2002 ANNUAL REPORT

Annual General Meeting Corporate Calendar Corporate Directory Chairman's Statement The Company Review of Operations Schedule of Mineral Tenements Directors' Report Corporate Governance Statement Financial Information: Statement of Financial Position Statement of Financial Performance Statement of Cash Flows Notes to the Financial Statements Directors' Declaration Independent Audit Report Stock Exchange Information Top 20 Shareholders and Optionholders

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Over the past seven years the Company's exploration strategy has focussed on the Musgrave Block region of South Australia and the Northern Territory. This region has been of significant interest to the mining industry over the past 18 months due to the discovery of mineralisation at the Western Musgrave Nebo prospect by WMC Limited. Clearance has recently been granted to carry out work programs in five prospective areas in the Northern Territory region of the Musgrave Block and we expect ground surveys to commence in the current exploration season. Our joint venture partner Independence Gold NL has prepared in depth work programs that have initial expenditure commitments of over $400,000. The geology of the Musgrave Block is not widely understood due to the areas remoteness and minimal previous mineral exploration. The commencement of our program has wide interest and high expectation. Much of the present knowledge of the region is derived from regional mapping, geochemical programs, research projects and remote surveys carried out and sponsored by State or Commonwealth Government agencies approximately 30 years ago. Independence Gold NL has compiled a comprehensive dataset from all information obtained and identified a number of very interesting prospects in the suite of the Northern Territory Bloods Range and Petermann Range tenements. These areas are believed to have prospectivity for gold, silver, copper, platinoids, lead, zinc and diamonds.

In addition to our Musgrave Block tenements in South Australia Goldsearch has an exploration licence in the Hawks Nest area of the Gawler Craton. This tenement has some very interesting features that encouraged major company Phelps Dodge Australasia Inc. to enter into a joint venture agreement with Goldsearch in June 2002. As soon as negotiations with the traditional owners have been finalised we expect ground surveys to be carried out, possibly early in 2003.

Even though we believe our existing tenements offer exciting possibilities it was decided during the year to actively pursue new opportunities by applying for tenements at Moruya in New South Wales and at St Arnaud in Victoria. Both these tenements cover old 1890's workings and we believe with current mining equipment and geophysical advances Goldsearch may have the opportunity of adding to the Company's resource base with a minimum cost. We are also actively pursuing joint venture opportunities with other miners who have drill indicated gold resources. The intention is to add to our resource base with early cash flow potential while international perceptions about the precious metals markets are still low cycle. Details of the Company's exploration activities are described in the following Review of Operations.

The 2001/2002 year has certainly been a year of change with the gold price increasing by approximately 25% to the current price of US$320 per ounce. In this time of international tension the perception about precious metals is gradually changing and many highly qualified commentators have expectations of an improvement in the price of gold over the next few years. The coming year promises to be an active one for your Company with a significant increase in exploration activities on our tenements.

Your directors are looking to the future with a great deal of confidence and welcome your support and look forward to meeting with you at our annual general meeting on 28 November, 2002.


John Landerer CBE AM
Chairman

25 October, 2002

• To undertake grass-roots exploration in Australia with the aim of discovering commercial deposits of minerals and precious metals.
• To establish working relationships with Aboriginal Australians for exploration and mining on native title lands.
• To attract joint venture partners able to contribute experience and skills and share exploration costs so as to maximise value for shareholders.
• To adopt best practices in environmental and community responsibilities.
• To adopt best practices in exploration methods.
• To identify and develop mineral assets and mining operations at an advanced stage of project development that provide rewards commensurate with the high risks inherent in exploration and mining activities.
• To acquire non-producing measured and indicated Australian gold resources having minimal technical and financial risk to provide maximum leverage to higher gold prices.

