Windimurra Vanadium Ltd ABN 65 009 131 533 MidWest Vanadium Pty Ltd ABN 65 113 874 712 Level 4, 76 Kings Park Road, West Perth, Western Australia 6005 Tel: +61 8 9423 1900 Fax: +61 8 9423 1999

30 September 2008 Company Announcements Office Australian Stock Exchange Limited Exchange Plaza Sherwood Court PERTH WA 6000 Dear Sir / Madam Annual Financial Report for Year Ended 30 June 2008 Please find attached the audited Annual Financial Report of Windimurra Vanadium Limited and its controlled entities for the year ended 30 June 2008. Yours faithfully WINDIMURRA VANADIUM LIMITED

MATTHEW LILLY Company Secretary

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ABN 65 009 131 533

WINDIMURRA VANADIUM LIMITED AND ITS CONTROLLED ENTITIES

Annual Financial Report For the year ended 30 June 2008

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Contents

Page Directors’ report 3 – 21 Income statements 22 Statements of recognised income and expense 23 Balance sheets 24 Statements of cash flows 25 Notes to the consolidated financial statements 26 – 69 Directors’ declaration 70 Auditor’s report 71 – 72 Lead auditor’s independence declaration 73

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Windimurra Vanadium Limited and its controlled entities Directors’ report For the year ended 30 June 2008 The directors present their report together with the financial report of Windimurra Vanadium Limited (‘the Company’) and of the consolidated entity, being the Company and its subsidiaries, for the financial year ended 30 June 2008 and the auditor’s report thereon. Contents of directors’ report Page

1. Directors 4

2. Company secretary 6

3. Officers who were previously partners of the audit firm 6

4. Directors’ meetings 6

5. Corporate governance statement 7

5.1 Explanations for departures from Best Practice Recommendations 7

5.2 Term of office of each director 8 5.3 Identification of independent directors 8

5.4 Statement concerning availability of independent professional advice 8

5.5 Board of directors 8 5.6 Board processes 8

5.7 Remuneration committee 9

5.8 Audit committee 9 5.9 Project expenditure committee 9

5.10 Remuneration report - audited 10 – 15

5.11 Risk management 15 5.12 Ethical Standards 16

5.13 Communication with shareholders 16

6. Principal activities 16

7. Operating and financial review 17

8. Dividends 18

9. Events subsequent to reporting date 18

10. Likely developments 18

11. Directors’ interests 18

12. Share options 19 – 20

13. Indemnification and insurance of officers and auditors 20

14. Non-audit services 21

15. Lead auditor’s independence declaration 21

16. Rounding off 21

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Windimurra Vanadium Limited and its controlled entities Directors’ report (continued) For the year ended 30 June 2008 1. Directors The directors of the Company at any time during or since the end of the financial year are: Name, qualifications and independence status

Experience, special responsibilities and other directorships

Wolf Martinick PhD, BSc Agric Chairman and Independent Non-Executive Director

Appointed as Non-Executive Director on 21 December 2006 and Chairman on 6 March 2008. Dr Martinick is an environmental scientist with more than 35 years experience in the resources industry and has been involved with mineral exploration and mining projects around the world. Dr Martinick is Chairman of Weatherly International Limited, an AIM listed mining group with extensive copper mining and smelting interests in Namibia, Chairman of Ezenet Limited, and a non executive Director of the ASX listed companies Uran Limited, Sun Resources Limited, Carbine Resources Limited and Azure Minerals Limited.

Iain Scott PhD Min. Processing, B.Sc Met (Hons) Managing Director

Appointed as an Executive Director on 19 April 2007 and appointed as Managing Director on 20 June 2007. Dr Scott holds a PhD in Mineral Processing and first class honours degree in metallurgy. A highly credentialed mining executive with over 25 years experience in the minerals processing industry. Dr Scott is the former General Manager of Operations for copper, gold and bulk commodities producer, Straits Resources Limited.

Garry Korte B.Comm, CA, ACMA Finance Director

Appointed as Finance Director on 28 December 2007, Mr Korte’s experience includes holding the position of CFO for a mining and materials handling contractor for 7 years as well as 3 years working as a corporate finance executive for a merchant bank specializing in the mining sector. Most recently he was “General Manager Commercial” for Brambles Industrial Services responsible for negotiating major mining and transport contracts and developing business growth proposals for board approval.

Earl of Warwick Independent Non-Executive Director

Appointed as a Non-Executive Director on 14 May 1991, and held the position of Chairman of the Company for four years to 1 December 2005. The Earl of Warwick has wide management and property experience in Australia and overseas, and is Chairman of Central Asia Resources Ltd.

Ricardo Leiman B.Comm, MBA Non-Executive Director

Appointed as a Non-Executive Director on 3 November 2006. Mr Leiman holds Masters of Business Administration from the University of Rochester NY, USA and the University of Nyenrode, the Netherlands as well as an Economics degree from the University of Sao Paulo, Brazil. He started his career with Credit Lyonnais Bank in Brazil followed by management positions with Louis Dreyfus in Brazil, Eximcoop in the Netherlands and Trader Classified Media in London and Paris. In 2002 he rejoined Louis Dreyfus as COO North America, EMEA (Europe, Middle East, Africa) and Asia, later becoming COO Soft Commodities. Mr Leiman joined Noble Resources Limited in April 2006.

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Windimurra Vanadium Limited and its controlled entities Directors’ report (continued) For the year ended 30 June 2008 1. Directors (continued) The directors of the Company at any time during or since the end of the financial year are: Name, qualifications and independence status

Experience, special responsibilities and other directorships

Nicholas Morland ICAEW, ACA Non-Executive Director

Appointed as Non-Executive Director on 8 May 2008, Mr Morland is a London-based Chartered Accountant involved in investing in, and the management of, a worldwide portfolio. This portfolio is privately owned and has an emphasis on commodities. Previous roles have concentrated on situations where change management, new business planning and capital raising have been involved. These include as CEO of MIM, an insurance start up, Group Underwriting Deputy with Alea, General Manager Europe Portfolio Engineering with QBE and Group Operations Director at Hiscox. Mr Morland is a director of Minories Insurance Management Limited, Legion Limited, Prospect Publishing Limited and Tresilian Leisure Limited.

Phillip Laskaris BA (Hons), LLB Independent Non-Executive Director

Appointed as a Non-Executive Director on 20 March 2008, Mr Laskaris holds a Bachelor of Arts (Hons) and Bachelor of Laws from the Australian National University. Mr Laskaris is a barrister practicing from Francis Burt Chambers in Perth. He started his legal career in 1987 in Fremantle WA with a mid-sized law firm becoming a partner in 1989 and then principal of the firm in 1996. He joined the independent bar in 2002. He is on the roll in the High Court of Australia, the WA Supreme Court and the NSW Supreme Court.

Shaun Bunn MSc (Ext Met), Grad Dip Met), MBA Director of Operations

Mr Bunn was a Director from the beginning of the financial year until his resignation on 22 August 2007.

Roderick Smith B.Comm, CA, FSIA Non-Executive Director

Mr Smith was a Director from the beginning of the financial year until his resignation on 3 January 2008.

Michael Kiernan B.Bus Chairman and Non-Executive Director

Mr Kiernan was a Director from the beginning of the financial year until his resignation on 29 February 2008.

Andrew Simpson Grad. Dip. Bus (Curtin), MAICD Independent Non-Executive Director

Mr Simpson was a Director from the beginning of the financial year until his resignation on 29 February 2008.

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Windimurra Vanadium Limited and its controlled entities Directors’ report (continued) For the year ended 30 June 2008 2. Company secretary Mr Matthew Lilly, LLB was appointed to the position of company secretary on 27 February 2006. Mr Lilly gained his legal training post graduation at Parker & Parker and served seven years at Alcoa as corporate solicitor and company secretary. Prior to joining the Company he served a privately owned group as Commercial Manager and Company Secretary with a wide range of responsibilities including legal counsel, compliance with banking covenants, insurance management, corporate affairs, strategy, business restructure, business acquisition and divestment. 3. Officers who were previously partners of the audit firm No officer of the Company has held a position of partner of the current audit firm, KPMG, at a time when KPMG undertook an audit of the Company. 4. Directors’ meetings The number of directors’ meetings (including meetings of committees of directors) and number of meetings attended by each of the directors of the Company during the financial year are:

Director Board Meetings Audit Committee

Meetings Remuneration

Committee Meetings Project Expenditure Committee Meetings

A B A B A B A B Wolf Martinick 12 13 - - 1 1 - - Iain Scott 13 13 - - - - 10 11 Garry Korte 9 9 - - - - 9 9 Earl of Warwick 12 13 - - 1 1 - - Ricardo Leiman 12 13 - - 1 1 - - Nicholas Morland 1 2 - - - - - - Phillip Laskaris 4 4 - - - - 2 2 Michael Kiernan 6 7 1 1 - - 2 5 Roderick Smith 4 4 1 1 - - - - Shaun Bunn 1 1 - - - - 1 1 Andrew Simpson 7 7 1 1 - - - - A – Number of meetings attended B – Number of meetings held during the time the director held office during the year

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Windimurra Vanadium Limited and its controlled entities Directors’ report (continued) For the year ended 30 June 2008 5. Corporate governance statement The consolidated entity has adopted systems of control and accountability as the basis for the administration of Corporate Governance. Some of these policies and procedures are summarised below. 5.1 Explanations for departures from Best Practice Recommendations During the reporting period the consolidated entity has complied with each of the Ten Essential Corporate Governance Principles and the corresponding Best Practice Recommendations, other than in relation to the matters specified below. Principle Ref

BPR Ref Notification of Departure Explanation for Departure

2 2.1 A majority of the Board are Non-Executive directors but a majority are not independent. Dr W Martinick, The Earl of Warwick, and Mr P Laskaris are considered to be independent.

The structure of the Board during the reporting period was considered appropriate given the size, position and activities of the consolidated entity. The Company will continue to assess the structure and composition of the Board as the business continues to evolve.

2 2.4 There is no nomination committee.

The duties usually performed by a nomination committee are carried out by the full board.

2. 2.5 The process for evaluating the performance of the board, its committees and individual directors is not disclosed.

The board of the Company is of the view that following this recommendation is not appropriate given the consolidated entity’s size, position and activities.

3 3.1 There is no code of conduct.

The board of the Company has reviewed this matter in detail and given the consolidated entity’s size, position and activities, is of the view that it is not necessary to have a code of conduct.

4 4.3 The audit committee does not have a formal charter.

The board of the Company has reviewed this matter in detail and given the consolidated entity’s size, position and activities, is of the view that it is not necessary for the audit committee to have a formal charter.

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Windimurra Vanadium Limited and its controlled entities Directors’ report (continued) For the year ended 30 June 2008 5.2 Term of office of each director Directors Name Date of Appointment Date of ResignationWolf Martinick 21 December 2006 A current directorIain Scott 19 April 2007 A current directorGarry Korte 28 December 2007 A current directorThe Earl of Warwick 14 May 1991 A current directorRicardo Leiman 3 November 2006 A current directorNicholas Morland 8 May 2008 A current directorPhillip Laskaris 20 March 2008 A current directorMichael Kiernan 7 August 2006 29 February 2008Roderick Smith 6 April 2004 3 January 2008Shaun Bunn 3 February 2006 22 August 2007Andrew Simpson 20 June 2007 29 February 2008 5.3

Identification of independent directors

The independent directors of the Company are Dr Wolf Martinick, The Earl of Warwick, and Mr Phillip Laskaris. Mr Andrew Simpson (resigned 29 February 2008) was considered independent during his term. Neither Mr Ricardo Leiman or Mr Nicholas Morland are considered independent as both are senior executives and nominees of major shareholders. Both Dr Iain Scott and Mr Garry Korte are executives of the Company and are therefore not independent. Mr Shaun Bunn (resigned 22 August 2007) was an executive of the Company and was therefore not independent during his term. Mr Roderick Smith (resigned 3 January 2008) was the former Managing Director and was therefore not independent during his term. During the year Mr Michael Kiernan (resigned 29 February 2008) was chairman and major shareholder of a substantial shareholder and during such period was not considered independent. 5.4 Statement concerning availability of independent professional advice If a director considers it necessary to obtain independent professional advice to properly discharge the responsibility of his office as a director then, provided the director first obtains approval for incurring such expense from the Chairman, the Company will pay the reasonable expenses associated with obtaining such advice. 5.5 Board of directors The board’s primary role is the protection and enhancement of long-term shareholder value. To fulfil this role, the board is responsible for the overall corporate governance of the consolidated entity including formulating its strategic direction, approving and monitoring capital expenditure, setting remuneration, appointing, removing and creating succession policies for directors and senior executives, establishing and monitoring the achievement of management’s goals and ensuring the integrity of internal control and management information systems. It is also responsible for approving and monitoring financial and other reporting. 5.6 Board processes To assist in the execution of its responsibilities, the board has established a number of board committees including a remuneration committee, an audit committee, and a project expenditure committee. The board has also established a framework for the management of the consolidated entity including a system of internal control, a business risk management process and the establishment of appropriate ethical standards, including a visions and values statement which sets the framework for all of its dealings. The full board regularly holds scheduled meetings during the year, and any extraordinary meetings at such other times as may be necessary to address any specific significant matters that may arise. The agenda for meetings is prepared in conjunction with the chairman, managing director and company secretary. Submissions are circulated in advance. Executives are regularly involved in board discussions and directors have other opportunities, including visits to business operations, for contact with a wider group of employees.

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Windimurra Vanadium Limited and its controlled entities Directors’ report (continued) For the year ended 30 June 2008 5.7 Remuneration committee The remuneration committee reviews and makes recommendations to the board on remuneration packages and policies applicable to the executive officers and directors themselves of the consolidated entity. Subject to approval from the full board and where applicable the shareholders, the remuneration committee are responsible for share option schemes. It is also responsible for incentive performance packages, superannuation entitlements, fringe benefits policies and professional indemnity and liability insurance policies. The members of the remuneration committee during the year were:

• Mr W Martinick – Independent Non-Executive Director • Earl of Warwick – Independent Non-Executive Director • Mr R Leiman – Non-Executive Director • Mr M Kiernan – Non-Executive Director (Resigned as a director on 29 February 2008)

The remuneration committee is comprised only of non-executive directors. The Managing Director and Chief Financial Officer are invited to remuneration committee meetings, as required, to discuss senior executives’ performance and remuneration packages but do not attend meetings involving matters pertaining to them. The remuneration committee currently meets as required. The committee met one time during the financial year and committee members’ attendance record is disclosed in the table of directors’ meetings on page 6. 5.8 Audit committee The role of the audit committee is to assist the Board to meet its oversight responsibilities in relation to the Company’s financial reporting and internal control structure. The audit committee is required to have a minimum of three members, composed of non-executive directors. The members of the audit committee during the year were:

• Dr W Martinick – Independent Non-Executive Director • The Earl of Warwick – Independent Non-Executive Director • Mr P Laskaris – Independent Non-Executive Director (appointed as a director on 20 March 2008) • Mr M Kiernan – Non-Executive Director (resigned as a director on 29 February 2008) • Mr A Simpson – Non-Executive Director (resigned as a director on 29 February 2008) • Mr R Smith – Non-Executive Director (resigned as a director on 3 January 2008)

The audit committee currently meets as required. The committee met once during the financial year and committee members’ attendance record is disclosed in the table of directors’ meetings on page 6. 5.9 Project expenditure committee The role of the project expenditure committee is to review, evaluate and approve capital expenditure in accordance with the budget approved by the Board. The members of the project expenditure committee during the year were:

• Dr I Scott – Executive Director • Mr G Korte – Executive Director (appointed as a director on 28 December 2007) • Mr M Kiernan – Independent Non-Executive Director (resigned as a director on 29 February 2008) • Mr R Smith – Non-Executive Director (resigned as a director on 3 January 2008) • Mr S Bunn – Executive Director (resigned as a director on 22 August 2007)

On and from 23 May 2008, all non-executive directors have a standing invitation to attend any Project Expenditure Committee meetings.

