Golden Cross Resources : 2002 Annual Report

G O L D E N C R O S S R E S O U R C E S L T D

A B N 6 5 0 6 3 0 7 5 1 7 8

GCR

G O L D E N C RO S S

R E S O U R C E S L T D

A N N U A L R E P O R T

2 0 0 2

ANNUAL REPORT...

CONTENTS
Chairman's Review ....................................................................	1
Management Team ....................................................................	2
Project Locations ........................................................................	2
Review of Operations..................................................................	3
Directors' Report ......................................................................	18
Corporate Governance Statement............................................	22
Statements of Financial Performance ......................................	24
Statements of Financial Position ..............................................	25
Statements of Cash Flows........................................................	26
Notes to and Forming Part of the Financial Statements ..........	26
Directors' Declaration................................................................	38
Independent Audit Report to the Members ..............................	39
Interests in Mining Tenements ..................................................	40
Shareholder Information ..........................................................	41

COMPANY PARTICULARS . . .
DIRECTORS:	SECRETARY:
Lex Hansen, BSc, MBA, FAusIMM, FAICD	Daven Timms
Chairman	BSc LLB (Hons),
	ASIA, MAusIMM
David Timms, BSc (Hons), PEng, FAIG, FAusIMM
Managing Director	AUDITOR:

Kerry McHugh, B.Comm (Hons)	PricewaterhouseCoopers
Non-executive Director	Chartered Accountants
		201 Sussex Street
Daven Timms, BSc LLB (Hons), ASIA, MAusIMM	Sydney NSW 1171
Executive Director
		SOLICITORS:
PRINCIPAL AND REGISTERED	Allens Arthur Robinson
OFFICE IN AUSTRALIA:	The Chifley Tower
		2 Chifley Square
22 Edgeworth David Avenue	Sydney NSW 2000
Hornsby NSW 2077
Ph	[phone]	SHARE REGISTER:
Fax	[phone]
Email	[e-mail]	Registries Limited
Website	www.reflections.com.au/goldencross	Level 2, 28 Margaret Street
		Sydney NSW 2000
		Ph: [phone]
STOCK EXCHANGE LISTING:
		BANKERS:
Golden Cross Resources Ltd's shares are listed on the
Australian Stock Exchange (Listing Code GCR)	Westpac Banking Corporation
		60 Martin Place
		Sydney NSW 2000

Golden Cross Resources Ltd

ANNUAL REPORT...

CHAIRMAN'S REVIEW

Dear Shareholder,

During the year in review Golden Cross Resources made progress in applying its two-part business strategy.

The first part of the strategy is to explore for large mineral deposits that will have a significant impact on the growth of your company. The second part of the strategy is to establish early cash flow from mining projects to fund ongoing participation in the exploration and development of larger projects.

On some of those properties that require extensive and expensive exploration Golden Cross has negotiated farm-in arrangements. We now have farm-in arrangements on six properties - Copper Hill, Broken Hill, West Wyalong, Yellow Mountain, Wagga Tank and Cargo - where substantial mining companies are spending over $1 million this year on exploration and drilling. In all cases a significant interest in the properties can be retained by your company.

Last year we reported to you that we were in the process of acquiring the Adelong Gold Project from Orchid Capital Limited. This is in line with the second part of our strategy.

Conditions precedent for completing the purchase of the Adelong Project were not achieved until February 2002 and it was then that your Company was able to assume management of the project and move to completion of both the Feasibility Study and the multitude of regulatory requirements to be satisfied before approval to mine would be granted.

The Feasibility Study shows that a viable mining operation could be established, producing a net cash flow of $6.5 million over a period of 14 months. An external review highlighted technical areas that can be improved and work is in progress that will enhance the project.

We welcome the support of the Investor Group, which purchased a 5% joint venture interest in the Adelong Mining Lease. Funds from this arrangement allowed us to undertake further drilling and to screen and sample some of the old mullock dumps at Adelong.

Kempfield and Pipeline are two of GCR's 100%-owned properties. Kempfield has significant resources of silver and further progress towards development awaits additional funds to complete metallurgical studies. Shallow drilling near Canbelego on the Pipeline property has identified a broad zone of gold mineralisation. Additional drilling is planned.

