HALF-YEAR REPORT TO 30 JUNE 2003

HALF-YEAR REPORT TO 30 JUNE 2003 PO Box 2000, Subiaco, Western Australia 6904 Registered Office: 230 Rokeby Road, Subiaco, Western Australia 6008 Telephone: +61 8 9388 9697, 9381 5771 Facsimile: +61 8 9381 1705 Enquiries: info@gondwanaresources.com Web: www.gondwanaresources.com

DIRECTORS REPORT The directors present their report together with the consolidated financial report of Gondwana Resources Limited for the half- year ended 30 June 2003 and the auditor s review report thereon. DIRECTORS The directors of the Company at any time during or since the end of the half year are: Warren Talbot Beckwith Executive Chairman Warren Beckwith is a Chartered Accountant with many years' experience as a partner in international firms within Australia and overseas. He has held directorships and executive positions in Australian mining and other public listed companies in Australia and Hong Kong for more than 20 years. Steven Leigh Pynt Director Steven Pynt is a Partner with Perth legal firm McDonald Pynt, with his main area of practice being in Commercial Law including Corporations Law, Revenue and Contracts. In addition to completing his law degree in 1980 he has completed a Bachelor of Business majoring in Accounting, an MBA and a Master of Taxation Studies. Steven is a Fellow of the Australian Society of Certified Practising Accountants and a member of the Australian Institute of Company Directors. He is Chairman of the Commercial Tribunal of Western Australia, a member of the Racing Penalties Appeals Tribunal, Director of Working Systems Solutions Ltd and Chairman of Richfield Group Ltd. Paul Millington Goodsall Director & Company Secretary Paul Goodsall is a Chartered Accountant with 21 years experience in merchant banking specialising in commercial and resource based project financing. During this period he has been responsible for the appraisal and development of numerous mineral developments in both Australia and overseas. In recent years he has held the position of Commercial Manager, director or company secretary of several public companies. PRINCIPAL ACTIVITIES The Entity s principal activity during the half-year was mineral exploration. REVIEW OF OPERATIONS During the half year, the Company announced the new Parker Range Gold Project, south of Marvel Loch in the Yilgarn of Western Australia. This project, centred on the Golden Virgin Open Pit Gold Mine, has potential for an early recommencement of gold production and will be the Company s major focus. Key features of the Parker Range Gold Project are: aggregation of a significant landholding (a total of up to 63 tenements) within one of the principal gold corridors in the Goldfields of Western Australia, hosting significant gold resources, large numbers of advanced exploration targets and potential for substantial growth; agreement to acquire an interest in and management of a high grade gold resource, the Golden Virgin Gold Mine; outstanding potential to define high grade reserves at and around Golden Virgin for a recommencement of production; an Exploration Alliance with Sons of Gwalia Limited for Gondwana to acquire up to 54 regional tenements in the Parker Range region, centred on Golden Virgin. Sons of Gwalia retain the right to buy back into the regional tenements during the term of the Alliance; access Sons of Gwalia s nearby Marvel Loch mill. Figure 1: Gondwana project locations Figure 1: Gondwana Project Locations 1