The project expenditure committee currently meets as required. The committee met eleven times during the financial year and committee members’ attendance record is disclosed in the table of directors meetings on page 6.

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Windimurra Vanadium Limited and its controlled entities Directors’ report (continued) For the year ended 30 June 2008 5.10 Remuneration report 5.10.1 Principles of compensation – audited Remuneration is referred to as compensation throughout this report.

Key management personnel have authority and responsibility for planning, directing and controlling the activities of the Company and the consolidated entity, including directors of the Company and other executives. Key management personnel comprise the directors and the five most highly remunerated executives for the Company and the consolidated entity.

Compensation levels for key management personnel and secretaries of the Company, and relevant key management personnel of the consolidated entity are competitively set to attract and retain appropriately qualified and experienced directors and executives. Where required the remuneration committee obtains independent advice on the appropriateness of compensation packages of both the Company and consolidated entity given trends in comparative companies both locally and internationally and the objectives of the Company’s compensation strategy. The compensation structures explained below are designed to attract suitably qualified candidates, reward the achievement of strategic objectives, and achieve the broader outcome of creation of value for shareholders. The compensation structures take into account:

• the capability and experience of the key management personnel; • the key management personnel’s ability to control the relevant segment’s performance; and • the consolidated entity’s performance.

Compensation packages include a mix of fixed and variable compensation and short-term and long-term performance-based incentives. In addition to their salaries, the consolidated entity also provides non-cash benefits to its key management personnel, and contributes to a post-employment defined benefit superannuation plan on their behalf. Fixed compensation Fixed compensation consists of base compensation (which is calculated on a total cost basis and includes any FBT charges related to employee benefits including motor vehicles), as well as employer contributions to superannuation funds. Compensation levels are reviewed at least annually by the remuneration committee through a process that considers individual, segment and overall performance of the consolidated entity. Where necessary, external consultants provide analysis and advice to ensure the directors’ and senior executives’ compensation is competitive in the market place. A senior executive’s compensation is also reviewed on promotion. Performance-linked compensation Other short-term incentive bonuses or cash bonuses are determined by the Remuneration Committee and approved by the Board. Bonuses are based on the individual’s performance, as well as the performance or outcomes achieved by the consolidated entity. Other benefits Key management personnel can receive additional benefits as non-cash benefits, as part of the terms and conditions of their appointment. Non-cash benefits offered to key management personnel typically include payment of car parking. The Company pays fringe benefits tax on these benefits. The company has not established a policy for lending of funds to key management personnel. No loans were made during the current or prior financial periods and no loans are currently outstanding. Non-executive directors Dr Wolf Martinick , a non-executive director and was appointed Chairman on 6 March 2008, is entitled to receive a fixed directors’ fee of $110,000 effective from 8 May 2008. Prior to this, Dr Martinick was entitled to an annual director’s fee of $35,000.

Mr Nicholas Morland and Mr Phillip Laskaris, as non-executive directors, are entitled to receive a fixed director’s fee of $70,000 each per annum effective from 8 May 2008. The Earl of Warwick, as non-executive director, is entitled to a fixed director’s fee of $70,000 effective 1 August 2008. Prior to this, The Earl of Warwick was entitled under a contract of employment, to receive an annual salary of $109,000.

Ricardo Leiman, a non-executive director, receives no directors’ fees.

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Windimurra Vanadium Limited and its controlled entities Directors’ report (continued)

For the year ended 30 June 2008 5.10 Remuneration report (continued) 5.10.2 Directors’ and executive officers’ remuneration (Company and Consolidated) - audited Details of the nature and amount of each major element of remuneration of each director of the Company and each of the five named Company executives, relevant group executives who receive the highest remuneration and other key management personnel are:

Short-term Post-

employment Other

long term Share-based

payments

Salary & fees

$

STI cash bonus

$

Non-monetary benefits

$

Total Short-term

$

Super-annuation benefits

$

Termination benefits

$

Options and rights (B)

$ Total

$

S300A (1)(e)(i)

Proportion of remuneration performance

related %

S300A (1)(e)(vi) Value of options as proportion of remuneration

% Non-executive directors

2008 8,027 - - 8,027 26,973 - - - 35,000 - - Dr Wolf Martinick, Non-Executive Director

2007 - - - - 18,443 - - - 18,443 - -

2008 100,000 - - 100,000 9,000 - - - 109,000 - - The Earl of Warwick, Non-Executive Director

2007 100,000 - - 100,000 9,000 - - - 109,000 - -

2008 - - - - - - - - - - - Mr Ricardo Leiman, Non-Executive Director

2007 - - - - - - - - - - -

2008 - - - - 9,016 - - - 9,016 - - Mr Phillip Laskaris, Non-Executive Director (appointed 20 March 2008) 2007 - - - - - - - - - - -

2008 - - - - - - - - - - - Mr Nicholas Morland, Non-Executive Director (appointed 8 May 2008) 2007 - - - - - - - - - - -

Executive Directors

2008 404,572 - 2,759 407,331 69,578 - - 371,290 848,199 - 44% Dr Iain Scott, Managing Director (appointed 20 June 2007) 2007 - - 251 251 71,731 - - 61,158 133,140 - 46%

2008 240,000 - 2,759 242,759 21,600 - - 102,556 366,915 - 28% Mr Garry Korte, Finance Director, Chief Financial Officer (appointed Director 28 December 2007) 2007 70,513 - 627 71,140 6,346 - - 47,196 124,682 - 38% Executives

2008 180,650 920 181,570 66,834 851,559 1,099,963 77% Mr Martin Reed, Chief Operating Officer (commenced 5 November 2007) 2007 - - - - - - - - - - -

2008 200,000 2,759 202,759 18,000 90,823 311,582 29% Mr Matthew Lilly, Company Secretary

2007 65,354 - 627 65,981 6,553 - - 43,076 115,610 - 37%

2008 72,346 - 920 73,266 6,050 - - 156,464 235,780 - 66% Mr David English, General Manager Operations, MidWest Vanadium Pty Ltd (commenced 31 March 2008) 2007 - - - - - - - - - - -

2008 207,000 - 26,820 233,820 18,630 - - - 252,450 - - Mr Michael Tamlin, General Manager Marketing, MidWest Vanadium Pty Ltd 2007 200,000 - 10,048 210,048 18,000 - - 272,985 501,033 - 54%

2008 199,816 - 2,759 202,575 38,037 1,263 241,875 1% Mr Les Ford, Principal Consultant MidWest Vanadium Pty Ltd 2007 190,949 - - 190,949 12,325 - - 186,250 389,524 - 48%

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Windimurra Vanadium Limited and its controlled entities Directors’ report (continued)

For the year ended 30 June 2008 5.10 Remuneration report (continued) 5.10.2 Directors’ and executive officers’ remuneration (Company and Consolidated) – audited (continued)

Short-term Post-

employment Other

long term Share-based

payments

Salaries & fees

$

STI cash bonus (A)

$

Non-monetary benefits

$

Total short-term

$

Super-annuation benefits

$

Termination benefits

$

Options and rights (B)

$ Total

$

S300A (1)(e)(i)

Proportion of remuneration performance

related %

S300A (1)(e)(vi) Value of options as proportion of remuneration

% Former Executives

2008 50,000 - - 50,000 4,500 - - - 54,500 - - Mr Michael Kiernan, Chairman and Non-Executive Director (resigned 29 February 2008) 2007 32,729 - - 32,729 2,946 - - 430,155 465,830 - 92%

2008 22,298 - - 22,298 2,007 - - - 24,305 - - Mr Andrew Simpson, Non-Executive Director (resigned 29 February 2008) 2007 - - - - - - - - - - -

2008 16,055 - - 16,055 1,445 - - - 17,500 - - Mr Roderick Smith, Non-Executive Director and former Managing Director (resigned 3 January 2008) 2007 100,018 - 1,505 101,523 567,848 - 1,000,000 - 1,669,371 - -

2008 186,770 50,000 920 237,690 21,309 - - - 258,999 19.3% - Mr Shaun Bunn, Director of Operations (resigned 22 August 2007) 2007 221,667 80,000 1,505 303,172 19,950 - - 167,045 490,167 16.3% 34%

2008 - - - - - - - - - - - Mr Anthony Grey, former Chairman and Non-Executive Director (resigned 19 April 2007) 2007 66,250 - - 66,250 - - 27,500 167,257 261,007 - 64%

2008 - - - - - - - - - - - Mr Michael Fry, Non – Executive Director (resigned 20 June 2007) 2007 25,024 - - 25,024 2,252 - - - 27,276 - -

2008 - - - - - - - - - - - Mr Michael Drew, Chief Financial Officer (resigned 2 March 2007) 2007 127,518 - 1,003 128,521 28,209 - - - 156,730 - -

2008 1,887,534 50,000 40,616 1,978,150 312,979 - - 1,573,955 3,865,084 Total compensation: key management personnel (consolidated) 2007 1,200,022 80,000 15,566 1,295,588 763,603 - 1,027,500 1,375,122 4,461,813

2008 1,408,372 50,000 10,117 1,468,489 250,262 - - 1,416,228 3,134,979 Total compensation: key management personnel (company) 2007 809,073 80,000 5,518 894,591 733,278 - 1,027,500 915,887 3571,256

Notes in relation to the table of directors’ and executive officers remuneration - audited

A. During the 2008 financial year, Mr Shaun Bunn was paid a cash bonus of $50,000 as a performance bonus for the year determined and approved by the Board. B. The fair value of the options is calculated at the date of grant using the Black-Scholes option-pricing model and allocated to each reporting period evenly over the period from grant

date to vesting date. The value disclosed is the portion of the fair value of the options recognised in this reporting period. Market conditions have been taken into account within the valuation model.

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Windimurra Vanadium Limited and its controlled entities Directors’ report (continued) For the year ended 30 June 2008 5.10 Remuneration report (continued) The following factors and assumption were used in determining the fair value of options on grant date:

Grant Date Expiry Date

Fair value per

option Exercise

price

Price of shares on grant date

Expected volatility1

Risk free interest

rate

Probability of early exercise

of options Dividend

yield

6 Nov 2007 6 Nov 2010 $0.97 $2.32 $2.04 75.0% 6.75% 10.0% 0.00% 6 Nov 2007 6 Nov 2011 $1.12 $2.32 $2.04 75.0% 6.75% 10.0% 0.00%

21 Feb 2008 21 Feb 2011 $0.89 $2.03 $1.83 75.0% 7.00% 10.0% 0.00% 21 Feb 2008 21 Feb 2012 $1.02 $2.03 $1.83 75.0% 7.00% 10.0% 0.00%

1 Expected volatilities are based on the share price performance of the Company from 9 August 2005, being the date the agreement with Xstrata was finalised. Management believe this period of time is the most appropriate given the change in the activities of the business, which are now focussed on the re-development of the Windimurra mine.

Details of performance related remuneration – audited Details of the consolidated entity’s policy in relation to the proportion of remuneration that is performance related is discussed on page 10.

5.10.3 Analysis of bonuses included in remuneration - audited Details of the vesting profile of the short-term incentive cash bonuses awarded as remuneration to each director of the Company, each of the five named Company executives and relevant consolidated entity executives and other key management personnel are detailed below.

Short term incentive bonus

Director Included in remuneration

$ (A) % vested in year % forfeited in year Mr S Bunn 50,000 100% - (A) Amount included in remuneration for the financial year represent the amount that vested in the financial year based on

achievement of personal goals, determined and approved by the Board.

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Windimurra Vanadium Limited and its controlled entities Directors’ report (continued) For the year ended 30 June 2008 5.10.4 Equity instruments 5.10.4.1 Options and rights over equity instruments granted as compensation – audited Details on options over ordinary shares in the Company that were granted as compensation to each key management person during the reporting period and details on options that were vested during the reporting period are as follows:

Number of options granted during financial

year Grant date

Number of options vested

during the financial year

Fair value per option at

grant date

Exercise price per

option Expiry date 2008 Executives Mr D English 125,000 21 Feb 2008 125,000 $0.89 $2.03 21 Feb 2011 125,000 21 Feb 2008 - $1.02 $2.03 21 Feb 2012 Mr M Reed 500,000 6 Nov 2007 500,000 $0.97 $2.32 6 Nov 2010 500,000 6 Nov 2007 - $1.12 $2.32 6 Nov 2011 Vesting conditions on options granted are determined by the Board. Options vest on the employees commencement date, and on the completion of the number of year’s service nominated by the Board. All options expire on the earlier of their expiry date or one month after termination of the individual’s employment, unless otherwise agreed by the Board. The options are exercisable at any time from the grant date to the expiry date upon receipt by the Board of a written notice to exercise. The options were provided at no cost to the recipients. 5.10.4.2 Modification of terms of equity-settled share-based payment transactions – audited No terms of equity-settled share-based payment transactions (including options and rights granted as compensation to a key management person) have been altered or modified by the issuing entity during the reporting period or the prior period that require adjustment. 5.10.4.3 Exercise of options granted as compensation – audited

During the reporting period, the following shares were issued on the exercise of options previously granted as compensation:

Number of shares Amount paid $/share 2008 Directors Mr S Bunn 125,000 $1.50 125,000 $1.70 125,000 $1.95 Executives Mr M Reed 100,000 $2.32

There are no amounts unpaid on the shares issued as a result of the exercise of the options in 2008.

5.10.4.4 Analysis of options and rights over equity instruments granted as compensation - audited

Details of the vesting profile of the options granted during the reporting period as remuneration to each director of the Company and each of the five named Company executives and relevant group executives is detailed below.

Options granted

Number Date % vested

in year Forfeited in

year 1 Financial years in which grant vests

2008 Executives Mr D English 125,000 21 Feb 2008 100% - 2008 125,000 21 Feb 2008 0% - 2009 Mr M Reed 500,000 6 Nov 2007 100% - 2008 500,000 6 Nov 2007 0% - 2009 1 The % forfeited in the year represents the reduction from the maximum number of options available to vest.

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Windimurra Vanadium Limited and its controlled entities Directors’ report (continued) For the year ended 30 June 2008 5.10.4 Equity instruments (continued) 5.10.4.5 Analysis of movements in options - audited The movement during the reporting period, by value, of options over ordinary shares in the Company held by each Company director and each of the five named Company executives and relevant group executives is detailed below.

Value of Options

Granted in year

$ (A) Exercised in year

$ (B) Lapsed in year

$ (C)

Directors Mr M Kiernan - - (430,155) Executives Mr D English 238,781 - - Mr M Reed 1,047,943 97,282 - Mr S Bunn - 238,536 (84,297) 1,286,724 335,818 (514,452) (A) The value of options granted in the year is the fair value of the options calculated at grant date using the Black-

Scholes option-pricing model. The total value of the options granted is included in the table above. This amount is allocated to remuneration over the vesting period (i.e. in years 1 July 2008 to 7 May 2009).

(B) The value of options exercised during the year is calculated as the market price of shares of the Company on the

Australian Stock Exchange as at close of trading on the date the options were exercised after deducting the price paid to exercise the option.