Approximately 10,000m of drilling in 175 holes was completed during the year on GCR properties. We anticipate this will rise next year as an increasing number of co-venturersdrill-test targets.

Golden Cross is pleased to report it has provided a safe and harmonious workplace for its staff and contractors.

Finally I wish to record the Board's appreciation for your continued support and to the employees and contractors for their dedication and professionalism during the year.

1

LEX HANSEN

Chairman of Directors

Sydney, 30 September 2002

Golden Cross Resources Ltd

ANNUAL REPORT...

MANAGEMENT TEAM

Left to right: (Back Row) David Timms, Managing Director; Carl Hoyer, Accountant; Daven Timms, Executive Director; Chris Torrey, Exploration Manager.

(Front Row) Gordon McLean, Senior Geologist; Margaret Greentree, Secretary/Bookeeper; Robyn Hee, Senior Geologist.

2

Golden Cross Resources Ltd

ANNUAL REPORT...

REVIEW OF OPERATIONS

CORPORATE

Business Strategy

GCR's strategy is to create shareholder wealth through successful exploration. In this it has a two-pronged approach:

Firstly, GCR acquires high quality ground, especially in old mining districts, collates existing data, adds value through exploration to establish drill targets, and then enters into farm-ins on properties that are beyond its financial capabilities to test. These include targets such as porphyry copper-gold systems, which require large amounts of expensive drilling. In this regard the Company provides its ideas and concepts to the larger, better-funded mining companies and forms joint ventures. At present, GCR has six active farm-ins with over $1 million committed to exploration on GCR tenements in the current year. The farm-in properties are: Copper Hill and West Wyalong (MIM); Broken Hill (Sipa Resources); Yellow Mountain (Triako Resources); Wagga Tank (Pasminco) and Cargo (Yardarino).

The first part of GCR's strategy resulted in over 4,000m of drilling on GCR properties by co-venturers during the year, giving a total of approximately 10,000m of drilling in 175 holes on GCR properties during the year. The current farm-in position is the most active in the history of the Company.

Secondly, GCR explores and develops projects in its own right, which have the potential to provide a cash flow. These are generally smaller projects that GCR is able to evaluate cost-effectively, such as the Adelong Gold and Kempfield Silver projects.

Strategic Alliance with Aur Resources

In December 1997 GCR formed a strategic alliance with Canadian gold and base metals miner Aur Resources Inc. through the issue of GCR shares and options in consideration of $720,000.

Under the alliance Aur's subsidiary Aurcay Holdings has, until 31 December 2007:

• the right of first offer over any properties GCR offers for farm-in or option; and
• the right to earn a 50% interest in GCR's interest in any mineral property and obtain operatorship (to the extent GCR or its subsidiary is entitled to operatorship), once a production decision has been made. This right applies where GCR's share of planned production exceeds 75,000 oz/year of gold or 35 million pounds of copper or copper equivalent. The right may be exercised by Aurcay arranging 100% of GCR's financing required to bring the property into commercial production.

Aur's right of first offer has, to date, not been exercised on any farm-ins or options entered into by GCR, as Aur concentrates on its activities in North and South America.

PROJECT DEVELOPMENT

1. Adelong (near Tumut, NSW, 300 sq km, GCR 95% of ML 1435 and 100% of surrounding EL 5728 and EL 5995, gold)

A feasibility study on mining the Challenger and Challenger Extended zones (Figure 2) shows that the project could
produce a net cash flow of $6.5 million over the 14-month mine life (see page 38 for table of feasibility study
parameters and results).
The Company now owns a number of strategic capital items that are installed on site including crushing and
screening equipment, two refurbished ball mills and various leach tanks. The Mine Operating Plan has been
approved.
An external review of the feasibility study highlighted technical areas that can be improved and work is in
3
progress that will enhance the project.
Resources and Reserves
New drill data, work on pit optimisation and more detailed testwork on mullock dumps has led to a revision of
resources and reserves as outlined over leaf.

Golden Cross Resources Ltd