Re: ANNUAL REPORT - ASX2011/09/14 · Corporate Profile 30 June 2011 4 CORPORATE PROFILE AND KEY...

Extract Resources Limited (ABN 61 057 337 952)

30 Charles Street, South Perth • P.O. Box 752 South Perth WA , 6951

Telephone: +61 (08) 9367 2111 • Facsimile: +61 (08) 9367 2144 • [email protected]

14 September 2011 Company Announcements Office ASX Ltd 20 Bridge Street SYDNEY NSW 2000 Dear Sir, Re: ANNUAL REPORT Please find attached our 2011 Annual Report, which includes the Chairman’s Letter, Chief Executive Officer’s Report, Corporate Governance Statement, Directors’ Report and the Financial Report. If you have any queries in relation to the above please do not hesitate to contact me on +61 (0) 8 9367 2111.

Yours sincerely,

Company Secretary

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EXTRACT RESOURCES LTD

ABN 61 057 337 952

AND CONTROLLED ENTITIES

ANNUAL REPORT

30 JUNE 2011

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Annual Report

30 June 2011

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Contents COMPANY DIRECTORY ..................................................................................................................................... 3 CORPORATE PROFILE AND KEY HIGHLIGHTS .................................................................................................... 4 CHAIRMAN’S LETTER........................................................................................................................................ 5 CHIEF EXECUTIVE OFFICER’S REPORT ............................................................................................................... 7 URANIUM MARKET REVIEW .......................................................................................................................... 13 SUSTAINABILITY REPORT ............................................................................................................................... 15 CORPORATE GOVERNANCE STATEMENT ........................................................................................................ 18 DIRECTORS’ REPORT ...................................................................................................................................... 24 AUDITOR’S INDEPENDENCE DECLARATION .................................................................................................... 42 FINANCIAL REPORT ........................................................................................................................................ 43

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME ........................................................................................ 43 CONSOLIDATED STATEMENT OF FINANCIAL POSITION ............................................................................................... 44 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ............................................................................................... 45 CONSOLIDATED STATEMENT OF CASH FLOWS......................................................................................................... 46

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS .............................................................................. 47 DIRECTOR’S DECLARATION ............................................................................................................................ 89 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS .................................................................................. 90 SHAREHOLDER AND OTHER INFORMATION ................................................................................................... 92

The information in this report that relates to Exploration on the Husab Uranium Project is based on information compiled or reviewed by Mr Andrew Penkethman who is a Fellow of the Australian Institute of Mining and Metallurgy and a Member of the Australian Institute of Geoscientists. Mr Penkethman is a full time employee of Extract Resources Ltd. Mr Penkethman 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 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Penkethman consents to the inclusion in this report of the matters based on his information in the form and context in which it appears. Information in this report relating to Mineral Resources is based on information compiled or reviewed by Mr Neil Inwood. Mr Inwood is a Principal Resource Consultant with Coffey Mining Pty Ltd, (independent resource consultants engaged by Extract Resources Ltd). Mr Inwood is a Fellow of The Australasian Institute of Mining and Metallurgy. Mr Inwood has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which his is undertaking to qualify as a Competent Person under the JORC Code. Mr Inwood and Coffey Mining (through a Corporate Consent) consents a to the inclusion of the data in the form and context in which it appears. The information in this report that relates to Ore Reserves is based on information compiled or reviewed by Mr Steve Craig and Mr Ross Cheyne, who are both Members of The Australasian Institute of Mining and Metallurgy. Mr Craig and Mr Cheyne are consultants to the Company and founding directors of a mining consultancy group, ORElogy. Mr Craig and Mr Cheyne have sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Craig and Mr Cheyne consent to the inclusion in this report of the matters based on their information in the form and context in which it appears. This release contains certain “forward-looking statements”. All statements, other than statements of historical fact that address activities, events or developments that the Company believes, expects or anticipates will or may occur in the future are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “seek”, “anticipate”, “believe”, “plan”, “estimate”, “expect”, and “intend” and statements that an event or result “may”, “will”, “can”, “should”, “could”, or “might” occur or be achieved and other similar expressions. Forward looking statements include those relating to the updated resource estimate increasing mine life and value, and the potential for process enhancements to add further value to the project. These forward-looking statements reflect the current internal projections, expectations or beliefs of the Company based on information currently available to the Company. Forward-looking statements are subject to a number of risks and uncertainties, including those detailed from time to time in filings made by the Company with securities regulatory authorities, that may cause the actual results of the Company to differ materially from those discussed in the forward-looking statements, and even if such actual results are realised or substantially realised, there can be no assurance that they will have the expected consequences to, or effects, on the Company. The Company expressly disclaims any obligation to update or revise any such forward-looking statements except as required by securities laws.

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Company Directory

30 June 2011

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COMPANY DIRECTORY

Directors

Stephen Galloway Non-Executive Chairman Jonathan Leslie Chief Executive Officer Neil MacLachlan Non-Executive Director John Main Non-Executive Director Inge Zaamwani-Kamwi Non-Executive Director Alastair Clayton Non-Executive Director Ron Chamberlain Non-Executive Director

Key Management

Jonathan Leslie Managing Director/CEO Norman Green CEO Swakop Uranium Peter Sydney-Smith Chief Financial Officer Siobhan Lancaster Company Secretary/

Corporate Affairs

Registered Office

30 Charles Street SOUTH PERTH WA 6151 Telephone: +61 (0) 8 9367 2111 Facsimile: +61 (0) 8 9367 2144

Corporate Office

38 Jermyn Street London SW1Y 6DN United Kingdom Telephone: +44 (0)207 317 9220

Namibian Office

3 Schutzen Street Windhoek Namibia Telephone: +264 (61) 300 220

Web Site

www.extractresources.com

Auditors

BDO Audit (WA) Pty Ltd 38 Station Street SUBIACO WA 6008

Solicitors

Clayton Utz Level 27, QV.1 Building 250 St Georges Terrace PERTH WA 6000

Corporate Advisors

Rothschild Australia Ltd Level 41, 50 Bridge Street SYDNEY NSW 2000

Share Registry Link Market Services Limited Ground Floor 178 St Georges Terrace PERTH WA 6000 Telephone: 1300 554 474 or (02) 8280 7111 Facsimile: (02) 9287 0303

Stock Exchange Listings

Australian Stock Exchange Toronto Stock Exchange Namibia Stock Exchange

ASX/TSX/NSX: EXT

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Corporate Profile

30 June 2011

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CORPORATE PROFILE AND KEY HIGHLIGHTS

Profile

Extract Resources Ltd (“Extract” or the “Company”) is an international uranium exploration and development company primarily focused on the 100%-owned Husab Uranium Project in Namibia, which contains the fourth largest uranium-only deposit in the world. Extensive exploration potential also exists for new uranium discoveries in the region. Extract is listed on the Australian (ASX), Toronto (TSX) and Namibian (NSX) Stock Exchanges.

Delivering More – Key Highlights 2010/2011

July 2010 Itochu acquired 10.3% stake in Extract

August 2010 Resource Update - used to underpin Definitive Feasibility Study

September 2010 Emergence of Zone 5 mineralisation

December 2010 Lodged Mining Licence Application for Husab

January 2011 Received EIA & EMP on the proposed Mining Licence Area for Husab

February 2011 $60.9m placement at $8.35 per share

February 2011 Emergence of Middle Dome, Salem, Pizzarro mineralisation

March 2011 Possible cash offer for Kalahari by CGNPC-URC

April 2011 Received Extension of EPL 3138 to April 2013

April 2011 Completed Definitive Feasibility Study for Husab

June 2011 Resource Update – Making Husab 4th Largest Uranium Only Deposit Globally

Delivering More – Achieved and Expected Timeline 2011/2012

July 2011 Linear Infrastructure Environmental Approval for EIA

August 2011 Reserve Update

Expected H2, 2011 Mining Licence Approval for Husab

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Chairman’s Letter

30 June 2011

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CHAIRMAN’S LETTER

Dear Shareholder,

Extract Resources has maintained the pace of its evolution from uranium explorer to developer throughout what has been an uncertain year for both the global economy and the nuclear power industry.

Several milestones were achieved during the 2011 financial year at the Husab Uranium Project (Husab), including completion of the Definitive Feasibility Study (DFS), the establishment and initial results from the Mine Optimisation and Resource Extension (MORE) Programme, further exploration success and the receipt of the environmental clearances required to bring Husab into production.

The DFS, completed in March 2011, demonstrated the Husab project’s economic viability based on production of approximately 15 million pounds of uranium per year from Zones 1 and 2. More importantly, it also affirmed Husab’s position as a world class asset. If Husab was in production today, it would be the second-largest uranium mine in the world, representing a significant achievement for Extract since discovery of the deposit in February 2008.

At the same time as announcing the DFS, Extract initiated the MORE Programme, aimed at substantially increasing the current mine life and optimising the process plant and mining operations. While the DFS has demonstrated that Husab is a robust, world class project, we are confident that the MORE Programme will continue to add considerable value.

Initial results from the MORE Programme began with the announcement of an updated resource estimate in June 2011. To date, Extract has defined measured, indicated and inferred resources of more than 500 million pounds of uranium at Husab, establishing Husab as the fourth-largest uranium-only deposit globally. We believe that Husab will continue to move up the rankings with further exploration success. In addition to the growth of resources at Zones 1 to 5, we also announced the emergence of several new zones of mineralisation including Middle Dome, Salem and Pizarro.

In August 2011, Extract announced an updated reserve estimate, adding 37% to the mining inventory and resulting in an extension of the forecasted mine life from 16 to over 20 years (including pre-strip). The reserve update also demonstrates a higher average grade and lower strip ratio than disclosed in the DFS.

Extract is committed to ensuring that its environmental standards adhere to international best practice and that it operates sustainably. We were pleased to announce the receipt of environmental clearances for the Husab site in January 2011, and approval for the associated infrastructure in July this year.

In December 2010, Extract’s wholly owned subsidiary Swakop Uranium applied to the Ministry of Mines and Energy for a Mining Licence over the Husab project area, comprising the northern part of EPL 3138. The Ministry has confirmed that the licence is currently under active consideration. Receipt of the Mining Licence is the final approval required for the development of the Husab Mine which, once developed, will add substantially to Namibian GDP and offer significant employment opportunities.

During the year, changes to the Namibian Minerals Policy were discussed by the Namibian Cabinet, whereby future rights to own licences for exploration of strategic minerals, including uranium, were intended to be held by a state-owned company, Epangelo Mining. It has been clarified that these changes will not apply to existing exploration and mining licences, and that existing mining licence applications will be considered under the existing procedures on their own merit. Consequently, Extract has received confirmation that the proposed policy changes will not adversely affect Swakop Uranium’s existing exclusive prospecting licences or its application for a mining licence for the Husab Uranium Project.

Following the tragic earthquake and tsunami in Japan on March 11th 2011 and the consequent damage to the Fukushima nuclear plants, nuclear power development programmes around the world have been subjected to additional scrutiny. While several countries are reviewing their policies on energy generation, including nuclear as part of that mix, many are reaffirming that nuclear power remains a pillar of their energy generation strategy. We believe that the forces driving the long-term global growth of nuclear power, such as increased demand for energy and in particular carbon neutral energy, remain intact.

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Chairman’s Letter

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Apart from its size, Husab’s location in Namibia offers customers greater security of supply through geographic diversification in a market with increasing supply concentration. Kazakhstan accounts for about 33% of world uranium production, with Canada and Australia accounting for a further 30%.

Husab’s strategic significance is highlighted by continued international interest in the project. In July 2010 Itochu acquired a 10.3% stake in Extract. As part of the partnership process, initiated in mid-2009, discussions have continued with several prospective partners. On 21 February 2011, we announced that Extract was holding discussions with Rio Tinto about a potential combination of Husab with the neighbouring Rössing Uranium mine. In March 2011, China Guangdong Nuclear Power Holding Corporation (CGNPC), a state-owned enterprise in the People’s Republic of China, announced a proposed bid for our major shareholder, Kalahari Minerals Plc. The bid was subsequently withdrawn, in part as a result of the market dislocation observed after the nuclear accident at Fukushima.

Nonetheless our base case has always remained development of Husab on a standalone basis. We expect that the cost of development, including the capital cost outlined in the DFS, will be met through a combination of debt and equity.

Meanwhile, continuing expenditure, including that relating to drilling and engineering studies, will be met from existing cash resources. In February 2011 Extract concluded a placement of 7,299,069 shares to Kalahari Minerals Plc, raising A$60.9 million at $8.35 per share, which represented the highest trading price for the Company over the preceding 12-month period. On 30 June 2011, Extract held cash of A$74.9 million.

Looking ahead, we are entering another period of intense activity. The MORE Programme continues, and is scheduled to provide further results in 2012 financial year. Meanwhile, Extract looks forward to receipt of the Mining Licence, which will be a critical component in the timing of our decision to mine. A second critical component will be the availability of financing for the project. Discussions with potential lenders to the project have commenced, and Extract intends to progress these discussions over the coming months. The Company also intends to continue to assess the potential for additional value creation through the partnership process, with regard to the introduction of strategic investors, potentially in parallel with offtake agreements, as well as alternative strategies for development.

None of this can take place without the efforts of our committed and experienced team. I would like to thank our employees at Extract and our wholly owned subsidiary Swakop Uranium for their considerable efforts during the year. I would like to extend special thanks to Martin Spivey, not only for his efforts during the year – the results of which are evident in the significant resource update announced in June 2011 – but also for his role in the discovery of the Husab deposit itself. Martin left the Company to pursue other opportunities at the end of August this year.

As Extract moves towards development, the team in Namibia will continue to grow. Given the national significance that this project holds for the Namibian people, the Company believes that it will continue to attract and retain a high calibre workforce. The focus going forward will be to ensure that Extract and Swakop Uranium have the right team and capabilities to continue to deliver impressive results for all our stakeholders.

Regards

Steve Galloway

Chairman of Extract For

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CEO Report

30 June 2011

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CHIEF EXECUTIVE OFFICER’S REPORT

Introduction

Extract Resources Ltd has had a productive year, with several significant milestones achieved during the period at our world class Husab Uranium Project (“Husab” or “the Project”) in Namibia. From a technical perspective, the Company announced a resource update in August 2010, before the results of the Definitive Feasibility Study (DFS) were announced in April 2011, together with publication of a maiden reserve estimate for Husab. In conjunction with the DFS, Extract also initiated the Mine Optimisation and Resource Extension (MORE) Programme, which has already delivered two notable successes –a 33% increase in the total global resource announced in June 2011 and a 37% increase in reserves announced in August 2011.

We have continued to make progress on obtaining the necessary permits for the project, and Extract was delighted to receive approval of its environmental impact assessments and management plans for the project site in January 2011. Approval of the associated infrastructure followed in July 2011. The Company successfully applied for an extension of our principal exploration licence, EPL 3138, to April 2013 and in December 2010, Extract submitted an application for a mining licence for the Husab Project area. The application covers the main extent of the granite-hosted uranium mineralisation at the northern end of EPL 3138.

Extract’s current focus is to ensure that the Company is ready to progress the Project as quickly as possible following receipt of the mining licence. Various work-streams are underway, including programmes to define additional mineralisation, optimise the process design, ensure that appropriate organisational structures are in place, and to arrange financing for the Project.

DFS and MORE

The DFS demonstrated the technical and economic viability of Husab. The completion of this study was a significant milestone for the Company.

The DFS was based on Zones 1 and 2 of the August 2010 resource model. The base case assumes open pit mining by truck and shovel from two separate pits, and processing of 15 million tons of ore per year to produce approximately 15 million pounds of U04 per year.

The processing plant defined in the DFS is built around a conventional process flow sheet, employing milling, leaching, ion exchange, solvent extraction and precipitation. A combined waste and plant tailings storage facility (mine residue facility) is expected to be built adjacent to the pits.

Once development commences, Husab will offer significant employment opportunities in Namibia. During construction, we expect a peak of 4,000 workers on site, and one of the first tasks envisaged is the construction of a dedicated camp for these workers. Once in operation, the labour force will be a little over 1,000 people, and we have defined plans to assist these employees to find housing in the nearby towns and villages.

A detailed project schedule was developed as part of the DFS. This indicated an engineering and production period of 33 months from project approval to hot commissioning, based on the estimates valid at the time of the DFS. Critical path items include construction of key infrastructure including power and water supply, and procurement of the mining fleet.

The DFS envisages connection to Namibia’s existing power, communications and road infrastructure, and contribution to the cost of construction of a new water pipeline from the coast, to be linked to the proposed desalinisation plant at Mile 6.

The capital cost to construct the Project was estimated at US$1.48 billion, including initial mine fleet, process plant and supporting infrastructure. Inclusive of pre-strip and other pre-production operating costs of US$179 million, the Total Project Cost was estimated at US$1.659 billion. Production costs were estimated at US$32 a pound including royalties, marketing and transport.

At the same time Extract began the MORE Programme, the initial results from which indicate the following areas of improvement:

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Additional drilling has increased confidence in the resource model so that material previously classified as inferred has been upgraded to indicated, and is now available for inclusion in reserves. Furthermore, definition of measured resources means that approximately five years of Proven reserves have now been defined.

Additional reserves defined in the August 2011 reserve update will result in an increase in mine life (including pre-strip) from 16 years to more than 20 years.

Furthermore, the conversion of material results in a reduction in the forecast strip ratio for the mine – which has reduced from 7:1 to 6:1.

Based on the results of the drilling programme and reserve update, the forecast average head grade has increased from 497 ppm to 518 ppm.

Further results from the MORE Programme are expected, with a new resource estimate expected to be announced in the first half of 2012.

The current resource and reserve estimates are set out in Tables 1 and 2. Husab currently ranks as the largest in-situ and highest grade granite-hosted uranium deposit in Namibia, and the fourth-largest uranium-only deposit in the world. Extract expects it will continue to move up the rankings.

Table 1: Husab Uranium Project Zone 1 – 2 (August 2011) Reserve Estimates

Tonnage Grade Contained U3O8 (Mt) (ppm U3O8) (MLb)

Proven Zone 1 25.3 482 26.9 Zone 2 37.4 628 51.8

Total Tonnage & Contained U3O8 62.7 569 78.7 Probable Zone 1 123.4 460 125.1 Zone 2 93.9 561 116.1

Total Tonnage & Contained U3O8 217.3 504 241.3

Proven and Probable


Note: Figures have been rounded. Resources stated inclusive of reserves, and stated at 100ppm cut off.

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CEO Report

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Table 2: Husab Uranium Project Zone 1 – 5 (June 2011) and Ida Dome (August 2008) Resource Estimate

Tonnage Grade Contained U3O8 (Mt) (ppm U3O8) (MLb)

Measured Zone 1 32.1 420 29.4 Zone 2 42.3 580 54.4


Indicated

Zone 1 170.5 400 148.6

Zone 2 110.0 520 125.4

Ida Dome 0.6 246 0.3


Measured and Indicated


Inferred Zone 1 37.7 370 30.9 Zone 2 39.1 370 31.8

Zone 3 46.1 240 24.1 Zone 4 19.8 560 24.5 Zone 5 32.3 260 18.7 Ida Dome 52.7 213 24.8


Note: Figures have been rounded. Resources stated inclusive of reserves, and stated at a 100ppm U3O8 cut off. Refer to the June 7, 2011 resource update and August 10, 2011 reserve update ASX releases for full details.

Exploration

More than 640,000 metres of drilling has been completed since the start of the exploration programme in 2007, making it one of the largest resource drilling programmes in the world. The exploration team was again successful during the year with the emergence of several new zones of mineralisation including the emergence of Zone 5, Middle Dome, Pizarro and Salem.

There remains significant scope to grow our resource base further through continued exploration activities. With this in mind, Extract is maintaining an active drilling programme with four rigs currently on site completing both exploration and resource delineation drilling. Exploration drilling over the Zone 5 to Middle Dome area remains ongoing and is targeted at the Rössing South anticline.

In September 2010, the Company entered into an agreement with North River Resources (NRR) and West Africa Gold Exploration (Proprietary) Limited (WAGE) regarding our exploration rights under EPLs 3327 and 3328, and WAGE’s uranium exploration rights under EPL 3139. The agreement envisages investment by NRR in wholly owned subsidiary Brandburg Energy (formerly Extract Resources (Namibia) Pty Ltd), to acquire a 50% interest in Brandburg through the provision of funding for the expected exploration programme. The transaction has not yet completed.

Project Implementation

With the DFS having confirmed the feasibility of the project, our attention has turned to its implementation. The owner and external engineering teams have commenced pre-development studies to permit the early placing of contracts and control of the project. The management team of Swakop Uranium is being strengthened to provide in-country functions to support the project phase and then the commencement of operations. Recently we hired Grant Marais as Corporate Strategy and Business Development Manager, Conroy Mouton as Financial Controller and Nomvula Kambinda as Public Relations Officer for Swakop Uranium.

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In the corporate office, Sashi Davies was recruited as Head of Marketing. Sashi has significant experience in the uranium industry, and is developing a marketing strategy to ensure that the project achieves the right balance of price certainty, exposure to anticipated price upside, operating flexibility and customer diversity. Jonathan Bevan was also appointed as the Business Development Manager.

Partnership process

The Partnership Process continued throughout the year, and we remain in dialogue with a number of prospective investors and offtake partners for the standalone development of Husab. In July 2010, Nippon Uranium, a subsidiary of Japanese trading house Itochu Corporation, acquired a 10.30% interest in the Company, and continues to be a strong supporter of the Project. In February 2011, we confirmed that we were holding discussions with Rio Tinto, with a view to capturing the significant potential synergies that could be generated from a joint development of Husab with Rio Tinto’s neighbouring Rössing Uranium Mine. In March 2011, we noted the announcement of a possible offer by China Guangdong Nuclear Power Holding Corporation (CGNPC), for our major shareholder, Kalahari Minerals. While this offer was subsequently withdrawn, following the market dislocation observed after the nuclear accident at Fukushima, it nonetheless highlights the internationally strategic nature of the Husab Uranium Project.