(C) The value of the options that lapsed during the year represents the benefit forgone and is calculated at the date that

option lapsed using the Black-Scholes option-pricing model with no adjustments for whether the performance criteria had been achieved.

5.11 Risk management Financial Reporting The chief executive officer and the chief financial officer have declared in writing to the board that the Company’s financial reports are founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the board. Monthly actual results are reported against budgets approved by the directors and revised forecasts for the year are prepared regularly. Environmental regulation The consolidated entity’s operations are subject to significant environmental regulation under both Commonwealth and State legislation in relation to its exploration and mining activities. The consolidated entity is committed to achieving a high standard of environmental performance. It has appointed an Environmental Superintendent to focus on this area to ensure appropriate monitoring of environmental exposures and compliance with environmental regulations. Based on the results of enquiries made, the board is not aware of any significant breaches during the period covered by this report. F

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Windimurra Vanadium Limited and its controlled entities Directors’ report (continued) For the year ended 30 June 2008 5.12 Ethical standards All directors, managers and employees are expected to act with the utmost integrity and objectivity, striving at all times to enhance the reputation and performance of the consolidated entity. Every employee has a nominated supervisor to whom they may refer any issues arising from their employment. Conflict of interest Directors must keep the board advised, on an ongoing basis, of any interest that could potentially conflict with those of the Company. The board has developed procedures to assist directors to disclose potential conflicts of interest.

Where the board believes that a significant conflict exists for a director on a board matter, the director concerned does not receive the relevant board papers and is not present at the meeting whilst the item is considered.

5.13 Communication with shareholders The board provides shareholders with information in accordance with its legal obligations which includes identifying matters that may have a material effect on the price of the Company’s securities, notifying them to the ASX, posting them on the Company’s website, and issuing media releases. In summary, this process operates as follows: • the Chairman, managing director, finance director and the company secretary are responsible for compliance with the

company’s legal obligations and where necessary informing the board. The company secretary is responsible for all communications with the ASX.

• the full annual financial report is distributed to all shareholders and made available on the Company’s website. • the half-yearly report contains summarised financial information and a review of the operations of the consolidated entity

during the period. The half-year reviewed financial report is lodged with the Australian Securities and Investments Commission and the ASX, and sent to any shareholder who requests it. The half-year report is also posted on the company’s website.

• proposed major changes in the consolidated entity which may impact on share ownership rights are submitted to a vote of shareholders.

• all announcements made to the market, and related information (including information provided to analysts or the media during briefings), are placed on the Company's website after they are released to the ASX.

• the external auditor attends the annual general meetings to answer questions concerning the conduct of the audit, the preparation and content of the auditor’s report, accounting policies adopted by the Company and the independence of the auditor in relation to the conduct of the audit.

The board encourages full participation of shareholders at the Annual General Meeting, to ensure a high level of accountability and identification with the consolidated entity’s strategy and goals. Important issues are presented to the shareholders as single resolutions. 6. Principal activities The principal commercial activity of the consolidated entity during the year was the exploration and commercial development of the Windimurra Vanadium mine site. There were no other significant changes in the nature of the activities of the consolidated entity during the year.

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Windimurra Vanadium Limited and its controlled entities Directors’ report (continued) For the year ended 30 June 2008 7.

Operating and financial review

Overview of the consolidated entity The net loss after the provision for income tax for the consolidated entity for the financial year ended 30 June 2008 amounted to $2,035,000 (2007: profit $6,474,000). Review of Operations Windimurra Vanadium Limited (WVL) owns the Windimurra Vanadium Mine (the “Mine”), located some 600km north east of Perth and 80km south east of Mt Magnet in Western Australia. The Windimurra Vanadium Mine hosts one of the largest proven reserves of vanadium in the world. During the 2008 financial year, WVL has made substantial progress in the construction of the Mine. Construction is expected to be complete in the fourth quarter of 2008, with the commissioning of the plant in the first quarter of 2009. During the year, WVL finalised funding to complete construction of the project through a combination of project debt finance and two equity raisings. The Company has appointed the majority of the senior staff required for the commencement of operations. Early recruitment of some of the operations team has allowed those individuals to become familiar with the Mine by working in conjunction with the construction teams. Infill drilling over 1km of the 6km resource base has confirmed continuity of mineral resources below the existing pit design resulting in a 50% increase in resource tonnes and an improvement in the resource grade to 0.49% V2O5 for this area. WVL has also significantly increased its resource tonnage and grade. The global mineral resource base has increased by 19% from 149 million tonnes to 177 million tonnes at 0.46% V2O5. During the year there were a number of changes to the Board, following the resignations of Chairman Mr Michael Kiernan, and non-executive director Mr Andrew Simpson. Dr Wolf Martinick was appointed Chairman in March 2008, and since then Mr Phillip Laskaris and Mr Nicholas Morland have been appointed as non-executive directors to the WVL Board. WVL remains committed to finalising the construction of the new plant by the end of 2008 and to recommence production in early 2009.

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Windimurra Vanadium Limited and its controlled entities Directors’ report (continued) For the year ended 30 June 2008 8. Dividends No dividends have been paid or declared by the Company to members during the 2008 or 2007 financial years. 9. Events subsequent to reporting date There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely in the opinion of the directors of the Company, to affect significantly the operations of the consolidated entity, the results of those operations or the state of affairs of the consolidated entity, in future financial years. 10. Likely developments The consolidated entity intends to complete construction in the fourth quarter of 2008, with the commissioning of the plant in the first quarter of 2009. Further information about likely developments in the operations of the consolidated entity and the expected results of those operations in future financial years has not been included in this report because disclosure of the information would be likely to result in unreasonable prejudice to the consolidated entity. 11. Directors’ interests The relevant interest of each director in the shares, debentures, interests in registered schemes and rights or options over such instruments issued by the companies within the consolidated entity and other related bodies corporate, as notified by the directors to the Australian Stock Exchange in accordance with S205G(1) of the Corporations Act 2001, at the date of this report is as follows: Windimurra Vanadium Limited Ordinary shares Options over ordinary sharesDr W Martinick - 800,000The Earl of Warwick 1,509,664 500,000Mr P Laskaris - 500,000Mr N Morland - 500,000Dr I Scott 5,000 1,700,000Mr G Korte - 1,000,000

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Windimurra Vanadium Limited and its controlled entities Directors’ report (continued) For the year ended 30 June 2008 12. Share options Options granted to directors and officers of the Company During or since the end of the financial year, the Company granted options for no consideration over unissued ordinary shares in the Company to the following directors and to the following of the five most highly remunerated officers of the Company as part of their remuneration: Number of options granted Exercise price Expiry date 2008 Directors Dr I Scott 400,000# $2.13 1 May 2011 400,000# $2.23 1 May 2012 400,000# $2.32 1 May 2013 Mr G Korte 250,000# $2.13 1 May 2011 250,000# $2.23 1 May 2012 250,000# $2.32 1 May 2013 Dr W Martinick 266,667# $2.13 1 May 2011 266,667# $2.23 1 May 2012 266,667# $2.32 1 May 2013 The Earl Warwick 166,667# $2.13 1 May 2011 166,667# $2.23 1 May 2012 166,667# $2.32 1 May 2013 Mr P Laskaris 166,667# $2.13 1 May 2011 166,667# $2.23 1 May 2012 166,667# $2.32 1 May 2013 Mr N Morland 166,667# $2.13 1 May 2011 166,667# $2.23 1 May 2012 166,667# $2.32 1 May 2013 Officers Mr D English 125,000 $2.03 21 Feb 2011 125,000 $2.03 21 Feb 2012 Mr M Reed 500,000 $2.32 6 Nov 2010 500,000 $2.32 6 Nov 2011 Mr M Lilly 100,000# $2.13 1 May 2011 100,000# $2.23 1 May 2012 100,000# $2.32 1 May 2013

# Granted since the end of the financial year, following approval by shareholders.

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Windimurra Vanadium Limited and its controlled entities Directors’ report (continued) For the year ended 30 June 2008 12. Share options (continued) Unissued shares under options

At the date of this report unissued ordinary shares of the Company under option are: Expiry date Exercise price Number of shares

3 Sep 2009 $2.60 125,000

13 Sep 2009 $2.60 100,000 3 Dec 2009 $2.80 125,000

13 Jan 2010 $2.80 100,000 3 Mar 2010 $3.00 125,000

13 May 2010 $3.00 100,000 3 Jun 2010 $3.30 125,000

13 Sep 2010 $3.30 100,000 6 Nov 2010 $2.32 400,000

18 Feb 2011 $2.60 125,000 20 Feb 2011 $2.60 125,000 21 Feb 2011 $2.03 125,000 1 May 2011 $2.13 1,516,668 6 Nov 2011 $2.32 500,000

18 Feb 2012 $3.30 125,000 20 Feb 2012 $3.30 125,000 21 Feb 2012 $2.03 125,000 1 May 2012 $2.23 1,516,668 6 May 2012 $2.00 250,000 1 May 2013 $2.32 1,516,668 6 May 2013 $2.75 250,000

7,600,004 All options expire on the earlier of their expiry date or one month after termination of the employee’s employment, unless agreed and authorised by the board. These options do not entitle the holder to participate in any share issue of the Company or any other body corporate. Shares issued on exercise of options During or since the end of the financial year, the Company issued ordinary shares as a result of the exercise of options as follows (there were no amounts unpaid on the shares issued):

Number of shares Amount paid on each share 125,000 $1.50 Unlisted employee options 125,000 $1.70 Unlisted employee options 125,000 $1.95 Unlisted employee options 100,000 $2.32 Unlisted employee options

13. Indemnification and insurance of officers and auditors Indemnification The Company has agreed to indemnify the following current directors of the Company: Dr Wolf Martinick, Mr Ricardo Leiman, The Earl of Warwick, Dr Iain Scott, Mr Garry Korte, Mr Phillip Laskaris and Mr Nicholas Morland and the following former directors: Mr Shaun Bunn, Mr Roderick Smith, Mr Andrew Simpson and Mr Michael Kiernan, against all liabilities to another person (other than the Company or a related body corporate) that may arise from their position as directors of the Company and its controlled entities, except where the liability arises out of conduct involving a lack of good faith. Insurance premiums The Company has also agreed to indemnify the current directors of its controlled entities for all liabilities to another person (other than the Company or a related body corporate) that may arise from their position, except where the liability arises out of conduct involving a lack of good faith. The directors have not included details of the nature of the liabilities covered or the amount of the premium paid in respect of the directors’ and officers’ liability and legal expenses’ insurance contracts, as such disclosure is prohibited under the terms of the contract.

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Windimurra Vanadium Limited and its controlled entities Directors’ report (continued) For the year ended 30 June 2008 14. Non-audit services During the year KPMG, the Company’s auditor, has performed certain other services in addition to their statutory duties. The board has considered the non-audit services provided during the year by the auditor and in accordance with written advice provided by resolution of the audit committee, is satisfied that the provision of those non-audit services during the year by the auditor is compatible with, and did not compromise, the auditor independence requirements of the Corporations Act 2001. The non-audit services provided do not undermine the general principles relating to auditor independence as set out in Professional Statement F1Professional independence, as they did not involve reviewing or auditing the auditor’s own work, acting in a management or decision making capacity for the Company, acting as an advocate for the Company or jointly sharing risks and rewards. Details of the amounts paid to the auditor of the Company, KPMG, and its related practices for audit and non-audit services provided during the year are set out below. Consolidated 2008

$’000 2007

$’000Audit services: Auditors of the Company Audit and review of financial reports (KPMG Australia) 124 150 124 150Services other than statutory audit: Other services Corporate Finance fees (KPMG Australia) - 340 Agreed upon procedures (KPMG Australia) 3 - 3 340 15. Lead auditor’s independence declaration The Lead auditor’s independence declaration is set out on page 73 and forms part of the directors’ report for financial year ended 30 June 2008. 16. Rounding off The Company is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and in accordance with that Class Order, amounts in the financial report and directors’ report have been rounded off to the nearest thousand dollars, unless otherwise stated. This report is made with a resolution of the directors:

__________________________ Dr Iain Scott Managing Director Dated at Perth this 30th day of September 2008 F

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Windimurra Vanadium Limited and its controlled entities Income statements For the year ended 30 June 2008 Consolidated The Company Note 2008

$’000 2007

$’000 2008

$’000 2007

$’000 Other income 7 9,268 12,470 2,758 2,142 Administrative expenses (3,982) (3,907) (2,958) (3,286) Care and maintenance - (393) - - Marketing costs (455) (885) - - Other expenses 8 (3,894) (3,881) (2,582) (3,120) Profit/(loss) before financing costs 937 3,404 (2,782) (4,264) Financial income 9 5,700 3,755 1,697 3,222 Financial expenses 9 (8,672) (685) (20) (1) Net financing income (2,972) 3,070 1,677 3,221 Profit/(loss) before tax (2,035) 6,474 (1,105) (1,043) Income tax expense 12 - - - - Profit/(loss) for the period (2,035) 6,474 (1,105) (1,043) Attributable to: Equity holders of the Company (1,942) 6,780 (1,105) (1,043) Minority interest (93) (306) - - Profit/(loss) for the period (2,035) 6,474 (1,105) (1,043) Earnings per share Basic earnings/(loss) per share 13 ($0.02) $0.07 Diluted earnings/(loss) per share 13 ($0.02) $0.07 The income statements are to be read in conjunction with the notes of the financial statements set out on pages 26 to 69.

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Windimurra Vanadium Limited and its controlled entities Statements of recognised income and expense For the year ended 30 June 2008 Consolidated The Company

2008

$’0002007

$’000 2008

$’000 2007

$’000 Income and expense recognised directly in equity (2,407) 58 (2,407) 58 Profit/(loss) for the period (2,035) 6,474 (1,105) (1,043) Total recognised income and expense for the period (4,442) 6,532 (3,512) (985) Attributable to: Equity holders of the Company (4,349) 6,838 (3,512) (985) Minority interest (93) (306) - - Total recognised income and expense for the period

(4,442) 6,532 (3,512) (985)

The statements of recognised income and expense are to be read in conjunction with the notes to the financial statements set out on pages 26 to 69.

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Windimurra Vanadium Limited and its controlled entities Balance sheets For the year ended 30 June 2008 Consolidated The Company

Note 2008

$’0002007

$’0002008

$’000 2007

$’000Assets Cash and cash equivalents 14 183,148 63,407 3,797 61,029 Trade and other receivables 15 13,292 424 1,426 764Inventories 16 413 69 - -Financial assets 17 1,584 - - -Total current assets 198,437 63,900 5,223 61,793Restricted cash 14 8,120 3,857 140 200Investments 18 - - 12,753 -Trade and other receivables 15 - - 171,314 26,751Property, plant and equipment 19 126,793 51,572 200 247Intangible assets 20 7,755 - - -Financial assets 17 14,879 - - -Total non-current assets 157,547 55,429 184,407 27,198Total assets 355,984 119,329 189,630 88,991Liabilities Trade and other payables 21 21,201 5,493 744 287Employee benefits 22 248 133 123 57Borrowings 23 951 372 - -Total current liabilities 22,400 5,998 867 344Employee benefits 22 41 26 24 9Borrowings 23 125,280 5,093 - -Provisions 24 12,250 12,107 - -Total non-current liabilities 137,571 17,226 24 9Total liabilities 159,971 23,224 891 353Net assets 196,013 96,105 188,739 88,638Equity Issued capital 25 216,420 128,321 216,420 128,321 Reserves 25 18,631 5,376 17,968 5,376 Accumulated losses 25 (39,881) (38,454) (45,649) (45,059) Total equity attributable to the Parent 195,170 95,243 188,739 88,638 Minority interest 843 862 - Total equity 25 196,013 96,105 188,739 88,638 The balance sheets are to be read in conjunction with the notes to the financial statements set out on pages 26 to 69.

