NOTICE OF ANNUAL GENERAL MEETING AND EXPLANATORY STATEMENT

Annual General Meeting to be held at The Pilbara Room, Level C, Sheraton Perth Hotel, 207 Adelaide Terrace, Perth, Western Australia on Wednesday, 29 November 2006 commencing at 10.00am (WST)

GOLDEN WEST RESOURCES LIMITED

ABN 54 102 622 051

This Notice of Annual General Meeting and Explanatory Statement should be read in its entirety. If shareholders are in doubt as to how they should vote, they should seek advice from their accountant, solicitor or other professional adviser without delay.

Corporate Directory

Directors	John Daniels (Chairman) Gary Hutchinson (Managing Director) Michael Wilson Peter Gregory Alan Rudd
Secretary	John Palermo
Registered Office	Level 1, 284 Oxford Street Leederville WA 6007 Telephone: (08) 9242 1622 Facsimile: (08) 9443 2859
Principal Office	Suite 4, 159 Main Street Osborne Park WA 6017 Telephone: (08) 9201 9202 Facsimile: (08) 9201 9203
Auditor	Stanton Partners 1st Floor, 1 Havelock Street West Perth WA 6005
Lawyers	Pullinger Readhead Lucas Commercial Lawyers Level 2, Fortescue House 50 Kings Park Road West Perth WA 6005
Share Registry	Advanced Share Registry Services 110 Stirling Highway Nedlands WA 6009 Telephone: Facsimile:	$(08)$ 9389 8033 (08) 9389 7871
ASX Code	GWR GWRO

Notice of Annual General Meeting

The 2006 Annual General Meeting of Golden West Resources Limited will be held at The Pilbara Room, Level C, 207 Adelaide Terrace, Perth, Western Australia on Wednesday, 29 November 2006 commencing at 10.00am (WST).

Ordinary Business

Financial Statements and Reports

Period 1 July 2005 to 30 June 2006

To receive and consider the Annual Financial Report, together with the Directors' and Auditor's Reports for the year ending 30 June 2006.

Resolutions

$\blacksquare$ Adoption of Remuneration Report

To consider and, if thought fit, pass the following resolution as an ordinary resolution:

That, for all purposes, Shareholders adopt the Remuneration Report set out in the Directors' Report for the year ending 30 June 2006.

Please note that the vote on this resolution is advisory only, and does not bind the Directors or the Company.

$\overline{2}$ Election of Director

To consider and, if thought fit, pass the following resolution as an ordinary resolution:

That, for all purposes, Dr George Peter Gregory, who retires and offers himself for reelection, is re-elected as a Director.

Special Business

$\overline{3}$ Ratification of Previous Share Issues

To consider and, if thought fit, pass the following resolution as an ordinary resolution:

That, for all purposes, Shareholders approve and ratify the previous allotment and issue of Shares to the parties, for the purposes, in the amounts and on the terms set out in the Explanatory Statement.

For the purposes of Listing Rule 7.5, the Company will disregard any votes cast on the resolutions in each case by any person who received securities and any of his or her associates, unless it is cast by a person as proxy for a person who is entitled to vote (in accordance with the directions on the proxy form) or the person chairing the meeting as proxy for a person who is entitled to vote (in accordance with a direction on the proxy form to vote as the proxy decides).

$\overline{\mathbf{A}}$ Ratification of Previous Option Issues

To consider and, if thought fit, pass the following resolution as an ordinary resolution:

That, for all purposes, Shareholders approve and ratify the previous allotment and issue of Options to acquire Shares to the parties, for the purposes, in the amounts and on the terms set out in the Explanatory Statement.

For the purposes of Listing Rule 7.5, the Company will disregard any votes cast on the resolutions in each case by any person who received securities and any of his or her associates, unless it is cast by a person as proxy for a person who is entitled to vote (in accordance with the directions on the proxy form) or the person chairing the meeting as proxy for a person who is entitled to vote (in accordance with a direction on the proxy form to vote as the proxy decides).

5 Issue of Shares - General

To consider and, if thought fit, pass the following resolution as an ordinary resolution:

That, for all purposes, Shareholders approve the issue of up to 10 million Shares on the terms set out in the Explanatory Statement.

For the purposes of Listing Rule 7.3, the Company will disregard any votes cast on the resolution by any person who may participate in the proposed issue and a person who might obtain a benefit, (except a benefit solely in the capacity of Shareholder) and any of their associates, unless it is cast by a person as proxy for a person who is entitled to vote (in accordance with the directions on the proxy form) or the person chairing the meeting as proxy for a person who is entitled to vote (in accordance with a direction on the proxy form to vote as the proxy decides).

Adoption of Employee Share Option Plan 6

To consider and, if thought fit, pass the following resolution as an ordinary resolution

That, for all purposes, Shareholders approve the establishment by the Company of an Employee Share Option Scheme for the purposes and on the terms set out in the Explanatory Statement.

For the purposes of Listing Rule 7.3, the Company will disregard any votes cast on the resolution by any director of the Company and any of their associates, unless it is cast by a person as proxy for a person who is entitled to vote (in accordance with the directions on the proxy form) or the person chairing the meeting as proxy for a person who is entitled to vote (in accordance with a direction on the proxy form to vote as the proxy decides).

Explanatory Statement

The Explanatory Statement accompanying this Notice of Annual General Meeting is incorporated in and comprises part of this Notice of Annual General Meeting.

Shareholders are specifically referred to the Glossary in the Explanatory Statement which contains definitions of capitalised terms used both in this Notice of Annual General Meeting and Explanatory Statement.

Proxies

Please note that:

• $(a)$ a member of the Company entitled to attend and vote at the Annual General Meeting is entitled to appoint a proxy;
• $(b)$ a proxy need not be a member of the Company; and
• $(c)$ a member of the Company entitled to cast two or more votes may appoint two proxies and may specify the proportion or number of votes each proxy is appointed to exercise, but where the proportion or number is not specified, each proxy may exercise half of the votes.

The enclosed proxy form provides further details on appointing proxies and lodging proxy forms.

"Snap-shot" Time

The Company may specify a time, not more than 48 hours before the meeting, at which a "snapshot" of shareholders will be taken for the purposes of determining shareholder entitlements to vote at the meeting.

The Company's directors have determined that all shares of the Company that are quoted on ASX at 5.00pm (WST) on 27 November 2006 shall, for the purposes of determining voting entitlements at the Annual General Meeting, be taken to be held by the persons registered as holding the shares at that time.

By Order of the Board of Directors

John Palermo Company Secretary

27 October 2006

Explanatory Statement

This Explanatory Statement has been prepared for the information of Shareholders in relation to the business to be conducted at the Company's 2006 Annual General Meeting.

The purpose of this Explanatory Statement is to provide Shareholders with all information known to the Company which is material to a decision on how to vote on the resolutions in the accompanying Notice of Annual General Meeting.

This Explanatory Statement should be read in conjunction with the Notice of Annual General Meeting. Capitalised terms in this Explanatory Statement are defined in the Glossary.

$\blacksquare$ Financial Statements and Reports

The Annual Financial Report, Directors' Report and Auditor's Report for the Company for the year ending 2006 will be laid before the meeting.

There is no requirement for Shareholders to approve these reports. However, the Chairman will allow a reasonable opportunity for Shareholders to ask questions or make comments about those reports and the management of the Company. Shareholders will also be given a reasonable opportunity to ask the auditor questions about the conduct of the audit and the preparation and content of the auditor's report.

In addition to taking questions at the meeting, written questions to the Chairman about the management of the Company, or to the Company's auditor about:

• the preparation and content of the Auditor's Report;
• the conduct of the audit:
• accounting policies adopted by the Company in relation to the preparation of the financial statements: and
• the independence of the auditor in relation to the conduct of the audit, may be submitted no later than 5 business days before the meeting date to:

John Palermo Company Secretary Golden West Resources Limited Level 1, 284 Oxford Street Leederville WA 6007

$-$ or $-$

Fax: (08) 9443 2859

$\overline{2}$ Resolution 1: Adoption of Remuneration Report

The Remuneration Report of the Company for the financial year ending 30 June 2006 is set out in the Director's Report contained within the Company's Annual Report.

The Remuneration Report sets out the Company's remuneration arrangements for the executive and non-executive Directors and executive employees of the Company.

A reasonable opportunity will be given for the discussion of the Remuneration Report at the meeting. Shareholders should note that the vote on this resolution is advisory only and does not bind the Company or the Directors.

$\overline{3}$ Resolution 2: Election of Director - Dr George Peter Gregory

In accordance with Listing Rule 14.4 and clause 14.4 of the Constitution, at every Annual General Meeting, one third of the Directors for the time being must retire from office and are eligible for re-election. The Directors to retire are to be those who have been in office for 3 years since their appointment or last re-appointment or who have been longest in office since their appointment or last re-appointment or, if the Directors have been in office for an equal length of time, by agreement.

In accordance with the above requirement, Dr Gregory retires from office and offers himself for re-election.

Resolution 3: Ratification of Previous Share Issues $\boldsymbol{\Lambda}$

Since the previous General Meeting of Members, the Company has issued equity securities to the parties detailed below.

Listing Rule 7.1 provides that a company must not, without prior approval of Shareholders, issue securities if the securities will in themselves or when aggregated with the securities issued by a company during the previous 12 months, exceed 15% of the number of securities on issue at the commencement of that 12 month period.

Listing Rule 7.4 states that an issue by a company of securities made without approval under Listing Rule 7.1 is treated as having been made with approval for the purpose of Listing Rule 7.1 if the issue did not breach Listing Rule 7.1 and the company's members subsequently approve it.

Under this resolution, the Company seeks from Shareholders approval for, and ratification of, the issues of securities set out below so as to limit the restrictive effect of Listing Rule 7.1 on any further issues of securities in the next 12 months.

Details of the Shares issued are set out in the table below. The Shares comprise 10.6% of the Company's share capital as at the date of the Notice of Annual General Meeting.

Date of	Allottee	Issue Price	Number of
Issue			Shares Issued
25/08/2006	Peter Brady	\$1.20	1,183,333
25/08/2006	Gregory John Patterson and Douglas James Harvie	\$1.20	500,000
25/08/2006	Chatmoss Farming Co Limited	\$1.20	333,333
25/08/2006	Raymore John Millard	\$1.20	233,333
25/08/2006	Captain Starlight Nominees	\$1.20	266,667
25/08/2006	Morris John Starcevich and Glenice Starcevich	\$1.20	375,000
25/08/2006	Mikael Keith Overheu and Marilyn Anne Overheu <seabreeze \infty	\$1.20	116,667
25/08/2006	Mikael Keith Overheu and Marilyn Anne Overheu	\$1.20	133.333
25/08/2006	Allens Business Group Pty Ltd	\$1.20	3.108.334

Listing Rule 7.5 requires the following information to be given to Shareholders:

Funds raised are for the purposes of further exploration at the Wiluna Project including 18,760 metres of reserve drilling (\$1.8m), 45,000 metres of resource drilling (\$4.5m) and for general working capital purposes (\$1,200,000).

The Shares were issued on the terms set out in Annexure A to this Explanatory Statement.

The Board believes that the ratification of these issues is beneficial for the Company. The Board recommends Shareholders vote in favour of resolution 4 as it allows the Company to ratify the above issue of Shares and retain the flexibility to issue further securities representing up to 15% of the Company's share capital during the next 12 months.

5 Resolution 4: Ratification of Previous Option Issues

Since the previous General Meeting of Members, the Company has also issued equity securities to the parties detailed below. The Options were issued in conjunction with the issue of the Shares the subject of Resolution 3, on the basis of one free Option for every 4 Shares subscribed for. Accordingly no monies were raised directly from the issue of the Options.

Listing Rule 7.1 provides that a company must not, without prior approval of Shareholders, issue securities if the securities will in themselves or when aggregated with the securities issued by a company during the previous 12 months, exceed 15% of the number of securities on issue at the commencement of that 12 month period.

Listing Rule 7.4 states that an issue by a company of securities made without approval under Listing Rule 7.1 is treated as having been made with approval for the purpose of Listing Rule 7.1 if the issue did not breach Listing Rule 7.1 and the company's members subsequently approve it.

Under this resolution, the Company seeks from Shareholders approval for, and ratification of, the issues of securities set out below so as to limit the restrictive effect of Listing Rule 7.1 on any further issues of securities in the next 12 months.

Details of the Options issued are set out in the table below. They comprise 1.8% of the Company's fully diluted capital as at the date of the Notice of Annual General Meeting.

Listing Rule 7.5 requires the following information to be given to Shareholders:

Date of Issue	Allottee	Number of Options Issued
25/08/2006	Peter Brady	295,833
25/08/2006	Gregory John Patterson and Douglas James Harvie	125,000
25/08/2006	Chatmoss Farming Co Limited	83,333
25/08/2006	Raymore John Millard	58,333
25/08/2006	Captain Starlight Nominees	66,667
25/08/2006	Morris John Starcevich and Glenice Starcevich	93.750
25/08/2006	Mikael Keith Overheu and Marilyn Anne Overheu <seabreeze Super Fund A/\infty</seabreeze	29,167
25/08/2006	Mikael Keith Overheu and Marilyn Anne Overheu	33,333
25/08/2006	Allens Business Group Pty Ltd	777,084

No funds were raised from the issue of the Options however the Company may raise funds in the event the Options are exercised in the future. The Options were issued on the terms set out in Annexure B to this Explanatory Statement.

The Board believes that the ratification of these issues is beneficial for the Company. The Board recommends Shareholders vote in favour of resolution 4 as it allows the Company to ratify the above issue of Options and retain the flexibility to issue further securities representing up to 15% of the Company's share capital during the next 12 months.

6 Resolution 5: Issue of Shares - General

The Company seeks approval to issue up to 10 million Shares at an issue price equal to 80% of the volume weighted average price of Shares on ASX over a 5 trading day period before their issue or, if the Shares are issued under a prospectus, the date of signing of the prospectus.

The issue of all of these Shares will be equal to approximately 11.4% of the Company's fully-diluted share capital assuming no further issues of securities by the Company.

Funds raised will be used for regional exploration (\$1 million), mapping (\$0.2 million), drilling (\$3.5 million), working capital (\$1 million) and the remainder for the development of infrastructure associated with the Company's Wiluna project.

Listing Rule 7.1 provides generally that a company may not issue shares or options to subscribe for shares equal to more than 15% of the company's issued share capital in any 12 months without obtaining shareholder approval. Resolution 5 seeks this approval.

The Shares will be allotted and issued as soon as possible but, in any case, not later than 3 months after the date of Shareholder approval to those parties determined by the Company having regard to the level of demand for the Shares, the identification of investors with a long term commitment to the Company and other factors the Company may consider appropriate. The identity of the investors is unknown at this stage.

It is anticipated that the Shares will be allotted progressively. However, the exact dates of allotment are unknown at this stage.

The Shares will be issued on terms and conditions set out in Annexure A. The Company will apply to ASX for Official Quotation of the Shares.

The Board believes that the proposed issue is beneficial for the Company and recommends Shareholders vote in favour of the resolution. It will allow the Company to retain the flexibility to issue further securities representing up to 15% of the Company's share capital during the next 12 months.

$\overline{7}$ Resolution 6: Employee Share Option Plan

To assist in the attraction and retention of staff, the Company wishes to implement an employee share option plan ("Plan") on the terms summarised in Annexure C.

If shareholders approve the adoption of the Plan, then options issued under the Plan will not be included for the purposes of calculating the number of equity securities under Listing Rule 7.1.

A copy of the Plan shall be made available for inspection at the Company's registered office until (and during) the General Meeting.

The Company does not currently have an employee option or share plan and consequently, there have bee no previous issues under any such plan.

Any participation by Directors in the Plan will require the prior approval of Shareholders.

8 Glossary

In this Explanatory Statement, the following terms have the following unless the context otherwise requires:

Annexure	annexure to this Explanatory Statement.
ASIC	Australian Securities and Investments Commission.
ASX	Australian Stock Exchange.
Board	board of Directors.
Company	Golden West Resources Limited ABN 54 102 622 051.
Constitution	constitution of the Company.
Corporations Act	Corporations Act 2001 (Cth).
Director	Director of the Company.
Option	option to subscribe for a Share.
Share	fully paid ordinary share in the capital of the Company
Shareholder	shareholder of the Company.

ANNEXURE A TERMS OF SHARES

The following is a broad summary (though not necessarily an exhaustive or definitive statement) of the rights attaching to the shares of the Company. Full details are contained in the Constitution. available for inspection at the Company's registered office.