Further, discussions continue with Epangelo, the Namibian state-owned mining company, about its potential involvement in Husab.

Financing Strategy

In the past three years, Extract has funded expenditure totalling A$142.6m on its drilling programme, completion of feasibility studies and associated test work, and corporate activities, from the proceeds of equity issuance. Looking ahead, Extract intends to finance the development of Husab with a combination of debt and equity.

The DFS estimated a cost of US$1.659 billion to develop the Project. The Project Cost excludes allowance for finished goods inventory in transit and held at conversion facilities, other working capital escalation, and financing costs (including fees and interest during construction).

Extract is confident that the fundamentals underlying the Project will support stand-alone financing. These include:

Attractive fundamentals of the long-term uranium market

Supportive government allowing for an investment grade rating and Namibia’s access to the international capital markets

Experienced management team and engineering support

Long life of mine

Competitive cost structure

Established economics of proven mining and processing technologies

Extract has approached a number of financing agencies and banks with a view to funding development of Husab through a core group of multilateral/bilateral international financial institutions, export credit, import credit, commercial bank lenders and equipment manufacturers with relevant industry and regional experience. Discussions have been held with several prospective buyers who may enter into long-term and sizeable offtake and partnership arrangements supportive of equity and debt financing.

The Company’s shares are listed on the Australian, Toronto and Namibian Stock Exchanges. As at 30 June 2011, the Company had 251,014,044 shares outstanding and a market capitalisation of A$1,985.5 million at a price of A$7.91 per share. The Company has raised A$182.4 million in the past three years:

In February 2011 the placement of 7.3m shares to Kalahari Uranium Limited raising A$60.9m

Market offer and share placement of 11.8m shares raising A$91.1m in September and October 2009

Raising A$30.5m through the issue of 27.5m shares in June 2008

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Financial position

As at 30 June 2011, the Company held A$74.9 million of cash and was free of debt. In accordance with the Company’s treasury policy cash is held predominantly in Australian dollars with Namibian dollars held against short term costs. Existing cash balances are expected to be sufficient to fund currently planned activities including the MORE Programme, continued drilling and ongoing marketing, financing and corporate expenses.

Financial Analysis

Consolidated net loss 2011

A$’000

2010

A$’000

2009

A$’000

Interest and other income 2,872 3,097 1,572

Exploration and evaluation expenditure (47,982) (44,540) (22,580)

Corporate and administration expenditure (12,926) (9,621) (4,918)

Write down of investments - (706) -

Income tax benefit 2,951 16,214 14,187

Net loss for the year (55,085) (35,556) (11,739)

The Company’s interest income for the 2011 year of A$2.9 million was marginally lower than the 2010 year on an average cash holding of A$61.3 million (2010: A$76.9 million).

Exploration and evaluation expenditure for 2011 totalled A$48.0 million and was expensed in accordance to company policy per note 1(t). Expenditure during the year included continued exploration and in-fill drilling, completion of the DFS and initiation of the MORE Programme for Husab, including associated test work, and compilation of resource and reserve updates announced in June 2011 and August 2011 respectively. Since discovery of the Husab deposit the Company has spent A$82.2 million on drilling and A$32.9 million on engineering. In accordance with the Company’s accounting policy the Company continues to expense exploration and evaluation costs as a decision to proceed to development has not yet been taken by the Board.

During the period, the Company has expanded its corporate capabilities to support the management, partnership process and marketing of the Project, increasing corporate and administration costs in 2011 to A$12.9 million (2010: A$9.6 million).

The income tax benefit recorded primarily relates to deferred tax assets in Namibia which can be carried forward and offset against future taxable income. As the Company incurs exploration and evaluation expenditure in Namibia it gives rise to deferred tax assets (tax losses) that can be carried forward indefinitely to offset future taxable income. When the group acquired its subsidiaries in Namibia a deferred tax liability was recognised as required under the International Financial Reporting Standards. Pursuant to the offset provisions deferred tax assets have been recognised only to the extent of the recognised deferred tax liability which was exhausted during the 2011 year. Net deferred tax assets are brought to account where the generation of sufficient future taxable income to utilise the assets is probable. As at June 2011 the Company has A$24 million of unrecognised deferred tax assets. Overall the current year loss attributable to equity holders is higher than the prior year as a consequence of the factors mentioned above.

Cash flow

2011

A$’000

2010

A$’000

2009

A$’000

Exploration, evaluation and corporate expenditure (58,107) (50,673) (23,830)

Interest received 2,234 3,097 1,147

Net capital expenditure (244) (546) (605)

Sale/(purchase) of investments - - 3,612

Equity issue proceeds, net of costs 61,032 89,411 16,011

Effects of foreign exchange (143) (112) 212

Movement 4,772 41,177 (3,453)

Opening Cash 70,118 28,941 32,394

Closing cash 74,890 70,118 28,941

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Cashflow on exploration, evaluation and corporate expenditure totalled A$58.1 million, A$2.8 million less than expensed in profit and loss due to non-cash costs such as staff share based payments of A$3.1 million, offset by depreciation, working capital and foreign exchange movements of A$0.3 million. During the year, Extract raised $60.9 million by a placing of 7.3 million shares to Kalahari Uranium Limited; a subsidiary of AIM listed Kalahari Minerals Ltd.

At 30 June 2011 the Company held cash of A$74.9 million (2010: A$70.1 million).

Consolidated financial position

2011

A$’000

2010

A$’000

2009

A$’000

Current assets 76,961 74,398 30,189

Non current assets 83,396 90,319 100,640

Current liabilities (5,062) (11,079) (3,577)

Non current liabilities (533) (389) (23,421)

Net Assets 154,762 153,249 103,840

Consolidated current assets at June 2011 of A$76.9 million were similar to those at June 2010 of A$74.4 million, as cash expenditure during the period was approximately offset by the $60.9 million equity placement in February 2011.

Consolidated non-current assets have decreased from June 2010, primarily as a result of the retranslation of Namibian exploration and evaluation assets – exchange rate moved higher to 7.19730 N$/A$ at June 2011 (2010: 6.67767 ).

Consolidated current liabilities are lower than June 2010, predominantly due to lower trade and other payables and the offset of deferred tax liability with deferred tax assets.

Consolidated non-current liabilities represent provisions for rehabilitation and long-term employee retirement benefits. The balance is significantly lower than the 2009 year due to the reclassification of deferred tax liabilities as current during the 2010 year.

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Uranium Market Review

30 June 2011

13

URANIUM MARKET REVIEW

Extract believes that the fundamentals of the uranium market remain positive, despite the decline in short-term uranium prices following the nuclear accident at Fukushima. That belief is underpinned by a projected increase in global nuclear power production.

Increasing global energy demand as global electricity consumption doubles by 2030

o Future trends such as the increasing shortage of fresh water globally requiring the deployment of desalination plants; hydrogen production for transport use and the potential implementation of electric cars all have the potential to increase electricity consumption. According to the World Energy Outlook 2010 report, world primary energy demand is forecast to increase by 36% between 2008 and 2035, or 1.2% per year on average. In this scenario, non-OECD countries account for 93% of the primary energy demand growth. The report notes that while China's energy use was half that of the USA in 2000, it overtook the USA in 2009. Over the same period, electricity demand is expected to grow at 2.2% per annum, almost double the rate of primary energy, and with 80% of the growth being in non-OECD countries.

Concerns about the impact of climate change. Reduced usage of fossil fuel is still an important goal for decision makers, the media and the public.

o Post Fukushima, generation options are being reviewed, but nuclear power remains the single most significant means of large scale base load generation which reduces greenhouse gas emissions

Increased focus on security of supply, leading to diversification of energy sources

Uranium demand growth driven by significant nuclear programmes in China, South Korea and India, which seek to bring the proportion of their electricity derived from nuclear power into line with that in Europe and North America

o China alone has close to 29GWe (gigawatt electric) currently under construction and due to come online within the coming five years.

Around 14% of the world’s electricity in 2010 was generated from nuclear power. As of June 2011, 30 countries are operating 441 nuclear reactors for electricity generation and 60 new nuclear plants are under construction in 13 countries. Installed nuclear capacity will have to more than double if this share of electricity generation is to be maintained. To put this into context, installed nuclear capacity between 1995 and present day has grown from around 350Gwe to 377Gwe, though the increase in uranium demand was higher due to increasing capacity factors.

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Uranium Market Review

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Uranium production during 2010 was 140 million lbs U3O8, almost 40 million lbs below uranium demand of 180 million lbs, with the deficit being met from secondary supply from various forms of inventory held by governments and commercial entities.

As shown in the above graph, TradeTech forecasts that at least 40 million pounds per annum of capacity from new mines will be needed from the middle of this decade, just as Husab is ramping up to full production.

The uranium market in 2011 financial year was characterised by two phases; a period of rising spot and term prices during the second half of calendar year 2010 as participants responded to a perceived strengthening of market fundamentals, followed by a sharp decline in spot prices, and a more muted decline in the term market, following the nuclear accident at Fukushima. Both spot and term price indicators are still significantly higher than at the end of 2010 financial year.

Uranium spot prices ended the year at $51/lb, a rise of $10/lb from the start of the period, having peaked at $73/lb in January 2011. Meanwhile, the perceived strengthening of the fundamentals of the uranium market has continued to support the term market, which at the end of the year had fallen only $5/lb from its pre-Fukushima peak.

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Sustainability Report

30 June 2011

15

SUSTAINABILITY REPORT

Environment/ Our People / Our Community

Extract expects that the Husab Uranium Project will have a positive impact on the local, regional and national community in Namibia, including provision of employment, direct and indirect stimulation of the economy, and fiscal contributions to the state through royalties and taxes. It is estimated that, once operating, the project could represent 5-6% of the GDP of Namibia.

Extract and its wholly owned Namibian operational company, Swakop Uranium, recognise the need to proactively develop, maintain and promote environmentally sustainable practices at Husab.

The Company’s approach to sustainability, including the environment, our people, and engagement with the community in which we work is underpinned by the following key principles:

Our aspiration to engage with the relevant communities in the Erongo region

Creating and fostering a culture of sustainable and environmentally responsible values through training programmes and educational activities

Integration of sustainable business practices into the Company’s activities

Commitment to continuous improvement of environmental performance and occupational health and safety standards

Efficient resource use and enhancement of biodiversity protection.

Environment

Extract has received environmental approval for the Husab Mine and for the associated linear infrastructure.

Extensive specialist studies have been undertaken to investigate and manage the impacts of the proposed mine, plant and associated infrastructure on the bio-physical and socio-economic environment. Respected local scientists and socio economic specialists were retained to undertake baseline studies. The Environmental Impact Assessments and Management Planes were conducted to meet the requirements of the Equator Principles (www.equator-principles.com) and International Finance Corporation (IFC) Performance Standards.

During the development and operational phases, Extract is committed to operating to and maintaining these standards and procedures have been implemented to ensure Extract operates to best practice standards. A bi-annual environmental project audit by an independent assessor will be undertaken to ensure these standards are maintained.

As part of our commitment to being environmentally responsible and ensuring minimal long-term impact the Company has undertaken several studies to ensure environmental sustainability at Husab. Two such studies underway are on the little known species, Husab Sand Lizard, found in the area where the Swakop and Khan Rivers meet, and the protected Welwitschia mirabilis plant, one of the oldest known plants in the world.

Husab Sand Lizard (Pedioplanis husabensis)

Under the management of Dr Theo Wassenaar, the Gobabeb Training and Research Centre was commissioned to implement a pilot study on the Pedioplanis husabensis lizard, primarily to determine the extent of its geographic distribution. At this stage the lizards’ known range is only 5,000 km2. Secondly, it is hoped that the study will give rise to a better understanding of the species’ ecology, population dynamics and genetic structure.

Preliminary findings support the earlier observations that the Husab Sand Lizard is highly specialised and despite its name, it appears to be exclusively associated with rocky and rough terrain.

Future research by the Gobabeb Research Centre and the University of Arizona will investigate the natural history, basic ecology and habitat requirements of the Husab Sand Lizard which will be expanded to include the genetic research findings in a species management plan.

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Monitoring of the genetic structure will determine the population status and trends and will allow for the early detection of any decline in dispersal rate and population size.

Welwitschia mirabilis

The Welwitschia genus belongs to the cone-bearing gymnosperms and are considered to be dwarf trees related to conifers, specifically pines. Darwin described them as “the Platypus of the Plant Kingdom”.

They are believed to live for an estimated 1,500 years and specimens of average size are thought to be 500-600 years old. In its lifetime, the evergreen plant only produces a single pair of leaves which grow from opposite sides of the stem, and which grow throughout the year. Growth rates of the leaves differ between seasons, years and sites, depending mainly on the amount of moisture available. The water required for growth is thought to come from moist soil and fog dripping on to the soil surface. Recent studies support the suggestion that the plants utilise fresh water. The leaf ends, burned by the sun and torn by the wind, are reduced to a tangle of strips which give the appearance of lots of individual leaves.

Extract’s exploration geologists initiated a study on these enigmatic plants. To date more than 30,000 individual plants have been photographed, and their geographic location, relative health status, size and sex have been recorded.

The information from this study resides in a database that will be made available to scientists to undertake population dynamics and other studies to provide Extract with information on strategies to manage future potential impacts on the plant. At present, the data shows certain trends, for example, there appears to be more dead plants in certain areas and more female plants in others. The results from the census will assist in enabling scientists to determine why it grows, where it grows, what keeps it alive and what causes it to die.

No Welwitschias occur in Zones 1 and 2 of the proposed Husab Mine, but the major Welwitschia field is situated south of the proposed mine residue facility. Extract has commenced a programme with local specialists to determine the source of water for this Welwitschia field, amongst other studies.

Employment

Extract strives to implement best practice standards for a uranium mining company in occupational health and safety, employment equity, conditions of employment, training and development and industrial relations. The Company aims to attract and retain quality staff and be seen as an “employer of choice” in Namibia.

Last year the focus was on building a world class management team, which was achieved through the appointment of Jonathan Leslie as CEO of Extract and Norman Green as CEO of Swakop Uranium. Similarly the focus for 2010/2011 was on resource planning for the DFS.

The first half of the new financial year will focus on ensuring operational readiness for Husab in Namibia by building up the strength of the Swakop Uranium Team. The aim is to attract and retain skilled individuals and to coach and mentor emerging talent, so that the Company can ensure that it has a world class pool of Namibian employees.

As part of this focus, and to ensure industrial action is kept to a minimum during the project development phase, Swakop Uranium, the Metal and Allied Namibian Workers Union (MANWU) and the Construction Industry Federation of Namibia (CIF) signed a Project Labour Agreement (PLA) for the construction and commissioning phase of the Husab Project.

Health and Safety and Stewardship

The Company continues to be proactive in promoting safe working environments by anticipating, recognising, evaluating and controlling unhealthy and unsafe situations that could result in accidents or disruption of work. The Company’s priority is to ensure that everyone is made aware of hazards attached to all work performed, understands the precautionary measures required with respect to hazards and is provided with the necessary information, education, training and supervision to maintain a healthy and safe workplace.

Extract takes the concept of uranium stewardship seriously and operates responsibly on the basis that all injuries and environmental breaches are avoidable. This principle features in every aspect of the Company’s business starting with best

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practice occupational health and safety procedures. On site targets are set so that they either meet or exceed all regulatory guidelines and either meet or exceed the Equator Principles and International Finance Corporation standards.

The Company has a Radiation Management Plan in place to ensure that radiation is managed and monitored in an effective manner. This plan has been submitted to the National Radiation Protection Authority and is regularly audited to ensure compliance. To date there have been no cases on non-compliance found by the authority.

Extract is also an active participant in the uranium sector and is a member of the World Nuclear Association. In Namibia Swakop Uranium is a member of the Chamber of Mines and Uranium Stewardship Committee and in Australia Extract is a member of the Australian Uranium Association.

Community Relations

Swakop Uranium engages key stakeholders in the Erongo Region on an ongoing basis, including local authorities, environmental groups and the public; as well as formal open days which were organised as part of the environmental impact assessments. The Company also produces a bi-monthly newsletter called Swakop Vission, which provides answers to local questions as well as key pieces of information on Husab. Engagement with stakeholders is viewed as a key part of ensuring sustainable development and that the Company acts in the best interest of all stakeholders.

As part of our commitment to the local Erongo Region, Extract has set up the Swakop Uranium Foundation (the “Foundation”). Using established criteria based on the benefits to the community, the region and the country, and identified through an engagement process with key stakeholders in the region, the Foundation has three aims:

1. To contribute to the economic and social welfare of the communities in which it operates – with a focus on education and health.

2. To increase the pool of mathematics and science students through the support of education resulting in more technically skilled Namibians who can drive the country’s economy.

3. To support sustainable projects with sound monitoring and tracking mechanisms in place.

This year the Foundations objectives have been achieved by:

Offering bursaries to six Namibian mining students with exceptional academic track records to study various engineering and accounting courses at universities and colleges in Namibia and South Africa

Donating to the National Disaster Relief Fund through President Hifikepunye Pohamba in aid of the northern flood crisis

Supporting road safety awareness campaign Xupifa Eemwenyo and donating to the December 2010 campaign. This campaign raises driver awareness and aims to reduce road fatalities and injuries

Sponsoring the Arandis Town Council’s first fire fighting and first aid course for selected participants of the Town Council

The Company is committed to increasing its involvement and participation in Community-related activities going forward as it moves towards the next phase of project development at Husab.

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Corporate Governance Statement

30 June 2011

18

CORPORATE GOVERNANCE STATEMENT

Extract Resources Ltd (the Company) and the Board are committed to achieving and demonstrating the highest standards of corporate governance. The Board continues to review and develop our framework and practices to ensure high quality governance and the creation of long-term shareholder value. The Company and its controlled entities together are referred to as “the Group” in this statement.

This statement outlines the Group’s 2010/2011 system of governance which complies with the ASX Corporate Governance Principles and Recommendations (including 2010 Amendments) and was in place for the entire year unless otherwise indicated. Any divergences from the ASX best practice recommendations, and the reasons for doing so, are outlined below. The ASX Corporate Governance Council recognises that not all recommendations are appropriate for all companies and that only suitable recommendations should be adopted.

The Company consistently reviews and refines its corporate governance policies to appropriately reflect the growth of the Company, current legislation and good practice. Further details of the Company’s policies and procedures are available in the corporate governance section of the Company’s website at www.extractresources.com.

Principle 1: Lay solid foundations for management and oversight

The relationship between the Board and senior management is critical to the Group’s long term success. In order to formalise and disclose the functions reserved to the Board and those delegated to management the Company adopted a statement summarising the roles and responsibilities of the Board and the Company. The Board adopted a new Board Charter in June 2011 (see Board Charter in the Corporate Governance Section of the Company’s website; www.extractresources.com).

According to the Roles and Responsibilities of the Board, the Board is responsible for ensuring that the Company is managed in a manner which protects and enhances the interests of its shareholders and takes into account the interests of all stakeholders. The Board is also responsible for setting the strategic directions for the Company, establishing goals for management and monitoring the achievement of these goals.

The Board specifically reserved the following matters for its decision:

Guidance for and approval of corporate strategy

Oversight and monitoring of the Company’s

o performance and achievement of its strategic goals and objectives;

o compliance with its Code of Conduct; and

o major capital expenditures, major funding raising activities and other significant corporate projects.

Approval and monitoring Company budgets and business plans

Ensuring availability of sufficient resources to meet the approved objectives of the Company

Monitoring financial performance including approval of the annual and half-year financial report and liaison with the external auditors

Appointment, performance assessment and removal of the Managing Director

Appointment and/or removal of senior management, including the Company Secretary

Management of the remuneration and reward systems and structures for executive management and staff

Ensuring that appropriate risk management systems and internal controls are in place

Ensuring that the capital markets are kept informed of all relevant and material matters and ensuring effective communication with shareholders

Formal determinations that are required by the Company’s constitutional documents, by statute or by other external regulation.

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Day to day management of the Group’s affairs and the implementation of the corporate strategy and policy initiatives have been formally delegated by the Board to the CEO/Managing Director and senior executives.

A performance assessment for senior executives took place in June 2011. This involved assessing the performance of Senior Executives against key performance indicators as agreed at the commencement of 2010/2011 Financial year. The processes for these assessments are described in the Remuneration and Nomination Committee Charter which can be found on the Company’s website: www.extractresources.com.

Principle 2: Structure the Board to add value

The Company has an experienced Board of Directors with appropriate expertise across a range of sectors including: exploration and development, mining, production, finance, and corporate advisory. For the names and details of the Directors of the Company in office at the date of this Statement, and whether they are considered Independent Directors, please refer to the Director’s Report.

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

Persons nominated as Non-Executive Directors must have the relevant qualifications, experience and expertise to benefit the Company and add shareholder value

Persons nominated as Executive Directors must be of sufficient stature and security of employment to express independent views on any matter

The Chairperson is a Non-Executive who, is ideally independent, and elected by the Board based on his/her suitability for the position

The roles of Chairperson and CEO are not held by the same individual

All Non-Executive Directors are expected voluntarily to review their membership of the Board from time-to-time taking into account: length of service, age, qualifications and expertise relevant to the Company’s current policy and strategies, together with the other criteria considered desirable for composition of a balanced Board and the overall interests of the Company

Executive Directors are to retire from the Board on the relinquishment of their executive position with the Company

Under the Company's Constitution, the minimum number of Directors is three. At each Annual General Meeting, one third of the Directors (excluding the Managing Director) must resign, with Directors resigning by rotation based on the date of their appointment. Directors resigning by rotation may offer themselves for re-election. The number of Directors is maintained at a level which will enable effective spreading of workload and efficient decision making

The structure of the Board is reviewed on an annual basis to ensure that the Board has the appropriate mix of expertise and experience. Where a vacancy exists, through whatever cause, or where it is considered that the Board would benefit from the services of a new Director with particular skills, the Board determines the selection criteria for the position based on the skills deemed necessary for the Board to best carry out its responsibilities. The Board then appoints the most suitable candidate who must stand for election at the next general meeting of shareholders

Each Director has the right of access to all relevant Company information, the Company’s Executives and, subject to prior consultation with the Chairman, may seek independent professional advice at the consolidated entity’s expense with a copy of such advice being made available to all Board members.

