BARRA RESOURCES LIMITED

BARRA RESOURCES LIMITEDANNUAL REPORT 2010

ABN 76 093 396 859

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DIRECTORS

Executive ChairmanGary John BerrellBEc (Hons)

Non-Executive DirectorDean Barry GoodwinBAppSc (Geology), MAIG

Non-Executive DirectorGrant Jonathan Mooney CA

COMPANY SECRETARYGrant Jonathan Mooney CA

REGISTERED OFFICELevel 3, Mercury House33 Richardson StreetWest Perth WA 6005Phone: +61 8 9481 3911Fax: +61 8 9481 3955Website: www.barraresources.com.au

SOLICITORS TO THE COMPANYDLA Phillips Fox44 St Georges TerracePerth WA 6000

SHARE REGISTRYSecurity Transfer Registrars Pty Ltd770 Canning HighwayApplecross WA 6953Phone: +61 8 9315 2333Fax: +61 8 9315 2233Email: [email protected]

AUDITORSHLB Mann JuddLevel 4, 130 Stirling Street,Perth WA 6000

STOCK EXCHANGEThe Company’s securities are quoted on the Official List of the AustralianSecurities Exchange Limited (ASX)2 The EsplanadePerth WA 6000

ASX CODESShares: BAROptions: BARO

corporate directory

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CONTENTS

Chairman’s Report ……………………………………………………………………………………………..

x

Review of Operations…………………………………………………………………………………………..

x

Tenements …………………………………………………………………………………………………… xx

Directors’ Report …………………………………………………………………………………………… xx

Auditor’s Independence Declaration …………………………………………………………………………..

xx

Balance Sheet …………………………………………………………………………………………………..

xx

Income Statement …………………………………………………………………………………………… xx

Cash Flow Statement …………………………………………………………………………………………..

xx

Statement of Changes in Equity ………………………………………………………………………………..

xx

Notes to the Financial Statements ……………………………………………………………………………..

xx

Directors’ Declaration …………………………………………………………………………………………

xx

Independent Audit Report ……………………………………………………………………………………..

xx

Additional Information …………………………………………………………………………………………

xx

Corporate Governance ……………………………………………………………………………………….. xx

Project Location Map

Chairman’s Report ...................................................................................... 2Review of Operations ................................................................................... 4Tenements ................................................................................................... 15Directors’ Report ......................................................................................... 16 Auditor’s Independence Declaration .............................................................. 23Statement of Comprehensive Income ............................................................. 24Statement of Financial Position ....................................................................... 25Statement of Cash Flows ............................................................................... 26Statement of Changes in Equity ..................................................................... 27Notes to the Financial Statements .................................................................. 28Directors’ Declaration .................................................................................. 52Independent Audit Report ............................................................................. 53Additional Information & Corporate Governance ............................................. 55

coNteNts

proJect LocatioN Map

• Port Hedland

MINE/EXPLORATION

PROJECTS

EXPLORATION

BASE METALS

MT THIRSTY

PHILLIPS FIND

• Kununurra

• Meekatharra

250km

N

• Geraldton

• Perth

• Esperance

• Albany

• Leonora

• Norsman

• Kalgoorlie

RIVERINA

BURBANKS

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PAGE 2

cHairMaN’s report

CHAIRMAN’S REPORT

On behalf of the Board of Directors I take pleasure in presenting the 2010 Annual Report. The last financial year has yet again been another year with markets troubled with self doubt, reluctant lenders and cautious investors. For our Company, it can be best categorised as a year of consolidation as the Mt Thirsty Joint Venture (“MTJV”) progresses our cornerstone Mt Thirsty Cobalt-Nickel-Manganese Project through the pre-feasibility study stage (“PFS”). Our gold assets provided some welcome highlights with some very encouraging gold hits from the Phillips Find and Burbanks Projects. The Company is firmly committed to continuing with our dual strategy of getting Mt Thirsty into production whilst continuing to explore, develop and mine our gold assets. The 50% owned Mt Thirsty Cobalt-Nickel-Manganese Project is located 20 kilometres north-northwest of Norseman, Western Australia. The deposit differs significantly from typical WA nickel laterite occurrences in that it’s completely oxidised containing mainly goethite, haematite and manganese oxide minerals with very low clay content. This makes the deposit very amenable to cheaper atmospheric leaching techniques which don't require expensive and problematic autoclaves.

Metallurgical testing and PFS work in conjunction with MTJV partner Fission Energy Limited has highlighted the potential world class nature of this outstanding project. The PFS is expected to be completed in early 2011. The Mt Thirsty Project has the potential to emerge as the world’s fourth largest cobalt supplier with capacity to deliver 3,000 tonnes of cobalt, 9,000 tonnes of nickel and 13,000 tonnes of manganese per annum during the first 3 years of production. Cash costs have been estimated at around US$55 per tonne of ore treated, making the Mt Thirsty Project one of the lowest cost atmospheric leaching operations in the world. In October 2009 the Company delivered a presentation at the Mining Conference in Brisbane and was very encouraged by the audience response and follow up enquiries by local and overseas investors. The competition for investor dollars is fierce and we need to be ever vigilant in presenting our story when the

opportunities arise. The theme of our presentation was to highlight the size and relative low cost of leaching the cobalt and nickel using a single stage atmospheric leach process from our preferred flow sheet design for the Mt Thirsty Project. Cobalt is an important metal used primarily in the preparation of magnetic, wear-resistant and high strength alloys. In particular these super alloys are used in the construction of turbine blades for gas turbines and jet aircraft engines. Other major uses include hybrid car and mobile phone batteries, hip and knee replacement parts, nutritional supplements (cobalt is an element of vitamin B12), in the destruction of cancerous cells (Cobalt 60 is a radioactive isotope) and has been used to colour glass since the Bronze Age.

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BARRA RESOURCES LIMITED | ANNUAL REPORT 2010BARRA RESOURCES LIMITED | ANNUAL REPORT 2010

cHairMaN’s report

CHAIRMAN’S REPORT

Around 50 percent of the global cobalt production is sourced from Democratic Republic of Congo. This and surrounding countries in central Africa have been bedevilled by civil and political problems for many years. There appears to be no end in sight for the continuing turmoil. This political and social instability can only enhance the sovereign risk of the region. This risk has to manifest in doubts about the enforceability of long term supply contracts. We firmly believe this sovereign risk will be the basis of future Chinese, Indian or European support for the Mt Thirsty Project. Regardless of the attractiveness of the financial metrics of the project, the key to getting it funded will ultimately be determined by the level of comfort the lending organisation will have in the Project delivering consistent output over a lengthy period of time. During the year, exploration activities were focussed on testing the footwall ultramafic contact west of the Mt Thirsty Cobalt-Nickel-Manganese Oxide Deposit for a possible source of the oxide deposit. The MTJV was pleased with an exciting new nickel sulphide discovery 6 metres grading 3.4% nickel in MTRC015. Sulphide deposits are extremely difficult to locate due to their narrow twisting structures and to achieve this intersection early on in the drilling campaign was testament to the quality of geological mapping and interpretation. At the 100% owned Burbanks Project, the Company was rewarded for intensifying its gold exploration initiatives with the exciting return of 27 metres grading 10.28 grams per tonne gold including 9 metres grading 28.49 grams per tonne gold from RC hole BBRC219 at the new Trumpeter Prospect. This hole was drilled in an area of no previous drilling 1.3 kilometres along strike from the Burbanks Gold Mining Centre. Encouraging results were also returned from Burbanks North Prospect which has the potential to deliver a shallow oxide gold resource. Immediate follow-up drilling is underway. This success highlights the significant potential for discoveries along strike from existing mining operations in close proximity to historic gold production where in excess of 400,000 ounces has been produced. Also at the Burbanks Project, the Company continued its tribute mining operation with Mulgabbie Mining Pty Ltd (“Mulgabbie”) throughout the course of the financial year. The tribute mining and profit-sharing agreement with Kalgoorlie based Mulgabbie sees Mulgabbie bearing all development, stoping, transportation and milling costs while Barra shares 50/50 with Mulgabbie all profits from the operation. Mulgabbie has reported production

slower than hoped due to a raft of development issues that arose in and around the historical workings of the Burbanks mine. Many of these issues have now been overcome and production levels are on the rise. Mulgabbie have provided the Company with an optimistic outlook for production going forward. The Project has the potential to generate between A$1.0 million and A$2.5 million in revenue over the next 12 months by focussing on the high grade components of the major lodes utilising hand held and smaller mechanised mining methods to maximise grade and reduce costs. The Company also intensified its gold exploration initiatives at its Phillips Find Gold Project where priority drilling was completed at advanced gold targets at Truth and Bob Hope prospects and at the high priority Diablo prospect where exploration drilling during 2009 encountered shallow high-grade mineralisation. Drilling effectively defined the Diablo Lode which will be evaluated to determine the economic viability of a small scale open pit operation. Potential exists for repeat structures along strike of the Diablo Lode which will be investigated in the coming months. Still at Phillips Find, the Newminster Deposit is being progressed toward production following an independent pre-feasibility optimisation study which found that an economically robust open pit could be mined to 45 metres depth. Tribute mining possibilities are currently being investigated to ensure maximum return for shareholders with minimum risk. The Company successfully raised $ 3.5 million in August 2009 to fund our continued expenditure on the PFS for the Mt Thirsty Cobalt-Nickel Project, to continue the exploration of sulphide targets at Mt Thirsty and the on-going extensional gold drilling programme at Phillips Find and Burbanks. The Company was extremely grateful for the shareholder support and the issue was fully subscribed. On behalf of the Board, I would sincerely like to thank our many loyal shareholders who have stood by the Company and we look forward to an active 2010/11.

Gary Berrell Executive Chairman

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REVIEW OF OPERATIONS

Table 1: Drilling Statistics for 2009-2010 Financial Year

Burbanks

Project Mt Thirsty

Project Phillips Find

Project

TOTAL

Quarter Holes Metres Holes Metres Holes Metres Holes Metres

1 2 3

Rot

ary

Air

B

last

4 154 5,430 154 5,430 TO TOTAL RAB 154 5,430

1 14 1,765 14 1,765 2 3 3 666 3 666

Rev

erse

C

ircu

lati

on

4 50 3,817 4 775 24 2,242 78 6,834 TOTAL RC 95 9,265

1 3 1,970 3 1,970 2 3 1,359 3 1,359 3 357* 2 241 2 598

Dia

mon

d D

rilli

ng

4 2 545 2 545 TOTAL DD 10 4,472

TOTAL DRILL METRES 19,167 Note: *Drill hole extension of MTDD008

review of operatioNs

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BARRA RESOURCES LIMITED | ANNUAL REPORT 2010



MT THIRSTY PROJECT (Barra 50%) The 66 square kilometre Mt Thirsty Cobalt-Nickel-Manganese Project is located 20 kilometres north-northwest of Norseman, Western Australia, in a well endowed nickel terrain (Figure 1). It is a 50/50 joint venture between the Company and ASX listed Fission Energy Limited. Mt Thirsty has a current JORC1 Indicated Resource of 14.8 million tonnes at 0.14% cobalt, 0.59% nickel and 0.99% manganese and a JORC Inferred Resource of 14.2 million tonnes at 0.11% cobalt, 0.52% nickel and 0.77% manganese over a length of 1.3 kilometres and a width of up to 850 metres.

The defined Mt Thirsty Cobalt-Nickel-Manganese Oxide Deposit has the potential to emerge as one of the world’s most significant cobalt suppliers with metallurgical testwork indicating that high recoveries of cobalt, nickel and manganese can be achieved through low temperature atmospheric leaching. In addition to the Cobalt-Nickel-Manganese Oxide Resource, the Mt Thirsty joint venture tenements have the potential to host primary nickel sulphide mineralisation within the same ultramafic sequence. These sulphide occurrences may well lead to the discovery of a much larger primary host to the oxide deposit. 1The Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves prepared by the Joint Ore Resources Committee, The Australian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Mineral Council of Australia as at 9 March 2005.

Figure 1: Mt Thirsty Project Location Plan and Regional Geology

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MT THIRSTY PROJECT (Continued) Nickel Sulphide Diamond Drilling Program Early in 2009 the MTJV partners set out to explore the Mt Thirsty area for a potential primary source to the world class Cobalt-Nickel-Manganese Oxide Deposit. Subsequent detailed surface geological mapping identified a very large lava channel system at Mt Thirsty associated with the formation of the surface oxide deposit. Lava channels are the primary target for the accumulation of nickel sulphide mineralisation on the basal footwall contact or bottom of the channel. The exploration strategy is based on a geological model similar to the basal lava channel embayment type structures observed in Kambalda. The first hole drilled in July 2009 was MTDD008 which was designed to test a substantial electromagnetic (‘EM’) anomaly adjacent to the Mt Thirsty Cobalt-Nickel-Manganese Oxide Deposit. This hole intersected several zones of disseminated and stringer sulphide mineralisation including some nickel sulphides. Most encouraging was the intersection of a 6 centimetre thick fragment of massive nickel sulphide caught up in a much younger Proterozoic aged mafic dyke. It is thought that during its emplacement from depth, the dyke may have collected nickel sulphides from the basal footwall contact. This model formed the basis of the 2009/2010 exploration strategy for nickel sulphides on the basal footwall contact within the tenement package. During the year, hole MTDD008 was extended and a further 5 diamond holes were drilled within tenement E63/373 to test several priority targets adjacent to the oxide resource (MTDD025 to MTDD026) and along the basal footwall contact (MTDD009 to MTDD011) for a total of 3,426 metres (Figure 2). Holes MTDD025 to MTDD026 were designed to further follow-up the two EM conductors tested by MTDD008. Hole MTDD025 failed to reach target depth while hole MTDD026 successfully intersected several metres of stringer nickel sulphides similar to hole MTDD008. Unfortunately, only anomalous nickel results were returned from this zone of stringer sulphides. Holes MTDD009 to MTDD011 designed to test the potential up dip plunge extent of the interpreted lava channel and to also test encouraging Nickel:Chromite ratios failed to return significant intersections but clearly showed a geological and geochemical vectoring toward a lava channel located potentially south of MTDD011. Reverse Circulation drilling (“RC”) conducted during the year (MTRC009 to MTRC011, MTRC014 to MTRC017; 1,441 metres) focussed on a potential lava channel positioned several hundred metres south of diamond hole MTDD011. Holes MTRC009 to MTRC011 failed to reach the footwall contact as they were drilled too far east of the basal footwall contact. Holes MTRC014 to MTRC017 were drilled closer to the contact with MTRC015 intersecting 6 metres grading 3.4% nickel adjacent to the basal footwall contact (Figure 3). This very encouraging result lead to the drilling in August

of holes MTRC018 to MTRC023. Holes MTRC020 and MTRC022 drilled 50 metres north of MTRC015 intersected 2 metres grading 5.9% nickel and 2 metres grading 3.5% nickel respectively (Figure 4). These very encouraging intersections remain open in all directions and will be a primary focus for the MTJV in the coming year. At the Woodcutters prospect located 6 kilometres further to the west north-west of Mt Thirsty within tenement E63/1113, two diamond holes (WCDD001 and WCDD002; 805m) were completed to test surface and down-hole EM targets. No significant intersections were returned however a strong off-hole conductor located 100 metres north of WCDD001 was identified. Cobalt-Nickel-Manganese Oxide Deposit Metallurgical Testwork During the year, ten large diameter triple tube PQ diamond drill holes (MTDD013 to MTDD022; 466 metres) were drilled adjacent to existing air core holes within the oxide orebody. This core will be used to further determine the metallurgical response across the deposit and the ore sensitive aspects of the mineral processing flow sheet. Pre-feasibility Study Metallurgical testing and PFS work in conjunction with MTJV partner Fission Energy Limited has highlighted the potential world class nature of this outstanding project. The Mt Thirsty Project has the potential to emerge as the world’s fourth largest cobalt supplier with capacity to deliver 3,000 tonnes of cobalt, 9,000 tonnes of nickel and 13,000 tonnes of manganese per annum during the first 3 years of production. Cash costs have been estimated at around US$55 per tonne of ore treated, making the Mt Thirsty Project one of the lowest cost atmospheric leaching operations in the world. The deposit differs significantly from typical WA nickel laterite occurrences in that is completely oxidised containing mainly goethite, haematite and manganese oxide minerals with very low clay content. This makes the deposit very amenable to cheaper atmospheric leaching techniques which don't require expensive and problematic autoclaves. Due to the intense oxidation of the ores, mining is extremely low cost as the ores can be extracted without the need for blasting. The majority of this soft ore is shallow and flat lying occurring only 10 to 15 metres below surface. Another advantage to the deposit is the location of the high grade ore zones. They are situated closest to the surface allowing the deposit to be high graded during the first 3 to 4 years of production, dramatically reducing capital payback. The PFS is expected to be completed early in 2011. Pending a favourable outcome, the MTJV partners are confident that the Project has all of the necessary ingredients to attract a major international cobalt refiner/off-take partner to fund final Feasibility and Project construction.