Mr J. Landerer, CBE AM
Mr A.G. Harris
Mr R.B. Leece, AM RFD (appointed 7/8/02)
Mr J.M.E. Percival

Principal activities
The principal activities of the Company during the year were exploration for gold and other minerals and investment in technology related opportunities.
Apart from the decision to liquidate the technology related investments there were no significant changes in the nature of the activities of the Company that occurred during the year.

Results
The result for the financial year was a loss of $885,857 after income tax expense of $nil.

Dividend
No dividends were paid or declared during the year by the Company and no recommendation is made as to dividend.

Review of operations
During the year under review:

• The Company expended $219,933 on exploration and wrote off $103,500 of capitalised exploration costs.
• On 2 July, 2001 the Company advised having settled proceedings against a former director of the Company. This resulted in the Company receiving $175,000 in cash and being indemnified in respect of claims by former directors totalling $160,125. $75,000 was received in the current year with the remainder having been taken to account in the previous year.
• At a general meeting held on 16 August, 2001 shareholders approved the issue of 15,000,000 options to executives, directors and consultants. These options were issued on 15 September, 2001.
• On 17 July, 2001 the Company announced that VisionGlobal Corporation had filed a petition for re-organisation under Chapter 11 of U.S. bankruptcy laws. Consequently, in completing the accounts for the year ended 30 June, 2001, the directors provided for non-recovery of the full $170,668 of capitalised expenditure on this project.
• On 18 September, 2001 the directors announced having made a private placement of 12,500,000 ordinary fully paid shares in the capital of the Company at an issue price of 4 cents per share to raise a total of $500,000 additional working capital. The placement was made pursuant to shareholder approval given at the general meeting held on 16 August, 2001.
• In the report for the quarter ended 30 September, 2001 released on 30 October, 2001 the Company advised that
  • Exploration deeds from the Central Land Council have been finalised for four exploration licence application areas located in the Musgrave Block region of the Northern Territory
  • A total of 50 priority exploration targets have been defined by Independence Gold NL (Independence) within the Company's Musgrave Block exploration licence application areas under the joint venture agreement with Independence.
  • The Company has completed an access agreement with the Mitakoodi People for exploration permit for minerals EPM 13336. A similar agreement is being negotiated with the Kalkadoon People who are also registered native title applicants for the area.
• On 19 December, 2001 the Company announced having been granted exploration licence EL 9407 covering a total of approximately 1,235 square kilometres in the Bloods Range area of the Musgrave Block region in the Northern Territory.
• On 17 January, 2002 the Company announced having been granted exploration licences ELs 5702, 9443 and 9741 covering a total of 665 square kilometres in the Musgrave Block region in the Northern Territory.
• On 23 January, 2002 the directors announced having made a private placement of 10,000,000 ordinary fully paid shares in the capital of the Company at an issue price of 5 cents per share to raise a total of $500,000 additional working capital.
• On 9 May, 2002 the Company announced having been granted exploration licence EL 22710 covering a total of 449 square kilometres in the Musgrave Block region in the Northern Territory.
• On 4 June, 2002 the Company announced a joint venture with Phelps Dodge Australasia Inc over EL 2899 in the Gawler Craton area of South Australia.
• In the report for the quarter ended 30 June, 2002 released on 31 July, 2002 the Company advised that:
  • In May 2002 the Company applied for an exploration licence over the Moruya Goldmines, 333 kilometres south-south-west of Sydney.
  • application has been made for a 311 square kilometre exploration licence at St Arnaud, located 100 kilometres west of Bendigo in Victoria.
  • During the quarter Mr Norman Kennedy resigned as 'General manager - Exploration'. Pending a decision in relation to the appointment of a replacement general manager, Mr John Percival, a director of the Company, is acting as 'General manager - Operations' of the Company.

Significant changes
Apart from the issues of securities set out in the above review of operations, there were no significant changes to the state of affairs of the Company which occurred during the financial year ended 30 June, 2002.