In accordance with the Corporations Act 2001 and the Company’s Constitution, Directors must keep the Board advised, on an ongoing basis, of any interest that could potentially conflict with those of the Company. Where the Board believes that a significant conflict exists, the Director concerned does not receive the relevant Board papers and is not present at the Board meeting whilst the item is considered. Details of Directors’ related entity transactions with the Company and consolidated entity are set out in the related parties note in the financial statements.

Improvement in Board processes, structure, effectiveness and contributions to the Company is a continuing objective. The Chairman is responsible for annually reviewing the Board’s performance. In order to identify ways to improve the Company’s performance an evaluation of the performance of the Board, the Chairman, CEO and each Director was carried

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out in June 2011 against the requirements of the Company, Committee Charters and policies. The evaluation process involved Directors completing individual questionnaires focusing on a range of Board related matters (for example Board structure, committees, risk management policies, peer and self-assessment and interaction with management). Responses to the questionnaire were collated and discussed by the Board in an open forum and recommendations for improvement considered and majority of these have been implemented.

The Board has seven Directors of which the majority are Independent Directors. The Board considers the following Directors to be independent: Mr Stephen Galloway (Chair of the Board), Mr John Main, Ms Inge Zaamwani-Kamwi and Mr Ron Chamberlain (from April 2011). As Mr Neil MacLachlan and Mr Alastair Clayton are representatives of major shareholder Kalahari Minerals Plc they are not considered independent.

The Remuneration and Nomination Committee, as discussed below in Principle 8, was established to assist the Board in a range of matters including: size and composition of the Board, appointment and removal of Directors, induction of new Directors and the ongoing education of Directors. The commitments of Non-Executive Directors are considered by the Remuneration and Nomination Committee prior to the Directors’ appointment to the Board and are reviewed each year as part of the annual performance assessment. Please refer to Principle 8 below for further details about the Remuneration and Nomination Committee.

Principle 3: Promote Ethical and Responsible Decision-Making

The Board has adopted a Code of Conduct for all Directors, Officers and employees. The Code of Conduct provides policies for trading in Extract securities and embraces the values of integrity, excellence and commercial discipline. It provides guidance to Executives and Officers for maintaining confidence in the Company’s integrity. A copy of the Code of Conduct is available on the Extract website at www.extractresources.com.

The Board has adopted a Share Trading Policy on trading in Company securities by Directors, Senior Executives and employees. The Board is satisfied that the Group has complied with its policies on ethical standards, including trading in securities. This policy is available on the Extract website at www.extractresources.com.

In June 2011, the Board adopted a Diversity Policy as outlined in the new ASX Corporate Governance Recommendations 3.2, 3.3 and 3.5. Extract values diversity and recognises the benefits that it can bring to the Company’s ability to achieve its goals.

Extract is committed to improving diversity within its organisation and consequently its Diversity Policy encompasses measurable objectives to achieve gender diversity and annual assessment of the objectives and its progress in achieving them. In addition to gender diversity, Extract is committed to diversity within its workforce such that the Extract workforce is representative of the communities in which it works. The Diversity Policy is available on the Company’s website at www.extractresources.com. However, given that the Company is in the process of the organisational design of the workforce the Company has not yet set targets for the female representation in the Company.

Principle 4: Safeguard Integrity in Financial Reporting

The Audit and Risk Committee consisted of the following Non-Executive Directors during the financial year ending on 30 June 2011:

Chairman: J Main (1 July 2010 – 1 April 2011) R Chamberlain (2 April 2011 – 30 June 2011) Members: S Galloway (1 July 2010 – 1 April 2011) J Main (2 April 2011 – 30 June 2011) N MacLachlan (1 July 2010 – 30 June 2011)

During the year ending 30 June 2011 the Audit and Risk Committee maintained a total of three Non-Executive Directors, with the majority being Independent Directors. The Audit and Risk Committee was also always chaired by an Independent Director who did not chair the Board at the same time.

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Details of these Directors’, including their qualifications and attendance at Audit and Risk Committee meetings, are set out in the Directors’ report on page (29.)

All members of the Audit and Risk Committee are financially literate and have an appropriate understanding of the industries in which the Group operates. The Chairman of the Audit and Risk Committee, Ron Chamberlain, has particularly relevant qualifications as a Fellow of the Institute of Chartered Accountants in Australia and possesses over 20 years experience in international finance with global listed companies, private companies and chartered accountant firms.

The Audit and Risk Committee operates in accordance with its Charter which is available on the Extract website at www.extractresources.com. The Board, and by delegation, the Audit and Risk Committee, have the primary responsibility of ensuring that the Company presents and publishes accounts which present a true and fair view of its results and financial position. This includes ensuring the adoption of consistent, appropriate accounting methods applied in accordance with accounting standards and relevant laws, as well as monitoring the appointment, independence and performance of the external auditor.

Accountability is encouraged by requiring the Chief Financial Officer to state in writing that the Company’s financial reports present in all material respects a true and fair view of the Company’s financial condition and performance and are in accordance with relevant accounting standards.

The appointment and performance of the external auditor is appropriately administered to ensure independence and the serving of the interests of the shareholders. In its Charter, the Audit and Risk Committee are delegated the task of nominating the external auditor and reviewing the external auditor, at least annually, in terms of their independence and performance in relation to the adequacy of the scope and quality of the annual statutory audit and half-year review and the fees charged.

The external auditor will attend the Annual General Meeting and be available to answer shareholder questions about the conduct of the audit and the preparation and content of the Audit Report.

For information on the number of Audit Committee meetings held during the year and the number of Audit Committee meetings attended by each committee member please refer to page (29) of the Directors’ report.

There was full compliance with Recommendation 4 of the ASX Principles of Corporate Governance.

Principle 5: Make Timely and Balanced Disclosure

The Board has adopted a Continuous Disclosure Policy to ensure that the Company complies with its obligations in relation to disclosure of information to the market and accountability at a Senior Executive level for such compliance. This Policy provides a commitment to ensuring that shareholders and the market are provided with timely and balanced information about the Company’s activities. The Company Secretary is responsible for the overall administration of this Policy and all information disclosed to the ASX is posted on the Company’s website as soon as it is disclosed to the ASX. Such disclosure is to ensure that all participants have equal opportunity to receive information issued and to ensure compliance with ASX listing rules and the Corporations Act. The Continuous Disclosure Policy is available on the Extract website at www.extractresources.com.

Principle 6: Respect the Rights of Shareholders

The Company has adopted a Communication Policy to maintain and improve effective communications with shareholders and encourage effective participation at General Meetings. The establishment of the Company’s website also enables users to view Company announcements, media briefings, details of company meetings and financial reports at their convenience. At the Annual General Meetings, Directors and the auditors are requested to make themselves available for questions and general discussions. The Communication Policy is available on the Extract website at www.extractresources.com.

Principle 7: Recognise and Manage Risk

The Board recognises that taking and managing risk is central to the conduct of Extract’s business and to building shareholder value. The Board is responsible for satisfying itself annually, or more frequently as required, that management has developed and implemented a sound system of risk management and internal control in safeguarding the assets of the

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Group. Detailed work on this task is delegated to the Audit and Risk Committee and reviewed by the Board. The Audit and Risk Committee Charter outlines the policy objectives of the Company to effectively manage the level of risk by linking the Company’s vision and values, objectives and strategies, procedures and training.

Internal control systems are designed to reflect the particular type of business, operations and health and safety risks and to identify and manage risks, but not all risks to which the business is exposed. As a result, internal controls can only provide a reasonable, but not absolute, assurance against material misstatements or loss. The Board reviews the effectiveness of the internal controls through the Audit and Risk Committee and the Executive Management reporting to the Board on a regular basis where business plans, budgets and authorisation limits for the approval of significant expenditure, including investments, are appraised and agreed. The Board also seeks to ensure that there is a proper organisational and management structure with clear responsibilities and accountability. It is the Board's policy to ensure that the management structure and the quality and integrity of the personnel are compatible with the requirements of the group.

The Audit and Risk Committee monitors the Company’s risk management by overseeing management’s actions in the evaluation, management, monitoring and reporting of material operational, financial, compliance and strategic risks. In providing this oversight, the Committee reviews:

the framework and methodology for risk identification, the degree of risk the company is willing to accept, the management of risk and the processes for auditing and evaluating the company’s risk management system;

group-wide objectives in the context of the abovementioned categories of corporate risk;

where necessary, approves guidelines and policies governing the identification, assessment and management of the Company’s exposure to risk;

approves the delegations of financial authorities and addresses any need to update these authorities on an annual basis; and

compliance with agreed policies.

The Audit and Risk Committee oversaw the management of a comprehensive risk review on the Company and project risks in June 2011. The methodology used to review these risks was the Australian Standards AS/NZS 4360:2004, Risk Management. This involved identification, assessment, evaluation and treatment of risks.

Management will continue to design and implement risk management and internal control systems to manage the Company’s material business risks and report to the Board on these risks on an ongoing basis.

The Audit and Risk Committee Charter is available on Extract website at www.extractresources.com.

The Board has received assurance from the Chief Executive Officer and the Chief Financial Officer that the declaration provided in accordance with section 295A of the Corporations Act 2001 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.

Principle 8: Remunerate Fairly and Responsibly

The Remuneration and Nomination Committee consisted of the following Non-Executive Directors during the financial year ending on 30 June 2011:

Chairman: N MacLachlan (1 July 2010 – 1 April 2011) J Main (1 April 2011 – 30 June 2011) Members: I Zaamwani-Kamwi (1 July 2010 – 30 June 2011) N MacLachlan (2 April 2010 – 30 June 2011) J Main (1 July 2010 – 1 April 2011)

During the year ending 30 June 2011 the Remuneration and Nomination Committee maintained a total of three Non-Executive Directors with the majority being Independent Directors. Details of these Directors’ attendance at Remuneration and Nomination Committee meetings are set out in the Directors’ Report on page 29.

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The Remuneration and Nomination Committee operates in accordance with its Charter which is available on the Company website at www.extractresources.com. The Remuneration and Nomination Committee advises the Board on remuneration and incentive policies and practices generally, and makes specific recommendations on remuneration packages and other terms of employment for Executive Directors, other Senior Executives and Non-Executive Directors. The Committee also assumes responsibility for overseeing management succession planning, the annual performance assessment programme, proposed candidates for board vacancies and reviewing Board composition and appointments to maintain an appropriately balanced mix of skills, experience and diversity on the Board.

Each Senior Executive signs a formal employment contract at the time of their appointment covering a range of matters, including their duties, rights, responsibilities and any entitlements on termination. The standard contract refers to a specific formal job description.

Further information on Directors’ and Executives’ remuneration, including principles used to determine remuneration, is set out in the Directors’ report under the heading “Remuneration Report”.

The performance of the Managing Director is reviewed at least annually in accordance with the Company’s corporate governance guidelines.

Company Website

Extract Resources has made available all the details of all its corporate governance principles on its website at www.extractresources.com.

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Directors’ Report

For the year ended 30 June 2011

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DIRECTORS’ REPORT

Your Directors present their report on the consolidated entity consisting of Extract Resources Ltd (“the Group”) and the entities it controlled at the end of, or during, the year ended 30 June 2011.

Directors

The following persons were Directors of Extract Resources Ltd during the whole of the year:

Stephen Galloway Neil MacLachlan John Main Inge Zaamwani-Kamwi Alastair Clayton Ron Chamberlain Jonathan Leslie

Company Secretary

Siobhan Lancaster was the Company Secretary of Extract Resources Ltd during the whole of the year.

Principal Activities

Extract Resources Ltd is an international uranium exploration and development company whose primary focus is in Namibia. The Company’s principal asset is its 100% owned Husab Uranium Project which contains the fourth-largest uranium-only deposit in the world. Extensive exploration potential also exists for new uranium discoveries in the region.

There were no significant changes in the nature of Extract’s activities during the year.

Dividends

There were no dividends paid or declared for payment.

Operating Results

The net loss for the year attributable to equity holders was $55.1 million (2010: $35.6 million).

Significant Change in Affairs

Other than disclosed in review of operations in the Chief Executive Officer’s report, there were no significant changes in the state of affairs of the Group during the year.

Matters subsequent to the end of the financial year

Since 30 June 2011 the following after balance sheet date events have occurred:

(a) Vesting of Performance Rights and Issue of Shares

On 11 July 2011 the Company announced that 145,119 Class A Performance Rights had vested at 30 June 2011, and a corresponding amount of shares were issued. The financial effect of the vesting was recognised in the year ending 30 June 2011.

(b) Husab received its Linear Infrastructure Environmental Approval

On 25 July 2011, the Husab Uranium Project received its Linear Infrastructure Environmental Approval. This was the final environmental approval required to commence the development of the Husab Mine.

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(c) Issue of Class A Performance Rights

A total of 145,294 Class A Performance Rights were issued on 5 August 2011 and 8 August 2011.

(d) Husab Uranium Project Reserve Upgrade

On 10 August 2011 the Group announced a new reserve estimate for the Husab Project on Zones 1 and 2, following JORC Code and Canadian NI43-101 guidelines.

Husab Uranium Project Zone 1 – 2 (August 2011) Reserve Estimates Tonnage Grade Contained U3O8

(Mt) (ppm U3O8) (MLb)

Proven Zone 1 25.3 482 26.9 Zone 2 37.4 628 51.8

Total Tonnage & Contained U3O8 62.7 569 78.7 Probable Zone 1 123.4 460 125.1 Zone 2 93.9 561 116.1


Proven and Probable



Except for as disclosed above, no other matter or circumstance has arisen since 30 June 2011 that has significantly affected, or may significantly affect:

the Group’s operations in future financial years, or

the results of those operations in future financial years, or

the Group’s state of affairs in future financial years.

Likely developments and expected results of operations

(i) The Group expects to continue exploration and evaluation at its Husab Uranium Project

(ii) The Group expects to raise funds to pay for commitment requirements to develop the Husab Mine

(iii) On the provision that the Mining Licence has been granted and that the Project Financing has been achieved, the Group expects to commence development at its Husab Uranium Project

(iv) The Group expects to further expand its activities and presence in Namibia

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Information on Directors

Stephen Galloway. Chairman – Non Executive. Age 54. Mr Stephen Galloway is an independent Non-Executive Chairman. Mr Galloway has extensive experience working in Namibia across mining, energy, investment and financial sectors. He began his career as a geologist, working with various exploration and mining companies, after which he held a number of positions within the Namibian Government including Chief Mineral Economist, Under Secretary of the Ministry of Trade and Industry and Executive Director of the Namibian Investment Centre. He was Managing Director of NedCapital Namibia (Pty) Ltd, from 1999 until 2010. He was appointed CEO of RMB Namibia in July 2011, a company that provides specialised project and corporate finance products and financial services to the Namibian market. Other current listed directorships None Former listed directorships in the last three years Non-Executive Director of AIM listed Kalahari Minerals Plc Special responsibilities Chairman of the Board Member of the Special Sub Committee Member of the Audit and Risk Committee (until April 2011) Interest in shares and options 15,524 interest ordinary shares in Extract Resources Ltd Nil interest in options in Extract Resources Ltd Nil interests in performance rights in Extract Resources Ltd

Jonathan Leslie. Managing Director/Chief Executive Officer. Age 60 Mr Jonathan Leslie is the Managing Director of Extract and as a consequence is not considered independent. Mr Leslie is a highly experienced mining executive, with extensive operational and management knowledge of the global mining industry which includes experience in uranium marketing and project management. He was on the Board of Rio Tinto Plc for nine years and CEO of two of Rio Tinto's major product groups. He has broad experience of uranium marketing, having spent four years responsible for Rio Tinto's worldwide uranium sales into the Far East and Asia. His involvement in uranium continued with his appointment as Managing Director of Rössing Uranium where he developed close relationships with the Namibian government and related agencies. More recently Mr Leslie served as Executive Chairman for the major AIM listed mining company, Nikanor plc, formed to develop the world class KOV copper/cobalt project in the Democratic Republic of Congo. Prior to his role with Nikanor, Mr Leslie was CEO of Sappi Ltd, from 2003 to 2006.

Other current listed directorships Non-Executive Director of Lonmin Plc Member of the Investment Advisory Committee of Arias Resource Capital Management Former listed directorships in the last three years Executive Chairman Nikanor Plc Special responsibilities Managing Director/ Chief Executive Officer Interest in shares and options 134,130 ordinary shares in Extract Resources Ltd Nil interest in options in Extract Resources Ltd 1,005,975 Class B performance rights in Extract Resources Ltd

Neil MacLachlan. Director – Non Executive. Age 69. Mr Neil MacLachlan is a Non-Executive Director. As he is a representative for a major shareholder he is not considered independent by the Board. Mr MacLachlan holds a Science degree with Honours from Manchester University and has more than 30 years of investment banking experience gained in Europe, South East Asia and Australia, including 16 years with the investment banking division of HSBC including positions as deputy chairman/CEO for Wardly Australia Ltd (now HSBC Bank Australia Ltd) and as head of investment banking at James Capel & Co Ltd. He also has extensive mining industry experience, including as Executive Vice President, Asia for Barrick Gold Corporation, with responsibility for identifying and negotiating new acquisitions in Asia. Other current listed directorships

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Non-Executive Director of Eurogold Limited Executive Director of Kalahari Minerals Plc Non-Executive Director of Oklo Resources Ltd Former listed directorships in the last three years Non-Executive Director of Samson Oil and Gas Ltd Non-Executive Director of Brinkley Mining Plc Special responsibilities Member of the Remuneration and Nomination Committee Member of the Audit and Risk Committee Interest in shares and options 231,137 ordinary shares in Extract Resources Ltd Nil interest in options in Extract Resources Ltd Nil interests in performance rights in Extract Resources Ltd

John Main. Director – Non Executive. Age 64. Mr John Main is an independent Non-Executive Director. He is a geologist with 40 years of practical and management experience in the international mineral exploration and mining industry, across a wide range of commodities and mineralisation styles. He has been a senior exploration executive with a number of major mining companies, with extensive overseas and uranium exploration experience. This includes four years based in Namibia working on uranium and base metals projects. He has led exploration teams in the discovery, definition and evaluation of a number of world-class mineral projects, including the Skorpion Zinc Project in Namibia, the Century Zinc-Lead Project in Queensland, and the Resolution Copper Project in Arizona.

Other current listed directorships None Former listed directorships in the last three years None Special responsibilities Member of the Audit and Risk Committee Chairman of the Remuneration and Nomination Committee Interest in shares and options 25,422 ordinary shares in Extract Resources Ltd Nil interest in options in Extract Resources Ltd Nil interests in performance rights in Extract Resources Ltd

Inge Zaamwani-Kamwi. Director – Non Executive. Age 52. Ms Inge Zaamwani-Kamwi is an independent Non-Executive Director. Ms Zaamwani-Kamwi is a qualified mining lawyer having obtained her undergraduate and postgraduate degrees in Law in the UK. She is a member of the Honorable Society of Lincoln’s Inn, London. Inge is currently the Managing Director of Namdeb Diamond Corporation,a company jointly owned by the Government of the Republic of Namibia and De Beers SA Diamond Corporation Limited. Prior to to her role as Managing Director, she served as Chief Mineral Rights Officer rising through the ranks to assume the position of Director of Mines in the Namibian Ministry of Mines and Energy. She also serves as board member of several of Namibia’s premier companies, institutions and non-government organisations. Other current listed directorships Managing Director of Namdeb Diamond Corporation Limited Non-Executive Director of First National Bank of Namibia Limited Former listed directorships in the last three years None Special responsibilities Member of the Remuneration and Nomination Committee. Interest in shares and options 4,851 ordinary shares in Extract Resources Ltd Nil interest in options in Extract Resources Ltd Nil interests in performance rights in Extract Resources Ltd

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Alastair Clayton Director. Director - Non Executive. Age 39. Mr Alastair Clayton is a Non-Executive Director. As he is a representative for a major shareholder he is not considered independent by the Board. Mr Clayton is a qualified geologist and mining executive with extensive experience in optimising and financing large scale mining projects. Mr Clayton recently served as a Non-Executive Director of Ortac Resources Ltd (formerly Templar Minerals Plc), an AIM-listed mining and exploration group. In addition Mr Clayton was previously Chairman of Bannerman Resources, a uranium exploration company in Namibia and was extensively involved in the optimisation and construction of the Murrin Murrin project in Western Australia. Other current listed directorships None Former listed directorships in the last three years Chairman/Non-Executive Director of Bannerman Resources Limited Non-Executive Director of Ortac Resources Ltd (formerly Templar Minerals Plc) Non-Executive Director of Universal Coal Plc Special responsibilities None Interest in shares and options 1,808 ordinary shares in Extract Resources Ltd Nil interest in options in Extract Resources Ltd Nil interests in performance rights in Extract Resources Ltd

Ron Chamberlain. Director – Non Executive. Age 42. Mr Ron Chamberlain is an independent Non-Executive Director (considered independent since 1 April 2011). Mr Chamberlain is a Fellow of the Institute of Chartered Accountants in Australia with 20 years experience in international finance with global listed companies, private companies and chartered accountant firms. He was recently Acting Chief Financial Officer for Atlantic Limited which owns the Windimurra Vanadium Project in Western Australia. Prior to this he was Extract’s Acting Chief Financial Officer, where he was contracted as an independent consultant until April 2010. Between 2004 and 2008 he was Chief Financial Officer for Paladin Energy Limited where he was intimately involved in development of the Langer Heinrich Mine in Namibia. During the period 1998 to 2004 he worked in a variety of senior financial roles for the global mineral sands miner Iluka Resources Limited in Australia and the United States. Other current listed directorships None Former listed directorships in the last three years None Special responsibilities Chairman of the Audit and Risk Committee Member of the Special Sub Committee Interest in shares and options 1,037 ordinary shares in Extract Resources Ltd Nil interest in options in Extract Resources Ltd Nil interests in performance rights in Extract Resources Ltd

Siobhan Lancaster – Company Secretary Miss Siobhan Lancaster has a Masters in Law and Legal Practice from the University of Technology, Sydney, a Bachelor of Agricultural Economics from the University of Sydney, and is currently completing her executive MBA with the Australian Graduate School of Management, UNSW. She has also completed the Australian Institute of Company Directors Course. Miss Lancaster commenced her career as a lawyer with Allens Arthur Robinson, working in Mergers and Acquisitions. Prior to her role at Extract, Miss Lancaster worked for an ASX listed uranium exploration company. F

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Meeting of the Directors

The numbers of meetings of the Company’s Board of Directors and of each Board Committee held during the year ended 30 June 2011, and the number of meetings attended by each Director are as follows:

Full meetings of directors

Independent board meetings*

Committee Meetings

Audit & Risk Remuneration &

Nomination Special Sub

Total Held 1.

