cash flow. Forecasted liquidity for the financial year following 30 June 2011 is as follows:

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13. FINANCIAL INSTRUMENTS (continued)

The following table details the expected maturity of the Company‟s financial assets and liabilities based on

the earliest date of maturity or payment respectively. The amounts are stated on an undiscounted basis and

include interest.

Less than

1 month

$

1 – 3

Months

$

3 months

– 1 year

$

1 – 5

years

$

2011

Financial Assets:

Non-interest bearing 16,895 - -

Variable interest rate 787,960 - -

Fixed interest rate - -

804,855

Financial Liabilities:

Non-interest bearing 26,441 - 187,500 -

26,441 - 187,500 -

2010

Financial Assets:

Non-interest bearing 86,703 - - -

Variable interest rate 343,355 - - -

Fixed interest rate - - - -

430,058 - - -

Financial Liabilities:

Non-interest bearing 40,626 - - -

40,626 - - -

(f) Capital Risk Management

The Board does not deem necessary a formal Capital Risk Management Charter. The Company manages

its capital to ensure that it will be able to continue as a going concern whilst maximising the return to

shareholders.

14. EARNINGS / (LOSS) PER SHARE

2011

$

2010

$

(a) Profit / (loss) used in the calculation of basic and dilutive

loss per share

7,025 (1,687,993)

Number of

Shares

Number of

Shares

(b) Weighted average number of ordinary shares outstanding

during the year used in the calculation of basic loss per

share:

244,906,085

244,906,085

Basic earnings / (loss) per share (cents per share)

- (0.69)

Diluted loss per share is not calculated as there is not

considered any potential to increase the ordinary shares on

issue.

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15. CASH FLOW INFORMATION 2011

$

2010

$

(a) Reconciliation of cash and cash equivalents

For the purposes of the Statement of Cash Flows, cash and cash equivalents includes cash on hand and in banks and investments in money market instruments. Cash and cash equivalents at the end of the financial year as shown in the Statement of Cash Flows is reconciled to the related items in the Statement of Financial Position as follows:

Cash at bank 787,960 343,355

(b) Reconciliation of net cash flow used in operating

activities with profit / (loss) after income tax

Profit / (loss) 7,025 (1,687,993)

Non-cash flows in operating profit / (loss)

- Depreciation and amortisation expense 11,544 16,965

- Exploration expenditure written off - 81,855

- Foreign exchange losses 28,313 252,682

- Impairment of investments - 347,652

- Interest forgiven on settlement of convertible notes - (34,250)

- Loss on disposal of assets - 12,937

- (Profit)/Loss on sale of investments (188,081) 6

- Equity settled convertible note interest - (27,750)

Changes in assets and liabilities:

- Decrease in trade and other receivables 69,809 39,190

- Increase/ (decrease) in trade payables and other accruals 173,315 (183,917)

Net cash provided by/(used in) operating activities 101,925 (1,182,623)

16. AUDITORS’ REMUNERATION

The auditors of the Company are HLB Mann Judd

Remuneration of the auditor for:

- Auditing or reviewing the financial report

- Tax compliance services

29,850

15,500

31,350

12,941

45,350 44,291

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17. COMMITMENTS

Exploration Expenditure Commitments

In order to maintain current rights of tenure to mining tenements, the Company has the following

discretionary exploration expenditure requirements up until expiry of leases. These obligations, which are

subject to renegotiation upon expiry of the leases, are not provided for in the financial statements and are

payable:

2011 2010

$ $

Not longer than one year 21,240 21,240

Longer than one year, but not longer than five years - -

Longer than five years - -

21,240 21,240

If the Company decides to relinquish certain leases and/or does not meet these obligations, assets

recognised in the balance sheet may require review to determine the appropriateness of carrying values.

The sale, transfer or farm-out of exploration rights to third parties will reduce or extinguish these

obligations.