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Windimurra Vanadium Limited and its controlled entities Statements of cash flows For the year ended 30 June 2008 Consolidated The Company

Note 2008$’000

2007$’000

2008 $’000

2007$’000

Cash flows from operating activities

Cash receipts from related parties - - 2,604 1,423Cash paid to suppliers and employees (4,871) (7,714) (3,905) (4,657)Interest received 5,750 3,943 1,748 3,409Interest paid (7,312) (61) -Net cash from operating activities 31 (6,433) (3,832) 447 175 Cash flows from investing activities Proceeds from sale of property, plant and equipment 13,360 3 1 -Payments for property, plant and equipment (86,661) (33,761) (56) (180)Payments for exploration and evaluation - (2,760) - -Payments for financial assets (9,700) - - -Net cash from investing activities (83,001) (36,518) (55) (180) Cash flows from financing activities Loans to related party - - (136,808) (26,500)Proceeds from the issue of share capital 80,000 51,204 80,000 51,205Payment of transaction costs from share issues (2,922) (2,109) (2,922) (2,109)Proceeds from the issue of shares to minorities - 13,500 - -Proceeds from the exercise of options 2,046 1,765 2,046 1,765Proceeds from borrowings - related parties 6,527 2,972 - -Proceeds from borrowings 142,426 - - -Payment of transaction costs from borrowings (6,375) - - -Repayments of borrowings (416) (138) - -Net cash from financing activities 221,286 67,194 (57,684) 24,361 Net increase in cash and cash equivalents 131,852 26,844 (57,292) 24,356Opening cash and cash equivalents at 1 July 67,264 40,420 61,229 36,873Effect of exchange rate fluctuations on cash at bank (7,848) - - -Closing cash and cash equivalents 14 191,268 67,264 3,937 61,229

The statements of cash flows are to be read in conjunction with the notes to the financial statements set out on pages 26 to 69.

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Windimurra Vanadium Limited and its controlled entities Notes to the consolidated financial statements For the year ended 30 June 2008

1. Reporting entity Windimurra Vanadium Limited (the ‘Company’) is a company domiciled in Australia. The consolidated financial

statements of the Company for the financial year ended 30 June 2008 comprises the Company and its subsidiaries (together referred to as the ‘consolidated entity’).

2. Basis of preparation (a) Statement of compliance The financial report is a general purpose financial report which has been prepared in accordance with Australian

Accounting Standards (‘AASBs’) (including Australian Interpretations) adopted by the Australian Accounting Standards Board (‘AASB’) and the Corporations Act 2001. The financial report of the consolidated entity and the Company also comply with International Financial Reporting Standards (IFRSs) and interpretations adopted by the International Accounting Standards Board (IASB).

The financial statements was authorised for issue by the directors on 30 September 2008.

(b) Basis of measurement The consolidated financial statements have been prepared on the historical cost basis except for the following:

• derivative financial instruments at fair value though profit or loss are measured at fair value • financial instruments fair value through profit or loss are measured at fair value • liabilities for cash-settled share-based payment arrangements are measured at fair value.

The methods used to measure fair values are discussed further in note 3.

(c) Functional and presentation currency These consolidated financial statements are presented in Australian dollars, which is the Company’s functional

currency and the functional currency of its subsidiaries. The Company is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and in accordance with that Class Order, all financial information presented in Australian dollars has been rounded to the nearest thousand unless otherwise stated.

(d) Use of estimates and judgements The preparation of financial statements requires management to make judgements, estimates and assumptions

that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements are described in the following notes: Note 3(c) – valuation of financial instruments Note 3(e) – accounting for an arrangement containing a lease Note 3(e) – lease classification Note 3(h) – measurement of the recoverable amount of cash-generating units Note 12 – utilisation of tax losses Note 22(a) – measurement of share-based payments Note 24 & 29 – provisions and contingencies

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Windimurra Vanadium Limited and its controlled entities Notes to the consolidated financial statements (continued) For the year ended 30 June 2008

3. Significant accounting policies The accounting policies set out below have been applied consistently to all periods presented in these consolidated

financial statements, and have been applied consistently by its subsidiaries.

Certain comparative amounts have been reclassified to conform with the current year’s presentation. (a) Basis of consolidation

Subsidiaries Subsidiaries are entities controlled by the Company. Control exists when the Company has the power, directly or

indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable or convertible are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

In the Company’s financial statements, investments in subsidiaries are carried at cost.

Transactions eliminated on consolidation Intra-group balances, and any unrealised income and expenses arising from intra-group transactions, are eliminated

in preparing the consolidated financial statements.

Minority interests The consolidated entity applies a policy of treating transactions with minority interests as transactions with parties

external to the consolidated entity. Gains and losses that arise as a change in ownership interest through dilution are recognised in the income statement.

(b) Foreign currency

Foreign currency transactions Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the foreign exchange rate at that date. Foreign exchange differences arising on retranslation are recognised in the income statement. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Foreign exchange differences arising on retranslation are recognised in the income statement, except for qualifying cash flow hedges which are recognised directly in equity (see note 3(c)).

(c) Financial instruments

Non-derivative financial instruments Non-derivative financial instruments comprise investments in equity and debt securities, trade and other receivables,

cash and cash equivalents, loans and borrowings, and trade and other payables.

Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs. Subsequent to initial recognition non-derivative financial instruments are measured as described below.

A financial instrument is recognised if the consolidated entity becomes a party to the contractual provisions of the instrument. Financial assets are derecognised if the consolidated entity’s contractual rights to the cash flows from the financial assets expire or if the consolidated entity transfers the financial asset to another party without retaining control or substantially all risks and rewards of the asset. Regular way purchases and sales of financial assets are accounted for at trade date, i.e., the date that the consolidated entity commits itself to purchase or sell the asset. Financial liabilities are derecognised if the consolidated entity’s obligations specified in the contract expire or are discharged or cancelled. Cash and cash equivalents comprise cash balances and call deposits. Accounting for finance income and expense is discussed in note 3(k).

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Windimurra Vanadium Limited and its controlled entities Notes to the consolidated financial statements (continued) For the year ended 30 June 2008

(c)

Financial instruments (continued) Non-derivative financial instruments (continued) Held-to-maturity investments If the consolidated entity has the positive intent and ability to hold debt securities to maturity, then they are classified as held-to-maturity. Held-to-maturity investments are measured at amortised cost using the effective interest method, less any impairment losses.

Financial assets at fair value through profit or loss An instrument is classified as at fair value through profit or loss if it is held for trading or is designated as such upon initial recognition. Financial instruments are designated at fair value through profit or loss if the consolidated entity manages such investments and makes purchase and sale decisions based on their fair value in accordance with the consolidated entity’s documented risk management or investment strategy. Upon initial recognition, attributable transaction costs are recognised in profit or loss when incurred. Financial instruments at fair value through profit or loss are measured at fair value, and changes therein are recognised in profit or loss.

Other Other non-derivative financial instruments are measured at amortised cost using the effective interest method, less any impairment losses.

Derivative financial instruments

The consolidated entity holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures. Embedded derivatives are separated from the host contract and accounted for separately if the economic characteristics and risks of the host contract and the embedded derivative are not closely related, a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative, and the combined instrument is not measured at fair value through profit or loss. Derivatives are recognised initially at fair value; attributable transaction costs are recognised in profit or loss when incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are accounted for as described below.

Cash flow hedges Changes in the fair value of the derivative hedging instrument designated as a cash flow hedge are recognised directly in equity to the extent that the hedge is effective. To the extent that the hedge is ineffective, changes in fair value are recognised in profit or loss. If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, then hedge accounting is discontinued prospectively. The cumulative gain or loss previously recognised in equity remains there until the forecast transaction occurs. When the hedged item is a non-financial asset, the amount recognised in equity is transferred to the carrying amount of the asset when it is recognised. In other cases the amount recognised in equity is transferred to profit or loss in the same period that the hedged item affects profit or loss.

Economic hedges Hedge accounting is not applied to derivative instruments that economically hedge monetary assets and liabilities denominated in foreign currencies. Changes in the fair value of such derivatives are recognised in profit or loss as part of foreign currency gains and losses.

Separable embedded derivatives Changes in the fair value of separable embedded derivatives are recognised immediately in profit or loss.

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Windimurra Vanadium Limited and its controlled entities Notes to the consolidated financial statements (continued) For the year ended 30 June 2008

(c) Financial instruments (continued) Share capital

Ordinary shares Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity, net of any tax effects. Dividends Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the financial year but not distributed at balance date.

(d) Property, plant and equipment Recognition and measurement Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses.

Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended use, and the costs of dismantling and removing items and restoring the site on which they are located. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and are recognised net within “other income” or “other expenses” in the profit or loss.

Subsequent costs The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item

if it is probable that the future economic benefits embodied within the part will flow to the consolidated entity and its costs can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.

Depreciation Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an

item of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives. Land is not depreciated. The estimated useful lives for the current and comparative periods are as follows: - Site buildings 4 years - Site plant and equipment 4-5 years - Office equipment 2-5 years - Motor vehicles 4 years Depreciation methods, useful lives and residual values are reassessed at the reporting date. F

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Windimurra Vanadium Limited and its controlled entities Notes to the consolidated financial statements (continued) For the year ended 30 June 2008

(d) Property, plant and equipment (continued) Mine development

Once a development decision has been taken, expenditure for the establishment of access to mineral reserves, together with capitalised exploration, evaluation and commissioning expenditure, including an appropriate portion of related overhead expenditure directly attributable to the development property are capitalised and classified under non-current assets as “Mine development”. No amortisation is provided in respect of development properties until commercial production is declared by the consolidated entity (for new operations), or in which mining of a mineral resource has commenced, and mine development expenditure is reclassified as “Mine properties”. Mine properties Mine properties represent the accumulation of all development expenditure in relation to areas of interest. When further development expenditure is incurred in respect of a mine property after the commencement of production, such expenditure is carried forward as part of the mine property only when substantial future economic benefits are thereby established, otherwise such expenditure is classified as part of the cost of production on the income statement. Amortisation of costs is provided on the unit-of-production method which results in an amortisation charge proportional to the depletion of the economically recoverable mineral reserves within the proven and probable category.

(e) Leased assets Leases in terms of which the consolidated entity assumes substantially all the risks and rewards of ownership are

classified as finance leases. Upon initial recognition the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Other leases are operating leases.

Operating lease payments Payments made under operating leases are recognised in the income statement on a straight-line basis over the term

of the lease. Lease incentives received are recognised in the income statement as an integral part of the total lease expense and spread over the lease term.

(f) Intangible assets

Exploration and evaluation assets

Exploration and evaluation costs, comprising net direct costs (including the costs of acquiring licences) and an appropriate portion of related overhead expenditure directly attributable to the exploration property, relating to current areas of interest are capitalised as exploration and evaluation assets on an area of interest basis. Costs incurred before the consolidated entity has obtained the legal rights to explore an area are recognised in the income statement.

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

(i) the expenditures are expected to be recouped through successful development and exploitation of the area of interest; or

(ii) activities in the area of interest have not at the reporting date, reached a stage which permits a reasonable assessment of the existence or other wise of economically recoverable reserves and active and significant operations in, or in relation to, the area of interest are continuing.

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Windimurra Vanadium Limited and its controlled entities Notes to the consolidated financial statements (continued) For the year ended 30 June 2008

(f) Intangible assets (continued) Exploration and evaluation assets are assessed for impairment if:

• sufficient data exists to determine technical feasibility and commercial viability; and • circumstances suggest that the carrying amount exceeds the recoverable amount (see impairment

accounting policy 3(h)).

For the purposes of impairment testing, exploration and evaluation assets are allocated to cash-generating units to which the exploration activity relates. The cash generating unit shall not be larger than the area of interest.

Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are demonstrable, exploration and evaluation assets attributable to that area of interest are first tested for impairment and then reclassified from intangible assets to mining property and development assets.

In the event that an area of interest is abandoned, accumulated costs carried forward are written off to the income statement in the year in which that assessment is made. Expenditure is not carried forward in respect of any area of interest, unless the consolidated entity’s right of tenure to that area of interest is current.

Marketing rights

Marketing rights are recognised as an intangible asset at fair value less accumulated amortisation and impairment losses. Marketing rights which result from a share based payment are measured at the fair value of shares on the date of issue.

Amortisation of costs is provided on the unit-of-production method which results in an amortisation charge proportional to the depletion of the economically recoverable mineral reserves within the proven and probable category.

(g) Inventories Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on the first-in

first-out principle and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition.

(h) Impairment Financial assets

A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset. An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. An impairment loss in respect of an available-for-sale financial asset is calculated by reference to its current fair value. Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognised in profit or loss. Any cumulative loss in respect of an available-for-sale financial asset recognised previously in equity is transferred to profit or loss. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost and available-for-sale financial assets that are debt securities, the reversal is recognised in profit or loss. For available-for-sale financial assets that are equity securities, the reversal is recognised directly in equity.

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Windimurra Vanadium Limited and its controlled entities Notes to the consolidated financial statements (continued) For the year ended 30 June 2008

(h) Impairment (continued) Non-financial assets

The carrying amounts of the consolidated entity’s non-financial assets, inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the asset’s recoverable amount is estimated. For goodwill and intangible assets that have indefinite lives or that are not yet available for use this recoverable amount is estimated at each reporting date. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that are largely independent from other assets and groups. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. 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. An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

(i) Employee benefits Wages, salaries, annual leave, sick leave and non-monetary benefits

Liabilities for employee benefits for wages, salaries and annual leave that are expected to be settled within 12 months of the reporting date represent present obligations resulting from employees’ services provided to reporting date, are calculated at undiscounted amounts based on remuneration wage and salary rates that the consolidated entity expects to pay as at reporting date including related on-costs, such as workers compensation insurance and payroll tax.

Share-based payment transactions The share option program allows consolidated entity employees to acquire shares of the Company. The fair value of

options granted is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and spread over the period during which the employees become unconditionally entitled to the options. The fair value of the options granted is measured using the Black-Scholes pricing model, taking into account the terms and conditions upon which the options were granted.

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Windimurra Vanadium Limited and its controlled entities Notes to the consolidated financial statements (continued) For the year ended 30 June 2008

(j) Provisions A provision is recognised in the balance sheet when the consolidated entity has a present legal or constructive

obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. 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.

Site restoration

In accordance with applicable legal requirements, a provision for site restoration in respect of mining projects is recognised where the mining or exploration activity undertaken, requires rehabilitation in the future, usually upon final and permanent closure of the relevant mine.

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

The amount of the provision for future restoration costs is capitalised and is depreciated in accordance with the policy set out in note 3(d). The unwinding of the effect of discounting on the provision is recognised as a finance cost.

(k) Finance income and expenses Finance income comprises interest income on funds invested, gains on the disposal of available-for-sale financial

assets, changes in the fair value of financial assets at fair value through profit or loss, foreign currency gains, and gains on hedging instruments that are recognised in profit or loss. Interest income is recognised as it accrues, using the effective interest method. Finance expenses comprise interest expense on borrowings, unwinding of the discount on provisions, foreign currency losses, changes in the fair value of financial assets at fair value through profit or loss, impairment losses recognised on financial assets, and losses on hedging instruments that are recognised in profit or loss. All borrowing costs are recognised in profit or loss using the effective interest method. Foreign currency gains and losses are reported on a net basis.