Attended 2. Total

Held 1. Attended 2.

Total Held 1.

Attended 2. Total

Held 1. Attended 2.

Total Held 1.

Attended 2.

S Galloway 12 12 7 7 2 1 ^ N/A N/A 2 2

R Chamberlain 12 12 7 6 2 1 ^^ N/A N/A 2 2

I Zaamwani-Kamwi

12 9 7 2 N/A N/A 7 5 N/A N/A

J Main 12 12 7 5 2 2 7 7 N/A N/A

J Leslie 12 12 7 6 N/A N/A N/A N/A 2 2

N MacLachlan 12 12 ** ** 2 2 7 7 N/A N/A

A Clayton 12 11 ** ** N/A N/A N/A N/A N/A N/A

1. Total number of meetings held during the year 2. Number of meetings attended during the time the director held office or was a member of the committee N/A Not a member of the relevant committee

* Meetings of Board members who are considered independent by virtue of not possessing potential or actual conflict of interest(s) with Extract’s major shareholder’s interests

** Not attended as the Director is not an independent member of the Board

^ S Galloway stepped down as a member of this Committee and was replaced by R Chamberlain after the first Committee meeting

^^ R Chamberlain was not a member of the Audit and Risk Committee when the first Committee meeting was held

Remuneration Report

The information provided in this remuneration report has been audited as required by section 308 (3C) of the Corporations Act 2001.

Principles used to determine the nature and amount of remuneration

The Group's policy for determining the nature and amount of emoluments of Board members and Senior Executives of the Company is as follows:

The objective of the Group’s executive reward framework is to ensure reward for performance is competitive and appropriate for the results delivered. The framework aligns Executive reward with achievement of strategic objectives and

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the creation of value for shareholders and conforms with market practice for delivery of reward. The Board ensures that Executive reward satisfies the following key criteria for good reward governance practices:

Competitiveness and reasonableness

Acceptability to shareholders

Performance linkage/ alignment of executive compensation

Capital management

The remuneration structure for Executive Officers, including Executive Directors, is based on a number of factors, including the particular experience of the individual concerned relative to the external market, and overall performance of the group. The remuneration framework provides a mix of fixed and variable pay, and a blend of short- and long- term incentives. As Executives gain seniority within the Group, the balance of this mix shifts to a higher proportion of “at risk” rewards.

The Board has established a Remuneration and Nomination Committee which makes recommendations to the Board on remuneration and incentive policies and practices and specific recommendations on remuneration packages and other terms of employment for Executive Directors, other Senior Executives and Non-Executive Directors. The Corporate Governance Statement provides further information on the role of this Committee.

Non-Executive Directors’ remuneration

Fees and payments to Non-Executive Directors reflect the demands which are made on, and the responsibilities of, the Directors. Non-Executive Directors’ fees and payments are reviewed annually by the Board. The Board has also considered the advice of independent remuneration consultants to ensure Non-Executives Directors’ fees and payments are appropriate and in line with the market. The Chairman’s fees are determined independently to the fees of Non-Executive Directors based on comparative roles in the external market. The Chairman is not present at any discussions relating to determination of his own remuneration.

Directors’ fees

The current base fees were last reviewed with effect from 1 July 2010. Base fees are not inclusive of committee fees. Members of committees receive additional yearly committee fees. For additional duties, Committee Chairs receive an additional $5,000 over and above a committee member’s annual fee.

The following fees have applied:

2011 Base fees $ Chairman – S. Galloway 180,000 Other non-executive directors Committee Chair Audit and Risk Committee Member Remuneration and Nomination Committee Member

110,000 12,000

7,000 7,000

Retirement allowances for Directors

All Director fees are inclusive of the superannuation contributions required under the Australian superannuation guarantee legislation. There are no other retirement allowances for Non-Executive Directors.

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Share grants to Non-Executive Directors

Non-Executive Directors do not receive performance-based pay.

Executive remuneration

The Executive pay and reward framework has three components:

Base pay and benefits, including superannuation

Short term performance incentives

Long term incentives through participation in the Extract Resources Performance Rights Plan

Base pay and benefits

Remuneration is structured as a total employment costs package which may be delivered as a combination of cash and prescribed non-financial benefits, Executives are offered a competitive base pay that comprises the fixed component of pay and rewards. External remuneration consultants provide analysis and advice to ensure base pay is set to reflect the market for a comparable role. Base pay for Executives is reviewed annually to ensure that it is competitive with the market. An Executive’s pay is also reviewed on promotion. There is no guaranteed base pay increases included in any Executives’ contracts. Some Executive benefits include health insurance as well as other minor benefits.

Short-term incentives

The purpose of short term incentives it to align an Executive’s goals and performance targets for the year (KPIs) with the Company’s annual strategy and targets to ensure that value is create for shareholders. Cash incentives are payable on 30 June each year.

Each Executive has a target STI opportunity depending on the accountabilities of the role and impact on the organisation or business unit performance. The maximum target bonus for the 2011 year was 44 per cent of base pay, but this varies with each Executive role.

The Remuneration and Nomination Committee is responsible for assessing whether the KPIs are met. To help make this assessment the Committee receives detailed reports on performance from management. The Remuneration and Nomination Committee has the discretion to adjust STIs downwards in light of unexpected or unintended circumstances. The STI target and payment is reviewed annually.

Long term incentives

Long term incentives are provided to Executives and Senior Employees via the Extract Resources Ltd Employee Performance Rights Plan. The performance rights incentives granted are aimed to motivate Executives to pursue and deliver long-term shareholder returns within an appropriate control framework and to demonstrate a clear relationship between performance and remuneration. Under the plan, participants are granted rights which only vest if certain performance standards are met and the participants are still employed at the end of the vesting period. Participation in the plan is at the Board’s discretion and no individual has a contractual right to participate in the plan. Non-Executive Directors are excluded from participating in the plan and shareholder approval is required for any grant of Performance Rights to be made to the Managing Director/ Chief Executive Officer.

Currently the Company is in a loss position as it is in transition from exploration to production. As a consequence, the Company’s earnings do not reflect the Company’s performance and cannot be used as a long-term incentive measure.

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The overall level of long term compensation is linked to the growth in shareholder wealth of the Company. The chart below compares the yearly percentage change in the cumulative total shareholder return of the Company’s Ordinary Shares against the cumulative total shareholder return of the S&P/ASX 200 Index for the Company’s six most recently completed financial years.

The Employee Performance Rights Plan is designed to link reward to the performance of Extract Resources Ltd, and also provide long-term incentives for employees to deliver long-term shareholder returns and to encourage personal commitment and contribution to the Company.

Rights are issued under the plan for no consideration. Rights issued under the plan carry no dividend or voting rights. Performance Rights vest when all vesting conditions have been met and each right is convertible into one ordinary share. Performance Rights lapse if vesting conditions have not been met.

Three classes of Performance Rights exist as a consequence of different vesting conditions. Class A Performance Rights have a Total Shareholders Return vesting condition and vest annually at 30 June. Class B Performance Rights are for the CEO of Extract Resources Ltd, these have specific performance target vesting conditions and vest in equal tranches from 1 March 2010 for four years. Class C Performance Rights are for the CEO of Swakop Uranium (Pty) Ltd. These have specific performance target vesting conditions and vest in equal tranches from 1 March 2010 for three years.

The Class A Performance Rights have a performance condition that is based on the Total Shareholders Return of Extract Resources Ltd which is compared to the Total Shareholder Return of a peer group constituent for the purpose of determining the rank of Extract Resources Ltd. The peer group for the 2011 year included Bannerman Resources Ltd, Cameco Corporation, Areva, Denison Mines Corporation, Deep Yellow Ltd, Energy Resources of Australia Ltd, Forsys Metals Corporation, Mantra Resources Ltd, Paladin Energy Ltd, Summit Resources Ltd, and Uranium One Inc. The rank is converted to a quartile ranking which is used to determine the proportion of awards that vest as per the scale below. The Total Shareholder Return growth is calculated based on the 30-day volume weighted average TSR index, adjusted for foreign exchange, dividends and capital movements, as at the start and end of the performance period.

0%

200%

400%

600%

800%

1,000%

2006 2007 2008 2009 2010 2011

Year

ly C

hang

e (%

)

Yearly Change - Extract Resources Ltd vs. S&P/ASX 200 (A$)

EXT (A$) (983%) S&P/ASX (91%)

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The proportions of awards that vest are as follows:

Quartile Rank Proportion of awards vesting Lower quartile 25% Third quartile 50% Second quartile 75% Upper quartile 100%

The Class B and Class C Performance Rights have initial performance targets which require an improvement of Extract Resources Ltd’s net present value from a base case model. The base case model has certain fixed assumptions such as uranium prices, exchange rates, discount rates, royalty rates and tax rates. The subsequent performance targets will be linked to development and construction schedules, as determined and agreed by the Board.

The assessed fair value at grant date of the Class A Performance Rights granted during the year ended 30 June 2011 was A$4.43 per Performance Right. The fair value at grant date is independently determined using a Monte-Carlo simulation model that takes into account the exercise price, the term of the performance rights, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the correlation matrix, the total shareholder return, the expected dividend yield and the risk free interest rate for the term of the Performance Right.

The model inputs for Class A Performance Rights granted during the year ended 30 June 2011 included:

• Performance Rights are granted for no consideration • grant date 1 July 2010 • expiry date 30 June 2011 • share price at grant date A$ 6.30 • expected price volatility of the Company's shares 45% • expected dividend yield 0% • risk-free interest rate 4.44% • expected life 1 year The expected price volatility is based on the historic volatility of the market price of Extract Resources Ltd shares, the mean reversion tendency of volatilities and the volatility of each peer group company. All inputs are based upon conditions at the grant date in Australia, where the shares of Extract Resources Ltd are primarily listed.

The assessed fair value at grant date of the Class C Performance Rights granted during the year ended 30 June 2011 was A$8.23 per performance right. The valuation of these performance rights did not take into account the specific performance target vesting conditions as these were non-market related vesting conditions. As no market conditions exist with regards to the vesting of Class C Performance Rights, the underlying value is the market value at the grant date.

Details of remuneration

Details of the remuneration of the Directors, Key Management Personnel of the Group (as defined in AASB 124 Related Party Disclosures) and specified Executives of Extract Resources Ltd and the Extract Resources Ltd Group are set out in the following tables.

The Key Management Personnel and the five highest paid Executives of the Group are the Directors of Extract Resources Ltd (see pages 34 to 39): Mr Norman Green - Chief Executive Officer of Swakop Uranium (Pty) Ltd, Mr Peter Sydney-Smith - Chief Financial Officer; Mr Martin Spivey – Manager of Exploration, Mr Andrew Penkethman – Manager of Projects and Miss Siobhan Lancaster - Company Secretary/Corporate Affairs. There are no other employees considered Key Management Personnel or company / group executives.

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Key management personnel of the Group 2011

Short-term employee benefits

Post employment benefits

Long term benefits

Share based payments

Name

Cash salary and fees *

Bonus/Non-monetary benefits **

Superannuation Long service leave

Performance rights

Total

$ $ $ $ $ $

Non-Executive Directors

S Galloway 365,951 - - - - 365,951 N MacLachlan 135,955 - - - - 135,955 J Main 79,000 - 50,000 - - 129,000 I Zaamwani-Kamwi 117,430 - - - - 117,430 R Chamberlain 160,574 - 16,860 - - 177,434 A Clayton 110,000 - - - - 110,000

Executive Directors – Managing Director/Chief Executive Officer J Leslie 1,122,596 340,490 - - 1,681,096 3,144,182 Other Key Management Personnel

N Green - CEO Swakop Uranium (Pty) Ltd*** 399,953 108,793 40,010 - 513,820 1,062,576 P Sydney-Smith – CFO 481,300 174,400 - - 293,306 949,006 M Spivey – Manager of Exploration 250,000 42,625 25,000 - 71,292 388,917 A Penkethman – Manager of Projects 247,727 41,598 24,773 - 71,292 385,390 S Lancaster - Co Secretary/ Corp Affairs 191,250 30,504 19,125 - 48,482 289,361

Total (note 16(c)) 3,661,736 738,410 175,768 - 2,679,288 7,255,202

* Cash salary and fees for non-executive directors includes committee, consulting and advisory fees paid during the year. R

Chamberlain and S Galloway were paid consulting fees by the Company during the year. In particular S Galloway was paid a consulting fee for assisting the Company with Government of Namibia relations. This consulting agreement ended on 20 June 2011. R Chamberlain was paid a consulting fee to assist the Finance team with its transition to the UK.

** Bonus benefits for the year ending 30 June 2011 were paid in July & August 2011. J Leslie, P Sydney-Smith and N Green were paid bonuses at a pro-rata rate to represent their short time in the Company prior to this financial year. No bonuses were paid to these individuals in the previous financial year.

*** N Green has been remunerated as CEO Swakop Uranium (Pty). N Green is Managing Director of Green Team International (Pty) Ltd which has entered into a consultancy contract with Swakop Uranium (Pty) Ltd – refer to note 16(e) for disclosure.

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Key management personnel of the Group 2010

Short-term employee benefits

Post employment

benefits

Long term

benefits

Share based payments

Name

Cash salary and fees*

Bonus/Non-monetary benefits**

Super-annuation

Long service leave

Performance rights/option/

shares

Total

$ $ $ $ $ $

Non-Executive Directors S Galloway – Chairman 430,219 - - - 109,444 539,663 N MacLachlan 187,687 - - - 34,200 221,887 J Main 228,302 - 4,269 - 34,200 266,771 I Zaamwani-Kamwi 89,000 - - - 34,200 123,200 R Chamberlain (appointed 14/04/2010) 82,456 - 5,012 - 7,311 94,779 S Dattels (appointed 6/7/2009 resigned 8/4/2010) A Clayton (appointed 12/2/2010)

80,797 28,750

- -

- -

- -

- 12,746

80,797 41,496

C McFadden (appointed 6/7/2009 resigned 8/4/2010) 64,235 - - - - 64,235 Executive Directors – Managing Director/Chief Executive Officer J Leslie (start 1/3/2010, appointed to Board 12/4/2010) P McIntyre (resigned 16/9/2009)

401,485

108,166

-

3,125

-

8,505

-

-

1,313,356

18,361

1,714,841

138,157 Other Key Management Personnel N Green – CEO Swakop (appointed 1/10/2009)*** P Sydney-Smith – CFO (appointed 19/4/2010) S Lancaster – Co. Secretary (appointed 1/2/2010) R Dorrington – Co. Secretary (resigned 30/11/2009)

33,326 104,049

54,167 66,906

- -

7,583 4,167

- -

6,175 6,691

- - - -

82,542 -

21,235 -

115,868 104,049

89,160 77,764

P Ironside - Co. Secretary (resigned 10/9/2009) - - - - - - Total (note 16(c)) 1,959,545 14,875 30,652 - 1,667,595 3,672,667 * Cash salary and fees for Non-Executive Directors includes consulting fees paid during the year as the Company had no Managing Director and Chief Financial Officer. ** The only key management person to receive a cash bonus during the year was S Lancaster. The other key management personnel disclosed above have received non-monetary benefits in accordance with their service agreements. *** N Green has been remunerated as CEO Swakop Uranium (Pty) Ltd from 1 June 2010. N Green is Managing Director of Green Team International (Pty) Ltd which has entered into a consultancy contract with Swakop Uranium (Pty) Ltd – refer to note 16(e) for disclosure. The relative proportions of remuneration that are linked to performance and those that are fixed are detailed below. Remuneration paid to Non-Executive Directors is all fixed remuneration, but consists of cash salary, fees, superannuation and grant of shares.

Fixed remuneration At risk – STI** At risk – LTI* Name

2011

2010

2011

2010

2011

2010

Executive Directors J Leslie 36% 23% 11% - 53% 77% P McIntyre - 87% - - - 13% Other Key Management Personnel N Green 42% 29% 10% - 48% 71% P Sydney-Smith 51% 100% 18% - 31% - M Spivey 71% - 11% - 18% - A Penkethman 71% - 11% - 18% - S Lancaster 73% 67% 10% 9% 17% 24% R Dorrington - 100% - - - -

* The percentages disclosed reflect the value of remuneration consisting of options/performance rights, based on the value of share based payments expensed during the year.

** The short term incentives for J Leslie, P Sydney-Smith and N Green were determined during the 2011 year.

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Service Agreements

On appointment to the Board, all Non-Executive Directors enter into a service agreement with the Company in the form of a letter of appointment. The letter summarises the Board policies and terms, including compensation, relevant to the office of director.

Remuneration and other terms of employment for the Chief Executive Officer & Managing Director of Extract, the Chief Financial Officer, the Company Secretary, Manager of Exploration and Manager of Projects and the Chief Executive Officer of Swakop Uranium (Pty) Ltd (the wholly owned Namibian subsidiary of Extract Resources Ltd), are also formalised in service agreements. Each of these agreements provides for the provision of performance-related cash bonuses, other benefits including health insurance, and participation where eligible in the Extract Resources Ltd Employee Performance Rights Plan.

While the employment of Executives can be terminated without notice for illegal actions, gross negligence and other misconduct, the service agreements are subject to the following termination with notice provisions:

Name Term of Agreement and Termination Provisions

Base Salary including

Superannuation *

Termination Benefit

J Leslie, Chief Executive Officer

Four year term; or notice by the Company or the Executive for the lesser of 12 months or the unexpired portion of the term notice for any reason; or by the lesser of three months or the unexpired portion of the Term by reason of illness or incapacity.

GBP 700,000

(AUD equivalent at foreign exchange of 1 AUD = 0.6614 GBP

A$ 1,058,361)

After either the Company or executive has given notice, termination of employment may be brought forward at any time by the Company paying the executive an amount equivalent to the remuneration which the executive would have earned during the balance of the notice period.

Norman Green, Chief Executive Officer of Swakop Uranium

This agreement ends on 31 December 2012, unless terminated as follows: The Executive may terminate his employment at any time by giving six months’ notice, or such shorter period as agreed by the Company. The Company may terminate the Executive’s employment by giving 6 months’ notice in writing or giving the Executive 3 months’ notice by reason of illness, injury or incapacity of the Executive.

NAM $2,980,000

(AUD equivalent at foreign exchange of

1 AUD = 7.1973 NAM A$ 414,044)

After either the Company or executive has given notice the termination of employment clauses may be brought forward at any time by the Company paying the Executive an amount equivalent to the remuneration which the Executive would have earned during the balance of the notice period.

P Sydney Smith, Chief Financial Officer

The agreement has no set term. Termination of the agreement is twelve months notice by the Executive or such shorter period of notice as may be agreed in writing by the company; or 12 months notice by the Company for any reason; or three months notice by the company by reason of illness or incapacity.

GBP 300,000

(AUD equivalent at foreign exchange of 1 AUD = 0.6614 GBP

A$ 453,583)

After either the Company or Executive has given notice in accordance with the terms, termination of employment may be brought forward at any time by the Company paying the Executive an amount equivalent to the remuneration which the Executive would have earned during the balance of the notice period.

M Spivey Manager of Exploration

The agreement has no set term. Termination is four weeks notice by either the Company or the Executive.

AUD $275,000 Four weeks notice.

A Penkethman Manager of Projects



S Lancaster, Company Secretary / Corporate Affairs



* Base annual salaries quoted as current at the year ended 30 June 2011. They are reviewed annually by the Remuneration and Nomination Committee.

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Share-based Compensation

Performance rights

Details of performance rights provided as remuneration to each Director of Extract Resources Ltd as approved by shareholders in a general meeting and to Key Management Personnel of the group under the Extract Resources Ltd Employee Performance Rights Plan are:

Name Number of performance

rights granted during the year

Value of performance

rights at grant date

Number of performance rights vested

during the year

Number of performance rights lapsed

during the year 2011 2011 2011 2011 Directors J. Leslie Class B Performance Rights

- - 134,130 201,195

Other key management personnel N. Green – CEO Swakop Uranium Class C Performance Rights

113,804 $936,607 28,547 28,547

P. Sydney Smith – CFO Extract Class A Performance Rights

66,209 $293,306 49,657 16,552

M Spivey – Manager of Exploration Class A Performance Rights

16,093 $71,292 12,070 4,023

A Penkethman – Manager of Projects Class A Performance Rights

16,093 $71,292 12,070 4,023

S Lancaster – Co Secretary/Corp Affairs Class A Performance Rights

10,944 $48,482 8,208 2,736

The assessed fair value at grant date of the Performance Rights granted to the individuals is allocated equally over the vesting period, and the amount is included in the remuneration tables above.

Details of ordinary shares in the company provided as a result of the vesting of remuneration performance rights to Directors and Key Management Personnel of the group are set out below.

