ANNUAL REPORT 2006 Corporate Directory Maximus Resources Limited ABN 74 111 977 354 Directors Robert Kennedy Non-executive Chairman Kevin Wills Managing Director Gary Maddocks Exploration Director Ewan Vickery Non-executive Director Company Secretary and Chief Financial Officer Richard Willson Registered and Principal Office 62 Beulah Road Norwood South Australia 5067 Contact Details +61 8 8132 7960 Phone +61 8 8362 5966 Fax Email info@maximusresources.com Website www.maximusresources.com Solicitor DMAW Lawyers Auditors Grant Thornton Share Registry Computershare Investor Services Pty Ltd Level 5 115 Grenfell Street Adelaide South Australia 5000 GPO Box 1903 Adelaide South Australia 5001 Enquiries within Australia Enquiries outside Australia Email Website www.computershare.com 1300 556 161 61 3 9415 4000 web.queries@computershare.com.au ASX Code: MXR CONTENTS Highlights Chairman’s Report Managing Director’s Report Exploration Director’s Report Tenement Schedule Financial Report Corporate Goverance Statement Directors Report Auditors Independence Declaration Income Statement Balance Sheet Statement of Changes in Equity Cash Flow Statement Notes to the Financial Statements Directors Declaration Indepenent Audit Report ASX Additional information 1 2 4 6 17 19 20 22 26 27 28 29 30 31 41 42 44 Drilling at Bird- in-Hand Prospect - South Australia Highlights Gold • In Maximus’ first year, a total of 112,000 ounces of potentially economic gold resources have been located at two projects - At the Bird-in-Hand Gold Mine in the Adelaide Hills, South Australia an inferred resource of 116,000 tonnes at 14.2 grams per tonne containing 53,000 ounces of gold has been delineated - At the Flushing Meadows Prospect in the Yandal Greenstone Belt, Western Australia an inferred resource of 1,100,000 tonnes at 1.7 grams per tonne containing 59,000 ounces of gold has been estimated Uranium • Exploration drilling has commenced for calcrete-hosted uranium mineralisation at the highly prospective Wondinong and Windimurra Palaeochannels, near Mount Magnet in Western Australia • Through the spin-off of Eromanga Uranium Limited, Maximus has a significant shareholding in Eromanga and a 30% interest in a major sedimentary uranium exploration project on the margin of the Eromanga Basin in South Australia and the Northern Territory Base Metals • At Billa Kalina in South Australia’s Gawler Craton, a significant gravity anomaly target, highly prospective for Olympic Dam–Prominent Hill style Iron-Oxide copper-gold-uranium mineralisation, will be drilled under a 50:50 joint venture agreement with Eromanga Uranium Identified Gold Resources Project Maximus Ownership Inferred Mineral Resource Ounces Gold Lobethal, SA [Bird-in-Hand] 75% 116,000 tonnes at 14.2 grams per tonne 53,000 ounces Yandal, WA [Flushing Meadows] 90% 1,100,000 tonnes at 1.7 grams per tonne 59,000 ounces Windimurra Palaeochannel, Western Australia Chairman’s Report Dear Fellow Shareholders This is the first Annual Report since Maximus listed on the Australian Stock Exchange in October 2005. During the company’s IPO nearly 65 million shares were issued, 54% to the public, and $7 million was raised. After payments due on listing such as vendor payments and broker commission, the Company commenced exploration activities with a balance of about $6 million, and in its first financial year has spent about $2.3 million on exploration activities. To date this expenditure has led to the: • identification of 112,000 ounces of inferred gold resources in two projects, • definition of a high quality target for copper-gold-uranium mineralisation on the Gawler Craton, • recognition of palaeochannels prospective for calcrete uranium mineralisation near Mount Magnet in Western Australia and • formation of Eromanga Uranium Limited in which Maximus has a significant shareholding and uranium joint venture interests in South Australia and the Northern Territory. The Company has followed its stated strategy to complete these achievements. Our two initial objectives, stated in Maximus’ September 2005 Prospectus, were the exploration of high-grade gold deposits that can generate early cashflow opportunities and the building of longer- term wealth through the discovery of major deposits of metalliferous and industrial mineral commodities. Our expectations at the Bird-in-Hand Mine in the Adelaide Hills have so far been exceeded with the estimation of an inferred resource between 100 and 200 metres from the surface of 116,000 tonnes at 14.2 gram per tonne of gold containing 53,000 ounces. Due to the cost of developing a small underground gold mine, there is still a need to find further mineralisation before a development can be considered. As the lode remains open at depth it is thought likely there will be an increase to this resource. Apart from Bird-in Hand, Maximus also has gold and base metal exploration rights over most of the Adelaide Hills Gold Province. It is our intention to repeat our success at Bird-in Hand elsewhere and become a significant gold producer. In the Narndee Project near Mount Magnet in Western Australia, Maximus has commenced an exploration program for calcrete-hosted palaeochannel uranium mineralisation. Projects at Wondinong and Windimurra were shown to contain calcrete uranium mineralisation by WMC in the Billa Kalina Project Area South Australia. 1970s. At the main area of interest near the Windimurra Vanadium mine, an area of about eight square kilometres is known to contain anomalous uranium mineralisation from previous drilling. Maximus believes there is a good chance of establishing an inferred resource of uranium after a shallow delineation drilling program. It is the Company’s intention to advance suitable projects towards development and create income generation from an operation as soon as possible. There are two projects where this appears possible on current knowledge. Firstly, at Bird-in Hand, the discovery of additional mineralisation during the current drilling program may enable a decision to commence a pre- feasibility study to be made by the second quarter of 2007. Maximus has decided to commence consultations in the Woodside area to enable the community to follow our exploration activities and to consider potential impacts as they develop. Secondly, at Yandal in Western Australia, infill and extension drilling is likely to increase the current 59,000 ounce gold resource. The establishment of Eromanga Uranium Limited during 2006 also has the potential to significantly benefit Maximus Shareholders. This will enhance the Company’s exposure to uranium through exploration to be undertaken by a specialist uranium company. Maximus will hold a significant shareholding in Eromanga Uranium, will maintain its direct involvement with exploration of its Uranium properties in Western Australia and will retain 50% in the Billa Kalina copper-gold-uranium project. However, by application for an area of over 16,000 square kilometres on the margin of the Eromanga Basin in South Australia and the Northern Territory, and retaining a 30% interest in that project, Maximus will have a much greater exposure to uranium than in its original IPO. The creation and operation of a Company such as Maximus does not happen without a great deal of hard work by a number of people. I would like to take this opportunity to thank our geologists, field hands and support staff for their efforts in helping to establish the Company. The Directors have also diligently represented the Company and guided its activities. Finally, thanks goes to our loyal shareholders who have supported the Company during its formative stages and who hopefully will receive benefits from the Company’s future growth. Robert Kennedy Chairman October 2006 Managing Director’s Report In 2006, Maximus located two prospects that contain inferred gold resources of potential economic significance. ������ ���� ������� ������ ������� ����������� ���������������� Figure 1 Location of activities. �������� ����������� �������������� ������� �������������� ������ ������ ������������ ������������������� �������������� ���� ������������ ���� with the best result to date of 18 metres downhole averaging 24 grams per tonne gold from hole BH 21 on the deepest level drilled. Results have demonstrated significant widths and grades of primary mineralisation at greater depth than any previous mining has occurred in the Adelaide Hills. Maximus has an opportunity to re-establish significant gold production from the Adelaide Hills through exploration below other prospective old mines in the Adelaide Hills Gold Province. At the Yandal Project in Western Australia, Maximus has five zones of known gold mineralisation at Flushing Meadows, Oblique, Quarter Moon, Withers Find and Little Yanbo. All of these prospects contain significant drill intersections and demonstrable continuity of mineralisation with overall gold grades in the 1 to 3 gram range. At Flushing Meadows, Maximus has sufficient information from previous drilling by other companies to estimate an inferred resource of 1,100,000 tonnes at 1.7 grams per tonne containing 59,000 ounces of gold. Further drilling is necessary to establish extensions of this mineralisation and to infill at the other prospects to define a much larger resource. Maximus has base metal interests in four projects located in three States. In South Australia, Maximus is encouraged by recent announcements by Terramin Australia Limited towards development of the Angas Mine near Strathalbyn and by Hillgrove Resources Limited defining copper resources at the historic Kanmantoo mine. Maximus is evaluating other known base metal occurrences in its Adelaide Hills project and we intend to locate further targets to explore. At Billa Kalina in South Australia, a very interesting gravity anomaly has been defined on the straight line linking Olympic Dam and Prominent Hill. This project has been farmed out to Eromanga Uranium who will spend $3 million to earn a 50% interest. At Woolanga in the Northern Territory, base metal and gold mineralisation has been defined and will be the subject of further exploration. Marree Project Area, Eromanga Basin South Australia. ACTIVITIES OVERVIEW Maximus was able to commence exploration activities soon after listing due partly to its relationship with Flinders Diamonds Limited. In exchange for selling the non- diamond mineral rights in three projects to Maximus, Flinders holds seven million Maximus shares and is the Company’s largest shareholder. They also share office, administration and support staff with Maximus. By making available granted exploration licences in the Adelaide Hills, Flinders was able to assist Maximus in commencing drilling at the Bird-in Hand prospect only two weeks after listing on 26 October 2005. As well as commencing drilling in South Australia, Maximus also quickly established an office in West Perth, and recruited a small team who commenced field activities in Western Australia in February 2006. Maximus holds two important projects in Western Australia – the Narndee and Yandal Projects. These projects are prospective for a variety of commodities including greenstone belt gold, calcrete uranium mineralisation and nickel-copper-platinum mineralisation in mafic intrusive complexes. In 2006, Maximus identified two prospects that contain gold resources of potential economic significance, Bird-in-Hand in South Australia and Yandal in Western Australia (Figure 1). In Maximus’ 2005 Prospectus it was predicted that gold mineralisation at the old Bird-in Hand Mine was increasing in width and grade with depth. Drill results in 2006 have confirmed this conclusion Drilling at Bird-in-Hand, Adelaide Hills, October 2006. In Western Australia at the Narndee project, Maximus holds majority exploration rights to a large part of the largest Archaean mafic intrusive complex in Australia. The complex has high potential for deposits of nickel, copper, vanadium and platinum, and is the host to the Windimurra vanadium deposit owned by Precious Metals Australia Limited. Maximus’ uranium assets consist of calcrete-hosted uranium prospects in the Windimurra and Wondinong Palaeochannels at Narndee in Western Australia, and two joint ventures with Eromanga Uranium, at Billa Kalina on the Gawler Craton and on the margin of the Eromanga Basin in South Australia and the Northern Territory. Since listing, Maximus has maintained an active program of assessing new exploration opportunities via project generation and examination of numerous farm-in and farm-out opportunities. In addition, ground held is periodically reviewed and since listing, some ground has been relinquished and other new tenements applied for. Maximus will continue to monitor new exploration and mining opportunities in its quest to achieve production status as soon as possible. I also take this opportunity to thank all Maximus personnel for their efforts in establishing the Company during its first year of exploration. K Wills October 2006 - Inferred mineral resource of 53,000 ounces of gold grading 14 grams per tonne at Bird-in-Hand reported May - Proposed spin out of Eromanga Uranium - Inferred mineral resource of 59,000 ounces of gold grading 1.7 grams per tonne for Flushing Meadows estimated Third Quarter, 2006 Limited announced May - Bird-in-Hand drilling recommenced Exploration Director’s Report Since listing in October 2006, Maximus has maintained its multi-project/multi-commodity approach to exploration. REVIEW OF EXPLORATION ACTIVITIES - Commenced drilling on Bird-in-Hand gold mine in November 2005 - First significant drill intersections from Bird-in-Hand reported January, 2006 - New Eromanga sedimentary uranium project announced January - Gravity target (between Olympic Dam and Prominent Hill) defined at Billa Kalina project in First Quarter, 2006 � � � � � � � � � � - Gold intersections for RC and reconnaissance RAB/Aircore drilling on Western Australian projects reported Second Quarter, 2006 � � � � � � � � � � ������������ ������ ������� � �� �� ���������� ��������� ����������������� ������������ ������������������� ������������������ ������������������ �������� ����������������� �������� ������������ �������������������� ����������� ������������� and Narndee uranium drilling underway during Third Quarter, 2006. Adelaide Hills Project, South Australia 100% Maximus and 75% in EL 3215 under Lobethal Agreement Maximus Resources Limited (Maximus) holds 100% equity in all metalliferous minerals in six of seven exploration licences in the Adelaide Hills through an agreement with the registered tenement holder, Flinders Diamonds Limited (Figures 2). Maximus is also the applicant for two additional exploration licences in the same region. When the applications are granted, the total granted tenement package will cover 3,549 square kilometres. By March, 2006 Maximus, together with Flinders Diamonds Limited, had completed sufficient earn-in expenditure to gain a 51% equity position in the seventh granted licence (Exploration Licence 3215) from Indo Mines Limited and Statelink Holdings Pty Ltd through the Lobethal joint venture agreement. The Company continued expenditure of a further $500,000 to earn 75% equity in all metalliferous