$(a)$ Share Capital

All issued ordinary shares rank equally in all respects.

Voting Rights $(b)$

At a general meeting of the Company, every holder of shares present in person, by an attorney, representative or proxy has one vote on a show of hands and on a poll, one vote for every fully paid share held, and for every contributing share held, a fraction of a vote equal to the proportion which the amount paid up bears to the total issue price of the contributing share.

$(c)$ Dividend Rights

Subject to the rights of holders of shares issued with any special or preferential rights (at present there are none), the profits of the Company which the Directors may from time to time determine to distribute by way of dividend are divisible among the shareholders in proportion to the shares held by them respectively, according to the amount paid up or credited as paid up on the shares.

Rights on Winding-Up $(d)$

Subject to the rights of holders with shares with special rights in a winding-up (at present there are none), on a winding-up of the Company all assets which may be legally distributed amongst the members will be distributed in proportion to the shares held by them respectively, according to the amount paid up or credited as paid up on the share.

Transfer of Shares $(e)$

Shares in the Company may be transferred by instrument in any form which complies with the Constitution, the Corporations Act, Listing Rules and SCH Business Rules.

Shares may be transferred by such means in accordance with Listing Rules and the SCH Business Rules. The Directors may refuse to register a transfer of shares only in those circumstances permitted by Listing Rules and SCH Business Rules.

Calls on Shares $(f)$

Shares issued as fully paid are not subject to any calls for payment by the Company and will not therefore become liable for forfeiture.

$(q)$ Further Increases in Capital

The allotment and issue of any new shares is under the control of the Directors and, subject to any restrictions on the allotment of shares imposed by the Constitution, Listing Rules or the Corporations Act, the Directors may allot, issue or grant options over or otherwise dispose of those shares to such persons, with such rights or restrictions as they may from time to time determine.

$(h)$ Variation of Rights Attaching to Shares

Where shares of different classes are issued, the rights attaching to the shares of a class can thereafter only be varied by a special resolution passed at a separate general meeting of the holders of those shares of that class, or with the written consent of the holders of at least three quarters of the issued shares of that class.

$(i)$ General Meeting

Each shareholder will be entitled to receive notice of, and to attend and vote at, general meetings of the Company and to receive notices, accounts and other documents required to be furnished to shareholders under the Constitution, the Corporations Act and Listing Rules.

ANNEXURE B TERMS OF OPTIONS

Exercise Date $(a)$

The options are exercisable wholly or in part at any time before 5.00pm (WST) on 31 December 2007. Options not exercised by that date shall lapse.

$(b)$ Exercise Price

Each option shall entitle the optionholder to acquire one fully paid ordinary share upon payment of \$0.20 per option to the Company.

Notice of Exercise $(c)$

Each option may be exercised by notice in writing to the Company at any time before their date of expiry. Any notice of exercise of an option received by the Company with payment in full of the exercise price will be deemed to be a notice of the exercise of that option as at the date of receipt.

$(d)$ Quotation of Options and Shares on Exercise

Application will be made to ASX for official quotation of the options. Application will be made for official quotation of the shares issued upon exercise of options. The options are transferable as the optionholder thinks fit.

Participation Rights or Entitlements $(e)$

There are no participating rights or entitlements inherent in the options and optionholders will not be entitled to participate in new issues of securities offered to shareholders during the currency of the options. However, the Company will ensure that for the purposes of determining entitlements to any such issue, the record date will be at least 10 business days after the issue is announced so as to give optionholders the opportunity to exercise their options before the date for determining entitlements to participate in any issue.

$(f)$ Shares Allotted on Exercise

Shares allotted pursuant to the exercise of options will be allotted following receipt of all the relevant documents and payments and will rank equally with the issued shares.

$(q)$ Reconstruction of Share Capital

In the event of a reconstruction (including consolidation, subdivision, reduction or return) of the issued capital of the Company, all rights of the optionholder shall be reconstructed in accordance with the Listing Rules.

Bonus Issues $(h)$

If, from time to time, before the expiry of the options the Company makes a pro rata issue of shares to shareholders for no consideration, the number of shares over which an option is exercisable will be increased by the number of shares which the optionholder would have received if the option had been exercised before the date for calculating entitlements to the pro rata issue.

ANNEXURE C EMPLOYEE SHARE OPTION PLAN SUMMARY

The options are issued under the terms of the Golden West Resources Limited Employee Option Plan ("Plan"). The full terms of the options are set out in the Plan a copy of which may be obtained from the Company. The following is a summary of those terms. In the event of any inconsistency between the terms of the Plan and the summary set out below, the terms of the Plan will prevail.

• $\mathbf{I}$ Each option entitles the holder, on exercise, to one fully paid ordinary share in the Company ("Share").
• $\overline{2}$ The exercise price and expiry date for the options will be as determined by the Board (in its discretion) on or before the date of issue.
• 3 Shares issued on exercise of options will rank equally with other fully paid ordinary shares of the Company.
• $\Delta$ An option may only be exercised after that option has vested, after any conditions associated with the exercise of the option are satisfied and before its expiry date. The Board may determine the vesting period (if any). On the grant of an option the Board may in its absolute discretion impose other conditions on the exercise of an option.
• 5 An option will lapse upon the first to occur of its expiry date; the holder acting fraudulently or dishonestly in relation to the Company or the employee ceasing to be employed by the Company.
• 6 If the Company enters into a scheme of arrangement, a takeover bid is made for the Company's Shares, or a party acquires a sufficient interest in the Company to enable them to replace the Board (or the Board forms the view that one of those events is likely to occur) then the Board may declare an option to be free of any conditions of exercise. Options which are so declared may be exercised at any time on or before they lapse.
• $\overline{7}$ Options may not be transferred other than to a nominee of the holder. Quotation of options on ASX will not be sought. However, the Company will apply to ASX for official quotation of Shares issued on the exercise of options.
• 8 There are no participating rights or entitlements inherent in the options and holders will not be entitled to participate in new issues of capital offered to Shareholders during the currency of the options. However, the Company will ensure that the record date for determining entitlements to any such issue will be at least 6 ASX Business Days after the issue is announced.
• 9 If the Company makes an issue of Shares to Shareholders by way of capitalisation of profits or reserves ("Bonus Issue"), each optionholder holding any options which have not expired at the time of the record date for determining entitlements to the Bonus Issue shall be entitled to have issued to him upon exercise of any of those options the number of Shares which would have been issued under the Bonus Issue ("Bonus Shares") to a person registered as holding the same number of Shares as that number of Shares to

which the optionholder may subscribe pursuant to the exercise of those options immediately before the record date determining entitlements under the Bonus Issue (in addition to the shares which he or she is otherwise entitled to have issued to him or her upon such exercise).

10 In the event of any reconstruction (including a consolidation, subdivision, reduction or return) of the issued capital of the Company prior to the expiry of any options, the number of options to which each optionholder is entitled or the exercise price of his or her options or both or any other terms will be reconstructed in a manner determined by the Board which complies with the provisions of the ASX Listing Rules.

Shareholder Details

Name:
Address:
Contact Telephone No:
Contact Name (if different from above);

Appointment of Proxy

I/We being a shareholder/s of Golden West Resources Limited and entitled to attend and vote hereby appoint

The Chairman of the meeting	Write here the name of the person you are appointing if this person is someone other than the Chairman of the Meeting.
(mark with an $'X'$ )

or failing the person named, or if no person is named, the Chairman of the Meeting, as my/our proxy to attend and act generally at the meeting on my/our behalf and to vote in accordance with the following directions (or if no directions have been given, as the proxy sees fit) at the Annual General Meeting of Golden West Resources Limited to be held at The Pilbara Room, Sheraton Perth Hotel, 207Adelaide Terrace, Perth, Western Australia on 29 November2006 at 10.00am (WST) and at any adjournment of that meeting.

IMPORTANT

If the Chairman of the Meeting is your nominated proxy, or may be appointed by default, and you have not directed your proxy how to vote, please place a mark in this box with an 'X'. By marking this box you acknowledge that the Chairman of the Meeting may exercise your proxy even if he has an interest in the outcome of the resolutions and that votes cast by him, other than as a proxy holder, would be disregarded because of that interest. If you do not mark this box, and you have not directed your proxy how to vote, the Chairman of the Meeting will not cast your votes on the resolutions and your votes will not be counted in computing the required majority if a poll is called. The Chairman of the Meeting intends to vote undirected proxies in favour of each resolution.

Voting directions to your proxy – please mark $\triangleright$ to indicate your directions
Ordinary Business		For	Against	Abstain *
Resolution 1.	Adoption of Remuneration Report
Resolution 2.	Re-election of George Peter Gregory
Special Business
Resolution 3	Ratification of Previous Share Issues
Resolution 4	Ratification of Previous Option Issues
Resolution 5.	Issue of Shares - General
Resolution 6.	Employee Share Option Plan
	*If you mark the Abstain box for a particular Resolution, you are directing your proxy not to vote on your behalf on a show of hands or on a poll and your votes will not be counted in computing the required majority on a poll.

Appointment of a second proxy (see instructions overleaf)

If you wish to appoint a second proxy, state the % of your voting rights applicable to the proxy appointed by this form

PLEASE SIGN HERE This section must be signed in accordance with the instructions overleaf to enable your directions to be implemented

Individual or Shareholder 1

Shareholder 2

Shareholder 3

Sole Director and Sole Company Secretary Director

Director/Company Secretary

$\%$

How to complete this Proxy Form

Your Name and Address

Please print your name and address as it appears on your holding statement and the company's share register. If shares are jointly held, please ensure the name and address of each joint shareholder is indicated. Shareholders should advise the company of any changes. Shareholders sponsored by a broker should advise their broker of any changes. Please note, you cannot change ownership of your securities using this form.

Appointment of a Proxy

If you wish to appoint the Chairman of the Meeting as your proxy, mark the box. If the person you wish to appoint as your proxy is someone other than the Chairman of the Meeting please write the name of that person. If you leave this section blank, or your named proxy does not attend the meeting, the Chairman of the Meeting will be your proxy. A proxy need not be a shareholder of the company.

Votes on Resolutions

You may direct your proxy how to vote by placing a mark in one of the boxes opposite each Resolution. All your shareholding will be voted in accordance with such a direction unless you indicate only a portion of voting rights are to be voted on any Resolution by inserting the percentage or number of shares you wish to vote in the appropriate box or boxes. If you do not mark any of the boxes on a given Resolution, your proxy may vote as he or she chooses. If you mark more than one box on a Resolution your vote on that Resolution will be invalid.

Appointment of a Second Proxy

You are entitled to appoint up to two persons as proxies to attend the meeting and vote on a poll. If you wish to appoint a second proxy, an additional Proxy Form may be obtained by telephoning the Company Secretary on (08) 9242 1622 or you may photocopy this form.

To appoint a second proxy you must on each Proxy Form state (in the appropriate box) the percentage of your voting rights which are the subject of the relevant proxy. If both Proxy Forms do not specify that percentage, each proxy may exercise half your votes. Fractions of votes will be disregarded.

Signing Instructions

You must sign this form as follows in the spaces provided:

Individual:	where the holding is in one name, the holder must sign.
Joint Holding:	where the holding is in more than one name, all of the shareholders should sign.
Power of Attorney:	to sign under Power of Attorney, you must have already lodged this document with the company's share registry. If you have not previously lodged this document for notation, please attach a certified photocopy of the Power of Attorney to this form when you return it.
Companies:	where the company has a Sole Director who is also the Sole Company Secretary, this form must be signed by that person. If the company (pursuant to section 204A of the Corporations Act 2001) does not have a Company Secretary, a Sole Director can also sign alone. Otherwise this form must be signed by a Director jointly with either another Director or a Company Secretary. Please indicate the office held by signing in the appropriate place.

If a representative of the corporation is to attend the meeting a "Certificate of Appointment of Corporate Representative" should be produced prior to admission. A form of the certificate is either included in the Notice of Annual General Meeting or may be obtained from the company's share registry.

Lodgement of a Proxy

This Proxy Form (and any Power of Attorney under which it is signed) must be received at the address given below not later than 48 hours before the commencement of the meeting (ie. no later than 10.00 am WST on 27 November 2006). Any Proxy Form received after that time will not be valid for the scheduled meeting.

This Proxy Form (and any Power of Attorney and/or second Proxy Form) may be sent or delivered to the company's registered office at Level 1, 284 Oxford Street, Leederville WA 6007 or sent by facsimile to the registered office on (08) 9443 2859.

COUDENTWESTRESOURGESHIVIERD

ABN 54 102 622 051

Tolder West
Resources of Figure

Annual Report 2006

Corporate Directory

Board Of Directors I L Daniels G W Hutchinson M R Wilson G P Gregory A P Rudd

. . . . . . . . . . . . . . . . . . .

Company Secretary John Palermo

Principal Office Suite 4 159 Main Street Osborne Park, Western Australia 6017 Telephone: +61 8 9201 9202 Facsimile: +61 8 9201 9203

Website & Email www.goldenwestresources.com [email protected]

Registered Office Level 1 284 Oxford Street Leederville, Western Australia 6007 Telephone: +61 8 9242 1622 Facsimile: +61 8 9242 5903

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Table of Contents

Corporate Directory	Inside front cover
Chairman's Report	2
Review of Operations	4
Directors' Report	21
Income Statement	26
Balance Sheet	27
Statement of Changes in Equity	28
Statement of Cash Flows	29
Notes to the Financial Statements	30
Directors' Declaration	52
Independent Audit Report to the members	53
Auditor's Independence Declaration	55
ASX Additional Information	56
Corporate Governance Statement	59

CHATRWANS REPORT

It is with a great deal of pleasure that I present
to you the Chairman's Report for the period
.from July 2005 to 30 June 2006

his period has seen considerable positive progress for your Company, which is now capitalised at more than A\$90,000,000. The road to building a Company of this size commenced in December 2004 with an initial capital raising of A\$2,800,000. Primarily, the re-rating of the Company is due to promising results and significant progress from the Company's Wiluna West Project.

You will remember that the Company was formed and floated on the ASX largely on several gold deposits. The Company is considering several scenarios regarding joint ventures and mining of the gold resources with nearby processing facilities.

Following initial exploration, the Company realised the iron ore available on our leases was very significant and well worth testing. This is especially so in the light of the recent price rises for iron ore and the world demand for very high quality ore.

As reported last year, the initial results indicated one of the iron rich bands produced very high iron analyses. Importantly, these analyses revealed that the deposit also had very small quantities of deleterious impurities which is a great advantage to smelters, and commands a premium price.

For most of the last year, sampling, drilling and assaving of the iron ore deposits have been our prime focus and is continuing as fast as possible. The initial results show there are five main horizons, each of which includes high grade iron ore results. The total extent of these horizons in the Company's leases amounts to more than 120 kilometres of cumulative strike. Total tonnages are not yet known and, with such large lengths of iron ore to test at the required drill

spacings, a tonnage will not be achieved for quite a while yet.

The Company is in the process of drilling a small area to achieve the necessary JORC compliance reserve to commence mining in the short term and to provide a cash flow. Additional resources will be defined after further drilling. Initial results are extremely encouraging and we are of the view that at least 200 to 250 million tonnes of high grade iron ore is available at the Wiluna West Project.

In order to progress as quickly as possible, we have a clear two-staged development approach.

It is proposed to commence a small operation exporting at least 1,000,000 tonnes p.a. for four to five years from Esperance Port. The cash flow generated will be used to fund the exploration and development of the next stage.

It is proposed that Stage 2 will see the export of 10 to 12 million tonnes p.a.

The initial resource for Stages 1 and 2 will be provided from six targets identified on Ridge "B" Bowerbird, Joyners Find and Ridge "C" targets C1, C2, C3 and C4. Please refer to the map and drilling results from these areas in the geological report of this Annual Report.

For Stage 1, infrastructure planning has already commenced. The Company has acquired an option over a 1.8 hectare area at the Esperance Port in preparation for the building of a shed to accommodate up to 300,000 tonnes of iron ore. It is planned that a total of 1,000,000 tonnes of iron ore per year can be exported for the required four to five year period.

The second stage will involve a considerably larger infrastructure operation involving the building of a

Close up of iron ore

300 kilometre railway from Wiluna to Leonora, or Wiluna to Meekatharra, so as to access the proposed Oakajee Port. This will entirely depend on the success of discussions relating to port usage and timeliness of government approvals for the proposed Oakajee Port.

In addition, the Company has had some initial uranium success from its first pass exploration on its most southern lease (53/1159) covering deposits which are up stream from known significant uranium deposits, one of which is the Yeleerie deposit.