Name Date performance rights vested

Date performance rights converted to

ordinary shares

Number of ordinary shares issued during the year on

vesting of performance rights

Value at conversion date

$

Executive Directors – Managing Director/Chief Executive Officer J Leslie 05.04.2011 05.04.2011 134,130 1,103,890 Other Key Management Personnel N Green 05.04.2011 05.04.2011 28,547 234,942 M Spivey 30.06.2010 09.07.2011 15,645 108,733

A Penkethman 30.06.2010 09.07.2011 15,645 108,733 S Lancaster 30.06.2010 09.07.2011 3,012 20,933

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Options

The Extract Resources Ltd Employee Option Plan was superseded by the Company’s Performance Rights Plan during the 2010 financial year.

Details of ordinary shares in the company provided as a result of the exercise of remuneration options to Directors and Key Management Personnel of the group are set out below.

Name Date of exercise of options

Number of ordinary shares issued on exercise of options during the year

Value at exercise date $

Other Key Management Personnel

M Spivey 13.01.2011 250,000 2,067,500

Details of remuneration: Bonuses and share-based compensation benefits

For each cash bonus, grant of options and grant of performance rights included in the tables on pages 34 and 35, the percentage of the available bonus or grant that was paid, or that vested, in the financial year, and the percentage that was forfeited because the person did not meet the service and performance criteria is set out below.

The Class A performance rights vest after one year, provided that the vesting conditions are met (see page 31 above). The Class B performance rights vest over four years, provided that the vesting conditions are met (see page 31 above). The Class C performance rights vest over three years, provided that the vesting conditions are met (see page 31 above). The maximum value of the performance rights yet to vest has been determined as the amount of the grant date fair value of the performance rights that is yet to be expensed.

Cash bonus Options/Performance Rights Name Vested Forfeited Year

granted Vested Forfeited Financial years in

which share based payments may

vest

Maximum total value of grant yet

to vest*

% % % % $ J.Leslie Class B Performance Rights

64.5 35.5 2010 - - -

40

- - -

60

30/6/2014 30/6/2013 30/6/2012 30/6/2011

591,010 1,379,024 2,561,045

- N.Green Class C Performance Rights

60 40 2011

2010

- -

50 - -

50

- -

50 - -

50

30/6/2013 30/6/2012 30/6/2011

30/6/2013 30/6/2012 30/6/2011

104,066 260,164

-

45,024 112,559

- P.Sydney-Smith Class A Performance Rights

70 30 2011 75 25 30/6/2011 -

M Spivey Class A Performance Rights

77.5 22.5 2011 75 25 30/6/2011 -

A Penkethman Class A Performance Rights

71.5 28.5 2011 75 25 30/6/2011 -

S.Lancaster Class A performance rights

72.5 27.5 2011 75 25 30/6/2011 -

* The maximum total value of grant yet to vest is expressed as at 30 June 2011. This is calculated as the value of performance rights at grant date less the amount recognised as a share based payments expense up to 30 June 2011.

END OF AUDITED REMUNERATION REPORT

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Loans to Directors and Executives

A United Kingdom PAYE income tax liability of GBP110,139 (AUD $166,524) was incurred by Extract Resources UK Limited, an Extract Group company, in relation to Peter Sydney-Smith’s Class A Performance Rights that vested on 30 June 2011. Pursuant to the performance rights plan rules the company held security over this receivable which was settled on the 19 July 2011 by part sale of Peter Sydney-Smith’s allotment of Extract Resources Ltd shares.

Shares under option

There are no unissued ordinary shares of Extract Resources Ltd under option at the date of this report.

Shares subject to performance rights

Unissued ordinary shares of Extract Resources Ltd under performance rights at the date of this report are as follows:

Performance rights class Date performance rights granted Expiry date Number of performance rights

Class A Performance Rights 01.07.2011 30.6.2012 145,294 Class B Performance Rights 22.6.2010 1.3.2012 335,325 Class B Performance Rights 22.6.2010 1.3.2013 335,325 Class B Performance Rights 22.6.2010 1.3.2014 335,325 Class C Performance Rights 22.6.2010 1.3.2012 19,159 Class C Performance Rights 22.6.2010 1.3.2013 19,158 Class C performance rights 05.04.2011 1.3.2012 37,935 Class C performance rights 05.04.2011 1.3.2013 37,934 1,265,455

No performance rights holder has any right under the performance right to participate in any other share issue of the Company or any other entity.

Shares issued on the exercise of options

The following ordinary shares of Extract Resources Ltd were issued during the year ended 30 June 2011 on the exercise of options granted under the Extract Resources Ltd Employee Option Plan. No amounts are unpaid on any of the shares.

Date options granted Issue price of shares $A Number of shares issued 01.11.2007 $1.00 50,000 30.04.2008 $1.25 250,000

300,000

Shares issued in lieu of performance rights

No ordinary shares of Extract Resources Ltd were issued during the year ended 30 June 2011 in lieu of performance rights granted under the Extract Resources Ltd Employee Performance Rights Plan.

On 11 July 2011 the Company announced that 145,119 Class A Performance Rights had vested on 30 June 2011, and a corresponding amount of shares were issued.

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Insurance of officers

During the financial year, the Company has paid premiums to insure the Directors and specified Executives against certain liabilities arising out of their conduct while acting as an Officer of the Company. Under the terms and conditions of the insurance contract, the nature of liabilities insured against and the premium paid cannot be disclosed.

Proceedings on behalf of the Company

No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings.

No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of the Corporations Act 2001.

Indemnity of auditors

The auditors have not been indemnified by the Company or the Group.

Non-audit services

The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s expertise and experience with the Company and/or the Group are important.

Details of the amounts paid or payable to the auditor (BDO Audit (WA) Pty Ltd and Grant Thornton Neuhaus) for non-audit services and other assurance services provided during the year are set out below.

The Board of Directors have satisfied themselves that where such services are provided, the provision of non-audit services during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:

all non-audit services are reviewed and approved by the Board, Chief Executive Officer or the Audit and Risk Committee to ensure they do not impact the impartiality and objectivity of the auditor

none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants.

During the year the following fees were paid or payable for non-audit services and other assurance services provided by the auditor of the Company, its related practices and non-related audit firms:

Consolidated 2011 2010 $ $ BDO (WA) Pty Ltd

Other assurance services 8,800 5,909 Taxation compliance services 51,151 44,903 Transfer pricing advice 16,978 4,028 Due diligence services on equity raising - 32,337

Grant Thornton Neuhaus or related practices

Share options advice - 542 Consultancy agreements review - 3,864 Transfer pricing advice - 1,517 Company secretarial fees 1,821 1,803

78,750 94,903

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Directors’ Report


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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 42.

Rounding of amounts

The Group is of a kind referred to in Class Order 98/100, issued by the Australian Securities and Investments Commission, relating to the “rounding off” of amounts in the Directors’ Report and Financial Report. Amounts in the Directors’ Report and Financial Report have been rounded off to the nearest thousand dollars in accordance with that Class Order.

This report is made in accordance with a resolution of Directors.

Jonathan Leslie Managing Director/Chief Executive Officer Perth Dated: 13th September 2011

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Tel: +8 6382 4600 Fax: +8 6382 4601 www.bdo.com.au

38 Station Street Subiaco, WA 6008 PO Box 700 West Perth WA 6872 Australia

BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.

13 September 2011 Board of Directors Extract Resources Limited 30 Charles Street SOUTH PERTH WA 6151 Dear Sirs, DECLARATION OF INDEPENDENCE BY BRAD MCVEIGH TO THE DIRECTORS OF EXTRACT RESOURCES LIMITED As lead auditor of Extract Resources Limited for the year ended 30 June 2011, I declare that, to the best of my knowledge and belief, there have been no contraventions of: • the auditor independence requirements of the Corporations Act 2001 in relation to the audit;

and • any applicable code of professional conduct in relation to the audit. This declaration is in respect of Extract Resources Limited and the entities it controlled during the period.

Brad McVeigh Director

BDO Audit (WA) Pty Ltd Perth, Western Australia

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Consolidated Statement of Comprehensive Income


43

FINANCIAL STATEMENTS

Consolidated Statement of Comprehensive Income

2011 2010

Notes A$’000 A$’000

Interest revenue 2,872 3,097

Exploration and evaluation expenses 5a (47,982) (44,540)

Corporate and administration expenses 5b (12,926) (9,621)

Write down of ATW Gold Corporation warrants - (706)

Loss before income tax (58,036) (51,770)

Income tax benefit 6a 2,951 16,214

Loss for the year (55,085) (35,556)

Loss attributable to the owners of Extract Resources Ltd (55,085) (35,556)

Other comprehensive income

Changes in the fair value of available-for-sale financial assets - 706

Exchange differences on translation of foreign operations (7,571) (7,374)

Other comprehensive income (loss) for the year, net of tax (7,571) (6,668)

Total comprehensive income (loss) for the year (62,656) (42,224)

Total comprehensive income (loss) for the year attributable to the owners of Extract Resources Ltd

(62,656) (42,224)

Cents per share

Cents per share

Loss per share attributable to the ordinary equity holders of the company:

Basic loss per share 24 (22.39) (14.90)

Diluted loss per share 24 N/A N/A

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notesFor

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Consolidated Statement of Financial Position

As at 30 June 2011

44

Consolidated Statement of Financial Position

30 June 2011 30 June 2010 Notes A$’000 A$’000

ASSETS

Current assets

Cash and cash equivalents 7 74,890 70,118

Trade and other receivables 8 1,786 4,065

Prepayments 285 215

Total current assets 76,961 74,398

Non-current assets

Property, plant and equipment 9 846 1,206

Exploration and evaluation expenditure 10 82,547 89,113

Deferred tax asset 6d 3 -

Total non-current assets 83,396 90,319

Total assets 160,357 164,717

LIABILITIES

Current liabilities

Trade and other payables 11 3,855 7,547

Provision for employee entitlements 12 1,207 380

Deferred tax liabilities 6d - 3,152

Total current liabilities 5,062 11,079

Non-current liabilities

Provision for rehabilitation 13 500 389

Provision for employee entitlements 13 33 -

Total non-current liabilities 533 389

Total liabilities 5,595 11,468

Net assets 154,762 153,249

EQUITY

Contributed equity 14 342,032 281,000

Reserves 15(a) (4,810) (376)

Accumulated losses 15(b) (182,460) (127,375)

Total equity 154,762 153,249

The above consolidated statement of financial position should be read in conjunction with the accompanying notes

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Consolidated Statement of Changes in Equity


45

Consolidated Statement of Changes in Equity

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes

Contributed equity

Foreign currency

translation reserve

Share based

payments reserve

Available for sale

investments revaluation

reserve

Accumulated Losses

Total Equity

A$’000 A$’000 A$’000 A$’000 A$’000 A$’000

Balance at 1 July 2009 191,358 (308) 5,315 (706) (91,819) 103,840

Exchange differences on translation of foreign operations

- (7,374) - - - (7,374)

Changes in the fair value of available-for-sale financial assets net of tax

- - - 706 - 706

Loss for the year - - - - (35,556) (35,556)

Total comprehensive income (loss) for the year

- (7,374) - 706 (35,556) (42,224)

Transactions with owners in their capacity as owners:

Share based payments – value of director and employee services

232 - 1,991 - - 2,223

Contributions of equity, net of transaction costs

89,410 - - - - 89,410

Balance at 30 June 2010 281,000 (7,682) 7,306 - (127,375) 153,249

Balance at 1 July 2010 281,000 (7,682) 7,306 - (127,375) 153,249

Exchange differences on translation of foreign operations

- (7,571) - - - (7,571)

Loss for the year - - - - (55,085) (55,085)

Total comprehensive income (loss) for the year

- (7,571) - - (55,085) (62,656)

Transactions with owners in their capacity as owners:

Share based payments – value of director and employee services

- - 3,093 - - 3,093

Taxation (excess of profit and loss entry and tax value of shares vested)

- - 44 - - 44

Contributions of equity, net of transaction costs

61,032 - - - - 61,032

Balance at 30 June 2011 342,032 (15,253) 10,443 - (182,460) 154,762

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Consolidated Statement of Cash Flows


46

Consolidated Statement of Cash Flows

2011 2010

Notes A$’000 A$’000

CASH FLOWS FROM OPERATING ACTIVITIES

Exploration and evaluation (48,000) (43,240)

Corporate and administration (10,107) (7,433)

Interest received 2,234 3,097

Net cash outflow from operating activities 23 (55,873) (47,576)

CASH FLOWS FROM INVESTING ACTIVITIES

Payments for property, plant and equipment (248) (546)

Sale of assets 4 -

Net cash outflow from investing activities (244) (546)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issue of shares and other equity securities 61,310 93,504

Share issue costs (278) (4,093)

Net cash inflow from financing activities 61,032 89,411

Net increase in cash held 4,915 41,289

Cash and cash equivalents at beginning of reporting period 70,118 28,941

Effects of exchange rate changes on the balance of cash held in foreign currencies

(143) (112)

Cash and cash equivalents at end of reporting period 7 74,890 70,118

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes

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Notes to the Consolidated Financial Statements


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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1 Summary of significant accounting policies

The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements include the consolidated entity consisting of Extract Resources Ltd and its subsidiaries.

The accounting policies adopted are consistent with those of the previous financial year.

(a) Basis of preparation

These general purpose financial statements have been prepared in accordance with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Interpretations and the Corporations Act 2001.

Compliance with IFRS The financial statements of the Extract Resources Ltd group also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

Historical cost convention These financial statements have been prepared under the historical cost convention as modified by the revaluation of selected non-current assets, and financial assets and liabilities for which the fair value basis of accounting has been applied.

Critical accounting estimates The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 3. (b) Principles of consolidation Subsidiaries The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Extract Resources Ltd (‘company’ or ‘Parent Entity’) as at 30 June 2011 and the results of all subsidiaries for the year then ended. The Parent Entity and its subsidiaries together are referred to in these financial statements as the ‘Group’ or the ‘Consolidated Entity’.

Subsidiaries are all those entities over which the Group has the power to govern the financial and operating polices so as to obtain benefits from its activities.

A list of controlled entities is contained in note 21 to the financial statements. All controlled entities have a June financial year end.

All intercompany transactions, balances, unrealised losses and gains on transactions between group companies are eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Investments in subsidiaries are accounted for at cost in the individual financial statements of Extract Resources Ltd. For

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Notes to the Consolidated Financial Statements (continued)


48

1 Summary of significant accounting policies (continued) (c) 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 Chief Executive Officer. An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. An operating segment’s operating results are reviewed regularly by the CEO to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. Segment results that are reported to the CEO include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets, corporate expenses and income tax assets and liabilities. (d) Foreign currency translation

i. Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in Australian dollars, which is Extract Resources Ltd’s functional and presentation currency.

ii. Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of comprehensive income, except when they are deferred in equity as qualifying cash flow hedges and qualifying net investment hedges, or are attributable to part of the net investment in a foreign operation. Translation differences on financial assets and liabilities carried at fair value are reported as part of the fair value gain or loss. Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss. Translation differences on non-monetary financial assets, such as equities classified as available-for-sale financial assets are included in the fair value reserve in equity.

iii. Group companies The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position;

income and expenses per the profit or loss are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and

all resulting exchange differences are recognised in other comprehensive income. On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings and other financial instruments designated as hedges of such investments, are taken to shareholders’ equity.

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1 Summary of significant accounting policies (continued) When a foreign operation is sold or any borrowings forming part of the net investment are repaid, a proportionate share of such exchange differences is reclassified to profit or loss, as part of the gain or loss on sale where applicable. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entities and translated at the closing rate. (e) Revenue recognition Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets. (f) Income tax The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate for each jurisdiction, adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the company’s subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the reporting date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. Current and deferred tax is recognised in profit and loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. Tax consolidation legislation Extract Resources Ltd and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation. The head entity, Extract Resources Ltd, and the controlled entities in the tax consolidated group account for their own current and deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidated group continues to be a standalone taxpayer in its own right.

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1 Summary of significant accounting policies (continued) In addition to its own current and deferred tax amounts, Extract Resources Ltd also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the tax consolidated group.

Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts receivable from or payable to other entities in the Group. Details about the tax funding agreement are disclosed in note 6. Any difference between the amounts assumed and amounts receivable or payable under the tax funding agreement are recognised as a contribution to (or distribution from) wholly-owned tax consolidated entities. (g) Leases Leases of property, plant and equipment where the Group, as lessee, has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease’s inception at the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in other short-term and long-term payables. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases is depreciated over the shorter of the asset’s useful life and the lease term. Leases in which a significant portion of the risks and rewards of ownership are not transferred to the group as lessee are classified as operating leases (note 19(b)). Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease. (h) Business combinations The acquisition method of accounting is used to account for all business combinations, including business combinations involving entities or businesses under common control, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the group. The consideration transferred also includes the fair value of any contingent consideration arrangement and the fair value of any pre-existing equity interest in the subsidiary. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their net fair values at the date of acquisition. On an acquisition-by-acquisition basis, the group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net identifiable assets. The excess of the consideration transferred the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the group’s share of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the difference is recognised directly to the profit and loss as a bargain purchase. Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions. Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value with changes in fair value recognised in profit or loss.

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1 Summary of significant accounting policies (continued) (i) Impairment of assets Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at the end of each reporting period. (j) Cash and cash equivalents For cash flow statement presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the statement of financial position. (k) Trade receivables Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. Trade receivables are generally due for settlement within 30 days. Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off by reducing the carrying amount directly. An allowance account (provision for impairment of trade receivables) is used when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the trade receivable is impaired. The amount of the impairment allowance 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. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial. The amount of the impairment loss is recognised in profit or loss within other expenses. When a trade receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in the profit and loss. (l) Investments and other financial assets Classification The Group classifies its financial assets in the following categories: financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments and available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and, in the case of assets classified as held-to-maturity, re-evaluates this designation at each reporting period.

i. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those with maturities greater than 12 months after the reporting date which are classified as non-current assets. Loans and receivables are included in trade and other receivables (note 8) in the statement of financial position.

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1 Summary of significant accounting policies (continued)

ii. Held-to-maturity investments Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Group’s management has the positive intention and ability to hold to maturity. If the Group were to sell other than an insignificant amount of held-to-maturity financial assets, the whole category would be tainted and reclassified as available-for-sale. Held-to-maturity financial assets are included in non-current assets, except for those with maturities less than 12 months from the reporting date, which are classified as current assets.

iii. Available-for-sale financial assets Available-for-sale financial assets, comprising principally marketable equity securities, are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the reporting date. Investments are designated as available-for-sale if they do not have fixed maturities and fixed or determinable payments and management intends to hold them for the medium to long term. Recognition and derecognition Regular purchases and sales of financial assets are recognised on trade-date – the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss, are initially recognised at fair value and transaction costs are expensed in the profit or loss. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership. When securities classified as available-for-sale are sold, the accumulated fair value adjustments recognised in other comprehensive income are reclassified to profit or loss as gains and losses from investment securities. Measurement At initial recognition, the group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss. Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective interest method. Available-for-sale financial assets and financial assets at fair value through profit and loss are subsequently carried at fair value. Gains or losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are presented in profit or loss within other income or other expenses in the period in which they arise. Dividend income from financial assets at fair value through profit and loss is recognised in the statement of comprehensive income as part of revenue from continuing operations when the Group’s right to receive payments is established. Interest income from these financial assets is included in the net gains/(losses). Changes in the fair value of monetary securities denominated in a foreign currency and classified as available-for-sale are analysed between translation differences resulting from changes in amortised cost of the security and other changes in the carrying amount of the security. The translation differences related to changes in the amortised cost are recognised in profit or loss, and other changes in carrying amount are recognised in other comprehensive income. Changes in the fair value of other monetary and non-monetary securities classified as available-for-sale are recognised in other comprehensive income. Details on how the fair value of financial instruments is determined are disclosed in note 2. Impairment The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group financial asset is impaired.

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1 Summary of significant accounting policies (continued) A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. In the case of equity investments classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is considered an indicator that the assets are impaired.

i. Assets carried at amortised cost For loans and receivables, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the profit or loss. If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the group may measure impairment on the basis of an instrument’s fair value using an observable market price. 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 (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in the profit or loss. Impairment testing for trade receivables is described in note 1(k)

ii. Assets classified as available-for-sale If there is objective evidence of impairment for available-for-sale financial assets, the cumulative loss measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in the profit or loss is removed from equity and recognised in profit or loss. Impairment losses on equity instruments that were recognised in profit or loss are not reversed through profit or loss in a subsequent period. If the fair value of a debt instrument classified as available-for-sale increases in a subsequent period and the increase can be objectively related to an event occurring after the impairment loss was recognised in the profit or loss, the impairment loss is reversed through profit or loss. (m) Property, plant and equipment Land and buildings are shown at fair value, based on periodic, but at least triennial, valuations by external independent valuers, less subsequent depreciation for buildings. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. All other property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Cost may also include transfers from equity of any gains or losses on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income statement during the reporting period in which they are incurred.

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1 Summary of significant accounting policies (continued) Increases in the carrying amounts arising on revaluation of land and buildings are credited, net of tax, to other reserves in shareholders’ equity. To the extent that the increase reverses a decrease previously recognised in profit or loss, the increase is first recognised in profit or loss. Decreases that reverse previous increases of the same asset are first recognised in other comprehensive income to the extent of the remaining surplus attributable to the asset; all other decreases are charged to profit or loss. Each year, the difference between depreciation based on the revalued carrying amount of the asset charged to profit or loss and depreciation based on the asset’s original cost, net of tax, is transferred from the property, plant and equipment revaluation reserve to retained earnings. Depreciation on other assets is calculated using the straight-line method to allocate their cost or revalued amounts, net of their residual values, over their estimated useful lives, as follows: - Land not depreciated - Buildings 20 to 50 years - Plant and Equipment 3 to 30 years - Light Vehicles 3 to 8 years - Office Equipment and Software 3 to 8 years The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (note 1(i)). Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss. When revalued assets are sold, it is group policy to transfer the amounts included in other reserves in respect of those assets to retained earnings. (n) Trade and other payables These amounts represent liabilities for goods and services provided to the group prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are presented as current liabilities unless a payment is not due within 12 months from the reporting date. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method. (o) Provisions Provisions for legal claims, service warranties and make good obligations are recognised when the group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated. Provisions are not recognised for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the reporting date. The discount rate used to determine the present value reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense. (p) Employee benefits

i. Short-term obligations Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be settled within 12 months after the end of the period in which the employees render the related service are recognised in respect of the employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liability for annual leave and accumulating sick leave is recognised in the provision for employee entitlements. All other short-term employee benefit obligations are presented as payables.