18. SEGMENT REPORTING

The Company has adopted AASB 8 Operating Segments which requires operating segments to be

identified on the basis of internal reports about components of the Company that are reviewed by the chief

operating decision maker in order to allocate resources to the segment and assess its performance. The

Board of Gleneagle Gold Limited reviews internal reports prepared as financial statements and strategic

decisions of the Company are determined upon analysis of these internal reports. During the year, the

Company operated predominantly in one business and geographical segment being the exploration sector

in Australia. Accordingly, under the „management approach‟ outlined only one operating segment has been

identified and no further disclosure is required in the notes to the financial statements.

19. RELATED PARTY INFORMATION

Transactions between related parties are on commercial terms and conditions, no more favourable than

those available to other parties unless otherwise stated.

Transactions with director related entities:

There were no related party transaction during the year. In the previous year, Mr Boyd‟s fees for the

provision of corporate and administration services totalling $138,572 were paid to the Elovadae Trust. Mr

Boyd held himself out as a non-executive director.

Details of directors‟ interests in shares and over options in the Company are disclosed in note 4.

20. EVENTS SUBSEQUENT TO REPORTING DATE

There are no matters or circumstances that have arisen since 30 June 2011 that have or may significantly

affect the operations, results, or state of affairs of the company in future financial years.

21. CONTINGENT LIABILITIES

As at the 30 June 2011 the Company did not have any contingent liabilities.

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HLB Mann Judd (WA Partnership) ABN 22 193 232 714 Level 4, 130 Stirling Street Perth WA 6000. PO Box 8124 Perth BC 6849 Telephone +61 (08) 9227 7500. Fax +61 (08) 9227 7533. Email: [email protected]. Website: http://www.hlb.com.au Liability limited by a scheme approved under Professional Standards Legislation

HLB Mann Judd (WA Partnership) is a member of

International, a worldwide organisation of accounting firms and business advisers.

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AUDITOR’S INDEPENDENCE DECLARATION As lead auditor for the audit of the financial report of Gleneagle Gold Limited for the year ended 30 June 2011, I declare that to the best of my knowledge and belief, there have been no contraventions of:

a) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

b) any applicable code of professional conduct in relation to the audit.

This declaration is in respect of Gleneagle Gold Limited.

Perth, Western Australia 28 September 2011

N G NEILLPartner, HLB Mann Judd

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HLB Mann Judd (WA Partnership) ABN 22 193 232 714 Level 4, 130 Stirling Street Perth WA 6000. PO Box 8124 Perth BC 6849 Telephone +61 (08) 9227 7500. Fax +61 (08) 9227 7533. Email: [email protected]. Website: http://www.hlb.com.au Liability limited by a scheme approved under Professional Standards Legislation

HLB Mann Judd (WA Partnership) is a member of

International, a worldwide organisation of accounting firms and business advisers.

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INDEPENDENT AUDITOR’S REPORT To the members of Gleneagle Gold Limited

Report on the Financial Report

We have audited the accompanying financial report of Gleneagle Gold Limited, which comprises the statement of financial position as at 30 June 2011, the statement of comprehensive income, the statement of changes in equity and the statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration for Gleneagle Gold Limited.

Directors’ Responsibility for the Financial Report

The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error.

In Note 1(a), the directors also state, in accordance with Accounting Standard AASB 101: Presentation of Financial Statements, that the financial report of Gleneagle Gold Limited complies with International Financial Reporting Standards.

Auditor’s Responsibility

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

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

Our audit did not involve an analysis of the prudence of business decisions made by directors or management.

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

Matters relating to the electronic presentation of the audited financial report This auditor’s report relates to the financial report and remuneration report of Gleneagle Gold Limited for the financial year ended 30 June 2011 included on Gleneagle Gold Limited’s website. The company’s directors are responsible for the integrity of the Gleneagle Gold Limited website. We have not been engaged to report on the integrity of this website. The auditor’s report refers only to the

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financial report and remuneration report identified in this report. It does not provide an opinion on any other information which may have been hyperlinked to/from the financial report. If users of the financial report are concerned with the inherent risks arising from publication on a website, they are advised to refer to the hard copy of the audited financial report and remuneration report to confirm the information contained in this website version of the financial report.