minerals in this licence, which includes the historic Bird-in-Hand gold mine, during the September quarter of 2006. ������������ ������������� ���������������� ���������� ����������� ��������� �������������� �������������������� ��������������������� Figure 2 Adelaide Hills Goldfields showing Bird-in-Hand location. Bird-in-Hand Gold Mine The first phase of core drilling to investigate the potential for gold mineralisation below the historic underground workings at the Bird-in-Hand Gold Mine commenced in November 2005 and continued until early May (Figures 3). During that initial program, a number of significant drill intersections were reported and an initial inferred mineral resource estimated for the gold content of this mineralisation. All significant drilling results from this initial Maximus program are tabulated below and include several exceptional intersections such as 18.6 metres from 186.3 metres down hole averaging 23.9 grams gold per tonne (Hole BH 21). The true width of this intersection is estimated at 13 metres and lends further support to the stated view of previous explorers within the mine area that the mineralisation is widening and increasing in gold grade with depth. While the significance of gold has outweighed the base metal value of all intersections, two holes have also reported encouraging thickness of copper, lead, silver and zinc mineralisation. Hole BH 17 reported 9.0 metres from 158.5 metres downhole averaging 5.8% lead, 58 grams silver per tonne, and 4.6% zinc in addition to a highly significant 31.3 grams gold per tonne. The estimated true width of this intersection is 6.5 metres. � � � � � � � � � � � � � � � � � � � � � � � � � � � ������������ ������������� ���������� ���������� ���������� ���������� � �� ������ ��� ������������������ ������������������� ������������������� ���������� Figure 3 Location of Bird-in-Hand previous drill holes and proposed deep drilling. Table of Significant Intersections1 for Maximus Drilling at Bird-in-Hand Gold Mine, Woodside, South Australia from November 2005 to May 2006 Drill Hole No. From (metres) To (metres) Interval (metres) Gold (grams/ tonne) Silver (grams/ tonne) Cu % Pb % Zn % BH 16 BH 17 BH 19 BH 20 190.3 195.50 158.5 167.54 183.0 189.00 168.0 171.35 177.0 179.42 5.20 9.04 6.00 3.35 2.42 BH 21 183.6 202.25 18.65 3.6 31.2 23.5 23.1 53.4 23.9 3.0 58.3 0.41 5.8 4.6 6.3 78.3 7.65 0.57 4.7 1.7 1. Mineralised intervals containing gold values equal to or more than 3 g/t gold over at least 1 metre. NB: Blanks in column means no significant values recorded. Exploration Director’s Report An independent estimate of the inferred mineral resource in and below the historic gold mine workings was undertaken by Consultant Geologist, Mr Douglas McLean. The estimation was based on drilling results from the Maximus program as well as the results of 1997 reverse circulation drill holes by Capricorn Resources Limited. Also included in the estimate was a gold resource delineated for stoping during underground sampling undertaken by the Bird-in-Hand Gold Mining NL in 1934. The inferred mineral resource is located between 100 and 200 metres below surface and totals 116,000 tonnes averaging 14.2 grams gold per tonne (53,000 ounces of gold). Table of Inferred Mineral Resources, 100 to 200 metres vertical depth Bird-in-Hand Gold Mine, Woodside, South Australia As at 27 April 2006. Diamond drill core from Bird-in-Hand. Bulk Density1 Average Width2 (metres) 2.8 2.8 6.0 1.9 Tonnes Grade (g/t) Gold (ounces) 87,907 21,128 7,585 15.51 10.35 9.33 43,841 7,030 2,275 Total Main Reef Zone Total White Reef Zone Mineralisation remaining, Level 5 & 6 of Mine Workings (1934 Estimate) Total Inferred Mineral Resource 116,000 14.2 53,000 1. Density value is based on an average of measurements on 22 samples from the mineralised zones. 2. Horizontal width based on lode dipping approximately 50 degrees to east. A long projection of holes completed since Maximus commenced exploration activities in November 2005 to May 2006 are shown in Figures 4 and 5. The gold mineralisation remains untested below 200 metres. A further program of precollared core drilling commenced in September 2006. This program will involve the completion of at least 12 holes drilled to vertical depths of 300 to 500 metres below surface in order to test the potential for significant gold mineralisation below the estimated inferred resource (Figures 4 and 5). Woodside Goldfield Bird-in-Hand gold mine is one of several important hard rock gold mines that are enclosed by the Lobethal JV tenement, EL 3215. More than ten historic producers are known within the Woodside Goldfield, which produced some 30,000 ounces of gold in total. Particular attention will be placed on investigation through further drilling at the mines of Ridge (only 300 metres from Bird-in-Hand), Blackbird, New Era and Eureka. Discovery of a lode similar in tonnes and average gold grade to that already demonstrated at Bird-in-Hand would significantly enhance the potential viability of any future mining operation. Adelaide Hills Gold Province Through its agreement with Flinders Diamonds Limited, Maximus has the exploration rights to the numerous gold and base metal occurrences that constitute another six Adelaide Hills goldfields (Figure 2). Historic hard rock gold mines such as Deloraine and several nearby gold occurrences are to be investigated for Bird-in-Hand look-alike lode style gold mineralisation. In addition, more disseminated gold styles that would have been dismissed as unprofitable in historic times will be sought as larger-sized, longer- term gold opportunities. Bird-in-Hand Mine in the 1880s. Base metal potential of the Adelaide Hills has been enhanced by the recent notice of the intention to mine lead-zinc-silver at Strathalbyn (Terramin Australia Limited’s Angas deposit) and the prefeasibility study to mine copper near Callington (Hillgrove Resources Limited’s Kanmantoo deposit). Maximus also holds the rights to the Kapunda copper deposit and Karinya Syncline lead-zinc occurrences, both of which have attracted interest from third parties. It is expected that Maximus will retain its Adelaide Hills focus on gold mineralisation and pursue a farm-out strategy with those base-metal occurrences for which gold is not the dominant commodity. Bird-in-Hand drilling April 2006. �������������� �������������� ������ ���� ������� ������� ������� ����� ���������������� ������������������������ ����� � � � ��������� ������������������ ����������� � ��� ������ ���������������������� ������������������� ������������������� Figure 4 Longitudinal section of Bird-in-Hand showing proposed deep drilling. Figure 5 Cross section of Bird-in-Hand showing intersections and proposed deep drilling. �� �������������������� �� ���������������������� ������ ������ ������ �������������� ��������� ��������� ��������� �������������� ���������������������� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � ��� ��� � � ��� � � ��� � � � � � �� ���� ����� ������������������������� ������������������ ����� ������������� ������������������� ����� � ��� ������ Exploration Director’s Report � � � � � � � � � � � � � � � � � � � � ���������������������� ��������� ���������� ������� ������������ ������� � � � � � � � � � � � � � � �������������������� ������������������� ���������� ������������ ������������ ������ ���������� ���� �������� � � �� �� ���������� ������� ������� ������� ����� ���������� ������������� ��������������� ������������������������������� ����������������������� ������������������������������� ������������������������� ��������������� ����������������������������� Narndee JV Project, Western Australia Maximus earning 70% under Apex JV Agreement The project area comprises nineteen exploration licences and fourteen exploration licence applications located near Mt Magnet in the Murchinson region of Western Australia. In total, the project area covers 3,136 square kilometres of the mineral rich Narndee and Windimurra mafic complexes (Figure 6). Numerous mineral occurrences are enclosed within the project area and include: - Calcrete hosted Uranium mineralisation in palaeochannels overlying the older basement geology - Nickel and Platinum Group Metals [PGMs] in the layered mafic intrusives forming both the Narndee and Windimurra complexes - Gold within the Windimurra complex and in peripheral contact zones of both complexes - Vanadium-enriched magnetite similar to the mineralisation to be mined by Precious Metals Australia Ltd at their Windimurra Vanadium deposit - Copper, Lead and Zinc in both felsic volcanics and structural settings within the basement geology. Figure 6 Location of Narndee JV Project area and Narndee and Windimurra mafic complexs. 0 Maximus has undertaken 7366 metres of RAB/Aircore drilling that tested gold-in-soil anomalies within the Windimurra complex and completed initial reconnaissance drilling of gold-prospective zones at Windsor and along the Kiabye Greenstone Belt. This program included two drill traverses across granted portions of the uranium-bearing Windimurra and Wondinong palaeochannels. Gold results for the wide spaced reconnaissance drill traverses over the Kiabye Greenstone Belt indicated anomalous gold results of up to 8 metres from 4 metres depth averaging 300 ppb with a best 1 metre interval of 0.5 ppm gold (hole MNRB122). The program also demonstrated that soil sampling techniques can be applied in the area. Further drilling in the area will follow an extensive soil sampling program along the strike of these anomalous drill results. Windimurra Palaeochannel, Western Australia. Exploration Director’s Report � � � � � � � � � � ��������� ������������� ����������������������� ������������ � �� ���������� The single drill traverses across the palaeochannels intersected calcrete carrying anomalous uranium to 36 ppm U (0.04 kg/t U3O8) within the Windimurra palaeochannel. A program of 2000 metres of aircore drilling for some 200 holes in the Wondinong palaeochannel commenced in late September. The drilling of an 8 x 1 kilometre area of plus 100 ppm (+0.01 kg/t U3O8) within the Windimurra palaeochannel that enclose the better uranium grades previously identified by WMC during the 1970s will commence as soon as the requisite tenements are granted later in 2006. Yandal, Western Australia ��������������������� ��������������������� ������������������������ ������������ ���� ������������������������ Figure 7 Radiometrics over the Wondinong and Windimurra palaeochannel. �������� 90% Maximus The Yandal project area comprises two separate tenement packages situated near Wiluna and located within the highly prospective Yandal Greenstone Belt. The Ironstone Well package contains a granted tenement and several applications covering 239 square kilometres and includes three zones of known gold mineralisation (Figure 8). The Yandal Homestead package comprises five granted tenements and five applications covering 56 square kilometres and includes two zones of gold mineralisation (Figure 9). During the reporting period, much of the tenure remained in the application stage but a program of 890 metres of RC drilling for 11 holes near the Withers Find and Little Yanbo gold prospects on the Yandal Homestead tenement block has been completed. ��������� �������� ���� ��� ������������ � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � ������ � � � � � � � ����� ��������������� �������� ���� �� ������� � � ����� ������ ����� ����� ����� ����� ����� ����� ����� ���������������� � � ���������� ������������ ������������ � � � � � � � � � � � � � ������� ������������ � ���� � � � �������������� ������� ������������ ������������ � � � � � � � � � � � � � � ���������������� ����������� � �� �� �� �� �� ���������� ������������� Figure 8 Ironstone Well geology and gold prospects. Better results included 2 metres at 3.2 g/t gold from 88 metres depth in hole MYRC0001 at Withers Find but no additions to the previously mentioned zones of known gold mineralisation were located. Maximus consultant geologist, Douglas McLean has reviewed previous drilling data for the three zones of mineralisation on the Ironstone Well tenement block. It is the opinion of the consultant that the Flushing Meadows prospect has sufficient drilling and reliable assay data to complete an estimate for an inferred mineral resource. However, closer spaced drilling would be necessary at the Quarter Moon and Oblique prospects to enable their contained gold mineral resources to be estimated. The inferred mineral resource at Flushing Meadows has been estimated at 1.1 million tonnes averaging 1.7 grams gold per tonne ������������ � � � ���������� Figure 9 Yandal Homestead geology and gold prospects. ���������� �������� ���������������� ��������� ���������������� ������������������������ ��������������� ����������� ����� ������ ������������������� ����� �������� ������������������������� ��������������������������� Exploration Director’s Report ���������� ������������ ���������� ���������������� � � � ���������� ������������ Figure 10 Billa Kalina detailed ground gravity survey results. recently, a Native Title heritage clearance was completed over the enhanced gravity feature (Figure 10). The high cost of drilling this relatively deep gravity feature has been considered against other opportunities available to the company. As a consequence the Maximus Board has decided to share the risk and reward factor in drilling such a target. A project joint venture agreement has been reached with Eromanga Uranium Resources Pty Ltd, a Maximus subsidiary now subject to a sale and purchase agreement with Eromanga Uranium Limited (ERO). ERO is currently seeking a listing on the Australian Stock Exchange (ASX). Under the terms of the joint venture Maximus will retain a 50% interest in the Billa Kalina project. ERO will manage the project and must expend $3,000,000 over six years to earn its 50% interest. Subject to the successful listing of ERO, it is anticipated that the Billa Kalina gravity feature will be drill tested for Olympic Dam style copper-gold-uranium mineralisation during the December Quarter of 2006. (59,000 ounces of gold) using 1 gram per tonne as lower cut off and 12 grams per tonne as the upper cut. This resource is situated at depths of near surface (<5 metres) to a maximum of 160 metres from surface with the majority of the tonnage lying within 100 metres of surface. Maximus plans further drilling at Flushing Meadows, Quarter Moon and Oblique so that a total resource for the project can be estimated. Only then can options to realise the gold value of the Ironstone Well tenement package be considered. Further field activities in the Yandal project tenement packages await the granting of additional tenements at Ironstone Well and Yandal Homestead during the December Quarter. It is excepted that any additional drilling will be undertaken during the first half of 2007. Billa Kalina, South Australia Maximus diluting to 50% under Billa Kalina JV Agreement with Eromanga Uranium The Billa Kalina project area comprises five exploration licences located 70 km northwest of the Olympic Dam copper- uranium-gold deposit and 45 km south east of the Prominent Hill copper-gold-uranium deposit. The