Parker Range Gold Project DIRECTORS REPORT (continued) This Project comprises up to 63 new tenements in the Marvel Loch area, south of Southern Cross in the Yilgarn of WA. Acquiring such a large, prospective and strategically located tenement holding is considered an important achievement for the Company. It is certainly a major step forward in the Company s strategy to become a gold producer. These tenements and the Golden Virgin Gold Mine are referred to as the Parker Range Gold Project. As announced, the Company has agreed to acquire 50% of PGM Exploration Pty Ltd (PGM) for 1,075,000, of which 125,000 has been paid prior to 30 June 2003, with an option to increase to 100% for a further 1,075,000. PGM owns 51% of the Golden Virgin Gold Mine (figure 2) and Gondwana will be Operator. PGM developed a small open pit on Golden Virgin, mining and toll treating 3,420 tonnes of ore at the high grade of 12.4 g/t gold, to a total pit depth of 28 metres. Approximately 3,500 tonnes of medium grade ore at an estimated grade of 3.5 g/t gold was also produced and is presently stockpiled. Drilling immediately down plunge of the pit has outlined a resource (indicated and inferred, 90 g/t Au top cut) of 20,000 tonnes at 11.5 g/t gold, to 70 metres depth. Existing drilling at Golden Virgin is largely limited to the small open pit and the Company believes substantial untested potential exists for extensions of mineralisation adjacent to the existing pit and along strike. RC drilling results at Golden Virgin include: Hole No Depth From To Intercept PGM2 26m 34m 8m @ 30.4g/t PGM3* 16m 29m 13m @16g/t, incl 2m @ 88g/t PGM7 29m 33m 4m @ 11.2g/t PGM10 23m 40m 17m @ 17.3g/t incl 6m @25g/t & 3m @ 42 g/t PGM52 48m 56m 8m @ 19.5g/t PGM55 50m 53m 3m @ 14.5g/t 58m 67m 9m @13.5g/t *Mined to a depth of 28m The Parker Range Project is the culmination of extensive negotiations involving six separate acquisition agreements, providing a major landholding in this most prospective and productive gold province. The Company has already successfully dealt with 12 pre-existing plaints and objections. A highlight is the Exploration Alliance with Sons of Gwalia Limited for Gondwana to acquire up to 54 tenements centred on Golden Virgin (figure 2). The acquisition cost was 110,000, of which 10,000 has been paid. Sons of Gwalia retains the right to buy back up to a 60% interest in these tenements during the term of the Alliance. The precise number of tenements will be determined when it is known whether pre-emption rights held by joint venture partners over 7 of the tenements are to be exercised. These tenements host a large number of advanced exploration targets, with potential for substantial discoveries. Figure 2: Location of Parker Range Gold Project and Golden Virgin Gold Mine 2 Gondwana also has agreement in principle to access Sons of Gwalia s nearby Marvel Loch mill. This will allow a rapid progression to gold production for economically feasible projects.

Parker Range Gold Project (continued) DIRECTORS REPORT (continued) Following completion of a capital raising referred to later in this report, the Company plans an extensive drilling programme aiming to expand resources at Golden Virgin and other nearby targets and define reserves for a recommencement of gold production. This will be supported with an active exploration and resource definition programme within the large Parker Range holdings. Resource estimates Reference to the Golden Virgin resource estimate in this report is based on, and accurately reflects, information compiled by Mr Allen Maynard, who is a corporate member of the Australasian Institute of Mining and Metallurgy. Mr Maynard is an independent consultant and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity he is undertaking to qualify as a Competent Person as defined in the 1999 edition of the Australian Code for Reporting of Mineral Resources and Ore Reserves. Mr Maynard consents to the inclusion in the report of the resource estimate in the form and context in which it appears. Eastern Pilbara Projects Gondwana holds a large portfolio (> 2,000 sq km) of exploration tenement applications south of Marble Bar in the Eastern Pilbara of Western Australia (figure 3) prospective for economic gold, diamond, base metal and tantalum mineralisation. The Company holds a 90% interest in all of the Eastern Pilbara tenements except Brockman Dyke, Comet East and Blue Bar West, in which the Company holds 100% interest. The tenements host a large number of advanced targets including extensive gold anomalies, a 20 km long diamond bearing kimberlite dyke, copper - zinc anomalies and tantalum resources. Figure 3: Pilbara region, major resources and Gondwana project areas 3