(l) Income tax Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the

income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively

enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years. Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the

carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: initial recognition of goodwill, the initial recognition of assets or liabilities that affect neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available

against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

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Windimurra Vanadium Limited and its controlled entities Notes to the consolidated financial statements (continued) For the year ended 30 June 2008

(m) Segment reporting A segment is a distinguishable component of the consolidated entity that is engaged either in providing products or

services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments.

(n) Goods and services tax Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except where

the amount of GST incurred is not recoverable from the taxation authority. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the balance sheet.

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

(o) New standards and interpretations not yet adopted: The following standards, amendments to standards and interpretations have been identified as those which may impact the entity in the period of initial application. They are available for early adoption at 30 June 2008, but have not been applied in preparing this financial report:

• Revised AASB 3 Business Combinations changes the application of acquisition accounting for business combinations and the accounting for non-controlling (minority) interests. Key changes include: the immediate expensing of all transaction costs; measurement of contingent consideration at acquisition date with subsequent changes through the income statement; measurement of non-controlling (minority) interests at full fair value or the proportionate share of the fair value of the underlying net assets; guidance on issues such as reacquired rights and vendor indemnities; and the inclusion of combinations by contract alone and those involving mutuals. The revised standard becomes mandatory for the Group’s 30 June 2010 financial statements. The consolidated entity has not yet determined the potential effect of the revised standard on the consolidated entity’s financial report.

• AASB 8 Operating Segments introduces the “management approach” to segment reporting. AASB 8, which becomes mandatory for the consolidated entity’s 30 June 2010 financial statements, will require the disclosure of segment information based on the internal reports regularly reviewed by the consolidated entity’s Chief Operating Decision Maker in order to assess each segment’s performance and to allocate resources to them. Currently the consolidated entity presents segment information in respect of its business and geographical segments (see note 6). The consolidated entity has not yet determined the potential effect of the revised standard on the consolidated entity’s financial report.

• Revised AASB 101 Presentation of Financial Statements introduces as a financial statement (formerly “primary” statement) the “statement of comprehensive income”. The revised standard does not change the recognition, measurement or disclosure of transactions and events that are required by other AASBs. The revised AASB 101 will become mandatory for the consolidated entity’s 30 June 2010 financial statements. The consolidated entity has not yet determined the potential effect of the revised standard on the consolidated entity’s disclosures.

• Revised AASB 123 Borrowing Costs removes the option to expense borrowing costs and requires that an entity capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. The revised AASB 123 will become mandatory for the consolidated entity’s 30 June 2010 financial statements and will constitute a change in accounting policy for the consolidated entity. In accordance with the transitional provisions the consolidated entity will apply the revised AASB 123 to qualifying assets for which capitalisation of borrowing costs commences on or after the effective date. The consolidated entity has not yet determined the potential effect of the revised standard on future earnings.

• Revised AASB 127 Consolidated and Separate Financial Statements changes the accounting for investments in subsidiaries. Key changes include: the remeasurement to fair value of any previous/retained investment when control is obtained/lost, with any resulting gain or loss being recognised in profit or loss; and the treatment of increases in ownership interest after control is obtained as transactions with equity holders in their capacity as equity holders. The revised standard will become mandatory for the consolidated entity’s 30 June 2010 financial statements. The consolidated entity has not yet determined the potential effect of the revised standard on the consolidated entity’s financial report.

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Windimurra Vanadium Limited and its controlled entities Notes to the consolidated financial statements (continued) For the year ended 30 June 2008

(o) New standards and interpretations not yet adopted (continued): • AASB 2008-1 Amendments to Australian Accounting Standard - Share-based Payment: Vesting Conditions

and Cancellations changes the measurement of share-based payments that contain non-vesting conditions. AASB 2008-1 becomes mandatory for the consolidated entity’s 30 June 2010 financial statements. The consolidated entity has not yet determined the potential effect of the amending standard on the consolidated entity’s financial report.

The potential impact of the above standards and interpretations has not yet been determined.

4. Determination of fair values A number of the consolidated entity’s accounting policies and disclosures require the determination of fair value,

for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and / or disclosure purposes based on the following methods. Where applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

(a) Trade and other receivables The fair value of trade and other receivables is estimated as the present value of future cash flows, discounted at the market rate of interest at the reporting date.

(b) Derivatives

The fair value of forward exchange contracts is based on their listed market price, if available. If a listed market price is not available, then fair value is estimated by discounting the difference between the contractual forward price and the current forward price for the residual maturity of the contract using a risk-free interest rate (based on government bonds). The fair value of the Australian Dollar call options is measured using the binomial option pricing model. Measurement inputs include AUD/USD exchange rate on measurement date, exercise price of the instrument, expected volatility of AUD/USD exchange rates and the risk free interest rate (based on government bonds). The fair value of interest rate swaps is based on broker quotes. Those quotes are tested for reasonableness by discounting estimated future cash flows based on the terms and maturity of each contract and using market interest rates for a similar instrument at the measurement date.

(c) Non-derivative financial liabilities

Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date. In respect of the liability component of convertible notes, the market rate of interest is determined by reference to similar liabilities that do not have a conversion option. For finance leases the market rate of interest is determined by reference to similar lease agreements.

(d) Share-based payment transactions The fair value of employee stock options is measured using the Black-Scholes formula. Measurement inputs

include share price on measurement date, exercise price of the instrument, expected volatility (based on weighted average historic volatility adjusted for changes expected due to publicly available information), weighted average expected life of the instruments (based on historical experience and general option holder behaviour), expected dividends, and the risk-free interest rate (based on government bonds). Service and non-market performance conditions attached to the transactions are not taken into account in determining fair value. The fair value of share based payments is measured using the market price of the listed shares on the date of issue.

(e) Financial guarantees

For financial guarantee contract liabilities, the fair value at initial recognition is determined using a probability weighted discounted cash flow approach. This method takes into account the probability of default by the guaranteed party over the term of the contract, the loss given default (being the proportion of the exposure that is not expected to be recovered in the event of default) and exposure at default (being the maximum loss at the time of default).

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Windimurra Vanadium Limited and its controlled entity’s Notes to the consolidated financial statements (continued) For the year ended 30 June 2008

5. Financial risk management Overview

The Company and consolidated entity have exposure to the following risks from their use of financial instruments: • credit risk • liquidity risk • market risk.

This note presents information about the Company’s and consolidated entity’s exposure to each of the above risks, their objectives, policies and processes for measuring and managing risk, and the management of capital. Further quantitative disclosures are included throughout this financial report.

The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework.

Risk management policies are established to identify and analyse the risks faced by the Company and Consolidated entity, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s and consolidated entity’s activities. The Company and consolidated entity aim to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

The Audit Committee of the consolidated entity oversees how management monitors compliance with the Company’s and consolidated entity’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Company and consolidated entity.

Credit risk Credit risk is the risk of financial loss to the consolidated entity if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the consolidated entity’s receivables from customers and investment securities. For the Company it arises from receivables due from subsidiaries. Trade and other receivables

The Company’s and consolidated entity’s exposure to credit risk is influenced mainly by the individual characteristics of each customer.

The Company has a sole customer, Noble Resources Limited, who under the Sales and Marketing Agreement will take 100% of the company’s product. 90% provisional payment will be received on delivery to the port of export, with the final 10% being received within 3 months of export on final measurements.

Guarantees

The consolidated entity’s policy is to provide financial guarantees only to wholly-owned subsidiaries. Details of outstanding guarantees are provided in note 29.

Liquidity risk

Liquidity risk is the risk that the consolidated entity will not be able to meet its financial obligations as they fall due. The consolidated entity’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the consolidated entity’s reputation.

The consolidated entity continually monitors its cash flow requirements. Typically the consolidated entity ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 90 days, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.

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Windimurra Vanadium Limited and its controlled entities Notes to the consolidated financial statements (continued) For the year ended 30 June 2008

5. Financial risk management (continued) Market risk

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

The consolidated entity enters into derivatives, and also incurs financial liabilities, in order to manage market risks. All such transactions are carried out within the guidelines set by the Board. Where permitted, the consolidated entity generally seeks to apply hedge accounting in order to manage volatility in profit or loss.

Commodity price risk Commodity price risk is the risk of financial loss resulting from movements in the price of the consolidated entity’s commodity inputs and outputs.

The consolidated entity has signed a number of fixed price contracts, subject only to price increases for inflation, for major cost inputs.

There is no current hedge market for vanadium. As the profitability of the consolidated entity is closely linked to the vanadium price, investors are effectively able to gain exposure to the vanadium price through investment in the Company. The Company has entered into an off-take and marketing agreement with Noble Resources Limited, a related party, that includes a floor price guarantee whereby the consolidated entity will receive the higher of the market price for vanadium or the cost of production, effectively providing downside price protection for the consolidated entity.

Currency risk The consolidated entity is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than the respective functional currency of the consolidated entity.

The currencies in which these transactions primarily are denominated are AUD, USD, euro, and South African Rand (ZAR).

The consolidated entity uses a combination of AUD Call Options and forward exchange contracts to hedge its currency risk.

Borrowings denominated in USD match the cash flows generated by the underlying operations of the consolidated entity, which provides an economic hedge and no derivatives are entered into.

In respect of other monetary assets and liabilities denominated in foreign currencies, the consolidated entity ensures that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short-term imbalances.

Interest rate risk Interest rate risk arises as a result of the fluctuations in variable the interest rates.

The consolidated entity manages its exposure to changes in interest rates on borrowings that are subject to a variable interest rates by entering into interest rate swaps.

Capital management

Capital is defined as the share capital of the Company. The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. There were no changes in the Group’s approach to capital management during the year. Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements.

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Windimurra Vanadium Limited and its controlled entities Notes to the consolidated financial statements (continued) For the year ended 30 June 2008

6. Segment reporting The Company and the consolidated entity operate in one industry being mining and mineral exploration and in the

one geographical segment, Australia. 7. Other income Consolidated The Company

2008

$’000 2007

$’000 2008

$’000 2007

$’000 Change in fair value of financial asset -

realised 308 - - - Change in fair value of financial asset -

unrealised 6,982 Foreign exchange gain (net) - realised 553 - - - Foreign exchange gain (net) – unrealised 1,378 - - - Gain on dilution of interest in subsidiary - 12,332 - - Management fees charged to controlled

entities - - 2,758 2,138 Sundry revenue 47 138 - 4 9,268 12,470 2,758 2,142 8. Other expenses Depreciation and amortisation expense 19 (645) (250) (96) (63) Directors fees and related costs (902) (1,440) (1,060) (1,440) Equity-settled transactions 22 (1,574) (1,375) (1,416) (1,375) Profit/(loss) on sale of assets (140) - (6) - Gas management & transport charges (630) - - - Other expenses (3) (816) (4) (242) (3,894) (3,881) (2,582) (3,120)

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Windimurra Vanadium Limited and its controlled entities Notes to the consolidated financial statements (continued) For the year ended 30 June 2008

Consolidated The Company

2008

$’000 2007

$’000 2008

$’000 2007

$’000 9. Finance income and expense Interest received from external

parties 5,700 3,755 1,697 3,222 Total finance income 5,700 3,755 1,697 3,222 Interest expense – external (7,861) (1) - (1) Bank fees (22) - (20) - Corporate advisory (580) - - - Establishment and facility fees (201) (60) - - Stamp duty (8) - - - Borrowing costs - (624) - - Total finance expense (8,672) (685) (20) (1) Net finance income and expense (2,972) 3,070 1,677 3,221 10. Personnel expenses Wages, salaries and director fees (1) 2,328 1,244 2,066 734 Other associated personnel

expenses 291 462 186 392 Contributions to superannuation

funds 220 91 173 51 Increase (decrease) in liability for

annual leave 140 76 66 (14) Equity-settled transactions 1,574 1,375 1,416 1,375 4,553 3,248 3,907 2,538 (1) A portion of the wages, salaries and executive directors salaries have been capitalised to mining, property and

development assets (exploration and evaluation assets prior to 1 December 2006) in accordance with the consolidated entity’s accounting policies.

11. Auditors’ Remuneration Audit services Auditors of the Company KPMG Australia: Audit and review of financial reports 124 150 78 49 124 150 78 49

Other services Corporate finance fees (KPMG

Australia)

- 340 - 246 Agreed upon procedures (KPMG

Australia)

3 - - - 3 340 - 246

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Windimurra Vanadium Limited and its controlled entities Notes to the consolidated financial statements (continued) For the year ended 30 June 2008

Consolidated The Company

2008

$’000 2007

$’000 2008

$’000 2007

$’000 12. Income tax Recognised in the income statement Current tax expense/(benefit) Current tax expense/(benefit) - - - - Deferred tax expense/(benefit) Origination and reversal of temporary

differences - - - - Total income tax expense in income

statement - - - - Numerical reconciliation between

tax expense and pre-tax net profit

(Loss)/profit before tax (2,035) 6,474 (1,105) (1,043) Income tax (benefit)/expense using

the domestic corporation tax rate of 30% (2007: 30%) (610) 1,942 (332) (313)

Non-deductible expenses 485 493 483 485 Non-assessable gain - (3,700) - - Temporary differences/tax losses not

recognised 125 1,265 (151) (172) Income tax expense on pre-tax net

profit - - - -

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Windimurra Vanadium Limited and its controlled entities Notes to the consolidated financial statements (continued) For the year ended 30 June 2008

Deferred tax assets and deferred tax liabilities Deferred tax assets and liabilities are attributable to the following: Assets Liabilities Net

Consolidated entity 2008

$’000 2007

$’000 2008

$’000 2007

$’000 2008

$’000 2007

$’000 Trade and other receivables - - 31 16 31 16 Consumable stock - - 124 - 124 - Financial instruments (123) - 2,438 - 2,315 - Property, plant and equipment (1,096) (25) 3,983 2,506 2,887 2,481 Capitalised exploration (124) (124) 124 124 - - Trade and other payables (11) (19) - - (11) (19) Employee entitlements (43) (28) - - (43) (28) Rehabilitation provision (43) (2,451) - - (43) (2,451) Borrowing costs (49) - 511 - 462 - Capital raising costs (115) - - - (115) - Unrealised foreign exchange - - 414 - 414 - Tax Losses (6,021) - - - (6,021) - Total (assets)/liabilities (7,625) (2,646) 7,625 2,646 - - Set off of tax 7,625 2,646 (7,625) (2,646) - - Net tax (assets)/liabilities - - - - - - Company Trade and other receivables - - 1 16 1 16 Property, plant and equipment (42) (10) 41 - (1) (10) Capitalised exploration (124) (124) 124 124 - - Trade and other payables - (6) - - - (6) Total (assets)/liabilities (166) (140) 166 140 - - Set off of tax 166 140 (166) (140) - - Net tax assets/liabilities - - - - - -

Unrecognised deferred tax assets Deferred tax assets have not been recognised in respect of the following items: Consolidated Company

2008

$’000 2007

$’000 2008

$’000 2007

$’000 Provision for impairment on investments 14 14 14 14 Property, plant and equipment 10 347 10 - Trade and other payables 15 16 15 16 Employee entitlements 44 20 44 20 Rehabilitation provision - 1,182 - - Capital raising costs 1,175 506 1,175 506 Unrealised foreign exchange 1 - 1 - Tax losses 4,267 4,494 2,252 1,230 Potential unrecognised tax benefit at 30% 5,526 6,578 3,511 1,786 The deductible temporary difference and tax losses do not expire under current tax legislation. Deferred tax assets have not

been recognised in respect of these items because it is not probable that future taxable profit will be available against which the consolidated entity can utilise the benefits from.