On behalf of all of the Golden West Resources shareholders, I'd like to thank the Company's staff and contractors for their hard work throughout the year. They have indeed laid a solid foundation for your Company for a very successful future.

Dated this 27th day of September, 2006.

ti e dremar^ia

Dr JOHN LEONARD DANIELS Chairman

EVIEW OF OPERAT

The Board of Golden West Resources has made significant progress in the
development of the Wiluna West Project over the past 12 months to the
extent it believes it has control of a major high grade iron ore deposit.

Wiluna West Project

he Wiluna West Project (Project) is located 35 kilometres south-west of the township of Wiluna in the north eastern Goldfields of Western Australia, 450 kilometres north of Kalgoorlie. The Project occupies an area of 440 square kilometres covering a length of 45 kilometres over almost the entire Joyners Find Greenstone Belt, a region known for significant mineralised deposits with potential for iron ore, gold and uranium.

Iron Ore

The Wiluna West Project contains 5 mineralised ridges with a cumulative strike of 120 kilometres. Exploration to date has concentrated on the northern, more exposed sections of two ridges namely "B" and "C". Initial results from mapping and limited drilling indicate that the project has the potential to host a major high grade iron ore deposit of at least 200 to 250 million tonnes. Exploration by way of mapping and drilling is ongoing and the preliminary

resource and reserve figures are expected before calendar year end. The development of iron ore assets is

the Company's number one priority.

Gold

The Wiluna West Project contains a combined indicated and measured gold resource of 788,000 tonnes at 3.5 g/t for a contained 87,000 ounces of gold. There remains considerable untested potential for further discoveries.

Waniww

The Company holds exploration licence 53/1159 which is located at the South-East of the Project. This tenement is upstream from the Dawson Well, Hinkler

Well, Centipede and Lake Way uranium deposits. The region is highly prospective for calcrete style deposits. The significant Yeleerie deposit, owned by BHP Billiton, is located 16 kilometres south of the Project. Recent drilling by newly listed U3O8 Limited on its Hinkler Well project has intersected significant uranium mineralisation adjacent to the Company's tenement boundary. Stratigraphical RC drilling by Golden West Resources earlier in the year identified, but as yet not completely tested, the same paleochannel as targeted by U3O8.

Doherty's Project

The Doherty's Project is located in the Barrambie greenstone belt, 65 kilometres north of the township of Sandstone in the Murchison region of Western Australia. The Doherty's Project consists of a single

granted prospecting licence P57/972 covering an area of 175 hectares and contains an indicated resource of 25,700 tonnes @ 23.8 $g/t$ gold for a contained 20,430 ounces of gold.

Bullabulling South Project

The Bullabulling South Project covers an area of 98 square kilometres and is located 35 kilometres southwest of Coolgardie at the southern end of the highly mineralised Coolgardie - Bullabulling Greenstone Belt. Gold deposits within 10 kilometres of the Bullabulling South Project have produced more than one million ounces of gold. Ramelius Resources Ltd recently withdrew from the Farm-in Agreement without earning an interest in the project. The Company will review all data and may elect to seek a further joint venture partner.

Malcom Doutch, Kerrie Johnston and Glen Barnes

Regional Geology - Wiluna West Project

RAVIAVOJOPERA JONS

The Company has identified a potentially major iron ore deposit in the
Joyner's Find Greenstone Belt located 35 kilometres southwest of
Wiluna in the north-eastern Goldfields of Western Australia.

Wiluna West Project

Iron Ore

he Company has identified a potentially maior iron ore deposit in the Joyner's Find Greenstone Belt located 35 kilometres southwest of Wiluna in the north-eastern Goldfields of Western Australia. Based upon results from aeromagnetic surveys and geological mapping, five mineralised horizons have been identified, which have been named from east to west as units A to E. These units have a total cumulative strike length of 120 kilometres. Exploration results suggest that the Project has potential to host a major iron deposit of at least 200 to 250 million tonnes.

The Company plans to develop the Wiluna West Project in two clear stages:

Stage 1: To outline a 5 million tonne iron ore reserve to generate early cash flow.

Stage 1 aims to outline a JORC compliant reserve of five million tonnes of high grade direct shipping hematite suitable for sale at a rate of one million tonnes per annum. The revenue generated will assist the funding of the larger, second stage program. RC and diamond drilling programs are currently in progress and resource and reserve calculations are expected to be available before the end of the 2006 calendar year.

Stage 2: Evaluate and confirm the overall potential size of the Wilsma fron Ore Project and develop the required infrastructure to transport the iron ore to market. Stage 2 will involve the development of a major iron ore project of at least 200 million tonnes together with the required infrastructure to support an operation of 10 million tonnes per annum RC drilling for Stage 2 is being undertaken concurrently with the Stage 1 drilling program.

Massive hematite at Wiluna West Project

Plan showing Prospective Units containing Iron Mineralisation - Wiluna West Project

REVIEW OF OPERATIONS continued

Plan showing Prospective Units containing Iron Mineralisation - Wiluna West Project

Massive hematite at Wiluna West Project

Exploration

A major exploration program consisting of RC drilling, diamond drilling, metallurgical testwork and geotechnical studies have commenced. This work is being supervised by international mining engineering group Snowden Mining Industry Consultants.

At present only the northern 20 kilometre section of the 45 kilometre long Joyners Find Greenstone Belt is being targeted. From this area, only Units B and C have received detailed exploration. A small portion of the potentially mineralised area is presently being explored.

A total of 73 RC holes for an aggregate of 6087 metres was completed during the

year as part of the ongoing preliminary resource and scout drill program.

Units B and C are the present focus of the exploration. Within Unit B, which includes the Joyners Find and Bowerbird Prospects a number of high grade, direct shipping, hard hematite deposits have been identified. Unit C has four priority target areas, namely C1, C2, C3 and C4. Field mapping and rock chip sampling programs are ongoing and it is highly likely that further targets will be identified.

INITE

The majority of exploration drilling has been on Unit B which has a strike length of 35 kilometres. High grade hematite

deposits have been identified at the Joyners Find and Bowerbird Prospects. Significant intercepts from RC drilling at Joyners Find are summarised below:

The Bowerbird Prospect is located approximately 10 kilometres north of Joyners Find. Rock chip sampling over Bowerbird returned some very encouraging results of up to 69.7% Fe. Mineralisation at Bowerbird contains hematite and magnetite explaining the exceptional grades. Some of the more significant results are listed next page.

The high grade mineralisation, with low contaminants will be used to underpin Stage 1 development which presently commands a premium on current contract sale prices.

REVIEW OF OPERATIONS continued

Joyners Find Significant RC Drilling Results

Hole #	North (MGA)	East (MGA)	Dip/Azi	From	Width (m)	Fe(%)	SiO2(%)	A1203 (%)	$P($ %)
WWRC78	7033400	793810	-90/0		10	67.37	1.16	0.60	0.010
				26		65.09	1.75	1.05	0.017
WWRC79	7033411	793786	-90/0	78	o	68.31	0.77	0.55	0.010
WWRC80	7033000	793720	$-90/0$	34	29	68.25	0.63	0.45	0.012
WWRC81	7033000	793745	$-90/0$	32	16	65.07	2.81	2.18	0.018
				51		67.84	0.90	0.68	0.009
WWRC82	7033800	793890	$-90/0$	28	17	68.67	0.72	0.46	0.006
WWRC83	7033815	793850	$-90/0$	51		67.10	2.14	0.31	0.011
WWRC89	7034000	793875	-60/90	66		66.57	2.20	1.68	0.013
WWRC94	7033200	793765.5	$-60/270$	36		63.85	3.53	3.02	0.006
				45	q	67.41	1.17	0.95	0.008
TERRITORY - 1999				60	22	68.50	0.46	0.29	0.013

Note 1: Mineralisation is steeply dipping and true down bole widths for drill holes numbered WWRC28 to WWRC83 inclusive will be approximately 0.3 of the reported intercept. All other drill hole intercepts have a factor of $\geq 0.6$ .

Note 2: Assays are based upon an average of 1m cone split samples analysed by Ultra Trace Laboratories in Perth using XRE

Bowerbird Significant Rock Chip Samples

	MGA
Sample #	North	East	Width (m)	Fe(%)	$-Si02(%)$	$AI203$ (%)	$P(\%)$	- LOI (%)
6100003	7042516	794441	82	69.68	0.38	0.25	0.018	0.01
6100007	7042594	794481	10.2	67.68	0.88	0.58	0.035	1.50
6100020	7042474	794490	7.8	69.54	0.28	0.18	0.028	$-0.02$
6100023	7042712	794500	7.1	67.64	0.84	0.79	0.094	1.11
G100026	7042869	794510	5.7	68.60	0.94	0.72	0.033	0.39
6100029	7042950	794516	5.1	69.26	0.48	0.34	0.008	0.17
G100042	7043555	794704	9.6	65.91	1.54	0.90	0.340	1.93
6100054	7043304	794622	72	66.52	1.68	1.03	0.112	1.69
6100055	7043279	794618	5.7	63.67	2.90	1.29	0.106	4.01
6100056	7043276	794608	7.5	65.40	2.28	1.10	0.098	2.41
6100061	7041730	794413	7.4	63.34	2.20	1.30	0.091	5.31
G100072	7041552	794402	6.4	67.30	1.73	1.28	0.032	0.90 1
6100073	7041559	794447	16.0	64.52	2.16	1.49	0.186	3.06
G100075	7041507	794428	8.2	65.77	2.18	1.24	0.054	1.93

Note 1: Assays are based upon surface rock chip samples and analysed by Ultra Trace Laboratories in Perth using XRF.

Samples $\ge$ 5m in width and $>$ 60% Fe. Note 2:

Bowerbird Significant RC Drilling Intercepts

Hole #	North MGA	East MGA	Dip/Azi	From	Width (m)	Fe (%)	Si02 (%)	AI203 (%)	$P($ %)
WWRC152A	7042400	794360	-60/090	57.5	16.0	64.9		0.40	0.040
WWRC153	7042400	794500	$-60/270$	17.5	15.5	67.4		1.00	0.020
WWRC154	7042803	794520	$-60/270$	29.0	10.0	68.4	$0.8\,$	0.50	0.04
WWRC157	7043200	794500	-60/090	116.0	6.0	62.9	5.0	1.80	0.030
WWRC161	7042400	794420	$-60/090$	55.0	18.0	66.8		l 10	0.010
WWRC252	7041200	794375	-60/090	31.0	34.0	62.2	49	3.04	0.070

Assay results based upon 1m or 0.5 m riffle or cone split samples analysed by Ultra Trace Laboratories, Perth using XRE Note 1:

Note 2: Mineralisation is steeply dipping and true width is estimated to be approximately 60 to 75% of the down hole intercept.

UNITC

To date, the most significant iron mineralisation defined within the Project area has been found in the notably thicker and more strike persistent Unit C. Based upon preliminary field mapping four initial target areas named C1, C2, C3 and C4 have been identified and have the following preliminary surface dimensions tabled below.

Rock chip sampling at C1 yielded the following results tabled below.

The most recent development has

been the recognition of the potential at the C4 deposit. This varies between 40 metres and 60 metres in apparent surface width. However, RC drill hole WWRC200 intersected a down hole width of 55 metres at 63.1% Fe (with low contaminants) from 35 metres to 90 metres down hole, ending in mineralisation. The hole was collared 20 metres into the hanging wall of a steeply dipping outcrop of hematite, with the hole terminating in mineralisation at a grade of 66.2% Fe.

Units C1, C2, C3, C4 Preliminary Surface Dimensions

Tarqet Name . . .	The state of . Length (Approx.) . . .	. . .
	.7 km * **
	.5 km
	1.5 km .
--------------------------------------	km	60m (possibly 140m)

C1 Rock Chip Sample Results

Width (m)	Fe(%)	$Si02$ (%)	AI203 (%)	(96)	(96)	IOH (%)
	61.74	.86	.40	0.070	በ በናን
	62.00	$4.0^{\circ}$	45	9.077	0.074	. ne
		-95	SC.		0.084

Significantly, within the 55 metres intercept the latter 30 metres, from 60 metres to 90 metres (EOH), returned an average grade of 65.8% Fe.

The intersection is considered to be the hanging wall of the partially buried C4 deposit. If this proves to be correct then the true width of C4 at this locality could be up to 140 metres.

RC drill hole WWRC202, located 800 metres to the north of WWRC200. intersected two zones of significant mineralisation with the lower intercept averaging 61.3% Fe over a down hole width of 35 metres. Geological mapping in this area suggests the total actual width of the mineralisation may be up to 100 metres.

Significant iron ore intercepts received from limited RC drilling to date along the Unit C horizon are listed next page.

In the immediate future, C4 and the other C targets will be systematically tested by RC drilling campaigns, initially on a 400/200 metre x 40 metre grid pattern and to a down hole depth of 90 metres. The resources identified will be used to underpin the Stage 2 development of the Project.

Mick Wilson mapping mineralised ridge – Wiluna West Project

REVIEW OF OPERATIONS continued

Unit C Significant Iron Ore Intercepts

		North	East	$\cdot$ $\cdot$		Width (m)			AI203 (%)	$-$ P.(%) $-$	·LOI (%) ·
Proso	$\sim$ Hote ID $\sim$ .	(MGA zone 50)		∴Din/Azi	from(m)		$\lceil \cdot \rceil$ Fe (%) $\lceil \cdot \rceil$	SiO2(96)
	WWRC171	7036200	792680	-60/090	47	18	58.6	44		0.02
	WWRC177	7036600	792640	-60/090		15	56.2	11.5		0.14
	WWRC182	7032400	792360	-60/090	34	26	64.4	2.5	1.6	0.07	3.6
	WWRC184	7032600	792420	-60/090	31		55.4	11.1	4.2	0.10
04	WWRC199	7045600	792330	-60/090 -	77	29	57.3	7.7	5.2	0.05
-64	WWRC 200	7045600	792325	-60/090	35.	55 eoh	63.1	२ ६		0.04	3.6
04	WWRC202	7046400	792580	-60/090	30	35	61.3	6.8	3.03	0.04

Assay results based upon 1m or 0, m riffle or cone split samples analysed by Ultra Trace Laboratories, Perth using XRE Note 1:

Note 2: Mineralisation is steeply dipping and true width is estimated to be approximately 60 to 75% of the down hole intercept.

Cross Section 7045600N C4 Deposit - Wiluna West Project

Project Geology - Wiluna West Project

REVIEW OF OPERATIONS CONTINUE

Infrastructure

Infrastructure is one of the keys to the successful development of the Project and significant progress has been made for both Stages 1 and 2.

Esperance Port

An option over land at the Esperance Port suitable for building a 300,000 tonne iron ore storage shed has been entered into with the option exercisable by 31 December 2006. Rail cartage discussions have commenced with a number of parties with the aim of transporting sufficient ore to Esperance to meet a shipping target of one million tonnes per annum, possibly using the larger Cape size ships with capacity of 160,000 tonnes.

Road Haulage

A road haulage contract from Wiluna to Leonora covering a distance of 300 kilometres is now being discussed and expressions of interest will be sought. Stage 1 will include trucking ore from Wiluna to Leonora for loading onto rail wagons to Esperance.

Desktop Review

An initial desktop review indicates mining and exporting of one million tonnes per annum of high grade hematite lump iron ore via Esperance Port will return a positive cash flow which will be used to assist funding of Stage 2 development. The Company anticipates that a higher ore sale price will be achieved by selling lump iron ore on the spot market.

Signing the option for the lease of land at Esperance Port. Left to right: Richard Nulsen, Gary Hutchinson and Colin Stewart

Railway Infrastructure

Mr Raymond Marks from Longrun Pty Ltd who has considerable experience in railway infrastructure has been retained to complete a study and evaluate the costs and plans for Stage 1. In addition, Longrun will evaluate the infrastructure requirements relating to Stage 2 in linking the Wiluna Project to the

proposed Midwest regional rail system to the Oakajee Port, or the alternative plan of building a rail from Wiluna to Leonora. Both routes will require new rail infrastructure of approximately 300 kilometres to link with other rail networks. The Company has the benefit of using alternative transport routes to Oakajee or Esperance.

Old railway corridor resumed on Wiluna West Project

Geraldton Iron Ore Alliance

Golden West Resources is a member of the Geraldton Iron Ore Alliance, which has proposed the building of a new port at Oakaiee, 25 kilometres north of Geraldton. The Government of Western Australia has confirmed Oakaiee as the most suitable site for the proposed port. The Alliance is leading discussions on the planning and financing of the port and rail infrastructure and is endeavouring to obtain direction from the West Australian Government on the ownership, funding and longer term management of this infrastructure.

