acn 131 405 144 - latin resources...

Registered OfficeOld Swan Brewery

Level 1, 173 Mounts Bay RoadPERTH WA 6000

Telephone: (08) 9485 0601Facsimile: (08) 9321 6666

Email: [email protected] Website: www.latinresources.com.au

ANNUAL REPORTFOR THE FINANCIAL YEAR ENDED

30 JUNE 2011

ACN 131 405 144

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Latin Resources Limited

Company DireCtory ........................................................................................................................................................1

DireCtors’ report ...........................................................................................................................................................2

remuneration report (auDiteD) ...............................................................................................................................15

DireCtor’s DeClaration ..............................................................................................................................................18

auDitor’s inDepenDenCe DeClaration ....................................................................................................................19

ConsoliDateD statement of Comprehensive inCome .........................................................................................20

ConsoliDateD statement of finanCial position ..................................................................................................21

ConsoliDateD statement of Changes in equity ..................................................................................................22

ConsoliDateD statement of Cash flows ...............................................................................................................23

notes to the finanCial statements for the year enDeD 30 June 2011 ...........................................................24

auDit report ...................................................................................................................................................................49

Corporate governanCe statement .........................................................................................................................51

asX aDDitional information ....................................................................................................................................54

Contents

annual report 2011 1

DireCtors

Mr Roderick Brown

(Non-Executive Chairman)

Mr Christopher Gale

(Managing Director)

Mr Mark Rowbottam

(Non-Executive Director)

Mr David Vilensky

(Non-Executive Director)

Company seCretary

Mr James Moran

registereD offiCe

Level 1, Old Swan Brewery

173 Mounts Bay Road

Perth WA 6000

Australia

Telephone: +61 8 9485 0601

Facsimile: +61 8 9321 6666

E-mail: [email protected]

Website: www.latinresources.com.au

auDitors

Deloitte Touche Tohmatsu

Woodside Plaza

Level 14

240 St George’s Terrace

Perth WA 6000

Australia

Telephone: +61 8 9485 0601

Facsimile: +61 8 9365 7001

share registrar

Advanced Share Registry Limited

150 Stirling Highway

Nedlands WA 6009

Australia

Telephone: (08) 9365 8045

Facsimile: (08) 9315 2233

stoCK eXChange listing

australian securities exchange

(Home Exchange: Perth, Western Australia)

Code: LRS & LRSO

Company DireCtory

2 Latin Resources Limited

The directors of Latin Resources Limited submit herewith the annual report of the company for the financial year ended 30 June 2011. In order to comply with the provisions of the Corporations Act 2001, the directors report as follows:

information about directors and senior management

The names of company’s directors in office during the half-year and until the date of this report are set out below. Directors were in office for this entire period unless otherwise stated.

Roderick Brown

Chairman

Mr Brown is a mining engineer by profession and has extensive experience in general management. He has held various senior management positions including managing Director, with companies involved in the engineering, mining and industrial service sectors across Australia, USA and Europe. Mr Brown has also 20 years’ experience as Company Director and is currently Chairman of both RCR Tomlinson and Immersive Technologies Pty Ltd.

Christopher Gale

Managing Director

Mr Gale is an experienced executive in both public and private sectors having founded and managed a number of businesses over a twenty year period. He has significant executive management experience and a unique combination of commercial, finance and natural resources management skills. In 2008 he established the company Peruvian Latin Resources SAC in Peru, South America.

Mark Rowbottam

Non-executive Director

Mr Rowbottam is an experienced corporate executive, advisor and company director. Mr Rowbottam has undergraduate science qualifications and a Master of Business Administration with specialities in corporate administration and marketing. He is a Fellow of the Securities Institute of Australia and active member of Chartered Secretaries Australia and the Australian Institute of Company Directors. Mr Rowbottam has more than 15 years’ experience in the corporate financial arena and has been involved in numerous ASX capital raisings, mergers/acquisitions and corporate transactions in the mineral and energy sectors. He is currently also a director of ASX listed GRP Corporation Limited.

David Vilensky

Non-executive Director

Mr Vilensky is a practising solicitor and managing partner of Perth law firm Bowen Buchbinder Vilensky. He has more than 30 years of experience in the field of corporate and business law and in commercial and corporate management. Mr Vilensky is also regarded as a specialist on Trade Practice Law and has written a number of published articles on this subject. Mr Vilensky acts for a number of listed and resource companies and is the chairman of Zambezi Resources Ltd, an ASX listed advanced exploration company focusing on copper and other mining and resource projects in Zambia.

Directorships of other listed companies

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

name Company period of directorship

Roderick Brown RCR Tomlinson Limited October 2005 – present

Chris Gale Nil Nil

Mark Rowbottam GRP Corporation Limited November 2010 – present

David Vilensky Zambezi Resources Limited August 2009 – present

DireCtors’ report


Directors’ shareholdings

The following table sets out each Director’s relevant interest in shares, debentures, and rights or options in shares or debentures of the Company or a related body corporate as at the date of this report.

Directors

fully paid ordinary shares

number

share options

number

Roderick Brown 807,692 150,000

Chris Gale 11,030,000 2,206,000

Mark Rowbottam 6,498,730 1,295,900

David Vilensky 1,269,230 250,000

Remuneration of directors and senior management

Information about the remuneration of Directors and Senior Management is set out in the remuneration report of this directors’ report on page 15.

Company Secretary

Mr James Moran

Mr Moran has had over 25 years of resources sector experience gained throughout Australia and internationally in countries such as Ghana, Mongolia, China and New Zealand. In previous CFO/Company Secretary roles he has gained exposure across the resources spectrum covering green fields exploration, construction, production and the closure of projects.

He is a qualified CPA and holds a Bachelor of Business Degree, is an Associate CPA, a graduate of the Australian Institute of Company Directors and is a Fellow of the Chartered Secretaries. He also has a Graduate Diploma in Applied Corporate Governance.

Principal Activities

The Group’s principal activities during the course of the financial year was the exploration undertaken in Peru on the Company’s projects.

During the period there were no significant changes in the nature of those activities.


REVIEW OF OPERATIONS

The loss for the group for the year ended 30 June 2011 was $5,591,697 (2010: $3,224,230).

Company overview

Latin Resources Limited listed on the Australian Stock Exchange on the 21st of September 2010.

It is just over 12 months since the listing and within that time a variety of exploration work has been carried out to progress towards the company’s goal of identifying its flagship project.

Latin Resources Limited has been actively developing its high quality portfolio of Iron Mineral Sands and Iron Ore projects located in Peru throughout the last 12 months.

Latin has initially committed its attention to the newly discovered Iron Ore belts and territories of Peru due to the favourable climate for foreign investment, vast quantities of untapped high grade mineral resources and low production costs. As a result of this focus, Latin is rapidly advancing its two major projects, the Guadalupito Iron mineral sands project and the Ilo iron ore projects. Latin also has promising exposure to Gold, Zircon, Andalusite and Ilmenite through its Iron mineral sands project at Guadalupito.

highlights for 2010/11

Highly prospective projects located close to major port and infrastructure;

Focussed on defining a flagship project and delineating a JORC resource;

Conceptual exploration target mass at Guadalupito is over 2 billion tonnes* based on initial testing by drilling that confirms heavy mineral presence to 20m below surface;

Reverse Circulation drilling program completed at Ilo Norte with magnetite mineralisation observed in all 8 holes in mineralised skarn units up to 300m thick;

Defined a large anomaly at its Mariela Project;

Appointment of the Snowden Group to assess JORC resource estimate; and

Appointment of Ausenco to commence Scoping Study at Guadalupito.

peru eXploration introDuCtion

*See Footnote page 6.


figure 1

projects

guadalupito iron mineral sands project

The Guadalupito iron mineral sands project consists of over 16,000 hectares and is in close proximity to high quality infrastructure including port, road and smelter. Latin has developed a conceptual exploration target of over 2 billion tonnes* of mineralized sediment containing heavy minerals including Magnetite, Zircon and Gold based on geological mapping and previous sampling. Latin Resources has secured drilling approvals and has commenced the drilling program with the objective of delineating a JORC resource.

*See Footnote page 6.


The results of recent analysis and test work from two phases of preliminary sampling of the Guadalupito Iron and Heavy Mineral Sands Project, showed that the initial results are important in the sense that they confirm the presence of a number of minerals of economic interest in free forms. That is, no milling would be required to liberate the economic minerals of interest from the unconsolidated bulk material that might make up a resource in the future. This allows Latin to continue working to determine the concentration, distribution, recoverability and separability of each of the target minerals by gravimetric, magnetic, electrostatic or other means that are industry standard in the mining of heavy mineral deposits.

highlights

A global all inclusive (no lower cut- off grade applied) average of 10.4% total heavy mineral content determined in 366 samples from 1m deep pits along 17 km of strike of prospective shoreline sediments (including previously reported results from 192 samples);

Latest results support previously announced conceptual exploration target of 2 billion tonnes* of mineralised sediment;

An average of 17.4% heavy mineral content was determined in the -1mm+52µm “Sand” fraction (representing an average of 62.5% of total sample mass); and

Previously reported heavy mineral assemblage of 6 “Sand” (-1mm+52µm) fraction samples analysed by Mineral Liberation Analysis (MLA) are consistent and the heavy minerals of most economic significance include:

Magnetite (Average 41 %);

Low iron Andalusite (Average 13 %);

Ilmenite and other Ferro-Titanium oxides (Average 11 %);

Zircon (Average 0.9 %); and

Gold (Average 1100mg/m3 in the undersize fraction)

Previously reported mineralogical test results show clean grains of liberated minerals which indicate good potential for low cost mineral processing.

Gold values returned to date from sampling program suggest that gold could be a significant contributor to future project earnings.

A global all inclusive (no lower cut-off grade applied) average of 0.55 g/t Au content (approx. 1100 mg/m3 or 1.1 g/m3 Au) in -52 mm “undersize” fraction of the 366 pit samples from 1 m deep pits along 17 km of strike of prospective shoreline sediments.

*On 9 and 10 May 2011 Latin announced a conceptual exploration target of 2 billion tonnes of mineralised sediment at Guadalupito (within a range 2.0-2.6 billion tonnes). This was based on an estimated area of 6000 hectares of prospective sediments generated from detailed field mapping, a mineralised depth of 20 m as suggested by initial test drilling and an estimated S.G. of 1.8-2.2. Work to date highlighted good potential for economic content of Magnetite (3.5 - 15.1%), Andalusite (5.3 - 16.5%), Gold (6 - 556 mg/m3), and potentially economic content of Monazite (REE) (trace - 1.7%), Zircon (trace - 1.1%), Ilmenite (trace - 2.8%) and Wolframite (trace). The potential quantities and grades are conceptual in nature, and there has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resource.


figure 3: Drilling on the guadalupito site

figure 2: guadalupito Concessions


guadalupito scoping study

The Scoping Study for Guadalupito has commenced and will be carried out by the highly credible and well known engineering consultants, Ausenco.