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Windimurra Vanadium Limited and its controlled entities Notes to the consolidated financial statements (continued) For the year ended 30 June 2008

13. Earnings per share Basic earnings per share The calculation of basic earnings per share at 30 June 2008 was based on the loss attributable to ordinary

shareholders of $2,035,000 (2007: profit of $6,474,000) and a weighted average number of ordinary shares outstanding during the financial year ended 30 June 2008 of 118,858,855 (2007: 87,603,769).

Consolidated Weighted average number of ordinary shares 2008 2007 Issued ordinary shares at 1 July 102,625,095 74,720,430

Effect of unlisted options conversion in October 2006 - 361,644 Effect of unlisted options conversion in December 2006 - 173,425 Effect of unlisted options conversion in January 2007 - 92,877 Effect of share placement in January 2007 - 12,248,271 Effect of unlisted options conversion in June 2007 - 7,122 Effect of unlisted options conversion in November 2007 73,630 - Effect of share placement in February 2008 13,100,198 - Effect of share placement in April 2008 3,003,288 - Effect of unlisted options conversion in May 2008 43,082 - Effect of unlisted options conversion in June 2008 13,562 -

Weighted average number of ordinary share at 30 June 118,858,855 87,603,769 Diluted earnings per share The calculation of diluted earnings per share at 30 June 2008 was based on the loss attributable to ordinary

shareholders of $2,035,000 (2007: profit of $6,474,000) and a weighted average number of ordinary shares outstanding during the financial year ended 30 June 2008 of 119,009,677 (2007: 88,677,639), calculated as follows:

Weighted average number of ordinary shares (diluted) 2008 2007

Weighted average number of ordinary shares at 30 June 118,858,855 87,603,769 Effect of unlisted share options on issue 150,822 1,073,870 Weighted average number of ordinary shares (diluted)

at 30 June

119,009,677 88,677,639 Profit attributable to ordinary shareholders (diluted) No adjustments were made to the profit attributable to members of the parent entity as disclosed in the Income

Statements.

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Windimurra Vanadium Limited and its controlled entities Notes to the consolidated financial statements (continued) For the year ended 30 June 2008

14. Cash and cash equivalents Consolidated The Company 2008

$’000 2007

$’000 2008

$’000 2007

$’000 Current Bank balances 183,148 13,188 3,797 10,810 At call deposits - 50,219 - 50,219 183,148 63,407 3,797 61,029 Non-current Restricted cash on deposit 8,120 3,857 140 200 191,268 67,264 3,937 61,229 Restricted cash on deposit relates to cash backed unconditional performance bonds, guaranteed by a financial

institution, and cash backed bank guarantees for the operation of corporate credit cards, and other facilities. The financial institution has taken security, by way of right of offset, against the term deposit $8.12 million (2007: $3.86 million) (refer note 29). The consolidated entity’s exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities are disclosed in note 26.

15. Trade and other receivables Current Other receivables and prepayments 13,292 424 888 764 Loans to controlled entities - - 538 - 13,292 424 1,426 764 Non-current

Loans to controlled entities - - 171,314 26,751 13,292 424 172,740 27,515

The consolidated entity’s exposure to credit and currency risks and impairment losses related to trade and other receivables are disclosed in note 26.

16. Inventories Stores and consumable supplies –

at cost

413 69 - -

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Windimurra Vanadium Limited and its controlled entities Notes to the consolidated financial statements (continued) For the year ended 30 June 2008

17. Financial assets Consolidated The Company 2008

$’000 2007

$’000 2008

$’000 2007

$’000 Current Derivatives not used for hedging (i) 1,584 - - - 1,584 - - - Non-current Derivatives not used for hedging (i) 14,169 - - - Derivatives used for hedging –

interest rate swap (ii) 710 - - - 14,879 - - - The consolidated entity’s exposure to credit, currency and interest rate risks related to other investments is disclosed in note 26.

(i) Derivatives not used for hedging The consolidated entity has entered into a series of European call options with one month expiry dates. The call currency is Australian Dollars (AUD) and the put currency is United States Dollars (USD), with a strike price of 1AUD = 0.86USD. A premium of $9,700,000 AUD was paid by the consolidated entity. The first tranche expires on 30 April 2009. For the monthly options expiring between 30 April 2009 to 31 December 2009 the notional amount per month is $6,250,000 AUD. For the monthly options expiring on 29 January 2010 to 30 December 2011 the notional amount is $7,500,000 AUD per month. (ii) Derivatives used for hedging Interest bearing loans of the consolidated entity currently bear an interest rate of 6.0% plus the floating US-LIBOR. In order to protect against rising interest rates the consolidated entity has entered into an interest rate swap contract under which it has taken a fixed position at 3.52%, against the floating US–LIBOR. Swaps in place cover 100% of the senior debt of $90 million of the principal outstanding and will expire on 15 June 2011. The senior debt is repayable on the 13 January 2013. 18. Investments Consolidated The Company 2008

$’000 2007

$’000 2008

$’000 2007

$’000 Non-current Investments in controlled entities -

at cost - - 12,753 -

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For the year ended 30 June 2008

19. Property, Plant and equipment Consolidated The Company

Site plant & equipment

$’000

Leased Assets (1)

$’000

Office equipment

$’000

Motor vehicles

$’000

Under construction

$’000

Mine properties under development

$’000 Total$’000

Office equipment$’000

Total $’000

Cost Balance at 1 July 2006 1,743 - 161 74 22 - 2,000 151 151 Transfers in - - - - - 9,263 9,263 - - Additions 267 2,514 404 74 33,211 4,130 40,600 180 180 Disposals - - (1) - - - (1) (1) (1) Balance at 30 June 2007 2,010 2,514 564 148 33,233 13,393 51,862 330 330

Balance at 1 July 2007 2,010 2,514 564 148 33,233 13,393 51,862 330 330 Additions 242 367 137 14 59,290 16,062 76,112 57 57 Disposals (191) - (12) (70) - - (273) (12) (12) Balance at 30 June 2008 2,061 2,881 689 92 92,523 29,455 127,701 375 375

Depreciation Balance at 1 July 2006 7 - 21 13 - - 41 21 21 Depreciation charge for

the year 48 83 93 26 - - 250 63 63 Disposals - - (1) - - - (1) (1) (1)

Balance at 30 June 2007 55 83 113 39 - - 290 83 83

Balance at 1 July 2007 55 83 113 39 - - 290 83 83 Depreciation charge for the year 74 363 171 37 - - 645 96 96 Accumulated depreciation

on disposal

(2) - (4) (22) - - (28) (4) (4) Balance at 30 June 2008 127 446 281 54 0 0 908 175 175

Carrying amounts At 30 June 2007 1,955 2,431 451 109 33,233 13,393 51,572 247 247

At 30 June 2008 1,934 2,435 408 38 92,523 29,455 126,793 200 200

1 Leased assets are subject to a charge by the lessor (refer note 23)

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Windimurra Vanadium Limited and its controlled entities Notes to the consolidated financial statements For the year ended 30 June 2008

20. Intangible assets Consolidated

Exploration &

evaluation$’000

Marketing rights(1)

$’000 Total$’000

Cost Balance at 1 July 2006 6,503 - 6,503 Additions 2,760 - 2,760 Transfers out (9,263) - (9,263) Balance at 30 June 2007 - - -

Balance at 1 July 2007 - - - Additions - 7,755 7,755 Transfers out - - - Balance at 30 June 2008 - 7,755 7,755

Carrying amounts At 30 June 2007 - - -

At 30 June 2008 - 7,755 7,755

1 On 26 February 2008 the Company made a share based payment of 3,728,549 ordinary shares to Noble Resources Limited, a related party, for nil consideration. The payment was made in satisfaction of the contractual obligation in consideration for Noble Resources Limited entering into the Sales and Marketing Agreement, following approval by shareholders.

21. Trade and other payables Consolidated The Company

2008

$’000 2007

$’000 2008

$’000 2007

$’000 Trade payables 2,761 5,159 38 32 Sundry creditors and accrued expenses 18,440 334 706 255 21,201 5,493 744 287

The consolidated entity’s exposure to currency and liquidity risk related to trade and other payables is disclosed in note 26.

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Windimurra Vanadium Limited and its controlled entities Notes to the consolidated financial statements For the year ended 30 June 2008

22.

Employee benefits

Consolidated The Company

2008

$’0002007

$’000 2008

$’0002007

$’000 Current Liability for annual leave 248 133 123 57 Non-current Liability for long service leave 41 26 24 9 289 159 147 66

(a) Share based payments On 15 October 2005, the consolidated entity established an Executive and Employee Share Option Plan that entitles

eligible executives and employees to purchase shares in the entity. Under the plan the options have a vesting period and can be exercised at any time during the period commencing on the issue date and ending on the expiry date. The options lapse if the employee ceases to be an eligible employee, e.g. leaves the service of the consolidated entity, unless otherwise agreed and authorised by the Board. The vesting period and exercise price is to be determined by the Board. The expense attributable to the options are recognised in the income statement over the vesting period (refer note 3(i)).

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Windimurra Vanadium Limited and its controlled entities Notes to the consolidated financial statements For the year ended 30 June 2008

22. Employee benefits (Continued) The terms and conditions of the grants are all options are settled by physical delivery of shares. The following

tranches of options were granted during the financial year:

(a) Share based payments (continued)

Grant date / employee entitled

Number of instruments

Vesting conditions

Contractual life of options

Option grant to key management on 6 Nov 2007 500,000 Vested 6 Nov 2010 Option grant to key management on 6 Nov 2007 500,000 1 year’s service 6 Nov 2011 Option grant to key management on 21 Feb 2008 125,000 Vested 21 Feb 2011 Option grant to key management on 21 Feb 2008 125,000 1 year’s service 21 Feb 2012 1,250,000

The number and weighted average exercise prices of share options is as follows:

Weighted

averageexercise

price

Number of options

Weighted average exercise

price

Numberof options

2008 2008 2007 2007 Outstanding at 1 July $2.49 2,900,000 $0.88 1,100,000 Forfeited during the period ($2.20) (625,000) ($1.88) (200,000) Exercised during the period ($1.84) (475,000) ($1.07) (1,650,000) Granted during the period $2.26 1,250,000 $2.30 3,650,000 Outstanding at 30 June $2.59 3,050,000 $2.49 2,900,000 Exercisable at 30 June $2.67 1,550,000 $2.33 1,675,000

The options issued pursuant to the Executive and Employee share option plan and outstanding at 30 June 2008 have an exercise price in the range of $2.00 to $3.30 and a weighted average remaining contractual life of 3.0 years.

During the financial year, 475,000 share options were exercised (2007: 1,650,000). The weighted average share price at the dates of exercise was $2.50.

The fair value of services received in return for share options granted are measured by reference to the fair value of share options granted. The estimate of the fair value of the services received is measured based on the Black-Scholes option-pricing model. The contractual life of the option is used as an input into this model. Expectations of early exercise are incorporated into the Black-Scholes option-pricing model.

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Windimurra Vanadium Limited and its controlled entities Notes to the consolidated financial statements For the year ended 30 June 2008

22. Employee benefits (continued) Key management

personnel Key management

personnel

Fair value of share options and assumptions 2008 2007 Fair value at measurement date $1.03 $0.72 Assumptions

Share price $1.99 $1.86 Exercise price $2.26 $2.30 Expected volatility (expressed as weighted average volatility used in

the modelling under the Black-Scholes option-pricing model) 75% 50% Option life (expressed as weighted average life used in the modelling

under the Black-Scholes pricing model) 3.5 4.5 Expected dividends Nil Nil Risk-free interest rate (based on national government bonds) 6.8% 5.8%

The expected volatility is based on the historic volatility (calculated based on the weighted average remaining life of the share options), adjusted for any expected changes to future volatility due to publicly available information.

Note Consolidated The Company

Employee expenses

2008$

2007 $

2008 $

2007$

Share options granted during the financial year under Executive and Employee Share Option Plan -

Directors and key management personnel 8 1,574 1,375 1,416 1,375 Other - 236 - 236 1,574 1,611 1,416 1,611 23. Borrowings

This note provides information about the contractual terms of the Company’s and consolidated entity’s interest-bearing loans and borrowings which are measured at amortised cost. For more information about the Company’s and consolidated entity’s exposure to interest rate, foreign currency and liquidity risk, see note 26.

2008$’000

2007 $’000

2008 $’000

2007$’000

Current Secured bank loans 463 - - - Finance lease liabilities 488 372 - - 951 372 - - Non-current Secured bank loans 113,826 - - - Loans from related parties 9,499 2,972 - - Finance lease liabilities 1,955 2,121 - - 125,280 5,093 - - 126,231 5,465 - -

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Windimurra Vanadium Limited and its controlled entities Notes to the consolidated financial statements For the year ended 30 June 2008

23. Borrowings (continued)

Terms and debt repayment schedule

Terms and conditions of outstanding loans were as follows:

Consolidated 30 June 2008 30 June 2007

Currency

Nominal interest

rate Year of

maturity

Face value $’000

Carrying amount

$’000

Face value $’000

Carrying amount

$’000 Secured bank loans (A) USD 9.52% 2013 93,793 89,133 - - Secured bank loans (B) USD 11.00% 2015 39,124 25,156 - - Loans from related parties AUD nil % 2016 9,499 9,499 2,972 2,972 Finance lease liabilities AUD 9.72% 2011 2,443 2,443 2,493 2,493 Total interest-bearing liabilities 144,859 126,231 5,465 5,465

Secured bank loans

On 14 January 2008 the consolidated entity entered into USD denominated loan agreements with a syndicate of lenders, secured by way of a fixed and floating charge over all assets of the subsidiary, MidWest Vanadium Pty Ltd, and a share mortgage over the shares the Company holds in the subsidiary, on the following terms:

Secured bank loan (A)

The US$90 million secured bank loan facility has a five year term, with a 1% capital amortization commencing after the second anniversary until the end of the facility, at the end of year five.

Secured bank loan (B)

The US$37.5 million secured bank loan facility has a seven year term, repayable as a balloon at the end of the term.

Loan from related party

Noble Resources Limited, a related party, advanced funds under a cash call made under the terms of the Shareholder Agreement dated 4 October 2006.

On 10 January 2008, the Company and Noble Resources Limited entered into an AUD denominated loan agreement with MidWest Vanadium Pty Ltd. The loan principal of $95 million is funded pro-rata to the shareholders’ equity holdings in MidWest Vanadium Pty Ltd for the purchase of capital equipment, construction and development expenditure associated with the Windimurra mine site. The facility is unsecured and subordinated to the US$90 million Senior Syndicated Facility Agreement dated 14 January 2008 and the US$37.5 million Subscription Agreement dated 14 January 2008. The interest rate will be notified annually by the Company and Noble Resources Limited, but not to exceed the lesser of 12% per annum, on a cumulative basis, or the maximum amount payable to the shareholder under the US$90 million Senior Syndicated Facility Agreement and the US$37.5 million Subscription Agreement. Noble Resources Limited has the right to require payment under this facility in shares in the Company in lieu of interest. The loan is repayable by no later than 4 January 2016. The lenders have not notified the interest rate for the 2008 financial year.

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Windimurra Vanadium Limited and its controlled entities Notes to the consolidated financial statements For the year ended 30 June 2008

23. Borrowings (continued) Finance lease liabilities

Finance lease liabilities of the consolidated entity are payable as follows:

Future minimum

lease payments Interest

Present value of

minimum lease

payments

Future minimum

lease payments Interest

Present value of

minimum lease

payments 2008

$’000 2008

$’000 2008

$’000 2007

$’000 2007

$’000 2007

$’000 Less than one year 695 207 488 577 200 377 Between one and five years 2,270 315 1,955 2,545 429 2,116 2,965 522 2,443 3,122 629 2,493

Finance lease liabilities are effectively secured as the rights to the leased assets recognised in the financial statements revert to the lessor in the event of default.