principal target is copper- gold-uranium mineralisation of Olympic Dam style within an anomalous gravity feature in the underlying basement rocks which are covered by 200 to 500 metres of sediment. To further resolve the drill targeting, Maximus has completed a detailed gravity survey at 400 metre spacing and, more ��������������������������� ������������������������ �������������� ����������������������� ������������������������� Figure 11 Johnnies Reward magnetic model. at its nearby Mud Tank operation (Figure 12). These vermiculite occurrences have attracted interest from third parties and it is expected that Maximus will benefit from a sale or farm-out of equity in the medium term. No field activities have been undertaken to date, but electrical geophysical surveys and RC drilling focused on the Johnnies Reward mineralisation are anticipated during the latter part of 2006. Woolanga, Northern Territory 100% Maximus The Woolanga project area comprises five exploration licences and one Authority covering 1739 square kilometres and is located 100 km northeast of Alice Springs. The tenement package includes the Johnnies Reward ironstone hosted copper- gold prospect for which previous explorers have intersected up to 50 metres averaging 1.8 grams gold per tonne from 75 metres (Alcoa hole DDH 002, Figure 11). In addition, the project area includes vermiculite occurrences of potential commercial grade similar to that currently mined by Australian Vermiculite Industries � � � � � � � � � � � � � � � � � � ���������������������������������������� �������������������������������������������������� ������������������������������������������ ���������� ���� �������������� ������� ����������� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � ������ ����� � � ����� � � ���� ��������������� � � � ���� � � � ����� � � � � � ����� � � � � � �� �� �� ���������� ����������������������������������������������� ���������������� ��������������������������������������� ���������������������������������������������������� �� �� �� ���� ������ ���� ���� ����������� ����� ���������� Figure 12 Woolanga Project geology and prospects. ������������������������� ������������������������������������ Exploration Director’s Report Eromanga Sedimentary Uranium Project, South Australia & Northern Territory Maximus diluting to 30% under Eromanga JV Agreement In January, 2006 Maximus lodged applications for eighteen exploration licence applications near Abminga, Kingoonya, Marla and Marree in northern South Australia and Kulgera and Illogwa in the Northern Territory. The overall tenement package covers 16,216 square kilometres of sedimentary units along the margin of the Eromanga Basin that are considered favourable for the discovery of sedimentary uranium deposits. While conceptual in nature, limited previous exploration of this tenure has demonstrated that all geological conditions are present to concentrate uranium in the Mesozoic sedimentary formations that fill the Eromanga Basin. This is particularly relevant given the uranium enhanced nature of the underlying and nearby exposed Precambrian basement rocks. Sedimentary uranium deposits are a significant source of the World’s uranium resources. However, despite Australia’s Precambrian basement rocks hosting approximately one third of the World’s low cost uranium resources, and the existence of ideal geological settings such as the Eromanga Basin, Australia is considered ������������� ������ � � � � � � � � � � � � ������� ������� ����� ���������� �� ������� � �� �� � � �� � ������������ �� � ������� ����� ��������������� under represented in such sedimentary uranium deposits. In part, this is due to a lack of persistant exploration in Australia for this style of uranium deposit. To be successful, the Eromanga Project will require extensive regional geophysical surveys to focus any initial drilling campaigns into potential uranium bearing palaeochannels within the Mesozioc sedimentary formations. As a consequence, Maximus has considered the potential effects of such regional exploration programs for the Eromanga project on the highly encouraging results from existing projects such as the Lobethal JV. In order to better fund this exciting venture into uranium exploration, the Maximus Board decided the project was better served by a farm out to its subsidiary Eromanga Uranium Resources Pty Ltd, an entity which is now subject to a sale and purchase agreement with Eromanga Uranium Limited (ERO). ERO may earn a 70% interest in the Eromanga project through an exploration expenditure of $7,000,000 over six years. Maximus will retain the remaining 30% interest. Uranium exploration activities on the Eromanga tenement package will commence immediately following the successful ASX listing of ERO. ����������� ��������� ���� ���� ������������ ������ ������ ���������� ����������� ��������� ����������� ��������� ������� ���� ������� � ��� ���������� ����� �������������� ���� �������� ���������� ������ ��������� ������������ ����������� �������� ���� � � ������ �� G Maddocks Exploration Director October 2006 Figure 13 Eromanga Uranium licence areas. Tenement Schedule at 30 June 2006 Tenement Number Tenement Name Date Granted / Applied For Expiry Date Area Sq. Km. Registered Holder / Applicant Related Agreement Western Australia Narndee Project E58/232 Boulder Well E58/235 E58/236 E58/237 E58/240 E58/270 E58/271 E58/272 E58/273 E58/274 E58/281 E58/282 E58/283 E58/284 E58/287 E58/294 E58/295 E58/309 E59/908 E59/1078 E59/1081 E59/1082 E59/1083 E59/1084 E59/1085 E59/1087 E59/1088 E59/1111 E59/1206 E59/1251 E59/1252 E59/1265 E59/1270 Canegrass Well Challa Naluthanna Hill Windimurra Wondinong Hill Gingier Pool Meeline Wagoo Hills Paynesville Boundary Well Honeypot Jinna East Old Windie Seven Mile Wondinong Windsor Brailia South Narndee Tandy Bore Dromedary Well Warne River Narndee West Moolyawarda Hill Budnee Bricky Bore Dunns Tank Tootawarra Well Tootawarra East Tank Hut Boodanoo Well Wydgee Doodhoowooroo Rockhole 28/07/07 28/07/07 21/03/07 21/03/07 10/03/07 27/10/10 6/11/10 4/03/08 27/06/11 6/06/11 6/06/11 7/09/06 13/11/07 13/11/07 13/11/07 13/11/07 13/11/07 13/11/07 27/10/10 29/07/02 29/07/02 22/03/02 22/03/02 11/03/02 28/10/05 7/11/05 17/12/01 17/12/01 5/03/03 28/06/06 7/08/03 7/08/03 7/08/03 21/10/03 7/06/06 7/06/06 25/11/05 8/09/00 14/11/02 14/11/02 14/11/02 14/11/02 14/11/02 14/11/02 17/12/01 17/12/01 28/10/05 8/06/05 10/03/06 10/03/06 31/05/06 23/06/06 98 98 98 98 98 196 132 196 196 196 42 25 14 14 Windimurra Resources Pty Ltd Windimurra Resources Pty Ltd Windimurra Resources Pty Ltd Windimurra Resources Pty Ltd Bernfried Gunter Franz Wasse Apex Minerals NL(80)/Mark Gareth Creasy (20) Apex Minerals NL(80)/Mark Gareth Creasy (20) Apex Minerals NL(80)/Mark Gareth Creasy (20) Apex Minerals NL(80)/Mark Gareth Creasy (20) Apex Minerals NL(80)/Mark Gareth Creasy (20) Apex Minerals NL Apex Minerals NL Apex Minerals NL Apex Minerals NL 196 Apex Minerals NL 87 6 17 98 118 98 84 106 98 98 196 196 42 14 78 48 15 39 Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Apex Minerals NL(80) Tyson Resources P/L(6) Wedgetail Resources P/L(14) Apex Minerals NL(80)/Mark Gareth Creasy (20) Apex Minerals NL(80)/Mark Gareth Creasy (20) Apex Minerals NL(80)/Mark Gareth Creasy (20) Apex Minerals NL(80)/Mark Gareth Creasy (20) Apex Minerals NL(80)/Mark Gareth Creasy (20) Apex Minerals NL(80)/Mark Gareth Creasy (20) Apex Minerals NL(80)/Mark Gareth Creasy (20) Apex Minerals NL(80)/Mark Gareth Creasy (20) Apex Minerals NL(80)/Mark Gareth Creasy (20) Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Also associated with these Exploration Licences are 10 Mining Lease Applications and 22 pending and granted Prescribed Prospecting Licences. Yandal Homestead Project Yandal Homestead E37/818 M37/527 M37/528 Southeast Homestead Well Northwest Homestead Well 7/02/05 10/04/95 10/04/95 M37/576 Homestead Well 13/12/95 M37/611 Yandal Reserve 13/05/96 P37/6709 P37/6710 P37/6711 P37/6712 P37/6713 Withers 1 Withers 2 Withers 3 Withers 4 Withers 5 Yandal - Ironstone Well Project E53/1223 Ironstone Well E53/1224 P53/1209 Flushing Meadows Barwidgee 15/04/05 15/04/05 15/04/05 15/04/05 15/04/05 27/03/06 27/03/06 8/08/05 34 Nemex Pty Ltd 1.5 0.7 6.8 4.3 1.9 1.6 1.9 2.0 1.8 Allied Technologies Group Ltd(33) Newmont Wiluna Gold P/L(67) Allied Technologies Group Ltd(33) Newmont Wiluna Gold P/L(67) Allied Technologies Group Ltd(33) Newmont Wiluna Gold P/L(67) Allied Technologies Group Ltd(33) Newmont Wiluna Gold P/L(67) Dennis James Hawtin Dennis James Hawtin Dennis James Hawtin Dennis James Hawtin Dennis James Hawtin 14/04/09 14/04/09 14/04/09 14/04/09 14/04/09 214 90 Maximus Resources Limited(90) Nemex Pty Ltd(10) Maximus Resources Limited(90) Nemex Pty Ltd(10) 7/08/09 1.7 AM-Australian Minerals Exploration P/L Apex Agreement Apex Agreement Apex Agreement Apex Agreement Apex Agreement Apex Agreement Apex Agreement Apex Agreement Apex Agreement Apex Agreement Apex Agreement Apex Agreement Apex Agreement Apex Agreement Apex Agreement Apex Agreement Apex Agreement Apex Agreement Apex Agreement Apex Agreement Apex Agreement Apex Agreement Apex Agreement Apex Agreement Apex Agreement Apex Agreement Apex Agreement Apex Agreement Apex Agreement Apex Agreement Apex Agreement Apex Agreement Apex Agreement Nemex Agreement Nemex Agreement Nemex Agreement Nemex Agreement Nemex Agreement Nemex Agreement Nemex Agreement Nemex Agreement Nemex Agreement Nemex Agreement Nemex Agreement Nemex Agreement Nemex Agreement Tenement Schedule Tenement Number Tenement Name Date Granted / Applied For Expiry Date Area Sq. Km. Registered Holder / Applicant M53/437 M53/542 Outcamp Well Jundee 3/02/95 16/12/96 M53/858 Doublehole Well 15/01/99 22/02/00 24/09/02 20/04/06 7.2 6.0 4.2 0.3 6.6 Eagle Mining P/L(71)Hunter Resources P/L(29) Mark Gareth Creasy(30) Newmont Yandal Operations P/L(70) Australian Metals Corporation P/L(20) Eagle Mining P/L(51) Hunter Resources P/L(29) Newmont Yandal Operations P/L Newmont Yandal Operations P/L 348 Flinders Diamonds Ltd(50) Maximus Resources Ltd(50) M53/889 M53/989 Newmont Gift Outcrop Well Kimberley Project E80/3670 Police Valley South Australia Adelaide Hills EL 3215 Lobethal EL 3425 EL 3534 EL 3057 Echunga Mt Pleasant Mt Barker EL 3064 Kapunda EL 3141 EL 3239 Brukunga Tarlee ELA 251/06 Mount Monster ELA 252/06 Williamstown Billa Kalina Project Francis EL 3526 24/06/04 23/06/2007 341 AKD Ltd & Statelink Holdings Pty Ltd 18/10/06 29/03/07 16/01/2006 Extn 15/11/05 11/03/2006 Extn 09/02/06 23/10/06 9/09/06 19/10/05 30/03/06 17/01/03 12/03/03 24/10/03 10/09/04 16/05/06 16/05/06 253 719 162 Flinders Diamonds Limited Flinders Diamonds Limited Flinders Diamonds Limited 746 Flinders Diamonds Limited 176 533 575 44 Flinders Diamonds Limited Flinders Diamonds Limited Maximus Resources Limited Maximus Resources Limited 23/02/06 22/02/07 734 Flinders Diamonds Limited EL 3525 Margaret 23/02/06 22/02/07 771 Flinders Diamonds Limited EL 3170 Billa Kalina 25/02/04 24/02/07 1,435 Flinders Diamonds Limited EL 3337 Welcome Creek 19/05/05 EL 3338 Millers Creek 19/05/05 Eromanga Project EL 3579 Calcutta EL 3578 EL 3577 EL 3574 EL 3575 ELA 20/06 ELA 21/06 ELA 22/06 ELA 23/06 EL 3576 EL 3573 EL 3590 EL 3591 Dalarinna Hill Wilpoorina Mundowdna Marla Alberga River Mt Weir Warrataddy Hill Mt Anthony Whymlet Haggard Hill Bon Bon McDouall Peak ELA 30/06 Phar Lap Northern Territory EL 23592 Johnnies Reward Mud Tank Reserve Strangways Mud Tank-Alcoota Illogwa Creek Numery Mt Peterswald Jenkins Bluff A 23714 SEL 25055 SEL 25056 EL 25161 EL 25162 EL 25163 EL 25166 21/06/06 21/06/06 21/06/06 21/06/06 21/06/06 17/01/06 17/01/06 17/01/06 17/01/06 21/06/06 21/06/06 22/06/06 22/06/06 19/01/06 12/2/03 11/11/04 13/6/06 13/6/06 24/1/2006 24/1/2006 23/1/2006 23/1/2006 18/05/2006 Extn 11/04/06 18/05/2006 Extn 11/04/06 20/06/07 20/06/07 20/06/07 20/06/07 20/06/07 20/06/07 20/06/07 21/06/07 21/06/07 11/2/09 10/11/10 12/6/2010 12/6/2010 373 Flinders Diamonds Limited 771 Flinders Diamonds Limited 984 1000 962 963 988 903 959 963 966 973 859 667 980 581 73 28 1118 520 1117 216 1130 1005 Maximus Resources Limited Maximus Resources Limited Maximus Resources Limited Maximus Resources Limited Maximus Resources Limited Maximus Resources Limited Maximus Resources Limited Maximus Resources Limited Maximus Resources Limited Maximus Resources Limited Maximus Resources Limited Maximus Resources Limited Maximus Resources Limited Maximus Resources Limited Flinders Diamonds Limited Flinders Diamonds Limited Flinders Diamonds Limited Flinders Diamonds Limited Maximus Resources Limited Maximus Resources Limited Maximus Resources Limited Maximus Resources Limited Related Agreement Nemex Agreement Nemex Agreement Nemex Agreement Nemex Agreement Nemex Agreement Lobethal JV Agreement Flinders Agreement Flinders Agreement Flinders Agreement Flinders Agreement Flinders Agreement Flinders Agreement Flinders and Eromanga Agreements Flinders and Eromanga Agreements Flinders and Eromanga Agreements Flinders and Eromanga Agreements Flinders and Eromanga Agreements Eromanga Agreement Eromanga Agreement Eromanga Agreement Eromanga Agreement Eromanga Agreement Eromanga Agreement Eromanga Agreement Eromanga Agreement Eromanga Agreement Eromanga Agreement Eromanga Agreement Eromanga Agreement Eromanga Agreement Eromanga Agreement Flinders Agreement Flinders Agreement Flinders Agreement Flinders Agreement Eromanga Agreement Eromanga Agreement Eromanga Agreement Eromanga Agreement Financial Report For the year ended 30 June 2006 INDEX Corporate Governance Statement Directors Report Auditors Independence Declaration Income Statement Balance Sheet Statement of Changes in Equity Cash Flow Statement Notes to the Financial Statements Directors Declaration Independent Audit Report ASX Additional information 20 22 26 27 28 29 30 31 41 42 44 Corporate Governance Statement The Board of Directors of Maximus Resources Limited aims to achieve the highest standards of corporate governance and has established corporate government policies and procedures, where practicable, consistent with the ASX Corporate Governance Council’s publication “Principles of Good Corporate Governance and Best Practice Recommendations” (“ASXCGC”). The Company to date has not adopted the ASXCGC best practice recommendations other than those specifically identified and disclosed below as the Board believes that it cannot justify the necessary cost in view of the size and early stage of the entity’s life as a listed exploration company. This statement outlines the main corporate governance practices of the Company disclosed under the principles outlined in the ASXCGC. Principle 1 - Lay solid foundations for management and oversight Role of the Board The Board is governed by the Corporations Act 2001, its formal constitution and by the ASX Listing Rules. The Board’s primary role is to set policy regarding the affairs of the company for the protection and enhancement of long-term shareholder value. The Board takes responsibility for the overall Corporate Governance of the Company including its strategic direction, management goal setting and monitoring, internal control, risk management and financial reporting. Board processes and management The