The Scoping Study brief consist of the following;

the mining operation

Establish the scale of mining suitable for the project taking into account:

Development of early cash flow, primarily on the basis of a simple 10 Mt/a mining operation with a magnetite •product;

Development of an early “proof of concept”;µ

Staged establishment of a mining operation in the area;µ

Access to a portion of the deposit is well advanced to the remaining portion of the deposit;µ

An eventual target, within 3 to 5 years, of developing a 30 to 35 Mtpa mining operation to deliver magnetite to the •smelter in Chimbote as one of several potential options, including pelletizing and export to Asia;

Understanding the economics of the extraction of the minor minerals and elements and the most suitable place in the •project for their extraction to commence;

Determine the mining method suitable for the deposit;•

Examine suitability of existing infrastructure and suggest likely required upgrades particularly electricity and fresh •water;

Determine transport options including an assessment of the suitability of the Chimbote port facilities to receive bulk •concentrative via road (limits on roads, bridges etc., and the export capacity of the port);

Transportation of concentrate by road or pipeline from the Guadalupito mine site to the Chimbote port, separation •plant or pellet plant site and the implications of slurry transportation should be understood;

Establish the operational characteristics and requirements of pelletising and concentrate at Chimbote;•

Establish the operational characteristics and requirements for undertaking gravity concentration at the mine site, •subsequent concentrate separation in a separate facility in Chimbote or other potential industrial site;

Develop a capital and operating estimate suitable for scenario evaluation and decision making;•

Generate a preferred project plan.•

figure 4: Dredging operation


latin resources Coastal iron exploration

There are 700 kilometres of the Southern Peruvian coast with favourable geology for iron deposits and iron occurrences. The largest iron deposits in Peru, Marcona and Pampa de Pongo, are located in this belt 400 kilometres south of Lima. Marcona is owned and operated by Shougang Hierro Peru (Shougang is the fourth largest steel producer in China) and expects to increase production from 5.5 million tonnes of iron ore in 2009 to 10.0 million tonnes in 2012 after a 1.0 billion US dollar investment in project upgrades announced last year. Pampa de Pongo, recently purchased by Nanjinzhao Group of China for US $100 million dollars from Cardero Resource Corporation of Canada, is being advanced to production.

Both Marcona and Pampa de Pongo are ‘IOCG’ (Iron Oxide Copper Gold) type deposits, which have skarn deposit-type affinities and normally have at least anomalous to ore-grade copper and/or gold values. There are also important copper-rich deposits and many small gold veins and occurrences in this belt. While the belt has been explored for copper dominant IOCG deposits by most of the large copper companies working in Peru, only recently has the belt attracted attention for iron and iron exploration, in spite of the significant size of the two known deposits.

latin ilo iron projects

southern Coastal iron province

The Company has had a strong interest in the Coastal Sur Iron Province and Ilo area due to many known occurrences of iron (magnetite-maghemite veins), a geologic setting somewhat similar to Marcona and Pampa de Pongo, a large amount of ground staked in the proximity to the Pan American highway and port facility at Ilo city. The proximity of the project areas to well established infrastructure is consistent with the Company’s strategy and the potential to have a lower capital intensity hurdle involved in any development opportunity.

figure 5: ilo projects


ilo norte

Latin Resources completed drilling 8 initial exploration reverse circulation holes. The holes drilled up to 350m below surface at its Ilo Project, 35km from the port of Ilo in Southern Peru.

The highlights from the drilling program were as follows;

highlights

Iron (magnetite) and copper mineralization encountered in all of eight initial exploratory holes drilled along 1.25 km of strike and 400 m width;

Gold anomalism coincident with copper mineralization with intersections including 14m from 52m @ 0.55% Cu, 0.13g/t Au in hole IN-02 and 22m from 254m @ 0.22% Cu, 0.09g/t Au –indicating exploration potential for a nearby copper-gold target;

Anomalous zinc values up to 12m @ 1.1% within a larger intersection of 50m @ 0.44% Zn;

Mineralised unit more than 250 m thick and open to the north, south and east; and

35 km from port.

figure 6: Drilling ilo norte


figure 7: ilo norte Drilling section

mariela iron ore project

The Mariela Iron Ore Project (Mariela) is situated in very close proximity to key infrastructure as it is located directly on the Pan-American Highway, a major road transport route, and is only 60 km from a major port.

Mariela is based around 5 contiguous mining concessions covering 3,200 hectares in the Islay Province of Arequipa in Southern Peru. Figure 4 shows the location and proximity to the paved Pan-American.

highlights

Ground magnetic survey delineates a high intensity (3000nT) anomaly with the modelled source under 30-100 m of cover and measuring 3000 m long, 1000 m wide and up to 200 m thick;

30% magnetite equivalent cut-off (1SI unit) used in “straight forward model” completed to match measured total magnetic field;

Bi-polar anomaly characteristic of low magnetic latitudes;

Gravity survey will commence immediately to allow for improved drill targeting;

Located directly on major road transport route and only 60 km from major mining port; and

Close proximity to major highway.


figure 8: magnetite survey

Competent person statement

The information in this report that relates to Geological and Geochemical Data, Exploration Results and any Conceptual Exploration Target is based on information compiled by Mr Andrew Bristow, a full time employee of Latin Resources Limited’s Peruvian subsidiary. Mr Bristow is a member of the Australian Institute of Geoscientists and has sufficient experience which is relevant to the style of mineralization and the type of deposit under consideration to qualify as a Competent Person as defined in the December 2004 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code). Mr Bristow consents to the inclusion in this report of the matters based on his information in the form and context in which they appear.


CORPORATE

initial public offer (“ipo”) successfully concluded oversubscribed

The IPO announced on 8 July 2010 was fully subscribed in September. Under the offer Latin offered 25 million shares at $0.20 per share to raise $5 million. Oversubscriptions of up to a further $1 million were accepted to take the total capital raising to $6 million.

The 10 cent options held by Dempsey Resources Pty. Ltd. were converted and the allotment and dispatch of the 5,000,000 Dempsey Options was finalised during the quarter.

The Convertible Note totalling $2.2 million was also repaid in full and the Fixed and Floating Charge which secured the Convertible note was discharged.

latin admitted to asX official list

Latin was admitted to the Official List of the ASX Limited on Thursday 16 September and the Official Quotation of the shares commenced on 21 September 2010.

Change of Company secretary

In October 2010 Mr James Moran replaced Mr Morgan Barron as Company Secretary. Mr Moran is also the Chief Financial Officer. He has gained considerable experience over the past 25 years in Australia, Ghana, Mongolia, China and New Zealand. His past roles covered the administration, commercial and financial aspects of resources projects and companies.

Change of general manager of peruvian subsidiaryOn 1 November Mr Andrew Bristow replaced Mr Stanley Myers as General Manager of Peruvian Latin Resources S.A.C. He has significant experience in mineral exploration in Australia, Africa and South America, including 10 years based in Peru. Mr Bristow holds a B.App.Sc. from Queensland University of Technology, a B.Sc. (Hons I) from James Cook University of North Queensland and an MBA from the CENTRUM business school of Peru’s Catholic University. He is a member of the Australian Institute of Geoscientists and a Fellow of the Association of Applied Geochemists.

issue of 6 million unlisted optionsPursuant to the Prospectus Offer dated 24 June 2010 the issue and allotment of six million unlisted options were finalised in October. These options have an exercise price of $0.30 and expire on 31 March 2013.

non- renounceable rights issueOn 22 November 2010 the Company announced a non-renounceable rights issue. This was a pro rata non renounceable issue on the basis of one (1) Option for every 5 (five) Shares held by Shareholders (as at 30 November) at an issue price of $0.01 per Option. This was to raise up to approximately $265,500.

The offer closed on 17 December 2010 with a shortfall of 3,511,700 options and the Board placed these options.

shares released from escrowOn 29 December, 5 million fully paid shares in the name of Dempsey Resources Pty Ltd were released from escrow and quotation on the ASX was applied for.

indemnification of officers and auditorsDuring the financial year, the company paid a premium in respect of a contract insuring the directors of the company, as named above, the Company Secretary, Mr James Moran, and all executive officers of the company against a liability incurred as such a director, secretary or executive officer to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.

The company has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified or agreed to indemnify an officer of the company against a liability as such an officer.

Changes in state of affairsOn September 21, 2010 the Company was admitted to the Official List of the Australian Securities Exchange. Apart from this milestone there was no other significant change in the state of affairs.


subsequent eventsShare Purchase Plan closed undersubscribedThe Share Purchase Plan announced on 9 June 2011 closed undersubscribed on 10 August 2011. Only 1,686,522 shares were applied for under the plan and $438,496 was received. These shares were issued and allotted on 10 August 2011.General Meeting of ShareholdersOn 11 August 2011 a general meeting of shareholders was held primarily to ratify the change in the level of activity undertaken by the company’s wholly owned subsidiary company, Peruvian Latin Resources SAC.This change in the level of activity resulted from the acquisition of additional mining concessions at the Guadalupito project in Peru.

Directors meetingsThe following table sets out the number of directors’ meetings (including meetings of committees of directors) held during the financial year and the number of meetings attended by each Director (while they were a Director or committee member). During the financial year, 9 board meetings were held and 16 circular resolutions were ratified.

Board of Directors

Directors eligible to attend attended

Roderick Brown 9 9

Chris Gale 9 9

Mark Rowbottam 9 9

David Vilensky 9 9


remuneration report (auDiteD)

This remuneration report, which forms part of the directors’ report, sets out information about the remuneration of Latin Resources Limited’s directors and its senior management for the financial year ended 30 June 2011. The prescribed details for each person covered by this report are detailed below under the following headings:

Director and senior management details; µ

remuneration policy; µ

relationship between the remuneration policy and company performance; andµ

remuneration of director and senior management.µ

Director and senior management details

The following persons acted as Directors of the Company during or since the end of the financial year:

Directors

Mr Roderick Brown (Chairman)

Mr Chris Gale (Managing Director)

Mr Mark Rowbottam (Non-executive Director)

Mr David Vilensky (Non-executive Director)

executives

Mr James Robert Moran (Appointed 18 October 2010)

Unless otherwise disclosed, the KMP held their position from 1 July 2010 until the date of this report.

remuneration policy

Directors

The Company’s Constitution provides that the remuneration of Directors (excluding salaries to executive Directors) will be not more than the aggregate fixed sum determined by a general meeting. The aggregate remuneration for Directors (excluding salaries to executive Directors) has been set at an amount not to exceed $350,000 per annum.

The remuneration of executive directors will be determined from time to time by the Board having regard to the nature and extent of their responsibilities.

The remuneration of an Executive Director will be decided by the Board, without the affected Executive Director participating in that decision-making process.