Convertible note

The consolidated entity has the right to require Noble Resources Limited, a related party, to make a cash payment of $8.2 million to the Company under a convertible note facility. The convertible note facility remained uncalled at the date of this report.

If called the note will accrue interest at a rate of Libor plus 2% per annum paid quarterly, and Noble Resources Limited will have the right to convert the convertible note into 3,728,549 ordinary shares in the Company, subject to shareholder approval. The convertible note is repayable 3 years after being called if it has not been converted into shares in the Company.

Under the terms of the facility, Noble Resources Limited cannot convert the note into equity until the consolidated entity has drawn upon the note. The consolidated entity is not obliged to draw upon the note at any time. As a result, the consolidated entity does not currently consider the convertible note to be dilutive to its current shareholders.

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Windimurra Vanadium Limited and its controlled entities Notes to the consolidated financial statements For the year ended 30 June 2008 24. Provisions Site

restoration $’000 Consolidated Balance at 1 July 2007 12,107 Provisions made during the period 143 Balance at 30 June 2008 12,250 Represented by: Non-current 12,250 12,250

Consolidated Balance at 1 July 2007 12,107 Balance at 30 June 2008 12,250

Site restoration

At 1 July 2007 the consolidated entity had a provision of $12.1 million in respect of it’s obligation to restore land disturbance relating to the plant, tailings storage facilities, pits and waste dump sites. During the year ended 30 June 2008 the consolidated entity increased the existing provision for site restoration by an amount of $0.1 million. The provision of $12.2 million is based on estimated cash flows using an estimated inflation rate of 2.5% per annum, which has been discounted to present value using a discount rate of 6.45%. The cash outflows are expected at the end of the 20 year mine life, being the financial year ending 30 June 2029.

In accordance with Western Australian law, land disturbed by the consolidated entity in Western Australia must be restored in accordance with the environmental conditions attached to government approval upon the decommissioning of the mine.

Because of the long-term nature of the liability, the estimate of the provision is subject to change based on amendments to laws and regulations, and as new information concerning the consolidated entity’s operations become available. In particular, the consolidated entity has assumed that the site will be restored using technology and materials that are available currently. Future changes to the above assumptions, if any, may be significant and would be recognised prospectively as a change in estimate, when applicable.

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Windimurra Vanadium Limited and its controlled entities Notes to the consolidated financial statements For the year ended 30 June 2008 25. Capital and reserves Reconciliation of movement in capital and reserves attributable to equity holders of the parent

Consolidated

Share capital

$’000

Hedging reserve

$’000

Employee option

reserve$’000

Share option

reserve $’000

Option premium

reserve$’000

Accumulated Losses

$’000Total $’000

Minority Interest

$’000Total Equity

$’000 Balance at 1 July 2006 76,889 - 429 - 3,966 (45,292) 35,992 - 35,992 Total recognised income and expense - - - - - 6,838 6,838 (306) 6,532 Employee share options - - 1,552 - - - 1,552 - 1,552 Share options exercised by directors 1,492 - (442) - - - 1,050 - 1,050 Share options exercised by employees 845 - (129) - - - 716 - 716 Increase in minority interest - - - - - - - 1,168 1,168 Shares issued 49,095 - - - - - 49,095 - 49,095 Balance at 30 June 2007 128,321 - 1,410 - 3,966 (38,454) 95,243 862 96,105 Balance at 1 July 2007 128,321 - 1,410 - 3,966 (38,454) 95,243 862 96,105 Revaluation increment - 663 - - - - 663 74 737 Total recognised income and expense (2,922) - - - - (1,427) (4,349) (93) (4,442) Equity settled transactions, net of tax 7,755 - - - - - 7,755 - 7,755 Share options - - - 12,753 - - 12,753 - 12,753 Share options exercised 2,054 - - (884) - - 1,170 - 1,170 Employee share options - - 1,059 - - - 1,059 - 1,059 Employee share options exercised 1,212 - (336) - - - 876 - 876 Shares issued 80,000 - - - - - 80,000 - 80,000 Balance at 30 June 2008 216,420 663 2,133 11,869 3,966 (39,881) 195,170 843 196,013

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Windimurra Vanadium Limited and its controlled entities Notes to the consolidated financial statements For the year ended 30 June 2008 25. Capital and reserves (continued)

The Company

Share capital

$’000

Employee option reserve

$’000

Shareoption reserve

$’000

Option premium

reserve$’000

Accumulated Losses

$’000Total Equity

$’000 Balance at 1 July 2006 76,889 429 - 3,966 (44,074) 37,210 Total recognised income and expense - - - - (985) (985) Employee share options - 1,552 - - - 1,552 Share options exercised by directors 1,492 (442) - - - 1,050 Share options exercised by employees 845 (129) - - - 716 Shares issued 49,095 - - - - 49,095 Balance at 30 June 2007 128,321 1,410 - 3,966 (45,059) 88,638 Balance at 1 July 2007 128,321 1,410 - 3,966 (45,059) 88,638 Revaluation increment - - - - - - Total recognised income and expense (2,922) - - - (590) (3,512) Equity settled transactions, net of tax 7,755 - - - - 7,755 Share options - - 12,753 - - 12,753 Share options exercised 2,054 - (884) - - 1,170 Employee share options - 1,059 - - - 1,059 Employee share options exercised 1,212 (336) - - - 876 Shares issued 80,000 - - - - 80,000 Balance at 30 June 2008 216,420 2,133 11,869 3,966 (45,649) 188,739

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Windimurra Vanadium Limited and its controlled entities Notes to the consolidated financial statements For the year ended 30 June 2008 25. Capital and reserves (continued) Share capital The Company

Ordinary shares

2008 2007 On issue at 1 July 102,625,095 74,720,430 Unlisted options exercised 1,075,000 1,650,000 Shares issued for cash 46,850,030 26,254,665 Shares issued for nil consideration (refer note 20) 3,728,549 -

On issue at 30 June – fully paid 154,278,674 102,625,095

The consolidated entity has also issued share options under the Executive and Employee Share Option Plan (see

note 22). The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one

vote per share at meetings of the Company. Hedging reserve The hedging reserve comprises the effective portion of the cumulative net change in fair value of cash flow hedging

instruments related to hedged transactions that have not yet occurred. Employee option reserve The employee option reserve represents the fair value of share options issued to employees under the Executive

and Employee Share Option Plan issued on 15 October 2005. The fair value has been calculated as at the grant date of each option granted and is recognised over the vesting period.

Share option reserve The share option reserve represents the fair value of share options issued to lenders of secured bank loan “B” (refer

note 23) under the Option Deed dated 14 January 2008. The fair value has been calculated as at the grant date of each option granted and is recognised over the vesting period.

Option premium reserve The option premium reserve represents the net cash received from the issue of 108,016,033 options on 8 August

2000 at 4c per option less the expenses incurred to place the options. Dividends No dividends were proposed or paid during the financial year.

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Windimurra Vanadium Limited and its controlled entities Notes to the consolidated financial statements For the year ended 30 June 2008 26. Financial instruments

Credit risk

Exposure to credit risk

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

Carrying amount 2008 2007 $’000 $’000 Cash and cash equivalents 191,268 67,264 Financial assets at fair value through profit or loss 15,753 - Interest rate swaps used for hedging: Assets 710 - Other receivables 12,605 424 220,336 67,688

The Company’s maximum exposure to credit risk at the reporting date was: Carrying amount 2008 2007 $’000 $’000 Cash and cash equivalents 3,937 61,229 Other receivables 172,713 27,515 176,650 88,744

The consolidated entity does not currently earn revenue from operating assets, thus there is currently no credit risk on trade receivables at the reporting date by geographic region, customer type or by significant customer.

Impairment losses The consolidated entity does not currently earn revenue from operating assets, thus there is currently no receivables that are past due, nor is there a requirement to make any allowances for impairment in respect of other receivables.

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Windimurra Vanadium Limited and its controlled entities Notes to the consolidated financial statements For the year ended 30 June 2008 26. Financial instruments (continued)

Liquidity risk

The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements:

Consolidated 30 June 2008

Carrying amount

Contractual cash flows

6 mths or less 6-12 mths 1-2 years 2-5 years

More than 5 years

$’000 $’000 $’000 $’000 $’000 $’000 $’000 Non-derivative financial liabilities Secured bank loans 114,289 196,614 6,305 6,305 12,609 126,875 44,520 Finance lease liabilities 2,443 2,965 348 348 694 1,575 - Trade and other payables* 21,201 21,201 21,201 - - - - Loan from related parties 9,499 9,499 - - - - 9,499 Derivative financial liabilities Interest rate swaps used for hedging 435 443 312 131 - - -

147,867 230,722 28,166 6,784 13,303 128,450 54,019

Consolidated 30 June 2007 Non-derivative financial liabilities Finance lease liabilities 2,493 3,122 190 190 380 2,362 - Trade and other payables* 5,493 5,493 5,493 - - - - 7,986 8,615 5,683 190 380 2,362 -

* Excludes derivatives (shown separately).

Company 30 June 2008

Carrying amount

Contractual cash flows

6 mths or less 6-12 mths 1-2 years 2-5 years

More than 5 years

$’000 $’000 $’000 $’000 $’000 $’000 $’000 Trade and other payables 744 744 744 - - - - Company 30 June 2007

Trade and other payables 287 287 287 - - - -

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Windimurra Vanadium Limited and its controlled entities Notes to the consolidated financial statements For the year ended 30 June 2008 26. Financial instruments (continued)

The following table indicates the periods in which the cash flows associated with derivatives that are cash flow hedges are expected to occur. 2008 2007

Carrying amount

$’000

Expected cash flows $’000

6 mths or less

$’000

6-12 mths $’000

1-2 years $’000

2-5 years $’000

More than 5 years $’000

Carrying amount

$’000

Expected cash flows $’000

6 mths or less

$’000

6-12 mths $’000

1-2 years $’000

2-5 years $’000

More than 5 years $’000

Interest rate swaps: Assets 710 843 (312) (131) 1,286 - - - - - - - - - 710 843 (312) (131) 1,286 - - - - - - - - -

The following table indicates the periods in which the cash flows associated with derivatives that are cash flow hedges are expected to impact profit or loss. 2008 2007

Carrying amount

$’000

Expected cash flows $’000

6 mths or less

$’000

6-12 mths $’000

1-2 years $’000

2-5 years $’000

More than 5 years $’000

Carrying amount

$’000

Expected cash flows $’000

6 mths or less

$’000

6-12 mths $’000

1-2 years $’000

2-5 years $’000

More than 5 years $’000

Interest rate swaps: Assets 710 843 (312) (131) 1,286 - - - - - - - - - 710 843 (312) (131) 1,286 - - - - - - - - -

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Windimurra Vanadium Limited and its controlled entities Notes to the consolidated financial statements For the year ended 30 June 2008 26. Financial instruments (continued)

Currency risk

Exposure to currency risk

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

In thousands of AUD USD ZAR USD ZAR 30 June 2008 30 June 2007 Cash and cash equivalents 31,245 3,393 - - Secured bank loans (132,917) - - - Trade and other payables (527) (2,121) - - Gross balance sheet exposure (102,199) 1,272 - - Forward exchange contracts 15,753 - - - Net exposure (86,446) 1,272 - -

The Company was not exposed to foreign currency risk at reporting date.

The following significant exchange rates applied during the year: Average rate Reporting date spot rate 1 AUD: 2008 2007 2008 2007 USD 0.8968 0.7875 0.9626 0.8487 ZAR 6.5648 5.7610 7.6579 6.0062

Sensitivity analysis

A 10 percent strengthening of the Australian dollar against the following currencies at 30 June would have increased (decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant. The analysis is performed on the same basis for 2007.

Consolidated Company Effect in thousands of AUD Equity Profit or loss Equity Profit or loss 30 June 2008 USD - 9,291 - - ZAR - (116) - - 30 June 2007 USD - - - - ZAR - - - -

A 10 percent weakening of the Australian dollar against the above currencies at 30 June would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant. F

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Windimurra Vanadium Limited and its controlled entities Notes to the consolidated financial statements For the year ended 30 June 2008 26. Financial instruments (continued)

Interest rate risk

Profile

At the reporting date the interest rate profile of the Company’s and the consolidated entity’s interest-bearing financial instruments was:

Consolidated Carrying amount

Company Carrying amount

In thousands of AUD 2008 2007 2008 2007 Fixed rate instruments Financial liabilities 41,568 2,493 - - Variable rate instruments Financial liabilities 94,228 - - -

Fair value sensitivity analysis for fixed rate instruments

The consolidated entity does not account for any fixed rate financial liabilities at fair value through profit or loss, therefore a change in interest rates at the reporting date would not affect profit or loss, and equity.

Cash flow sensitivity analysis for variable rate instruments

A change of 100 basis points in interest rates at the reporting date would have increased (decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. The analysis is performed on the same basis for 2007.

Profit or loss Equity Effect in thousands of AUD 100bp increase 100bp decrease 100bp increase 100bp decrease 30 June 2008 Variable rate instruments: Secured bank loan (935) 935 - - Interest rate swap 900 (900) 3,379 (1,905) Cash flow sensitivity (net) (35) 35 3,379 (1,905)

30 June 2007 Variable rate instruments: Interest rate swap - - - - Cash flow sensitivity (net) - - - -

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Windimurra Vanadium Limited and its controlled entities Notes to the consolidated financial statements For the year ended 30 June 2008 26. Financial instruments (continued)

Fair values

Fair values versus carrying amounts

The fair values of the Company’s and consolidated entity’s financial assets and liabilities are not significantly different from their carrying amounts shown in the balance sheet.

The basis for determining fair values is disclosed in note 4.

Interest rates used for determining fair value

The interest rates used to discount estimated cash flows, where applicable, are based on the government yield curve at the reporting date plus an adequate credit spread, and were as follows:

2008 2007 Derivatives 3.7% - 7.9% - Secured bank loans 9.9% - Finance leases 9.7% 8.5%

27. Operating leases Leases as lessee Non-cancellable operating lease rentals are payable as follows: Consolidated The Company

2008$’000

2007 $’000

2008 $’000

2007$’000

Less than one year 4,364 147 - 4,511 Between one and five years 9,359 221 - 9,580 More than five years 1,890 - - 1,890

15,613 368 - 15,981

The consolidated entity leases office space in West Perth, from which it conducts its corporate activities.

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Windimurra Vanadium Limited and its controlled entities Notes to the consolidated financial statements For the year ended 30 June 2008 28. Capital and other commitments Capital commitments Consolidated The Company 2008

$’0002007

$’000 2008

$’000 2007

$’000 Within one year 30,783 6,893 - - One year or later and no later than five years - - - - More than five years - - - -

30,783 6,893 - -

Capital commitments entered into by the consolidated entity relate to items of plant for the development of the Windimurra Vanadium mine.

Exploration expenditure commitments In order to maintain current rights of tenure to exploration tenements, the consolidated entity is required to perform

minimum exploration work to meet the minimum expenditure requirements specified by various State governments. These obligations are subject to renegotiation when application for a mining lease is made and at other times. These obligations are not provided for in the financial report and are payable:

Within one year 533 537 - - One year or later and no later than five years 1,075 1,215 - - Later than five years 1,238 1,415 - - 2,846 3,167 - -

These obligations are expected to be fulfilled in the normal course of operations. Commitments beyond 2008 are dependent upon whether existing rights of tenure are renewed or new rights of tenure are acquired. If the consolidated entity decides to relinquish certain leases and/or does not meet these obligations, assets recognised on the balance sheet may require review to determine the appropriateness of carrying values.