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Figure 2: Mt Thirsty Drill Hole Location Plan and Geology showing Cross Section locations


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Figure 3: Mt Thirsty Interpreted Cross Section 6446450N Showing Location of Nickel Sulphide Intersection

Figure 4: Mt Thirsty Interpreted Cross Section 6446510N Showing Location of Nickel Sulphide Intersection

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BURBANKS GOLD PROJECT (100% Barra; 50/50 Tribute Mining Agreement established) The Burbanks Project is located 9 kilometres southeast of Coolgardie and consists of granted tenements totalling 22.5 square kilometres and covering over 5 kilometres of strike extent of the Burbanks shear. The Burbanks Mining Centre has produced in excess of 400,000 ounces from predominantly above 150 metres vertical depth from both historical underground mine workings, modern open pits and current Barra underground production. During the year, the Company completed a significant RC drilling program to test three prospects; Burbanks North, Fangjaw and Pipeline. The program consisted of 50 RC holes (BBRC170 to BBRC219) for 3,817 metres targeting potential open pit resources along strike of existing gold mining operations. Burbanks North At Burbanks North, 33 RC holes (BBRC170 to BBRC202; 2,449 metres) were drilled to improve confidence in the interpretation of the mineralised zones of the existing shallow oxide resource located along strike to the north of the underground operations at Burbanks (Figure 5). This infill program tested an area 350 metres in strike and 150 metres in width. The results of the program were highly encouraging and provided the Company with the necessary confidence in the interpretation to commence a preliminary resource estimation and open-pit optimisation study with a view to commencing a shallow open-cut operation in the near future. Best intersections include 10 metres grading 3.85 grams per tonne gold from 17 metres in BBRC182 including 6 metres grading 5.74 grams per tonne gold, 10 metres grading 3.90 grams per tonne gold from 21 metres in BBRC186 including 6 metres grading 6.07 grams per tonne

gold and 6 metres grading 4.18 grams per tonne gold from 49 metres in BBRC190. Mineralisation at Burbanks North remains open in all directions. Further drilling to test the strike extent of Burbanks North is anticipated once preliminary resource estimation work has been completed. Trumpeter BBRC219 was drilled 100 metres to the west of the Burbanks North Prospect in an area not previously tested by drilling. Whilst the area, now referred to as ‘Trumpeter’, was previously flagged as a drilling target, no work was planned until late 2010. The decision to drill BBRC219 was made based on encouraging surface mapping whilst drilling was in progress at Burbanks North. This hole returned an outstanding result of 27 metres grading 10.28 grams per tonne gold from 60 metres associated with highly favourable diorite; the same rock associated with the Burbanks underground mine (Figure 5). The intersection included 9 metres grading 28.49 grams per tonne gold from 60 metres along the hangingwall contact of the diorite and 8 metres grading 2.34 grams per tonne gold from 79 metres along the footwall contact of the diorite. Follow-up drilling around BBRC219 to confirm the result and test immediate strike extensions to the north and south has commenced. Fangjaw At Fangjaw, 13 RC holes (BBRC203 to BBRC213 and BBRC217 to BBRC218; 1,012 metres) were drilled with mixed results (Figure 5). The drilling was designed to infill existing broad zones of low-grade supergene gold mineralisation about 300 metres along strike to the north of Burbanks North, in an attempt to identify a potential primary source to the supergene mineralisation.

Best results include 9 metres grading 2.81 grams per tonne gold from 61 metres including 5 metres grading 4.81 grams per tonne gold in BBRC207, 9 metres grading 1.08 grams per tonne gold from 42 metres including 3 metres grading 1.91grams per tonne gold, 5 metres grading 1.16 grams per tonne gold from 58 metres, and 4 metres grading 1.26 grams per tonne gold from 67 metres in BBRC209 and 2 metres grading 3.89 grams per tonne gold from 20 metres, 8 metres grading 1.62 grams per tonne gold from 29 metres, and 7 metres grading 1.27 grams per tonne gold from 42 metres in BBRC210. Whilst the drilling confirmed the existence of several narrow quartz lodes within the supergene zone, it did not identify any significant primary source to the supergene mineralisation. Fangjaw remains a high priority target due to the abundance of supergene gold mineralisation and its association with the same structural system and geology as Burbanks North. Although grades are lower in comparison, there is sufficient evidence to suggest that higher grade lodes may exist to the western side of the prospect area where mineralisation is associated with sheared diorites; similar to Burbanks North. Pipeline At Pipeline, 3 RC holes (BBRC214 to BBRC216; 269 metres) were drilled to follow-up on two previous high-grade intersections (Figure 5). All holes failed to intersect any significant mineralisation. The prospectivity of Pipeline has been subsequently downgraded. Gold Production The Company recommenced mining operations on 15 June 2009 at the Burbanks gold mine under a new tribute mining and profit-sharing arrangement put in place by the Company with Mulgabbie.


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BURBANKS GOLD PROJECT (Continued) Burbanks has a current Indicated Resource of 250,000 tonnes at 3.43 grams per tonne gold for 27,570 ounces and an Inferred Resource of 141,000 tonnes at 2.92 grams per tonne gold for 13,240 ounces at a 1.0 grams per tonne lower gold grade cut-off, compiled in accordance with the JORC guidelines (Table 2).

Mulgabbie have concentrated their mining efforts within the 3 gram per tonne cut-off resource which comprises 108,000 tonnes grading 5.23 grams per tonne gold in the Indicated category and 51,000 tonnes grading 4.34 grams per tonne gold in the Inferred category. Mulgabbie successfully extracted a 40 metre by 30 metre high grade ore stoping block on the 325 metre level within the Dahmu Reef. This ore was processed at Ramelius’ Burmill milling operation for 3,660 tonnes at 7.04

grams per tonne gold for 828 ounces. Additional revenue was received from stockpile sales of 1,000 tonnes at 4.4 grams per tonne gold for approximately 141 ounces. This totalled $229,000 revenue for the Company. A new mine design to optimise production from Dahmu and Eastern reefs in 2H2010 has been completed and underground mining is continuing.

Table 2: Burbanks Gold Resource at Varying Gold Cut-off Grades

Indicated Resource Category Inferred Resource Category Total Resource

Gold Cut-Off g/t Tonnage Ave/G* Tonnage Ave/G* Tonnage Ave/G* Ounces

1.0 250,000 3.43 141,000 2.92 391,000 3.24 40,800

1.5 224,000 3.68 126,000 3.12 349,000 3.48 39,100

2.0 184,000 4.10 105,000 3.39 289,000 3.84 35,700

2.5 143,000 4.63 77,000 3.81 219,000 4.34 30,600

3.0 108,000 5.23 51,000 4.34 159,000 4.95 25,400

4.0 66,000 6.38 22,000 5.53 88,000 6.17 17,500

5.0 43,000 7.43 11,000 6.80 53,000 7.31 12,500 Note: *Avg/G denotes the average block gold grade estimate in grams per tonne. Table above show rounded tonnages. This may cause some apparent computational discrepancies.

Figure 5: Burbanks RC Drill Hole Locations

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PHILLIPS FIND PROJECT (100%1 Barra)

The Phillips Find Project is located some 50 kilometres north of Coolgardie and consists of granted tenements totalling 38 square kilometres. The tenement package contains the Phillips Find Mining Centre (Figure 6) where some 50,000 ounces of gold has been mined. The Newminster Deposit, within the Phillips Find Mining Centre, has a current JORC Indicated Resource of 84,111 tonnes at 4.62 grams per tonne for 12,500 ounces and JORC Inferred Resource of 32,265 tonnes at 2.50 grams per tonne for 2,600 ounces at a 0.8 gram per tonne lower gold grade cut-off. Regionally, the Phillips Find Mining Centre is located at the intersection of several major gold producing structures. Controls on gold mineralisation are both lithologically and structurally complex. Alteration is intense throughout the system. Open pit mining has been relatively shallow at 50 metres depth below surface. Previous drilling to over 100 metres depth indicates gold mineralisation continues at depth beneath the Bacchus Gift and New Haven pits. Management rates the Phillips Find Mining Centre high on the list of exploration opportunities within the Company’s tenement portfolio. 1Tenements P16/2420-2425 85% Barra and 15% Phoenix Resources Pty Ltd

Figure 6: Phillips Find Drill Hole and Prospect Location

Newminster The Newminster gold deposit is located adjacent to the Bacchus Gift and Newhaven open pits within the historical Phillips Find Mining Centre which produced some 50,000 ounces of gold from historical underground and open pit mining operations over the past 100 years. This deposit hosts a JORC Indicated Resource of 84,111 tonnes at 4.62 grams per tonne for 12,500 ounces and a JORC Inferred Resource of 32,265 tonnes at 2.50 grams per tonne for 2,600 ounces. An independent study in 2009 determined that an economically robust open pit could be mined to a vertical depth of 45 metres. When evaluated using current mining and milling costs, Newminster’s “base case” optimum pit shell at A$1,250 per ounce would produce an operating profit of approximately A$2.8 million from 5,300 ounces of gold with cash costs estimated at A$694. The resource is situated on a granted mining lease already permitted for production with the potential to commence mining within months providing Barra with a short to medium term cashflow. The Company is presently considering tribute mining arrangements for the deposit similar to that currently in operation at its Burbanks underground gold mining operation. Exploration Bob Hope/Diablo* (Carbine Tenements – Barra 85% only) The Bob Hope/Diablo Prospects were subject to extensive exploration during the year. Following up on last year’s successful RAB drilling program a second phase infill RAB drilling program of 154 holes (PFRB106 to PFRB259; 5,430 metres) was completed targeting areas of anomalous gold mineralisation between the two prospects in addition to extensional drilling to the south of Diablo. Several anomalous trends were defined that require further follow-up in 2011 with the most encouraging target located 400 metres south of Diablo. Best results include 4 metres grading 0.85 grams per tonne gold from 24 metres in PFRB166, 4 metres grading 0.85 grams per tonne gold from 4 metres in PFRB175, 4 metres grading 0.57 grams per tonne from 40 metres in PFRB226 and 8 metres grading 0.20 grams per tonne from 56 metres in PFRB243. At Diablo 32 RC holes (PFRC001 to PFRC032; 3,375 metres) and 2 diamond holes (PFDD007 to PFDD008; 241 metres) were completed around RAB hole PFRB051, drilled in 2009, which returned 24 metres grading 4.6 grams per tonne gold. Best intersections include 6 metres grading 6.49 grams per tonne gold from 76 metres depth on PFRC014, 7 metres grading 30.90 grams per tonne gold from 67 metres depth in PFRC017, and 3 metres grading 70.78 grams per tonne gold from 61 metres depth in diamond hole PFDD007.

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PHILLIPS FIND PROJECT (Continued) Drilling effectively defined a 2 to 3 metre wide high-grade quartz vein hosted gold lode (Diablo Lode) over a strike length of 60 metres and a vertical height of 40 metres (Figure 7). The Company is presently working on an in-house modelling and preliminary resource calculation for the Diablo Lode. Truth During the year 6 RC holes (PFRC033 to PFRB038; 507 metres) were drilled at the Truth Prospect to test historical shallow gold mineralisation at depth. Best results include 2 metres grading 2.84 grams per tonne from 26 metres in PFRC034, 14 metres grading 0.8 grams per tonne from 41 metres including 5 metres grading 1.05 grams per tonne from 41 metres and 4

metres grading 1.01 grams per tonne from 49 metres in PFRC037, 1m grading 7.75 grams per tonne from 72 metres also in PFRC037, and 11 metres grading 0.85 grams per tonne from 65 metres including 3 metres grading 1.60 grams per tonne from 65 metres and 3 metres grading 1.11 grams per tonne from 73 metres in PFRC038. Geological interpretation suggests that gold mineralisation is associated with thrust related shearing along a dolerite footwall contact with basalt with several hangingwall and cross-cutting shears within the dolerite. This indicates that Truth appears to be structurally more complex than anticipated and will require substantially more drilling to fully determine the structural geometry of the mineralised system. Further work is planned for 2011.

Figure 7: Diablo Prospect Schematic Plan of Mineralisation

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RIVERINA PROJECT (Barra 30% nickel rights) The Riverina Project is located 125 kilometres north of Coolgardie on granted tenements that cover an area of approximately 120 square kilometres. Joint Venture partner and manager RRPL earned 70% equity in the project in June 2006 and in August 2007 the joint venture sold the project tenements and gold rights to Monarch Gold Mining Company Limited (“Monarch”). RRPL (70%) and Barra (30%) retain the nickel rights to the Riverina Project and Monarch must maintain the tenements in good standing. Between 2005 and 2008 the Joint Venture actively explored the Martins Zone ultramafic unit for economic concentrations of nickel laterite and nickel sulphide mineralisation.

Drilling has defined a JORC compliant nickel laterite resource in the northern area of the Martins Zone containing 2,340,700 tonnes grading 1.01% nickel and 0.06% cobalt for 23,639 tonnes of nickel and 1,440 tonnes of cobalt (0.7% nickel lower cut), or 924,600 tonnes grading 1.3% nickel and 0.09% cobalt for 12,100 tonnes of nickel and 800 tonnes of cobalt (1.0% nickel lower cut). Exploration has also demonstrated that the Martins Zone ultramafic unit is prospective for nickel sulphide mineralisation, with drilling in the southern area of the Martins Zone returning narrow widths of high-grade remobilised massive nickel sulphide adjacent to an undeformed ultramafic footwall contact, including 2.00 metres grading 2.80% nickel from 152 metres and 0.40 metres grading 10.90% nickel from 251 metres.