The total maximum remuneration of Non-Executive Directors is the subject of a Shareholder resolution in accordance with the Company’s Constitution, the Corporations Act 2001 and the ASX Listing Rules, as applicable. The determination of Non-Executive Directors’ remuneration within that maximum will be made by the Board having regard to the inputs and value to the Company of the respective contributions by each Non-Executive Director. The current limit, which may only be varied by Shareholders in general meeting, is an aggregate amount of $350,000 per annum.

The Board may award additional remuneration to Non-Executive Directors called upon to perform extra services or make special exertions on behalf of the Company.

Executives

The policy is to structure compensation levels for Executives competitively in order to attract and retain appropriately qualified and experienced Executives. The remuneration levels are based on commercial rates of remuneration for similar levels of responsibility and experience.


relationship between the remuneration policy & company performance (continued)

At this stage of the Company’s activities, the remuneration policy does not include provisions to link Key Management remuneration to Company performance. In the coming months the board intends to adopt provisions in the Company’s remuneration policy to provide Key Management Personnel with incentives to improve company performance and shareholder wealth.

The overall level of executive reward will take into account the performance of the Group over a number of years, with greater emphasis given to the current and prior year. Group performance is reflected in the movement of the Group’s earnings or loss per share over time. Group performance will also be measured by assessing the movement in the Company’s share price.

Remuneration levels are not dependent upon any performance criteria as the nature of the Group’s operations is exploration and they are not generating profits.

The tables below set out the summary information about the consolidated activities and shareholder wealth:-

30 June 2011 30 June 2010

$ $

Loss (5,591,697) (3,224,230)

Net Loss before tax (5,591,697) (3,224,230)

Net Loss after tax (5,591,697) (3,224,230)

Share price at start of year (The company listed on 21 September 2010)

- -

Share price at end of year $0.25 -

Basic earnings per share (0.04) (0.04)

Diluted earnings per share (0.04) (0.04)


remuneration of directors and senior management for the year ended 30 June 2011, and 30 June 2010

30 June 2011 Short-term employee benefits

Postemployment

benefits

Other long-term employee benefits

Share-based

payment Total

Salary & Fees

$Bonus

$

Non-monetary

$Other

$Super’n

$ $

Options & rights

$ $

Directors

Roderick Brown 71,999 - - - 23,650(b) - - 95,649

Chris Gale 251,500 - - 12,000 - - - 263,500

Mark Rowbottam 45,000 - - - - - - 45,000

David Vilensky 38,500 - - - - - - 38,500

executives

James Moran(a) 140,256 - - - 12,623 - - 152,879

Total 547,255 - - 12,000 36,273 - - 595,528

Appointed 18 October 2010(a)

Includes salary sacrifice - $17,170(b)

30 June 2010 Short-term employee benefitsPost

employment benefits

Other long-term employee benefits

Share-based

paymentTotal

Salary & Fees

$Bonus

$

Non-monetary

$Other

$

Super-annuation

$ $

Options & rights

$ $Directors

Roderick Brown(b) 9,265 - - - - - - 9,265

Chris Gale 153,500 - - - - - - 153,500

Mark Rowbottam 67,500 - - - - - - 67,500

David Vilensky 18,250 - - - - - - 18,250

Kim Bischoff(c) - - - - - - - -

executives

Morgan Barron - - - - - - - -

Total 248,515 - - - - - - 248,515

Appointed 14 May 2010(c)

Appointed 24 Dec 2009, resigned 18 Mar 10(d)

There were no share based payment arrangements for key management personnel in existence during the year.

auditor’s independence Declaration

The auditor’s independence declaration under section 307C of the Corporations Act 2001 is set out on page 19 for the year ended 30 June 2011.

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

Mr Roderick BrownNon-executive ChairmanDated this, the 30th day of September 2011


The directors declare that:

in the directors’ opinion, there are reasonable grounds to believe that the company will be able to pay its (a) debts as and when they become due and payable;

in the directors’ opinion, the attached financial statements are in compliance with International Financial (b) Reporting Standards, as stated in note 3(a) to the financial statements;

in the directors’ opinion, the attached financial statements and notes thereto are in accordance with the (c) Corporations Act 2001, including compliance with accounting standards and giving a true and fair view of the financial position and performance of the company and the consolidated entity; and

the directors have been given the declarations required by s295A of the Corporations Act 2001.(d)

Signed in accordance with a resolution of the Directors made pursuant to s.295 (5) of the Corporations Act 2001.

On behalf of the Directors

Mr Roderick BrownNon-executive ChairmanDirectorSigned on 30th September 2011, in Perth, Western Australia.

DireCtors’ DeClaration


auDitor’s inDepenCenCe DeClaration


Consolidated statement of Comprehensive income

For the year ended 30 June 2011

notes

year ended

30 June 2011

$

year ended

30 June 2010

$

Finance income 4(a) 25,508 11,157Depreciation expense 4(d) (23,108) (4,376)Employee benefits expense (881,767) (257,715)Finance costs 4(c) (101,769) (609,815)Professional fees (90,674) (522,910)Occupancy expenses (82,031) (123,807)Foreign exchange gain/(loss) (111,000) (7,897)Exploration and evaluation expenditure (2,504,799) (1,325,776)Administrative expenses (1,822,057) (383,091)

Loss before tax (5,591,697) (3,224,230)Income tax expense 21 - -LOSS FOR THE YEAR (5,591,697) (3,224,230)

Other comprehensive income Exchange differences on translating foreign operations

Exchange differences arising during the year 279,654 (69,043)

TOTAL COMPREHENSIVE LOSS FOR THE YEAR (5,312,043) (3,293,273)

Loss attributable to Owners of the Company (5,591,697) (3,224,230)Total comprehensive loss attributable to Owners of the Company

(5,312,697) (3,293,273)

Basic loss per share 15 (0.04) (0.04)Diluted loss per share 15 (0.04) (0.04)

The accompanying notes form part of this financial report.


Consolidated statement of financial position

As at 30 June 2011

Notesyear ended

30 June 2011year ended

30 June 2010

$ $

assetsCurrent assetsCash and bank balances 5 3,314,271 284,897Trade and other receivables 6 147,746 106,123Other current assets 6 414,659 140,182total Current assets 3,876,676 531,202

non-Current assetsProperty, plant & equipment 18 100,969 90,288Mining rights & exploration expenses 19 235,044 62,775total non-Current assets 336,014 153,063total assets 4,212,690 684,265

liaBilitiesCurrent liaBilitiesTrade and other payables 7 650,922 289,469Provisions 7 98,247 72,184Interest bearing loans and liabilities 8 - 2,205,494total Current liaBilities 749,168 2,567,147total liaBilities 749,168 2,567,147net assets 3,463,522 (1,882,882)

equityIssued capital 9 12,198,743 2,960,153Reserves 9 1,544,145 (155,365)Accumulated losses (10,279,366) (4,687,670)total equity 3,463,522 (1,882,882)



Consolidated statement of Changes in equity


Consolidatedissued Capital

Convertible note

foreign exchange reserve

share Based payment reserve

accumulated losses total

$ $ $ $ $ $Balance at 1 July 2009 668,004 349,884 (86,322) - (1,463,439) (531,874)Profit/(loss) for the period - - - - (3,224,231) (3,224,231) Other comprehensive income for the period - - (69,043) - - (69,043)Total comprehensive income for the period - - (69,043) - (3,224,231) (3,293,274)Issue of Shares 2,001,775 - - - - 2,001,775Share Issue Costs (59,510) - - - - (59,510) Balance at 30 June 2010 2,610,269 349,884 (155,365) - (4,687,670) (1,882,882)Profit/(loss) for the period - - - - (5,591,697) (5,591,697)Other comprehensive income for the period - - 279,654 - - 279,654Total comprehensive income for the period - - 279,654 - (5,591,697) (5,312,043)Transfers between equity 349,884 (349,884) - - - -Issue of Shares - IPO 6,000,000 - - - - 6,000,000Issue of Shares - Options Conversion 1,000,000 - - - - 1,000,000Issue of Shares - Placement 4,000,000 - - - - 4,000,000Issue of Options - Entitlements Issue 412,500 - - - - 412,500Share Issue Costs (2,173,910) - - - - (2,173,910)Issue of Options - - - 1,419,856 - 1,419,856Balance at 30 June 2011 12,198,743 - 124,289 1,419,856 (10,279,367) 3,463,522



Consolidated statement of Cash flows


notesyear ended

30 June 2011year ended

30 June 2010

$ $

Cash flows from operating activitiesPayments to suppliers and employees (5,465,219) (2,525,197)Interest received 25,508 17,320Interest paid (92,520) (294,438)net cash flows (used in) operating activities 5 (5,532,231) (2,802,315)

Cash flows from investing activitiesPurchase of plant and equipment (33,729) (73,152)Disposal of plant & equipment - -net Cash flows (used in) investing activities (33,729) (73,152)

Cash flows from financing activitiesProceeds from the issue of equity 11,412,501 2,001,775Capital raising costs (813,564) (59,510)Repayment of borrowings (2,205,494) -net cash (from) financing activities 8,393,443 1,942,265

net (decrease)/increase in cash and cash equivalents 2,827,482 (933,202)Cash and cash equivalents at the beginning of the period 284,897 1,243,982Effects of movement in foreign exchange 201,892 (25,883)Cash and cash equivalents at the end of the period 5 3,314,271 284,897



1. general information

Latin Resources Limited (the Company) is a limited company incorporated in Australia.

The addresses of its registered office and principal place of business are disclosed in the introduction to the annual report.

appliCation of new anD reviseD aCCounting stanDarDs2.

Standards and Interpretations affecting amounts reported in the current period (and/or prior periods)

The following new and revised Standards and Interpretations have been adopted in the current period and have affected the amounts reported in these financial statements. Details of other Standards and Interpretations adopted in these financial statements but that have had no effect on the amounts reported are set out in this section.

Standards affecting presentation and disclosure

Amendments to AASB 7

‘Financial Instruments: Disclosure’ (adopted in advance of effective date of 1 January 2011)

The amendments (part of AASB 2010-4 ‘Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project’) clarify the required level of disclosures about credit risk and collateral held and provide relief from disclosures previously required regarding renegotiated loans


‘Presentation of Financial Statements’ (adopted in advance of effective date of 1 January 2011)

The amendments (part of AASB 2010-4 ‘Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project’) clarify that an entity may choose to present the required analysis of items of other comprehensive income either in the statement of changes in equity or in the notes to the financial statements.


‘Statement of Cash Flows’

The amendments (part of AASB 2009-5 ‘Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project’) specify that only expenditures that result in a recognised asset in the statement of financial position can be classified as investing activities in the statement of cash flows. Consequently, cash flows in respect of development costs that do not meet the criteria in AASB 138 ‘Intangible Assets’ for capitalisation as part of an internally generated intangible asset (and, therefore, are recognised in profit or loss as incurred) have been reclassified from investing to operating activities in the statement of cash flows.

Standards and Interpretations affecting the reported results or financial position

AASB 2009-5 ‘Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project’

Except for the amendments to AASB 5 and AASB 107 described earlier this section, the application of AASB 2009-5 has not had any material effect on amounts reported in the financial statements.