The Company is continuing to evaluate its infrastructure options including using Oakajee or Esperance ports for the shipping of the Wiluna iron ore resource.

Heritage Surveys

Mr Glen Barnes has been appointed as Community Liaison Officer for the Company.

Heritage surveys have commenced and are in final stages of negotiations.

Steel Mills - Sale of Ore

Presentations, to and discussions with Asian steel mills and iron ore dealers continue with strong interest for longer term involvement. Several interested parties have already visited the Wiluna Project. At this stage, the Company is focused on obtaining a better understanding of the magnitude of the iron ore resource.

Drill hole - Wiluna West Project

Gary Hutchinson and Steel Mill representative visiting Wiluna West Project. Scenic view from mineralised ridge

REVIEW OF OPERATIONS CONTINUE

Gold

The fovners Find and Brilliant Shear Zones host almost all of the known gold mineralisation within the Wiluna project area. More than 80% of the gold so far identified is within a corridor straddling the Joyners Shear Zone. Both these structures appear to exhibit a major control on gold mineralisation within the region. The Project contains both quartz reef and quartz stockwork gold deposits related to shears and Banded Iron Formations (BIF) style replacement deposits.

Gold exploration undertaken since listing has successfully increased the resource at the Iron Monarch prospect and has identified a new resource at Eagle East. A total of nine gold deposits have now been identified for a combined indicated and measured resource of 788,000 tonnes at 3.5 g/t gold for 87,000 ounces of gold as summarised opposite.

Exploration

Eagle Prospect

The 4 kilometre long Eagle Prospect is located within the fovners Shear Zone in a system that has a number of geochemical and structural targets over a width of greater than 1 kilometre.

The results from the aircore drilling at the Eagle Prospect suggest that the Joyners Find Shear Zone at this location contains multiple mineralised structures over a width of at least 600 metres over a strike length of at least 4 kilometres. Exploration in the past has largely overlooked this possibility mainly targeting one individual horizon, namely the Eagle deposit. The Company considers these results are highly encouraging and expects a number of new gold deposits will be identified in due course.

Within the Eagle Prospect, RC drilling was undertaken at Eagle East over a strike length of 160 metres on 40 metre by 20 metre sections. A total of 22 RC holes (WWRC018 - 027 and 066 - 077) for 1,496 metres was completed. These holes

returned significant gold intercepts with mineralisation being hosted by a steeply dipping gossanous BfF unit.

The RC drilling results combined with previous drilling delineated an indicated resource of 102,000 tonnes @ 3.7 g/t gold for a contained 12,130 ounces. This mineralisation is at present open along strike and at depth. Further drilling upon the strike extensions and at depth is warranted.

Future Exploration & Development One of the Company's objectives is to increase the level of known gold resources in preparation for mining to deliver early cash flow by either a joint venture or toll treating ore at one of several nearby milling facilities. The Company has commenced discussions with potential milling facilities to carry out further exploration and mining.

Summary of Gold Resources - Wiluna West Project

Prospect	Resource Type	Tonnage	Grade (q/t Au)	Ounces (Au)
Iron Monarch	Indicated	140.000	3.0	13.500
Eagle East	Indicated	102.000	R 7	12.000
Hawk	Indicated	42.000	ጋ ና	3.400
tron King	Indicated	163,000	ર ર	17,300
Iron Duke	Indicated	143.000	2.6	12.000
Goldfinch	Indicated	72.000	3.0	6.900
Bronzewing	Indicated	30.000	5.5	5.300
Bottom Camp	Measured	21.000	7.6	5.100
	Indicated	16.000	٢٢	2.800
Brilliant North	Indicated	59.000	4.6	8.700
TOTAL		788.000	35	87.000

Golden West Resources co-sponsors the local Wiluna football team

Gold Soil Geochemistry - Wiluna West Project

REVIEW OF OPERATIONS continued

Uranium

The Company has been granted exploration licence 53/1159. This lease is located in the South-East of the Project area and is upstream from the Dawson Well, Hinkler Well, Centipede and Lake Way uranium deposits. These deposits, like the Yeleerie deposit (50,000 tonnes of contained U,O.), located 16 kilometres south of the Company's Project are calcrete hosted style deposits.

A single stratigraphic traverse of RC holes (26 holes for 1,238 metres) were completed to test a possible palaeochannel target within the Abercromby Creek system immediately upstream from the Dawson-Hinkler Well Prospects. 4 metre composite samples returned anomalous values to 74ppm uranium. Single metre split samples will be submitted for analysis.

Recently, ASX listed company, U308 Limited issued a release to the ASX titled "Extensive uranium mineralisation confirmed at Dawson-Hinkler Well" which is downstream and contiguous with the eastern boundary of the Company's E53/1159. It has been noted that "U308 Limited's most western traverse through the Dawson Well zone, intersected a substantial zone of uranium mineralisation 1 kilometre wide and up to 5 metres thick". This zone is 300 to 700 metres from Golden West Resources' eastern tenement boundary.

The Company is considering its options in relation to progressing the uranium potential in conjunction with its major iron ore drilling campaigns.

Two RC drill rigs on Wiluna West Project

Tenements

Wiluna West Project consists of more than 440 square kilometres of granted and priority tenement applications as follows:

• Mining Leases 53/1016 to 53/1018 inclusive. The Company owns 100% of the tenements, subject to royalty agreement with the original prospectors.
• Exploration licences 53/1114, 53/1116, 53/1159, 53/1173 and 53/1177.
• Exploration Licence 53/1089 and Mining Lease Application 53/1078, the Company is earning 60% from lindalee Resources Ltd.
• Miscellaneous Licences L53/146. and Applications 53/147,53/148.

Bullabulling South Project

he Bullabulling South Project covers 1 an area of 98 square kilometres and is located 35 kilometres southwest of Coolgardie at the southern end of the highly mineralised Coolgardie - Bullabulling Greenstone Belt. Gold deposits within 10 kilometres of the project have produced more than one million ounces of gold.

Two large gold-in-soil anomalies have been delineated, being the Triton and

Canyon Prospects. The Canyon Prospect overlies the Reptile and Bullabulling shear zones and contains anomalous gold intercepts (up to 2g/t) along the downhole saprolite-saprock interface below transported overburden.

Ramelius Resources Ltd has withdrawn from the Farm-in Agreement.

The Company will review all data and may elect to seek a further joint venture partner.

View from iron ridge - Wiluna West Project

REVIEW OF OPERATIONS COntinue

Doherty's Project

he Doherty's Project is located in the Barrambie greenstone belt, 65 kilometres north of the township of Sandstone in the Murchison region of Western Australia. The Project consists of a single granted prospecting licence P57/972 covering an area of 175 hectares.

The Barramble region has a previous history of high-grade gold production. Historical records show that 27,308 ounces of gold have been produced from 34,101 tonnes of ore from four mining centres. The Doherty's Project consists of

three groups of historical mine workings: the Doherty's, Old Camp and South Shear mines. Doherty's is the largest, having produced 2,292 tonnes at a grade of 25.4 g/t gold between 1955 and 1985. Exploration over the Doherty's Project area concentrated upon the Doherty's mine and culminated with shaft sinking and underground development where high grade gold mineralisation was defined on the eight level (100 metre depth) averaging 43.1 g/t gold over a distance of 51 metres.

All of the previous exploration data has been compiled and re-assessed leading to a much clearer understanding of the high-grade mineralisation present.

This work has resulted in a complete reappraisal of the deposit and now contains an indicated resource of 25,700 tonnes @ 23.8 g/t gold for a contained 20,430 ounces.

The Doherty's Project clearly contains a high-grade gold resource and the Company intends to seek a joint venture partner to develop the deposit.

Lonaitudinal Section - Doherty's Mine

Your Directors submit their report on the Consolidated Entity consisting of Golden West Resources Limited and its controlled entity for the financial year ended 30 June 2006.

DIRECTORS

The following persons were Directors of Golden West Resources Limited during the financial year and up to the date of this report. Directors were in office for this entire period unless otherwise stated.

John Leonard Daniels (Chairman)

Gary Wayne Hutchinson

Michael Reginald Wilson

George Peter Gregory

Alan Paul Rudd

PRINCIPAL ACTIVITIES

The principal activity of the economic entity during the year was exploration.

CONSOLIDATED RESULTS

The consolidated loss for the year after income tax was \$2,271,381 (2005: loss of \$542,126).

DIVIDENDS PAID OR RECOMMENDED

No dividends were paid or recommended for the year ended 30 June 2006.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

During the year, the following shares and options were issued:

Date	Details	No. of Shares		Issue Price No. of Options	Exercise Price	Exercisable By
17/11/2005	Working capital	2.000.000	\$0.25	1.000.000-	\$0.20	31/12/2007
25/11/2005	Conversion of options	162.750	-SO 20
07/12/2005	Conversion of options	144.875	\$0.20
03/02/2006	Working capital	3.900.000	\$0.336884
03/02/2006	Working capital	3,100,000	\$0.3665
06/02/2006	Debt conversion	$- -$	$- -$	625.000	-\$0-20	31/12/2007
13/04/2006	Conversion of options	43.500	-SO 20
16/06/2006	Conversion of options	94.250	\$0.20

REVIEW OF ECONOMIC OPERATIONS

The Company and its controlled entity continued their exploration activities. Further details are noted in the review of operations section of the annual report.

LIKELY DEVELOPMENTS AND EXPECTED RESULTS

The Company and its controlled entity intend to continue their exploration activities.

ENVIRONMENTAL REGULATION

The Consolidated Entity has assessed whether there are any particular or significant environmental regulations which apply. It has determined that the risk of non-compliance is low, and has not identified any compliance breaches during the year.

DIRECTORS' REPORT CONT

PARTICULARS OF DIRECTORS

Dr John Daniels, B.Sc(Hons), M.Sc, PhD, F.G.S. - Non Executive Chairman

Dr Daniels is an experienced geologist and Company Director. Dr Daniels has produced extensive publications on petrology, mineralogy, photogeology, remote sensing, regional geology, economic geology, gossans and gemstones. He has undertaken extensive regional mapping and photogeological studies in Australia, North Africa, Somalia, Brazil, Iran and Saudi Arabia and visited and studied mineral deposits in Brazil, Venezuela, Canada and the U.S.A. During the past three years Dr Daniels has also served as a director of the following other listed companies:

• Caldera Resources Inc
• Australia Mines Limited
• Adamus Resources Limited
• (* denotes current directorship)

Mr Gary Wayne Hutchinson - Managing Director

Mr Hutchinson has had considerable experience in the administration of several listed mining companies and has had over 20 years in the finance and banking industry as the principal of a finance broking business and Branch Manager of a major finance house. During the past three years Mr Hutchinson has not held a directorship in any other listed company.

Mr Michael Reginald Wilson, B.App.Sc-Exploration Manager, Executive Director

Mr Wilson is an exploration geologist with more than 20 years experience within Australia and South East Asia. He was actively involved in the discovery of the Bullabulling gold deposits in Western Australia and the development of the Longos gold deposit in the Philippines. During the past three years Mr Wilson has not held a directorship in any other listed company.

Dr George Peter Gregory, PhD, D.I.C, A.R.S.M, BSc, F.Aus.I.M.M. - Non Executive Director

Dr Gregory is an exploration geologist with more than 30 years experience involved with successful exploration for diamonds, gold, nickel and base metals throughout the world, including 12 years in the corporate sector. During the past three years he has also served as a director of the following listed companies:

• Metalex Ventures Limited listed on Canadian TSX Venture Exchange *
• (* denotes current directorship)

Mr Alan Rudd, B.App.Sc - Non Executive Director

Mr Rudd has been involved in mineral exploration for 16 years since graduating from Curtin University of Western Australia in 1990. He has successfully explored for a wide range of commodities including gold and base metals predominantly in the Eastern Goldfields of Western Australia. Mr Rudd resides in Kalgoorlie and brings a wealth of experience in all facets of geology including tenement project acquisition, grass roots exploration and project development. During the past three years Mr Rudd has not held a directorship in any other listed company.

COMPANY SECRETARY

John Palermo, B.Bus, FCA, FCPA, JP

Mr J Palermo has been the Company Secretary of Golden West Resources Limited since 14 November 2003. He is a Chartered Accountant and a consultant to the Chartered Accounting Practice, Palermo Chartered Accountants. He has been in public practice as a Principal since 1978. His main areas of expertise are corporate services and administration.

REMUNERATION REPORT

Executive remuneration and other terms of employment are reviewed annually by the Board having regard to performance against goals set at the start of the year, relevant comparative information and independent expert advice. As well as a base salary, remuneration packages include superannuation, retirement and termination entitlements, performance-related bonuses and fringe benefits.

Remuneration packages are set at levels that are intended to attract and retain executives capable of managing the Company's diverse operations.

Remuneration and other terms of employment for the executive Directors and certain other senior executives have been formalised in service agreements. Details of service agreements are set out in Note 21.

Remuneration of non-executive Directors is determined by the Board within the maximum amount approved by the shareholders from time to time and which currently stands at \$250,000 per annum.

The Board undertakes an annual review of its performance against goals set at the start of the year.

Details of the nature and amount of emolument paid for each Director of Golden West Resources Limited are set out below:

		Primary Benefits		Post Employment	Equity	Other - Benefits	TOTAL
	Salary & Fees	$\gamma$ Non- Cash Bonus Monet.	tion	Superanua-Retirement Benefits	Shares/ Options
	Ś.
Directors:
	Daniels, J L - Chairman (non-executive)
2006	45,000						45,000
2005	63,750				15,150		78,900
	Hutchinson, G W - Director (executive)
2006	151,250		13,612			12,000	176,862
2005	75,000		6,750		12,120	6,000	99,870
	Wilson, M R - Director (executive)
2006	123,000		11,070				134,070
2005	60,000		5,400		12,120		77,520
	Gregory, G P - Director (non-executive)
2006	25,000	$ -$	2,250			$-$	27,250
2005	12,500		1,125		12,120		25,745
	Rudd, A P - Director (non-executive)
2006	36,655		2,250				38,905
2005	13,048	--	1,174		12.120	$-$	26,342
	Total Remuneration: Directors
2006	380,905		29,182			12,000	422,087
2005	224,298		14,449		63,630	6,000	308,377

Remuneration Options (2005)

. The component of the model of the model of the top pay a component the property control that the protection of pay いち エネイション ショット・スタイ ちょうかい Terms and conditions for each grant
Principal de internet en la para la para la para la	Grant No.	' Grant Date	Exercise Price \$	First Exercise Date	Last Exercise Date
1 L Daniels	750.000	06/08/2004	\$0.25, \$0.30 & \$0.40	06/08/2004	30/06/2008
G W Hutchinson	600,000	06/08/2004	\$0.25, \$0.30 & \$0.40	06/08/2004	30/06/2008
M R Wilson	600.000	06/08/2004	\$0.25, \$0.30 & \$0.40	06/08/2004	30/06/2008
G P Gregory	600.000	06/08/2004	\$0.25, \$0.30 & \$0.40	06/08/2004	30/06/2008
A P Rudd	600,000	06/08/2004	\$0.25, \$0.30 & \$0.40	06/08/2004	30/06/2008

Using the Black Scholes option valuation methodology, and allowing for a 25% discount to allow for the fact that the Company was unlisted at the date of grant of the options, resulted in valuations of \$0.0305 per option for the \$0.25 exercise priced options, \$0.0205 each for the \$0.30 exercise priced options and \$0.0096 each for the \$0.40 exercised price options. Under AASB 2 "Share-based Payments", the value of shares and options issued to Directors, employees and consultants will need to be accounted for as a cost in the Income Statement.

DIRECTORS' REPORT cont

INTERESTS IN SHARES AND OPTIONS OF THE COMPANY

As at the date of this report, the Directors' interests in shares and options of Golden West Resources Limited were:

a político de la casa de la casa de la casa de la casa de la casa de la casa de la casa de la casa de la casa La casa de la casa de la casa de la casa de la casa de la casa de la casa de la casa de la casa de la casa de La	The state and . Shares Drdinar	The property
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, I Daniels		ിവിവ
G W Hutchinson	2,062,500	1.631.250
M R Wilson	1,653,573	1.426.786
G P Gregory	ാന നന
A P Rudd

DIRECTORS' MEETINGS

During the financial year ended 30 June 2006, the Company held twenty-three (23) Directors' Meetings including Directors' Resolutions. The total number of meetings /resolutions attended by each Director were:

. The second contract that the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of th	Tallet 10 Number Eligible to Attend	Number Attended
I L Daniels
G W Hutchinson
M R Wilson
G P Gregory
A P Rudd

SHARE OPTIONS

At the date of this report there existed the following outstanding options to acquire ordinary shares;

Unlisted Options

• 1,450,000 options remain on issue, exercisable at \$0.25 on or before 30 June 2008.
• 1,450,000 options remain on issue, exercisable at \$0.30 on or before 30 June 2008.
• 1,450,000 options remain on issue, exercisable at \$0.40 on or before 30 June 2008.