Board has an established framework for the management of the entity including a system of internal control, a business risk management process and appropriate ethical standards. The Board has appointed a Managing Director responsible for the day to day management of the Company including management of financial, physical and human resources, development and implementation of risk management, internal control and regulatory compliance policies and procedures, recommending strategic direction and planning for the operations of the business and the provision of relevant information to the Board. Principle 2 - Structure Board to add value Composition of the Board The Board comprises individuals with a range of knowledge, skills and expertise that are appropriate to its activities and objectives. The composition of the Board consists of four directors. Two, including the Chairman, are non-executives. Mr Kennedy’s role as Chairman of the Board is separate from those of the Managing Director, Dr Wills who is responsible for the day to day management of the Company. This is in compliance with the ASXCGC best practice recommendation. The Company’s constitution specifies the number of directors must be at least three and at most ten. The Board may at any time appoint a director to fill a casual vacancy. Directors appointed by the Board are subject to election by shareholders at the following annual general meeting and thereafter directors (other than the Managing Director) are subject to re- election at least every two years. Principle 3 - Promote ethical and responsible decision making Ethical standards The Company aims to a high standard of corporate governance and ethical conduct by directors and employees. All directors will be required to provide the Company with details of all securities registered in the director’s name or an entity in which the director has a relevant interest. Directors are required to disclose to the Board any material contract in which they may have an interest. In accordance with Section 195 of the Corporations Act 2001, a director having a material personal interest in any matter to be dealt with by the Board, will not be present when that matter is considered by the Board and will not vote on that matter. Trading in the Company’s Securities Directors, officers and employees are not permitted to trade in securities of the Company at any time whilst in possession of price sensitive information not readily available to the market. The Corporations Act also prohibits the acquisition and disposal of securities where a person possesses information that is not generally available and which may reasonably be expected to have a material effect on the price of the securities if the information was generally available. Principle 4 - Safeguard integrity in financial reporting Audit Committee The Board has established an audit committee. The primary role of the committee is to monitor and review the effectiveness of the control environment in the company and provide an independent and objective review of financial and other information prepared by management, including overseeing the company’s discharge of its responsibilities with respect to: • reviewing, assessing and making recommendations to the Board on the annual and half year financial reports and all other financial information published or released to the market by the Company; • overseeing establishment, maintenance and reviewing the effectiveness of the Company's internal control and ensuring efficacy and efficiency of operations, reliability of financial reporting and compliance with applicable Accounting Standards and ASX Listing Rules; • liaising with and reviewing reports of the external auditor; and • reviewing performance and independence of the external auditor and where necessary making recommendations for appointment and removal of the Company's auditor. 0 Corporate Governance Statement The Committee will meet at least two times per annum and will report to the Board. The Managing Director, Company Secretary and external auditor may by invitation attend meetings at the discretion of the Committee. Principle 5 - Making timely and balanced disclosure Continuous Disclosure The Company operates under the continuous disclosure requirements of the ASX Listing Rules and ensures that all information which may be expected to affect the value of the Company’s securities or influence investment decisions is released to the market in order that all investors have equal and timely access to material information concerning the Company. This is made publicly available on the Company’s web-site following release to the ASX. Principle 6 - Respect The Role of Shareholders The Board will aim to ensure that shareholders are informed of all major developments affecting the Company’s state of affairs. In accordance with the ASXCGC best practice recommendations, information is communicated to shareholders as follows: • the annual financial report which includes relevant information about the operations of the Company during the year, changes in the state of affairs of the entity and details of future developments, in addition to the other disclosures required by the Corporations Act 2001; the half yearly financial report lodged with the Australian Stock Exchange and Australian Securities and Investments Commission and sent to all shareholders who request it; notifications relating to any proposed major changes in the Company which may impact on share ownership rights that are submitted to a vote of shareholders; • notices of all meetings of shareholders; • publicly released documents including full text of notices of meetings and explanatory material made available on the Company's web-site; and • disclosure of the Company's Corporate Governance practices and communications strategy on the entity's web-site. The Board will encourage full participation of shareholders at the Annual General Meeting to ensure a high level of accountability and identification with the Company’s strategy and goals. The external auditor of the Company will also be invited to the Annual General Meeting of shareholders and will be available to answer any questions concerning the conduct, preparation and content of the auditor’s report. Principle 7 - Recognise and manage risks Risk Assessment and Management The Board recognises that there are inherent risks associated with the Company’s operations including mineral exploration and mining, environmental, title and native title, legal and other operational risks. The Board endeavours to mitigate such risks by continually reviewing the activities of the Company in order to identify key business and operational risks and ensuring that they are appropriately assessed and managed. Principle 8 - Encourage performance Performance Evaluation The Board will evaluate the performance of the Managing Director, other executive directors and senior management on a regular basis and will encourage continuing professional development at these levels. Principle 9 - Remunerate fairly and responsibly Remuneration Policy In view of the current size of the Board, remuneration matters will be monitored by the entire board having regard for industry practices and laws. The Company’s Constitution specifies that the total amount of remuneration of non-executive directors shall be fixed from time to time by a general meeting. Directors may apportion any amount up to this maximum amount amongst the non-executive directors as they determine. Directors are also entitled to be paid reasonable travelling, accommodation and other expenses incurred in performing their duties as directors. The remuneration of the Managing Director is determined by the Board as part of the terms and conditions of his employment which are subject to review from time to time. The remuneration of employees is determined by the Managing Director subject to the approval of the Board. Principle 10 - Recognise the legitimate interests of stakeholders Code of Conduct The Company requires all its directors and employees to abide by the highest standards of behaviour, business ethics and in accordance with the law. In discharging their duties, Directors of the Company are required to: • act in good faith and in the best interests of the Company; • exercise care and diligence that a reasonable person in that role would exercise; • exercise their powers in good faith for a proper purpose and in the best interests of the Company; • not improperly use their position or information obtained through their position to gain a personal advantage or for the advantage of another person to the detriment of the Company; • disclose material personal interests and avoid actual or potential conflicts of interests; • keep themselves informed of relevant Company matters; • keep confidential the business of all directors meetings; and • observe and support the Board's Corporate Governance practices and procedures. Directors Report Your directors present their report on the company and its controlled entities for the financial year ended 30 June 2006. Directors The names of directors in office at any time during or since the end of the year are: Robert Michael Kennedy Kevin John Anson Wills Gary Eric Maddocks Ewan John Vickery Nick John Smart (alternate for E J Vickery) Richard Walter Cumming Willson (alternate for G E Maddocks, since 18 May 2006) The directors have been in office since the start of the financial year to the date of this report unless otherwise stated. Company Secretary The following person held the position of company secretary at the end of the financial year: Richard Walter Cumming Willson B.Ac., CPA, MAICD Bachelor of Accounting, CPA, Member of the Australian Institute of Company Directors. Mr Willson has had more than 12 years experience. He has worked in public practice and in various financial management and company secretarial roles within the Provimi Australia group, BHP Billiton and the Jumbuck Pastoral group. He has been the Company Secretary since 2 March 2006 and to the date of this report. Principal Activities The principal activity of the company during the financial year was gold, nickel, uranium, copper, platinum and other minerals exploration. Operating Results The consolidated net result of operations for the financial year was a loss of $659,028. Dividends There were no dividends declared or paid during the period. Review of Operations After listing on 26 October 2005, Maximus set up an exploration office in Norwood, SA and a one-room office in West Perth WA. A team of geologists, field hands and support staff were recruited and field activities commenced. Drilling commenced at the Bird-in-Hand Gold Prospect on 8 November 2005. A run of high-grade gold intersections commenced with the second hole, BH 17, making a down-hole intersection of 9 metres averaging 31 g/t gold. Between November 2005 and April 2006, a total of eight diamond drill holes were completed at Bird-in Hand with five of these achieving significant intersections. The best result was in hole BH 21 which intersected 18 metres at 24 g/t gold. Together with previous drilling these holes were sufficient to estimate an inferred resource of about 116,000 tonnes at 14.2 g/t gold containing 53,000 ounces of gold between 200 and 300 vertical metres below the surface. In Western Australia, work focused on the Narndee joint venture with Apex Minerals NL. This project is located near Mount Magnet and a 7,366 metre reconnaissance RAB drilling program was carried out in June. Several anomalous zones were identified for follow up exploration. A program of 890 metres of RC percussion drilling was carried out on Maximus’ Yandal Homestead project but no significant intersections were recorded. Financial Position The net assets of the company have increased by $8,048,714 during the financial year from $74,877 at 30 June 2005 to $8,123,591 at 30 June 2006. This increase has largely resulted from the proceeds from share issues raising $8,624,075. The company has been actively undertaking exploration activities and has capitalised $4,088,094 in exploration expenditure during the current financial year. The directors believe the company is in a strong and stable financial position to continue its exploration activities. Adoption of Australian Equivalents to IFRS As a result of the introduction of Australian equivalents to International Financial Reporting Standards (AIFRS), the company’s financial report has been prepared in accordance with those Standards. After Balance Date Events • On 25 July 2006 the shareholders of Maximus Resources Limited voted to approve the sale of Eromanga Uranium Resources Pty Ltd, a wholly owned subsidiary, to Eromanga Uranium Limited for a consideration of 44,357,143 shares in Eromanga Uranium Limited and 8,035,714 options to acquire shares in Eromanga Uranium Limited. • On 3 August 2006 the Company entered into a services agreement with F M Exploration Services Pty Ltd whereby F M Exploration Services will provide Administration services to the Company. Future Developments, Prospects and Business Strategies At Bird-in-Hand, between April and August 2006 difficulty was experienced in finding a suitable drilling rig but eventually a track-mounted rig was contracted to commence in mid September. A 12-hole 5,000 metre program of diamond drilling is planned to explore for continuity of high- grade mineralisation between 300 and 500 metres vertical depth. If successful, this work will lead to consideration of an underground gold mine development. In Western Australia, exploration for uranium at the Narndee Project near Mount Magnet should commence in the September Quarter. Calcrete uranium mineralisation has been previously discovered in the Windimurra and Wondinong palaeochannel and will be drill tested by several air-core drilling programs. Further drilling of gold and nickel prospects is also expected in the 2006/2007 year. Maximus carries out an ongoing program of project review, project generation and new opportunity assessment. Some ground has already been relinquished, new projects have been applied for and significant new opportunities examined. Farm in and Farm out opportunities are also being considered. Environmental Issues The economic entity’s operations are subject to significant environmental regulation under both Commonwealth and Directors Report relevant State legislation in relation to discharge of hazardous waste and materials arising from any exploration or mining activities and development conducted by the company on any of its tenements. The company believes it is not in breach of any environmental obligation. Information on Directors Robert Michael Kennedy Non-Executive Chairman - ASAIT, Grad, Dip (Systems Analysis), FCA, ACIS, Life Member AIM, FAICD A Chartered Accountant and a consultant to Kennedy & Co, Chartered Accountants, a firm he founded. Mr Kennedy has been a director since incorporation 17 December 2004. Mr Kennedy is the Chairman of Beach Petroleum Limited (Director since 1991, Chairman since 1995), Flinders Diamonds Limited (since 2001), Ramelius Resources Limited (since 1995), and Monax Mining Limited (since 2004). Mr Kennedy’s appointment to public company boards