Golden Cross Resources : 2003 Annual Report

GOLDEN CROSS RESOURCES LTD

annual report 2003

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... exploring New South Wales

CONTENTS
Chairman's Letter			1
Corporate			2
Focus on NSW			2
Review of Exploration			4
GCR People			18
Directors' Report			19
Corporate Governance Statement			23
Statements of Financial Performance			24
Statements of Financial Position			25
Statements of Cash Flows			26
Notes to the Financial Statements			27
Directors' Declaration			38
Independent Audit Report to the Members		39
Interests in Mining Tenements			40
Shareholder Information			inside back cover

COMPANY PARTICULARS . . .
DIRECTORS	SECRETARIES
Christopher Ryan, BEcon, MBA, FAusIMM, ASIA, MPESA	Daven Timms
Chairman		BSc LLB (Hons), AMPLA,
		ASIA, MAusIMM
David Timms, BSc (Hons), PEng, FAIG, FAusIMM
Managing Director	Margaret Greentree
		BEc, BBus (Accounting)
Kerry McHugh, BCom (Hons)
Non-executive Director
Chris Torrey, BSc, MSc, MAIG, FSEG	AUDITOR
Director - Exploration	PricewaterhouseCoopers
		Chartered Accountants
Daven Timms, BSc LLB (Hons), AMPLA, ASIA, MAusIMM	201 Sussex Street
Alternate Director	Sydney NSW 1171
PRINCIPAL AND REGISTERED OFFICE	SOLICITORS
22 Edgeworth David Avenue	Allens Arthur Robinson
Hornsby NSW 2077	The Chifley Tower
Ph	[phone]	2 Chifley Square
Fax	[phone]	Sydney	NSW	2000
Email	[e-mail]
Website	www.goldencross.com.au
STOCK EXCHANGE LISTING	SHARE REGISTER
Golden Cross Resources Ltd's shares are listed on the	Registries Limited
Australian Stock Exchange (Listing Code GCR)	Level 2, 28 Margaret Street
		Sydney	NSW	2000
		Ph: [phone]

BANKERS

Westpac Banking Corporation

60 Martin Place

Sydney NSW 2000

CHAIRMAN'S LETTER TO SHAREHOLDERS

Dear Shareholder

After nearly six months as chairman of Golden Cross Resources Ltd I feel that I now know and understand the company's exploration property portfolio and the prospects it offers well enough to convey to all shareholders a real sense of excitement for the coming year.

Every property in our portfolio has good prospects for an economic minerals discovery. Four properties stand out at this time:

Sunny Corner - on what we know at the date of writing, we have good reasons to be optimistic for a favourable outcome from further exploration and drilling.

Broken Hill - our farm-in with Sipa Resources International NL and Gravity Capital Limited offers the prospect of participating in a large discovery.

McPhails - the drilling by Alkane Exploration Ltd in recent months provides encouraging evidence that the Wyoming discovery trends south into the tenement in which we hold a royalty interest and further south where we hold the ground in our own right.

Canbelego - the outlook is good for a cash flow from exploration conducted by our farm-in partner Polymetals Pty Ltd.

In addition, at Adelong, the re-working of the feasibility study has renewed our belief that this property can be developed successfully with an attractive return on funds invested and an excellent outlook for regional exploration enhancing the available resources.

The other properties held by the company all also have merit and each contributes in its own way to the company's future.

I believe that it is not sufficient just to have good properties and prospects, important though that is. The communication with both the shareholders and the market generally is also important, because the fact of life is that unless and until the company has access to internally generated cash flow, it must seek additional equity capital from time to time.

It is in the area of investor relations that I have focussed my attention as chairman and over recent months we have taken several new initiatives. I would like to mention three of these.

First, you will see that the annual report looks different. We have placed a map of New South Wales on the front cover to emphasise that is where the company's operations are exclusively conducted. We want to emphasise this for two reasons. One is that NSW offers wonderful opportunities for a minerals exploration company. There is a rich history of mining in the state and many old mining districts have not been explored in recent times the way they would have been were they in Western Australia. The other is that Sydney is Australia's largest centre of finance and commerce. Of course not all investors are familiar with minerals exploration and many have an aversion to the associated risks. Nevertheless, we believe that there are benefits in becoming better known to New South Wales investors.

Secondly, we have organised the inaugural "NSW Miners and Explorers Conference" to be held in October in both Sydney and Canberra at which 11 companies, including Golden Cross Resources, will present on their NSW activities. I would like to encourage our shareholders to attend. Details are available on our website. We would like this conference to become a regular event.

Thirdly, we have begun a comprehensive re-working of our website. Our aim is to provide shareholders and investors with meaningful information in relation to each of our properties, in addition to corporate information. We intend to update the website frequently as new information comes to hand. We invite shareholders to visit the site and provide feedback.