Eastern Pilbara Projects (continued) DIRECTORS REPORT (continued) The tenements provide an extensive coverage of prospective greenstone belts. These include 70km of the Coongan Greenstone Belt, extending south from Marble Bar. The Marble Bar district has a gold endowment (production plus resources) in excess of 600,000 ounces of gold, indicating promise for commercial discoveries in the remainder of the belt. The Company has compiled a large database of geochemical and drilling data from previous exploration in the region, covering the 1970 s to 1990 s. This includes analyses from stream sediment samples (>4000 samples), surface soil samples (>7500 samples), rock chips (>2600 samples) and drilling (47 holes). Highlights in the Coongan Belt Project, include a large number of gold and copper-zinc anomalies that are untested by drilling. Stream and rock-chip sampling results are particularly encouraging, better results including 17 rock chip samples ranging from 3 to 66 g/t gold. At Baroona Hill a substantial copper molybdenum tungsten soil anomaly has been identified by previous explorers. The Brockman Dyke Project covers approximately 15 km of the known 20 km extent of a diamondiferous Kimberlite Dyke. Previous drilling and bulk sampling have recovered both microdiamonds and macrodiamonds. The Western Shaw Project includes tantalum occurrences prospective for deposits of similar style to the large Wodgina Tantalum Mine, located 90km to the north west. With the major focus of the Company now on exploration and possible development of the Parker Range Project, it has been decided to seek joint venture partners to drill identified targets in the Eastern Pilbara Projects. Bustler Well Project The Bustler Well Project (figure 1), comprises one granted exploration licence and an adjacent application and is located 800km north of Perth. The Bustler Well Gold Prospect was drilled during the late 1980 s, with best results of: BR1 : 20 21m 1m at 37.3 g/t Au BR2 : 10 12m 2m at 9.1 g/t Au BR3 : 17 20m 3m at 7.6 g/t Au BR15 : 46 49m 3m at 7.2 g/t Au Stream sediment sampling was also completed, with unexplained gold anomalies suggesting possible repetitions of mineralisation. Follow up sampling is planned to assess the anomalies. Lake Cronin Project Lake Cronin comprises one prospecting licence and is located in the Southern Cross Greenstone Belt, about 90km south of Parker Range (figure 1). Geological mapping and channel sampling of old gold workings during 2002 gave a best result of 1.6m (true width) at 6.2 g/t Au, with the shear being open (untested) beneath recent alluvial cover south from the workings for approximately 200 metres to the tenement boundary. Petroleum The Company retains a 2% gross overriding royalty interest in EP 23 (WA), a 3.25% royalty interest in TP3(3) in Western Australia, and a 1.25% royalty interest in ATP471 in Queensland. Investment The Company continues to hold a 19.9% interest in GlobalNet Asia Pacific Limited (GlobalNet), a company formed by Gondwana in 1999 to enter into a technology joint venture. GlobalNet is now based and managed in Victoria and its present activities are focused on wireless telecommunications in regional Australia. GlobalNet is optimistic about its imminent first entry into the marketplace in Geelong. However, the carrying value of Company s investment in GlobalNet at 30 June 2003 has been written down in full due to the uncertainty of future revenue streams from the investment. 4

Placement of new shares and options DIRECTORS REPORT (continued) During the half year the Company agreed placements of 45,500,000 shares at a price of 1 cent per share, each share having an attached free option exercisable at 2 cents on or before 31 December 2003. Of this, 24,000,000 shares and options were issued during the half year and 21,500,000 shares and options will be issued subject to shareholder approval at the Annual General Meeting on 17 September 2003. The purpose of the placements was for working capital, including the deposit paid on the acquisition of shares in PGM Exploration Pty Ltd, which owns 51% of the Golden Virgin Gold Mine. AFTER BALANCE DATE EVENTS An Exploration Alliance Agreement has been entered into with Sons of Gwalia Limited for Gondwana to acquire up to 54 regional tenements in the Parker Range region for 110,000, of which 10,000 has been paid. No other events, matter or circumstances have arisen since the end of the financial year which in the opinion of the directors, are likely to significantly affect the operations of the Company, the results of those operations or the state of affairs of the Company in subsequent years. Dated at Perth this 11 th day of September 2003 and signed in accordance with a resolution of the directors. WT Beckwith Director 5