The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Dean Goodwin who is a Member of the Australian Institute of Geoscientists. Dean Goodwin is a full-time employee of the Company. Dean Goodwin has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2005 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Dean Goodwin consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. The information in this report which relates to the Burbanks and Mt Thirsty Mineral Resources is based on information compiled by Alan Miller, a full time employee of Golder Associates Pty Ltd and who is a member of the Australasian Institute of Mining and Metallurgy. Alan Miller has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the March 2005 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves prepared by the Joint Ore Resources Committee, the Australian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and the Mineral Council of Australia.” Alan Miller consents to the inclusion in the report of the matters based on this information in the form and context in which it appears. The information in this report that relates specifically to Riverina Project to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Anthony Gray who is a Member of The Australian Institute of Geoscientists. Anthony Gray is a fulltime employee of RRPL and has sufficient experience, which is relevant to the style of and type of deposit under consideration and to the activity, which he is undertaking to qualify as a Competent Person as defined in the January 2005 Edition of the ‘Australasian Code for Reporting of Mineral Resources and Ore Reserves’. Anthony Gray consents to the inclusion in the report of the matters based on their information in the form and context in which it appears. The information in this report which relates to the Newminster Mineral Resource calculations is based on information compiled by Neil Newman, a once full time employee of Australian Mine Management and whom are corporate members of the Australasian Institute of Mining and Metallurgy. Neil Newman has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the March 2005 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves prepared by the Joint Ore Resources Committee, the Australian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and the Mineral Council of Australia.” Neil Newman consents to the inclusion in the report of the matters based on this information in the form and context in which it appears.


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teNeMeNts

TENEMENTS

Project Tenement Comments Project Tenement Comments Project Tenement

M15/161 M16/130 E30/283 P15/4776 M16/133 E30/332 P15/4777 M16/168 E30/333 P15/4778 M16/171 M30/16 P15/4779 M16/242 M30/43 P15/4780 M16/258 M30/60 P15/4781 P16/2323 M30/84 P15/5211 P16/2390 M30/91 P15/5212 P16/2391 M30/97 P15/5213 P16/2392 M30/98 P15/5281 P16/2393 M30/99

Burbanks 100%

P15/5282 P16/2394 M30/118 E63/373 P16/2395 M30/127 E63/1113 P16/2396 M30/133 P63/1453 P16/2397 M30/157 P63/1490 P16/2398 M30/178 P63/1491 P16/2399 M30/182 P63/1492 P16/2400 P30/986 P63/1493 P16/2401 P30/1006 P63/1494 P16/2402 P30/1007 P63/1495 P16/2403 P30/1008 P63/1496 P16/2404 P30/1017 P63/1497 P16/2405 P30/1018 P63/1498 P16/2406 P30/1019 P63/1499 P16/2407 P30/1020 P63/1500 P16/2408 P30/1021 P63/1501 P16/2409 P30/1022 P63/1502 P16/2410 P30/1023 E63/1267 P16/2420* P30/1024 E63/1268 P16/2421* P30/1025 E63/1303 P16/2422* P30/1026 E63/1304 P16/2423* P30/1027

MtThirsty 50%

P63/1749 P16/2424* P30/1028 P16/2425*

Barra 85% (Carbine

Tenements)

P30/1029

Phillips Find 100%

P16/2578 P30/1030 *Barra 85% and Phoenix Resources 15% P30/1031

P30/1032 P30/1033 P30/1034 P30/1035 P30/1036 P30/1038 P30/1039 P30/1040

Riverina 30% nickel rights

P30/1041

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BARRA RESOURCES LIMITED ABN 76 093 396 850

DIRECTORS’ REPORT

1

The Directors present their report together with the financial report on Barra Resources Limited (“Barra” or “the Company”) for the year ended 30 June 2010. In order to comply with the provisions of the Corporations Act 2001, the Directors report as follows:

Details of Directors The names and particulars of the Directors of the Company holding office during the financial year and at the date of this report are:

GARY JOHN BERRELL (54 years) BEc (Hons)

Executive ChairmanAppointed 22 March 2005

Mr Berrell has a background in banking and finance and was an Executive Director of Macquarie Bank for seven years. He has had over 24 years experience trading a broad range of products including foreign exchange, bonds, equities, futures and commodities. He has held a variety of management positions throughout this time. He has been involved in extensive committee work for financialmarkets associations covering areas of market regulation and prudential risk management, and has represented Australia at numerous overseas foreign exchange market conferences.

DEAN BARRY GOODWIN(46 years) B(App) Sc., MAIG

Non Executive Director - Technical

Appointed 24 September 2004

Mr Goodwin graduated from Curtin University in 1986 with a Bachelor of Applied Science (Geology). He spent 6 years with WesternMining Corporation Ltd in the capacity of exploration geologist. He was involved in the discovery of the Intrepid, Redoubtable and Santa Anna gold deposits under Lake Lefroy and worked closely with the nickel exploration team. In 1994 he joined Resolute Ltd as Senior Exploration Geologist spending 5 years in Kalgoorlie managing exploration for Chalice, Higginsville, Bullabulling and Bulong Projects. In 1999, Mr Goodwin was appointed Senior Exploration Geologist with LionOre Limited at the Bounty Gold Mine operationswhere he was responsible for the discovery of several auxiliary gold deposits.

Prior to joining Barra Resources as Managing Director he worked as an independent contract geologist exploring for nickel sulphides throughout Western Australia. Mr Goodwin’s enthusiasm combined with his gold and nickel exploration expertise has significantlycontributed to recent developments. Mr Goodwin stepped down from the position of Managing Director on 30 June 2010 to the position of Non-Executive Director – Technical.

GRANT JONATHAN MOONEY (43 years)

BBus CA

Non-Executive Director and Company SecretaryAppointed 29 November 2002

Mr Mooney is the principal of Perth-based corporate advisory firm Mooney & Partners, specialising in corporate compliance administration to public companies. He has gained extensive experience in the areas of corporate and project management since commencing Mooney & Partners in 1999. His experience extends to advice on capital raisings, mergers and acquisitions and corporate governance.

Currently, Mr Mooney serves as a director and company secretary to several ASX listed companies across a variety of industries including technology and resources. He is a Director of ASX listed resource companies Wild Acre Metals Limited and Phosphate Australia Limited and is Chairman of renewable energy company Carnegie Wave Energy Limited. Mr Mooney is a member of the Institute of Chartered Accountants in Australia.

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directors’ reportBARRA RESOURCES LIMITED ABN 76 093 396 850

DIRECTORS’ REPORT

2

Directorship of Other Listed Companies Directorships of other listed companies held by Directors in the three years immediately before the end of the financial year are as follows:

DIRECTORS NAME COMPANY PERIOD OF DIRECTORSHIP

Grant Jonathan Mooney Carnegie Wave Energy Limited (Formerly Carnegie Corporation Limited)

Phosphate Australia Limited

Ampella Mining Limited

Wild Acre Metals Limited

19 February 2008 to the present

14 October 2008 to the present

1 July 2008 to 24 November 2008

1 July 2007 to present

Directors’ Share and Option Holdings At the date of this report, the direct and indirect interest of the Directors in the shares and options of the Company were:

DIRECTORS NAME ORDINARY SHARES NUMBER

OPTIONS (UNLISTED) NUMBER

Gary Berrell 678,412 750,000

Dean Goodwin 2,922,667 2,250,000

Grant Jonathan Mooney 1,103,556 750,000

Principal Activities The Company's principal activity is gold, nickel and cobalt exploration and the development of their gold assets.

Operating Results The loss from ordinary activities after income tax of the Company for the year ended 30 June 2010 was $8,672,598(2009: $4,314,193 loss).

Future Developments Information as to the likely developments in the operations of the Company and the expected results of those operations in subsequent financial years has not been included in this report because, in the opinion of the Directors, it would prejudice the interests of the Company.

Environmental RegulationThe Company is required to carry out its activities in accordance with the Mining Laws and regulations in the areas in which itundertakes its exploration activities. The Company is not aware of any matter which requires disclosure with respect to any significant environmental regulation in respect of its operating activities.

Dividends No dividends have been paid or declared since the start of the financial year, and the Directors do not recommend the payment of a dividend in respect of the financial year.

Review of Operations The following activities were undertaken by the Company during the financial year ended June 2010:

a) Exploration drilling of nickel sulphides and metallurgical testwork on the Cobalt-Nickel-Manganese deposit at the Mt Thirsty Joint Venture Project, Located in the Eastern Goldfields, Western Australia;

b) Exploration drilling for gold and the extraction of 8,900 tonnes of ore at an average grade of 5.2 grams per tonne gold to produce 1,425 ounces at a recovery of 96% at Burbanks Project operated under a tribute mining agreement with Mulgabbie Mining Pty Ltd located in Eastern Goldfields, Western Australia;

c) Exploration drilling for gold was undertaken at Phillips Find Project in Eastern Goldfields, Western Australia; d) Also at Phillips Find, an independent study on the Newminster deposit was undertaken to review the potential to develop an open

pit mining operation;

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DIRECTORS’ REPORT

3

Review of Operations (continued) e) On 31 August 2009, the Company completed a placement of 28 million ordinary shares at an issue price of 12.5 cents per share

to raise $3.5 million; f) On 24 September 2009, the Company announced that it had agreed terms with FMR Investments Pty Ltd (“FMR”) whereby the

outstanding amount owing from Burbanks underground mining operations in 2008 totalling $648,434 would be satisfied by the issue to FMR of 5,187,472 ordinary shares in Barra at a deemed price of 12.5 cents per share; and

g) On 14 January 2010, the Company announced that shareholders of Barra Resources Limited as at 21 January 2010 will be offered the opportunity to participate on a priority basis in the proposed ASX listing of Wild Acre Metals Limited (“Wild Acre”). Wild Acre would seek to raise up to $2.5million by the issue of up to 12.5 million shares at an issue price of 20 cents each pursuant to a prospectus dated 14 January 2010. Wild Acre was subsequently admitted to the Official List of the ASX on 5 March 2010.

Significant Changes in the State of Affairs There was no significant change in the state of affairs of the Company during the financial year.

Significant Events Subsequent to End of Year There has not been any matter or circumstance that has arisen after balance date that has significantly affected, or may significantly affect, the operations of the Company, the results of those operations, or the state of affairs of the Company in future financial periods other than the following:

The Company announced a management restructure on 1 July 2010 whereby Dean Goodwin stood down as Managing Director effective at that date, but would remain on the Board as Non-Executive Director. The Chairman, Gary Berrell, would assume an executive role.

Share Options During the financial year and to the date of this report there were no options issued. 30,125,000 options were carried forward from prior periods.

At the date of this report, the following options are outstanding in respect of unissued ordinary shares in Barra Resources Limited:

NUMBER OF SHARES UNDER OPTIONS

EXERCISE PRICE EXPIRY DATE

25,625,000 $0.65 31 December 2010

1,250,000 $0.65 31 December 2010

1,250,000 $0.80 31 December 2010

1,250,000 $1.00 31 December 2010

750,000 (i) $0.65 11 December 2012

(i) Issued under the Employee Share Ownership Plan

The holders of these options do not have the right, by virtue of the option, to participate in any share issue or interest issue of the Company or of any other body corporate or registered scheme.

No options were exercised during the year.

Indemnifying Officer or Auditor During the financial year, the Company paid a premium in respect of a contract insuring the Directors of the Company, the Company Secretary and all Executive officers of the Company and related body corporate against a liability incurred as such a Director,Secretary or Executive officer to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.

The Company has not indemnified or agreed to indemnify the auditor of the Company or of any related body corporate against a liability incurred as the auditor.

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directors’ reportBARRA RESOURCES LIMITED

ABN 76 093 396 850

DIRECTORS’ REPORT

4

Directors’ Meetings There were 4 Directors’ meetings held during the financial year ended 30 June 2010. The names of Directors who held office during the financial year and their attendance at Board meetings is detailed below:

DIRECTOR NUMBER ATTENDED NUMBER ELIGIBLE TO ATTEND

Gary Berrell 4 4

Dean Goodwin 2 4

Grant Jonathan Mooney 4 4

There was also one circular resolution passed by the Board of Directors during the financial year.

As at the date of this report an Audit Committee of the Board of Directors did not exist due to the Directors of the Board having a close involvement in the operations of the Company. There are no other sub-committees of the Board.

Remuneration Report (audited) This report, which forms part of the directors’ report, details the amount and nature of remuneration of each Key Management Personnel of the Company. Other than Directors, there were no Executive officers of the Company included in Key Management Personnel during the year.

Remuneration Policy The remuneration policy is to provide a fixed remuneration component, performance related bonus and a specific equity related component. The Board believes that this remuneration policy is appropriate given the stage of development of the Company and theactivities which it undertakes and is appropriate in aligning executives objectives with shareholder and business objectives.

The remuneration policy in regards to settling terms and conditions for the Executive Directors has been developed by the Board taking into account market conditions and comparable salary levels for companies of similar size and operating in similar sectors.

The Board reviews the remuneration packages of all key management personnel on an annual basis. The maximum remuneration of Non-Executive Directors is to be determined by Shareholders in general meeting in accordance with the Constitution, the Corporations Act and the ASX Listing Rules, as applicable. At present the maximum aggregate remuneration of Non-Executive Directors is $400,000 per annum. The apportionment of Non-Executive Director Remuneration within that maximum will be made by the Board having regardto the inputs and value to the Company of the respective contributions by each Non-Executive Director. Remuneration is not linked to specific performance criteria.

The Board policy is to remunerate Non-Executive Directors at market rates for comparable companies for time, commitment and responsibilities. The Board determines payment to the Non-Executive Directors and reviews their remuneration on an individual basis, based on market practices, duties and accountability. Independent external advice is sought when required. Remuneration is not linked to the performance of the Company.

During the previous financial year the Board chose to suspend and/or reduce certain directors fee payments for a period of approximately 6 months while the Company’s short term cash position was able to improve. Following the completion of successfulfundraisings in April and May 2009, these fees were reinstated to previous levels.

The Company is a developing listed company with most of its funds allocated to specific exploration and new business developmentactivities. As a result, the Board has chosen to issue options to directors and executives as a key component of their remuneration, in order to retain the services of the directors and executives. The Board considers that each Key Management Personnel’s experience in the resources industry will greatly assist the Company in progressing its projects to the next stage of development and the identification of new projects. As such, the Board believes that the number of options granted to Key Management Personnel is commensurate to their value to the Company.

There are no service or performance criteria on the options granted to Key Management Personnel as, given the speculative nature of the Company’s activities and the small management team responsible for its running, it is considered the performance of the KeyManagement Personnel and the performance and value of the Company are closely related. The Board has a policy of granting options to key management personnel with exercise prices above the respective share price at the time that the options were agreed to be granted. As such, options granted to Key Management Personnel will generally only be of benefit if the Key Management Personnel perform to the level whereby the value of the Company increases sufficiently to warrant exercising the options granted. Given the stage of development of the Company and the high risk nature of its activities, the Board considers that the prospects of the Company and resulting impact on shareholder wealth are largely linked to the success of this approach, rather than by referring to current or prior year earnings.

Executives receive a superannuation guarantee contribution required by the Government, which is currently 9% and do not receive any other retirement benefit. Some individuals, however, have chosen to sacrifice part of their salary to increase payments towardssuperannuation. The Directors are not entitled to any termination benefits.

The Board does not impose any restrictions in relation to a person limiting his or her exposure to the risk in relation to the options issued by the Company.

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DIRECTORS’ REPORT

5

Services Agreements Executive Chairman Gary Berrell has an employment contract for a period of 3 years commencing on 1 September 2009. The Contract provides for a directors fee of $95,000 per annum plus statutory superannuation. The Contract has a requirement to provide 6 months notice of termination by either party.