Listed Options

• 23,566,288 options remain on issue, exercisable at \$0.20 on or before 31 December 2007.

No person entitled to exercise options had or has any right, by virtue of the option, to participate in any share issue of any other body corporate.

MATTERS SUBSEQUENT TO THE END OF FINANCIAL YEAR

Details of subsequent events are set out in note 28.

ADOPTION OF AUSTRALIAN EQUIVALENTS TO IFRS

This financial report has been prepared under Australian equivalents to IFRS. A reconciliation of differences between previous GAAP and Australian equivalents to IFRS has been included in note 2 of the financial report.

INDEMNIFICATION AND INSURANCE OF DIRECTORS

The Company has entered into a Directors and Officers Insurance policy.

The Company has, during or since the financial year, in respect of any person who is or has been an officer of the Company or a related body corporate:

• Indemnified or made any relevant agreement for indemnifying against a liability incurred as an officer, including costs and expenses in successfully defending legal proceedings; or
• paid or agreed to pay a premium in respect of a contract insuring against a liability incurred as an officer for the costs or expenses to defend legal proceedings.

Insurance of Officers

Since the end of the previous financial year the Company has paid insurance premiums of \$24,868 in respect of Directors and officers liability and corporate reimbursement, for Directors and officers of the Company. The insurance premiums relate to:

• any loss for which the Directors and officers may not be legally indemnified by the Company arising out of any claim, by reason of any wrongful act committed by them in their capacity as a Director or officer, first made against them jointly or severally during the period of insurance; and
• indemnifying the Company against any payment which it has made and was legally permitted to make arising out of any claim, by reason of any wrongful act, committed by any Director or officer in their capacity as a Director or officer, first made against the Director or officer during the period of insurance.

The insurance policy outlined above does not allocate the premium paid to each individual officer of the Company.

AUDITOR'S INDEPENDENCE DECLARATION

A copy of the Auditor's independence declaration as required under Section 307C of the Corporations Act 2001 is set out on page 55.

NON-AUDIT SERVICES

Any non-audit services that were provided by the entity's auditor, Stantons International, is shown at Note 20. The Directors are satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act. The nature and scope of each type of non-audit service provided means that auditor independence was not compromised.

Dated at Perth this 27th day of September, 2006. Signed in accordance with a resolution of the Directors:

Hall

GARY WAYNE HUTCHINSON Director

INCOME STATEME FOR THE YEAR ENDED 30 JUNE 2006

	NOTE	CONSOLIDATED			PARENT ENTITY
		2006	2005	2006	2005
		\$	\$	\$	\$
Revenue	3	75,008	38,984	75,008	38,984
Consulting fees	4(b)	(51, 410)	(103, 460)	(51, 410)	(103, 460)
Depreciation	4(a)	(40, 596)	(3, 435)	(40,596)	(3,435)
Exploration expenditure written off	4(b)	(1,458,200)		(1,458,200)
Legal costs	4(b)	(10,385)	(3,654)	(10, 385)	(3,654)
Employee entitlements	4(b)	(135,902)	(82,000)	(135,902)	(82,000)
Borrowing costs	4(a)	(85)	(12,000)	(85)	(12,000)
Write off of loans				(1,069)
Other expenses		(649, 811)	(376, 561)	(648,741)	(376, 561)
Loss before income tax	5	(2,271,381)	(542, 126)	(2,271,380)	(542, 126)
Income tax
Loss after income tax		(2,271,381)	(542, 126)	(2,271,380)	(542, 126)
Loss attributable to members of
Golden West Resources Limited	18	(2.271.381)	(542, 126)	(2.271.380)	(542, 126)
Basic loss per share (cents per share)	23	(4.79)	(1.83)

The above income statement should be read in conjunction with the accompanying notes

AS AT 30 JUNE 2006

	NOTE		CONSOLIDATED		PARENT ENTITY
		2006	2005	2006	2005
		\$	\$	\$	\$
Current Assets
Cash and cash equivalents	6	1,500,216	1,020,996	1,500,216	1,020,996
Trade and other receivables	7	110,765	53,814	110,765	53,814
Other	8	10,494		10,494
Total Current Assets		1,621,475	1,074,810	1,621,475	1,074,810
Non Current Assets
Plant and equipment	9	298,964	19,098	298,964	19,098
Mineral exploration and
evaluation expenditure	10	3,259,756	3,394,558	3,259,756	3,394,558
Other financial assets	$\mathbf{11}$	5,000		5,001
Total Non Current Assets		3,563,720	3,413,656	3,563,721	3,413,656
Total Assets		5,185,195	4,488,466	5,185,196	4,488,466
Current Liabilities
Interest bearing liabilities	12.	74,244		74,244
Trade and other payables	13	24,875	208,749	24,875	208,749
Provisions	14	135,902	82,000	135,902	82,000
Non interest bearing liabilities	15		1,420		1,420
Total Liabilities		235,021	292,169	235,021	292,169
Net Assets		4,950,174	4,196,297	4,950,175	4,196,297
Equity
Contributed equity	16(a)	7,895,906	4,870,648	7,895,906	4,870,648
Reserves	17	108,028	108,028	108,028	108,028
Accumulated losses	18	(3,053,760)	(782, 379)	(3,053,759)	(782, 379)
Total Equity		4,950,174	4,196,297	4,950,175	4,196,297

The above balance sheet should be read in conjunction with the accompanying notes

STATEMENTORGHAVGEZIVERDIEN FOR THE YEAR ENDED 30 JUNE 2006

	ORDINARY SHARE CAPITAL \$	OPTIONS RESERVES \$	ACCUMULATED LOSSES \$	TOTAL \$
Consolidated
Balance at 01/07/2004	443,215		(240, 253)	202,962
Shares issued during the year	4,427,433			4,427,433
Options issued during the year		108,028		108,028
Loss attributable to members of
parent entity			(542, 126)	(542, 126)
Balance at 30/06/2005	4,870,648	108,028	(782, 379)	4,196,297
Balance at 01/07/2005	4,870,648	108,028	(782, 379)	4,196,297
Shares issued during the year	3,039,075			3,039,075
Transaction costs	(13, 817)	(125,000)		(138, 817)
Options issued during the year		125,000		125,000
Loss attributable to members of
parent entity			(2,271,381)	(2,271,381)
Balance at 30/06/2006	7,895,906	108,028	(3,053,760)	4,950,174
Parent
Balance at 01/07/2004	443,215		(240, 253)	202,962
Shares issued during the year	4,427,433			4,427,433
Options issued during the year		108,028		108,028
Loss attributable to members of parent entity			(542, 126)	(542, 126)
Balance at 30/06/2005	4,870,648	108,028	(782,379)	4,196,297
Balance at 01/07/2005	4,870,648	108,028	(782, 379)	4,196,297
Shares issued during the year	3,039,075			3,039,075
Transaction costs	(13, 817)	(125,000)		(138, 817)
Options issued during the year		125,000		125,000
Loss attributable to members of parent entity			(2,271,380)	(2,271,380)
Balance at 30/06/2006	7,895,906	108,028	(3,053,759)	4,950,175

The above statement of changes in equity should be read in conjunction with the accompanying notes

ATITUDE ANTIQUE

FOR THE YEAR ENDED 30 JUNE 2006

2005 \$
(485, 860)
29,152
(16,798)
(473,506)
(3,157,956)
(14, 162)
(3,172,118)
4,996,478
(461,017)
4,535,461
889,837
131,159
1,020,996

The above statement of cash flows should be read in conjunction with the accompanying notes

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2006

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of preparation

The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards, Urgent Issues Group Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. This financial report has also been prepared on an accruals and historical cost basis.

The financial report covers the economic entity of Golden West Resources Limited and Controlled Entity, and Golden West Resources Limited as an individual parent entity. Golden West Resources Limited is a public company, incorporated and domiciled in Australia.

The financial report of Golden West Resources Limited and Controlled Entity, and Golden West Resources Limited as an individual parent entity comply with all Australian equivalents to International Financial Reporting Standards (IFRS) in their entirety. This is the first financial report prepared based on AIFRS and comparatives for the year ended 30 June 2005 have been restated accordingly. Reconciliations of AIFRS equity and loss for 30 June 2005 to the balances reported in the 30 June 2005 financial report and at transition are detailed in note 2.

The following is a summary of the material accounting policies adopted by the economic entity in the preparation of the financial report. The accounting policies have been consistently applied, unless otherwise stated.

(b) Principles of consolidation

The consolidated accounts incorporate the assets and liabilities of the entity controlled by Golden West Resources Limited (parent entity) as at 30 June 2006 and the results of its Controlled Entity for the year then ended. The effects of all transactions between Golden West Resources Limited and its Controlled Entity are eliminated in full.

Where control of an entity is obtained during a financial year, its results are included in the consolidated income statement from the date on which control commences. Where control of an entity ceases during a financial year, its results are included for the part of the year for which control exists.

(c) Income Tax

The charge for current income tax expense is based on the profit for the year adjusted for any non-assessable or disallowed items. It is calculated using the rates that have been enacted or are substantively enacted by the balance sheet date.

Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax base of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the income statement except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.

Deferred income tax assets are recognised to the extent that it is probable that future profit will be available against which deductible temporary differences can be utilised.

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the economic entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

(d) Property, Plant and Equipment

Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and impairment losses.

Plant and equipment

Plant and equipment is measured on the cost basis less depreciation and impairment losses.

The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the assets employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts.

Depreciation

The depreciable amount of all fixed assets is depreciated on a diminishing value method over their useful lives to the economic entity commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.

The depreciation rates used for each class of depreciable assets are:

Plant and equipment 7.50-75.00%

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the income statement.

(e) Exploration and Development Expenditure

Exploration, evaluation and development expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves.

Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area is made.

When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves.

A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest.

Costs of site restoration are provided over the life of the facility from when exploration commences and are included in the costs of that stage. Site restoration costs include the dismantling and removal of mining plant, equipment and building structures, waste removal, and rehabilitation of the site in accordance with clauses of the mining permits. Such costs have been determined using estimates of future costs, current legal requirements and technology on a discounted basis.

Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of site restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations and future legislation. Accordingly the costs have been determined on the basis that the restoration will be completed within one year of abandoning the site.

(f) Leases

Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal ownership that are transferred to entities in the economic entity are classified as finance leases.

Finance leases are capitalised by recording an asset and a liability at the lower of the amounts equal to the fair value of the leased property of the present value of the minimum lease payments, including any guaranteed residual values. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period.

Leased assets are depreciated on a straight-line basis over their estimated useful lives where it is likely that the economic entity will obtain ownership of the asset or over the term of the lease.

Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses in the periods in which they are incurred.

Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the life of the lease term.

(q) Financial Instruments

Recognition

Financial instruments are initially measured at cost on trade date, which includes transactions costs, when the related contractual rights or obligations exist. Subsequent to initial recognition these instruments are measured as set out below.

Financial assets at fair value through profit and loss

A financial asset is classified in this category if acquired principally for the purpose of selling in the short term, or if so designated by management and within the requirement of AASB 139: Recognition and Measurement of Financial Instruments. Realised and unrealised gains and losses arising from changes in the fair value of these assets are included in the income statement in the period in which they arise.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are stated at amortised cost using the effective interest rate method.

Held-to-maturity investments

These investments have fixed maturities, and it is the Company's intention to hold these investments to maturity. Any held-to-maturity investments held by the Company are stated at amortised cost using the effective interest rate method.

Available-for-sale financial assets

Available-for-sale financial assets include any financial assets not included in the above categories. Available-for-sale financial assets are reflected at fair value. Unrealised gains and losses arising from changes in fair value are taken directly to equity.

Financial liabilities

Non-derivative financial liabilities are recognised at amortised cost, comprising original debt less principal payments and amortisation.

Fair value

Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm's length transactions, reference to similar instruments and option pricing models.

Impairment

At each reporting date, the Company assesses whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a prolonged decline in value of the instrument is considered to determine whether an impairment has arisen. Impairment losses are recognised in the income statement.

(h) Impairment of Assets

At each reporting date, the Company reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset's fair value less costs to sell and value in use, is compared to the asset's carrying value. Any excess of the asset's carrying value over its recoverable amount is expensed to the income statement.

Impairment testing is performed annually for goodwill and intangible assets with indefinite lives.

Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

(i) Investments in Associates

Investments in associate companies are recognised in the financial statements by applying the equity method of accounting where significant influence is exercised over an investee. Significant influence exists where the investor has the power to participate in the financial and operating policy decisions of the investees but does not have control or joint control over those policies. The equity method of accounting recognises the Company's share of post acquisition reserves of its associates.

. . . . . . . . . . . . . . . . . . . .

NOTES TO THE FINANCIAL STATEMENTS CONTINUED FOR THE YEAR ENDED 30 JUNE 2006

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

(i) Employee Benefits

Provision is made for the Company's liability for employee benefits arising from services rendered by employees to balance date. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled, plus related on-costs. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits.

(k) Cash and Cash Equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on the balance sheet.

(I) Revenue

Revenue from the sale of goods is recognised upon the delivery of goods to customers.

Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets.

Revenue from the rendering of a service is recognised upon the delivery of the service to the customers.

All revenue is stated net of the amount of goods and service tax (GST).

(m) Borrowing Costs

Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a substantial period of time to prepare for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

All other borrowing costs are recognised in income in the period in which they are incurred.

(n) Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the balance sheet are shown inclusive of GST.

Cash flows are presented in the cash flow statement on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.

(o) Earnings per share

(i) Basic Earnings per share

Basic earnings per share is determined by dividing the operating profit/(loss) after income tax attributable to members of Golden West Resources Limited by the weighted average number of ordinary shares outstanding during the financial year.

(ii) Diluted Earnings per Share

Diluted earnings per share adjusts the amounts used in the determination of basic earnings per share by taking into account unpaid amounts on ordinary shares and any reduction in earnings per share that will probably arise from the exercise of options outstanding during the financial year.

(p) Contributed equity

Issued and paid up capital is recognised at the fair value of the consideration received by the Company.

Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received.

(q) Comparative Figures

When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.

NOTE 2: FIRST-TIME ADOPTION OF AUSTRALIAN EQUIVALENTS TO INTERNATIONAL FINANCIAL REPORTING STANDARDS

For all periods up to and including the year ended 30 June 2005, the Group prepared its financial statements in accordance with Australian generally accepted accounting practice (AGAAP). These financial statements for the year ended 30 June 2006 are the first the Group is required to prepare in accordance with Australian equivalents to International Financial Reporting Standards (AIFRS).

Accordingly, the Group has prepared financial statements that comply with AIFRS applicable for periods beginning on or after 1 January 2005 and the significant accounting policies meeting those requirements are described in note 1. In preparing these financial statements, the Group has started from an opening balance sheet as at 1 July 2004, the Group's date of transition to AIFRS, and made those changes in accounting policies and other restatements required by AASB 1 First-time adoption of AIFRS.

This note explains the principal adjustments made by the Group in restating its AGAAP balance sheet as at 1 July 2004 and its previously published AGAAP financial statements for the year ended 30 June 2005.