Employee compensation commitments Key management personnel (consolidated and

the Company)

There are no employee compensation commitments under non-cancellable employment contracts.

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Windimurra Vanadium Limited and its controlled entities Notes to the consolidated financial statements For the year ended 30 June 2008 29. Contingencies

The consolidated entity had contingent liabilities at 30 June 2008 in respect of: Performance bonds The consolidated entity has provided unconditional performance bonds, guaranteed by a financial institution, amounting to $3.60 million (2007: $3.60 million) to the Department of Industry and Resources in respect of compliance with environmental conditions in relation to certain tenements. The financial institution has taken security, by way of right of offset, against the term deposit of $3.60 million invested with it (refer note 14). A provision for site rehabilitation has been established based on future values should Windimurra mine site be rehabilitated from its current state, as set out in note 24. Bank guarantees The consolidated entity has provided bank guarantees for the supply of natural gas, the operation of corporate credit cards and other facilities. A financial institution has taken security, by way of right of offset, against the term deposit totalling $4.52 million invested with it.

30. Consolidated entities

Country of

incorporation Ownership interest

Parent entity 2008 2007

Windimurra Vanadium Limited Australia Subsidiaries MidWest Vanadium Pty Ltd Australia 90% 90% Midwest Coal Pty Ltd Australia 100% 100% PMAL Investments Pty Ltd Australia 100% 100%

31. Reconciliation of cash flows from operating activities Consolidated The Company

Note 2008$’000

2007$’000

2008 $’000

2007$’000

Cash flows from operating activities Profit/(loss) for the period (2,035) 6,474 (1,105) (1,043) Adjustments for: Depreciation 645 250 96 63 (Gain)/loss on property, plant and

equipment

140 (4) 6 - Gain on dilution of interest in subsidiary - (12,332) - - Equity-settled share-based payment

expenses 22 1,574 1,611 1,574 1,611 Change in fair value of financial assets (6,982) - - - Exchange rate gains (1,378) - - - Borrowing costs 1,315 - - - Operating profit/(loss) before changes

in working capital and provisions

(6,721) (4,001) 571 631 (Increase)/decrease in other receivables (662) 8 (662) (503) Increase in inventories (345) (55) - - Increase in trade and other payables 1,164 129 456 53 Increase/(decrease) in provisions and

employee benefits

131 87 82 (6) Net cash from operating activities

(6,433) (3,832) 447 175

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Windimurra Vanadium Limited and its controlled entities Notes to the consolidated financial statements For the year ended 30 June 2008 31. Reconciliation of cash flows from operating activities (continued)

Non-cash investing and financing activities Transactions and other events that do not result in any cash flows during the period but affect assets and liabilities that have been recognised in the financial statements were as follows:

Consolidated The Company

2008

$’0002007 $’000

2008 $’000

2007$’000

Acquisitions of plant and equipment by means of: Finance lease 352 2,514 - -

Borrowing costs incurred by means of: Share options issued 12,753 - - -

Loans to controlled entities by means of: Equity-settled transactions - - 7,755 -

Borrowing costs Under the Option Deed dated 14 January 2008 8,653,846 share options were issued to lenders of secured bank loan “B” (refer note 25). Loans to controlled entities On 26 February 2008 the Company made a share based payment of 3,728,549 ordinary shares to Noble Resources Limited, a related party, for nil consideration (refer note 20).

32. Related Parties The following were key management personnel of the consolidated entity at any time during the reporting

period and unless otherwise indicated were key management personnel for the entire period: Non-executive directors Executive directors Dr Wolf Martinick (Chairman) Dr Iain Scott (Managing Director) The Earl of Warwick Mr Garry Korte (Finance Director) Mr Ricardo Leiman Mr Shaun Bunn (Director of Operations)

(resigned 22 August 2007) Mr Nicholas Morland

(appointed 8 May 2008)

Mr Phillip Laskaris (appointed 20 March 2008)

Mr Andrew Simpson (resigned 29 February 2008)

Mr Michael Kiernan (resigned 29 February 2008)

Executives Mr Matthew Lilly (Legal Counsel and Company Secretary) Mr Michael Tamlin (General Manager, Marketing) Mr Les Ford (Principal Consultant) Mr Martin Reed (Chief Operating Officer)

(commenced 5 November 2007)

Mr David English (General Manager – Operations (commenced 31 March 2008)

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Windimurra Vanadium Limited and its controlled entities Notes to the consolidated financial statements For the year ended 30 June 2008 32. Related Parties (continued) The key management personnel compensation included in ‘personnel expenses’ or capitalised as exploration and

development expenditure are as follows: Consolidated The Company 2008

$’000 2007

$’000 2008

$’000 2007

$’000 Short-term employee benefits 1,978 1,296 1,469 895 Post-employment benefits 313 764 250 733 Termination benefits - 1,027 - 1,027 Equity-settled transactions 1,574 1,375 1,416 916 3,865 4,462 3,135 3,571 Individual directors and executives compensation disclosures Information regarding individual directors and executives compensation and some equity instruments disclosures as

permitted by Corporation Regulations 2M.3.03 and 2M.6.04 is provided in the Remuneration Report section of the Directors’ report on pages 10 to 15.

Apart from the details disclosed in this note, no director has entered into a material contract with the Company or the consolidated entity since the end of the previous financial year and there were no material contracts involving directors’ interests existing at year-end.

Loans to key management personnel and their related parties (consolidated) There are no loans to key management personnel or their related parties as at the end of the current or prior financial

years. Other key management personnel transactions with the Company or its controlled entities Related parties of key management personnel did not transact with the Company or its controlled entities during the

current or prior financial years.

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Windimurra Vanadium Limited and its controlled entities Notes to the consolidated financial statements For the year ended 30 June 2008 32. Related Parties (continued)

Options and rights over equity instruments The movement during the reporting period in the number of options over ordinary shares in Windimurra Vanadium

Limited held, directly, indirectly or beneficially, by each key management person, including their related parties, is as follows:

2008 Held at 1 July

Granted as compensation

Exercised Other

changes Held at

30 June

Vested during

the year

Vested and exercisable

at 30 June Directors Dr I Scott 500,000 - - - 500,000 250,000 250,000#

Mr G Korte 250,000 - - - 250,000 125,000 125,000# Mr M Kiernan 500,000 - - (500,000) - - - Executives Mr S Bunn 500,000 - (375,000) (125,000) - - - Mr M Tamlin 500,000 - - - 500,000 125,000 500,000 Mr L Ford 400,000 - 400,000 100,000 400,000 Mr M Lilly 250,000 - - - 250,000 125,000 125,000 Mr D English - 250,000 - - 250,000 125,000 125,000 Mr M Reed - 1,000,000 (100,000) - 900,000 500,000 400,000 2007 Directors Mr M Fry 500,000 - (500,000) - - - - Mr A Grey - 650,000 (650,000) - - 650,000 - Mr M Kiernan - 500,000 - - 500,000 500,000 500,000 Dr I Scott - 500,000 - - 500,000 - - Executives Mr M Drew 300,000 100,000 (200,000) (200,000) - 100,000 - Mr B Foster 300,000 - (300,000) - - - - Mr S Bunn - 500,000 - - 500,000 500,000 500,000 Mr M Tamlin - 500,000 - - 500,000 375,000 375,000 Mr L Ford - 400,000 - - 400,000 300,000 300,000 Mr G Korte - 250,000 - - 250,000 - - Mr M Lilly - 250,000 - - 250,000 - -

# Options vested and capable of being exercised as at 30 June 2008, despite the option certificates not being issued

until after the financial year end. No options held by key management personnel are vested but not exercisable at 30 June 2008 or 2007.

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Windimurra Vanadium Limited and its controlled entities Notes to the consolidated financial statements For the year ended 30 June 2008 32. Related Parties (continued) Movements in shares The movement during the reporting period in the number of ordinary shares in Windimurra Vanadium Limited held,

directly, indirectly or beneficially, by each key management person, including their related parties, is as follows:

2008

Held at 1 July Purchases

Rights Issue

Exercise of Options Sales

Held at 30 June

Directors Mr R Smith 11,425,041 15,000 - - (11,440,041) - The Earl of Warwick 6,078,331 - 431,333 - (5,000,000) 1,509,664 Mr M Kiernan 52,564 - - - (52,564) - Dr I Scott - 5,000 - - - 5,000 Executives Mr M Reed - - - 100,000 (71,099) 28,901 Mr S Bunn - - - 375,000 (375,000) - 2007 Directors Mr R Smith 11,791,709 50,000 - - (416,668) 11,425,041 The Earl of Warwick 6,305,331 23,000 - - (250,000) 6,078,331 Mr M Fry 2,200,000 - - 500,000 (1,500,000) 1,200,000 Mr M Kiernan - 250,000 - - (200,000) 50,000 No shares were granted to key management personnel during the reporting period as compensation. Changes in key management personnel in the period after the reporting date and prior to the date

when the financial report is authorised for issue There have been no changes in key management personnel in the period after the reporting date and prior to the

date when the financial report is authorised for issue. Transactions with minority interest On 26 February 2008 the Company made a share based payment of 3,728,549 ordinary shares to Noble Resources

Limited, a related party, for nil consideration on behalf of MidWest Vanadium Pty Ltd. The payment was made in satisfaction of the contractual obligation in consideration for Noble Resources Limited entering into the Sales and Marketing Agreement, following approval by shareholders.

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Windimurra Vanadium Limited and its controlled entities Notes to the consolidated financial statements For the year ended 30 June 2008 32. Related Parties (continued) Identity of related parties The consolidated entity has a related party relationship with its subsidiaries (see note 30) and with its key

management personnel. Other related party transactions Subsidiaries – transactions with MidWest Vanadium Pty Ltd (MVPL)

At 30 June 2008 MVPL owed the following to the respective entities: 2008 2007

$’000 $’000

Loan A Loan from Windimurra Vanadium Limited to MVPL 85,501 26,751 Loan from Noble Resources Limited to MVPL 9,499 2,972 95,000 29,723 Loan B Loan from Windimurra Vanadium Limited to MVPL 7,755 - Loan C Loan from Windimurra Vanadium Limited to MVPL 53,970 - Loan D Loan from Windimurra Vanadium Limited to MVPL 24,087 - 180,812 29,723

Loan A

Noble Resources Limited, a related party, advanced funds under a cash call made under the terms of the Shareholder Agreement dated 4 October 2006.

On 10 January 2008, the Company and Noble Resources Limited entered into an AUD denominated loan agreement with MidWest Vanadium Pty Ltd. The loan principal of $95 million is funded pro-rata to the shareholders’ equity holdings in MidWest Vanadium Pty Ltd for the purchase of capital equipment, construction and development expenditure associated with the Windimurra mine site. The facility is unsecured and subordinated to the US$90 million Senior Syndicated Facility Agreement dated 14 January 2008 and the US$37.5 million Subscription Agreement dated 14 January 2008. The interest rate will be notified annually by the Company and Noble Resources Limited, but not to exceed the lesser of 12% per annum, on a cumulative basis, or the maximum amount payable to the shareholder under the US$90 million Senior Syndicated Facility Agreement and the US$37.5 million Subscription Agreement. Noble Resources Limited has the right to require payment under this facility in shares in the Company in lieu of interest. The loan is repayable by no later than 4 January 2016. The lenders have not notified the interest rate for the 2008 financial year.

Loan B

On 26 February 2008 the Company made a share based payment of 3,728,549 ordinary shares to Noble Resources Limited, a related party, for nil consideration on behalf of MidWest Vanadium Pty Ltd. The payment was made in satisfaction of the contractual obligation in consideration for Noble Resources Limited entering into the Sales and Marketing Agreement, following approval by shareholders. The loan was made on the same terms as Loan A.

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Windimurra Vanadium Limited and its controlled entities Notes to the consolidated financial statements For the year ended 30 June 2008 32. Related Parties (continued)

Loan C

On 10 January 2008, the Company entered into an AUD denominated loan agreement with MidWest Vanadium Pty Ltd. The loan principal of $54 million was advanced for the purchase of capital equipment, construction and development expenditure associated with the Windimurra mine site.

The facility is unsecured and subordinated to the US$90 million Senior Syndicated Facility Agreement dated 14 January 2008 and the US$37.5 million Subscription Agreement dated 14 January 2008. The interest rate will be notified annually by the Company and Noble Resources Limited, but not to exceed the lesser of 12% per annum, on a cumulative basis, or the maximum amount payable to the shareholder under the US$90 million Senior Syndicated Facility Agreement and the US$37.5 million Subscription Agreement. Noble Resources Limited has the right to require payment under this facility in shares in the Company in lieu of interest. The loan is repayable by no later than 4 January 2016. The lenders have not notified the interest rate for the 2008 financial year.

Loan D

On 29 May 2008, under the Shareholder Agreement date 4 October 2006, MidWest Vanadium Pty Ltd made a cash call on the Company and Noble for $26.8 million. As at 30 June 2008, the Company advanced its share of the cash call being $24.1 million. Noble advanced its share of the cash call being $2.68 million subsequent to year end on 15 July 08.

The facility is unsecured and subordinated to the US$90 million Senior Syndicated Facility Agreement dated 14 January 2008 and the US$37.5 million Subscription Agreement dated 14 January 2008. The interest rate will be notified annually by the Company and Noble Resources Limited, but not to exceed the lesser of 12% per annum, or the maximum amount payable to the shareholder under the US$90 million Senior Syndicated Facility Agreement and the US$37.5 million Subscription Agreement.

Management services

During the year, the Company charged a management fee to MidWest Vanadium Pty Ltd of $2.8 million (2007: $0.9 million) for management services provided to the subsidiary.

Transactions with directors There were no transactions with directors in the current financial year.

Transactions with key management personnel

There were no transactions with key management personnel in the current financial year.

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Windimurra Vanadium Limited and its controlled entities Directors’ declaration 1. In the opinion of the directors of Windimurra Vanadium Limited (‘the Company’):

(a) the financial statements, notes and the remuneration disclosures that are contained in sections 5.10.1, 5.10.2, 5.10.3, 5.10.4.1, 5.10.4.2, 5.10.4.3, 5.10.4.4 and 5.10.4.5 of the Remuneration report in the Directors' report, set out on pages 22 to 69, are in accordance with the Corporations Act 2001, including:

(i) giving a true and fair view of the financial position of the Company and the consolidated

entity as at 30 June 2008 and of their performance, as represented by the results of their operations and their cash flows, for the financial year ended on that date; and

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

2001; and

(b) the remuneration disclosures that are contained in 5.10.1, 5.10.2, 5.10.3, 5.10.4.1, 5.10.4.2, 5.10.4.3, 5.10.4.4 and 5.10.4.5 of the Remuneration report in the Directors’ report comply with Australian Accounting Standard AASB 124 Related Party Disclosures.

(c) there are reasonable grounds to believe that the Company and consolidated entity will be able

to pay its debts as and when they become due and payable. (d) the financial report also complies with International Financial Reporting Standards as disclosed

in note 2(a). 2. The directors have been given the declarations required by Section 295A of the Corporations Act

2001 from by the Chief Executive Officer and Chief Financial Officer for the financial year ended 30 June 2008.

Dated at Perth this 30th day of September 2008. Signed in accordance with a resolution of the directors:

_______________________ Dr Iain Scott Director

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