Non-Executive Director Technical, Dean Goodwin, has an employment contract commencing on 1 July 2010. The Contract provides for a directors fee of $45,000 per annum plus statutory superannuation.

Non-Executive Director Grant Mooney has an Employee Services Agreement for a period of 3 years commencing on 1 September 2009. The Contract provides for a directors fee of $45,000 per annum plus statutory superannuation. The Contract has a requirement to provide 6 months notice of termination by either party.

Mooney & Partners Pty Ltd, a company associated with Grant Mooney has a services contract with the Company to provide company secretarial and administrative services to the Company for a period of 3 years commencing on 1 September 2009. The Contract provides for an annual fee of $96,000 per annum plus GST. The Contract has a requirement to provide 6 months notice of termination by either party.

No key personnel management are entitled to any termination payment apart from remuneration payable up to and including the termination date and any amounts payable due upon accrued leave.

Company Performance The table below sets out summary information about the Company’s earnings and movements in shareholder wealth for the five yearsto 30 June 2010:

2010 $

2009 $

2008 $

2007 $

2006 $

Revenue 206,927 232,236 5,288,066 14,704,939 60,834

Net loss before tax (8,672,598) (4,314,193) (10,740,383) (6,215,529) (967,954)

Net loss after tax (8,672,598) (4,314,193) (10,740,383) (6,215,529) (967,954)

2009 2008 2007 2006 Share price at start of year (cents) 8.7 19.0 56.0 27.5 17.0

Share price at end of year (cents) 5.0 8.7 19.0 56.0 27.5

Shares on issue at end of year 314,914,550 281,727,078 222,159,245 180,653,029 144,089,001

Market capitalisation at end of year (undiluted) $15,745,728 $24,510,256 $42,210,256 $101,165,696 $39,624,476

Basic earnings per share (cents) (2.82) (1.78) (5.28) (3.53) (0.72)

Diluted earnings per share (cents) (2.82) (1.78) (5.28) (3.53) (0.72)

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directors’ reportBARRA RESOURCES LIMITED

ABN 76 093 396 850

DIRECTORS’ REPORT

6

Remuneration Details of remuneration provided to Directors and Executives during the financial year are as follows:

SHORT-TERM EMPLOYEE BENEFITS

POST-EMPLOYMENT

BENEFITS

SHARE-BASED

PAYMENT

SHARE-BASED

PAYMENTS

DIRECTORS SALARY & FEES

$

BONUS

$

SUPER- ANNUATION

$

OPTIONS

$

TOTAL

$

PERCENTAGE PERFORMANCE

RELATED%

Gary Berrell (Executive Chairman)

Dean Goodwin (Managing Director, now Non-Executive Director)

2010

2009

2010

2009

89,167

60,000

250,090

212,323

-

-

-

-

8,025

5,400

17,186

19,062

-

-

-

-

97,192

65,400

267,276

231,385

0%

0%

0%

0%

Grant Jonathan Mooney (Non-Executive Director & Company Secretary)

2010

2009

147,420

108,644

-

-

4,050

2,700

-

-

151,470

111,344

0%

0%

TOTAL 2010 486,677 - 29,261 - 515,938

TOTAL 2009 380,967 - 27,162 - 408,129

Amounts paid to Grant Mooney include director’s fees of $45,000 and fees paid to a related party in respect of company secretarial and corporate services, totaling $102,420.

There are no contracts to which a Director is a party or under which the Director is entitled to a benefit other than as disclosed in the financial report. No director appointed during the period received a payment as part of his or her consideration for agreeing to hold the position.

There are no other individuals employed by the Company who meet the definition of ‘company executive’ under the Corporations Act2001.

Employee option plan On 11 December 2007 (grant date) the Company established an Employee Share Option Plan (ESOP) whereby the Company’s employees are given an opportunity to purchase shares in the Company. Each option converts into one ordinary share of Barra Resources Limited on exercise. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of expiry. No options were issued during the financial year under this plan. There are presently 750,000 options on issue pursuant to the ESOP.

No directors have received options under this plan.

During the financial year, the following share-based payment arrangements were in existence.

OPTION SERIES GRANT DATE EXPIRY DATE GRANT DATE FAIR VALUE

VESTING DATE

ESOP Tranche 1 11 December 2007 11 December 2012 $0.130 12 months from date of issue

ESOP Tranche 2 11 December 2007 11 December 2012 $0.181 24 months from date of issue Options series There are no further service or performance criteria that need to be met in relation to options granted under Tranches 1 or 2.

Value of options issued to Directors During the year ended 30 June 2010 no options were issued to Directors.

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DIRECTORS’ REPORT

7

Non Audit Services No non-audit services were provided by the auditor, HLB Mann Judd during the year.

Auditor’s Independence Declaration A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 23.

Signed on 20 September 2010 in accordance with a resolution of the Board, made pursuant to Section 298(2) of the Corporations Act 2001.

On behalf of the Directors:

GARY BERRELL - Chairman

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7HLB 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.auLiability 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.

Auditor’s Independence Declaration

As lead auditor for the audit of the financial report of Barra Resources Limited for the year ended 30 June 2010, 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 Barra Resources Limited.

Perth, Western Australia 20 September 2010

M R W OHM Partner, HLB Mann Judd

aUditor’s iNdepeNdeNce decLaratioN

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stateMeNt of coMpreHeNsive iNcoMe for tHe year eNded 30 JUNe 2010


Statement of Comprehensive Income for the year ended 30 June 2010

9

NOTE 30 JUNE 2010 $

30 JUNE 2009 $

Other income 4 206,927 232,236

Total Revenue 206,927 232,236

Disposal of exploration projects 5 40,000 (1,038,915)

Exploration & Development costs written off 5 (7,679,851) (1,907,835)

Employee benefits expense (331,064) (692,835)

Depreciation expense 5 (137,002) (139,493)

Consulting expenses (183,796) (230,660)

Rental expenses (159,801) (164,920)

Administration expenses (415,208) (240,513)

Finance expenses - (93,952)

Other expenses from ordinary activities (12,803) (37,306)

Loss before income tax expense (8,672,598) (4,314,193)

Income tax expense 6 - -

Loss for the year (8,672,598) (4,314,193)

Other comprehensive income 342,000 -

Total Comprehensive Income for the Year (8,330,598) (4,314,193)

Earnings Per Share

Basic loss per share (cents per share) 25 2.82 cents 1.78 cents

Diluted loss per share (cents per share) 25 2.82 cents 1.78 cents

The Statement of Comprehensive Income should be read in conjunction with the accompanying notes. For

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stateMeNt of fiNaNciaL positioN as at 30 JUNe 2010


Statement of Financial Position as at 30 June 2010

10

NOTE 30 JUNE 2010 $

30 JUNE 2009 $

CURRENT ASSETS

Cash and cash equivalents 9 2,019,069 1,776,813

Trade and other receivables 10 157,970 205,441

Other 11 8,726 9,415

TOTAL CURRENT ASSETS 2,185,765 1,991,669

NON CURRENT ASSETS

Financial assets 12 1,036,592 694,592

Property, plant and equipment 13 217,856 185,939

Exploration, evaluation and development expenditure 14 8,945,427 14,279,089

TOTAL NON CURRENT ASSETS 10,199,875 15,159,620

TOTAL ASSETS 12,385,640 17,151,289

CURRENT LIABILITIES

Trade and other payables 15 680,492 334,843

Borrowings 16 305,501 319,244

Provisions 17 90,000 125,000

TOTAL CURRENT LIABILITIES 1,075,993 779,087

NON CURRENT LIABILITIES

Borrowings 16 11,698 700,687

TOTAL NON CURRENT LIABILITIES 11,698 700,687

TOTAL LIABILITIES 1,087,691 1,479,774

NET ASSETS 11,297,949 15,671,515

EQUITY

Issued capital 18 47,206,207 43,263,344

Reserves 19 2,460,444 2,104,275

Accumulated losses 20 (38,368,702) (29,696,104)

TOTAL EQUITY 11,297,949 15,671,515

The Statement of Financial Position should be read in conjunction with the accompanying notes.

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stateMeNt of casH fLows for tHe year eNded 30 JUNe 2010


Statement of Cash Flows for the year ended 30 June 2010

11

NOTE 30 JUNE 2010 $

30 JUNE 2009 $

CASH FLOWS FROM OPERATING ACTIVITIES

Cash received from customers 43,826 109,152

Payments to trade creditors, other creditors and employees (644,308) (1,107,646)

Interest Paid - (93,953)

NET CASH FLOWS USED IN OPERATING ACTIVITIES 21 (600,482) (1,092,447)

CASH FLOWS FROM INVESTING ACTIVITIES

Interest received 141,023 95,561

Payments for property, plant and equipment (260,523) (53,732)

Proceeds from disposal of property, plant and equipment 49,000 175,674

Payments for exploration, evaluation and development expenditure (2,381,191) (864,857)

NET CASH FLOWS USED IN INVESTING ACTIVITIES (2,451,691) (647,354)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issue of shares 3,500,000 1,846,985

Capital raising costs (205,571) (34,258)

Repayment of loans - (350,630)

NET CASH FLOWS USED IN FINANCING ACTIVITIES 3,294,429 1,462,097

NET INCREASE /(DECREASE) IN CASH AND CASH EQUIVALENTS HELD 242,256 (277,704)

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 1,776,813 2,054,517

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 9 2,019,069 1,776,813

The Statement of Cash Flows should be read in conjunction with the accompanying notes. For

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stateMeNt of cHaNGes iN eQUity for tHe year eNded 30 JUNe 2010


Statement of Changes in Equity For the year ended 30 June 2010

12

ORDINARY SHARES

$

EQUITY-SETTLED BENEFITS RESERVE

$

INVESTMENT REVALUATION

RESERVE

$

ACCUMULATED LOSS

$

TOTAL ATTRIBUTABLE

TO EQUITY HOLDERS OF THE ENTITY

$

BALANCE AS AT 1 JULY 2008 38,678,291 1,904,999 - (25,381,911) 15,201,379

Loss for the year - - - (4,314,193) (4,314,193)

Total Recognised Income and Expenditure - - - (4,314,193) (4,314,193) Issue of 27,723,260 shares at 10 cents per share as part settlement of debt to FMR Investments Pty Ltd 2,772,326 - - - 2,772,326

Issue 9,482,759 shares at 5.8 cents per share as per placement 550,000 - - - 550,000

Issue 22,361,814 shares at 5.8 cents per share pursuant to Share Purchase Plan 1,296,985 - - - 1,296,985

Recognition of share based payments - 199,276 - - 199,276

Cost of issue of shares (34,258) - - - (34,258)

BALANCE AS AT 30 JUNE 2009 43,263,344 2,104,275 - (29,696,104) 15,671,515

BALANCE AS AT 1 JULY 2009 43,263,344 2,104,275 - (29,696,104) 15,671,515

Loss for the year - - - (8,672,598) (8,672,598)

Total Recognised Income and Expenditure - - - (8,672,598) (8,672,598)

Issue of 5,187, shares at 12.5 cents per share as final settlement of debt to FMR Investments Pty Ltd 648,434 - - - 648,434

Issue 28,000,000 shares at 12.5 cents per share as per placement 3,500,000 - - - 3,500,000

Revaluation of Wild Acre Metals Limited’s shares - - 342,000 - 342,000

Recognition of share based payments - 14,169 - - 14,169

Cost of issue of shares (205,571) - - - (205,571)

BALANCE AS AT 30 JUNE 2010 47,206,207 2,118,444 342,000 (38,368,702) 11,297,949

The Statement of Changes in Equity should be read in conjunction with the accompanying notes.

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Notes to aNd forMiNG part of tHe fiNaNciaL stateMeNts for tHe year eNded 30 JUNe 2010


Notes to and forming part of the Financial Statements for the year ended 30 June 2010

13

1. Corporate Information Barra Resources Limited is a Company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange. Barra Resources Limited registered office and principle place of business is:

Level 3, 33 Richardson Street West Perth 6005 Western Australia

The nature of the operation and principal activities of the Company are gold, nickel and cobalt exploration and the development of their gold assets within Australia.

2. Summary of Accounting Policies The significant accounting policies, which have been adopted in the preparation of this financial report, are:

(a) Statement of compliance The financial report is a general purpose financial report which has been prepared in accordance with the Corporations Act 2001, Accounting Standards and Interpretations, and complies with other requirements of the law.

Accounting Standards include Australian equivalents to International Financial Reporting Standards (‘A-IFRS’). Compliance with A-IFRS ensures that the financial statements and notes of the Company comply with International Financial Reporting Standards (‘IFRS’).

The financial statements were authorised for issue by the directors on 20 September 2010. The financial statements are presented in Australian Dollars.

(b) Basis of preparation The financial report has been prepared on the basis of historical cost, except for certain financial instruments which are carried at fair value. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in Australian dollars, unless otherwise noted.

The Company has applied the revised AASB 101 Presentation of Financial Statements which became effective on 1 January 2009. The revised standard requires the separate presentation of a statement of comprehensive income and a statement of changes in equity. All non-owner changes in equity must now be presented in the statement of comprehensive income. As a consequence, the Company had to change the presentation of its financial statements. Comparative information has been re-presented so that it is also in conformity with the revised standard.

In the application of A-IFRS management is required to make judgments, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

Judgments made by management in the application of A-IFRS that have significant effects on the financial statements and estimates with a significant risk of material adjustments in the next year are disclosed, where applicable, in the relevant notes to the financial statements. Accounting policies are selected and applied in a manner which ensures that the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlyingtransactions or other events is reported. Refer to note 3 for a discussion of critical judgements in applying the entity’s accounting policies, and key sources of estimation uncertainty.

(c) Cash and cash equivalents Cash and cash equivalents comprise cash on hand, cash in banks and investments in money market instruments, net of outstanding bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the statement of financial position.

(d) Employee leave benefits Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be settled within 12 months of the balance date are recognised in other payables in respect of employee’s services up to the balance date. They are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and are measured at the rates paid or payable.

Defined contribution plansContribution to defined contribution superannuation plans are expensed when the employees have rendered services entitling them to the contributions.

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2. Summary of Accounting Policies (continued) (e) Goods and services tax Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except:

i. where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition of an asset or as part of an item of expense; or

ii. for receivables and payables which are recognised inclusive of GST.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables.

Cash flows are included in the statement of cash flows on a gross basis. The GST component of cash flows arising from investing and financing activities which is recoverable from, or payable to, the taxation authority is classified as operating cash flows.

(f) Income tax Current taxCurrent tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profit or tax loss for the period. It is calculated using tax rates and tax laws that have been enacted or substantively enacted by reporting date. Current tax for current and prior periods is recognised as a liability (or asset) to the extent thatit is unpaid (or refundable).

Deferred taxDeferred tax is provided on all temporary differences at balance date between the tax base of an asset or liability and its carrying amount in the statement of financial position. The tax base of an asset or liability is the amount attributed to that asset or liability for tax purposes.

In principle, deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that sufficient taxable amounts will be available against which deductible temporary differences or unused tax losses and tax offsets can be utilised. However, deferred tax assets and liabilities are not recognised if the temporary differences giving rise to them arise from the initial recognition of assets and liabilities(other than as a result of a business combination) which affects neither taxable income nor accounting profit.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period(s) when the asset and liability giving rise to them are realised or settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by reporting date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

Current and deferred tax for the periodCurrent and deferred tax is recognised as an expense or income in the statement of comprehensive income, except when it relates to items credited or debited directly to equity, in which case the deferred tax is also recognised directly in equity, or where it arises from the initial accounting for a business combination, in which case it is taken into account in the determination of goodwill or excess.