Independence

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

Auditor’s Opinion In our opinion:

(a) the financial report of Gleneagle Gold Limited is in accordance with the Corporations Act 2001, including:

(i) giving a true and fair view of the company’s financial position as at 30 June 2011 and of its performance for the year ended on that date; and

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

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

Report on the Remuneration Report

We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2011.The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

Auditor’s Opinion

In our opinion the Remuneration Report of Gleneagle Gold Limited for the year ended 30 June 2011 complies with section 300A of the Corporations Act 2001.

HLB MANN JUDD Chartered Accountants

Perth, Western Australia N G NEILL 28 September 2011 Partner

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SCHEDULE OF MINERAL TENEMENTS

AS AT 27 September 2011

Project Tenement Interest held by Gleneagle Gold Limited Peak Hill E52/1641 100% Horseshoe P52/1166 100%

P = Prospecting Licence

E = Exploration Licence

ASX ADDITIONAL INFORMATION

Additional information as required by the ASX Limited Listing Rules and not disclosed elsewhere

in this report is set out below. This information is current as at 27 September 2011.

Distribution of equity security holders (number of holders)

Category Shares

1-1,000 621

1,001-5,000 130

5,001-10,000 34

10,000-100,000 240

100,000 and over 201

TOTAL 1,226

There are 908 holders of shares holding less than a marketable parcel.

Quoted and unquoted equity securities

Equity Security Quoted Unquoted

Ordinary Shares 244,906,085 -

Options - 179,000,000

Voting rights

Ordinary shares carry one vote per share. There are no voting rights attached to the options in the

Company.

Restricted equity securities

There are no restricted securities.

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Twenty largest holders of quoted shares

Name Number of Shares %

1. MS DONNA JOY LOXTON <LOXTON INVESTMENT A/C> 40,500,000 16.54

2. JP MORGAN NOMINEES AUSTRALIA LIMITED <CASH

INCOME A/C> 32,562,165 13.30

3. HAO YUN LIMITED 17,329,546 7.08

4. SDG NOMINEES PTY LTD <T J STRAPP SUPER FUND A/C> 11,000,000 4.49

5. HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 8,001,901 3.27

6. KAPIRI HOLDINGS PTY LTD 7,531,164 3.08

7. MR DAVID JAMES PORTER 5,625,000 2.30

8. MRS ALLISON ANNETT <THE ANNETT INVESTMENT A/C> 4,204,546 1.72

9. CAPERANGE INVESTMENTS PTY LTD <SOUTHBANK EQUITY

SUPER A/C> 4,000,630 1.63

10. ARDLUSSA PTY LTD <V&V PENDAL SUPER FUND A/C> 4,000,000 1.63

11. GREATSIDE HOLDINGS PTY LTD 4,000,000 1.63

12. WILDARA PTY LTD 4,000,000 1.63

13. PERIZIA INVESTMENTS PTY LTD 2,931,165 1.20

14. MR DANH PHUONG NGUYEN 2,766,095 1.13

15. MS NADA GRANICH 2,500,000 1.02

16. MR RAFAEL MORENO 2,041,030 0.83

17. MR CURTIS BLADE <BLADES FAMILY ACCOUNT> 2,000,000 0.82

18. GECKO RESOURCES PTY LTD 2,000,000 0.82

19. SEVENTY THREE PTY LTD <KING SUPER FUND NO 3 A/C> 2,000,000 0.82

20. MR CHUANQING YANG 2,000,000 0.82

TOTAL 160,993,242 65.74

Substantial shareholders

The company has been notified of the following substantial shareholdings:

Ms Donna Joy Loxton <Loxton Investment A/C> 40,500,000

Stock Exchange

The Company is listed on the Australian Securities Exchange and has been allocated the code

“GLN”. The “Home Exchange” is Perth.

Other information

Gleneagle Gold Limited, is incorporated and domiciled in Australia, and is a publicly listed

company limited by shares.

On-market buy-back

There is no current on-market buy-back.

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