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1 Summary of significant accounting policies (continued)

ii. Other long-term employee benefit obligations The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

iii. Share-based payments Share-based compensation benefits are provided to employees via the Extract Resources Ltd Performance Rights Plan from 2010 and previously the Extract Resources Ltd Option Plan. Information relating to these schemes is set out in note 25. Share-based payments - Extract Resources Ltd Performance Rights Plan The fair value of the performance rights (equity instruments) are valued on the date they are granted, based on market prices, taking into account the terms and conditions upon which those equity instruments were granted. The estimation of the fair value of share-based payment awards requires judgement with respect to the appropriate valuation methodology. The choice of valuation methodology is determined by the structure of the awards, particularly vesting conditions. The Monte-Carlo simulation valuation methodology has been chosen to incorporate an appropriate amount of flexibility to the particular performance and vesting conditions of the award. With regards to vesting conditions, those conditions, other than market conditions, are not taken into account when estimating the fair value of the equity instruments at the measurement date. Vesting conditions are taken into account by adjusting the number of equity instruments included in the measurement of the transaction amount so that, ultimately, the amount recognised for services received as consideration for the equity instruments granted shall be based on the number of equity instruments that eventually vest. The calculated value of equity instruments granted is to be recognised as an expense over the vesting term of the equity instrument. The vesting period is defined as the period during which all the specified vesting conditions are satisfied. Share-based payments - Extract Resources Ltd Option Plan The fair value of options granted under the Extract Resources Ltd Employee Option Plan is recognised as an employee benefit expense with a corresponding increase in equity. The fair value is measured at grant date and recognised over the period during which the employees become unconditionally entitled to the options. The fair value at grant date is independently determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option.

iv. Termination benefits Termination benefits are payable when employment is terminated before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits when it is demonstrably committed to either terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after reporting date are discounted to present value. (q) Contributed equity Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Incremental costs directly attributable to the issue of new shares or options for the acquisition of a business are not included in the cost of the acquisition as part of the purchase consideration.

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1 Summary of significant accounting policies (continued) If the entity reacquires its own equity instruments, for example as the result of a share buy-back, those instruments are deducted from equity and the associated shares are cancelled. No gain or loss is recognised in profit or loss and the consideration paid including any directly attributable incremental costs (net of income taxes) is recognised directly in equity. (r) Earnings per share

i. Basic earnings per share Basic earnings per share is calculated by dividing the profit attributable to equity holders of the company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year.

ii. Diluted earnings per share Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares. (s) Value Added Tax (VAT) and Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of associated VAT/GST, unless the VAT/GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of VAT/GST receivable or payable. The net amount of VAT/GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the statement of financial position. Cash flows are presented on a gross basis. The VAT/GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows. (t) Exploration and evaluation costs

Exploration and evaluation costs are allocated separately to specific areas of interest. Each area of interest is limited to a size related to a known or probable Mineral Resource capable of supporting a mining operation. Such costs comprise net direct costs and an appropriate portion of related overhead expenditure directly related to activities in the area of interest. Exploration and evaluation costs incurred in the normal course of operations are written off immediately. Exploration and evaluation costs are capitalised where they are the result of an acquisition from a third party. These capitalised costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves. When a decision to proceed to development is made the exploration and evaluation costs capitalised to that area are transferred to mine development within property, plant and equipment. All costs subsequently incurred to develop a mine prior to the start of mining operations within the area of interest are capitalised. These costs include expenditure to develop new ore bodies within the area of interest, to define further mineralisation in existing areas of interest, to expand the capacity of a mine and to maintain production. (u) Rounding of amounts The Group is of a kind referred to in Class Order 98/100, issued by the Australian Securities and Investments Commission, relating to the “rounding off” of amounts in the financial statements. Amounts in the financial statements have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, the nearest dollar.

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1 Summary of significant accounting policies (continued) (v) New accounting standards and interpretations Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2011 reporting periods. The consolidated entity’s assessment of the impact of these new standards and interpretations is set out below.

AASB

reference

Title and Affected

Standard(s):

Nature of Change Application

date:

Impact on Initial Application

AASB 9

(issued December 2009 and amended December 2010)

Financial Instruments

Amends the requirements for classification and measurement of financial assets

The following requirements have generally been carried forward unchanged from AASB 139 Financial Instruments: Recognition and Measurement into AASB 9. These include the requirements relating to:

Classification and measurement of financial liabilities; and

Derecognition requirements for financial assets and liabilities

However, AASB 9 requires that gains or losses on financial liabilities measured at fair value are recognised in profit or loss, except that the effects of changes in the liability’s credit risk are recognised in other comprehensive income

Periods commencing on or after 1 January 2013

The entity does not have any financial liabilities measured at fair value through profit or loss. There will therefore be no impact on the financial statements when these amendments to AASB 9 are first adopted

AASB 2010-8

(issued December 2010)

Amendments to Australian Accounting Standards – Deferred Tax: Recovery of Underlying Assets [AASB 112]

For investment property measured using the fair value model, deferred tax assets and liabilities will be calculated on the basis of a rebuttable presumption that the carrying amount of the investment property will be recovered through sale. This presumption is rebutted if the investment property is depreciable and is held within a business model whose objective is to consume substantially all of the economic benefits embodied in the investment property over time, rather than through sale. However, this presumption cannot be rebutted for the land portion of investment property which is not depreciable

Periods commencing on or after 1 January 2012

The entity does not have any investment property measured using the fair value model. There will therefore be no impact on the financial statements when these

amendments are first adopted

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AASB

reference

Title and Affected

Standard(s):

Nature of Change Application

date:


AASB 10

(issued May 2011)

Consolidated Financial Statements

Introduces a single ‘control model’ for all entities, including special purpose entities (SPEs), whereby all of the following conditions must be present:

Power over investee (whether or not used in practise)

Exposure, or rights, to variable returns from investee

Ability to use power over investee to affect the entity’s returns from investee

Annual reporting periods commencing on or after January 2013

When this standard is first adopted for the year ended 30 June 2014, there will be no impact on transactions and balances recognised in the financial statements because the entity does not have any special purpose entities

AASB 11

(issued May 2011)

Joint Arrangements

Joint arrangements will be classified as either ‘joint operations’ (where parties with joint control have rights to assets and obligations for liabilities) or ‘joint ventures’ (where parties with joint control have rights to the net assets of the arrangement)

AASB 11

(issued May 2011)

When this standard is first adopted for the year ended 30 June 2014, there will be no impact on transactions and balances recognised in the financial statements because the entity has not entered into any joint arrangements

AASB 13

(issued May 2011)

Fair Value Measurement

Currently, fair value measurement requirements are included in several Accounting Standards. AASB 13 establishes a single framework for measuring fair value of financial and non-financial items recognised at fair value in the statement of financial position or disclosed in the notes in the financial statements

Annual reporting periods commencing on or after 1 January 2013

Due to the recent release of this standard, the entity has yet to conduct a detailed analysis of the differences between the current fair valuation methodologies used and those required by AASB 13. However, when this standard is adopted for the first time for the year ended 30 June 2014, there will be no impact on the financial statements because the revised fair value measurement requirements apply prospectively from 1 July 2013

Amendments to AASB 2011-9

(issued June 2011)

Presentation of Items of Other Comprehensive Income

Amendments to align the presentation of items of other comprehensive income (OCI) with US GAAP

Various name changes as follows:

statement of comprehensive income to be referred to as ‘statement of profit or loss and other comprehensive income’

statements – to be referred to as ‘statement of profit or loss’ and ‘statement of comprehensive income’

OCI items must be grouped together into two sections, those that could subsequently be reclassified into profit or loss and those that cannot

Amendments to AASB 2011-9

(issued June 2011)

When this standard is first adopted for the year ended 30 June 2014, there will be no impact on amounts recognised for transactions and balances for 30 June 2014 (and comparatives). However, the statement of comprehensive income will include name changes and include subtotals for items of OCI that can subsequently be reclassified to profit or loss in future (e.g. foreign currency translation reserves) and those that cannot subsequently be reclassified (e.g. fixed asset revaluation surpluses)

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AASB reference

Title and Affected Standard(s):

Nature of Change Application date:


AASB 119

(issued June 2011)

AASB 119

(issued June 2011)

Main changes include:

Elimination of the ‘corridor’ approach for deferring gains/losses for defined benefit plans

Actuarial gains/losses on remeasuring the defined benefit plan obligation/asset to be recognised in OCI rather than in profit or loss, and cannot be reclassified in subsequent periods

Subtle amendments to timing for recognition of liabilities for termination benefits

Employee benefits expected to be settled (as opposed to due to settled under current standard) within 12 months after the end of the reporting period are short-term benefits, and therefore not discounted when calculating leave liabilities. Annual leave not expected to be used within 12 months of end of reporting period will in future be discounted when calculating leave liability

Annual periods commencing on or after 1 January 2013

The entity currently calculates its liability for annual leave employee benefits on the basis that it is due to be settled within 12 months of the end of the reporting period because employees are entitled to use this leave at any time. The amendments to AASB 119 require that such liabilities be calculated on the basis of when the leave is expected to be taken, i.e. expected settlement

When this standard is first adopted for year ended 30 June 2014, annual leave liabilities will be recalculated on 1 July 2012. Leave liabilities for any employees with significant balances of leave outstanding who are not expected to take their leave within 12 months will be discounted, which may result in a reduction of the annual leave liabilities recognised on 1 July 2012, and a corresponding increase in retained earnings at that date

AASB 2011-6 (issued July 2011)

Amendments to Australian Accounting Standards – Extending Relief from Consolidation, Equity Method and Proportionate Consolidation – Reduced Disclosure Requirements [AASB 127, AASB 128 & AASB 131]

Extends relief from preparing consolidated financial statements to entities applying the Reduced Disclosure Requirements wanting to apply the consolidation exemption in paragraph 10 of AASB 127 (or exemption from equity accounting or proportionate consolidation under equivalent paragraphs in AASB 128 and AASB 131) where the ultimate parent entity prepares consolidated financial statements using the Reduced Disclosure requirements, rather than using full IFRS

Annual reporting periods commencing on or after 1 July 2013

When this standard is first adopted there will be no impact on presentation because the group has always qualified for relief from preparing consolidated financial statements because its parent entity produces consolidated financial statements in accordance with IFRS

AASB 2010-6

(issued November 2010)

Amendments to Australian Accounting Standards – Disclosures on Transfers of Financial Assets

Additional disclosures required for entities that transfer financial assets, including information about the nature of financial assets involved and the risks associated with them


As this is a disclosure standard only, there will be no impact on amounts recognised in the financial statements F

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AASB reference

Title and Affected Standard(s):

Nature of Change Application date:


AASB 1054

(issued May 2011)

Australian Additional Disclosures

Moves additional Australian specific disclosure requirements for for-profit entities from various Australian Accounting Standards into this Standard as a result of the Trans-Tasman Convergence Project. Removes the requirement to disclose each class of capital commitment and expenditure commitment contracted for at the end of the reporting period (other than commitments for the supply of inventories)


When this Standard is adopted for the first time for the year ended 30 June 2012, the financial statements will no longer include disclosures about capital and other expenditure commitments as these are no longer required by AASB 1054

IFRS 12

(issued May 2011)

Disclosure of Interests in Other Entities

Combines existing disclosures from IAS 27 Consolidated and Separate Financial Statements, IAS 28 Investments in Associates and IAS 31 Interests in Joint Ventures. Introduces new disclosure requirements for interests in associates and joint arrangements, as well as new requirements for unconsolidated structured entities


As this is a disclosure standard only there will be no impact on amounts recognised in the financial statements. However, additional disclosures will be required for interests in associates and joint arrangements, as well as for unconsolidated structured entities

AASB 13

(issued May 2011)

Fair Value Measurement

Additional disclosures required for items measured at fair value in the statement of financial position, as well as items merely disclosed at fair value in the notes to the financial statements. Extensive additional disclosure requirements for items measured at fair value that are ‘level 3’ valuations in the fair value hierarchy that are not financial instruments, e.g. land and buildings, investment properties etc


When this standard is adopted for the first time on 1 July 2013, additional disclosures will be required about fair values

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2 Financial Risk Management

The Group’s activities have exposure to the following risks from their use of financial instruments:

Credit risk; Liquidity risk; and Market risk (including currency risk and interest rate risk)

The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. Risk management is carried out by corporate under policies approved by the Board of Directors. (a) Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s cash and receivables.

i. Cash and cash equivalents

The Group limits its exposure to credit risk by only investing in liquid securities and only with counterparties in respective countries of operation that have an acceptable credit rating in accordance with corporate treasury policy.

ii. Trade and other receivables

As the Group operates in the uranium exploration and evaluation sector, it does not have trade receivables and therefore is not exposed to credit risk in relation to trade receivables.

The Group has exposure to credit risk on other receivables, mainly VAT/GST, but at year end there were no significant concentrations of credit risk.

iii. Exposure to credit risk

The carrying amount of the Group’s financial assets represents the maximum credit exposure. The Group’s maximum exposure to credit risk at the reporting date was:

Carrying amount

Note 2011 2010 A$’000 A$’000 Cash and cash equivalents 7 74,890 70,118 Trade and other receivables 8 1,786 4,280

The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings (if available) or to historical information about counterpart default rates: Consolidated

2011 2010 A$’000 A$’000 Cash and cash equivalents Counterparties with external credit rating Standard & Poor’s Short Term A-1+ 67,574 68,493 Standard & Poor’s Short Term A-2 7,253 - Global Credit Ratings Short Term A1+ 59 1,618 Counterparties without external credit rating Other 4 7 74,890 70,118

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2 Financial risk management (continued)

Consolidated

2011 2010

A$’000 A$’000 Trade and other receivables Counterparties with external credit rating Fitch Rating BBB- 567 3,743 Standard & Poor’s AAA 209 - Standard & Poor’s A-1+ 638 229 Counterparties without external credit rating Other 372 93 1,786 4,065 (b) Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.

The Group manages liquidity risk by maintaining adequate reserves by preparing an annual budget, continuously monitoring to the budget, subsequent forecasts and actual cash flows.

Typically the Group ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 60 days, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.

The following are the contractual maturities of financial assets and liabilities:

Consolidated 30 June 2011

Carrying amount

A$’000

Contractual cash flows

A$’000

6 mths or less

A$’000

6-12 mths

A$’000

1-2 years

A$’000

2-5 years

A$’000

More than 5 years

A$’000

Trade and other receivables 1,786 1,786 1,786

Trade and other payables 3,855 3,855 3,855 - - - -

Consolidated 30 June 2010

Carrying amount

A$’000

Contractual cash flows

A$’000

6 mths or less

A$’000

6-12 mths

A$’000

1-2 years

A$’000

2-5 years

A$’000

More than 5 years

A$’000

Trade and other receivables 4,065 4,065 4,065

Trade and other payables 7,547 7,547 7,547 - - - -

(c) Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

i. Foreign exchange risk The Group is exposed to currency risk on investments and purchases that are denominated in a currency other than the respective functional currencies of Group entities, primarily the Australian dollar (AUD), but also the Namibian dollar (NAD). The NAD is linked to the South African Rand. The currencies in which the transactions primarily are denominated are AUD and NAD.

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2 Financial risk management (continued)

The Group has not entered into any derivative financial instruments to hedge such transactions and anticipated future payments that are denominated in a foreign currency.

The Group’s investments in its subsidiaries are not hedged as those currency positions are considered to be long term in nature.

The Group’s exposure to foreign currency risk at balance date was as follows, based on notional amounts:

30 June 2011 30 June 2010 AUD NAD* GBP* Total AUD NAD* GBP* Total A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 Cash and cash equivalents 67,238 7,316 336 74,890 68,492 1,626 - 70,118 Trade and other receivables 972 646 453 2,071 486 3,794 - 4,280 Trade and other payables (721) (2,632) (502) (3,855) (3,129) (4,418) - (7,547)Gross balance sheet 67,489 5,330 287 73,106 65,849 1,002 - 66,851 Forward exchange contracts - - - - - - - Net exposure 67,489 5,330 287 73,106 65,849 1,002 - 66,851

* Amounts in Namibian Dollars (NAD) and Great British Pounds (GBP), converted into Australian Dollars (AUD).

The following significant exchange rates applied during the year:

Average rate Reporting date spot rate 2011 2010 2011 2010

NAD 6.7733 6.7739 7.1973 6.6776

GBP 0.6216 0.5588 0.6614 0.5686

Group sensitivity

A 10 percent strengthening of the Australian dollar against the following currencies at 30 June would have (decreased) equity and loss after tax by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant. The analysis is performed on the same basis for 2010.

Consolidated

Equity Loss A$’000 A$’000 30 June 2011 NAD (8,801) (4,790) GBP (67) (24) 30 June 2010 NAD (8,764) (2,541) GBP (21) (10)

The exposure to foreign currency risk above is recognised in equity under the foreign currency translation as part of the net investment in foreign operations and these amounts would be recognised in profit or loss upon disposal of the foreign operations. A 10 percent weakening of the Australian dollar against the above currencies at 30 June would have had the equal but opposite effect.

ii. Interest Rate Risk

The Group is exposed to interest rate risk in the form of bank cash deposits held.

At the reporting date the interest rate profile of the Group’s interest-bearing financial instruments was:

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2 Financial Risk Management (continued)

Consolidated %

2011 2010 Variable rate financial assets Cash and cash equivalents 5.64 4.72

Cash flow sensitivity analysis for variable rate instruments

A change of 100 basis points in interest rates at the reporting date would have increased (decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. The analysis is performed on the same basis for 2010.

Carrying value Profit or loss Equity

A$’000 A$’000 A$’000

100bp increase

100bp decrease

100bp increase

100bp decrease

30 June 2011 Variable rate instruments 74,890 611 (611) 611 (611) Cash flow sensitivity (net) 74,890 611 (611) 611 (611)

30 June 2010 Variable rate instruments 70,118 752 (752) 752 (752) Cash flow sensitivity (net) 70,118 752 (752) 752 (752)

Fair values

Fair values versus carrying amounts

The fair values of financial assets and liabilities, together with the carrying amounts shown in the statement of financial position, are as follows:

Consolidated 30 June 2011 30 June 2010 Carrying amount Fair value Carrying amount Fair value A$’000 A$’000 A$’000 A$’000 Cash and cash equivalents 74,890 74,890 70,118 70,118 Trade and other receivables 2,071 2,071 4,280 4,280 Trade and other payables 3,855 3,855 7,547 7,547

The basis for determining fair values is disclosed in note 1 (l).

Capital Management The Group's objectives when managing capital are to safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

The Group monitors its working capital position against expenditure requirements to undertake its planned exploration and evaluation programme and maintain its ongoing corporate operations. Where required, the Group will sell assets, issue new securities, raise debt or modify its exploration and evaluation programme to ensure that the Group's working capital requirements are met.

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3 Critical accounting estimates and judgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.

(a) Critical accounting estimates and assumptions

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

i. Impairment The Group tests annually whether any assets have suffered any impairment, in accordance with the accounting policy stated in note 1(i). Where an impairment trigger exists, the recoverable amount of the asset is determined. Value-in-use calculations performed in assessing recoverable amounts incorporate a number of key estimates

ii. Share based payments The Company grants share based payments to Group employees as part of their annual remuneration. The valuation of share based payments is a complex area and the Company seeks appropriate external valuation advice. The accounting policy adopted is stated in note 1(p)(iii).

iii. Rehabilitation provision Extract’s accounting policy for the recognition of rehabilitation provisions requires significant estimates including the magnitude of possible works required for removal or treatment of waste materials and the extent of work required and the associated costs of rehabilitation work. These uncertainties may result in future actual expenditure differing from the amounts currently provided.

The provision recognised for each site is periodically reviewed and updated based on the facts and circumstances available at the time. Changes to the estimated future costs are recognised in the statement of financial position sheet by adjusting the rehabilitation asset and provision. (b) Critical judgements in applying the entity’s accounting policies

i. Deferred tax liability

Upon acquisition of Swakop Uranium (Pty) Ltd, in accordance with the requirements of Australian Accounting Standard on Income Taxes, a deferred tax liability of N$222,664,493 was recognised in relation to the difference between the carrying amount for accounting purposes of deferred exploration and evaluation assets and their actual cost base for tax purposes. In the event that the manner by which the carrying value of these assets is recovered differs from that which is assumed for the purpose of this estimation, the associated tax charge may be significantly less than this amount.

ii. Deferred tax asset The Group expects to have carried forward tax losses which have not been recognised as deferred tax assets as it is not considered sufficiently probable that these losses will be recouped by means of future profits taxable in the relevant jurisdictions. The exception to this is the carried forward tax losses which have been offset against the deferred tax liability noted above as these are considered sufficiently probable to be recouped. This offset has been recognised as an income tax benefit within the statement of comprehensive income.

iii. Capitalised exploration and evaluation expenditure The Group has expensed all exploration and evaluation expenditure on the basis that a decision to proceed to development has yet to be made.

4 Segment information

The consolidated entity currently operates in the one operating segment of uranium exploration and evaluation. Discrete financial information is available for this operating segment and the results of this business activity are regularly reviewed by the entity’s chief operating decision maker. Project locations are all within one geographical area, being Namibia.