Events subsequent to balance date
Except for the expiry on 31 July, 2002 of 106,607,369 options over unissued shares in the capital of the Company and the lapsing of 3,000,000 unquoted options on 22 August, 2002, no matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations, the result of those operations, or the state of affairs of the Company in financial years subsequent to the financial year ended 30 June, 2002.

Likely developments
The directors intend the Company to continue to explore the Company's mineral tenements both by direct exploration and by joint venture and to seek new exploration or development projects; they also intend to realise the remainder of the Company's technology investments; otherwise there are no known likely developments in the operations of the Company.

Information on directors

John LANDERER, CBE AM
(non-executive chairman of directors)

• Appointed as director and non-executive chairman on 11 October, 1995.
• A qualified lawyer - LL.B., Sydney University.
• Senior partner of Sydney solicitors, Landerer & Company.
• Chairman of directors of National Hire Group Limited and a director of a number of other prominent private family companies.
• Beneficially holds 2,000,000 fully paid ordinary shares in the capital of the Company and has an indirect interest in 3,000,000 unquoted options over unissued ordinary shares in the Company.
  

Albert G. HARRIS
(non-executive director)

• Appointed a director on 11 October, 1995.
• Member of the Institute of Measurement and Control.
• Has been involved in the international petroleum and mineral resources industries for 50 years.
• Has had senior management responsibility for exploration operations and the development of petroleum and mineral projects in Australia, the Middle East, West Africa and the USA.
• Director of Takoradi Gold NL and Pan Palladium Limited.
• Beneficially holds 300,000 fully paid ordinary shares in the capital of the Company and 3,000,000 unquoted options over unissued ordinary shares in the Company.
  

Robert B. LEECE, AM RFD
(non-executive director)

• Appointed a director on 7 August, 2002.
• A civil engineer with extensive experience in project management and construction, both in the private and public sectors.
• Formerly director general of the Olympic Co-ordination Authority and chief executive of the Olympic Roads and Transport Authority for the 2000 Sydney Olympic Games. He was also chairman of the Southern Sydney Recovery Task Force to co-ordinate and manage the damage from the 1999 Sydney hail storms.
• A trustee of the Sydney Opera House Trust and a member of a number of NSW state government boards.
• Has been involved as a director of several public and private development companies including Abigroup and Merlin International Properties, having previously spent 13 years with the NSW Department of Main Roads on road and freeway construction and transport operations.
• Indirectly holds 8,040,900 fully paid ordinary shares in the capital of the Company.

John M.E. PERCIVAL
(non-executive director)

• Appointed a director on 11 October, 1995.
• Has been involved in investment and merchant banking for over 25 years including 15 years as investment manager of Barclays Bank New Zealand Limited.
• Has had extensive experience in stockbroking, corporate finance and investment management.
• Indirectly holds 900,000 fully paid ordinary shares in the capital of the Company and 3,000,000 unquoted options over unissued ordinary shares in the Company.
  

Corporate governance
The following statement outlines the principal corporate governance practices that were in place throughout the financial year.

The directors of the Company in office at the date of this statement are set out above. All four directors are non-executive, including the chairman.

Directors are required to seek re-election by shareholders at least every three years.

The composition of the board is determined by all directors using the following principles:

• The chairman of the board should be a non-executive director.
• The board should comprise a majority of non-executive directors.

When a vacancy exists on the board or where it is considered that a director with particular skills or experience is required, the board selects a panel of candidates with the appropriate expertise and experience from which the most suitable candidate is appointed on merit.

The shareholders determine the aggregate remuneration of the directors, and the directors then determine the allocation of the approved remuneration between themselves.

The board is responsible for establishing the policies of the Company, overseeing its financial position, approving major capital expenditures, and exploration programs and expenditures. The board is also responsible for the appointment and supervision of the chief executive of the Company, and monitoring the corporate conduct of its officers.

The board meets monthly and deals with most corporate governance matters, including:-

• reviewing executive remuneration;
• reviewing the composition of the board;
• reviewing published reports and stock exchange announcements to ensure their accuracy and compliance with statutory requirements;
• identification of areas of significant business risk and the management of those risks; and
• the establishment and maintenance of appropriate ethical standards for the Company.