(g) Payables Trade payables and other accounts payable are recognised when the Company becomes obliged to make future payments resulting from the purchase of goods and services.

(h) Property, plant and equipment Plant and equipment and leasehold improvements are stated at cost less accumulated depreciation and impairment. Cost includes expenditure that is directly attributable to the acquisition of the item.

Depreciation is provided on property, plant and equipment and is calculated on a straight line basis so as to write off the net cost of each asset over its expected useful life to its estimated residual value. Leasehold improvements are depreciated over the period of the lease or estimated useful life, whichever is the shorter, using the straight line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each annual reporting period.

The following estimated useful lives are used in the calculation of depreciation:

Motor Vehicles - 3 years Office Furniture and equipment 3 - 10 years

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2. Summary of Accounting Policies (continued) (i) Provisions Provisions are recognised when the Company has a present obligation, the future sacrifice of economic benefits is probable, and the amount of the provision can be measured reliably.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that recovery will be received and the amount of the receivable can be measured reliably.

(j) Revenue recognition Interest revenueInterest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial asset.

Sale of GoodsSales revenue is recognised when significant risks are rewards of ownership have passed to the purchaser.

(k) Share-based payments Equity settled 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).

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 a Black-Scholes model, further details of which are given in Note 31.

In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of Barra Resources 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 balance 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.

The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per share (see Note 25).

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2. Summary of Accounting Policies (continued) (l) Exploration and evaluation Exploration and evaluation expenditure costs are accumulated in respect of each separate area of interest.

Exploration and evaluation costs are carried forward where the right of tenure of the area of interest is current and they are expected to be recouped through sale or successful development and exploitation of the area of interest, or, where exploration and evaluation activities in the area of interest have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves and active and significant operations, in, or in relation to, the area of interest are continuing.

Exploration and evaluation costs are initially measured at cost and include acquisition of rights to explore, studies, exploratory drilling, trenching and sampling and associated activities and an allocation of depreciation and amortisation of assets used in exploration and evaluation activities. General and administrative costs are only included in the measurement of exploration and evaluation costs where they are related directly to operational activities in a particular area of interest.

These assets are considered for impairment on a six monthly basis, depending on the existence of impairment indicators including: the period for which the Company has the right to explore in the specific area has expired during the period or will

expire in the near future, and is not expected to be renewed;

substantive expenditure on further exploration for and evaluation of mineral resources in the specific area is neither budgeted nor planned;

exploration for and evaluation of mineral resources in the specific area have not led to the discovery of commercially viable quantities of mineral resources and the company has decided to discontinue such activities in the specific area; and

sufficient data exists to indicate that, although a development in the specific area is likely to proceed, the carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful development or by sale.

Accumulated costs in relation to an abandoned area are written off in full against profit/(loss) in the year in which the decision to abandon the area is made.

Where a decision has been made to proceed with development in respect of a particular area of interest, the relevant exploration and evaluation asset is then tested for impairment and the balance is then transferred to development.

(m) Development Costs Development costs related to an area of interest are carried forward to the extent that they are expected to be recouped either through sale or successful exploitation of the area of interest. Development costs are recognised at cost less accumulated amortisation and any impairment losses. Exploration expenditure is reclassified to development expenditure once the technical feasibility and commercial viability of extracting the related mineral resource is demonstratable.

Amortisation is not charged on costs carried forward in respect of areas of interest in the development phase until production commences. When production commences, carried forward development costs are amortised on a units of production basis over the life of the economically recoverable reserves.

Changes in factors such as estimates of proved and probable reserves that affect unit-of production calculations are dealt with on a prospective basis.

(n) Provision for restoration and rehabilitation A provision for restoration and rehabilitation is recognised when there is a present obligation as a result of exploration, development, production, transportation or storage activities undertaken, it is probable that an outflow of economic benefits will be required to settle the obligation, and the amount of the provision can be measured reliably. The estimated future obligations include the cost of removing facilities, abandoning sites/wells and restoring the affected areas.

The provision for future restoration costs is the best estimate of the present value of the expenditure required to settle the restoration obligation at the reporting date, based on current legal and other requirements and technology. Future restoration costs are reviewed annually and any changes in the estimate are reflected in the present value of the restoration provision at each reporting date.

The initial estimate of the restoration and rehabilitation provision relating to exploration, development and milling/production facilities is capitalised into the cost of the related asset and depreciated/amortised on the same basis as the related asset, unless the present obligations arises from the production of inventory in the period, in which case the amount is included in the cost of production for the period. Changes in the estimate of the provision for restoration and rehabilitation are treated in the same manner, except that the unwinding of the effect of discounting on the provision is recognised as a finance cost rather than being capitalised into the cost of the related asset.

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2. Summary of Accounting Policies (continued) (o) Jointly controlled assets or operations The Company’s interest in its jointly controlled assets and operations are accounted for by recognising the Company’s assets and liabilities from the joint ventures, as well as expenses incurred in relation to the joint ventures in their respective classification categories.

(p) Financial instruments Debt and equity instrumentsDebt and equity instruments are classified as either liabilities or as equity in accordance with the substance of the contractual arrangements.

Transaction costs on the issue of equity instrumentsTransactions costs arising on the issue of equity instruments are recognised directly in equity as a reduction of the proceeds of the equity instruments to which the costs relate. Transactions costs are the costs that are incurred directly in connection with the issue of those equity instruments and which would not have been incurred had those instruments not been issued.

Financial liabilitiesFinancial liabilities are classified as either financial liabilities ‘at fair value through the profit and loss’ or other financial liabilities. The Company only holds other financial liabilities, including borrowings. Other financial liabilities are initiallymeasured at fair value, net of transaction costs and subsequently measured at amortised cost, with interest expense recognised on an effective yield basis.

Effective interest methodThe effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset, or, where appropriate, a shorter period.

(q) Financial Assets Investments are recognised and derecognised on trade date where purchase or sale of an investment is under a contract whose terms requires legal transfer of the investment within the timeframe established by the market concerned, and are initially measured at fair value, net of transaction costs.

Other financial assets are classified into the following specific categories: financial assets at fair value through profit or loss, held-to-maturity investments, available-for-sale financial assets and loans and receivables. The classification depends on the nature and purpose of the financial asset and is determined at the time of initial recognition and reviewed at each reporting date.

Available for sale financial assets Certain financial assets are designated as available for sale and are stated at fair value. Gain and losses are recognised directly in equity, with the exception of impairment losses. When the financial assets are disposed of or is determined to be impaired, the gain or loss previously recognised in equity is recognised in profit and loss for the period.

Loans and receivablesTrade receivables, loan and other receivables are recorded at amortised cost less impairment.

Impairment of financial assetsFinancial assets, other than those at fair value through the profit and loss, are assessed for indicators of impairment at each balance date. Financial assets are impaired where there is objective evidence that as a result of one or more events that occurred after the initial recognition of the financial asset the estimated future cash flows of the investment have been impacted.

For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate.

The carrying amount of financial assets including uncollectible trade receivables is reduced by the impairment loss through the use of an allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.

With the exception of available-for-sale equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

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2. Summary of Accounting Policies (continued) (q) Financial Assets (continued)In respect of available for sale equity instruments, any subsequent increase in fair value after an impairment loss is recognised directly in equity.

Derecognition of financial assetsThe Company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If theCompany neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

(r) Impairment of assets At each reporting date, the Company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised in the statement of comprehensive income immediately.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised in the statement of comprehensive income immediately.

(s) Leased assets Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Company as lesseeAssets held under finance leases are initially recognised at their fair value or, if lower, at amounts equal to the present value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation.

Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income.

Finance leased assets are amortised on a straight line basis over the estimated useful life of the asset.

Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

(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 Barra Resources Limited.

Change in accounting policyThe Company has adopted AASB 8 Operating Segments from 1 July 2009. AASB 8 replaces AASB 114 Segment Reporting. The new standard requires a ‘management approach’, under which segment information is presented on the same basis as that used for internal reporting purposes. This has not resulted in a change in the number of reportable segments presented by the Company as operating segments are reported in a manner that is consistent with internal reporting provided to the chief operating decision maker.

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(u) Earnings per share Basic earnings per share is calculated as net profit/loss attributable to members of the parent, adjusted to exclude any costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus element.

Diluted earnings per share is calculated as net profit/loss attributable to members of the parent, adjusted for: costs of servicing equity (other than dividends) and preference share dividends; the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have

been recognised as expenses; and other non-discretionary changes in revenues or expenses during the period that would result from the

dilution of potential ordinary shares; divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.

(v) Adoption of new and revised accounting standards In the year ended 30 June 2010, 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.

During the year, certain accounting policies have changed as a result of new or revised accounting standards which became operative for the annual reporting period commencing on 1 July 2009. The affected policies and standards are:

Segment reporting – new AASB 8 Operating Segments

Financial Instruments – revised AASB 7 Financial Instruments: DisclosuresThe Company has also reviewed all new Standards and Interpretations that have been issued but are not yet effective for the year ended 30 June 2010. 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.

3. Critical accounting judgements and key sources of estimation uncertainty

In the application of the Company’s accounting policies, which are described in note 2, management is required to make judgments, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstance, the results of which form the basis of making the judgments. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Critical judgements in applying the entity’s accounting policies The following are the critical judgements (apart from those involving estimations, which are dealt with below), that management has made in the process of applying the Company’s accounting policies and that have the most significant effect on the amounts recognised in the financial statements:

Treatment of exploration and development expendituresThe Company is currently capitalising exploration and development expenditures on various tenements until such time as production is commenced or the area of interest is deemed unlikely to yield benefits either through successful exploitation or sale, at which stage the costs will be recognised in profit and loss.

During the year the Company recognised impairment losses on the carrying value of capitalised gold assets. In determining the revised carrying value of the gold assets, estimated recoverability of minerals, along with mining and milling costs were considered, giving a potential net profit of each area. The potential net profit was compared to the capitalised exploration for each project and the difference was written off as impairment losses.

Key sources of estimation uncertainty The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the balance date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year:

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Provision for rehabilitation costsUpon cessation of production and exploration activities, the Company will have a statutory requirement to restore disturbed sites through earthmoving, capping and bunding, and reseeding work. The Company has made an estimation of the costing rates and disturbed hectares to calculate a rehabilitation provision as at 30 June 2010. In addition, the discount rate and risk rate used in the calculation are subject to estimation.

Reserve estimatesReserves are estimates of the amount of product that can be economically and legally extracted from the Company’s properties. In order to calculate reserves, estimates and assumptions are required about a large range of geological, technical and economic factors, including quantities, grades, production techniques, recovery rates, production costs, transport costs, commodity demand, commodity prices and exchange rates. Because the economic assumptions used to estimate reserves change from period to period, and because additional geological data is generated during the course of operation, estimates of reserves may change from period to period. Changes in reported reserves may affect the Company’s financial results and financial position in a number of ways, including the following:

Asset carrying values may be affected due to changes in estimated future cash flows; Depreciation and amortisation charged in the statement of comprehensive income may change where such charges

are determined by the units of production basis, or where the useful economic lives of assets change; and Decommissioning, site restoration and environmental provisions may change where changes in estimated reserves

affect expectations about the timing or cost of these activities.

30 JUNE 2010 $

30 JUNE 2009$

4. Revenue from Ordinary Activities Other Income:

Interest received from other parties 144,791 95,477 Net gain on disposal of property, plant & equipment 22,295 2,412 Other revenue 39,841 134,347

Total Revenue 206,927 232,236

5. Loss from Ordinary Activities Loss from ordinary activities before income tax has been determined after:

(a) Gains and losses Change in fair value of financial assets classified as held for trading: Loss on disposal of Quinn Hills Project (40,000) 1,038,915

(b) Other expenses: Depreciation of property, plant and equipment 137,001 139,493

Lease payments 50,318 164,920

Annual leave charge 86 41,631

Exploration Expenditure written off 7,714,851 1,907,835

Share based payments 14,168 199,276 For

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6. Income Tax(a) Income tax expense / (benefit)

Current tax expense in respect of the current year (2,474,216) (1,223,976)

Deferred tax expense relating to the origination and reversal of timing differences (83,158) (476,786)

Deferred tax assets not brought to account 2,557,374 1,700,762

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

The prima facie income tax expense / (benefit) on pre-tax accounting loss from operations reconciles to the income tax expense / (benefit) as follows:

Loss from continuing operations (8,330,598) (4,314,193)

Income tax benefit calculated at 30% (2009: 30%) (2,499,180) (1,294,258)Non deductible expenses in determining taxable loss 24,964 70,282

Temporary differences not brought to account as a deferred tax asset (83,158) (476,786)

Tax losses not brought to account as a deferred tax asset 2,557,374 1,700,762

Income tax expense / (benefit) - -

(b) Deferred Tax liabilityExploration interests at statement of financial position 2,232,290 2,030,253

Less: Deferred tax assets recognised (tax losses) (2,232,290) (2,030,253)

- -

(c) Deferred tax assets

Deferred tax assets – temporary differences 188,381 226,538

Deferred tax assets – losses* 12,084,176 10,706,202

Deferred tax liabilities (2,232,290) (2,030,253)

Deferred tax assets not recognised 10,040,267 8,902,486

Not recognised: Unrecognised tax losses 10,040,267 8,902,486

* Included in the losses are capital losses of $2,561,386 (2009: $1,656,991). The deferred tax asset arising from the tax losses has not been recognised as an asset in the statement of financial position because recovery is not probable.

The taxation benefit of tax losses not brought to account will only be obtained if:

(a) assessable income is derived of a nature and of an amount sufficient to enable the benefits to be realised; (b) conditions for deductibility imposed by the law are complied with; and (c) no changes in tax legislation adversely affect the realisation of the benefit from the deductions.

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7. Remuneration Benefits a) The following were key management personnel of the Company during the financial year:

Gary Berrell (Non-Executive Chairman)Dean Goodwin (Managing Director)Grant Jonathan Mooney (Non-Executive Director and Company Secretary)

The aggregate compensation made to key management personnel of the Company is set out below:

30 JUNE 2010 $

30 JUNE 2009 $

Short-term employee benefits 486,677 380,967Post-employment benefits 29,261 27,162Other long-term benefits - -Termination benefits - -Share-based payments - -

515,938 408,129

b) The Board reviews the remuneration packages of all key management personnel on an annual basis. The maximum remuneration of Non-Executive Directors is to be determined by Shareholders in general meeting in accordance with the Constitution, the Corporations Act and the ASX Listing Rules, as applicable. At present the maximum aggregate cash remuneration of Non-Executive Directors is $400,000 per annum. The apportionment of Non-Executive Director Remuneration within that maximum will be made by the Board having regard to the inputs and value to the Company of the respective contributions by each Non-Executive Director. Remuneration is not linked to specific performance criteria.

c) The Board policy is to remunerate Non-Executive Directors at market rates for comparable companies for time, commitment and responsibilities. The Board determines payment to the Non-Executive Directors and reviews their remuneration on an individual basis, based on market practices, duties and accountability. Independent external advice is sought when required. Remuneration is not linked to specific performance criteria.

8. Auditors’ Remuneration 30 JUNE 2010 $

30 JUNE 2009 $

Amounts received, or due and receivable by the former auditors, Deloitte Touche Tohmatsu, for audit or review of the financial report 965 44,388

Amounts received, or due and receivable by the current auditors, HLB Mann Judd, for audit or review of the financial report 31,500 -

32,465 44,388

The auditor of Barra Resources Limited is HLB Mann Judd.