AASB 2009-8 ‘Amendments to Australian Accounting Standards – Group Cash-Settled Share- based Payment Transactions’

The application of AASB 2009-8 makes amendments to AASB 2 ‘Share-based Payment’ to clarify the scope of AASB 2, as well as the accounting for group cash-settled share-based payment transactions in the separate (or individual) financial statements of an entity receiving the goods or services when another group entity or shareholder has the obligation to settle the award.

notes to the financial statements



notes to the financial statements for the year ended 30 June 2011 (continued)

appliCation of new anD reviseD aCCounting stanDarDs (Cont’D)2.

AASB 2009-10 ‘Amendments to Australian Accounting Standards – Classification of Rights Issues’

The application of AASB 2009-10 makes amendments to AASB 132 ‘Financial Instruments: Presentation’ to address the classification of certain rights issues denominated in a foreign currency as either an equity instrument or as a financial liability. To date, the Group has not entered into any arrangements that would fall within the scope of the amendments.

AASB 2010-3 ‘Amendments to Australian Accounting Standards arising from the Annual Improvements Project’

The application of AASB 2010-3 makes amendments to AASB 3(2008) ‘Business Combinations’ to clarify that the measurement choice regarding non-controlling interests at the date of acquisition is only available in respect of non- controlling interests that are present ownership interests and that entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation. All other types of non-controlling interests are measured at their acquisition-date fair value, unless another measurement basis is required by other Standards.

In addition, the application of AASB 2010-3 makes amendments to AASB 3(2008) to give more guidance regarding the accounting for share-based payment awards held by the acquiree’s employees. Specifically, the amendments specify that share-based payment transactions of the acquiree that are not replaced should be measured in accordance with AASB 2 ‘Share-based Payment’ at the acquisition date (‘market-based measure’).

AASB 2010-4 ‘Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project’

Except for the amendments to AASB 7 and AASB 101 described earlier this section, the application of AASB 2010-4 has not had any material effect on amounts reported in the financial statements.

Interpretation 19 ‘Extinguishing Financial Liabilities with Equity Instruments’.

This Interpretation provides guidance regarding the accounting for the extinguishment of a financial liability by the issue of equity instruments. In particular, the equity instruments issued under such arrangements will be measured at their fair value, and any difference between the carrying amount of the financial liability extinguished and the fair value of equity instruments issued will be recognised in profit or loss. To date, the Group has not entered into transactions of this nature.

Standards and Interpretations on issue not yet adopted

At the date of authorisation of the financial statements, the Standards and Interpretations listed below were in issue but not yet effective.

standard/interpretation

effective for annual reporting periods

beginning on or after

expected to be initially applied in

the financial year ending

AASB 124 ‘Related Party Disclosures’ (revised December 2009), AASB 2009-12 ‘Amendments to Australian Accounting Standards’.

1 January 2011 30 June 2012

AASB 9 ‘Financial Instruments’, AASB 2009-11 ‘Amendments to Australian Accounting Standards arising from AASB 9’ and AASB 2010-7 ‘Amendments to Australian Accounting Standards arising from AASB 9 (December 2010)’.


AASB 2009-14 ‘Amendments to Australian Interpretation – Prepayments of a Minimum Funding Requirement’


AASB 2010-5 ‘Amendments to Australian Accounting Standards. 1 January 2011 30 June 2012



appliCation of new anD reviseD aCCounting stanDarDs (Cont’D)2.

AASB 2010-6 ‘Amendments to Australian Accounting Standards – Disclosures on Transfers of Financial Assets’.

1 July 2011 30 June 2012

AASB 2010-8 ‘Amendments to Australian Accounting Standards – Deferred Tax: Recovery of Underlying Assets’.


signifiCant aCCounting poliCies3.

a) Statement of compliance

These financial statements are general purpose financial statements which have been prepared in accordance with the Corporations Act 2001, Accounting Standards and Interpretations, and comply with other requirements of the law.

The financial statements comprise the consolidated financial statements of the Group.

Accounting Standards include Australian Accounting Standards. Compliance with Australian Accounting Standards ensures that the financial statements and notes of the company and the Group comply with International Financial Reporting Standards (‘IFRS’).

The financial statements were authorised for issue by the directors on 30th September 2011.

Basis of b) preparation

The consolidated financial statements have been prepared on the basis of historical cost, except for certain non-current assets and financial instruments that are measured at revalued amounts or fair values, as explained in the accounting policies below. Historical cost is generally based on the fair values of the consideration given in exchange for assets. All amounts are presented in Australian dollars, unless otherwise noted.

The following significant accounting policies have been adopted in the preparation and presentation of the financial report:

Going Concernc)

The financial report has been prepared on a going concern basis, which assumes continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business.

For the year ended 30 June 2011 the consolidated entity incurred losses of $5,591,697 (2010: $3,224,230) and had cash outflows from operating and investing activities of $5,565,960 (2010: $2,875,467). Further as disclosed in note 16, the Company incurred a loss of $2,207,738 (2010: $5,049,762) for the year ended 30 June 2011.

As disclosed in note 14, on 11 August 2011 the Company received shareholder approval for the purchase of the Guadalupito Project in Peru. The consolidated entity is required to make instalment payments totalling US$1,050,000 within 12 months of the date of this report.

The Company is currently engaged in commercially confidential negotiations with a number of interested parties regarding:

potential project funding including farm-in arrangements; and/orµpartial or complete disposalµ

of some of its Peruvian projects (“proposed transactions”). As at the date of this report the negotiations are ongoing.

The ability of the Company and consolidated entity to continue as going concerns is principally dependent upon the ability of the Company and consolidated entity to successfully complete the proposed transactions and managing cash flow in line with available funds. In the event that the proposed transactions do not proceed, the Company will be required to secure funds by raising a minimum of approximately $3.5 million by January 2012.

The directors have prepared a cash flow forecast including the impact of the proposed transactions mentioned above, which indicates that the Company and consolidated entity will have sufficient cash flows to meet all commitments and working capital requirements for the 12 month period from the date of signing this financial report.

Based on the cash flow forecasts and other factors referred to above, the directors are satisfied that the going concern basis of preparation is appropriate. In particular, given the Company’s and consolidated entity’s.



signifiCant aCCounting poliCies (ContinueD)3.

Going Concern (continued)c)

history of raising capital to date, the directors are confident of the Company’s and consolidated entity’s ability to raise additional funds as and when they are required.

Notwithstanding the above, there is a material uncertainty whether the Company and consolidated entity will continue as going concerns and, therefore, whether they will realise their assets and extinguish their liabilities in the normal course of business and at the amounts stated in the financial statements. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or to the amount and classification of liabilities that might be necessary should the Company and the consolidated entity not continue as going concerns.

As at the date of this report the Company has approximately $2,000,000 in cash and cash equivalents.

Basis of consolidationd)

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities

Income and expense of subsidiaries acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the effective date of acquisition and up to the effective date of disposal, as appropriate. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group.

All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non -controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company.

When the Group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. When assets of the subsidiary are carried at revalued amounts or fair values and the related cumulative gain or loss has been recognised in other comprehensive income and accumulated in equity, the amounts previously recognised in other comprehensive income and accumulated in equity are accounted for as if the Company had directly disposed of the relevant assets (i.e. reclassified to profit or loss or transferred directly to retained earnings as specified by applicable Standards). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under AASB 139 ‘Financial Instruments: Recognition and Measurement’ or, when applicable, the cost on initial recognition of an investment in an associate or jointly controlled entity.

Business combinationse)

Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value which is calculated as the sum of the acquisition-date fair values of assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity instruments issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred.

At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value at the acquisition date, except that:




Business combinations (continued)e)

deferred tax assets or liabilities and liabilities or assets related to employee µ benefit arrangements are recognised and measured in accordance with AASB 112 ‘Income Taxes’ and AASB 119 ‘Employee Benefits’ respectively;liabilities or equity instruments related to share-based payment arrangements of the acquiree or µshare-based payment arrangements of the Group entered into to replace share-based payment arrangements of the acquire are measured in accordance with AASB 2 ‘Share-based Payment’ at the acquisition date; andassets (or disposal groups) that are classified as held for sale in accordance with AASB 5 ‘Non- µcurrent Assets Held for Sale and Discontinued Operations’ are measured in accordance with that Standard.

The Group as lesseef)

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

Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognised immediately in profit or loss.

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

In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

Exploration, evaluation and development expenditure g)

Exploration and evaluation expenditure in relation to its mineral tenements is expensed as incurred. Where the Directors decide to progress the development in an area of interest all further expenditure incurred relating to the area is capitalised. Projects are advanced to development status and classified as mining properties when it is expected that further expenditure can be recouped through sale or successful development and exploitation of the area of interest. Such expenditure is carried forward up to commencement of production at which time it is amortised over the life of the economically recoverable reserves. All projects are subject to detailed review on an annual basis and accumulated costs written off to the extent that they will not be recoverable in the future.

Tenement acquisition costs are capitalised as part of deferred exploration and evaluation assets. Subsequent to acquisition exploration expenditure is expensed in accordance with the Company’s accounting policy.

An impairment review is undertaken when indicators of impairment arise, typically when one of the following circumstances apply:

Unexpected geological occurrences that render the resource uneconomic;µTitle to asset is compromised;µVariations in prices that render the project uneconomic; andµVariations in the currency of operation.µ

Foreign currenciesh)

The individual financial statements of each group entity are presented in the currency of the primary economic environment in which the entity operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each group entity are expressed in Australian dollars (‘$’), which is the functional currency of the Company and the presentation currency for the consolidated financial statements.




Foreign currencies (continued)h)

In preparing the financial statements of each individual group entity, transactions in currencies other than the entity’s functional currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non- monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences on monetary items are recognised in profit or loss in the period in which they arise except for:

• exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings; and

• exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur (therefore forming part of the net investment in the foreign operation), which are recognised initially in other comprehensive income and reclassified from equity to profit or loss on repayment of the monetary items.

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations are translated into Australian dollars using exchange rates prevailing at the end of the reporting period. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity (attributed to non- controlling interests as appropriate).

Goodwill and fair value adjustments on identifiable assets and liabilities acquired arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the rate of exchange prevailing at the end of each reporting period. Exchange differences arising are recognised in equity.

Employee benefitsi)

A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave, long service leave, and sick leave when it is probable that settlement will be required and they are capable of being measured reliably.

Liabilities recognised in respect of short-term employee benefits, are measured at their nominal values using the remuneration rate expected to apply at the time of settlement.

Liabilities recognised in respect of long term employee benefits are measured as the present value of the estimated future cash outflows to be made by the Group in respect of services provided by employees up to reporting date.

Share-based payments transactions of the Companyj)

Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in note 13.

The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of equity instruments that will eventually vest, with a corresponding increase in equity. At the end of each reporting period, the Group revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity-settled employee benefits reserve.