STATEMENTS OF FINANCIAL PERFORMANCE FOR THE HALF-YEAR ENDED 30 JUNE 2003 Notes half-year ended 30 June 2003 half-year ended 30 June 2002 Revenue from rendering of services - - Other revenue from ordinary activities 3,406 16,395 Total revenue 3,406 16,395 Employee expenses (68,934) (63,740) Depreciation expenses (7,210) (6,569) Borrowing costs (4,031) (15,509) Consulting fees (30,000) (75,000) Exploration (223,703) - Write-down of investments (81,356) - Rent (25,843) 6,692 Directors fees (22,890) (19,500) Accounting and secretarial fees (23,932) (19,190) Other expenses from ordinary activities (48,252) (21,584) Loss from ordinary activities before related income tax expense (532,745) (198,005) Income tax expense - - Loss from ordinary activities after related income tax expense (532,745) (198,005) Net loss attributable to members of the company (532,745) (198,005) Basic loss per share (0.003) (0.0013) There are no dilutive potential ordinary shares and therefore diluted earnings per share has not been calculated. The statements of financial performance are to be read with the notes to the financial statements set out on pages 9 and 10. 6

STATEMENTS OF FINANCIAL POSITION AS AT 30 JUNE 2003 Notes 30 June 2003 31 Dec 2002 CURRENT ASSETS Cash 61,248 403,824 Other 29,187 38,924 TOTAL CURRENT ASSETS 90,435 442,748 NON-CURRENT ASSETS Property, plant and equipment 51,993 58,433 Exploration, evaluation and development expenditure 160,882 160,882 Other 3 136,178 - TOTAL NON-CURRENT ASSETS 349,053 219,315 TOTAL ASSETS 439,488 662,063 CURRENT LIABILITIES Payables 136,767 107,725 Interest bearing liabilities 83,249 28,613 TOTAL CURRENT LIABILITIES 220,016 136,338 NON-CURRENT LIABILITIES Interest bearing liabilities 6,588 20,096 TOTAL NON-CURRENT LIABILITIES 6,588 20,096 TOTAL LIABILITIES 226,604 156,434 NET ASSETS 212,884 505,629 EQUITY Contributed Equity 2 13,573,660 13,333,660 Accumulated losses (13,360,776) (12,828,031) TOTAL EQUITY 212,884 505,629 The statements of financial position are to be read with the notes to the financial statements set out on pages 9 and 10. 7

STATEMENTS OF CASH FLOWS FOR THE HALF-YEAR ENDED 30 JUNE 2003 Cash Flows from Operating Activities half-year ended 30 June 2003 half-year ended 30 June 2002 Cash receipts in the course of operations 1,040 45,454 Cash payments in the course of operations (203,714) (224,661) Interest received 3,406 128 Expenditure on mining interests (206,131) (49,823) Net Cash used in Operating Activities (405,399) (228,902) Cash Flows from Investing Activities Payments for plant & equipment (771) (1,550) Payments for deposits (136,178) (15,681) Payments for investments (81,356) - Net Cash used in Investing Activities (218,305) (17,231) Cash Flows from Financing Activities Proceeds from share issue 240,000 1,291,664 Transaction costs from issue of shares - (61,296) Repayment of borrowings - (35,000) Proceeds from borrowings- Other 55,000 116,800 Finance lease payments (13,871) (2,852) Net Cash provided by Financing Activities 281,129 1,309,316 Net Increase/(Decrease) in Cash Held (342,575) 1,063,183 Cash at the beginning of the financial period 403,823 850 Cash at the end of the financial period 61,248 1,064,033 The statements of cash flows are to be read in conjunction with the notes to the financial statements set out on pages 9 and 10. 8