has been to provide an independent view. His background as an official liquidator, management consultant and in litigation support has provided the necessary skills for that purpose. He has also been involved in making takeover offers and defending them. Mr Kennedy’s appointment as Chairman of several public and private company boards is a result of his inclusive leadership style and his emphasis on corporate governance. Mr Kennedy is a member of the Audit Committee. Kevin John Anson Wills Managing Director - ARSM, PhD, FAusIMM A director since incorporation 17 December 2004. Dr Kevin Wills is a geologist with 31 years experience in multi commodity mineral exploration including uranium exploration, feasibility studies and mine operations in Australasia. Dr Wills spent seven years with CRA Exploration Pty Ltd, the highlight of which was involvement with the location and evaluation of the Argyle Diamond Deposit. Later, with Penarroya Australia Pty Ltd, his work led to an expansion of reserves at Thalanga and the discovery of the Waterloo base metals deposit. In the late 1980s, Dr Wills was exploration manager with Metana Minerals NL. He built up a successful exploration team which extended known gold ore bodies and made new discoveries. In the early 1990s Dr Wills was regional exploration manager with Dominion Mining Ltd, based in Adelaide. His work on the Gawler Craton led to the development of a calcrete sampling technique which, later on, was instrumental in the Challenger gold discovery. Recently, Dr Wills resigned as a founding director of Adelaide Resources Ltd and he is currently managing director of Flinders Diamonds Limited (since 2000). He is a recent past chairman of the Adelaide Branch of the AusIMM and the Exploration Committee at the South Australian Chamber of Mines and Energy. Ewan John Vickery Non-Executive Director – L.LB A director since incorporation 17 December 2004. Mr Vickery is a corporate and business lawyer with over 30 years experience in private practice in Adelaide. He has acted as an advisor to companies on a variety of corporate and business issues including capital and corporate restructuring, native title and land access issues, and as lead native title advisor and negotiator for numerous mining and petroleum companies. Mr Vickery is a Director of Flinders Diamonds Limited (since 2001) and member of the Legislation and Land Access Committee of the South Australian Chamber of Mines and Energy Inc, the International Bar Association Energy and Resources Law Section, the Financial Services Institute of Australasia, the Australian Institute of Company Directors and is a past national president of Australian Mining and Petroleum Law Association (AMPLA) Limited. Mr Vickery is the Chairman of the audit committee. Gary Eric Maddocks Exploration Director (Executive) – M.Sc. & App.Sc.(Geology), Dip.App.Chem., F AusIMM(CP) A director since incorporation 17 December 2004. Mr Maddocks has 36 years of experience in mineral exploration for gold, copper, lead/zinc, nickel and tin throughout Australia. He has been involved with exploration activities for gold and copper in India, Indonesia and New Zealand. He is principal of GEM Exploration Management Services, a Chartered Professional (Geology) and Fellow of the Australian Institute of Mining and Metallurgy. Nicholas John Smart Alternate Director for E J Vickery (Non- Executive) An alternate director since 9 May 2005, Mr Smart has held positions as a General Manager in France and Australia in the wool, textile, leather and meat industries. Responsibilities included human resources, factory operations, currency movements and commodity trading. He was a full Associate Member of the Sydney Futures Exchange then became Managing Director of D&D-Tolhurst Ltd (sharebrokers) as a client advisor and in the corporate area including capital raising. He has been involved in start up companies in technology development such as the laser shearing of sheep skins, commercialisation of the Synroc process for safe storage of high level nuclear waste and controlled temperature and atmosphere transport systems. Mr Smart currently consults to various public and private companies. Mr Smart is a director of GTL Energy Limited. Richard Walter Cumming Willson Alternate Director for G E Maddocks (Executive) - B.Ac., CPA, MAICD Mr Willson has had more than 12 years experience. He has worked in public practice and in various financial management and company secretarial roles within the Provimi Australia group, BHP Billiton and the Jumbuck Pastoral group. Mr Willson is the Company Secretary and Chief Financial Officer for Maximus Resources Limited, Flinders Diamonds Limited and Eromanga Uranium Limited. Directors Report He is also a director of Housing Spectrum, a not for profit organisation that provides disability housing. He has been an alternate director since 18 May 2006. Directors Interests The relevant interest of each director in the ordinary share capital of the company at the date of this report is: Shares Options R M Kennedy 2,750,001(1) 1,375,000(1) K J A Wills 3,150,001(1) 1,575,000(1) G E Maddocks 2,500,001(1) 1,250,000(1) E J Vickery 2,975,001(1) 1,462,500(1) Remuneration Report This report details the nature and amount of remuneration for each director of Maximus Resources Limited. The board of Maximus Resources Limited believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best executives and directors to run and manage the company, as well as create goal congruence between directors, executives and shareholders. The board’s policy for determining the nature and amount of remuneration for board members and senior executives of the company is as follows: • The remuneration policy, setting the terms and conditions for the executive directors and other senior executives, was developed and approved by the board. • Executives receive a base salary (which is based on factors such as length of service and experience), and superannuation, or Consulting Fees. • The board reviews executive packages annually by reference to the company’s 512,500(1) performance, executive performance and comparable information from industry sectors. - The policy is designed to attract the highest calibre of executives and reward them for performance that results in long-term growth in shareholder wealth. N J Smart R W C Willson 25,000 57,000 (1) held by directors and entities in which directors have a relevant interest Significant changes in State of Affairs The following significant changes in the state of affairs of the parent entity occurred during the financial year: On 29 July 2005 1,250,000 shares were issued to Seed Capitalists at $0.10. On 23 August 2005 3,450,000 shares were issued to Seed Capitalists at $0.10. On 17 October 2005 2,000,00 shares were issued to Seed Capitalists at $0.10. On 21 October 2005 666,667 shares were issued at $0.20 as part of the Lobethal Joint Venture Agreement. On 31 October 2005 35,000,000 shares were issued at $0.20 to the public as a result of the initial public offer. On 30 November 2005 7,000,000 shares were issued to Flinders Diamonds Limited as consideration for the assignment of rights under the Flinders Agreement. On 20 December 2005 11,250 shares were issued as a result of the exercise of options. Changes in controlled entities and divisions: On 23 January 2006 Eromanga Uranium Resources Pty Ltd was incorporated with one $1 share owned by Maximus Resources Limited. Executives are also entitled to participate in the employee option arrangements. The directors and executives remunerated by salary receive superannuation inclusive of the superannuation guarantee contribution required by the government, which is currently 9%, and do not receive any other retirement benefits. Details of remuneration for year ended 30 June 2006 The remuneration for each director of the consolidated entity during the year was as follows: Salary, Fees and Commissions Superannuation Contribution Total Consulting Fees paid to entities in which the director has a relevant interest $ $ $ $ Directors R M Kennedy 43,496 10,120 K J A Wills G E Maddocks E J Vickery N J Smart R W C Willson - - - - - - - - - - - 72,650 53,616 72,650 116,583 116,583 29,792 16,232 - 29,792 16,232 - 43,496 10,120 235,257 288,873 Employment contracts of directors The employment conditions of the managing director, Dr Wills and the exploration director, Mr Maddocks are formalised in consultancy agreements. The agreements are for a fixed term from August 2005, after which the agreements continue on a monthly basis. Directors Report Meetings of Directors During the financial year, seventeen meetings of directors (including committees of directors) were held. Attendances by each director during the year were as follows: Directors Meetings Audit Committee Meeting Number eligible to attend Number attended Number eligible to attend Number attended 16 16 16 16 4 1 16 15 16 16 4 1 1 - - 1 - - 1 - - 1 - - R M Kennedy K J A Wills G E Maddocks E J Vickery N J Smart R W C Willson Indemnifying Officers or Auditor During or since the end of the financial year the company has given an indemnity or entered into an agreement to indemnify, or paid or agreed to pay insurance premiums as follows: The company has paid premiums to insure each of the following directors against liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in the capacity of director of the company, other than conduct involving a wilful breach of duty in relation to the company. The amount of the premium was $5,812 for each director. Mr R M Kennedy Mr K J A Wills Mr G E Maddocks Mr E J Vickery Options At the date of this report, the unissued ordinary shares of Maximus Resources Limited under option are as follows: Grant Date Date of Expiry Exercise Price 1 April 2005 12 April 2005 29 July 2005 23 August 2005 20 October 2005 25 October 2005 30 January 2006 18 May 2006 30 June 2008 12 April 2010 30 June 2008 30 June 2008 30 June 2008 30 June 2008 30 June 2008 30 June 2008 $0.20 $0.20 $0.20 $0.20 $0.20 $0.20 $0.20 $0.20 Number under Option 7,500,000 1,000,000 312,500 862,500 333,333 20,463,747 3,500,000 250,000 34,222,080 No person entitled to exercise an option had or has any right by virtue of the option to participate in any share issue of any other body corporate. Proceedings on Behalf of Company No person has applied for leave of Court to bring proceedings on behalf of the company or intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for all or any part of those proceedings. The company was not a party to any such proceedings during the financial year. Non-Audit Services The board of directors, in accordance with advice from the audit committee, is satisfied that 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 services disclosed below did not compromise the external auditor’s independence for the following reasons: • all non-audit services are reviewed and approved by the audit committee prior to commencement to ensure they do not adversely affect the integrity and objectivity of the auditor; and • the nature of the services provided do not compromise the general principles relating to auditor independence as set out in the Institute of Chartered Accountants in Australia and CPA Australia’s Professional Statement F1: Professional Independence. The following fees for non-audit services were paid/payable to the external auditors during the year ended 30 June 2006: Preparation of Independent Accountants Report for Prospectus $6,000. Auditor’s Independence Declaration The lead auditor’s independence declaration for the year ended 30 June 2006 has been received and can be found on page 19 of the directors’ report. Dated at Adelaide this 28th day of September 2006 and signed in accordance with a resolution of the directors. Robert M Kennedy Chairman Auditors Independence Declaration Chartered Accountants and Business Advisers AUDITOR’S INDEPENDENCE DECLARATION TO THE DIRECTORS OF MAXIMUS RESOURCES LIMITED In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Maximus Resources Limited for the year ended 30 June 2006, I declare that, to the best of my knowledge and belief, there have been: (a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (b) no contraventions of any applicable code of professional conduct in relation to the audit. GRANT THORNTON South Australian Partnership Chartered Accountants S J GRAY Partner Signed at Adelaide this 28 day of September 2006 Level 1 67 Greenhill Road Wayville SA 5034 GPO Box 1270 Adelaide SA 5001 DX 275 Adelaide T (08) 8372 6666 F (08) 8372 6677 E info@gtsa.com.au W www.grantthornton.com.au Grant Thornton Services (SA) Pty Ltd ACN 080 740 067 A Member of Grant Thornton Association Inc. The Australian Member of Grant Thornton International Income Statement For the year ended 30 June 2006 Note Economic Entity Parent Entity 2006 2005 2006 2005 Revenue 2 205,784 150 205,784 150 Marketing expenses Occupancy expenses Administrative expense Finance costs Other expenses Loss before income tax expense Income tax expense Loss for the year Basic earnings / (loss) per share (cents) Diluted earnings / (loss) per share (cents) (94,159) (6,202) (436,650) (1,428) (98,581) (431,236) - - - - (277) (127) (94,159) (6,202) (436,650) (1,428) (98,581) (431,236) - - - - (277) (127) (227,792) - (227,792) - (659,028) (127) (659,028) (127) (1.351) (1.351) (.000) (.000) 3 3 3 4 7 7 The accompanying notes form part of these financial statements Balance Sheet As at 30 June 2006 Note Economic Entity Parent Entity 2006 2005 2006 2005 CURRENT ASSETS Cash and cash equivalents Trade & other receivables Other current assets TOTAL CURRENT ASSETS NON-CURRENT ASSETS Property, Plant & Equipment Exploration, & Evaluation, Expenditure Financial assets Investments accounted for using the equity method 8 9 10 14 15 4,089,053 222,010 1,256 5,433 4,089,052 222,010 - 60,336 - 4,311,063 67,025 4,311,062 119,169 - 119,169 4,097,697 9,603 4,097,697 - 1 - - 1 1 TOTAL NON-CURRENT ASSETS 4,216,867 9,603 4,216,868 TOTAL ASSETS 8,527,930 76,628 8,527,930 CURRENT LIABILITIES Trade & other payables 16 404,339 TOTAL CURRENT LIABILITIES TOTAL LIABILITIES 404,339 404,339 1,751 1,751 1,751 404,339 404,339 404,339 1,256 5,433 60,336 67,025 - 9,603 - - 9,603 76,628 1,751 1,751 1,751 NET ASSETS 8,123,591 74,877 8,123,591 74,877 EQUITY Issued capital Reserves Retained earnings TOTAL EQUITY 17 8,699,079 75,004 8,699,079 75,004 83,667 - 83,667 (659,155) (127) (659,155) 8,123,591 74,877 8,123,591 - (127) 74,877 The accompanying notes form part of these financial statements Statement Of Changes In Equity For the year ended 30 June 2006 Share Capital Option Reserve Retained Earnings $ $ $ Economic Entity Balance at 1st July 2004 Loss for the period Shares issued during the period Balance at 30th June 2005 Balance at 1st July 2005 Loss for the period Shares issued during the period Transaction costs - - 75,004 75,004 75,004 - 9,155,588 (531,513) - - - - - - - - Options issued during the period - 83,667 Total $ - (127) 75,004 74,877 - (127) - (127) (127) 74,877 (659,028) (659,028) - - - 9,155,588 (531,513) 83,667 Balance at 30th June 2006 8,699,079 83,667 (659,155) 8,123,591 Parent Entity Balance at 1st July 2004 Loss for the period Shares issued during