NOTE 2: FIRST-TIME ADOPTION OF AUSTRALIAN EQUIVALENTS
TO INTERNATIONAL FINANCIAL REPORTING STANDARDS - Continued

Reconciliation of Equity at 1 July 2004

ECONOMIC ENTITY

	PREVIOUS GAAP AT 01/07/2004	ADJUSTMENTS ON INTRODUCTION OF AUSTRALIAN EQUIVALENTS TO IFRS	AUSTRALIAN EQUIVALENTS TO IFRS AT 01/07/2004
	\$	\$	\$
CURRENT ASSETS
Cash and cash equivalents	131,159		131,159
Trade and other receivables	27,184		27,184
Total Current Assets	158,343		158,343
NON CURRENT ASSETS
Plant and equipment	8,371		8,371
Mineral exploration and evaluation expenditure	86,602		86,602
Total Non Current Assets	94,973		94,973
TOTAL ASSETS	253,316		253,316
CURRENT LIABILITIES
Trade and other payables	48,934		48,934
Non interest bearing liabilities	1,420		1,420
Total Current Liabilities	50,354		50,354
TOTAL LIABILITIES	50,354		50,354
NET ASSETS	202,962		202,962
EQUITY
Contributed equity	443,215		443,215
Accumulated losses	(240, 253)		(240, 253)
TOTAL EQUITY	202,962 ,,,,,,,,,,,,,,,,,		202,962

FEAMAILE FUTITU

______________________________________ . . . . . . . . . . . . . . . . . . . .

a a shekarar 1979)
Marejeo

NOTES TO THE EINANG ALSO ANDERSON INTERN FOR THE YEAR ENDED 30 JUNE 2006

NOTE 2: FIRST-TIME ADOPTION OF AUSTRALIAN EQUIVALENTS
TO INTERNATIONAL FINANCIAL REPORTING STANDARDS - Continued

Reconciliation of Equity at 30 June 2005

		LLVKVAIL LA III I
	PREVIOUS GAAP AT 30/06/2005	ADJUSTMENTS ON INTRODUCTION OF AUSTRALIAN EQUIVALENTS TO IFRS	AUSTRALIAN EQUIVALENTS TO IFRS AT 30/06/2005
	\$	\$	\$
CURRENT ASSETS
Cash and cash equivalents	1,020,996		1,020,996
Trade and other receivables	53,814		53,814
Total Current Assets	1,074,810		1,074,810
NON CURRENT ASSETS
Plant and equipment	19,098		19,098
Mineral exploration and evaluation expenditure	3,394,558		3,394,558
Total Non Current Assets	3,413,656		3,413,656
TOTAL ASSETS	4,488,466		4,488,466
CURRENT LIABILITIES
Trade and other payables	208,749	$-$	208,749
Provisions	82,000	$\rightarrow$ $\rightarrow$	82,000
Non interest bearing liabilities	1,420		1,420
Total Current Liabilities	292,169		292,169
TOTAL LIABILITIES	292,169		292,169
NET ASSETS	4,196,297		4,196,297
EQUITY
Contributed equity	4,870,648		4,870,648
Reserves	108,028		108,028
Accumulated losses	(782, 379)		(782, 379)
TOTAL EQUITY	4,196,297	$\omega =$	4,196,297

NOTE 2: FIRST-TIME ADOPTION OF AUSTRALIAN EQUIVALENTS
TO INTERNATIONAL FINANCIAL REPORTING STANDARDS - Continued

Reconciliation of Profit or Loss at 30 June 2005

		ECONOMIC ENTITY
	PREVIOUS GAAP \$	EFFECT OF TRANSITION TO AUSTRALIAN QUIVALENTS TO IFRS	AUSTRALIAN EQUIVALENTS TO IFRS Ş
Revenue	38,984		38,984
Consulting fees	(103, 460)		(103, 460)
Depreciation	(3, 435)		(3, 435)
Borrowing costs	(12,000)	$ -$	(12,000)
Employee entitlements	(82,000)		(82,000)
Legal costs	(3,654)		(3,654)
Other expenses from ordinary activities	(376, 561)		(376, 561)
Loss before income tax	(542, 126)		(542, 126)
Income tax
Loss after income tax	(542, 126)		(542, 126)
Loss attributable to members
of Golden West Resources Limited	(542, 126)	________	(542, 126)

(i) During the year ended 30 June 2005, remuneration options were granted to Directors on 6 August 2004. These options vested on grant date. The Company has taken the election under AASB1 "First-time adoption of Australian Equivalents to International Financial Reporting Standards" not to book the value of remuneration options issued after 7 November 2002 but which vested before 1 January 2005.

NOTES TOTHE EINANG ALSTANDING SESSONALITED FOR THE YEAR ENDED 30 JUNE 2006

		CONSOLIDATED	PARENT ENTITY
	2006 \$	2005 \$	2006 \$	2005 \$
NOTE 3: REVENUE
Revenue
Interest earned	73,588	38,984	73,588	38,984
Write off of loan	1,420	$ -$	1,420
Total revenue	75,008	38,984	75,008	38,984
NOTE 4: EXPENSES AND LOSSES/(GAINS)
(a) Expenses
Depreciation of non-current assets
Plant and equipment	32,715	3,435	32,715	3,435
Motor vehicle	7,881		7,881
Total depreciation of non-current assets	40,596	3,435	40,596	3,435
Borrowing cost expense
Interest expense	85	12,000	85	12,000
(b) Significant Items
Loss before income tax includes the following expenses whose disclosure is relevant in explaining the financial performance of the entity:
Consulting fees	51,410	103,460	51,410	103,460
Exploration expenditure written off	1,458,200	$- -$	1,458,200
Legal costs	10,385	3,654	10,385	3,654
Employee entitlements	135,902	82,000	135,902	82,000

		CONSOLIDATED	PARENT ENTITY
	2006	2005	2006	2005
	\$	\$	\$	\$
NOTE 5: INCOME TAX
The prima facie tax on loss before income tax is reconciled to the income tax as follows:
Loss before income tax	(2,271,381)	(542, 126)	(2,271,380)	(542, 126)
Income tax calculated at 30%	(681, 414)	(162, 638)	(681, 414)	(162, 638)
Add back:
Income accrued	(7,139)	(2,950)	(7,139)	(2,950)
Non deductible expenses	494	30	494	30
Investment diminution	321		321
Provisions	(28, 549)	64,635	(28, 549)	64,635
Capital raising costs	(35,990)	(27, 661)	(35,990)	(27, 661)
Capitalised exploration written off	40,441	(992, 387)	40,441	(992, 387)
Future tax benefits not brought to account	711,836	1,120,971	711,836	1,120,971
Income tax expense
Deferred tax assets:
Provisions	47,893	76,442	47,893	76,442
Capital raising costs	387,661	368,812	387,661	368,812
Losses	1,896,009	1,184,173	1,896,009	1,184,173
	2,331,563	1,629,427	2,331,563	1,629,427
Deferred tax liabilities:
Capitalised exploration	977,927	1,018,367	977,927	1,018,367

NOTES TOTHE EINANG ALSTANDING SESSONALITED FOR THE YEAR ENDED 30 JUNE 2006

		CONSOLIDATED		PARENT ENTITY
	2006	2005	2006	2005
	\$	\$	\$	\$
NOTE 6: CASH AND CASH EQUIVALENTS
Cash on hand	200	200	200	200
Cash held in trust account	16	99	16	99
Cash at bank	$ -$	20,697	$\overline{\phantom{a}}$ .	20,697
Term deposit	1,500,000	1,000,000	1,500,000	1,000,000
	1,500,216	1,020,996	1,500,216	1,020,996
Bank overdraft (Note 12)	(74, 244)		(74, 244)
Closing cash balance	1,425,972	1,020,996	1,425,972	1,020,996
NOTE 7: TRADE AND OTHER RECEIVABLES
Current
Accrued interest	33,628	9,832	33,628	9,832
Goods and services tax	77,137	43,982	77,137	43,982
	110,765	53,814	110,765	53,814
NOTE 8: OTHER
Current
Prepayments	7,494		7,494
Impressed advance account	3,000		3,000
	10,494		10,494
NOTE 9: PLANT AND EQUIPMENT
Plant and equipment at cost	218,424	22,747	218,424	22,747
Less: accumulated depreciation	(36, 362)	(3,649)	(36, 362)	(3,649)
Total plant and equipment	182,062	19,098	182,062	19,098
Motor vehicles at cost	124,783	$\rightarrow$ $\rightarrow$	124,783
Less: accumulated depreciation	(7, 881)		(7, 881)
Total motor vehicles	116,902		116,902
Total plant and equipment	298,964	19,098	298,964	19,098

		CONSOLIDATED		PARENT ENTITY
	2006	2005	2006	2005
	\$	\$	\$	\$
NOTE 9: PLANT AND EQUIPMENT - Continued
Reconciliation of the carrying amount for plant and equipment and motor vehicles is set out below:
Plant and equipment
Carrying amount at beginning of year	19,098	8,371	19,098	8,371
Additions	195,679	14,162	195,679	14,162
Depreciation expense	(32,715)	(3, 435)	(32,715)	(3, 435)
Carrying amount at end of year	182,062	19,098	182,062	19,098
Motor vehicles
Carrying amount at beginning of year
Additions	124,783		124,783
Depreciation expense	(7, 881)		(7, 881)
Carrying amount at end of year	116,902		116,902
Total carrying amount at end of year	298,964	19,098	298,964	19,098
NOTE 10: MINERAL EXPLORATION AND EVALUATION EXPENDITURE
Balance at beginning of year	3,394,558	86,602	3,394,558	86,602
Exploration and mining expenditure incurred during year	1,323,398	3,307,956	1,323,398	3,307,956
Expenditure written off	(1,458,200)		(1,458,200)
Balance at end of year	3,259,756	3,394,558	3,259,756	3,394,558
NOTE 11: OTHER FINANCIAL ASSETS
Related party receivables:
Controlled entity			1,069
Less: provision for non recovery			(1,069)
Unlisted investments at cost:
Shares in controlled entity			1
Deposits held	5,000		5,000
	5,000	$\rightarrow$ $-$	5,001	$\sim$ $-$

NOTES TOTHE EINANG ALSTANDING SESSONALITED FOR THE YEAR ENDED 30 JUNE 2006

		CONSOLIDATED		PARENT ENTITY
	2006 \$	2005 \$	2006 \$	2005 \$
NOTE 12: INTEREST BEARING LIABILITIES
Bank overdraft	74.244		74,244
NOTE 13: TRADE AND OTHER PAYABLES
Trade creditors and accrued expenses	24,875	208,749	24,875	208,749
NOTE 14: PROVISIONS
Employee entitlements	135,902	82,000	135,902	82.000
NOTE 15: NON INTEREST BEARING LIABILITIES
Unsecured loans		1,420		1,420
NOTE 16: CONTRIBUTED EQUITY
(a) Issued Capital
52,656,377 Ordinary shares fully paid (2005: 43, 211, 002)	7,895,906	4,870,648	7,895,906	4.870.648

NOTE 16: CONTRIBUTED EQUITY - Continued

(b) Movements in ordinary share capital of the Company during the past two years were as follows:

DATE	DETAILS	NO. OF SHARES	ISSUE PRICE	\$
01/07/2004	Opening balance	17,650,002		443,215
09/09/2004	Share placements (a)	360,000	\$0.10	36,000
09/09/2004	Share placements (a)	240,000	\$0.01	2,400
15/09/2004	Share placements (a)	337,500	\$0.10	33,750
15/09/2004	Share placements (a)	225,000	\$0.01	2,250
15/09/2004	Share placements (a)	350,000	\$0.001	350
21/12/2004	Share placements (a)	14,318,500	\$0.20	2,863,700
21/12/2004	Debt conversion (b)	4,150,000	\$0.20	830,000
11/01/2005	Debt conversion (b)	500,000	\$0.20	100,000
11/04/2005	Debt conversion (b)	80,000	\$0.25	20,000
02/05/2005	Debt conversion (b)	5,000,000	\$0.20	1,000,000
	Less: transaction costs arising on share issues			(461, 017)
30/06/2005	Closing balance	43,211,002		4,870,648
17/11/2005	Share placements (a)	2,000,000	\$0.25	500,000
25/11/2005	Option conversion (c)	162,750	\$0.20	32,550
07/12/2005	Option conversion (c)	144,875	\$0.20	28,975
03/02/2006	Share placements (a)	3,900,000	\$0.336884	1,313,850
03/02/2006	Share placements (a)	3,100,000	\$0.3665	1,136,150
13/04/2006	Option conversion (c)	43,500	\$0.20	8,700
16/06/2006	Option conversion $(c)$	94,250	\$0.20	18,850
	Less: transaction costs arising on share issues			(13, 817)
30/06/2006	Closing balance	52,656,377		7,895,906

(a) Funds raised for working capital purposes

(b) Conversions of debt to equity

(c) Conversions of options to shares

NOTES TO THE FINANCIAL STATEMENTS CONTINUES. FOR THE YEAR ENDED 30 JUNE 2006

	CONSOLIDATED		PARENT ENTITY
	2006	2005	2006	2005
			Ş
NOTE 17: RESERVES
(a) Composition
Option premium reserve
22,785,131 listed options	108,028	108,028	108,028	108,028
4,350,000 unlisted options	,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
	108.028 ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,	108,028	108,028 ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,	108. .028

(b) Movements in options of the Company during the past two years were as follows:

DATE	DETAILS	NO. OF LISTED OPTIONS	NO.OF UNLISTED OPTIONS	ISSUE PRICE	\$
01/07/2004	Opening balance
08/09/2004	Incentive options (a)		4,350,000	\$0.00
25/05/2005	Option placement (b)	21,605,506		\$0.005	108,028
	Less: transaction costs arising on option issues
30/06/2005	Closing balance	21,605,506	4,350,000		108,028
17/11/2005	Option placement (b)	1,000,000		\$0.00
25/11/2005	Option conversion (d)	(162,750)		\$0.00
07/12/2005	Option conversion (d)	(144, 875)	$-1$	\$0.00
06/02/2006	Debt conversion (c)	625,000		\$0.20	125,000
13/04/2006	Option conversion (d)	(43,500)	$-$	\$0.00
16/06/2006	Option conversion (d)	(94,250)		\$0.00
	Less: transaction costs arising on option issues				(125,000)
30/06/2006	Closing halance	22.785.131	4 350 BBB		108.028

(a) Incentive options issued to current Directors, a former Director and current Company Secretary

(b) Option placement for working capital purposes

(c) Conversions of debt to equity

(d) Conversions of options to shares

Should the options not be exercised, the option premium reserve may be subject to capital gains tax.

CONSOLIDATED PARENT ENTITY 2006 2005 2006 2005 $\ddot{\bm{s}}$ \$ \$ \$ NOTE 18: ACCUMULATED LOSSES Balance at beginning of year $(782, 379)$ $(240, 253)$ $(782, 379)$ $(240, 253)$ Loss attributable to members of Golden West Resources Limited $(2, 271, 381)$ $(2,271,380)$ $(542, 126)$ $(542, 126)$ Balance at end of year $(3,053,760)$ $(782, 379)$ $(3,053,759)$ $(782, 379)$

NOTE 19: NOTES TO THE STATEMENT OF CASH FLOWS

Reconciliation of net cash and cash equivalents used in operating activities to loss after income tax:

Loss after income tax	(2,271,381)	(542.126)	(2,271,380)	(542, 126)
Depreciation	40,596	3.435	40,596	3,435
Exploration and evaluation expenditure written off	1,458,200	$\omega=$	1,458,200
Write off of loans	(1, 420)	$\omega$ $\omega$	(1,450)
Movements in assets and liabilities:
(Increase) in receivables	(67, 445)	(26, 630)	(67, 446)	(26, 630)
(Decrease)/increase in payables	(183, 874)	9.815	(183, 874)	9,815
Increase in provisions	53,902	82,000	53,902	82,000
Net cash used in operating activities	$(971,422)$ $(473,506)$ $(971,422)$ $(473,506)$

NOTE 20: REMUNERATION OF AUDITORS

Amount paid or due and payable to
Stantons International for:
Audit services	16,277	17.179	16,277	17,179
Other services		5.189	$\rightarrow$ $-$	5.189
	16.277 ASKATORENNINGSUNNINGSUNNINGSUNNINGSUNNINGSUNNINGSUNNINGSUNNINGSUNNINGSUNNINGSUNNINGSUNNINGSUNNINGSUNNINGSINGSI	22.368	16.277	22.368

Other services include consultancy fees in relation to IFRS disclosures and an independent accountant's report. The Auditors did not receive any other benefit during the year.

NOTES TO THE FINANCIAL STATE ALENES CONTINUED FOR THE YEAR ENDED 30 JUNE 2006

NOTE 21: REMUNERATION OF DIRECTORS AND EXECUTIVES

Names and positions held by key management personnel in office at any time during the financial year are:

Directors

J L Daniels	Chairman (non-executive)
G W Hutchinson	(executive)
M R Wilson	(executive)
G P Gregory	(non-executive)
A P Rudd-	(non-executive)

The Company has entered into an executive service agreement with Mr Gary Hutchinson pursuant to which Mr Hutchinson is engaged by the Company as Managing Director with effect from 24 December 2004, being the date the Company achieved ASX listing until terminated in accordance with the terms of the agreement.