9. Cash and Cash Equivalents Cash at bank 2,019,069 1,776,813

2,019,069 1,776,813

10. Trade and Other Receivables - Current Trade debtors 78,334 105,200

Other debtors 79,636 100,241

157,970 205,441

Normal trade terms are 30 days and no interest is charged on overdue amounts. No allowance for bad debts has been made as the Directors are of the opinion that all amounts are fully recoverable.

Ageing of amounts that are past due but not impaired: 30-60 days 60-90 days 90+ days

78,334 --

98,911 -

6,289 78,334 105,200

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11. Other - Current Assets 30 June 2010 $

30 June 2009 $

Prepayments 8,726 9,415

12. Financial Assets – Non Current Other - mining tenement bonds 552,092 552,092 Available for sale investments carried at fair value – listed company shares (i) 484,500 - Financial assets carried at cost – unlisted company shares (i) - 142,500

1,036,592 694,592 (i) The above financial asset was carried at deemed cost until 5th March 2010 which was the date of listing of the underlying investment. At that date a reasonable measure of fair value became available and therefore the investment is now recorded as an available for sale financial asset.

13. Property, Plant & Equipment Motor Vehicles – at cost 180,962 106,973 less accumulated depreciation (73,836) (65,372)

107,126 41,601

Office furniture and equipment - at cost 418,649 377,475 less accumulated depreciation (307,918) (233,137)

110,730 144,338

Total Property, Plant and Equipment 217,856 185,939

Some vehicle acquisitions are funded by means of finance leases with third party lending institutions. The vehicles are pledged as security for the finance leases.

MotorVehicles

$

Office Furniture & Equipment

$

Total

$Cost Balance as at 1 July 2008 189,921 363,985 553,906 Acquisitions - 13,490 13,490 Disposals (82,948) - (82,948) Balance at 30 June 2009 106,973 377,475 484,449 Acquisitions 134,716 56,529 191,244 Disposals (60,727) (15,355) (76,082) Balance at 30 June 2010 180,962 418,649 599,611

Accumulated Depreciation Balance as at 1 July 2008 (65,198) (137,549) (202,747) Eliminated on disposal 43,288 - 43,288 Depreciation expense for year (43,462) (95,588) (139,050) Balance at 30 June 2009 (65,372) (233,137) (298,509) Eliminated on disposal 44,079 9,677 53,756 Depreciation expense for year (52,543) (84,458) (137,001) Balance at 30 June 2010 (73,836) (307,918) (381,754)

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14. Exploration, Evaluation and Development Expenditure Mineral exploration and evaluation expenditure costs carried forward (exploration and evaluation phases)

30 June 2010 $

30 June 2009 $

Balance at beginning of financial year 9,363,002 10,105,477

Less: Exploration Expenditure Written Off (2,838,763) (415,918)

Less: Quinn Hills Project sale (a) 40,000 (1,191,415)

Exploration and evaluation expenditure 2,381,188 864,858

Total Exploration and evaluation expenditure 8,945,427 9,363,002

Development expenditure costs carried forward Balance at beginning of financial year

Development expenditure

Less accumulated amortisation

Less Impairment recognised

4,916,087

-

-

(4,916,087)

6,351,858

-

-

(1,435,771)

Total Development expenditure - 4,916,087

Balance at end of financial year 8,945,427 14,279,089

The recovery of the costs of expenditure carried forward in relation to areas of interest in the exploration and evaluation phases is dependent upon the discovery of commercially viable mineral and other natural resource deposits and their development and exploration or alternatively their sale.

The Company’s title to certain mining tenements is subject to Ministerial approval and may be subject to successful outcomes of native title issues (Refer Note 27).

An impairment review of all capitalised exploration and development expenditure is carried out at each reporting date to determine whether impairment indicators are present (Refer Note 3).

(a) During the previous year, the Company disposed of its remaining tenement interests at Quinn Hills to Wild Acre Metals Limited (“Wild Acre”) in exchange for 2,850,000 shares in Wild Acre and $10,000 cash. An additional $40,000 cash was received during the year which was previously contingent upon Wild Acre achieving listing on ASX or undertaking a raising of $500,000 or more within 3 years of the agreement dated 22 May 2009.

15. Trade and Other Payables Trade payables 457,450 245,826

Employee entitlements 14,919 23,479

Other 208,123 65,538

680,492 384,843

The average credit period on purchases of goods is 60 days. No interest is charged on the trade payables for the first 60 days from the date of the invoice. Thereafter, interest is charged at varying rate per supplier on the outstanding balance. The Company has financial risk management policies in place to ensure that all payables are paid within the credit timeframe. F

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16. Borrowings 30 JUNE 2010 $

30 JUNE 2009$

Unsecured – at amortised costNon-current BorrowingsLoan – FMR Investments Pty Ltd (i) - 648,434

Secured – at amortised cost Current BorrowingsLoan – Other (ii) Finance lease liability (iii)

297,000 8,501

297,000 22,244

Non-current BorrowingsFinance lease liability (iii) 11,698 52,253

317,199 1,019,931 Disclosed in financial statements as: Current borrowings 305,501 319,244 Non-current borrowings 11,698 700,687

317,199 1,019,931

(i) The remaining loan with FMR was converted to equity during the prior year. The current average effective interest rate on the finance lease liabilities is 0% (2009: 6.85%).

(ii) Funds held on trust for third parties to secure transfer of mineral titles. Funds held on trust are to be returned upon transfer of mining titles, such borrowings being interest free to the Company.

(iii) Secured by assets leased. The borrowings have a mix of variable and fixed interest rates with repayment periods not exceeding five years. The current average effective interest rate on the finance lease liabilities is 8.9% (2009: 8.9%).

17. Provisions - current Rehabilitation expenses (a) 90,000 125,000

(a) The rehabilitation provision has decreased by $35,000 (2009: $47,000) due to the sale/forfeiture of tenements and some rehabilitation work.

Movements in other provisionsMovements in each class of provisions during the financial year (excluding employee benefits) are set out below:

Carrying amount at start of year 125,000 172,000

Reduction in provision recognised (35,000) (47,000)

Carrying amount at end of year 90,000 125,000

18. Issued Capital Number $

Opening balance 1 July 2008 222,159,245 38,678,291

Issue of 27,723,260 shares at 10 cents per share as part settlement of debt to FMR Investments Pty Ltd 27,723,260 2,772,326

Issue of 9,482,759 shares at 5.8 cents per share from a placement to raise funds for ongoing exploration and working capital requirements 9,482,759 550,000

Issue of 22,361,814 shares pursuant to the Company's Share Purchase Plan 22,361,814 1,296,985

Less Share issue costs - (34,258)

Closing Balance 30 June 2009 281,727,078 43,263,344

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18. Issued Capital Number $

Opening balance 1 July 2009 281,727,078 43,263,344

Issue of 5,187,472 shares at 12.5 cents per share as final settlement of debt to FMR Investments Pty Ltd 5,187,472 648,434

Issue of 28,000,000 shares at 12.5 cents per share from a placement to raise funds for ongoing exploration and working capital requirements 28,000,000 3,500,000

Less Share issue costs - (205,571)

Closing Balance 30 June 2010 314,914,550 47,206,207

Fully paid ordinary shares carry one vote per share and carry the right to dividends.

Share options granted under the Employee Share Option Plan (ESOP) In accordance with the provisions of the ESOP, as at 30 June 2010, executives (Non Directors) and senior employees have options over 750,000 ordinary shares, in aggregate, expiring on 11 December 2012. As at 30 June 2009, executives and senior employees had options over 6,575,000 ordinary shares, in aggregate, with 5,000,000 of those options expiring 31 December 2010, and the remainder expiring on 11 December 2012. Share options granted under the Employee Share Option Plan carry no rights to dividends and no voting rights. Further details of the Employee Share Option Plan are contained in Note 31 to the financial statements.

Other Share Options As at 30 June 2010, the Company has 25,625,000 listed share options on issue (2009: 25,625,000), at an exercise price of $0.65. These options expire on 31 December 2010, and carry no rights to dividends or voting rights.

As at 30 June 2010, the Company has 3,750,000 unlisted Director Options on issue (2009: 3,750,000), with an exercise price between $0.65 and $1.00. These options expire on 31 December 2010, and carry no rights to dividends or voting rights.

19. Reserves 30 JUNE 2010

$30 JUNE 2009

$

(a) Equity-settled benefits reserve

Opening Balance 2,104,275 1,904,999

Employee Share Options expensed 14,169 199,276

Total Equity-settled benefits reserve 2,118,444 2,104,275

The Share Option Reserve arises on the share options granted to employees as part of the Employee Share Option Plan. Increases in the reserve are recognised on a time basis over the vesting period of the options. Refer to note 23 for further information.

(b) Investment revaluation reserve

Opening Balance - -

Movements during the year 342,000 -

Total Investment revaluation reserve 342,000 -

Total Reserves 2,460,444 -

20. Accumulated LossesBalance at the beginning of the financial year (29,696,104) (25,381,911)

Net loss (8,672,598) (4,314,193)

Balance at the end of the financial year (38,368,702) (29,696,104)

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21. Notes to the Cash Flow Statement 30 JUNE 2010 $

30 JUNE 2000 $

Reconciliation of Operating Loss to Net Cash Flows used in Operating Activities

Loss from ordinary activities after income tax

Depreciation expense

Share option expense

Interest Received

Write off exploration, evaluation and development expenses

Disposal of exploration projects

Gain on disposal of property, plant & equipment

Changes in assets and liabilities

Decrease in other debtors

(Decrease)/Increase in other provisions

(Decrease) in trade creditors

Decrease in prepayments

(8,672,597)

137,002

14,168

(144,791)

7,679,851

-

(22,295)

47,471

(43,560)

403,580

689

(4,314,193)

139,493

199,277

(95,477)

1,907,835

1,038,915

(136,014)

761,227

(92,174)

(504,723)

3,387

Net cash used in Operating Activities (600,482) (1,092,447)

Cash Balance not available for useThe company has a total of $552,092 (2009: $552,092) in term deposits that are security for cash backed performance bonds not available for use.

Non cash financing and investing activitiesDuring the prior year, the Company entered into the following non-cash financing and investing activities: i) During the year the Company issued 5,187,434 shares at 12.5 cents per share as final settlement of debt to FMR

Investments Pty Ltd.

22. Statement of Operations by Segment 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 chief operating decision maker of Barra Resources Limited reviews internal reports prepared as financial statements and strategic decisions of the Company are determined upon analysis of these internal reports. During the period, the Company operated predominantly in the business and geographical segment being the minerals exploration sector in Western Australia. Accordingly, under the ‘management approach’ outlined only one operating segment has been indentified and no further disclosure is required in the notes to the financial statements.

23. Related Party Transactions (a) Key management personnel compensation Details of key management personnel compensation are disclosed in Note 7 to the financial statements. F

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23. Related Party Transactions (continued) (b) Key management personnel equity holdings Fully paid ordinary shares issued by Barra Resources Limited

The movement during the reporting period in the number of ordinary shares in the Company held, directly, indirectly or beneficially, by each specified Director is as follows:

2010 DIRECTOR

BALANCE AS AT 1 JULY 2009

GRANTED AS REMUNERATION

RECEIVED ON EXERCISE OF

OPTIONS

PURCHASED BALANCE AS AT 30 JUNE 2010

Gary Berrell 678,412 - - - 678,412 Dean Goodwin 4,601,000 - - - 4,601,000 Grant Mooney 1,103,556 - - - 1,103,556 2009 DIRECTOR

BALANCE AS AT 1 JULY 2008

GRANTED AS REMUNERATION

RECEIVED ON EXERCISE OF

OPTIONS

PURCHASED BALANCE AS AT 30 JUNE 2009

Gary Berrell 506,000 - - 172,412 678,412

Dean Goodwin 4,601,000 - - - 4,601,000

Grant Mooney 1,017,350 - - 86,206 1,103,556

Share Options Issued by Barra Resources LimitedThe movement during the reporting period in the number of unlisted options over ordinary shares in the Company held, directly, indirectly or beneficially, by each specified Director is as follows:

UNLISTED OPTIONS 2010 DIRECTORS

BALANCE AS AT

1 JULY 09

GRANTED AS REMUNER-

ATION

LAPSED PURCHASED BALANCE AS AT

30 JUNE 10

VESTED BUT NOT

EXERCIS-ABLE

VESTED AND EXERCIS-

ABLE

OPTIONS VESTED DURING

THE YEAR

Gary Berrell 750,000 - - - 750,000 - 750,000 -DeanGoodwin 2,250,000 - - - 2,250,000 - 2,250,000 - Grant Mooney 750,000 - - - 750,000 - 750,000 - UNLISTED OPTIONS 2009 DIRECTORS

BALANCE AS AT

1 JULY 08

GRANTED AS REMUNER-

ATION

EXERCISED PURCHASED BALANCE AS AT

30 JUNE 09

VESTED BUT NOT EXERCIS-

ABLE

VESTED AND

EXERCIS-ABLE

OPTIONS VESTED DURING

THE YEAR

Gary Berrell 1,250,000 - 500,000 - 750,000 - 750,000 - DeanGoodwin 2,250,000 - - - 2,250,000 - 2,250,000 -Grant Mooney 750,000 - - - 750,000 - 750,000 -

Further details of the options granted during the year are contained in Note 18 to the financial statements.

As at the date of this report all options issued to Directors have been authorised at Annual General Meeting. For

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23. Related Party Transactions (continued)(c) Transactions with Director related entities Grant Mooney (Mooney and Partners Pty Ltd) was paid $102,419 (2009: $106,144) for Company Secretarial and Directors fees for the financial year ended 30 June 2009. These are included in the Directors remuneration as disclosed in the Directors’ Report. In addition, a company from which Grant Mooney is the sole director (Richardson Street Accounting Pty Ltd) was paid for accounting services totaling $44,746.

Grant Mooney is a Director of Wild Acre Metals Limited (“Wild Acre”). During the 2009 financial year, the Company disposed of its remaining tenement interests in the Quinn Hills Project to Wild Acre in exchange for 2,850,000 shares in Wild Acre and $10,000 cash. An additional $40,000 cash was receivable contingent upon Wild Acre achieving listing on ASX or undertaking a raising of $500,000 or more within 3 years of the agreement dated 22 May 2009. On 5th March 2010, Wild Acre achieved its ASX listing. As a result, payments pursuant to the Sale Agreement totalling $50,000 was received by the Company during the year.

24. Financial Instruments (a) Financial risk management objectives and policies: Overview The Company’s principal financial instruments comprise receivables, payables, available for sale financial instruments, cash and borrowings. The main risks arising from the Company’s financial instruments are interest rate risk, credit risk, liquidity risk and equity price risk.

The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Given the stage of development of the Company, the Board’s objective is to minimise debt and raise funds as required through the issue of shares or debt.

Interest rate risk The Company’s exposure to interest rate risk, which is the risk that a financial instrument’s value will fluctuate as a result of changes in market interest rates and the effective average interest rates in classes of financial assets and liabilities. The following table details the exposure to liquidity risk and interest rate risk as at year end.