Equity-settled share-based payment transactions with parties other than employees are measured at the fair value of the goods or services received, except where that fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service.




Share-based payments transactions of the Company (continued)j)

For cash-settled share-based payments, a liability is recognised for the goods or services acquired, measured initially at the fair value of the liability. At the end of each reporting period until the liability is settled, and at the date of settlement, the fair value of the liability is remeasured, with any changes in fair value recognised in profit or loss for the year.

Property, plant & equipment k)

Plant and equipment is stated at cost less accumulated depreciation and any impairment in value.

Depreciation is calculated on a straight-line basis over the estimated useful life of the asset as follows:Motor Vehicles - over 8 yearsµPlant and equipment - over 2.5 to 9 yearsµ

Impairment

The carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets or cash-generating units are written down to their recoverable amount.

The recoverable amount of plant and equipment is the greater of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

Impairment losses are recognised in the statement of comprehensive income.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued used of the asset.

Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the income statement in the period the item is derecognised.

Recoverable amount of assets l)

At each reporting date, the company assesses whether there is any indication that an asset may be impaired. Where an indicator of impairment exists, the company makes a formal estimate of recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount the asset is considered impaired and is written down to its recoverable amount.

Recoverable amount is the greater of fair value less costs to sell and value in use. It is determined for an individual asset, unless the asset’s value in use cannot be estimated to be close to its fair value less costs to sell and it does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

Trade and other receivables m)

Trade receivables, which generally have 30-90 day terms, are recognised and carried at original invoice amount less an allowance for any uncollectible amounts.

An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off when identified.




Cash and cash equivalents n)

Cash and short-term deposits in the balance sheet comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less.

For the purposes of the Cash Flow Statement, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.

Interest-bearing loans and borrowings o)

Interest-bearing loans and borrowings, including borrowings, are initially measured at fair value, net of transaction costs.

Interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.

Interest-bearing loans and borrowings p)

The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they expire.

Provisions q)

Provisions are recognised when the company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Where the company expects some or all of a provision to be reimbursed the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the income statement net of any reimbursement.

If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

Leases r)

Finance leases, which transfer to the company substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments.

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

Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term.

Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as the lease income.

Operating lease payments are recognised as an expense in the income statement on a straight-line basis over the lease term.

Revenue s)

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:




Interestt)

Revenue is recognised as the interest accrues (using the effective interest method, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial instrument) to the net carrying amount of the financial asset.

Income tax u)

Deferred income tax is provided on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for the financial reporting purposes.

Deferred income tax liabilities are recognised for all taxable temporary differences:

except where the deferred income tax liability arises from the initial recognition of an asset or µliability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

in respect of taxable temporary differences associated with investments in subsidiaries, associates µand interests in joint ventures, except where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilised:

except where the deferred income tax asset relating to the deductible temporary differences µarises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

in respect of deductible temporary differences associated with investments in subsidiaries, µassociates and interests in joint ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.

Income taxes relating to items recognised directly in equity are recognised in equity and not in the income statement.

Other taxes v)

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

where the GST incurred on a purchase of goods and services is not recoverable from the taxation µauthority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

receivables and payables are stated with the amount of GST included.µ

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

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

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.




Financial instrumentsw)

Converting note

The component of the converting note that exhibits characteristics of a liability is recognised as a liability in the balance sheet.

On the issue of the converting note, the fair value of the liability component is determined using a market rate for an equivalent non-convertible bond and this amount is carried as a liability on the amortised cost basis until extinguished on conversion or redemption. The increase in the liability due to the passage of time is recognised as a finance cost.

The remainder of the proceeds is allocated to the conversion option that is recognised and included in shareholders equity. The value of the conversion option is not changed in subsequent years.

Operating Segments policy summaryx)

The Group has presented its operating segment information based on its two principal geographical areas – Australia (country of domicile) and Peru. Please see Note 20 for further information.



year ended30 June 2011

$


$REvEnuES & ExPEnSES 4.

Other income (a)

Interest income 25,508 11,157

25,508 11,157

Other expenses (b)

Taxes 2,810 599

2,810 599Finance (costs)/income (c) Banking fees & other expenses 8,341 5,177Financial interests 15 155Financial transaction tax 1,163 2,170Convertible note interest 92,250 602,313Total finance costs (on historical cost basis) 101,769 609,815Total finance costs 101,769 609,815

Depreciation, (d) Depreciation 23,108 4,376

23,108 4,376

For the purposes of the statement of cash flows, cash and cash equivalents include cash on hand and in banks. Cash and cash equivalents at the end of the reporting period as shown in the statement of cash flows can be reconciled to the related items in the statement of financial position as follows:-

CASh & CASh EquIvALEnTS5. year ended

30 June 2011$


$Cash at bank & in hand 3,314,271 284,897

3,314,271 284,897

Cash at bank and in hand earns interest at floating rates based on daily bank rates.

Short-term deposits are made for varying periods of between one day and one month depending on the immediate cash requirements of the Group and earn interest at the respective short-term deposit rates.

Sh & CASh EquIvALEnTS

Cyear ended

30 June 2011$


$Reconciliation from the net profit after tax to the net cash flows from operations Net profit/(loss) for the year (5,591,697) (3,224,230)Adjustments for:Depreciation and amortisation of non-current assets 23,108 4,376Investment revenue recognised in the profit or loss - (11,157)Finance costs recognised in the profit or loss - 332,697Net foreign exchange (gain)/loss 111,000 7,897Changes in assets & liabilities:(Increase)/decrease in trade & other receivables (83,849) 49,595(Increase)/decrease in other financial assets 42,440 (103,038)(Increase)/decrease in intangible assets - 7,171(Increase)/decrease in non-current assets (172,270) -Increase/(decrease) in trade & other payables 126,027 77,721Increase/(decrease) in provisions 13,010 56,653Net cash from operating activities (5,532,231) (2,802,315)



TRADE & OThER RECEIvABLES (CuRREnT)6. year ended30 June 2011

$


$Trade and other receivables

Sundry Debtors 69,977 21,023Prepayments 77,613 54,814Related party receivables: Other related parties 156 30,286

147,746 106,123Other current assets

GST collectable 414,659 -414,659 -

Other Financial Receivables are non-interest bearing and are generally on 60 day terms.

TRADE & OThER PAyABLES (CuRREnT)7.


$


$

Trade payables 650,922 282,101Provision for Employee Benefits 98,247 7,368

749,168 289,469

Trade payables are non-interest bearing and are normally settled on 60-day terms. Other payables are non-interest bearing and have an average term of 6 months.

The net of GST payable and GST receivable is remitted to the appropriate tax body on a quarterly basis.

InTEREST-BEARInG LOAnS & BORROwInGS8.

Current

effective interest

rate%

maturityyear ended

30 June 2011$


$

Convertible note – liability portion 12 24/09/10 - 2,205,494- 2,205,494

On 18 December 2009 Latin Resources Limited executed a Convertible Note with Dempsey Resources Pty Ltd (“Dempsey”) on the following terms and conditions:

Interest: 12% p.a. (accrued daily)Convers ion terms:

The Note holder may at any time convert all or a portion of the Note and outstanding interest into Shares by giving notice to the Company.

Security: The Note was secured by a fixed and floating charge (Charge) in favour of Dempsey. The Charge was over the Company’s assets including its iron ore concessions in Peru. The Charge was on ordinary commercial terms and was discharged when the Note was repaid.

This note was fully repaid on the 15th of September 2010 and the fixed and floating charge was also discharged.




$


$ISSuED CAPITAL & RESERvES9. 148,134,618 fully paid ordinary shares (30 June 2010: 92,750,000) 14,357,260 3,007,375Less capital raising costs (2,571,016) (397,106)

11,786,244 2,610,269

Fully Paid Ordinary Sharesnumber of

sharesshare Capital

$Balance at 1 July 2009 70,000,000 668,004Movements:

Issue of shares 22,750,000 2,001,775Less capital raising costs (59,510)

Balance at 30 June 2010 92,750,000 2,610,269Movements:

Issue of shares as follows:issued pursuant to IPOµ 30,000,000 6,000,000issued on conversion of optionsµ 10,000,000 1,000,000issued under Placementµ 15,384,618 4,000,000

Convertible Note – equity component - 349,884Cost of Equity - (2,173,909)

148,134,618 11,786,244OptionsBalance at 1 July 2010 - -

Issue of shares as follows:issued under Entitlement Issueµ 41,550,000 412,500

41,550,000 412,500total issued capital 12,198,743


$


$ReservesForeign Exchange Reserve 124,289 (155,365)Share Based Payment Reserve 1,419,856 -total reserves 1,544,145 (155,365)



COnvERTIBLE nOTE (EquITy)10. Conversion

price$

maturityyear ended

30 June 2011$


$

Convertible note – equity portion 0.10 19/08/10 - 349,884

- 349,884


$


$

AuDITORS’ REmunERATIOn 11.

Amounts received or due and receivable by Deloitte Touche Tohmatsu for:

An audit or review of the financial report of the entity and any other entity in the consolidated entity

43,500 16,500

43,500 16,500

COmmITmEnTS & COnTInGEnCIES12.

Operating lease commitment repayments as follows:Not later than one year 70,000 82,899Later than one year but not later than five years 5,000 5,000

75,000 87,899

exploration Commitments:

The Group is required to pay a right of concession fee of US$3 per hectare per annum. The Director’s Estimate based on current holdings, that this commitment is approximately $429,000 per annum.

Contingencies:

Teck Agreement

On 23 March 2010, Peruvian Latin Resources SAC (“PLR”) executed a regional exploration agreement (Exploration Agreement) with Teck Cominco Peru S.A. (Teck).

PLR will grant Teck the option to earn in 51% interest in a new company (First Option). Teck may only exercise the first option if it has invested no less than US$4,000,000 or twice the amount invested by PLR in the form of expenditure. Such expenditure must be made over a period of 3 years from the date of authorisation for such an exploration program.

In the event that PLR does not invest the required minimum US$2,000,000, Teck will have the option to exercise the First Option. Teck will then have 90 days in which to exercise a second option to invest a minimum US$2,000,000 to obtain an additional 9% interest in the new company. If PLR decides not to pursue any base metals dominant project, PLR will first offer the sale of the project to Teck for $100 and will maintain a 1% royalty capped at a maximum of US$5,000,000.

In the event the Company finds an iron ore deposit to explore and develop within the Area of Interest PLR will pay Teck a royalty of US$0.50 for each tonne of iron ore sold, capped at a maximum of US$5,000,000 per iron ore dominant project.

Guadalupito Option Agreement - Cia Minera

On 18 August 2009 PLR executed an option agreement to acquire the Cia Minera Mining Properties. The term of the option is 48 months with the total transfer price being US$900,000 payable in instalments. PLR may at any time terminate the assignment and return the mining properties to Cia Minera.

Guadalupito Option Agreement-Bonanza

On 18 August 2009 PLR executed an option agreement to acquire the Bonanza Mining Properties. The term of the option is 48 months with the total transfer price being US$3,000,000 payable in instalments.