Under the agreement, the Company is to pay Mr Hutchinson a salary of \$150,000 per annum (exclusive of statutory superannuation) which salary will increase by the greater of 5% or CPI every 12 months. The Company is also required to pay to Mr Hutchinson a motor vehicle allowance of \$1,000 per calendar month.

The Company may terminate the agreement immediately in the usual circumstances. In addition, either the Company or Mr Hutchinson may terminate the agreement with three month's notice and payment by the Company to Mr Hutchinson of one month's salary for every 12 month period of service, up to a maximum of 12 months salary.

The Company has also entered into an executive service agreement with Mr Michael Wilson pursuant to which Mr Wilson is engaged by the Company as Exploration Manager with effect from 24 December 2004, being the date the Company achieved ASX listing until terminated in accordance with the terms of the agreement. The agreement with Mr Wilson is on the same key terms as the executive service agreement with Mr Hutchinson, other than Mr Wilson's salary is \$120,000 per annum (exclusive of statutory superannuation) and the Company must provide Mr Wilson with a fully maintained commercial motor vehicle.

The Constitution provides that the remuneration of non-executive Directors will be not more than the aggregate fixed sum determined by a general meeting of shareholders. The aggregate remuneration has been set at an amount of \$250,000 per annum.

Effective 24 December 2004, being the date the Company achieved ASX listing, the Directors have resolved that the fees payable will be \$45,000 per annum to the non-executive Chairman and \$25,000 per annum to the non-executive Directors (exclusive of statutory superannuation entitlements).

Non-executive Directors are also entitled to be paid reasonable travelling, accommodation and other expenses incurred as a consequence of their attendance at meetings of Directors and otherwise in the execution of their duties as Directors.

NOTE 21: REMUNERATION OF DIRECTORS AND EXECUTIVES - Continued

(a) Directors and Specified Executives

		Primary Benefits		the experiment of the extra	Post Employment	Equity	$\no$ Other $\no$ Benefits	TOTAL
	Salary & Fees - Ś.	$\gamma$ Non- $\cdot$ Cash $\cdot$ Bonus Monet. $\mathbf{C}$		tion ¢	Superanua-Retirement Benefits	Shares/ Options \$
Directors:
	Daniels, J L - Chairman (non-executive)
2006	45,000						$-$	45,000
2005	63,750					15,150		78,900
	Hutchinson, G W - Director (executive)
2006	151,250			13,612			12,000	176,862
2005	75,000			6,750		12,120	6,000	99,870
	Wilson, M R - Director (executive)
2006	123,000			11,070				134,070
2005	60,000			5,400		12,120		77,520
	Gregory, G P - Director (non-executive)
2006	25,000			2,250				27,250
2005	12,500			1,125		12,120		25,745
	Rudd, A P - Director (non-executive)
2006	36,655			2,250				38,905
2005	13,048		--	1,174		12,120		26,342
	Total Remuneration: Directors
2006	380,905			29,182			12,000	422,087
2005	224,298			14,449		63,630	6,000	308,377

There are no other specified executives in position of control or exercising management authority.

(b) Compensation of Key Management Personnel

		CONSOLIDATED	PARENT ENTITY
	2006	2005	2006	2005
Compensation by category:
Short-term	392,905	230,298	392,905	230,298
Post employment	29,182	14.449	29,182	14,449
Share-based payments		63,630		63.630
	.087	308.377	422.087	308.377

NOTES TO THE INANGLE SERIE AT ENERGINALIZED FOR THE YEAR ENDED 30 JUNE 2006

NOTE 21: REMUNERATION OF DIRECTORS AND EXECUTIVES - Continued

(c) Transactions with Directors and Director related entities

Gary Hutchinson (Shashua Pty Ltd) and Michael Wilson (Wilmick Holdings Pty Ltd)

Either individually or through companies under their control, or through companies under the control of a director related entity, the above named Directors received payment for the provision of consulting services and part time general office secretarial services under normal commercial terms and conditions during the years ended 30 June 2006 and 30 June 2005.

Aggregate amount of each type of transaction with Directors and their Director related entities were as follows:

	2006	2005
Consultancy and general office secretarial services (Gary Hutchinson)	$-$	-77.672
Consultancy and drilling, on site camp and mess facilities (Michael Wilson)	614.776 ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,	364.318

(d) Shareholdings by Directors

	BALANCE 01/07/05 (NO. OF SHARES)	RECEIVED REMUNERATION (NO. OF SHARES)	NO. OF OPTIONS EXERCISED	NET OTHER CHANGE (NO. OF SHARES)	BALANCE '06/06 (NO. OF SHARES)
DIRECTOR
Daniels
chinson.	2.062.500				2.062.500
M R Wilson	.653.573		,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,		573
G P Gregory	10.000				m
Rudd		,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,	.
TAL DIRECTORS

(e) Listed Options and Rights Holdings by Directors

	BALANCE 01/07/05 (NO. OPTIONS)	GRANTED AS RENUMERATION (NO. OPTIONS)	NO. OF OPTIONS EXERCISED	NET CHANGE OTHER (NO. OPTIONS)	BALANCE 30/06/06 (NO. OPTIONS)	TOTAL VESTED 30/06/06 (NO. OPTIONS)	TOTAL EXERCISABLE (NO. OPTIONS)
DIRECTOR
I I. Daniels
	250		,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,				.250
	826.786
	nnr						നവ
A P Rudd
TOTAL	2,363,036

NOTE 21: REMUNERATION OF DIRECTORS AND EXECUTIVES - Continued

(f) Unlisted Options and Rights Holdings by Directors

	BALANCE 01/07/05 (NO. OPTIONS)	GRANTED AS REMUNERATION (NO. OPTIONS)	NO. OF OPTIONS EXERCISED	NET CHANGE OTHER	BALANCE 30/06/06 (NO. OPTIONS) (NO. OPTIONS) (NO. OPTIONS)	TOTAL VESTED 30/06/06	TOTAL EXERCISABLE (NO. OPTIONS)
Director
J L Daniels	750,000				750,000	750.000	750.000
G W Hutchinson	600.000				600.000	600.000	600,000
M R Wilson	600,000				600.000	600.000	600,000
G P Gregory	600.000				600.000	600.000	600,000
A P Rudd	600,000				600.000	600.000	600,000
TOTAL	3,150,000				3.150.000	3,150,000	3,150,000

(g) Remuneration Options (2006)

During the year ended 30 June 2006, no shares or options were issued to Directors, employees and consultants for remuneration purposes.

Remuneration Options (2005)

				TERMS AND CONDITIONS FOR EACH GRANT
	GRANT NO.	GRANT DATE	EXERCISE PRICES	FIRST EXERCISE DATE	LAST EXERCISE DATE
I L Daniels	750.000	06/08/2004	$$0,25, $0.30 \& $0.40$	06/08/2004	30/06/2008
G W Hutchinson	600.000	06/08/2004	$$0.25, $0.30 \& $0.40$	06/08/2004	30/06/2008
M R Wilson	600.000	06/08/2004	$$0,25, $0.30 \& $0.40$	06/08/2004	30/06/2008
G P Gregory	600.000	06/08/2004	$$0.25, $0.30 \& $0.40$	06/08/2004	30/06/2008
A P Rudd	600.000	06/08/2004	$$0,25, $0.30 \& $0.40$	06/08/2004	30/06/2008

Using the Black Scholes option valuation methodology, and allowing for a 25% discount to allow for the fact that the Company was unlisted at the date of grant of the options, resulted in valuations of \$0.0305 per option for the \$0.25 exercise priced options, \$0.0205 each for the \$0.30 exercise priced options and \$0.0096 each for the \$0.40 exercised price options.

(h) Amounts owed to related parties at balance date were:

	2006	2005
Payables (related parties)	6,250 ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,	13,048

NOTESTOTHEELMANGALSTAREN EN ESCONTING FOR THE YEAR ENDED 30 JUNE 2006

NOTE 22: RELATED PARTY DISCLOSURE

The consolidated financial statements include the financial statements of Golden West Resources Limited and the subsidiaries listed in the following table.

	COUNTRY OF INCORPORATION	% EQUITY INTEREST		BOOK VALUE OF SHARES HELD BY PARENT ENTITY
		2006	2005	2006	2005
Iron West Resources Pty Ltd	AUS	100%	100%
				,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
		CONSOLIDATED		PARENT ENTITY
		2006	2005	2006	2005
Related party receivables with controlled entity:
Iron West Resources Pty Ltd				1,069
Less: provision for non recovery				(1.069)
		,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,

Related party transactions with Directors are disclosed in Note 21.

NOTE 23: LOSS PER SHARE

The following reflects the income and data used in the calculations of basic and diluted loss per share:

	2006	2005
Loss before income tax	(2,271,381)	(542, 126)
Earnings used in calculating basic loss per share	(2,271,381)	(542, 126)
	NO. OF SHARES	NO. OF SHARES
Weighted average number of ordinary shares used in calculating basic earnings per share:	47,454,094	29,576,258

Diluted loss per share is not disclosed as it would not reflect an inferior position.

There have been no conversions to, calls of or subscriptions for ordinary shares or issues of potential ordinary shares since the balance date and before the completion of this financial report.

NOTE 24: COMMITMENTS FOR EXPENDITURE

Tenement expenditure commitments

In order to maintain current rights of tenure to mining tenements, the Company will be required to outlay in 2006/07 amounts of \$445,000 in respect of minimum tenement expenditure requirements and lease rentals. The obligations are not provided for in the accounts and are payable as follows:

	2006	2005
Not later than one year	445,000	234,085
Later than one year but not later than 2 years	445,000	234,085
Later than 2 years but not later than 5 years	1,335,000	702,255
	2,225,000	1,170,425

Rental of premises commitments

The Company currently has a rental of premises contract of \$1,685 per month, inclusive of variable outgoings and GST.

	2006	2005
Not later than one year	20,220	18,600
Later than one year but not later than 2 years	20,220 .	18.600
	40.440 วยของของของของของของของของของของของของของข	37,200

NOTE 25: CONTINGENT LIABILITIES

Golden West Resources Limited has the following contingent liability at the end of the financial year:

The Company has a contingent liability with the vendor Lingchip Pty Ltd to issue the remaining 5,000,000 ordinary shares in the Company to Lingchip Pty Ltd upon the delineation of a JORC code compliant indicated resource of 200,000 ounces of gold.

NOTE 26: SEGMENT INFORMATION

Business and geographical segments:

The operations and assets of Golden West Resources Limited and its Controlled Entity are predominantly employed in exploration activities relating to minerals in Australia.

NOTESTOTHEELMANGALSTAREN EN ESCONTING FOR THE YEAR ENDED 30 JUNE 2006

NOTE 27: FINANCIAL INSTRUMENTS

(a) Interest Rate Risk

The economic entity's exposure to interest rate risk, which is the risk that a financial instrument's value will fluctuate as a result of change in the market interest rates and the effective weighted average interest rates on classes of financial assets and financial liabilities, is as follows:

		NON INTEREST BEARING		WEIGHTED		FLOATING INTEREST RATE		TOTAL S
		\$	AVERAGE EFFECTIVE INTEREST RATE %			\$
	2006	2005	2006	2005	2006	2005	2006	2005
Financial Assets
- Cash and cash equivalents	216	20,996	5.60	5.50	1,500,000	1,000,000	1,500,216	1,020,996
- GST	77,137	43,982	$-$	$\sim$ $-$		$\sim$ $-$	77,137	43,982
- Accrued interest	33,628	9,832	$-$	$\omega =$			33,628	9,832
Total Financial Assets	110,981	74,810				1,500,000 1,000,000 1,610,981 1,074,810
Financial Liabilities
- Trade and other payables - Amounts payable to	24,875	208,749					24,875	208,749
other parties		1.420						1.420
Total Financial Liabilities	24,875	210,169					24,875	210,169
Net Financial
Assets/(Liabilities)	86,106	(135,359)			1.500.000	1,000,000	1,586,106	864,641

The economic entity's accounting policies, including the terms and conditions of each class of financial asset, financial liability and equity instrument, both recognised and unrecognised in the balance sheet are as follows:

Financial assets

Trade and other receivables

Receivables are carried at nominal amounts due less any provision for doubtful debts. A provision for doubtful debts is recognised when collection of the full nominal amount is no longer probable. There are no repayment terms in relation to this debtor.

Financial liabilities

Trade and other payables

Liabilities are recognised for amounts to be paid in future for goods and services received, whether or not billed to the economic entity. Creditors are paid and cleared in a 30 day cycle.

NOTE 27: FINANCIAL INSTRUMENTS - Continued

(b) Credit risk

The Group does not grant credit and therefore there are no significant concentrations of credit risk within the Group, With respect to credit risk arising from the other financial assets of the Group, which comprise cash and cash equivalents, the Group's exposure to credit risk arises from default of the counter party, with a maximum exposure equal to the carrying amount of these instruments. Since the Group trades only with recognised third parties, there is no requirement for collateral.

(c) Net fair values

For assets and other liabilities the net fair value approximates their carrying value except for Director related receivables which are not interest bearing. The economic entity has no financial assets or liabilities that are readily traded on organised markets at balance date and has no financial assets where the carrying amount exceeds net fair values at balance date.

The aggregate net fair values and carrying amounts of financial assets and financial liabilities are disclosed in the balance sheet and in the notes to the financial statements.

NOTE 28: MATTERS SUBSEQUENT TO THE END OF FINANCIAL YEAR

Subsequent to the end of the financial year, the following events have occurred:

• On 28 July 2006 the Company converted 125,000 options exercisable at \$0.20 on or before 31 December 2007, into ordinary fully paid shares, following receipt of relevant notices on exercise of options.
• The Company announced on 18 August 2006 that it had reached agreement to place 6,250,000 ordinary fully paid shares at a price of \$1.20 per share plus a one for four free attaching option exercisable at \$0.20 on or before 31 December 2007 to raise \$7,500,000. The placement was completed on 25 August 2006.
• On 21 August 2006 the Company converted 110,000 options exercisable at \$0.20 on or before 31 December 2007, into ordinary fully paid shares, following receipt of relevant notices on exercise of options.
• On 6 September 2006 the Company converted 377,843 options exercisable at \$0.20 on or before 31 December 2007, into ordinary fully paid shares, following receipt of relevant notices on exercise of options.
• On 12 September 2006 the Company converted 168,500 options exercisable at \$0.20 on or before 31 December 2007, into ordinary fully paid shares, following receipt of relevant notices on exercise of options.
• On 27 September 2006 the Company reached agreement with Denarda Pty Ltd to purchase the Miscellaneous Licence ML53/115 for \$180,000. This included the established and operational camp facilities at Wiluna.

DIRECTORS DECLARATION FOR THE YEAR ENDED 30 JUNE 2006

The Directors declare that the financial statements and notes set out on pages 26 to 51:

• $\overline{1}$ . $(a)$ comply with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
• (b) give a true and fair view of the Company's and Consolidated Entity's financial position as at 30 June 2006 and of their performance, as represented by the results of their operations, changes in equity and their cash flows, for the financial year ended on that date.
• The Chief Executive Officer and Chief Finance Officer have each declared that: $\overline{2}$ .
• the financial records of the Company for the financial year have been properly maintained in accordance with section 286 $(a)$ of the Corporations Act 2001:
• $(b)$ the financial statements and notes for the financial year comply with the Accounting Standards; and
• $(c)$ the financial statements and notes for the financial year give a true and fair view.

In the Directors' opinion:

• (a) the financial statements and notes are in accordance with the Corporations Act 2001; and $\overline{3}$ .
• there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due $(b)$ and payable.

This declaration is made in accordance with a resolution of the Directors.

Dated this 27th day of September, 2006.

GARY WAYNE HUTCHINSON Director

Stantons Internationa

BREE AT 1890 PROF AND

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INDEPENDENT AUDIT REPORT

TO THE MEMBERS OF GOLDEN WEST RESOURCES LIMITED

SCOPE

The financial report and directors' responsibility

The financial report comprises the balance sheet, income statement, statement of changes in equity and statement of cash-flows, accompanying notes to the financial statements, and the directors' declaration for Golden West Resources Limited (the Company) and the consolidated entity for the year ended 30 June 2006. The consolidated entity comprises both the company and the entities it controlled during the year.

The directors of the Company are responsible for the preparation and true and fair presentation of the financial report in accordance with the Corporations Act 2001. This includes responsibility for the maintenance of adequate accounting records and internal controls that are designed to prevent and detect fraud and error, and for the accounting policies and accounting estimates inherent in the financial report.