the period Balance at 30th June 2005 Balance at 1st July 2005 Loss for the period Shares issued during the period Transaction costs - - 75,004 75,004 75,004 - 9,155,588 (531,513) - - - - - - - - Options issued during the period - 83,667 - (127) - (127) - (127) 75,004 74,877 (127) 74,877 (659,028) (659,028) - - - 9,155,588 (531,513) 83,667 Balance at 30th June 2006 8,699,079 83,667 (659,155) 8,123,591 The accompanying notes form part of these financial statements Cash Flow Statement For the year ended 30 June 2006 Note Economic Entity Parent Entity 2006 2005 2006 2005 CASH FLOWS FROM OPERATING ACTIVITIES Interest received 223,978 150 223,978 Payments to suppliers and employees (419,505) (277) (419,505) 150 (277) Net cash provided by (used in) operating activities CASH FLOWS FROM INVESTING ACTIVITIES 22 (195,527) (127) (195,527) (127) Purchase of property, plant and equipment (123,932) Purchase of investments (1) - - (123,932) (1) - - Payment for exploration activities (2,366,029) (9,603) (2,366,029) (9,603) Net cash provided by (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES (2,489,962) (9,603) (2,489,962) (9,603) Proceeds from issue of shares 6,773,286 10,986 6,773,286 10,986 Net cash provided by (used in) financing activities 6,773,286 10,986 6,773,286 Net increase in cash held 4,087,797 1,256 4,087,797 Cash at beginning of financial year 1,256 - 1,256 Cash at end of financial year 8 4,089,053 1,256 4,089,053 10,986 1,256 - 1,256 The accompanying notes form part of these financial statements 0 Notes To The Financial Statements For the year ended 30 June 2006 NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards, Urgent Issues Group Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. The financial report covers the economic entity of Maximus Resources Limited and controlled entities, and Maximus Resources Limited as an individual parent entity. Maximus Resources Limited is a listed public company, incorporated and domiciled in Australia. The financial report of Maximus Resources Limited and controlled entities, and Maximus Resources Limited as an individual parent entity comply with all Australian equivalents to International Financial Reporting Standards (AIFRS) in their entirety. The following is a summary of the material accounting policies adopted by the economic entity in the preparation of the financial report. The accounting policies have been consistently applied, unless otherwise stated. Basis of Preparation First-time Adoption of Australian Equivalents to International Financial Reporting Standards Maximus Resources Limited and controlled entities, and Maximus Resources Limited as an individual parent entity have prepared financial statements in accordance with the Australian equivalents to International Financial Reporting Standards (AIFRS) from 1 July 2005. In accordance with the requirements of AASB 1: First-time Adoption of Australian Equivalents to International Financial Reporting Standards, the effect on the parent entity and consolidated entity accounts resulting from the introduction of AIFRS have been considered retrospectively to 2005 comparative figures with no adjustments required. These consolidated accounts are the first financial statements of Maximus Resources Limited to be prepared in accordance with Australian equivalents to IFRS. Reporting Basis and Conventions The financial report has been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected non-current assets, and financial assets and financial liabilities for which the fair value basis of accounting has been applied. The accounting policies set out below have been consistently applied to all years presented unless otherwise stated. Accounting Policies a) Principles of Consolidation A controlled entity is any entity Maximus Resources Limited has the power to control the financial and operating policies of so as to obtain benefits from its activities. A list of controlled entities is contained in Note 13 to the financial statements. All controlled entities have a June financial year-end. All inter-company balances and transactions between entities in the economic entity, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistencies with those policies applied by the parent entity. Where controlled entities have entered or left the economic entity during the year, their operating results have been included/excluded from the date control was obtained or until the date control ceased. b) Income Tax The charge for income tax expense is based on the profit for the year adjusted for any non-assessable or disallowed items. It is calculated using the tax rates that have been enacted or are substantially enacted by the balance date. Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss. Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the income statement except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity. Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised. The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the economic entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law. c) Plant and Equipment Each class of plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and impairment losses. Plant and Equipment Plant and equipment are measured on the cost basis. The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the assets employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts. 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. All other repairs and maintenance are charged to the income statement during the financial period in which are they are incurred. Depreciation The depreciable amount of all fixed assets is depreciated on a straight-line basis over their useful lives to the economic entity commencing from the time the asset is held ready for use. The depreciation rates used for each class of depreciable asses are: Class of Non Current Asset Depreciation Rate Basis of Depreciation Plant and equipment 12.5 - 40% Straight line The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined in comparing proceeds with the carrying amount. These gains and losses are included in the income statement. When re-valued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings. Notes To The Financial Statements continued d) Exploration Expenditure Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves. Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area is made. When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. Costs of site restoration are provided over the life of the facility from when exploration commences and are included in the costs of that stage. Site restoration costs include the dismantling and removal of mining plant, equipment and building structures, waste removal, and rehabilitation of the site in accordance with clauses of the mining permits. Such costs have been determined using estimates of future costs, current legal requirements and technology on an undiscounted basis. Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of site restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations and future legislation. Accordingly the costs have been determined on the basis that the restoration will be completed within one year of abandoning the site. e) Financial Instruments Recognition Financial instruments are initially measured at cost on trade date, which includes transaction costs, when the related contractual rights or obligations exist. Subsequent to initial recognition these instruments are measured as set out below. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are stated at amortised cost using the effective interest rate method. Available-for-sale financial assets Available-for-sale financial assets are reflected at fair value. Unrealised gains and losses arising from changes in fair value are taken directly to equity. Fair value Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar instruments and option pricing models. Impairment At each reporting date, the group assess whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a prolonged decline in the value of the instrument is considered to determine whether an impairment has arisen. Impairment losses are recognised in the income statement. f) Impairment of Assets At each reporting date, the Company reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the assets carrying value. Any excess of the assets carrying value over its recoverable amount is expensed to the income statement. Impairment testing is performed annually for goodwill and intangible assets with indefinite lives. Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs. g) Investments in Associates Investments in associate companies are recognised in the financial statements by applying the equity method of accounting. The equity method of accounting recognised group’s share of post- acquisition reserves of its associates. h) Interests in Joint Ventures The economic entity’s share of the assets, liabilities, revenue and expenses of joint venture operations are included in the appropriate items of the consolidated financial statements. Details of the economic entity’s interests are shown at Note 12. The economic entity’s interests in joint venture entities are brought to account using the equity method of accounting in the consolidated financial statements. The parent entity’s interests in joint venture entities are brought to account using the cost method. i) Equity-settled compensation The cost of equity-settled transactions is measured by the fair value at the date at which the equity instruments are granted. The fair value is determined using the Black-Scholes pricing model. The cost is recognised as an expense in the income statement with a corresponding increase in the share option reserve or issued capital when the options or shares are issued. j) Cash and Cash Equivalents Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. k) Revenue Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets. l) Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Taxation Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of expense. Receivables and payables in the balance sheet are shown inclusive of GST. Cash flows are presented in the cash flow statement on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows. m) Comparative Figures When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. Critical Accounting Estimates and Judgments The Directors evaluate estimates and judgments incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the group. Notes To The Financial Statements continued NOTE 2. REVENUE Operating Activities Economic Entity Parent Entity 2006 2005 2006 2005 - Interest Received from other parties 205,784 150 205,784 150 NOTE 3. LOSS FOR THE YEAR Expenses Administration Accounting services Corporate consulting Legal fees Management fees Other Other Expenses Exploration expenditure written-off Economic Entity Parent Entity 2006 2005 2006 2005 52,189 153,552 89,103 99,000 42,806 436,650 98,581 - - - - - - - 52,189 153,552 89,103 99,000 42,806 436,650 98,581 - - - - - - - NOTE 4. INCOME TAX EXPENSE The prima facie tax on loss from ordinary activities before income tax is reconciled to the income tax as follows: Prima facie tax payable on profit from ordinary activities before income tax at 30% (2005 30%) Add: - Deferred tax asset arising from transaction costs not brought to account - Deferred tax asset not brought to account Income tax attributable to entity The directors estimate that the potential future income benefit at year end not brought to account is Economic Entity Parent Entity 2006 2005 2006 2005 (129,371) (38) (129,371) (38) 227,792 129,371 227,792 129,371 - (38) - - 227,792 129,371 227,792 129,371 - (38) - - The company has not brought to account the Deferred Tax Asset (DTA) resulting from tax losses that otherwise may have been brought to account as there is no certainty the company will achieve future taxable profits against which the DTA can be utilised. As at 30 June 2006, there is no unrecorded deferred income tax (2005 $Nil) for tax that would be payable on the unremitted earnings of the group’s subsidiary, associate or joint venture as the group has no liability for additional taxation should such amounts be remitted. NOTE 5. KEY MANAGEMENT PERSONNEL COMPENSATION a. Names and positions held of economic and parent entity key management personnel in office at any time during the financial year are: Key Management Person Position R M Kennedy K J A Wills G E Maddocks E J Vickery R W C Willson Non-Executive Chairman Managing Director Executive Director Non-Executive Director Chief Financial Officer & Company Secretary Notes To The Financial Statements continued b. Compensation Practices The board’s policy for determining the nature and amount of compensation of key management for the group is as follows: The compensation structure for key management personnel is based on a number of factors, including length of service, particular experience of the individual concerned, and overall performance of the company. The contracts for service between the company and key management personnel are on a continuing basis, the terms of which are not expected to change in the immediate future. Upon retirement key management personnel are paid employee benefit entitlements accrued to date of retirement. The employment conditions of the managing director, Kevin J A Wills and other executive key management personnel are formalised in contracts of employment. All key management personnel are permanent employees of the company or provide services on a consulting basis. Richard W C Willson is employed by F M Exploration Services Pty Ltd. His services are provided as part of the services agreement in place between F M Exploration Services Pty Ltd and Maximus Resources Limited. This agreement was formalised 3 August 2006. c. Key Management Personnel Compensation 2006 Directors R M Kennedy K J A Wills G E Maddocks E J Vickery N J Smart R W C Willson 2005 Directors R M Kennedy K J A Wills G E Maddocks E J Vickery N J Smart R W C Willson Salary, Fees and Commissions Superannuation Contribution Consulting Fees paid to entities in which the director has a relevant interest $ 43,496 $ 10,120 - - - - - - - - - - 43,496 10,120 $ - 72,650 116,583 29,792 16,232 - 235,257 Salary, Fees and Commissions Superannuation Contribution Consulting Fees paid to entities in which the director has a relevant interest $ 43,496 $ 10,120 - - - - - - - - - - 43,496 10,120 $ - 72,650 116,583 29,792 16,232 - 235,257 Total $ 53,616 72,650 116,583 29,792 16,232 - 288,873 Total $ 53,616 72,650 116,583 29,792 16,232 - 288,873 d. Number of Shares & Options held by Key Management Personnel R M Kennedy K J A Wills G E Maddocks E J Vickery N J Smart R W C Willson Shares Options 2,750,001(1) 3,150,001(1) 2,500,001(1) 2,975,001(1) 25,000 57,000 1,375,000(1) 1,575,000(1) 1,250,000(1) 1,462,500(1) 512,500(1) - (1) held by directors and entities in which directors have a relevant interest Notes To The Financial Statements continued NOTE 6. AUDITORS REMUNERATION Remuneration of the auditor of the company for: - Auditing or reviewing the financial report - Independent Report for Prospectus NOTE 7. EARNINGS PER SHARE Economic Entity Parent Entity 2006 2005 