WEIGHTED AVERAGE

EFFECTIVE INTEREST

RATE %

FIXED INTEREST

RATE

$

FLOATING INTEREST

RATE

$

NON-INTEREST BEARING

$

CARRYING AMOUNT

$2010Financial AssetsFinancial assets: CashTerm deposits Receivables Available for sale financial assets

4.96 5.46

-

-

-552,092

-

-

2,019,069 --

-

--

157,970

484,500

2,019,069 552,092 157,970

484,500 552,092 2,019,069 642,470 3,213,631

Financial LiabilitiesFinancial liabilities: Accounts payable Borrowings - current Borrowings - non current Loan – other

-8.618.61

-

-8,501

11,698 -

----

680,492 --

297,000

680,492 8,501

11,698 297,000

20,199 - 977,492 997,691 2009Financial AssetsFinancial assets: CashTerm deposits Receivables Shares in unlisted companies

2.804.00

-

-

-552,092

-

-

1,776,813 --

-

--

205,441

142,500

1,776,813552,092205,441

142,500 552,092 1,776,813 347,941 2,676,846

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24. Financial Instruments (continued) WEIGHTED AVERAGE

EFFECTIVE INTEREST

RATE %

FIXED INTEREST

RATE

$

FLOATING INTEREST

RATE

$

NON-INTEREST BEARING

$

CARRYING AMOUNT

$2009Financial LiabilitiesFinancial liabilities: Accounts payable Borrowings - current Borrowings – non-current Loan – other

-6.858.61

-

-648,434 74,497

-

----

311,364 --

297,000

311,364 648,434

74,497 297,000

722,931 - 608,364 1,331,295

The following table represents a summary of the interest rate sensitivity of the Company’s Financial Assets and Financial liabilities at year end upon the loss for the period and upon equity for a 1% change in interest rates. It is assumed that the change in interest rates is held constant throughout the reporting period:

-1%CHANGE +1%CHANGE

CARRYING AMOUNT

$

LOSS

$

EQUITY

$

LOSS

$

EQUITY

$

2010Financial AssetsCash Term deposits Receivables Shares in unlisted companies

2,019,069552,092157,970 142,500

(20,191) ---

----

20,191 ---

----

(20,191) - 20,191 -

Financial LiabilitiesAccounts payable Borrowings - current Borrowings – non-current Loan – other

685,572 8,501

11,698 297,000

----

----

----

----

- - - -

Total Increase/(Decrease) (20,191) - 20,191 -

2009Financial AssetsCash Term deposits Receivables Shares in unlisted companies

1,776,813552,092205,441 142,500

(17,768) ---

----

17,768 ---

----

(17,768) - 17,768 -

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24. Financial Instruments (continued)

-1%CHANGE +1%CHANGE

CARRYING AMOUNT

$

LOSS

$

EQUITY

$

LOSS

$

EQUITY

$

2009 Financial Liabilities

Accounts payable Borrowings - current Borrowings – non-current Loan - other

311,364 648,434 74,497

297,000

----

----

----

----

- - - -

Total Increase/(Decrease) (17,768) - 17,768 -

Credit risk Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The risk arises principally from cash and cash equivalents and trade and other receivables. The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised financial assets is the carrying amount, net of any allowances for doubtful debts, as disclosed in the statement of financial position and notes to the financial statements. The Company does not have any significant customers and accordingly does not have any significant exposure to bad or doubtful debts.

Interest rate risk management The Company is exposed to interest rate risk through funds on deposit being at both fixed and floating interest rates. The Company manages cash to ensure that the majority of cash is in higher interest bearing accounts. The Company’s exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity risk management sectionof this note.

Fair value The fair value of financial assets and financial liabilities approximate their carrying value. Net fair value and carrying amounts of financial assets and financial liabilities are disclosed in the statement of financial position and in the notes to and forming part of the financial statements.

As of 1 July 2009, Barra Resources Limited has adopted the amendments to AASB 7 Financial Instruments: Disclosureswhich require 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).

The following table present the company’s assets and liabilities measured and recognised at fair value at 30 June 2010. Comparative information has not been provided as permitted by the transitional provisions of the new rules.

LEVEL 1 LEVEL 2 LEVEL 3 TOTAL $ $ $ $

Assets Available-for-sale financial assets 484,500 - - 484,500 484,500 - - 484,500

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24. Financial Instruments (continued) Capital risk management The Company manages its capital to ensure that it will be able to continue as a going concern, whilst optimising the debt/equity structure to support to the long term strategic objectives of the Company. The Company’s overall strategy remains unchanged from 2008.

The capital structure of the Company consists of debt, which includes the borrowings disclosed in Note 16 cash and cash equivalents and equity attributable to the shareholders, comprising issued capital and reserves, as disclosed in notes 18 and 20.

There are no externally imposed capital requirements.

Liquidity risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of cash at bank, finance leases and hire purchase contracts. The Company has appropriate procedures to manage cash flows to ensure that sufficient funds are available to meet its commitments.

Liquidity risk management Ultimate responsibility for liquidity risk management rests with the board of directors, who have built an appropriate liquidity risk management framework for the management of the Company’s short, medium and long-term funding and liquidity management requirements. 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.

Liquidity and interest risk tables The following tables detail the company’s and the Company’s remaining contractual maturity for its non derivative financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The table includes both interest and principal cash flows.

LESS THAN 3 MONTHS

$

3–12 MONTHS

$

1-5 YEARS

$

GREATER THAN

5 YEARS $

TOTAL

$

2010Financial liabilities: Accounts payable Borrowings Borrowings – Finance Leases

685,572 -

2,230

--

6,692

-297,000

11,698

--

-

685,572 297,000

20,620 687,802 6,692 308,698 - 1,003,192

2009Financial liabilities: Accounts payable Borrowings Borrowings – Finance Leases

311,364 -

5,829

--

17,485

-945,434 51,183

---

311,364 945,434 74,497

317,193 17,485 996,617 - 1,331,295

Market risk The Company does not trade in foreign currency and is not materially exposed to other price risk.

Equity Price risk The Company is exposed to equity price risks arising from available-for-sale financial assets. Equity investments are held for strategic rather than trading purposes. The Company does not actively trade these investments. To manage its price risk arising from investments in equity securities, the Company diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Group.

The sensitivity analyses below have been determined based on the exposure to equity price risks at the balance date.

At balance date, if the equity prices had been 5% higher or lower:

Net loss for the year ended 30 June 2010 would have been unaffected as the equity investments are classified as available-for-sale and no investments were disposed of or impaired; and

Other equity reserves would decrease/increase by $24,225 (2009: decrease/increase by $7,125) for the Company, as a result of the changes in fair value of available-for-sale shares.

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24. Financial Instruments (continued)(b) Categories of Financial Instruments: In addition to cash, the carrying amounts of each of the following categories of financial assets and financial liabilities at the balance date are as follows:

CARRYING AMOUNT 30 JUNE 2010

$

CARRYING AMOUNT 30 JUNE 2009

$

Financial AssetsCash

Mining Bonds

Investment in unlisted company

Investment in listed company

Receivables

Financial LiabilitiesTrade and other payables

Borrowings

Current lease liability

Non current lease liability

2,019,069

552,092

-

484,500

157,970

685,572

297,000

8,501

11,698

1,776,813

552,092

142,500

-

205,441

311,364

945,433

22,244

52,253

25. Earnings per Share 30 JUNE 2010 30 JUNE 2009

Basic (loss) per share (cents per share) (2.82) (1.78) Diluted (loss) per share (cents per share) (2.82) (1.78)

Basic Loss per ShareThe loss and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows:

30 JUNE 2010 $

30 JUNE 2009 $

Loss (8,672,597) (4,314,193)

30 JUNE 2010 Nº.

30 JUNE 2009 Nº.

Weighted average number of ordinary shares 307,924,321 242,645,955

The options issued during the year are considered to be potential ordinary shares and are therefore excluded from the weighted average number of ordinary shares used in the calculation of basic earnings per share. Where dilutive, potential ordinary shares are included in the calculation of diluted earnings per share.

Diluted Earnings per Share30 JUNE 2010

$30 JUNE 2009

$

The loss and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows:

Loss (8,672,597) (4,314,193)

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25. Earnings per Share (continued)The loss and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows:

30 JUNE 2010 Nº.

30 JUNE 2009 Nº.

Weighted average number of ordinary shares and potential ordinary shares 307,924,321 242,645,955

Reconciliation of Weight Average of Ordinary Shares

Weighted average number of ordinary shares 307,924,321 242,645,955

Listed options - -

Director options - -

Weighted average number of ordinary shares used in the calculation of diluted EPS 307,924,321 242,645,955

Given that the company is in a loss making position, all potential ordinary shares have no dilutive effect to the diluted loss per share.

26. Significant Events Subsequent to Year End There were no significant events subsequent to year end other than the following:

The Company announced a management restructure on 1 July 2010 whereby Dean Goodwin stood down as Managing Director effective at that date, but would remain on the Board as Non-Executive Director. The Chairman, Gary Berrell, would assume an executive role.

27. Contingent Liabilities In June 1992, the High Court of Australia held in the Mabo case that the common law of Australia recognises a form of native title. The full impact that the Mabo decision may have on tenements held by the Company is not yet known. The Company is aware of native title claims that have been lodged with the National Native Title Tribunal (“the Tribunal”) over several areas in Western Australia in which the Company holds interests. The native title claims have been accepted by the Tribunal for determination under section 63(1) of the Native Title Act 1993 (Commonwealth).

28. Commitments for Expenditure These amounts are payable, if required, over various times over the next five years. In addition, royalty payments may be payable if certain conditions are met in the future. At this time, the Directors do not consider the payments to be probable.

1. Operating Lease Commitment:The Company rents an office which has a lease term of 3 years from 15 December 2007. The lease expires on the 14 December 2010. A separate lease for additional space on the same level has a lease term of 3 years from 1 January 2008, expiring on 31 December 2010. The Company also rents a printer/photocopier which has a lease term of 4 years from 29 January 2010.

30 JUNE 2010 $

30 JUNE 2009 $

Due within 1 year Due within 2 to 5 years Due after 5 years

83,928 8,970

-

132,412 66,206

-

2. Exploration Expenditure Commitments The Company has minimum statutory commitments as conditions of tenure of certain mining tenements. Whilst these obligations may vary, a reasonable estimate of the minimum commitment projected to 30 June 2010 if it is to retain all of its present interests in mining and exploration properties is $445,380 (2009: $374,120).

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29. Leases

MINIMUM LEASE PAYMENTS

PRESENT VALUE OF MINIMUM FUTURE LEASE PAYMENTS

Finance Lease Liabilities 30 JUNE 2010

$

30 JUNE 2009

$

30 JUNE 2010

$

30 JUNE 2009

$

Vehicle Hire Purchase

The Company has one vehicle (2009: two vehicles) on hire purchase, each for a period of 60 months with no residual value at the end of the term.

Due within 1 year

Due within 2 to 5 years

Due after 5 years

8,922

11,896

-

23,315

49,603

-

8,501

18,710

-

22,244

45,067

-

30. Jointly Controlled Assets OUTPUT INTEREST

NAME OF OPERATIONS PRINCIPAL ACTIVITY 2010 %

2009 %

Mt Thirsty Nickel Cobalt Project Exploration of the Mt Thirsty tenements 50 50

The Company’s interest in assets employed in the above joint venture is detailed below. The amounts are included in the financials statements under their respective assets categories:

Non-current assets 2010 $

2009 $

Cash and cash equivalents 109,266 -

Trade and other receivables 55,662 33,673

Total current assets 164,928 33,673

Exploration, evaluation and development expenditure 1,347,190 170,839

Total non-current assets 1,347,190 170,839

Trade and other payables 172,696 116,484

Total current liabilities 172,696 116,484

Other income 5,885 2,104

Administration expenses (75,400) (6,741)

Other expenses from ordinary activities (3,225) -

Net Loss (72,741) (4,637)

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31. Share Based Payments

The following share based payments were in existence in the current and comparative reporting periods:

OPTION SERIES ISSUE DATE NUMBER GRANT DATE EXPIRY DATE EXERCISE PRICE

$

FAIR VALUE AT GRANT

DATE $

Directors - 5 23 November 2007 1,250,000 23 November 2007 31 December 2010 0.65 0.178

Directors – 6 23 November 2007 1,250,000 23 November 2007 31 December 2010 0.80 0.161

Directors - 7 23 November 2007 1,250,000 23 November 2007 31 December 2010 1.00 0.142

ESOP (i) 11 December 2007 750,000 11 December 2007 11 December 2012 0.65 0.156

RM Capital Pty Ltd (ii) 27 November 2007 1,000,000 27 November 2007 31 December 2010 0.65 0.196

FMR Investments Pty Ltd (iii) 27 November 2007 8,000,000 27 November 2007 31 December 2010 0.65 0.180

(i) On 11 December 2007 the Company established an Employee Share Option Plan (ESOP) whereby the Company’s employees are given an opportunity to purchase shares in the Company. Each option converts into one ordinary share of Barra Resources Limited on exercise by payment of the exercise price. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of expiry. 50% of options vest 12 months from the date of issue and the remaining 50% vest 24 months from the date of issue.

(ii) Options issued in lieu of cash for services provided by stockbroker RM Capital Pty Ltd (AFSL 221938) for assistance with Capital raisings.

(iii) Options issued to FMR Investments Pty Ltd as part of a debt restructure agreement dated 20 September 2007. The weighted average remaining contractual life of the share options outstanding at 30 June 2010 is 233 days (2009: 588 days). The weighted average fair value of options granted during the year was nil (2009: nil).

Reconciliation of movements in options2010 2009

NUMBER WEIGHTED AVERAGE

EXERCISE PRICE $

NUMBER WEIGHTED AVERAGE

EXERCISE PRICE$

Balance at Beginning of year 13,500,000 0.70 15,575,000 0.68

Granted - - - -

Expired - - (500,000) 0.20

Exercised - - - -

Forfeited - - (1,575,000) 0.65

Balance at end of year 13,500,000 0.70 13,500,000 0.70

Exercised during the year There were no share options exercised during the year.

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director’s decLaratioN


Directors' Declaration

37

1. In the opinion of the directors of Barra Resources Limited (the ‘Company’):

a. the financial statements, notes and the additional disclosures of the company 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 2010 and of its performance for the year then ended; and

ii. complying with Australian 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

2. 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 2010.

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

On behalf of the Directors:

GARY BERRELL Chairman

Dated this 20th day of September 2010.

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iNdepeNdeNt aUditor’s report

37 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.auLiability 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.

INDEPENDENT AUDITOR’S REPORT

To the members of BARRA RESOURCES LIMITED

Report on the Financial Report We have audited the accompanying financial report of Barra Resources Limited which comprises the statement of financial position as at 30 June 2010, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year ended on that date, a summary of significant accounting policies, other explanatory notes and the directors’ declaration for Barra Resources Limited, as set out on pages 8 to 36.

Directors’ Responsibility for the Financial Report The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining internal controls relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

In Note 2(a), the directors also state, in accordance with Accounting Standard AASB 101: Presentation of Financial Statements, that the financial statements of Barra Resources Limited comply 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. These Auditing 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 opinions.

HLB Mann Judd (WA Partnership) ABN 22 193 232 714Level 4, 130 Stirling Street Perth WA 6000 PO Box 8124 Perth BC 6849 Telephone +61 (08) 9277 7500 Fax +61 (08) 9277 7533 Email: [email protected] www.hlb.com.au

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iNdepeNdeNt aUditor’s report (coNtiNUed)

38

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 Barra Resources 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 2010 and of its performance for the year ended on that date; and

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

(b) the financial statements also comply with International Financial Reporting Standards as disclosed in Note 2(a).