PLR may at any time terminate the assignment and return the mining properties to Bonanza.

Other than described above, the Directors are unaware of any further commitments and contingencies at the date of this report.

ShARE BASED PAymEnTS13.

The following share based payments were made during the period ended 30 June 2011 in relation to the raising of capital for the company:

option series number grant Date expiry Dateexercise

pricefair value at grant Date

October 2010 6,000,000 20 October 2010 31 March 2013 $0.30 $0.068

December 2010 15,000,000 30 December 2010 31 March 2013 $0.30 $0.068

fair value of share options granted in the period:

Options were priced using a binomial option pricing model. Where relevant, the expected life used in the model has been adjusted based on management’s best estimate for the effects of non-transferability, exercise restrictions (including the probability of meeting market conditions attached to the option), and behavioural considerations.

seriesinput variable october 2010 December 2010Grant date share price $0.17 $0.14Exercise price $0.30 $0.30Expected volatility 0.88 0.88Dividend yield - -Risk-free interest rate 4.90% 5.28%Annualised time to expiry (midpoint) 2.45 2.25

SuBSEquEnT EvEnTS TO REPORTInG DATE14.

overview of Change of activities

Background

On Thursday 11 August 2011 shareholders ratified a transaction the company’s 100% owned subsidiary company Peruvian Latin Resources SAC (PLR) had entered into on February 10, 2011. This transaction resulted in PLR acquiring additional mining licenses in relation to the Guadalupito project in Peru.

The Company is predominantly focused on mineral exploration of mineral resources in Latin America, with a specific focus on Peru.

PLR entered into the above mentioned agreement to acquire 20 mining concessions totalling 14,068 hectares of iron and heavy sands tenements adjacent to the Company’s existing holdings at Guadalupito.

The agreement was with 14 individual vendor companies with a common principle shareholder pursuant to which the Company agreed to acquire 14,068 hectares of iron and heavy sands tenements adjacent to the Company’s existing holdings at Guadalupito in Peru.



SuBSEquEnT EvEnTS TO REPORTInG DATE (COnTInuED)14.

overview of Change of activities (continued)

In consideration for the acquisition of these additional licenses, PLR will pay to the Vendors a total of US$20.035 million which will be paid in instalments over ten years (Purchase Price). PLR has paid the first instalment of US$185,000 upon signing the Acquisition Agreement back in February 2011 and will continue to pay the Purchase Price in accordance with the following table:

Instalment Due Date Payment (US$)

Paid on signing 185,000

30 July 2011 100,000

30 October 2011 200,000

30 January 2012 250,000

30 April 2012 300,000

30 July 2012 300,000

30 October 2012 300,000

30 January 2013 400,000

30 January 2014 1,500,000

30 January 2015 1,500,000

30 January 2016 2,000,000

30 January 2017 2,000,000

30 January 2018 2,500,000

30 January 2019 2,500,000

30 January 2020 3,000,000

30 January 2021 3,000,000

TOTAL 20,035,000





mining Concessions being acquired

The mining concessions that will be acquired by PLR (being the Additional Guadalupito Tenements) under the Acquisition Agreement, together with details of the Vendors, are set out in the table below:

No. Concession Code

Extension, in whose base, use rights are paid

(Has.)

Registry Entry(Trujillo Seat)

Owner

1. SANTA NORTE XXI 010110107 800 11140355S.M.R.L. LA INCONDICIONAL II

2. SANTA NORTE XXII 010110207 1000 11140348S.M.R.L. LA INCONDICIONAL II

3. SANTA NORTE XXIII 010110007 1000 11136306S.M.R.L. SANTA ANA QUIROZ

4. MI AMITO XXII 010052700 200 20007174S.M.R.L. VIRGEN DE ALTA GRACIA XXI

5. MI AMITO XXI 010183699 300 20007173 S.M.R.L. ÉXITO XXIII

6. FÁTIMA XXI 010140800 400 20007175 S.M.R.L. ÉXITO XXIII

7. SANTA ROSA XXI 010134998 700 20006481 S.M.R.L. ADELY XXI

8. MACARENA XXI 030005297 700 20006464 S.M.R.L. ADELY XXI

9. MACARENA XXII 010058807 1000 11136323 S.M.R.L. ADELY XXVII

10. SANTA XXIII 010059507 600 11136272 S.M.R.L. ADELY XXVII

11. SANTA XXII 010059107 1,000 11136302S.M.R.L. LA ESPERANZA XXI

12. SANTA 70 630002908 600 11136244 S.M.R.L. OYON XXII

13. AUXILIADORA II 010058607 970.2068 11136245 S.M.R.L. OMAY 300

14. AUXILIADORA III 010058707 994.3434 11136324 S.M.R.L. ÉXITO XXIV

15. SAN FRANCISCO XXI 010058907 862.5004 11136309 S.M.R.L. JOSELYN XXII

16. SANTA XIX 010059007 941.0295 11136243 S.M.R.L. OMAY 200

17. SANTA XX 630004209 700 Not registered S.M.R.L. JOSELYN XX

18. SANTA XVI 630004009 100 Not registered S.M.R.L. JOSELYN XX

19. SANTA XXI 630003509 1000 Not registered S.M.R.L. ANGELO XXV

20. SANTA XVIII 630004109 200 Not registered S.M.R.L. JOSELYN XX

acquisition terms

The Acquisition Agreement provides that title to the Additional Guadalupito Tenements transfers to PLR immediately, subject to the requirements of the Peruvian mining laws. There are no conditions precedent in the Acquisition Agreement.

As security for payment of the Purchase Price, the Vendors have taken a mortgage over each of the Additional Guadalupito Tenements. The mortgages will be reduced and released as the instalment payments of the Purchase Price are made in accordance with the terms of the Acquisition Agreement.





In the event that PLR defaults in payment of any instalment of the Purchase Price, the Vendors may give a default notice allowing PLR 60 days to rectify the default. If PLR does not rectify the default in this time period, the Vendors will be entitled to enforce the mortgages and take back title to some or all of the Additional Guadalupito Tenements. In this circumstance, PLR would forfeit any prior instalments of the Purchase Price that have been made.

The Acquisition Agreement also provides that PLR will pay to the Vendors a net smelting royalty of 1% which is calculated on all extracted and commercialised minerals from the Additional Guadalupito Tenements.

legal title

The mining concessions have been inscribed in the public registry, and the transfer of title to PLR has been duly inscribed on the title. i.e. PLR is currently title holder. A legal mortgage is also inscribed on the title in favour of the Vendors.

Two mining concession petitions (claims applied for but yet to be titled), have yet to be titled because of the failure of Chavimochic Special Project to provide a favourable opinion over the granting of title. Chavimochic have given favourable opinion over all other concession in the area, and the Company understands that this is just a formality to be completed. PLR have presented a preventative annotation to public registry that will effect titling direct to PLR based on the transfer agreement when the petitions are finally granted and converted to titled mining concessions.

EARnInGS PER ShARE15.

Consolidated Consolidated

net loss used in calculating basic and diluted earnings per share:

year ended 30 June

2011$

year ended 30 June

2010$

Profit/(loss) for the period (5,591,697) (3,224,230)

year ended30 June2011

year ended30 June2010

Weighted average number of ordinary shares 125,995,259 74,083,562

Effect of dilutive securities (a) - -

Adjusted weighted average number of ordinary shares and potential ordinary shares used in calculating diluted earnings per share

125,995,259 74,083,562

(a) As at balance date the 44,550,000 listed options (which represent 44,550,000 potential ordinary shares) were not dilutive as they would decrease the loss per share.

Consolidated Consolidatedyear ended

30 June2011

year ended30 June

2010

Basic Earnings per share (0.04) (0.04)

Diluted Earnings per share (0.04) (0.04)




$


$

PAREnT EnTITy DISCLOSuRES 16.

Financial position (a)

assets Current assets 6,649,940 265,429Non-current assets 27,216 -Total assets 6,677,156 265,429

liabilities Current liabilities 485,689 2,465,160Non-current liabilities - -Total liabilities 485,689 2,465,160

Equity Issued capital 12,198,743 2,669,779Share Based Payment Reserve 1,419,856 -Retained earnings (7,427,132) (5,219,394)Convertible note (equity) - 349,884Total equity 6,191,467 (2,199,731)

Financial performance (b)

Profit/(Loss) for the year (2,207,738) (5,049,762)Total comprehensive loss for the year (2,207,738) (5,049,762)

Commitments and contingencies of the parent entity (c)

Operating lease commitment repayments are as follows: Not later than one year 70,000 60,000 Later than one year but not later than five years 5,000 5,000

75,000 65,000Other than described above, the Directors are unaware of any further commitments and contingencies at the date of this report.

RELATED PARTIES DISCLOSuRE 17.

The Directors and other members of key management personnel of the Group during or since the end of the financial year are:Mr Roderick Brown (Chairman) (appointed 14 May 2010)Mr Chris Gale (Managing Director)Mr Mark Rowbottam (Non-executive Director)Mr David Vilensky (Non-executive Director)Mr James Moran (Company Secretary) appointed 18 October 2010

Key management personnel compensationyear ended

30 June 2011$


$Short-term employee benefits 568,579 248,515Post-employment benefits 37,112 -Other long-term employee benefits - -Share-based payment - -

605,691 248,515

The compensation of each member of the key management personnel of the Group is set out on the Directors’ Remuneration Report.



RELATED PARTIES DISCLOSuRE (COnTInuED)17.

as at the date of this report the Directors have relevant interest in shares as set out below:

Balance at1 July

number

granted as compensation

number

net other Changenumber

Balance at30 June number

2011Roderick Brown (a) 750,000 - 57,692 807,692Christopher Gale (b) 12,480,000 - (1,392,308) 11,087,692Mark Rowbottam (c) 6,425,000 - 73,730 6,498,730David Vilensky (d) 1,400,000 - (130,770) 1,269,230

2010Roderick Brown (a) - - 750,000 750,000Christopher Gale (b) 15,705,000 - (3,225,000) 12,480,000Mark Rowbottam (c) 8,905,000 - (2,480,000) 6,425,000David Vilensky (d) 1,000,000 - 400,000 1,400,000

807,692 shares (2010: 750,000) are held by Mr Roderick James McKenzie Brown and Mrs Lynette Seymour (a) Brown as trustees for the Enterprise Super Fund, a superfund that Mr Brown has relevant interest.

11,087,692 shares (2010: 12,480,000 shares) are held by Lascelles Holdings Pty Ltd, a company that Mr Gale (b) is a director and has relevant interest. The balance of 1,450,000 shares (2010: 1,450,000 shares) are held by family members.

6,498,730 shares (2010: 6,425,000 shares) are held by Heelmo Holdings Pty Ltd, a company that Mr (c) Rowbottam is a director and has a relevant interest.