2006 2005 8,300 6,000 14,300 - - - 8,300 6,000 14,300 - - - Earnings used to calculate basic & dilutive EPS Earnings used to calculate basic & dilutive EPS from continuing operations Weighted average number of ordinary shares outstanding during the period used to calculate basic EPS Weighted average number of options outstanding during period used to calculate dilutive EPS Weighted average number of ordinary shares outstanding during the period used to dilutive EPS NOTE 8. CASH & CASH EQUIVALENTS 2006 ($659,028) ($659,028) 2005 ($127) ($127) 48,787,703 4,787,399 - - 48,787,703 4,787,399 Economic Entity Parent Entity 2006 20,053 4,069,000 4,089,053 2005 1,256 - 1,256 2006 20,052 4,069,000 4,089,052 2005 1,256 - 1,256 Cash at bank & in hand Short-term bank deposits The effective interest rate on short term bank deposits was 5.65% (2005 Nil) these deposits have an average maturity of 3 months. Reconciliation of cash Cash at the end of the period as shown in the cash flow statement is reconciled to items in the balance sheet as follows: Cash & cash equivalents 4,089,053 1,256 4,089,052 1,256 NOTE 9. TRADE & OTHER RECEIVABLES Other Receivables Receivable from associated companies Economic Entity Parent Entity 2006 72,483 149,527 222,010 2005 5,433 - 5,433 2006 72,483 149,527 222,010 2005 5,433 - 5,433 Notes To The Financial Statements continued NOTE 10. OTHER CURRENT ASSETS Prepayments NOTE 11. ASSOCIATED COMPANIES Interests are held in the following associated companies. Economic Entity Parent Entity 2006 - - 2005 60,336 60,336 2006 - - 2005 60,336 60,336 Name Principal Activities Country of Incorporation Shares Ownership Interest Carrying amount of investment 2006 % 2005 % 2006 2005 Unlisted: F M Exploration Services Pty Ltd Administration Services Australia Ord 50 - 1 - NOTE 12. JOINT VENTURES The Economic Entity has the following interests in Joint Ventures: Agreement Name Parties Summary Lobethal Deed Maximus Resources Ltd AND Flinders Diamonds Ltd, AKD Ltd & Statelink Holdings Pty Ltd Flinders Agreement Maximus Resources Ltd AND Flinders Diamonds Ltd Apex Agreement Maximus Resources Ltd AND Apex Minerals NL, Windimurra Resources Pty Ltd & Mark Gareth Creasy Nemex Agreement Maximus Resources Ltd AND Nemex Pty Ltd MXR can earn a 75% interest in the non-diamond assets of EL 3215 by FDL/MXR spending $1 million on exploration FDL assigned all non-diamond rights in its Woolanga, NT and Billa Kalina, SA and metalliferous rights in its Adelaide Hills project tenements to MXR MXR can earn a 51% interest in the Apex Windimurra-Narndee project tenements by spending $1.5 million over 3 years and a further 19% interest by spending a further $1.5 million in the ensuing 3 years MXR purchased a 90% interest in the Nemex Yandal Homestead and Ironstone Lagoon project tenements NOTE 13. CONTROLLED ENTITIES a. Controlled Entities Consolidated Parent Entity: Maximus Resources Limited Subsidiaries of Maximus Resources Limited: Eromanga Uranium Resources Pty Ltd b. Acquisition of Controlled Entities Country of Incorporation Percentage Owned (%) 2006 2005 Australia Australia 100 - On 23 January 2006 Eromanga Uranium Resources Pty Ltd was incorporated with one $1 share owned by Maximus Resources Limited. Notes To The Financial Statements continued NOTE 14. PROPERTY, PLANT & EQUIPMENT PLANT & EQUIPMENT Plant & Equipment: At cost Accumulated Depreciation Total Plant & Equipment Economic Entity Parent Entity 2006 2005 2006 2005 123,932 (4,763) 119,169 - - - 123,932 (4,763) 119,169 - - - Movements in Carrying Amounts Movement in the carrying amounts for each class of property, plant and equipment between the beginning and the end of the current financial year Economic Entity Parent Entity Plant and Equipment Total Plant and Equipment Total Balance at the beginning of year - - - - Additions Disposals Depreciation expense Carrying amount at the end of year 123,932 123,932 123,932 123,932 - (4,763) 119,169 - (4,763) 119,169 - (4,763) 119,169 - (4,763) 119,169 NOTE 15. CAPITALISED EXPLORATION EVALUATION EXPENDITURE Economic Entity Parent Entity 2006 2005 2006 2005 Exploration, Evaluation Expenditure Capitalised - Exploration & Evaluation phases – 100% owned 78,501 - 78,501 tenements - Exploration & Evaluation phases – Joint Ventures 4,019,196 4,097,697 9,603 9,603 4,019,196 4,097,697 - 9,603 9,603 Recoverability of the carrying amount of exploration assets is dependent on the successful exploration and sale of the minerals being sought. Exploration, Evaluation Expenditure Capitalised Balance at beginning of year Additions through capitalisation of expenditure Reductions through write off Balance at end of year NOTE 16. TRADE & OTHER PAYABLES Unsecured Trade Payables Sundry payables & accrued expenses Economic Entity Parent Entity 2006 2005 2006 2005 9,603 4,186,675 (98,581) 4,097,697 - 9,603 - 9,603 9,603 4,186,675 (98,581) 4,097,697 - 9,603 - 9,603 Economic Entity Parent Entity 2006 2005 2006 2005 202,208 202,131 404,339 1,751 - 1,751 202,208 202,131 404,339 1,751 - 1,751 Notes To The Financial Statements continued NOTE 17. ISSUED CAPITAL 64,977,921 (2005: 15,600,004) fully paid ordinary shares 8,886,479 2006 2005 75,004 2006 8,886,479 2005 75,004 Economic Entity Parent Entity Ordinary Shares At the beginning of the period Shares issued during the year - 17 December 2004 - 25 February 2005 - 1 April 2005 - 12 April 2005 - 29 July 2005 - 23 August 2005 - 17 October 2005 - 21 October 2005 - 31 October 2005 - 30 November 2005 - 20 December 2005 At reporting date - 4 10,000,000 5,000,000 600,000 15,600,004 1,250,000 3,450,000 2,000,000 666,667 35,000,000 7,000,000 11,250 - 4 10,000,000 5,000,000 600,000 15,600,004 1,250,000 3,450,000 2,000,000 666,667 35,000,000 7,000,000 11,250 64,977,921 15,600,004 64,977,921 15,600,004 On 29 July 2005 1,250,000 shares were issued to Seed Capitalists at $0.10. On 23 August 2005 3,450,000 shares were issued to Seed Capitalists at $0.10. On 17 October 2005 2,000,00 shares were issued to Seed Capitalists at $0.10. On 21 October 2005 666,667 shares were issued at $0.20 as part of the Lobethal Joint Venture Agreement. On 31 October 2005 35,000,000 shares were issued at $0.20 to the public as a result of the initial public offer. On 30 November 2005 7,000,000 shares were issued to Flinders Diamonds Limited as consideration for the assignment of rights under the Flinders Agreement. On 20 December 2005 11,250 shares were issued as a result of the exercise of options. Ordinary shares participate in dividends and the proceeds on winding up of the entity in proportion to the number of shares held. At the shareholders meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands. NOTE 18. RESERVES Option Reserve The Option Reserve records items recognised as expenses on valuation of employee options and options issued to external parties in consideration for goods and services rendered. NOTE 19. CONTINGENT LIABILITIES AND CONTINGENT ASSETS A share sale agreement has been entered into conditional upon the completion of a successful IPO by Eromanga Uranium Limited, which details the purchase of Eromanga Uranium Resources Pty Ltd from Maximus Resources Limited for 44,357,143 shares in Eromanga Uranium Limited and 8,035,714 options to purchase shares in Eromanga Uranium Limited. NOTE 20. COMMITMENTS FOR EXPENDITURE Exploration Licences In order to maintain current rights of tenure to exploration tenements the group will be required to outlay in the year ending 30 June 2007 amounts of approximately $4,218,000 in respect of tenement lease rentals and to meet minimum expenditure requirements pursuant to various joint venture requirements. NOTE 21. NEW ACCOUNTING AND UIG INTERPRETATIONS Certain new accounting standards and UIG interpretations have been published that are not mandatory for 30 June 2006 reporting periods. The Groups assessment of the impact of these new standards and interpretations is that there would be no material impact on the reported results of the company for the year ended 30 June 2006. Notes To The Financial Statements continued NOTE 22. CASH FLOW INFORMATION Reconciliation of Cash Flow from Operations with Loss after Income Tax Loss after tax Non-cash flows in profit Depreciation Bonus issue of shares to employees Deferred tax asset written off Exploration expenditure written off Changes in assets & Liabilities (Increase) / decrease in trade & term receivables Increase / (decrease) in trade payables & accruals Cash Flow from operations Economic Entity Parent Entity 2006 (659,027) 2005 (127) 2006 (659,027) 2005 (127) 4,763 70,000 227,792 98,581 (216,577) 278,941 (195,527) - - - - - - (127) 4,763 70,000 227,792 98,581 (216,577) 278,941 (195,527) - - - - - - (127) NOTE 23. EQUITY-SETTLED TRANSACTIONS The following share-based payment arrangements existed at 30 June 2006: • • On 17 October 2005, 1,000,000 share options were granted to Rundle Capital Partners and 500,000 share options were granted to Nick Smart at an exercise price of $0.20 each. The options are exercisable on or before 30 June 2008. The options hold no voting or dividend rights and are not transferable. At balance date no share options had been exercised. The share options were issued as payment for corporate advice during the IPO. On 21 October 2005, 250,000 share options were granted to AKD Limited and 83,333 share options were granted to Statelink Holdings Pty Ltd at an exercise price of $0.20 each. The options are exercisable on or before 30 June 2008. The options hold no voting or dividend rights and are not transferable. At balance date no share options had been exercised. The share options were issued as part of the Lobethal Joint Venture agreement. The weighted average fair value of the options granted during the year was $0.041. This price was calculated by using a Black Scholes option pricing model applying the following inputs: Weighted average exercise price $0.20 Weighted average life of the option 2.56 years Underlying share price Expected share price volatility Risk free interest rate $0.13 19% 6.5% Historical volatility has been the basis for determining expected share price volatility as it is assumed that this is indicative of future tender, which may not eventuate. NOTE 24. EVENTS AFTER THE BALANCE SHEET DATE • On 25 July 2006 the shareholders of Maximus Resources Limited voted to approve the sale of Eromanga Uranium Resources Pty Ltd, a wholly owned subsidiary, to Eromanga Uranium Limited for a consideration of 44,357,143 shares in the Company and 8,035,714 options to acquire shares in the Company. • On 3 August 2006 the Company entered into a services agreement with F M Exploration Services Pty Ltd whereby F M Exploration Services Pty Ltd will provide Administration services to the company. Notes To The Financial Statements continued NOTE 25. RELATED PARTY TRANSACTIONS Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated. Other Related Parties • Payments during the period to Flinders Diamonds Limited for expenses incurred on behalf of Maximus Resources Limited totalled $95,725. • • • Amounts received during the period from Eromanga Uranium Limited for expenses incurred on its behalf totalled $1,427. Services were provided by F M Exploration Services Pty Ltd to Maximus Resources Limited for $99,000. Maximus Resources Limited advanced F M Exploration Services Pty Ltd $149,527 to fund working capital. NOTE 26. SEGMENT INFORMATION The entity operates predominately in the mining industry, in Australia and as such has no material reportable segments. NOTE 27. FINANCIAL INSTRUMENTS a. Financial Risk Management The group’s financial instruments consist mainly of deposits with banks, local money market instruments, short-term investments, accounts receivable and payable, loans to and from subsidiaries, bills, leases, preference shares, and derivatives. Liquidity risk The group manages liquidity risk by monitoring forecast cash flows and ensuring that adequate funds are available to meet the cash demands. b. Financial Instruments i) Interest Rate Risk The economic entity’s exposure to interest rate risk, which is the risk that a financial instrument’s value will fluctuate as a result of changes in market interest rates and the effective weighted average interest rates on classes of financial assets and financial liabilities, is as follows: Weighted Average Effective Interest Rate Floating Interest Rate Non-interest Bearing Total Financial Assets: Cash and cash equivalents Receivables Total Financial Assets Financial Liabilities: Payables 5.65 4,089,053 - - 221,919 4,089,053 221,919 4,089,053 221,919 4,310,972 - 404,339 404,339 - - Total Financial Liabilities ii) Net Fair Values The company’s financial assets and liabilities are included in the balance sheet at amounts that approximate net fair value. 404,339 404,339 - NOTE 28. COMPANY DETAILS The principal place of business and registered office is Maximus Resources Limited 62 Beulah Road Norwood South Australia 5067 0 Directors Declaration In accordance with a resolution of the directors of Maximus Resources Limited, I state that: In the opinion of the directors: a) the financial statements and notes and additional disclosures included in the Directors’ Report as audited of the Company and of the consolidated entity are in accordance with the Corporations Act 2001, and; 1. give a true and fair view of the Company’s and consolidated entity’s financial position as at 30 June 2006 and of their performance for the year ended on that date; and 2. comply with Accounting Standards and Corporations Regulations 2001; and b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due. The directors have been given the declaration by the Managing Director and the Company Secretary required by section 295A of the Corporations Act 2001. On behalf of the Board Robert M Kennedy Director Adelaide, South Australia 28 September 2006 Independent Audit Report Chartered Accountants and Business Advisers INDEPENDENT AUDIT REPORT TO THE MEMBERS OF MAXIMUS RESOURCES LTD Scope and summary of our role The financial report and directors’ responsibility The financial report comprises the income statement, balance sheet, statement of changes in equity, statement of cash flows, accompanying notes to the financial statements, and the directors’ declaration for both Maximus Resources Ltd (the company) and Maximus Resources Ltd and its controlled entities (the economic entity) for the year ended 30 June 2006. The economic entity comprises both the company and the entities it controlled during the year. The directors of the company are responsible for the preparation and true and fair presentation of the financial report in accordance with Corporations Act 2001. This includes responsibility for the maintenance of adequate accounting records and internal controls that are designed to prevent and detect fraud and error, and for the accounting policies and accounting estimates inherent in the financial report. The auditor’s role and work We conducted an independent audit in order to express an opinion to the members of the company. Our audit was conducted in accordance with Australian Auditing and Assurance Standards, in order to provide reasonable assurance as to whether the financial report is free of material