A separate, formally constituted, audit committee reviews the published accounts of the Company as well as the external auditing arrangements and the adequacy, quality and effectiveness thereof. The committee consists of all four directors. Mr J. Landerer, CBE AM is chairman of the committee.

Because of the relatively small size of the Company and its operations, the board does not consider it appropriate, at this time, to form separate committees to deal with executive remuneration or nomination of directors.

Individual directors are able to seek independent professional advice, at the Company's expense, on matters relevant to their role as a director. This is subject to the prior approval of the chairman, which may not be unreasonably withheld, and the other directors being given a copy of such advice.

Board members, executive management and company officers are made aware of the requirements to follow corporate policies and procedures, to obey the law and to maintain appropriate standards of honesty and integrity at all times.

Directors' and auditors' indemnification
During or since the end of the financial year the Company has given an indemnity or entered an agreement to indemnify, or paid or agreed to pay insurance premiums as follows:

• Under the provisions of the constitution of the Company every officer (and former officer) of the Company is indemnified, to the extent permitted by law, against all costs expenses and liabilities incurred as such an officer providing it is in respect of a liability to another person (other than the Company or a related body corporate) where such liability does not arise out of conduct involving a lack of good faith and it is in respect of a liability for costs and expenses incurred in defending proceedings in which judgement is given in favour of the officer or in which the officer is acquitted or is granted relief under the Law.
• In the previous year the Company paid premiums to insure each of the directors and executives of the Company against liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in the capacity of director or executive of the Company, other than conduct involving a wilful breach of duty in relation to the Company. The amount of the premium paid during the year ended 30 June, 2001 was $25,410. This policy was allowed to lapse on 26 November, 2001 and at the date of this report has not been renewed.

Directors' meetings
Attendance of individual directors at board meetings held during the year ended 30 June, 2002 was as follows:

In addition there were 3 meetings of the audit sub-committee which were attended by directors as follows:

Options
At the date of this report there are 12,000,000 options over unissued shares in the capital of the Company, details of which are set out in Notes 17 and 18 to the attached financial statements. A total of 15,000,000 options were issued during the financial year. Since the end of the financial year 3,000,000 unquoted options have lapsed and 106,607,369 quoted options have expired. No options were exercised during the financial year or to the date of this report.

Directors' and officers' remuneration
The remuneration of the directors is established by the shareholders. The remuneration of executive directors and executive officers of the Company is established by the board of directors. Details of remuneration paid during the year to directors and the five most highly remunerated executive officers are as follows:

Environmental regulation
The Company's operations are subject to general environmental regulation under the laws of the states and territories of Australia in which it operates. In addition, the various exploration licences held by the Company impose environmental obligations on it in relation to site remediation following sampling and drilling programs. The board is aware of these requirements and management has been instructed to ensure that they are complied with. The directors are not aware of any breaches of these environmental regulations and licence obligations during the year.

Directors' benefits
Since the end of the previous financial year no director has received or become entitled to receive a benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by directors as shown in the annual accounts of the Company, or the fixed salary of a full-time employee of the Company) by reason of a contract made by the


Company or a related entity with the director or with a firm of which he is a member, or with a company in which he has a substantial financial interest, other than:

• Mr J. Landerer, CBE AM receives a benefit from fees paid for legal services provided by the Company's solicitors, Landerer & Company, of which he is the senior partner. Fees paid for these services totalled $9,530 during the year and were charged at normal commercial rates.
• Mr A.G. Harris received reimbursement for travelling expenses totalling $1,755 during the year.
• Mr J.M.E. Percival received consultancy fees and reimbursements for travelling expenses totalling $32,512 during the year.

Signed in accordance with a resolution of the board of directors.




A.G. Harris
Director



J.M.E. Percival
Director

Sydney
27 September, 2002