In conclusion, I want to assure shareholders that the board and management of the company are striving to deliver comprehensive increases in shareholder value by the application of capital and exploration expertise to our property portfolio. But we want to provide shareholders with more than that. Through our announcements to the ASX, our emails to shareholders who have provided us with their email address, our website and our conference we want shareholders to share with us the excitement of the excellent prospects for successful exploration provided by our property portfolio and our activities.

Yours faithfully

Christopher Ryan Chairman

CORPORATE

Objectives

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

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

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

Strategic Alliance with Aur Resources

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

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

the right of first offer over any properties GCR offers for farm-in or option; and

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

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

FOCUS ON NSW

GCR continues to focus its activities on NSW where records have been set in gold production (at Newcrest's Cadia-Ridgeway Mine near Orange) and where gold discoveries continue to be made (for example, Alkane's Wyoming Project).

Four million dollars was spent exploring GCR properties during the year including $1.5 million spent by GCR, for a total of 10,000m of drilling. NSW has a rich history of gold and base metals production, and GCR has positioned itself within, or in close proximity to, a number of Australia's premier mineral provinces.

At Broken Hill, over $70 billion worth of metal has been mined from the rich silver-lead-zinc ore body since 1883. In a three-way joint venture with Sipa and Gravity Capital Limited, GCR properties are being assessed using cutting-edge airborne gravity technology. GCR properties, most of which lie within 25 km of the legendary Broken Hill line of lode, have potential to host a number of ore body styles and already there are strong indications of very high grade platinum group elements associated with nickel and copper sulphides.

Further to the east, in the Lachlan Fold Belt, GCR has focussed much of its attention on a major structural break known as the Gilmore Suture. Throughout its geological history, spanning some 450 million years, this large, complex fault and its splays have been a focus for gold mineralisation. A rough estimate of historically mined and in- ground resource material suggests an inventory in excess of 6 million ounces of gold. This includes the Cowal deposit, currently being developed by Barrick with resources in excess of 2.5 million ounces.

On the northern part of the Gilmore Suture, GCR holds a strategic position in the Cobar mining district where GCR's farm-in partner, Polymetals, is exploring for and hopes to develop epithermal gold resources at Canbelego. The Cobar district boasts historic production of over 2.5 million ounces of gold and has another 1 million ounces in mine resource inventories.

To the south, GCR has an exciting farm-in with Triako, adjacent to the Mineral Hill gold mine, where gold has been located in large granitic intrusions. This is known as the Yellow Mountain property where potential for discovery of porphyry copper-gold resources within a large magnetically anomalous area is considered to be high. Further south, GCR controls the historic West Wyalong Goldfield (historic production 450,000 ounces), which lies 30 km to the southwest of the Cowal Deposit. In the far south of the Gilmore Suture, GCR has an extensive land position around the

FOCUS ON NSW

cont...

historic Adelong Goldfield (historic production

0.8 million ounces). GCR is encouraged by recent metallurgical testwork, which suggests that gold recoveries from the wholly owned Challenger gold deposit may be in the order of 93% using a combination of gravity and flotation techniques.

GCR has properties within the highly productive porphyry copper-gold belts of Parkes and Orange. Rocks and styles of mineralisation at the Copper Hill and Cargo properties strongly resemble and are of similar age to those at the large Cadia-Ridgeway deposit, which now has an inventory approaching 10 million ounces of gold. GCR also controls a large portion of the Tomingley-Parkes-Forbes Goldfield, which historically produced more than 1 million ounces of gold. A recent discovery by Alkane known as Wyoming One, in the northern part of this belt, straddles the boundary of a licence formerly held by GCR. GCR has a graduated royalty (up to 5% NSR) over this area and still controls the old McPhails workings immediately to the south, through a 90% interest.

Further to the east, still within the Lachlan Fold Belt, GCR has three licences located within sedimentary and volcanic rocks aged between 400 and 425 million years. These rock sequences are host to the important massive sulphide base metals resources at Woodlawn and Captains Flat.

In GCR's licences we see a number of important economic elements associated with base metals. For example, at Kempfield, GCR has defined resources containing silver (in excess of 11 million ounces) and the industrial mineral barite

(approximately 2 million tonnes). At Breadalbane and Sunny Corner, significant gold and silver is associated with base metal sulphides. The new and exciting gold and silver results from geochemical surveys at Sunny Corner in particular, indicate that NSW has significant potential for "re-discovery" of new mineral deposits within old mining camps.

GCR will continue its focus on NSW, consolidating and augmenting its land position in high quality mineral belts, exploring for opportunities to achieve discovery of world class mineral deposits.

PROJECT LOCATIONS

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Broken Hill

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S O U T H		W A L E S		GCR - Mineral Property
			LD	BELT		GCR - Farm-ins
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Wagga Tank	McPhails
	Copper Hill
Yellow Mountain		Sunny Corner
Parkes
	Cargo		SYDNEY
West Wyalong		Kempfield
		Breadalbane
South Gilmore
Projects

GOLDEN CROSS RESOURCES LTD ANNUAL REPORT 2003	3