misstatement. The nature of an audit is influenced by factors such as the use of professional judgment, selective testing, the inherent limitations of internal control, and the availability of persuasive rather than conclusive evidence. Therefore, an audit cannot guarantee that all material misstatements have been detected. We performed procedures to assess whether in all material respects the financial report presents fairly, in accordance with Corporations Act 2001, Accounting Standards and other mandatory financial reporting requirements in Australia, a view which is consistent with our understanding of the company’s financial position, and of its performance as represented by the results of its operations and cash flows. We formed our audit opinion on the basis of these procedures, which included: • examining, on a test basis, information to provide evidence supporting the amounts and disclosures in the financial report, and Level 1 67 Greenhill Road Wayville SA 5034 GPO Box 1270 Adelaide SA 5001 DX 275 Adelaide T (08) 8372 6666 F (08) 8372 6677 E info@gtsa.com.au W www.grantthornton.com.au Grant Thornton South Australian Partnership ABN 27 244 906 724 An independent South Australian partnership entitled to trade under the name Grant Thornton. Grant Thornton is a trademark owned by Grant Thornton International and used under licence by independent firms and entities throughout the world. Independent Audit Report • assessing the appropriateness of the accounting policies and disclosures used and the reasonableness of significant accounting estimates made by the directors. While we considered the effectiveness of management’s internal controls over financial reporting when determining the nature and extent of our procedures, our audit was not designed to provide assurance on internal controls. Our audit did not involve an analysis of the prudence of business decisions made by directors or management. We read the other information in the annual report to determine whether it contained any material inconsistencies with the financial report. Independence In conducting our audit, we followed applicable independence requirements of Australian professional ethical pronouncements and the Corporations Act 2001. Audit opinion In our opinion, the financial report of Maximus Resources Ltd is in accordance with: (a) the Corporations Act 2001, including: i) giving a true and fair view of the company’s and the economic entities financial position as at 30 June 2006 and of its performance for the year ended on that date; and ii) complying with Accounting Standards in Australia and the Corporations Regulations 2001; and (b) other mandatory financial reporting requirements in Australia. GRANT THORNTON South Australian Partnership Chartered Accountants S J GRAY Partner Signed at Adelaide this 28 day of September 2006 ASX Additional Information Additional information required by the Australian Stock Exchange and not shown elsewhere in this report is as follows. The information is current as of 25 September 2006. Distribution of equity securities Ordinary share capital Twenty largest shareholders Fully Paid Ordinary Shares 1 Flinders Diamonds Limited 2 Mr Bruce Robert Legendre 3 4 KJ Exploration Pty Ltd Chaffey Consulting Pty Ltd Fully paid ordinary shares are held by 1,036 individual shareholders. There are no unquoted ordinary shares. All issued ordinary shares carry one vote per share. 5 Mr Gary Eric Maddocks + Ms Paula Maddocks 6 7 Apex Minerals Nl Triple Eight Gold Pty Ltd Number 7,000,000 5,000,000 3,000,000 2,537,500 2,500,000 2,000,000 1,990,000 Options 8 Merrill Lynch (Australia) Nominees Pty Limited 1,555,345 % 10.77 7.69 4.62 3.91 3.85 3.08 3.06 2.39 2.08 1.69 1.55 1.54 1.00 0.88 0.77 0.77 0.77 0.68 0.68 0.62 9 Carmant Pty Ltd 10 Mr Jun Luo 11 Mr Arnold Olschyna 12 Yandal Investments Pty Ltd 13 Mr Nicholas Charles Richards 14 Mr Richard Victor Heymann 15 Akd Limited 16 Baracus Pty Ltd 17 RMK Super Pty Ltd 18 Clodene Pty Ltd 19 Baracus Pty Ltd 20 Westtin Pty Ltd 1,350,890 1,100,000 1,010,000 1,000,000 648,530 574,100 500,000 500,000 497,500 444,588 440,000 400,000 Twenty largest optionholders Options 1 Flinders Diamonds Limited 2 Mr Bruce Robert Legendre 3 4 KJ Exploration Pty Ltd Chaffey Consulting Pty Ltd 5 Mr Gary Eric Maddocks + Ms Paula Maddocks 6 7 8 Rundle Capital Partners Limited Triple Eight Gold Pty Ltd Clodene Pty Ltd 9 Merrill Lynch (Australia) Nominees Pty Limited 10 Mr Nicholas John Smart 11 Yandal Investments Pty Ltd 12 Analystics Pty Ltd 13 Kroy Investments Pty Ltd 14 Mr Nicholas Charles Richards 15 Analystics Pty Ltd 16 Carojon Pty Ltd 17 Mr Chee Chin 18 Mrs Ivanka Stoevova-millen 19 Mr Carsten Hans Huebner + Mrs Fiona Louise Huebner 20 Lawrence Crowe Consulting Pty Ltd 34,048,453 52.40 Number 3,500,000 2,500,000 1,500,000 1,268,750 1,250,000 1,000,000 995,000 848,230 578,900 500,000 500,000 400,000 400,000 358,150 300,000 300,000 291,400 284,200 258,000 % 10.54 7.53 4.52 3.82 3.76 3.01 2.99 2.55 1.74 1.51 1.51 1.20 1.20 1.08 0.90 0.90 0.88 0.86 0.78 256,689 17,289,319 0.77 52.00 Options are held by 750 individual option holders. The number of shareholders, by size of holding, in each class are: Options Fully paid ordinary shares 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over Holdings of less than a marketable parcel 21 111 330 500 74 1,036 59 Substantial shareholders 1 258 153 293 45 750 515 Fully Paid Ordinary Shares Number Flinders Diamonds Limited Mr Bruce Robert Legendre 7,000,000 5,000,000 % 10.77 7.69 Glossary of Technical Terms aircore A method of rotary drilling whereby rock chips are recovered by compressed air flow returning inside the rods. metamorphosed A rock that has been modified by the effects of pressure, heat and fluids within the earth’s crust. anomaly A value or group of values different from the expected norm. anticline A fold in rock strata that is convex upward with a core of older rocks. Archaean The oldest rocks of the Precambrian era, older than about 2,500 million years. assay Method of geochemical analysis generally referring to measurement of precious metal contents in a rock. base metal Referring to the transition elements, including copper, zinc and lead. basement The igneous and metamorphic crust of the earth, underlying sedimentary deposits. bedrock Solid rock underlying surficial deposits. carbonate A compound containing the radical CO3; commonly calcium carbonate or calcium-magnesium carbonate. calcite A mineral composed of calcium and carbonate. calcrete Calcium carbonate, dissolved and redeposited as surficial limestone. chert Fine grained sedimentary rock composed of cryptocrystalline silica. complex(es) In the geological sense meaning an area of general complexity. contact zone With reference to the contact between an intrusive igneous rock and surrounding intruded rocks. core drilling A rotary drilling technique in which a stick of rock is cut from the underlying geological sequence. craton Large, and usually ancient, stable mass of the earth’s crust. deformation A general term for the process of folding, faulting, shearing, compression or extension of rocks as a result of stress. diamond drilling A method of obtaining a cylindrical core of rock by drilling with a diamond impregnated bit. drill traverses Reference to a line of drill holes. electrical geophysics Geophysical survey techniques involving the use and measurement of electrical currents. extension drilling Reference to extending the drilling pattern generally along the projected strike or direction of a mineralised zone. fault A fracture in rock along which there has been relative displacement of the two sides either vertically or horizontally. farm-in Reference to dealing on opportunities through earning an equity in a new project through joint venture or purchase farm-out Reference to dealing on opportunities through earning an equity in an existing project through joint venture or sale of equity in a project felsic Descriptive of light coloured rocks containing an abundance of feldspars and quartz. g/t Au Grams gold per tonne geochemistry The study of the abundance and distribution of elements in rocks, or their weathering products, by chemical methods. gneiss A foliated rock formed by regional metamorphism. grams per tonne Unit of measurement often used for the number of grams of precious metal (gold, silver or PGMs) in a tonne of rock. granite A coarse-grained igneous rock containing mainly quartz and feldspar minerals and subordinate micas. granitoid A field term for a coarse grained felsic rock resembling granite. gravity The force due to a body’s attraction to the centre of the earth; also descriptive of a geophysical survey method which measures gravity responses. greywacke Type of sandstone composed of quartz, feldspar and clays. greenstone A term commonly applied to low metamorphic grade rocks of basic composition and comprised of the minerals chlorite and amphibole. Commonly applied to Archaean rock sequences dominated by these rock types (also referred to as “greenstone belts”). Heritage clearance Reference to a clearance survey undertaken to ensure exploration activities do not encroach on sites of indigenous heritage. igneous Rocks that have solidified from molten rock (magma). inferred (mineral) resource Mineralisation sufficiently assessed by drilling to allow an estimate of its tonnage and grade parameters under guidelines of the Australian Joint Ore Reserves Committee code. iron oxide Reference to a style of copper-gold-uranium mineralization that is hosted in rocks containing dominant iron oxide minerals such as magnetite and/or hematite. infill drilling Rrilling that infills a pattern of previous drilling. intersection General reference to encountering an interval of mineralisation in a drill hole. intrusive A mass of rock formed by magma cooling beneath the earth’s surface. layered Meaning the rock units are layered as in a cake. limestone Rock composed of calcium carbonate (calcite) lineament A significant linear feature of the earth’s crust, usually related to a major fault or shear structure. lode A tabular or vein-like deposit of valuable mineral between well defined walls. mafic Descriptive of rocks composed dominantly of magnesium, iron and calcium-rich rock-forming silicates. magnetic anomaly Zone where the magnitude and orientation of the earth’s magnetic field differs from adjacent areas. Mesozoic Era of geological time from about 235 million years ago to 65 million years ago. metalliferous as referencing minerals in which the metal content is of potentially extractable and, therefore, of potential economic significance. mineralisation A concentration of metals and their chemical compounds within a body of rock. marble A metamorphic rock composed of calcite or dolomite. Native Title Reference to indigenous landownership non-diamond All minerals other than diamonds. occurrence A location generally marking the presence of abnormal or anomalous quantities of a naturally occurring material. oxidation Near surface decomposition by exposure to the atmosphere and ground water. PACE Program of Accelerated Exploration – a South Australian Government initiative. palaeochannel Ancient river channel that may or may not reflect the present day drainage pattern. Paleozoic Era of geological time between the Precambrian and Mesozoic and Eras, from about 545 million years ago to 235 million years ago. PGE An abbreviation for the platinum group elements, referring to ruthenium, rhodium, palladium, osmium, iridium and platinum. porphyry A rock with conspicuous crystals in a fine grained ground mass. ppb or ppm Parts per billion or parts per million. potentially economic Tonnage and grade of mineralisation is within range of other past and present mining operations but additional mining factors have not been assessed. Precambrian Part of geological time prior to about 545 million years ago and including both the Archaean and Proterozoic eras. precollared Generally referencing cored drill holes for which the upper start of the hole has been drilled by other techniques such as percussion or rotary mud drilling. primary mineralization Refers to mineralisation that remains in its original form within unweathered rocks. Proterozoic The younger part of the Precambrian Era, being between 545 and 2,500 million years ago. pyrite An iron sulphide mineral. quartz A mineral composed of silicon dioxide. quartzite A metamorphosed sandstone composed of quartz. radiometrics Here refers to radiometric measurements for uranium. reconnaissance A general examination or survey of a region with reference to its main features, usually preliminary to a more detailed survey. reef Mining term generally referring to a thick vein of quartz. regional exploration Exploration undertaken over a wide area. regolith Upper layer of rocks comprising weathered and extraneous materials that may cover the basement geology. resource In-situ mineral occurrence from which valuable or useful minerals may be recovered. RAB drilling Rotary airblast drilling; a rotary drilling technique in which sample is returned to surface outside of the drill rod string by compressed air. RC drilling Reverse circulation drilling; A method of drilling whereby rock chips are recovered by airflow returning inside the drill rods rather than outside, thereby (usually) providing more reliable samples. sandstone Sediment composed of sand size particles – generally quartz sand. saprolite A soft, earthy clay-rich, thoroughly decomposed rock formed in place by chemical weathering of rocks. schist A metamorphic rock with a platy or foliated texture. sediment Rocks formed by the deposition of solids from water. sedimentary Formed or existing within a sediment. serpentinised Hydrothermally altered magnesium rich rock dominated by serpentine minerals. sphalerite A sulphide mineral of zinc and iron. shear A planar zone of dislocation in rock similar to a fault. siltstone A very fine grained consolidated clastic rock composed predominantly of silt. soil sampling Systematic collection of samples of soil at a series of locations in order to study the distribution of geochemical values in the soil. stratigraphy Composition, sequence and correlation of stratified rock in the earth’s crust. structural Pertaining to geological structure. sulphide A mineral compound characterised by the linkage of sulphur and a metal supergene A term to describe a mineral deposit or enrichment formed near the surface generally by descending groundwater. syncline A fold in rock strata that is concave upward with a core of younger rocks ultramafic Igneous rocks consisting essentially of ferromagnesian minerals with trace quartz and feldspar. underground workings General reference to underground mine workings that include vertical shafts and horizontal tunnels beneath the natural surface. U3O8 Chemical formula for an oxide of uranium. vein A thin sheet-like intrusion into a fissure or crack, commonly bearing quartz. vermiculite A platy micaceous mineral used in insulation and for its absorption properties. volcanic Descriptive of rocks originating from extrusive igneous activity. weathering The group of processes that change the character and composition of rocks by decay.