Golden Cross Resources : 2004 Annual Report

Annual Report 2004

GOLDEN CROSS RESOURCES LTD

Contents

Chairman's Letter to Shareholders __________________________________________________________________________ 1

Corporate________________________________________________________________________________________________ 2

Review of Exploration _____________________________________________________________________________________ 3

Directors' Report ________________________________________________________________________________________ 18

Corporate Governance Statement _________________________________________________________________________ 21

Statements of Financial Performance ______________________________________________________________________ 22

Statements of Financial Position ___________________________________________________________________________ 23

Statements of Cash Flows ________________________________________________________________________________ 24

Notes to the Financial Statements _________________________________________________________________________ 25

Directors' Declaration ____________________________________________________________________________________ 38

Independent Audit Report to the Members _________________________________________________________________ 39

Interests in Mining Tenements ____________________________________________________________________________ 40

Shareholder Information _____________________________________________________________________Inside back cover

Company Particulars

Directors

Christopher Ryan, BEcon, MBA, FAusIMM, ASIA, MPESA

Chairman

David Timms, BSc (Hons), PEng, FAusIMM, FAIG

Managing Director

Kerry McHugh, BCom (Hons)

Non-executive Director

Chris Torrey, BSc, MSc, MAIG

Director - Exploration

Daven Timms, BSc, LLB (Hons), AMPLA, MAusIMM, ASIA

Alternate Director

Principal and Registered Office in Australia

22 Edgeworth David Avenue

Hornsby NSW 2077

ph:	[phone]
fax:	[phone]
email:	[e-mail]
website:	www.goldencross.com.au

Stock Exchange Listing

Golden Cross Resources Ltd's shares are listed on the

Australian Stock Exchange (Listing Code GCR)

Secretaries

Daven Timms

BSc, LLB (Hons), AMPLA, MAusIMM, ASIA

Margaret Greentree

BEc, BBus (Accounting)

Auditor

PricewaterhouseCoopers

Chartered Accountants

201 Sussex Street

Sydney NSW 1171

Solicitors

Allens Arthur Robinson

The Chifley Tower

2 Chifley Square

Sydney NSW 2000

Share Register

Registries Limited

Level 2, 28 Margaret Street

Sydney NSW 2000

ph: [phone]

Bankers

Westpac Banking Corporation 60 Martin Place

Sydney NSW 2000

cover illustration: enlargement of porphyry rock from Bob's Creek prospect, near Sunny Corner.

Chairman's Letter to Shareholders

Dear Shareholder,

In last year's annual report I conveyed to shareholders a real sense of excitement for the year ahead. Now as I look back on the year, I can report that it was an exciting year, yet the immediate benefits of the economic minerals discovery that we all want to see on one of GCR's properties have eluded us.

The most significant event of the year under review was the substantial improvement in the outlook for the mining sector which was evident in the second and third quarters of the year under review, and which was reflected in increasing metal prices and the prices of the shares of mining and exploration companies, both big and small.

I have reproduced some base metal and gold price charts here because they indicate that metal prices are still relatively high. From this I conclude that the extent of the fall in the share prices of so many junior companies over the past 6 months is unjustified.

Admittedly the strength of the US dollar after a period of substantial weakening has influenced the US dollar prices. I believe that the price rises were more a function of the outlook for growth in the emerging economies of China and India, and despite some caution appearing

in these growth forecasts, their prospects appear bright.

Gold too has enjoyed a steady rise in US dollar terms, and remains at a most attractive price in Australian dollars, as the chart shows.

Many junior companies took advantage of the increased demand for the sector and raised new capital. GCR was one of those, raising $1.5 million (before costs) in a placement at 7.7 cents per share in October 2003, and $2.1 million in a share purchase plan offer at 8 cents per share in February 2004.

The funds raised allowed GCR to accelerate exploration on a number of its key prospects, with approximately 27,000 m of drilling done during

the year on GCR and joint venture properties. GCR spent $1.5 million on exploration through the year. At the end of June, there was $2.6 million cash remaining.

Looking to this year, there remains much to be done in pursuing the many excellent prospects in the GCR property portfolio. We have high hopes for the outcome of the drilling of the Tip anomaly at Broken Hill and the gold prospects at Sunny Corner and Canbelego, to name but three. This annual report and our website contain details of many of our properties.

While the focus remains on exploration in New South Wales, some executive time has been allocated to the identification and pursuit of other opportunities to add value to GCR.

Our sense of optimism remains. We have a highly prospective property portfolio. Our people are first class at what they do. We have sufficient funds to sustain our level of activity for the time being.

We are also optimistic that the market will recover some of the buoyancy lost in recent months. The many juniors who raised capital last year are active in their exploration and the probability seems reasonable that one or more significant discoveries will be made which will delight the shareholders of the successful companies and excite the imagination of investors, generally.

Yours faithfully

Christopher Ryan

Chairman

4000	Copper
3000
$US
2000
1000
30/06/2002	27/12/2002	25/06/2003	22/12/2003	19/06/2004
			Date
18000	Nickel

14000
$US
10000
6000
30/06/2002	27/12/2002	25/06/2003	22/12/2003	19/06/2004
			Date
1200	Zinc
1100
1000
$US
900
800
700
30/06/2002	27/12/2002	25/06/2003	22/12/2003	19/06/2004
			Date
1100	Lead
1000
800
$US
600

400

30/06/2002 27/12/2002 25/06/2003 22/12/2003 19/06/2004

Date

data above sourced from www.lme.com/dataprices_ pricegraphs.asp ©The London Metal Exchange Limited 2003, All rights reserved.