1,269,230 shares (2010: 1,250,000 shares) are held by Coilens Corporation Pty Ltd, a company that Mr (d) Vilensky is a director of and has a relevant interest. Coilens Corporation Pty Ltd is also a shareholder in Fidelis Corporation Limited.

No options are held by key management personnel at the date of this report (2010: nil).

other transactions with key management personnel

Throughout the financial year up until March 31, 2011 Allegra Capital Pty Ltd, a related party of Mr Chris Gale and Mr Mark Rowbottam has been paid the following:


$


$Rent 40,000 65,000Accounting fees 38,714 33,633Brokerage fees 221,489 -

On April 1, 2011 the company took over as head lessee of the office lease, which Allegra Capital had previously been and then Allegra Capital sublet the office space from the company.

Bowen Buchbinder & Vilensky Lawyers, a related party of Mr David Vilensky has been paid the following:

Legal Fees 46,238 9,846

outstanding balances as at 30 June:

Allegra Capital Limited 659 14,884David Vilensky - 1,650

The above transactions have been made at arm’s length.

interest in subsidiaries

The current shareholders of Peruvian Latin Resources S.A.C (a company incorporated in Peru) are Latin Resources Limited, with 99.96% (2,799 shares) of the issued shares of the Company, and Christopher Peter Gale, who owns 0.04% (1 share) of the issued shares of the company.

Mr Gale holds his 1 share on trust for Latin Resources Limited.

There are no shareholder agreements, and the Company’s shares are free of liens and encumbrances. This has been confirmed also with the Company’s Stock Ledger.



PROPERTy, PLAnT & EquIPmEnT18.


$


$Carrying amounts of:

Motor Vehicle 19,483 30,570Furniture 12,207 8,397Several Equipment 32,694 19,738Computer Equipment 31,481 31,583Office Equipment 4,285 -Leasehold Improvements 819 -

100,969 90,288

Cost or ValuationMotor

Vehicles at cost

Furniture at cost

Several Equipment

at cost

Computer Equipment

at cost

Office Equipment

at cost

Leasehold Improvements at fair value

Total

Balance at 30 June 2010 32,443 9,206 21,193 41,400 - - 104,242Additions - 6,526 19,012 24,092 4,448 890 54,966Disposals - - - - - - -

Effect of foreign currency exchange differences (6,057) (1,718) (3,956) (12,125) - - (23,858)

Balance at 30 June 2011 26,386 14,014 36,249 53,367 4,448 890 135,354

Accumulated depreciation & impairmentBalance at 30 June 2010 1,873 809 1,455 9,817 - - 13,954Depreciation expense 5,379 1,149 2,371 11,843 163 71 23,108Effect of foreign currency exchange differences (349) (151) (271) (1,896) - - (1,917)

Balance at 30 June 2011 6,903 1,807 3,555 21,886 163 71 34,385

ExPLORATIOn AnD EvALuATIOn ExPEnDITuRE19.


$


$

Opening Balance 62,775 -Additions 172,269 62,775Impairment - -

235,044 62,775

The ultimate recoupment of the capitalised expenditure is dependent upon successful development and commercial exploitation or alternatively the sale of the respective areas of interest at amounts at least equal to book value.



SEGmEnT InFORmATIOn20.

AASB 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by senior management in order to allocate resources to the segment and to assess it performance.

The Group has two segments – Australia and Peru. Information regarding these segments is presented below. The accounting policies of the reportable segments are the same as the Group’s accounting policies.

The following is an analysis of the Group’s results reportable by operating segment for the periods under review:-

The following table presents the Group’s assets and liabilities by reportable operating segment as at 30 June 2011:


australia peru total30 June 2010Assets and liabilities- Segment assets 264,588 419,677 684,265

- Segment liabilities 2,465,160 101,987 2,567,147

30 June 2011Assets and liabilities- Segment assets 3,239,160 973,530 4,212,690

- Segment liabilities 485,689 263,479 749,168

The following is an analysis of the Group’s revenue and results from continuing operations by reportable segments:

segment revenue segment profit/(loss)


$


$


$


$Australia 25,511 11,157 (2,207,738) (212,451)Peru - - (3,383,959) (3,011,780)Total for continuing operations 25,511 11,157 (5,591,697) (3,224,231)Profit/(Loss) before tax (5,591,697) (3,224,231)

Revenue reported above represents interest revenue generated from financial institutions. There were no inter-segment sales in the year (2010: Nil).

The accounting policies of the reportable segments are the same as the Group’s accounting policies described in note 3.

Segment profit represents the profit earned by each segment without allocation of central administration costs and directors’ salaries, profits of associates, investment revenue, finance costs and income tax expense. This is the measure reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance.



SEGmEnT InFORmATIOn (COnTInuED)20.

Other segment information (continued)

Depreciation and amortisation additions to non-current assets


$


$


$


$Australia 1,118 - 28,334 -Peru 21,990 4,375 26,337 73,152Total 23,108 4,375 54,671 73,152

InCOmE TAxES21.

Consolidated2011 2010

the components of income tax benefit comprise:

Current income tax benefit - -Deferred income tax benefit - -

Income tax benefit reported in the consolidated statement of comprehensive income

- -

Income tax expense recognised in equity - -

Accounting loss before tax (5,591,697) (3,224,230)

At the statutory income tax rate of 30% (1,677,509) (967,269)

Other non deductible expenditure for income tax purposes 895,938 902,044

Unrecognised tax losses 781,571 65,225

Income tax benefit reported in the consolidated statement of comprehensive income

- -

Consolidated2011 2010$’000 $’000

Deferred tax assets

Carried forward revenue losses 531,893 114,395Exploration 1,292,363 1,292,363Provisions and accruals 6,600Other Gross deferred tax asset 1,830,856 1,406,758Offset against deferred tax liability (1,490) (1,490)Unrecognised tax losses 1,829,366 1,405,268

Deferred tax liabilitiesExploration expenditurePP&E (1,490) (1,490)Gross deferred tax liability (1,490) (1,490)Offset against deferred tax asset 1,490 1,490Net deferred tax liability - -



FInAnCIAL InSTRumEnTS22.

Capital risk management

The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance.

The capital structure of the Group consists of net debt (borrowings as detailed in note 8 offset by cash and bank balances) and equity of the Group (comprising issued capital, reserves, retained earnings as detailed in notes 9 and 10).

Significant accounting policies

Details of the significant accounting policies and methods adopted (including criteria for recognition, the bases of measurement, and the bases for recognition of income and expenses) for each class of financial asset, financial liability and equity instrument are disclosed in note 3.

Financial risk management objectives

The Group’s Board of Directors monitor and manage the financial risks relating to the operations of the Group through internal risk reports which analyse exposures by degree and magnitude of risks. These risks include market risk (including currency risk, fair value interest rate risk and price risk), credit risk, liquidity risk and cash flow interest rate risk. The Group seeks to minimise the effects of these risks by using derivative financial instruments to hedge risk exposures. The use of financial derivatives is governed by the Group’s policies approved by the board of directors, which provide written principles on foreign exchange risk, interest rate risk, credit risk, the use of financial derivatives and non-derivative financial instruments, and the investment of excess liquidity. Compliance with policies and exposure limits is reviewed by the internal auditors on a continuous basis. The Group does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

market risk

The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates.

Foreign currency risk management

The Group undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise.

The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows.

liabilities assets30 June

2011$

30 June 2010

$

30 June 2011

$

30 June 2010

$

Cash - - 236,839 57,131Trade & other Receivables - - 61,033 57,131Other Financial Assets - - 366,859 -Trade & other payables 178,242 - - -

178,242 - 664,731 -

As at the end of the reporting period the group’s exposure to foreign currency risk is considered immaterial by the Company and therefore no sensitivity analysis has been disclosed.



FInAnCIAL InSTRumEnTS (COnTInuED)22.

Interest rate risk management

Interest rate risk is the risk that a financial instrument’s value will fluctuate as a result in changes in market interest rates. The Group is exposed to interest rate risk on cash balances held in interest bearing accounts. The Board constantly monitors its interest rate exposure and attempts to maximise interest income by using a mixture of fixed and variable interest rates, whilst ensuring sufficient funds are available for the Group’s operating activities. The Group’s net exposure to interest rate risk at 30 June 2011 approximates the value of cash and cash equivalents.

As at the end of the reporting period the group’s exposure to interest rate risk is considered immaterial by the Company and therefore no sensitivity analysis has been disclosed.

Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group only transacts with entities that are rated the equivalent of investment grade and above. This information is supplied by independent.

rating agencies where available and, if not available, the Group uses other publicly available financial information and its own trading records to rate its major customers. The Group’s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit exposure is controlled by counterparty limits that are reviewed and approved by the risk management committee annually.

Liquidity risk management

Ultimate responsibility for liquidity risk management rests with the board of directors, which has established an appropriate liquidity risk management framework for the management of the Group’s short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

The following tables detail the Group’s remaining contractual maturity for its financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. The tables include both interest and principal cash flows. To the extent that interest flows are at floating rate, the undiscounted amount is derived from interest rate curves at the end of the reporting period. The contractual maturity is based on the earliest date on which the Group may be required to pay.

weighted average effective

interest rate%

less than 1 month

$

1-3 months

$

3 months to 1 year

$1-5 years

$total

$30 June 2011Non-interest bearing 650,922 - - - 650,922

650,922 650,92230 June 2010Non-interest bearing - 289,469 - - - 289,469Convertible Notes 12.00 - 2,240,000 - - 2,240,000

289,469 2,240,000 - - 2,529,469


auDit report


The Company’s main corporate governance policies and practices are outlined below:

the Board of Directors

The Company’s Board of Directors is responsible for corporate governance of the Company. The Board develops strategies for the Company, reviews strategic objectives and monitors performance against those objectives. The goals of the corporate governance processes are to:

maintain and increase Shareholder value;(a) ensure a prudential and ethical basis for the Company’s conduct and activities; and(b) ensure compliance with the Company’s legal and regulatory objectives.(c)

Consistent with these goals, the Board assumes the following responsibilities:developing initiatives for profit and asset growth;(a) reviewing the corporate, commercial and financial performance of the Company on a regular basis;(d) acting on behalf of, and being accountable to, the Shareholders; and(e) identifying business risks and implementing actions to manage those risks and corporate systems to assure (f) quality.

The Company is committed to the circulation of relevant materials to Directors in a timely manner to facilitate Directors’ participation in the Board discussions on a fully-informed basis.

Composition of the Board

Election of Board members is substantially the province of the Shareholders in general meeting. However, subject thereto, the Company is committed to the following principles:

the Board is to comprise Directors with a blend of skills, experience and attributes appropriate for the (a) Company and its business; andthe principal criterion for the appointment of new Directors is their ability to add value to the Company (b) and its business.

No formal nomination committee or procedures have been adopted for the identification, appointment and review of the Board membership, but an informal assessment process, facilitated by the Chairman in consultation with the Company’s professional advisors, has been committed to by the Board.

independent professional advice

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

remuneration arrangements

The remuneration of an Executive Directors will be decided by the Board, without the affected Executive Director participating in that decision-making process.