Report on the Remuneration Report We have audited the Remuneration Report included in pages 4 to 6 of the directors’ report for the year ended 30 June 2010.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 Barra Resources Limited for the year ended 30 June 2010 complies with section 300A of the Corporations Act 2001.

HLB MANN JUDD Chartered Accountants

Perth, Western Australia 20 September 2010

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additioNaL iNforMatioN aNd corporate GoverNaNceBARRA RESOURCES LIMITED

ABN 76 093 396 859

Additional Information and Corporate Governance

40

Additional information required by the Australian Securities Exchange Limited Listing Rules and not disclosed elsewhere in this report. The information was prepared based on share registry information processed up to 16 September 2010.

SPREAD OF HOLDINGS TOTAL SHAREHOLDERS TOTAL OPTIONHOLDERS

1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 - and over

45 469 450

1,350 434

-5

149451

Number of Holders 2,748 164

Number of shareholders holding less than a marketable parcel: 730

Substantial Shareholders SHAREHOLDER NAME NUMBER OF SHARES

FMR Investments Pty Limited 69,900,262

Voting Rights All ordinary shares carry one vote per share without restriction. Options for ordinary shares do not carry any voting rights.

Statement of Quoted Securities Listed on the Australian Securities Exchange are 314,914,550 fully paid shares and 25,625,000 options exercisable at $0.65 each on or before 31 December 2010.

Company Secretary The name of the Company Secretary is Grant Jonathan Mooney.

Registered Office The registered office is at Level 3 33 Richardson Street West Perth Western Australia 6005

The telephone number is: (08) 9481 3911

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Twenty Largest Holders of Each Class of Quoted Equity Securities

ORDINARY FULLY PAID SHARES as at 31 August 2010

SHAREHOLDER NAME NUMBER OF

SHARES PERCENTAGE OF

CAPITAL

FMR Investments Pty Ltd 69,900,262 22.20

Lippo Sec Nominees BVI Ltd <Client A/c> 8,515,000 2.70

HSBC Custody Nominees Australia Ltd 8,469,692 2.69

JP Morgan Nominees Aust Ltd 7,074,800 2.25

Luitingh Lafras 6,169,990 1.96

RBC Dexia Investor Services <MLCI A/c> 5,703,870 1.81

Jeffrey Charles Hogan 3,258,206 1.03

ANZ Nominees Ltd <Cash Income A/c> 3,124,331 0.99

Allan Stanley & D H Hahn 3,000,000 0.95

Citicorp Nominees Pty Ltd 2,896,834 0.92

Green Drilling Pty Ltd 2,770,550 0.88

Gasmere Pty Ltd 2,552,000 0.81

Superbrook Pty Ltd <Berrell Super Fund A/c> 2,306,513 0.73

JP Morgan Nominees Australia Ltd <Cash Income A/c> 2,120,459 0.67

Bremerton Pty Ltd <Bartlett Family Fund> 2,051,500 0.65

Hahn Properties Pty Ltd <Hahn Asset A/c> 1,702,182 0.54

Robert G & MJ Colville <RG & MJ Super Account> 1,681,634 0.53

Laurie Barichello 1,650,000 0.52

Francis James Robinson 1,500,000 0.48

Samrae Pty Ltd 1,461,500 0.46

TOTAL 137,909,323 43.77

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Twenty Largest Holders of Each Class of Quoted Equity Securities

OPTIONS EXPIRING 31 DECEMBER 2010

OPTIONHOLDER NAME NUMBER OF

OPTIONS PERCENTAGE OF

CAPITAL

FMR Investments Pty Ltd 4,000,000 15.61

RBC Dexia Investor Services <MLCI Account> 1,328,000 5.18

Bechara Shamieh 875,000 3.41

Robert L & FE Brooks <R & F Brooks Family Account> 760,000 2.97

Temmedo Pty Ltd 750,000 2.93

Robert Patrick Sheil 700,000 2.73

Phillip Hunt 638,000 2.49

Arthur James Douglas 624,340 2.44

Kenny Investments Pty Ltd <K & G Malaxos Family Account> 500,000 1.95

Lafras Luitingh 500,000 1.95

Bizmark Pty Ltd <Magdolna Fonda Account> 500,000 1.95

Allen & Jolanka & J King <AJ & J King Super Fund Account> 500,000 1.95

Helmut Rocker 500,000 1.95

Barry & Lois Lea 423,000 1.65

John Alan Nash 407,870 1.59

Zadar Holdings Pty Ltd 373,843 1.46

Baloo Holdings Pty Ltd <Hassall Family A/c> 360,000 1.40

Clodene Pty Ltd 341,000 1.33

Mina Enterprises Pty Ltd <Watanobbi Investment Fund> 338,543 1.32

Barry Henderson 309,100 1.21

14,728,696 57.47

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Holders of Securities in an Unquoted Class OPTIONS (DIRECTORS)

OPTION HOLDER NAME DIRECTORS OPTIONS 31 DECEMBER 2010

Dean Barry Goodwin 2,250,000 Gary John Berrell 750,000 Grant Jonathan Mooney 750,000

Total 3,750,000

OPTIONS (EMPLOYEES)

There are a total of 750,000 unlisted options issued to employees. These options have been issued pursuant to the Company's Employee Share Option Plan. These options are exercisable on or before 11 December 2012 (subject to vesting dates) at an exercise price of $0.65 each.


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Corporate Governance (a) The Board of Directors The primary responsibility for the Board is to represent and advance Shareholder’s interests and to protect the interests of all stakeholders. To fulfil this role the Board is responsible for the overall corporate governance of the Company including its strategic direction, establishing goals for management and monitoring the achievement of these goals.

The Board recognises the need for the Company to operate with the highest standards of behaviour and accountability. The Company has adopted the ASX Corporate Governance Principles and Recommendations with some amendments where applicable after giving consideration to the Company’s size and the resources it has available.

As the Company’s activities develop in size, nature and scope the implementation of additional corporate governance structures will be given further consideration. A summary of the Company’s key policies follow.

(b) Board and Senior Executive Evaluation

The Board considers the ongoing development and improvement of its own performance as critical input to effective governance. The Board will undertake an annual evaluation of its effectiveness as a whole. The Chairman will review the individual performance of each Board member annually.

The Chairman’s performance is evaluated by the Board annually with facilitation by an external party.

All senior executives of Barra Resources are subject to an annual performance evaluation. Each year, senior executives establish a set of performance targets with her or his superior. These targets are aligned to overall business goals and requirements of the position. In the case of the Managing Director, these targets are established between the Managing Director and the Board.

(c) Code of Conduct

The Board, management and all employees of Barra Resources are committed to implementing Barra Resources’ core principles and values as stated in this Code of Conduct when dealing with each other and with customers, suppliers, government authorities, creditors and the wider community.

Barra Resources is dedicated to delivering outstanding performance for investors and employees. Barra Resources aspires to be a leader in its field while operating openly, with honesty, integrity and responsibility and maintaining a strong sense of corporate social responsibility. In maintaining its corporate social responsibility Barra Resources will conduct its business ethically and according to its values, encourage community initiatives, consider the environment and ensure a safe, equal and supportive workplace.

(d) Continuous Disclosure

In accordance with the ASX Listing Rules, Barra Resources will immediately notify the ASX of information concerning Barra Resources that a reasonable person would expect to have a material effect on the price or value of Barra Resources securities.

The only exception to this requirement is where the ASX Listing Rules do not require such information to be disclosed.

Upon confirmation of receipt from the ASX, Barra Resources will post all information disclosed to ASX on its website.

(e) Selection of External Auditor

The Board identifies and recommends an appropriate external auditor for appointment, in conjunction with senior management and/or Barra Resources in general meeting. The appointment is made in writing.

The external auditor is required to rotate its audit partners so that no partner of the external auditor is in a position of responsibility in relation to Barra Resources’ accounts for a year of more than five consecutive years. Further, once rotated off Barra Resources’ accounts, no partner of the external auditor may assume any responsibility in relation to Barra Resources’ accounts for a year of five consecutive years.

The Company has appointed, with their consent, HLB Mann Judd as its auditors.


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(f) Senior Executives Remuneration

Barra Resources is committed to remunerating its senior executives in a manner that is market competitive, consistent with best practice and supports the interests of shareholders. Consequently, senior executives’ remuneration consists of a fixed salary, statutory superannuation and, subject to the terms of their engagement, a fully serviced motor vehicle and mobile phone expenses.

All reasonable out of pocket expenses incurred by the senior executive in connection with the performance of duties on behalf of Barra Resources will be reimbursed.

In addition, the Company has established an employee share option plan (“ESOP”) in order to provide an incentive for senior executives and other employees to participate in the future growth of the Company. The ESOP is administered in accordance with the ESOP rules which can be viewed, in full, on the Company’s website.

(g) Non-executive Directors Remuneration

Non-executive Directors are paid their fees out of the maximum aggregate amount approved by shareholders for the remuneration of Non-Executive Directors. The sum each Non-Executive Director is paid is determined by the Board from time to time. Additional fees may be paid for participation on Board Committees however, the total fees paid to Non-Executive Directors, including fees paid for participation on Board Committees, are kept within the total amount approved by shareholders. At present the maximum aggregate remuneration of Non-Executive Directors is $400,000 per annum.

(h) Selection and Appointment of New Directors

Candidates for the Board are considered and selected by reference to a number of factors which include, but are not limited to, their relevant experience and achievements, compatibility with other Board members, credibility within Barra Resources’ scope of activities, and intellectual and physical ability to undertake Board duties and responsibilities. Directors are initially appointed by the full Board, subject to election by shareholders at the next general meeting.

(i) Risk Management

Risk recognition and management are viewed by Barra Resources as integral to the Company’s objectives of creating and maintaining shareholder value, and the successful execution of the Company’s mineral exploration and development.

There are a range of specific risks that have the potential to have an adverse impact on Barra Resources’ business. The Company has developed a framework for a risk management policy and internal compliance and control system which covers organisational, financial and operational aspects of the Company's affairs.

Management reports to the Board annually in relation to the key business risks, the control system in place to manage such risks and how effective the risk management system is operating.

(j) Security Trading

Barra Resources recognises that directors, officers and employees may hold securities in Barra Resources and that most investors are encouraged by these holdings. It is the responsibility of the individual director, officer or employee to ensure that any trading by the director, officer or employee complies with the Corporations Act 2001, the ASX Listing Rules and Company Policy.

A breach of this policy may lead to disciplinary action. It may also be a breach of the law.

The Company has established procedures and protocols to be complied with if a director, officer or employee wishes to trade in the Company’s securities.

(k) Shareholder Communication Policy

The Board aims to ensure that shareholders are informed of all major developments affecting Barra Resources. All shareholders receive the Company's annual report, and may also request copies of the Company's half-yearly and quarterly reports. The Board also encourages full participation of shareholders at the Company’s annual general meeting.

In addition, the Company maintains a website at www.barraresources.com.au which is regularly updated.


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(l) Independent Professional Advice

Subject to the Chairman's approval (not to be unreasonably withheld), the Directors, at the Company's expense, may obtain independent professional advice on issues arising in the course of their duties.

(m) Matters for Approval by the Board of Directors

The Board has adopted a list of matters required to be brought before the Board of Directors for approval. This provides an important means of dividing responsibility between the Board and management, assisting those affected by corporate decisions to better understand the respective accountabilities and contributions of the Board and the Senior Executives.

(n) Explanations for Departure From Best Practice Recommendations

During the reporting year from the Company has complied with each of the Essential Corporate Governance principles and the corresponding Best Practice Recommendations as published by ASX Corporate Governance Council ("ASX Principles and Recommendations"), other than in relation to the matters specified below.

EXPLANATION for DEPARTURE FROM BEST PRACTICE RECOMMENDATIONS

The Company has complied with each of the Eight Corporate Governance Principles and Recommendations as published by ASX Corporate Governance Council, other than in relation to the matters specified below.

Principle No

Best Practice Principle

Commentary Mechanism for Dealing with Non-Compliance

1 Lay Solid Foundations for Management and Oversight

The Company complies with this Principle.

The Company has a policy for the evaluation of the Board and Senior Executives Evaluation Policy.

A policy on matters reserved for the Board is outlined in this Report and is available on the Company’s website.

Not applicable

2 Structure the Board to Add Value

The Company does not comply with recommendation 2.4:

The Board should establish a Nomination Committee.

Given the Company’s size, it is not considered necessary to have a separate Nomination Committee.

In addition to the above, the following information is provided:

The skills, experience and expertise of each of the Company’s directors are set out in the Company’s Annual Report.

If a director considers it necessary to obtain independent professional advice to properly discharge the responsibility of his office as a director then provided the director must first obtain approval for incurring such expense from the Chairman the Company will pay the reasonable expenses associated with obtaining such advice.

The Board, in consultation with external advisers where required, undertakes this role.

A separate policy for Selection and Appointment of New Directors has been adopted by the Board which provides for the proper assessment of prospective directors and include, but are not limited to, their relevant experience and achievements, compatibility with other Board members, credibility within the Company’s scope of activities, and intellectual and physical ability to undertake Board duties and responsibilities.


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EXPLANATION for DEPARTURE FROM BEST PRACTICE RECOMMENDATIONS (Cont’d)

Principle No



3 Promote Ethical and Responsible Decision Making

The Company complies with this Principle. Not applicable.

4 Safeguard Integrity in Financial Reporting

The Company does not comply with the following recommendation:

The Board should establish and Audit Committee.

The Company does not presently have an Audit Committee.

The Company has a separate policy for the Selection and Appointment of External Auditors. A copy of this policy is provided on the Company’s website.

The Directors are of the view that given the size of the Company, the relatively small number of directors and only two independent directors, it is not practical to have an Audit Committee. The Board undertakes this role.

The Board meets on a regular basis and discusses matters normally captured under the terms of reference of an audit committee, being company risk, controls and general and specific financial matters.

5 Make Timely and Balanced Disclosure


6 Respect the Rights of Shareholders


7 Recognise and Manage Risk

The Company complies with this Principle.

The Board of Directors has received a report in relation to the effectiveness of the Company’s management of the Company’s material business risks.

The Board has received assurance from the Chief Executive Officer and the Chief Financial Officer that the declaration in relation to 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 Company also has a separate policy in relation to Risk Management which is available on the Company’s website.

Not Applicable


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EXPLANATION for DEPARTURE FROM BEST PRACTICE RECOMMENDATIONS (Cont’d)

Principle No



8 Remunerate Fairly and Responsibly

The Company does not comply with the following recommendation:

The Board should establish a Remuneration Committee.

The Company does not presently have a Remuneration Committee.

There is presently no scheme for retirement benefits, other than superannuation for non-executive directors.

The Directors are of the view that given the size of the Company, the relatively small number of directors and the fact that there are only two independent directors, it is not practical to have a Remuneration Committee. The Board undertakes this role with the assistance of any external advice which may be required from time to time.

The Company has separate policies relating to the remuneration of non-executive directors as opposed to senior executives.

These policies provide a basis for distinguishing the type of remuneration which is suitable for the two classes.


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Level 3, 33 Richardson Street West Perth, WA 6005T +61 (08) 9481 3911 F +61 (08) 9481 3955

www.barraresources.com.au

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BARRA RESOURCES LIMITED

Documents

Transcript of BARRA RESOURCES LIMITED