Gold

$US Gold 440

400

360

320

280

$A Gold

620

580

540

500

20032004

data above sourced from www.the-privateer.com The Privateer® market letter.

GOLDEN CROSS RESOURCES ANNUAL REPORT 2004

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.

Board of Directors: from left, Daven Timms (Alternate Director to David Timms), Kerry McHugh,

Chris Torrey, David Timms, Christopher Ryan

Corporate

OBJECTIVES

The Company's long-term objective is to participate in the discovery of one or more world class mineral deposits.

The short-term objective is to add value through exploration and development of mineral properties.

Value may be added through identifying and acquiring mineral properties in prospective locations, especially in old mining districts, generating drill targets through innovative modelling, delineating resources, entering into significant farm-in arrangements with other companies or developing projects through to the production stage to provide cash flow.

RISK AND REWARD

The Company seeks to balance the quest for significant shareholder rewards with the prudent management of downside risk.

On the reward upside, the Company is constantly searching for new mineral properties in prospective locations, such as new or proven mineral fields or geologically prospective terrane. Once a property is acquired, a detailed investigation is undertaken to ascertain its potential and whether the possible size and prospectivity of the mineral targets warrants sole funding by the Company or the sharing of funding by means of a farm-out.

Farm-outs are a tool used by the Company to manage downside risk, inherent in exploration, by sharing the exploration and development costs and the ownership of a project. For a large copper-porphyry system, for instance, it may be good management to farm the property out to a major mining company that has the large sums of money required to undertake extensive drilling programmes and carry out any required development work on the project to bring it into production. This may result in the Company holding a minority stake in a major mine without risk to GCR shareholders during the exploration and development phases. However, the minor share of a large porphyry copper-gold deposit worth billions of dollars would be a company maker for GCR.

N E W S O U T H	W A L E S		GCR - Mineral Property
	LD	BELT		GCR - Farm-ins
N	FO			GCR - Royalty
L
A
H
C
A
L			0	500km
Gilmore

EXPLORATION ON GCR PROPERTIES DURING 2004

Broken Hill

						n
						o
						t
						a
					r
					C
				n	a
			o
			m
		na
	r
u
C

	Suture
Lac			Canbelego-Pipeline
hlan	River
	Lin
	ea
		ment	McPhails
Wagga Tank
	CopperHill
Yellow Mountain	Sunny Corner
			Parkes
			Cargo	SYDNEY
	West Wyalong	Kempfield

South Gilmore	Breadalbane
Projects

Expenditure on GCR properties during 2004 demonstrates the risk-reward balance sought by the Company.

This year a considerable amount of drilling was undertaken on GCR properties. An estimated 27,000 m were completed of which approximately 11,000 m were undertaken by GCR.

PROJECT LOCATIONS

2

Of the $2.8 million spent on GCR properties during 2004, $1.5 million was spent by GCR. In addition, approximately $1.0 million was spent on properties over which GCR holds royalties.

GOLDEN CROSS RESOURCES ANNUAL REPORT 2004

from left: chimney at Sunny Corner, reviewing properties, drilling in the snow at Little Hill near Sunny Corner

Review of Exploration - GCR Managed

Sunny Corner

Location : near Lithgow, NSW

Size : 147 sq km

Ownership : GCR 100%

Commodities : gold, silver, lead, zinc

Sunny Corner was Australia's

richest silver mine until Broken Hill was discovered. The Sunny Corner Mining District produced approximately 3.5 million oz of silver and 140,000 oz of gold. Silver grades were exceptionally high, ranging from 600 g/t to 2,100 g/t. Grades of oxide ore mined reportedly averaged 1,000 g/t silver, 10% copper, 20% zinc, 10% lead and 10 g/t gold. Records indicate that 250,000 tons of massive sulphide ore mined averaged 800 g/t silver, 2% copper, 14% zinc, 14% lead and 4 g/t gold.

To the west and south of the old Sunny Corner mine are located three goldfields, Big Hill, Little Hill and Bob's Creek which have an aggregate historic production of about 15,000 oz of gold.

This year GCR undertook a concerted campaign of geological mapping, geochemical sampling and drilling in the Sunny Corner Mine area. A total of 4,090 m were drilled in 49 holes in order to evaluate the extent of high grade massive sulphide mineralisation. The work delineated a gently folded, mineralised horizon, with a true thickness of between 1 and 15 m. It occurs at the contact between felsic volcanic rocks and overlying fine sediments. A number of previously reported high grade intersections were encountered in the drilling. For example, hole GSC-03 returned 14 m at 16.4% lead+zinc, 0.7% copper, 3.5 g/t gold and 144 g/t silver from 22 m and hole GSC-36 returned 26 m at 16.9% lead+zinc, 1.2% copper, 0.42 g/t gold and 93 g/t silver from 46 m.

Drilling indicates that mineralisation is limited in extent to the north, west and east by faulting and erosion. The main area of potential is located in a downthrown fault block to the south of the old mine. Limited drilling undertaken in this area indicates the presence of hydrothermally altered rocks similar to those around the mine.

Further to the south and west are the Bob's Creek and Big Hill/Little Hill prospects where historically mined, gold-bearing quartz veins have a close spatial relationship to hydrothermally altered quartz-feldspar porphyry intrusions. Both GCR and previous explorers have sampled rocks at these prospects which have returned very encouraging, locally high gold grades.

GOLDEN CROSS RESOURCES ANNUAL REPORT 2004

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