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4 Segment information (continued)

2011 2010

Uranium exploration and evaluation segment - Namibia A$’000 A$’000

Segment interest revenue 180 -

Segment loss before income tax (47,802) (44,540)

Segment assets 91,259 95,698

Segment liabilities 3,248 8,042

Reconciliation of segment loss before income tax

Segment loss before income tax (47,802) (44,540)

Corporate and administration expenses (12,926) (9,621)

Corporate interest revenue 2,692 3,097

Write down of ATW Gold Corporation warrants - (706)

Loss before income tax (58,036) (51,770)

Reconciliation of segment assets

Segment current assets 7,961 5,419

Corporate and administration current assets 69,000 68,979

Segment non-current assets 83,298 90,279

Corporate and administration non-current assets 98 40

Total assets 160,357 164,717

Reconciliation of segment liabilities

Segment current liabilities 2,715 7,653

Corporate and administration current liabilities 2,347 3,426

Segment non-current liabilities 533 389

Corporate and administration non-current liabilities - -


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5 Loss for the year

Loss for the year includes the following specific expenses: 2011 2010

A$’000 A$’000

(a) Exploration and evaluation expenses

Drilling expenses 14,114 19,221

Feasibility study costs 20,143 11,702

Assay sample costs 3,324 4,021

Employee benefits expense 3,761 2,801

Share based payments 727 565

Depreciation and amortisation expense 584 437

Other expenses 5,329 5,793

Total exploration and evaluation expenses 47,982 44,540

(b) Corporate and administration expenses

Corporate expenses 4,404 4,931

Directors base and consulting fees 1,020 1,200

Employee benefits expenses 4,354 1,335

Share based payments 2,344 1,669

Administration expenses 754 467

Depreciation and amortisation expense 50 19

Total corporate and administration expenses 12,926 9,621

6 Income tax and deferred tax

(a) Total taxation expense (benefit) comprises 2011 2010

A$’000 A$’000

Current tax expense 76 -

Deferred tax (benefit) (3,027) (16,214)

(2,951) (16,214)

(b) Factors affecting income tax expense (benefit) for the period 2011 2010

A$’000 A$’000

Loss before income tax expense (benefit) (58,036) (51,770)

Tax at the Australian tax rate of 30% (17,411) (15,531)

Non-deductible expenditure (908) 1,957

Amounts (over)/under provided in prior years (272) -

Differences in overseas tax rates (3,614) (3,348)

Deferred tax not provided 1,488 -

Tax losses not recognised 17,766 708

Total taxation expense (benefit) (2,951) (16,214)

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6. Income tax and deferred tax (continued)

(c) Income tax relating to equity

Foreign currency translation (128) (3,679)

Employee entitlements on vesting of performance rights (44) -

Total income tax relating to equity (172) (3,679)

(d) The composition of the Group’s net deferred tax asset (liability) recognised in the consolidated statement of financial position and deferred tax expense (benefit) credited to the consolidated statement of comprehensive income is as follows

Deferred tax assets Deferred tax Liabilities Charged/(credited) to profit or loss

2011 2010 2011 2010 2011 2010 Type of temporary difference A$’000 A$’000 A$’000 A$’000 A$’000 A$’000 Depreciation 680 - 10 432 (1,142) 432

Exploration and evaluation assets - - 30,952 33,417 (56) 56

Tax losses 30,024 30,448 - - (1,807) (16,528)

Employee benefits 260 103 - - (168) (28)

Rehabilitation provision - 146 - - 146 (146)

30,964 30,697 30,961 33,849 (3,027) (16,214)

Net deferred tax asset (liability) 2011 2010 A$’000 A$’000

At the beginning of the financial year (3,152) (23,045)

Income tax (expense)/benefit recorded in the income statement 3,027 16,214

Exchange variations and other movements 128 3,679

Net deferred tax asset (liability) at the end of the financial year 3 (3,152)

When the Group acquired Swakop Uranium (Pty) Ltd in 2007 a Namibian deferred tax liability was recognised in relation to acquired "Exploration and evaluation assets" (see note 10) as required under International Financial Reporting Standards. The deferred tax income recorded relates to the recognition of deferred tax assets generated by Swakop Uranium (Pty) Ltd in Namibia. Deferred tax assets and liabilities have been set-off accordingly due to income taxes being levied by the same taxation authority on the same taxable entity.

(e) Unrecognised deferred tax assets 2011 2010 A$’000 A$’000 Tax losses 22,356 4,796

Other temporary differences 1,733 76

Unrecognised deferred tax assets 24,089 4,872

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6 Income tax and deferred tax (continued)

Net deferred tax assets are not brought to account where the generation of sufficient future taxable income to utilise such assets is uncertain.

(f) Franking account

The franking account balance at year end was $nil (2010: $nil).

(g) Tax consolidation legislation

Extract Resources Ltd and its wholly-owned Australian controlled entities implemented the tax consolidation legislation. The accounting policy in relation to this legislation is set out in note 1(f).

On adoption of the tax consolidation legislation, the entities in the tax consolidated group entered into a tax sharing agreement which, in the opinion of the directors, limits the joint and several liability of the wholly-owned entities in the case of a default by the head entity, Extract Resources Ltd. The entities have also entered into a tax funding agreement under which the wholly-owned entities fully compensate Extract Resources Ltd for any current tax payable assumed, and are compensated by Extract Resources Ltd for any current tax receivable and deferred tax assets relating to unused tax losses or unused tax credits that are transferred to Extract Resources Ltd under the tax consolidation legislation. The funding amounts are determined by reference to the amounts recognised in the wholly-owned entities’ financial statements.

7 Current assets – Cash and cash equivalents

2011 2010

A$’000 A$’000

Cash at bank and in hand 74,890 70,118

(a) Reconciliation to cash at the end of the year The above figures are reconciled to cash at the end of the financial year as shown in the statement of cash flows as follows: Balances as above 74,890 70,118

Balances per statement of cash flows 74,890 70,118

(b) Interest rate risk exposure The Group’s exposure to interest rate risk is discussed in note 2. The maximum exposure to credit risk at the reporting date is the carrying amount of each class of cash and cash equivalents mentioned above.

8 Current assets – Trade and other receivables 2011 2010

A$’000 A$’000

VAT/GST 776 3,971

Interest receivable 638 -

Insurance payments 42 -

Other receivables (a) 330 94

1,786 4,065

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8. Current assets – Trade and other receivables (continued) The classes within trade and other receivables do not contain impaired assets and are not past due. Based on the credit history of these classes, it is expected that these amounts will be received when due. The group does not hold any collateral in relation to these receivables. (a) Other receivables Other receivables consist largely of rental deposits and staff PAYG income tax on performance rights which vested 30 June 2011.

(b) Foreign exchange exposure The group’s exposure to foreign exchange is discussed in note 2(c).

(c) Fair value and credit risk Due to the short term nature of these receivables, their carrying amount is assumed to approximate their fair value. There is not considered to be any credit risk as they are mainly from the Namibia Government, Australian Government, established financial institutions or they are prepayments.

9 Non-current assets – Property, plant and equipment

Consolidated

Plant & Equipment

A$’000

Office Equipment

A$’000

Geographical Software A$’000

Light Vehicles A$’000

Total

A$’000

As at 30 June 2009

Cost or fair value 618 137 11 543 1,309

Accumulated depreciation (195) (61) (5) (70) (331)

Closing net book amount 423 76 6 473 978

Year ended 30 June 2010

Opening book amount 423 76 6 473 978

Exchange differences (72) 2 - (3) (73)

Additions 283 50 4 262 599

Depreciation charge (195) (31) (4) (68) (298)

Closing net book amount 439 97 6 664 1,206

As at 30 June 2010



Net book amount 439 97 6 664 1,206

Year ended 30 June 2011

Opening book amount 439 97 6 664 1,206

Exchange differences (25) (3) (1) (42) (71)

Additions 108 134 3 3 248

Disposals - (8) - (32) (40)

Depreciation charge (239) (67) (4) (187) (497)

Closing net book amount 283 153 4 406 846

As at 30 June 2011



Net book amount 283 153 4 406 846

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10 Non-current assets – Exploration and evaluation expenditure 2011 2010

A$’000 A$’000

Acquisition costs 82,538 88,962

Exploration licence costs 1,045 1,125

Accumulated amortisation of exploration licences (1,036) (974)

82,547 89,113

2011 2010

A$’000 A$’000

Movements

Opening balance 1 July 89,113 99,662

Foreign exchange movements (6,429) (10,391)

Amortisation expense for exploration licences (137) (158)

Closing balance 30 June 82,547 89,113

The exploration and evaluation assets above mainly relate to the acquisition of the Husab Uranium project in 2007. Legal rights to these assets were obtained through the acquisition of a wholly owned Namibian company Swakop Uranium (Pty) Ltd on 28 March 2007, for the issue of 66.7 million shares valued at A$0.94 each. In accordance with International Financial Reporting Standards this asset value has been grossed up to reflect a Namibian deferred tax liability at 37.5 per cent (see note 6) and initially expressed in Namibian dollars. At 30 June 2011 this Namibian asset value has been retranslated into Australian dollars.

The Group holds several exclusive prospecting licences in Namibia which provide the legal right to exploration and underpins the exploration and evaluation expenditure asset recorded at 30 June 2011. Some of these licences are due for renewal during the year ended 30 June 2012, and the Group has submitted the licence renewal application within the required timeframe, and see no reason why it should not be granted.

11 Current liabilities - Trade and other payables

2011 2010

A$’000 A$’000

Trade and other payables

Trade payables 1,845 5,135

Other payables 2,010 2,412

3,855 7,547

(a) Foreign exchange exposure The Group’s exposure to foreign exchange risk is discussed in note 2.

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12 Current liabilities – Provision for employee entitlements

2011 2010

A$’000 A$’000

Employee entitlements 1,207 380

Employee entitlements include accruals for annual leave. The entire obligation is presented as current, since the Group does not have an unconditional right to defer settlement. However, based on past experience, the Group does not expect all employees to take the full amount of accrued leave within the next 12 months.

13 Non-current liabilities – Provisions

2011 2010

A$’000 A$’000

Rehabilitation provision 500 389

Employee entitlements – long service leave 33 -

533 389

Movements in provisions other than employee benefits are set out below:

Rehabilitation provision

Total

A$’000 A$’000

Carrying amount at start of year – 1 July 2010 389 389

Unwinding of discount-charged to profit or loss 111 111

500 500

14 Contributed equity

2011 2010

A$’000 A$’000

(a) Share capital

Ordinary shares – Fully paid 342,032 281,000

Total consolidated contributed equity 342,032 281,000

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14 Contributed equity (continued)

(b) Movements in ordinary share capital:

Date Details Number of shares

Issue price

A$’000

A$

1 July 2009 Opening balance 228,981,605 191,358

September 2009 Private placement of special warrants on TSX 5,200,000 7.75 40,300

October 2009 Non-renounceable entitlement offer 6,555,031 7.75 50,802

December 2009 Exercise of employee options 1,881,000 0.98 1,846

February 2010 Exercise of employee options 25,000 1.00 25

March 2010 Exercise of employee options 225,000 1.25 281

June 2010 Exercise of employee options 250,000 1.00 250

June 2010 Non-Executive Director’s remuneration 32,922 7.05 232

Less: Transaction costs arising on share issue - (4,094)

30 June 2010 Closing balance 243,150,558 281,000

July 2010 Vesting of performance rights 101,740 - -

August 2010 Exercise of employee options 50,000 1.00 50

January 2011 Exercise of employee options 250,000 1.25 313

February 2011 Private placement 7,299,069 8.35 60,947

April 2011 Vesting of performance rights 162,677 - -

Less: Transaction costs arising on share issue - (278)

30 June 2011 Closing balance 251,014,044 342,032

(c) Employee performance rights plan and options scheme Information relating to the Extract Resources Ltd employee options scheme and the Extract Resources Ltd employee performance rights plan, including details of options issued/performance rights issued, exercised and lapsed (if applicable) during the financial year and options/performance rights outstanding at the end of the financial year, is set out in note 25 (a) and (b) respectively.

15 Reserves and accumulated losses

2011 2010

A$’000 A$’000

(a) Reserves

Asset revaluation reserve - -

Share based payments reserve 10,443 7,306

Foreign currency translation reserve (15,253) (7,682)

Balance 30 June (4,810) (376)

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15 Reserves and accumulated losses (continued)

2011 2010

A$’000 A$’000

Movements:

Asset revaluation reserve

Balance 1 July - (706)

Assets written down - 706

Balance 30 June - -

Share based payments reserve

Balance 1 July 7,306 5,315

Taxation charged to equity 44 -

Performance rights and options expense 3,093 1,991

Balance 30 June 10,443 7,306

Foreign currency translation reserve

Balance 1 July (7,682) (308)

Gain / (loss) on translation of foreign controlled entities (7,571) (7,374)

Balance 30 June (15,253) (7,682)

(b) Accumulated losses

Movements in accumulated losses were as follows:

Balance 1 July (127,375) (91,819)

Net loss for the year (55,085) (35,556)

Balance 30 June (182,460) (127,375)

(c) Nature and purpose of reserves

i. Asset revaluation reserve The asset revaluation reserve is used to recognise: the fair value of available for sale assets held by the group.

ii. Share-based payments reserve The share-based payments reserve is used to recognise: the fair value of performance rights and options issued to employees but not exercised

iii. Foreign currency translation reserve Exchange differences arising on translation of the foreign controlled entity are taken to the foreign currency translation reserve, as described in note 1(d).

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16 Key management personnel disclosures

(a) Directors

The following persons were directors of Extract Resources Ltd during the financial year. i. Chairman – non executive

S Galloway (from 9 March 2009) ii. Executive directors

J Leslie, Managing Director (from 12 April 2010) iii. Non-executive directors

N MacLachlan (from 26 April 2007) J Main (from 2 February 2009) I Zaamwani-Kamwi (from 7 April 2009) A Clayton (from 12 February 2010) R Chamberlain (from 14 April 2010)

(b) Other key management personnel

The following persons also had authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly, during the financial year.

Name Position Employer N Green (from 1 October 2009) Chief Executive Officer Swakop Uranium (Pty) Ltd P Sydney-Smith (from 19 April 2010) Chief Financial Officer Extract Resources (UK) Limited M Spivey (from 1 January 2008) Manager of Exploration Extract Resources Ltd A Penkethman (from 17 May 2006) Manager of Projects Extract Resources Ltd S Lancaster (from 1 February 2010) Company Secretary Extract Resources Ltd (c) Key management personnel compensation

Consolidated

2011 2010

A$ A$

Short term employee benefits 4,400,146 1,974,420

Post-employment benefits 175,768 30,652

Long term employee benefits - -

Share based payments 2,679,288 1,667,595

7,255,202 3,672,667

Detailed remuneration disclosures are provided in the remuneration report on pages 29 to 38.

(d) Equity instrument disclosures relating to key management personnel

(i) Option holdings

No director of Extract Resources Ltd and other key management personnel, including their personally related parties held any options over ordinary shares in the company during the financial year, with the exception of Martin Spivey who exercised 250,000 options 13 January 2011.

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16 Key management personnel disclosures (continued)

(ii) Performance rights as remuneration and shares issued on exercise of such options

Details of performance rights provided as remuneration and shares issued on the exercise of such rights, including terms and conditions, can be found in the remuneration report on pages 33-38.

(iii) Performance rights holdings

The numbers of performance rights over ordinary shares in the company held during the financial year by each director of Extract Resources Ltd and other key management personnel of the Group, including their personally related parties, are set out below.

2011 Balance at

start of year Granted as

compensation Vested and Exercised*

Forfeited Balance at end of year

Vested and convertible**

Amount yet to vest

Directors of Extract Resources Ltd

J Leslie (Class B) 1,341,300 - 134,130 201,195 1,005,975 - 1,005,975

Other key management personnel of the Group

N Green (Class C) 57,476 113,804 28,547 28,547 114,186 - 114,186

P Sydney-Smith (Class A) - 66,209 49,657 16,552 - 49,657 -

M Spivey (Class A) - 16,093 12,070 4,023 - 12,070 -

A Penkethman (Class A) - 16,093 12,070 4,023 - 12,070 -

S Lancaster (Class A) - 10,944 8,208 2,736 - 8,208 -

* Performance rights vest when all conditions of the plan are met. Once performance rights have vested, each vested right will

convert into an ordinary share.

** Class A performance rights vesting date is 30 June 2011 and the corresponding amount of ordinary shares were entered into the register in the subsequent year.

2010 Balance at

start of year Granted as

compensation Vested and exercised*

Forfeited Balance at end of year

Vested and convertible**

Amount yet to vest


J Leslie (Class B) - 1,341,300 - - 1,341,300 - 1,341,300


N Green (Class C) - 57,476 - - 57,476 - 57,476

S Lancaster (Class A) - 3,012 - - 3,012 3,012 -

* Performance rights vest when all conditions of the plan are met. Once performance rights have vested, each vested right will

convert into an ordinary share.

** Class A performance rights vesting date is 30 June 2010 and the corresponding amount of ordinary shares were entered into the register in the subsequent year.

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(iv) Share holdings

The numbers of shares in the company held during the financial year by each director of Extract Resources Ltd and other key management personnel of the Group, including related parties, are set out below.

2011 Balance at start of year Granted as

compensation Other changes * Balance at end of year


S Galloway 15,524 - - 15,524

J Leslie - - 134,130 134,130

N MacLachlan 231,137 - - 231,137

J.Main 25,422 - - 25,422

I Zaamwani-Kamwi 4,851 - - 4,851

R Chamberlain 1,037 - - 1,037

A Clayton 1,808 - - 1,808


N Green - - 17,500 17,500

P Sydney-Smith - - - -

M Spivey 350,000 - 265,645 615,645

A Penkethman 190,000 - (164,355) 25,645

S Lancaster - - 3,012 3,012

* Other changes for J Leslie, N Green, M Spivey, A Penkethman and S Lancaster includes shares received during the year upon the

vesting of performance rights granted during the 2010 year. M Spivey’s other changes also include shares received upon the exercise of options.

2010 Balance at start of year Received during the year as part of remuneration

Other changes * Balance at end of year


S Galloway - 15,524 - 15,524

P McIntyre 4,435,063 - (4,435,063) -

N MacLachlan 220,000 4,851 6,286 231,137

J.Main 20,000 4,851 571 25,422

I Zaamwani-Kamwi - 4,851 - 4,851

R Chamberlain - 1,037 - 1,037

A Clayton - 1,808 - 1,808


R Dorrington 250,827 - (250,827) -

* Other changes for P McIntyre and R Dorrington include shares received during the year upon the exercise of options. No share

holdings are disclosed for P McIntyre and R Dorrington at the end of the year as a consequence of their resignation during the year. The movement in share holdings as a result of resignation is also reflected in other changes.

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(e) Other transactions with key management personnel Consolidated

2011 2010

A$ A$

N Green (Consultancy fees paid to Green Team International) 4,484,630 907,657

N Green is a key management person of the Group having been appointed to the role of Chief Executive Officer of Swakop Uranium (Pty) Ltd on 1 October 2009. N Green is also Managing Director of Green Team International (Pty) Ltd, which has entered into a consultancy contract with Swakop Uranium (Pty) Ltd effective from 1 January 2010 based on approval from both the Boards of Extract Resources Ltd and Swakop Uranium (Pty) Ltd. Under this contract Green Team International (Pty) Ltd provides project management services to the Group in relation to the development of the Husab Project in exchange for both a small monthly retainer fee and technical services costs (charged at cost plus a nominal administrative cost mark up). The retainer fee and service costs are charged in South African Rand and together represent arms length market rates for the services provided. The contract is subject to annual escalation and runs for the duration of the Husab Project, subject to a six month termination notice by either party.

During the year an equivalent of A$4,484,630 in consultancy fees to Green Team International (Pty) Ltd have been incurred and reflected within exploration and evaluation expenses, and an equivalent of A$303,158 of this amount is unpaid as at 30 June 2011 and has been disclosed within current liabilities – trade and other payables.

(f) Loans to key management personnel

A United Kingdom PAYE income tax liability of GBP110,139 (AUD $166,524) was incurred by Extract Resources UK Limited, an Extract Group company, in relation to Peter Sydney-Smith’s Class A Performance Rights that vested on 30 June 2011. Pursuant to the performance rights plan rules the company held security over this receivable which was settled on the 19 July 2011 by part sale of Peter Sydney-Smith’s allotment of Extract Resources Ltd shares.

17 Remuneration of auditors

During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related practices and non-related audit firms:

Consolidated

a) Audit and other assurance services 2011 2010

A$ A$

BDO Audit (WA) Pty Ltd

Audit and review of financial statements 108,031 58,524

Other assurance services 8,800 5,909

BDO LLP

Audit or review of financial statements of entities in the Group

23,213 -

Grant Thornton Neuhaus

Audit or review of financial statements of entities in the Group

43,426 31,593

Total remuneration for audit and other assurance services 183,470 96,026

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17 Remuneration of auditors (continued)

Consolidated

b) Non audit and other assurance services 2011 2010

A$ A$

BDO Audit (WA) Pty Ltd

Taxation compliance services 51,151 44,903

Transfer pricing advice 16,978 4,028

Due diligence services on equity raising - 32,337

Grant Thornton Neuhaus

Share options advice - 542

Consultancy agreements review - 3,864

Transfer pricing advice - 1,517

Company secretarial fees 1,821 1,803

Total remuneration for non audit and other assurance services 69,950 88,994

18 Contingent liabilities and assets

The Group had no contingent assets or liabilities at either 30 June 2011 or 30 June 2010.

19 Commitments

(a) Exploration expenditure commitments

In order to maintain current rights of tenure to exploration tenements the Group is required to perform minimum exploration work to meet the minimum expenditure requirements specified by controlling Governments. These obligations are subject to renegotiation for each tenement. In some circumstances, commitments may be grouped between tenements or reduced where tenements are relinquished in part or in total.

The Group’s share of these obligations is not provided for in the financial statements.