The total maximum remuneration of Non-Executive Directors is the subject of a Shareholder resolution in accordance with the Company’s Constitution, the Corporations Act and the ASX Listing Rules, as applicable. The determination of Non-Executive Directors’ remuneration within that maximum will be made by the Board having regard to the inputs and value to the Company of the respective contributions by each Non-executive Director. The current limit, which may only be varied by Shareholders in general meeting, is an aggregate amount of $350,000 per annum.

The Board may award additional remuneration to Non-executive Directors called upon to perform extra services or make special exertions on behalf of the Company.

Continuous Disclosure policy

The Company Secretary has been appointed as the person responsible for communications with ASX. This person is also responsible for ensuring the compliance with the continuous disclosure requirements in ASX Listing Rules and overseeing and co-ordinating information disclosure to the ASX.

The Company Secretary is responsible for the communications strategy to promote the effective communications with shareholders and encourage effective participation at general meetings. The Company adheres to best practice in its preparation of notices of meetings to ensure all Shareholders are fully informed.

trading policy

It is the Company’s policy to encourage Directors and employees to own Shares in the Company. The Shares trading policy reinforces the obligations of Directors and employees of the Company, under the Corporations Act 2001 and the ASX Listing Rules in relation to trading in Shares. The policy restricts Directors and employees from acting on material information until it has been released to the market. Directors are required to report their proposed Share trading to the Company Secretary.

Corporate governanCe statement


Corporate governanCe statement (ContinueD)

Communicating with shareholders

The Board ensures that Shareholders are kept informed of all major developments that affect their Shareholding or the Company’s state of affairs through quarterly, half-yearly, annual and ad hoc reports. All shareholders are encouraged to attend the annual general meeting to meet the Chairman and Directors and to receive the most updated report on the Company’s activities.

The Company maintains a website at www.latinresources.com.au to provide shareholders with information of the Company’s activities. Shareholders may communicate with the Company through its email address [email protected]

external audit

The Company in general meetings is responsible for the appointment of the external auditors of the Company, and the Board from time to time will review the scope, performance and fees of those external auditors.

audit committee

The Company will not have a separate constituted audit committee.

identification and management of risk

The Board’s collective experience will enable accurate identification of the principal risks that may affect the Company’s business. Key operational risks and their management will be recurring items for deliberation at Board meetings.

ethical standards

The Board is committed to the establishment and maintenance of appropriate ethical standards.

risk management systems

The identification and management of risk, including calculated risk-taking activity is viewed by management as an essential component in creating shareholder value.

Management, through the Executive Director is responsible for developing, maintaining and improving the Company’s risk management and internal control system. Management provides the board with periodic reports identifying areas of potential risks and the safeguards in place to efficiently manage material business risks. These risk management and internal control systems are in place to protect the financial statements of the entity from potential misstatement, and the Board is responsible for satisfying itself annually, or more frequently as required, that management has developed a sound system of risk management and internal control.

Strategic and operational risks are reviewed at least annually as part of the forecasting and budgeting process. The Company has identified and actively monitors risks inherent in the industry in which the Company operates.

risk management systems - continued

The Board also receives a written assurance from the Executive Director and Company Secretary that to the best of their knowledge and belief, the declaration provided to the Board in accordance with section 295A of the Corporations Act is founded on a sound system of risk management and internal control, and that the system is operating effectively in relation to financial reporting risks. The Board notes that due to its nature, internal control assurance from the Executive Director and Company Secretary can only be reasonable rather than absolute. This is due to such factors as the need for judgement, the use of testing on a sample basis, the inherent limitations in internal control and because much of the evidence is persuasive rather than conclusive and therefore is not and cannot be designed to detect all weaknesses in internal control procedures.

asX principles of good Corporate governance

The Board has reviewed its current practices in light of the ASX principles of good corporate governance and best practice guidelines 2007 2nd edition with a view to making amendments where applicable after considering the Company’s size and the resources it has available.

As the Company’s activities develop in size, nature and scope, the size of the Board and the implementation of any additional formal corporate governance committees will be given further consideration.

The following table sets out the ASX Corporate Governance Guidelines with which the Company does not comply:


Corporate governanCe statement (ContinueD)

asX principle

reference/comment

principle 2: structure the Board to add value

2.4

The Board should establish a nomination committee

The Board has no formal nomination committee. Acting in its ordinary capacity from time to time as required, the Board carries out the process of determining the need for, screening and appointing new Directors. In view of the size and resources available to the Company, it is not considered that a separate nomination committee would add any substance to this process.

principle 4: safeguard integrity in financial reporting

4.1 – 4.4

The Board should establish an audit committee

The Company does not have an Audit Committee. The Board believes that, with only 4 Directors on the Board, the Board itself is the appropriate forum to deal with this function.

principle 8: remunerate fairly and responsibly

8.1

The Board should establish a remuneration committee

Given the current size of the Board, the Company does not have a remuneration committee. The Board as a whole reviews remuneration levels on an individual basis, the size of the Company making individual assessment more appropriate than formal remuneration policies. In doing so, the Board seeks to retain professional services as it requires, at reasonable market rates, and seeks external advice and market comparisons where necessary.


Additional information required by the ASX Limited Listing Rules not disclosed elsewhere in this Annual Report is set out below.

shareholdings

The issue capital of the Company at 13th September 2011 is 149,821,141 ordinary fully paid shares. All ordinary shares carry one vote per share.

top 20 shareholders as at 2 september 2011

no. of shares held

% held

1 Dempsey Resources Pty Ltd 22,257,693 14.8562 Lascelles Holdings Pty Ltd 10,087,692 6.7333 SRP Red Pty Ltd <SRP 2009 Investment A/C> 8,835,333 5.8974 SCW Red Pty Ltd <SCW 2009 Investment A/C> 8,833,333 5.8965 RMB Resources Limited <Telluride Investment A/C> 7,750,000 5.1736 Saliba and Yvonne Sassine <Sassine Superannuation Fund A/C> 5,000,000 3.3377 Heelmo Holdings Pty Ltd <Deep Blue A/C> 4,475,000 2.9878 Melbourne Capital Limited 4,000,000 2.6709 Jeffrey Charles Hogan 4,000,000 2.670

10 CF2 Pty Ltd <The CF A/C> 3,750,000 2.50311 HSBC Custody Nominees (Australia) Limited 3,461,539 2.31012 CPS Control Systems Pty Limited <The Ian Campbell S/Fund A/C> 2,673,080 1.78413 Foreign Dimensions Pty Ltd 2,500,000 1.66914 Hong Kong Merchants United Gold Co. Limited 2,500,000 1.66915 Trablus Investments Pty Ltd <Sassine Family Trust A/C> 2,400,000 1.60216 Heelmo Holdings Pty Ltd <Rowbottam Super Fund A/C> 2,023,730 1.35117 Confadent Limited 2,000,000 1.33518 Australian Global Capital Pty Ltd 2,000,000 1.33519 Saliba Sassine 1,880,000 1.25520 Atilio Paulino Aste Levaggi 1,400,000 0.934

101,827,400 67.966

shares rangeno. of

holdersno. of shares

1 – 1,000 16- 1,4111,001 – 5,000 59- 193,938

5,001 – 10,000 112 1,054,82610,001 – 100,000 212 8,355,092100,001 and over 121 140,215,874

520 149,821,141Number holding less than a marketable parcel at $0.135 per share

Shareholders by Locationno. of

holdersno. of shares

Australian holders 505 141,703,009Overseas holders 15 8,118,132

520 149,821,141

voting rights

In accordance with the Company’s Constitution, on a show of hands every shareholder present in person or by proxy, attorney or representative of a shareholder has one vote and on a poll every shareholder present in person or by proxy, attorney or representative of a shareholder has in respect of fully paid shares, one vote for every share held. No class of option holder has a right to vote, however the shares issued upon exercise of options will rank parri passu with the then existing issued fully paid ordinary shares.

asX aDDitional information


asX aDDitional information (ContinueD)

substantial shareholders as at 13th september 2011

no. of shares held

% held

1 Dempsey Resources Pty Ltd 22,257,693 14.8562 Lascelles Holdings Pty Ltd 10,087,692 6.733

option holdings

The Company has the following classes of options on issue at 13th September 2011 as detailed below. Options do not carry any rights to vote.

Class terms no. of optionsLRSO Listed Options 30 cent options expiring on or before 31 March 2013 44,550,000LRS-A Unlisted Options 30 cent options expiring on or before 31 March 2013 11,000,000

listed optionsno. of options

held % held1 Melbourne Capital Limited 6,000,000 12.9402 Dempsey resources Pty Ltdd 4,400,000 8.3733 SRP Red Pty Ltd <SRP 2009 Investment A/C> 3,764,000 7.1634 SCW Red Pty Ltd <SCW 2009 Investment A/C> 3,600,000 6.8515 Melbourne Capital Ltd 3,200,000 6.0896 Fidelis Corporation Limited 2,800,000 5.3287 Lascelles Holdings Pty Ltd 2,206,000 4.1988 BCP Equities Pty Ltd 2,075,000 3.9499 Peter Wilfling 2,000,000 3.806

10 Foreign Dimensions Pty Ltd 1,250,000 2.37911 Talex Investments Pty Ltd 1,000,000 1.90312 AEES AUS Pty Ltd 1,000,000 1.90313 Heelmo Holdings Pty Ltd <Deep Blue A/C> 895,000 1.70314 Jeffrey Charles Hogan 800,000 1.52215 Pandon Holdings Pty Ltd 750,000 1.42716 Chiefly Portfolios Pty Ltd 750,000 1.42717 CF2 Pty Ltd <The CF A/C> 750,000 1.42718 Alocasia Pty Limited <Camellia Super Fund A/C> 673,900 1.28219 Mungala Investments Pty Ltd 600,000 1.14220 HSBC Custody Nominees (Australia) Limited 558,000 1.062

38,871,900 75.874

options range unlisted optionsno. of holders no. of options

1 – 1,000 - -1,001 – 5,000 91 243,500

5,001 – 10,000 18 164,50010,001 – 100,000 63 3,283,792100,001 and over 57 48,858,208

229 52,550,000Shareholders by LocationAustralian holders 223 50,565,500Overseas holders 6 1,984,500

229 52,550,000

The following Option holders hold more than 20% of a particular class of the Company’s Unlisted Options.

listed optionsholder lrsoMelbourne Capital Limited 6,800,000Dempsey resources Pty Ltd 4,400,000


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Registered OfficeOld Swan Brewery

Level 1, 173 Mounts Bay RoadPERTH WA 6000

Telephone: (08) 9485 0601Facsimile: (08) 9321 6666

Email: [email protected] Website: www.latinresources.com.au

ANNUAL REPORTFOR THE FINANCIAL YEAR ENDED

30 JUNE 2011

ACN 131 405 144

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acn 131 405 144 - latin resources...

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