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 30 JUNE 2003 1. Statement of significant accounting policies (a) Basis of Preparation of Half-Year Financial Report The half year consolidated financial report is a general purpose financial report which has been prepared in accordance with the requirements with Accounting Standard AASB 1029 Interim Financial Reporting, the recognition and measurement requirements of applicable AASB standards, Urgent Issues Group Consensus Views, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. This half year consolidated financial report is to be read in conjunction with the 31 December 2002 Annual Financial Report and any public announcements by Gondwana Resources Limited during the half year in accordance with continuous disclosure obligations arising under the Corporations Act 2001. It has been prepared on the basis of historical costs and except where stated, does not take into account changing money values or fair values of non-current assets. These accounting policies have been consistently applied by each entity in the consolidated entity and are consistent with those applied in the 31 December 2002 Annual Financial Report. The half year report does not include full note disclosures of the type normally included in an annual financial report. (b) Going Concern The consolidated entity has incurred a loss for the half year of 532,745. The consolidated entity s financial statements have been prepared on a going concern basis on the grounds that, in the opinion of the Directors, the consolidated entity will be in a position to continue to meet its budgeted operating costs and minimum exploration expenditures for the twelve month period from the date of this report from current cash resources augmented by further capital raising during the period. In the light of the prospectivity of the consolidated entity s current exploration projects, the Directors are confident that the additional capital required can be raised in the market. Further, the consolidated entity has demonstrated an ability to raise additional funds through share placements and capital raisings, as disclosed in note 2. The company has arranged a placement of 21.5 million shares which will provide 215,500 (before issue expenses) in September 2003, subject to the approval of shareholders at the Annual General Meeting to be held on 17 September 2003. A further placement of shares to raise not less than 1,350,000 and a target of 2,000,000 (before issue expenses) is also proposed, subject to the approval of shareholders at the Annual General Meeting. 2. Contributed Equity Issued and Paid-up Share Capital 186,079,947 (December 2002:162,079,947) ordinary fully paid shares 30 June 2003 31 Dec 2002 13,573,660 13,333,660 During the half-year, a placement of 24,000,000 shares at a price of 0.01 per share was made and placement of a further 21,500,000 shares at a price of 0.01 was agreed to be made subject to shareholder approval at the Annual General Meeting to be held on 17 September 2003. Subject to shareholder approval, a free option exercisable at 0.02 on or before 31 December 2003 attaches to each share issued in these placements. 9

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 30 JUNE 2003 (continued) 3. Assets Other Included in other assets is a non-refundable deposit of 136,178 (including 11,178 of legal fees and stamp duty) paid pursuant to an agreement to acquire a 50% interest in PGM Exploration Pty Ltd, the holder of a 51% interest in the Golden Virgin Gold Mine. The agreement is conditional upon the balance of 950,000 being paid out of the proceeds of the proposed placement of new shares to raise not less than 1,350,000. The proposed placement is also subject to shareholder approval at the Annual General Meeting on 17 September 2003. 4. Segment Reporting The Company operates predominantly in the minerals exploration sector. The Company s operations are located in Australia. 5. Events Subsequent To Reporting Date An Exploration Alliance Agreement has been entered into with Sons of Gwalia Limited for Gondwana to acquire up to 54 regional tenements in the Parker Range region for 110,000, of which 10,000 has been paid. Other than disclosed above, no events, matters or circumstances have arisen since the end of the half-year which, in the opinion of the Directors, are likely to significantly affect the operations of the Company, the results of those operations or the state of affairs of the Company in subsequent financial years. 10

DIRECTORS' DECLARATION In the opinion of the directors of Gondwana Resources Limited: 1. the financial statements and notes set out on pages 6 to 10 are in accordance with the Corporations Act 2001, including: (a) giving a true and fair view of the financial position of the consolidated entity as at 30 June 2003 and of its performance, as represented by the results of its operations and cash flows for the half year ended on that date; and (b) complying with Australian Accounting Standard AASB 1029 Interim Financial Reporting and the Corporations Regulations 2001; and 2. there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. Dated at Perth this 11 th day of September 2003 and signed in accordance with a resolution of the directors: W T Beckwith Director 11

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