The Group’s share of these obligations for expenditure is as follows:

2011 2010

A$’000 A$’000

Current required expenditure commitments (within one year) 832 1,096

Later than one year but not later than five years 3,661 -

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19 Commitments (continued)

(b) Leasing commitments

The Group leases various offices under non-cancellable operating leases. The leases have varying terms, escalation clauses and renewal rights. Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows:

2011 2010

A$’000 A$’000

Within one year 225 261

Later than one year but not later than five years 111 4

The Group leases office equipment under cancellable operating leases. The Group is required to give three months’ notice for termination of these leases.

20 Related party transactions

Transactions between related parties are on normal commercial terms and conditions with no more favourable than those available to other parties unless otherwise stated.

(a) Wholly-owned group transactions

Loans Expenditure and asset acquisitions of Swakop Uranium (Pty) Ltd, Extract Resources (Namibia) (Pty) Ltd, Extract Resources (UK) Limited and Burnakura Pty Ltd are all funded by way of a loan from Extract Resources Ltd. No interest is charged on these loans and a date for repayment has not been stipulated. Any cash flow derived from the subsidiaries is expected to be applied in part settlement if their respective loans. Since the end of the year further funds have been provided in this manner.

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20 Related party transactions (continued)

Consolidated

(b) Director related entities 2011 2010

A$ A$

Extract Resources Ltd recharges to Coronet Resources Ltd - 2,022

West Africa Gold Exploration (Namibia) (Pty) Limited recharges to Swakop Uranium (Pty) Ltd

- 252,978

West Africa Gold Exploration (Namibia) (Pty) Limited recharges to Branberg Energy (Pty) Ltd, (formerly Extract Resources (Namibia) (Pty) Ltd)

340 -

TLP 105 (Pty) Limited recharges to Swakop Uranium (Pty) Ltd 59,606 -

TLP 105 (Pty) Limited recharges to Branberg Energy (Pty) Ltd, (formerly Extract Resources (Namibia) (Pty) Ltd) 590 -

Swakop Uranium (Pty) Ltd recharges to West Africa Gold Exploration (Namibia) (Pty) Limited - 23,282

Kalahari Minerals Plc recharges to Extract Resources Ltd - 1,582

Kalahari Minerals Plc recharges to Extract Resources UK Ltd 5,865 -

Extract Resources Ltd recharges to Kalahari Minerals Plc - 10,802

NedCapital Namibia (Pty) Limited recharges to Extract Resources Ltd 14,425 27,727

(c) Other Related Parties Southernwood Consulting recharges to Extract Resources UK Ltd 41,287 -

Sashi Investments (Pty) Ltd recharges to Extract Resources Ltd 13,781 -

Cost recharges relating to items (b) and (C) above:

i. West Africa Gold Exploration (Namibia) (Pty) Limited recharges to Extract Resources (Namibia) (Pty) Ltd administration and overhead costs during the year.

ii. Swakop Uranium (Pty) Ltd has a rental agreement with TLP 105 (Pty) Ltd and the charges during the year relate to office rent. TLP 105 (Pty) Ltd also charged rent to Branberg Energy (Pty) Ltd, formerly (Extract Resources (Namibia) (Pty) Ltd) to end of August 2011.

iii. During the year Kalahari Minerals Plc, a Director related entity, has recharged Extract Resources UK Ltd for administrative services at cost.

iv. Consultancy services have been recharged by Southernwood Consulting to Extract Resources UK Ltd.

v. During the year NedCapital Namibia (Pty) Limited, a Director related entity, charged the company for advisory fees and related costs.

vi. Sashi Investments (Pty) Ltd, a director related entity up to 13 October 2010, charged the company for consultancy fees and related costs during this period.

As at 30 June 2011 an amount of A$5,116 was outstanding to Southernwood Consulting Ltd, and A$3,995 was outstanding to TLP 105 (Pty) Ltd. In 2010, there were no amounts owing or due to or from a director or related entities.

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21 Subsidiaries

The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note 1 (b).

Name of entity Country of incorporation

Class of shares Equity holding

2011 2010

% %

Burnakura Pty Ltd Australia Ordinary 100 100

Branberg Energy (Pty) Ltd* Namibia Ordinary 100 100

(Formerly Extract Namibia (Pty) Ltd)

Swakop Uranium (Pty) Ltd Namibia Ordinary 100 100

Extract Resources (UK) Limited United Kingdom Ordinary 100 100

* In September 2010, the Company entered into an agreement with North River Resources and West Africa Gold Exploration (Proprietary) Limited (WAGE) regarding our exploration rights under EPL 3327 and 3328, and WAGE’s uranium exploration rights under EPL 3139. The agreement envisages investment by NRR in, wholly owned subsidiary, Brandburg Energy (formerly Extract Resources (Namibia) Pty Ltd), to acquire a 50% interest in Brandburg through the provision of funding for the expected exploration programme. The transaction has not yet completed as we are waiting for approval from the Government of Namibia.

22 Events occurring after the reporting date

Since 30 June 2011 the following after balance sheet date events have occurred:

(i) Vesting of Performance Rights and Issue of Shares

On 11 July 2011 the Company announced that 145,119 Class A Performance Rights had vested at 30 June 2011, and a corresponding amount of shares were issued. The financial effect of the vesting was recognised in the year ending 30 June 2011.

(ii) Husab received its Linear Infrastructure Environmental Approval

On 25 July 2011, the Husab Uranium Project Received its Linear Infrastructure Environmental Approval. This was the final environmental approval required to commence the development of the Husab Mine.

(iii) Issue of Class A Performance Rights

A total of 145,294 Class A Performance Rights were issued on the 5 August 2011 and 8 August 2011.

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22 Events occurring after the reporting date (continued)

(iv) Husab Uranium Project Reserve Upgrade

On 10 August 2011 the Group announced a new reserve estimate for the Husab Project on Zones 1 and 2, following JORC Code and Canadian NI43-101 guidelines.

Husab Uranium Project Zone 1 – 2 (August 2011) Reserve Estimates Tonnage Grade Contained U3O8

(Mt) (ppm U3O8) (MLb)

Proven Zone 1 25.3 482 26.9 Zone 2 37.4 628 51.8


Probable Zone 1 123.4 460 125.1 Zone 2 93.9 561 116.1


Proven and Probable



Except for as disclosed above, no other matter or circumstance has arisen since 30 June 2011 that has significantly affected, or may significantly affect:

(i) the Group’s operations in future financial years, or

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

(iii) the Group’s state of affairs in future financial years.

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23 Reconciliation of loss after income tax to net cash outflow from operating activities

Consolidated

2011 2010

A$’000 A$’000

Loss for the year (55,085) (35,556)

Amortisation and depreciation 634 456

Loss on disposal of assets (1) -

Write down of ATW Gold Corporation warrants - 706

Share based payments expense 3,071 2,224

Net foreign exchange (gain)/loss (833) (533)

(Increase)/decrease in trade and other receivables 2,316 (2,844)

(Increase)/decrease in prepayments (70) (187)

(Increase)/decrease in deferred tax assets (3) -

Increase/(decrease) in trade and other payables (3,773) 4,235

Increase/(decrease) in employee provisions 896 115

Increase/(decrease) in other provisions 127 22

Increase/(decrease) in deferred tax liabilities (3,152) (16,214)

Net cash outflow used in operating activities (55,873) (47,576)

24 Earnings per share

(a) Basic earnings per share Consolidated

2011

A Cents

2010

A Cents

Loss per share attributable to the ordinary equity holders of the company (22.39) (14.90)

(b) Diluted earnings per share

The company’s potential ordinary shares, being its options and performance rights granted are not considered dilutive as the conversion of these options and performance rights would result in a decrease in the net loss per share.

(c) Reconciliations of earnings used in calculating earnings per share

Consolidated

2011

A$’000

2010

A$’000

Basic and diluted earnings per share

Loss attributable to the ordinary equity holders of the company used in calculating basic and diluted earnings per share

(55,085) (35,556)

(d) Weighted average number of shares used as the denominator

Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share

245,967,837 238,841,871

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25 Share based payments

(a) Employee Option Plan

The establishment of the Extract Resources Ltd Employee Option Plan was approved by shareholders at the 2004 annual general meeting. The Employee Option Plan is designed to provide long-term incentives for employees (excluding directors) to deliver long-term shareholder returns. Under the plan, participants are granted options which only vest if certain performance standards are met.

Participation in the plan is at the Board’s discretion and no individual has a contractual right to participate in the plan.

Options are granted under the plan for no consideration. Options granted under the plan carry no dividend or voting rights.

When exercisable, each option is convertible into one ordinary share fourteen days after the release of the half-yearly and annual financial results of the Group to the market.

The exercise price of options is based on the weighted average price at which the company’s shares are traded on the Australian Stock Exchange during the five trading days immediately before the options are granted.

Grant date

Expiry date

Exercise price

AUD$

Balance at start of

year

Number

Granted during the

year

Number

Exercised during the

year

Number

Expired during the

year

Number

Balance at end of the

year

Number

Vested and exercisable at end

of year

Number

2011

01.11.07 01.11.10 1.00 50,000 - 50,000 - - -

30.04.08 30.04.11 1.25 250,000 - 250,000 - - -

2010

11.06.07 05.06.10 1.00 200,000 - 200,000 - - -

01.11.07 01.11.10 1.00 75,000 - 25,000 - 50,000 50,000

10.12.07 09.12.10 1.05 26,000 - 26,000 - - -

30.04.08 30.04.11 1.25 900,000 - 650,000 - 250,000 250,000

10.07.08 30.04.11 1.25 230,000 - 230,000 - - -

The weighted average share price at the date of exercise of options exercised during the year ended 30 June 2011 was $9.08.

(b) Employee Performance Rights Plan

The Extract Resources Ltd Employee Performance Rights Plan is designed to link reward to the performance of Extract Resources Ltd, and to also provide long-term incentives for employees to deliver long-term shareholder returns and to encourage personal commitment and contribution to the Company. Under the plan, participants are granted rights which only vest if certain performance standards are met.

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25 Share based payments (continued)

Participation in the plan is at the Board's discretion and no individual has a contractual right to participate in the plan. Rights are issued under the plan for no consideration. Rights issued under the plan carry no dividend or voting rights. Performance Rights vest when all vesting conditions have been met and each right is convertible into one ordinary share. Performance Rights which do not vest, lapse.

Three classes of performance rights exist as a consequence of different vesting conditions. Class A performance rights have a Total Shareholders Return vesting condition and vest annually at 30 June. Class B performance rights are for the CEO of Extract Resources Ltd. These have specific performance target vesting conditions and vest in equal tranches from 1 March 2010 for four years. Class C performance rights are for the CEO of Swakop Uranium (Pty) Ltd. These have specific performance target vesting conditions and vest in equal tranches from 1 March 2010 for three years.

The Class A performance rights have a performance condition that is based on the Total Shareholders Return of Extract Resources Ltd which is compared to the Total Shareholders Return of a peer group constituent for the purpose of determining the rank of Extract Resources Ltd. The peer group includes Bannerman Resources Ltd, Cameco Corporation, Areva, Denison Mines Corporation, Deep Yellow Ltd, Energy Resources of Australia Ltd, Forsys Metals Corporation, Mantra Resources Ltd, Paladin Energy Ltd, Summit Resources Ltd and Uranium One Inc. The rank is converted to a quartile ranking which is used to determine the proportion of awards that vest as per the scale below. The Total Shareholders Return growth is calculated based on the 30-day volume weighted average TSR index, adjusted for foreign exchange, dividends and capital movements, as at the start and end of the performance period.

The proportions of awards that vest are as follows:

Quartile Rank Proportion of awards vesting Lower quartile 25% Third quartile 50% Second quartile 75% Upper quartile 100% The Class B and Class C performance rights have initial performance targets which require an improvement of Extract Resources Ltd’s net present value from a base case model. The base case model has certain fixed assumptions such as uranium prices, exchange rates, discount rates, royalty rates and tax rates. The subsequent performance targets will be linked to development and construction schedules, as determined and agreed by the Board.

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25 Share based payments (continued) Details of outstanding performance rights at 30 June 2011 were:

Grant date Expiry date

Grant date unit value

Balance at start of

year

Granted during the

year

Vested and exercised during the

year*

Forfeited during the

year

Balance at end of the

year

Vested and convertible

at end of year**

$AUD Number Number Number Number Number Number

Class A Performance Rights

01.07.10 30.06.11 A$4.43 - 202,597 145,119 57,478 - 145,119

Class B Performance Rights

22.06.10 01.03.11 A$7.05 335,325 - 134,130 201,195 - -

22.06.10 01.03.12 A$7.05 335,325 - - - 335,325 -

22.06.10 01.03.13 A$7.05 335,325 - - - 335,325 -

22.06.10 01.03.14 A$7.05 335,325 - - - 335,325 -

Class C Performance Rights

22.06.10 01.03.11 A$7.05 19,159 - 9,579 9,580 - -

22.06.10 01.03.12 A$7.05 19,159 - - - 19,159 -

22.06.10 01.03.13 A$7.05 19,158 - - - 19,158 -

05.04.11 05.04.11 A$8.23 - 37,935 18,968 18,967 - -

05.04.11 01.03.12 A$8.23 - 37,935 - - 37,935 -

05.04.11 01.03.13 A$8.23 - 37,934 - - 37,934 -

* Performance rights vest when all conditions of the plan are met. Once performance rights have vested, each vested right will convert into an ordinary share.

** Class A performance rights vesting date is 30 June and the corresponding amount of ordinary shares were entered into the register in the subsequent year.

The assessed fair value at grant date of the Class A performance rights granted during the year ended 30 June 2011 was A$4.43 per performance right. The fair value at grant date is independently determined using a Monte-Carlo simulation model that takes into account the exercise price, the term of the performance right, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, correlation matrix, total shareholders return, the expected dividend yield and the risk free interest rate for the term of the performance right.

The model inputs for Class A performance rights granted during the year ended 30 June 2011 included: • performance rights are granted for no consideration • grant date 1 July 2010 • expiry date 30 June 2011 • share price at grant date A$ 6.30 • expected price volatility of the company's shares 45% • expected dividend yield 0% • risk-free interest rate 4.44% • expected life 1 year F

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25 Share based payments (continued) The expected price volatility is based on the historic volatility of the market price of Extract Resources Ltd shares, the mean reversion tendency of volatilities and the volatility of each peer group company. All inputs are based upon conditions at the grant date in Australia, where the shares of Extract Resources Ltd are primarily listed. The assessed fair value at grant date of the Class C performance rights granted during the year ended 30 June 2011 was A$8.23 per performance right. The valuation of these performance rights did not take into account the specific performance target vesting conditions as these were non-market related vesting conditions. As no market conditions exist with regards to the vesting of Class C performance rights, the underlying value is the market value at the grant date.

(c) Expenses arising from the share-based payment transactions

Total expenses arising from share-based payment transactions recognised during the period were as follows:

Consolidated

2011 2010

A$’000 A$’000

Within exploration and evaluation expenses 727 565

Within corporate and administration expenses 2,344 1,669

Total share based payments expense 3,071 2,234

26 Parent entity information

The following details information related to the parent entity, Extract Resources Ltd, at 30 June 2011. The information presented here has been prepared using consistent accounting policies as presented in note 1.

Parent entity

2011 2010

A$’000 A$’000

Current assets 68,210 68,671

Non-current assets 56,901 64,762

Total assets 125,111 133,433

Current liabilities 1,508 3,246

Non-current liabilities - -


Contributed equity 342,032 281,000

Reserves 10,399 7,306

Accumulated losses (228,828) (158,119)

Total equity 123,603 130,187

Loss for the year ended 30 June (70,709) (51,394)

Other comprehensive loss for the year - -

Total comprehensive loss for the year (70,709) (51,394)

Included in the leasing commitments in note 19(b) are commitments incurred by the parent entity relating to the lease of office premises under a non-cancellable operating lease for an amount of $99,929 (2010: $97,376).

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Director’s Declaration

30 June 2011

89

DIRECTOR’S DECLARATION

The directors of the company declare that:

1. The financial statements, comprising the statement of comprehensive income, statement of financial position, statement of cash flows, statement of changes in equity and accompanying notes, are in accordance with the Corporations Act 2001 and:

(a) comply with Accounting Standards and the Corporations Regulations 2001; and other mandatory professional reporting requirements; and

(b) give a true and fair view of the consolidated entity’s financial position as at 30 June 2011 and of its performance for the year ended on that date.

2. The Group has included in the notes to the financial statements an explicit and unreserved statement of compliance with International Financial Reporting Standards.

3. In the Directors’ opinion, there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due and payable.

4. The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by section 295A of the Corporations Act 2001.

This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the Directors by:

Jonathan Leslie Managing Director/Chief Executive Officer Perth 13th September 2011

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38 Station Street Subiaco, WA 6008 PO Box 700 West Perth WA 6872 Australia

Tel: +8 6382 4600 Fax: +8 6382 4601 www.bdo.com.au

BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF EXTRACT RESOURCES LIMITED

Report on the Financial Report We have audited the accompanying financial report of Extract Resources Limited, which comprises the consolidated statement of financial position as at 30 June 2011, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the year’s end or from time to time during the financial year. Directors’ Responsibility for the Financial Report The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements 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. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about 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 entity’s preparation of the financial report that gives a true and fair view 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 entity’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. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of Extract Resources Limited, would be in the same terms if given to the directors as at the time of this auditor’s report.

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Opinion In our opinion: (a) the financial report of Extract Resources Limited is in accordance with the Corporations Act

2001, including: (i) giving a true and fair view of the consolidated entity’s financial position as at 30 June

2011 and of its performance for the year ended on that date; and (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001;

and (b) the financial report also complies with International Financial Reporting Standards as disclosed

in Note 1. Report on the Remuneration Report We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2011. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. Opinion In our opinion, the Remuneration Report of Extract Resources Limited for the year ended 30 June 2011 complies with section 300A of the Corporations Act 2001. BDO Audit (WA) Pty Ltd

Brad McVeigh

Director

Perth, Western Australia Dated this 13th day of September 2011

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Shareholder and other information

30 June 2011

92

SHAREHOLDER AND OTHER INFORMATION

Voting Rights

Ordinary shares – All ordinary shares carry one vote per share when a poll is called, otherwise each member present at a meeting or by proxy has one vote on a show of hands. Quotation on the ASX has been granted for all ordinary shares

A. Ordinary shareholder distribution as at 9 September 2011 :-

Range Securities % No of Holders 100,001 and Over 235,097,263 93.60 67 10,001 to 100,000 10,083,511 4.01 385 5,001 to 10,000 2,312,081 0.92 323 1,001 to 5,000 2,983,868 1.19 1,215 1 to 1,000 682,440 0.27 1,612

Total 251,159,163 100.00 3,602

The number of registered shareholders holdings less than a marketable parcel as at 9 September 2011 is Nil.

B. Top 20 shareholders of fully paid ordinary shares as at 9 September 2011 :-

Rank Name 09 Sep 11 %IC 1 KALAHARI URANIUM LIMITED 107,342,087 42.74% 2 RIO TINTO INTERNATIONAL HOLDINGS AUSTRALIA PTY LTD 35,705,693 14.22% 3 CITICORP NOMINEES PTY LIMITED 32,625,089 12.99% 4 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 11,692,578 4.66% 5 NATIONAL NOMINEES LIMITED 8,289,454 3.30% 6 BRISPOT NOMINEES PTY LTD 6,897,921 2.75% 7 J P MORGAN NOMINEES AUSTRALIA LIMITED 6,386,932 2.54% 8 JP MORGAN NOMINEES AUSTRALIA LIMITED 4,481,314 1.78% 9 UBS WEALTH MANAGEMENT AUSTRALIA NOMINEES PTY LTD 3,113,425 1.24% 10 S G J INVESTMENTS PTY LTD 3,000,000 1.19% 11 ERIDITUS PTY LTD 1,253,565 0.50% 12 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2 864,676 0.34% 13 CANADIAN REGISTER CONTROL 713,203 0.28% 14 NEWECONOMY COM AU NOMINEES PTY LIMITED 653,059 0.26% 15 SILVERLODE PTY LTD 612,070 0.24% 16 COGENT NOMINEES PTY LIMITED 584,565 0.23% 17 MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED 552,148 0.22% 18 SHARE DIRECT NOMINEES PTY LTD 500,000 0.20% 19 AMP LIFE LIMITED 476,868 0.19% 20 SHARE DIRECT NOMINEES PTY LTD 400,327 0.16%

TOTAL 226,144,974 90.04% Balance of Register 25,014,189 9.96%

Grand TOTAL 251,159,163 100.00% For

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Shareholder and other information (continued)

30 June 2010

93

C. Substantial holders

Substantial holders in the company are set out below:

Ordinary shares Number held Percentage Kalahari Uranium Limited 107,342,087 42.74% Rio Tinto International Holdings Australia 35,705,693 14.22% Nippon Uranium Resources (Australia) Pty Ltd 25,107,278 10.00%

Tenement Schedule

Tenement Type Project / Location % Held

EPL3138 Exclusive Prospecting Licence Namibia 100 EPL3439 Exclusive Prospecting Licence Namibia 100

EPL3327* Exclusive Prospecting Licence Namibia 100 EPL3328* Exclusive Prospecting Licence Namibia 100 EPL3139** Nuclear Fuel Rights only (Under

Application) - Exclusive Prospecting Licence

Namibia 100

*

**

Refer to disclosure on p9 of the report in relation to agreement with North River Resources.

Licence held by West Africa Gold Exploration (Namibia) (Pty) Ltd for base and precious metals – Nuclear Fuel Rights over area have been applied for. If and when granted the nuclear fuel rights will be applied to be transferred to Brandberg Energy. Refer to disclosure on p9 of the report in relation to agreement with North River Resources.

DISCLOSURE REQUIRED BY NATIONAL INSTRUMENT 71-102 Continuous Disclosure and Other Exemptions Relating to Foreign Issuers

Extract is a “designated foreign Issuer” as such term is defined by Canadian National Instrument 71-102. Extract is subject to the foreign regulatory requirements of the Australian Securities Exchange and the Australian Securities & Investments Commission. As such, Extract is exempt from certain requirements otherwise imposed on reporting issuers in Canada.

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