Audit approach

We conducted an independent audit in order to express an opinion to the members of the Company. Our audit was conducted in accordance with Australian Auditing Standards in order to provide reasonable assurance as to whether the financial report is free of material misstatement. The nature of an audit is influenced by factors such as the use of professional judgement, selective testing, the inherent limitations of internal control, and the availability of persuasive rather than conclusive evidence. Therefore, an audit cannot quarantee that all material misstatements have been detected.

We performed procedures to assess whether in all material respects the financial report presents fairly, in accordance with the Corporations Act 2001, including compliance with Accounting Standards and other mandatory financial reporting requirements in Australia, a view which is consistent with our understanding of the Company's and the consolidated entity's financial position, and of their performance as represented by the results of their operations and cash flows.

We formed our opinion on the basis of these procedures, which included:

• examining, on a test basis, information to provide evidence supporting the amounts and disclosures in the financial report, and
• assessing the appropriateness of the accounting policies and disclosures used and the reasonableness of significant accounting estimates made by the directors.

INDEPENDENT AUDITERE 2019

While we considered the effectiveness of management's internal controls over financial reporting when determining the nature and extent of our procedures, our audit was not designed to provide assurance on internal controls.

a mana wa mshindi wa mshindi wa mshindi wa mshindi wa mshindi wa mshindi wa mshindi wa mshindi wa mshindi wa m
Marejeo Albanya (Albanya Albanya) a Manazara

INDEPENDENCE

In conducting our audit, we followed applicable independence requirements of Australian professional ethical pronouncements and the Corporations Act 2001.

AUDIT OPINION

In our opinion, the financial report of Golden West Resources Limited is in accordance with:

• a) the Corporations Act 2001, including:
• (i) giving a true and fair view of the Company's and consolidated entity's financial position as at 30 June 2006 and of their performance for the year ended on that date; and
• (ii) complying with Accounting Standards in Australia and the Corporations Regulations 2001; and
• b) other mandatory professional reporting requirements in Australia.

STANTONS INTERNATIONAL (Authorised Audit Company)

Storters Internative

J P Van Dieren Director

Perth, Western Australia 27 September 2006

Stantons Internationa

189241 1892 888 887

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27 September 2006

Board of Directors Golden West Resources Limited Suite 4 159 Main Street OSBORNE PARK WA 6017

Dear Directors

RE: GOLDEN WEST RESOURCES LIMITED

In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of Golden West Resources Limited.

As Audit Director for the audit of the financial statements of Golden West Resources Limited for the year ended 30 June 2006, I declare that to the best of my knowledge and belief, there have been no contraventions of:

• $(i)$ the auditor independence requirements of the Corporations Act 2001 in relation to the audit: and
• $(ii)$ any applicable code of professional conduct in relation to the audit.

Yours sincerely STANTONS INTERNATIONAL (Authorised Audit Company)

John Van Dieren Director

QUOTED SECURITIES 1.

$(a)$ ORDINARY FULLY PAID SHARES

DISTRIBUTION OF SHAREHOLDERS AS AT 15 SEPTEMBER 2006: $(i)$

			PERCENTAGE OF
SPREAD OF HOLDINGS	HOLDERS	SHARES	ISSUED CAPITAL %
$1 - 1,000$	90	56,804	0.095
$1,001 - 5,000$	307	1,009,866	1.692
$5,001 - 10,000$	228	1,976,008	3.310
$10,001 - 100,000$	319	9.846.571	16.497
$100,001+$	62	46,798,471	78.406
	1.006 , In the second construction of the second second second second second second construction of the second second second	59,687,720	100.000 ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,

The number of shareholdings held in less than marketable parcels is 15.

(ii) TOP 20 HOLDERS OF ORDINARY FULLY PAID SHARES:

The names of the twenty largest shareholders of ordinary fully paid shares are listed below:

NAME		NO. OF ORDINARY SHARES HELD	PERCENTAGE OF ISSUED SHARES %
1.	Lingchip Pty Ltd	14,062,500	23.560
2.	ANZ Nominees Limited	7,089,522	11.878
3.	D & F (WA) Pty Ltd	3,125,000	5.236
4.	Allens Business Group Pty Ltd	3,108,334	5.208
5.	Raymore Millard & Jacinta Reynolds	2,609,311	4.372
6.	Shashua Pty Ltd	1,812,500	3.037
7.	Peter Brady	1,183,333	1.983
8.	Lonart Pty Ltd	1,010,000	1.692
9.	Dolphin Technology Pty Ltd	625,000	1.047
10.	Fraser & Mountain Services Pty Ltd	600,000	1.005
11.	Dr Neville Peter Joseph	543,000	0.910
12.	Gregory John Patterson & Douglas James Harvie	500,000	0.838
13.	Fraser & Mountain Services Pty Ltd	450,000	0.754
14.	Mr David Jones Roberts	425,000	0.712
15.	Captain Starlight Nominees Pty Ltd	400,000	0.670
16.	Annette Stevenson & Bruce Stevenson < Stevenson Super>	400,000	0.670
17.	Mrs Jennifer Hanna	400,000	0.670
18.	Peter Samual Henry Brady	375,000	0.628
19.	Morris John Starcevich & Glenice Starcevich	375,000	0.628
20.	Sunami Pty Ltd	362,388	0.607
		39,455,888 555555555	66.105

(iii) VOTING RIGHTS

Articles 15 of the Constitution specify that on a show of hands every member present in person, by attorney or by proxy shall have:

• (a) for every fully paid share held by him one vote
• (b) for every share which is not fully paid a fraction of the vote equal to the amount paid up on the share over the nominal value of the shares.

1. QUOTED SECURITIES - Continued

(a) ORDINARY FULLY PAID SHARES - Continued

(iv) SUBSTANTIAL SHAREHOLDERS

Allens Business Group Pty Ltd

Substantial Shareholders as recorded in the Register of Members as at 15 September 2006;

NAME	ORDINARY SHARES
	NO.
Lingchip Pty Ltd	14,062,500	23
ANZ Nominees Limited < Cash Income $A/c$ >	7.089.522	11
D & F (WA) Pty Ltd	3,125,000	ε

(b) OPTIONS EXERCISABLE AT \$0.20 ON OR BEFORE 31 DECEMBER 2007

(i) DISTRIBUTION OF OPTIONHOLDERS AS AT 15 SEPTEMBER 2006:

			PERCENTAGE OF
SPREAD OF HOLDINGS	NO. OF HOLDERS	NO. OF OPTIONS	ISSUED OPTIONS %
$1 - 1,000$	16	10,503	0.044
$1,001 - 5,000$	82	327.981	1.392
5,001 - 10,000	53	431.108	1.829
$10,001 - 100,000$	143	4.881.671	20.715
$100,001+$	50	17,915,025	76.020
	344 *********	23,566,288	100.000.

(ii) TOP 20 HOLDERS OF OPTIONS EXERCISABLE AT \$0.20 ON OR BEFORE 31 DECEMBER 2007: The names of the twenty largest holders of options exercisable at \$0.20 on or before 31 December 2007 are listed below:

		NO. OF OPTIONS	PERCENTAGE OF
NAME		HELD	ISSUED OPTIONS %
1.	Lingchip Pty Ltd	2,792,222	11.848
2.	D & F (WA) Pty Ltd	1,500,000	6.365
3.	Raymore Millard & Jacinta Reynolds	1,201,833	5.100
4.	Shashua Pty Ltd	875,000	3.713
5.	Allens Business Group Pty Ltd	777,084	3.297
6.	Mr Michael Keith Overheu & Mrs Marilyn Anne Overheu	727,200	3.086
7.	Mr Morris John Starcevich and Mrs Glenice Starcevich	606,000	2.571
8.	Bruce Stevenson & Annette Stevenson	525,000	2.228
9.	Lonart Pty Ltd	505,000	2.143
10.	Beacon Lights Pty Ltd	400,000	1.697
11.	Rhiannon Doutch	375,000	1.591
12.	Dr Neville Peter Joseph	371,500	1.576
13.	Mrs Irene Lorraine Jesnoewski	360,000	1.528
14.	Dolphin Technology Pty Ltd	312,500	1.326
15.	Mrs Heather Joy Cole < Cole Family Super Fund A/c>	310,800	1.319
16.	Mr William McMillan Brown	306,500	1.301
17.	Fraser & Mountain Services Pty Ltd	300,000	1.273
18.	Mr Emad Odeh	300,000	1.273
19.	Dr James Crawford	300,000	1.273
20.	Marlene Michelle Doutch	300,000	1.273
		13,145,639	55.781

%

23.560 11,878

5.236 5,208

3,108,334

ASY ADDITIONAL INFORMATION Continued

$\mathbf{1}$ OUOTED SECURITIES - Continued

OPTIONS EXERCISABLE AT \$0.20 ON OR BEFORE 31 DECEMBER 2007 - Continued $(b)$

(iii) VOTING RIGHTS

Holders of options are not entitled to vote at a General Meeting of Members in person, by proxy or upon a poll, in respect of their option holding only.

UNQUOTED SECURITIES $2.$

As at 15 September 2006 there existed the following unquoted options:

1.450.000 OPTIONS EXERCISABLE AT \$0.25 EACH ON OR BEFORE 30 JUNE 2008 $(a)$

	OPTIONS	%
John Leonard Daniels	250,000	17.26%
Lonart Pty Ltd	200,000	13.79%
D & F (WA) Pty Ltd <m &="" A/c>	200,000	13.79%
Shashua Pty Ltd	200,000	13.79%
Alan Paul Rudd	200,000	13.79%
Wilmick Holdings Pty Ltd	200,000	13.79%
Dolphin Technology Pty Ltd	200,000	13.79%
	1.450.000	100.00%

1.450.000 OPTIONS EXERCISABLE AT \$0.30 EACH ON OR BEFORE 30 JUNE 2008 $(b)$

	OPTIONS	%
John Leonard Daniels	250,000	17.26%
Lonart Pty Ltd	200,000	13.79%
D & F (WA) Pty Ltd < M & L Family $A/c$ >	200,000	13.79%
Shashua Pty Ltd	200,000	13.79%
Alan Paul Rudd	200,000	13.79%
Wilmick Holdings Pty Ltd	200,000	13.79%
Dolphin Technology Pty Ltd	200.000	13.79%
	1,450,000	100.00%

1,450,000 OPTIONS EXERCISABLE AT \$0.40 EACH ON OR BEFORE 30 JUNE 2008 $(c)$

	OPTIONS	%
John Leonard Daniels	250,000	17.26%
Lonart Pty Ltd	200,000	13.79%
D & F (WA) Pty Ltd <m &="" A/c>	200,000	13.79%
Shashua Pty Ltd	200,000	13.79%
Alan Paul Rudd	200,000	13.79%
Wilmick Holdings Pty Ltd	200,000	13.79%
Dolphin Technology Pty Ltd	200,000	13.79%
	.450.000	100.00%

(d) VOTING RIGHTS

Holders of options are not entitled to vote at a General Meeting of Members in person, by proxy or upon a poll, in respect of their option holding.

DIRECTORS' INTERESTS 3.

Interests of each Director in the share capital of the Company at 30 June 2006 are detailed in Note 21 of this Report.

The ASX Corporate Governance Council requires that the Company must disclose the extent to which it has followed best practice recommendations, identify which recommendations have not been followed and the reason for not adopting the recommendations.

The ASX Corporate Governance Council recognises that not all recommendations are appropriate for all companies and that companies should only adopt those recommendations that are suitable in each individual case.

The following is a summary of policies adopted by the Company and where appropriate, explanations of where best practice recommendations have not been applied. The various policies and procedures were followed throughout the entire financial year.

Board Composition and Functions

Under the Company's Constitution, the Board is required to consist of at least 3 and no more than 10 directors. If the Company has 3 or more directors, one third of the directors, with the exception of the Managing Director, must retire and seek re-election at the Annual General Meeting each year.

The Board of the Company currently consists of three nonexecutive directors and two executive directors. The Board includes the Managing Director (executive) and the Chairman (non-executive).

The Board composition does not follow ASX recommendations, in that a majority of directors are not independent. However, the roles of Chairman and Managing Director are not exercised by the same person, and the Board is considered to be comprised of directors with the experience and qualifications best suited to the Company's size and range of activities.

The Company has followed ASX recommendations in the assessment of whether a director is considered to be "independent". The independent directors are John Daniels and Alan Rudd.

The Board delegates responsibilities to committees, executive directors and senior management.

The Board is responsible for corporate strategy, implementation of business plans, allocation of resources, approval of budgets and capital expenditure, and the adherence to Company policies.

The Board is also responsible for compliance with the Code of Conduct, overseeing risk management and internal controls, and the assessment, appointment and removal of the Managing Director, Company Secretary and other senior management.

Directors of the Company during the financial year and information pertaining to individual directors is included in the Directors' Report.

Board members have the right to seek independent professional advice in the furtherance of their duties as directors at the Company's expense.

Director Independence

The Company has established guidelines for testing the independence of directors.

A director is considered to be independent if they satisfy certain criteria, the most significant being as follows:

• The director must be in a non-executive role where any fees payable by the Company could not be considered to make the director reliant on such remuneration. The director must have no other material contractual relationship with the Company other than as a director of the Company.
• The director is not a substantial shareholder of the Company.
• The director has not been employed in an executive capacity by the Company and has not been a principal of a material adviser or consultant to the Company within the last 3 years, and
• The director is free from any interest which could reasonably be perceived to materially interfere with the director's ability to act in the best interests of the Company.

Risk Management

The Board is responsible for the identification of significant areas of business risk, implementing procedures to manage such risks and developing policies regarding the establishment and maintenance of appropriate ethical standards to:

• $\bullet$ Ensure compliance in legal, statutory and ethical matters:
• Monitor the business environment:
• Identify business risk areas:
• Identify business opportunities; and
• Monitor systems established to ensure prompt and appropriate responses to shareholder complaints and enquiries.

The Board meets on a regular basis. The Company does not follow the ASX best practice recommendation that the Company should have an internal control function. The Board considers that the Company is not of a size or operational complexity to warrant the implementation of a separate internal control function.

The Managing Director and Company Secretary are required to state in writing to the Board that the Company has a sound system of risk management, that internal compliance and control systems are in place to ensure the implementation of Board policies, and that those systems are operating efficiently and effectively in all material respects.

Audit Committee

The Company believes it is not of a size to justify having an Audit Committee. All directors are involved in overseeing the existence and maintenance of internal controls, accounting systems and external audit arrangements.

Procedure for the Selection of New Directors

The Company believes it is not of a size to justify having a Nomination Committee. If any vacancies arise on the Board, all directors are involved in the search and recruitment of a replacement.

Corporate performance is enhanced when the Board has an appropriate mix of skills and experience. The Board is evaluated before a candidate is selected to join the Board. Candidates are nominated by existing Board members and independent search consultants are also utilised if necessary. Where a director nominates a candidate for the Board, the director must disclose any pre-existing relationship with the nominee.

New directors are provided with a letter of appointment setting out their responsibilities and rights, and are provided with a copy of the Company's Constitution.

Remuneration of Board Members

The Company believes it is not of a size to justify having a Remuneration Committee. All directors are involved in the review of executive and non-executive directors' and senior management's remuneration. No director may be involved in setting their own remuneration or terms and conditions.

Conflicts of Interest

The Board has put in place Code of Conduct and Share Trading Policies which have been designed to ensure that all directors and employees of the Company act ethically and do not use confidential information for personal gain.

Code of Conduct

The Board is responsible for setting the tone of legal, ethical and moral conduct to ensure that the Company is considered reputable by the industry and other outside entities. This involves considering the impact of the Company's decisions on the industry, colleagues and the general community. The Code of Conduct adopted by the Company requires that all employees abide by the laws, regulations and business practices whenever the Company operates. The Board maintains an approach that preserves the integrity of any laws or regulations under which the Company operates. The Company has also put in place various internal Policies which provide internal controls to ensure employees only act within the authority given to them by the Board. This is to ensure that the Board has responsibility for any material transactions and dealings with outside parties, and that any legal, environment and social consequences of such dealings will be properly considered before any action is taken.

The Company has an Environmental Policy which requires all employees to comply with the environmental regulations in force in the region in which work is undertaken. The Company is committed to dealing fairly and equitably with interested parties relating to environmental issues, such as landholders, governmental agencies and native title claimants.

Annual General Meeting

The Company's Auditors are invited to each Annual General Meeting.

Service

Alan Rudd – Wiluna West Project

Iron Ore - Wiluna West Project