Golden Cross Resources : 2013 Annual Report

CONTENTS

Chairman's Letter to Shareholders	1
Review of Operations	2
Royalties	46
Directors' Report	47
Corporate Governance Statement	54
Consolidated Statement of Comprehensive Income	55
Consolidated Statement of Financial Position	56
Consolidated Cash Flow Statement	57
Consolidated Statement of Changes in Equity	58
Notes to the Financial Statements	59
Directors' Declaration	79
	80
Independent Audit Report to the Members
Interests in Mining Tenements	83
Shareholder Information	85

COMPANY PARTICULARS

DIRECTORS

Steve Gemell, BE Mining (Hons), FAusImm (CP) MAIME, MMICA

Chairman

Kim Stanton-Cook, BA (Geology and

Geophysics)

MAIG, GSA, ASEG, SEG

Managing Director

Xiaoming Li, BA(Comm), MBA

Non-Executive Director

Jingmin Qian, BEc, MBA, CFA, GAICD

Non-Executive Director

Xun (Suzanne) Qiu

Non-Executive Director

Yan Li, MBA

Alternate Director for Xiaoming Li

EXPLORATION MANAGER

Bret Ferris BAppSc, GradDipCompSt, MAIG

PRINCIPAL &

REGISTERED OFFICE

22 Edgeworth David Avenue Hornsby NSW 2077 Australia

Ph	[phone]
Fax	[phone]
Email	[e-mail]
Web	www.goldencross.com.au
ABN	65 063 075 178

AUDITORS

Ernst & Young

Chartered Accountants

680 George Street

SHARE REGISTER

Boardroom Limited

Level 7, 207 Kent Street

Sydney NSW 2000

Ph [phone]

Fax [phone]

STOCK EXCHANGE LISTING

Golden Cross Resources Ltd Shares are listed on the Australian Stock Exchange (Listed Code GCR)

COMPANY SECRETARY, GENERAL COUNSEL & CFO

Simon Lennon BSc, LLB, MCom, MBA, FCIS

Dear Shareholder,

The principal focus of our interest remains with the Copper Hill gold-copper project, near Molong in central western New South Wales. The extent and tenor of the mineral resource at Copper Hill itself has been delineated. The mineral resource comprises more than 200 million tonnes (details are included in the Review of Operations) of relatively low copper and gold grades. Work undertaken in previous years indicates little scope for mining higher grades in selected segments of the deposit, at least at current metal prices.

During the year, the company investigated a range of operating scenarios in order to determine an optimal throughput rate, which appears to be in the order of 7 million tonnes per year. At this rate, and again at recent metal prices, the mining scenario generated a positive rate of return, albeit of a level unlikely to attract debt and equity funding. Consequently, we need to focus on increasing the mineral resource base and improving recovery - both mining and metallurgical - from the known resource. In recent months, we have initiated new metallurgical test work at the General Research Institute for Non-Ferrous Metals, Beijing.

During the coming months, GCR will seek to expand the known mineral resource at Copper Hill, primarily by investigating potential satellite deposits within our exploration licence. Our permitting process is on hold until we either increase the known mineral resource or prove that we can increase recovery from the resource.

During the year, we commenced exploration at our South Australian group of projects, our exploration targets being potential iron oxide copper gold (IOCG) mineralisation. We have drilled several of the most prospective geophysically-defined targets. At this stage, we have detected weak copper mineralisation and geological indicators in the drill core are most encouraging. This type of exploration is high-risk, high- reward, and the company needs to review its position with respect to expensive exploration programs on a regular basis. Under the current strategic plan, this project is our second priority.

The drilling work undertaken at Cargo produced results that confirm the widespread presence of gold, but did not materially increase our mineral resource inventory. Some of the historical data indicates that in order to increase the known mineral resource we may need to step out around the perimeter of the igneous intrusion which forms the nucleus of radiating vein systems, and explore for a series of additional satellite deposits.

GCR holds a number of tenements in the Lachlan Fold Belt which appear very prospective for gold and base metals. Advanced targets, of which Burra is a prime example, have been defined by geophysical methods and, in some cases, by drilling. Work will progress on these should funds permit.

We retain our interests in a number of joint ventures operated by other parties, and retain commercial interests in projects previously joint-ventured. At Kempfield, for example, a fee of $1 million will be payable to GCR should the holder proceed to a decision to mine.

Capital markets are currently a matter of concern for all junior explorers and prospective miners. Available investment funds are limited and are competitively sought. Particular emphasis is being placed by us on the sourcing and allocation of funds to ensure that, in this restrictive environment, capital is being effectively utilised.

I wish to thank shareholders, staff and contractors for the support that they have provided over the past year. The directors remain focussed on delivering recognizable value from the company's diverse range of projects.

Steve Gemell

CHAIRMAN

Golden Cross Resources Limited - Annual Report 2013

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Review of Operations

Copper Hill - Molong Project (Copper-Gold100% GCR)

Work on the Copper Hill Definitive Feasibility Study (2Mtpa Option) was deferred following a review of the results from an in-house economic study.

The study was based on:

• Copper price of AUD 7,242/tonne and gold price of AUD 1,214/ounce
• AUD:USD exchange rate of 1.00
• Discount rate of 10%
• Mine life of 15 years
• Average waste: ore ratio of 0.84:1
• Average grades, over the life-of-mine, of 0.422% copper and 0.445 grams/tonne gold
• Flotation recovery targets based on then current results of 75% for copper and 45% for gold.
• Annual average metal production estimates of 6,300 tonnes of copper and 14,000 ounces of gold.

GCR determined the 2-million tonnes per annum throughput, with staged, expanded production rates, was insufficiently robust to attract funding. Reliable capital cost estimates in excess of $150 million and the limited copper and gold production profiles at the 2Mtpa mill feed rate required an alternative approach.

On the metallurgical front, copper and gold recoveries of 83% and 70% respectively, were achieved in locked-cycle tests to produce a copper concentrate containing 24% copper and 24g/t gold. These are the best results so far achieved for average grade mineralisation and there are indications that further improvements may be possible.

GCR investigated economies of scale at higher throughput rates, and tested these in economic studies in late 2012. This process examined ways in which a more economical, larger mine, mill and plant with improved recoveries could provide a way forward for Copper Hill. Higher projected capital costs were expected to be offset by lower unit costs resulting from reductions in operating costs and increased total metal production. The financial modelling allowed GCR to determine the optimum throughput rate and make a decision on the future of the project.

The study used a range of throughput rates varying from 5 million to 15 million tonnes per year determining that, for the currently known mineral resource, the appropriate production rate (mill throughput) to be studied in detail should be 8 million tonnes per year. Assuming the best flotation recoveries so far attained, the Copper Hill project could produce an average 21,000 tonnes of copper and 58,000 ounces of gold per year over a life of 7 years.

Although this anticipated production rate is the same as that premised in the Nerin Study of October 2010, the scope of the project differs.

The revised project scope involved an open pit mine to a depth of 340 metres, with an all drill- and-blast,excavator-and-shovel operation and average waste-ore ratio of around 0.8:1. The

Golden Cross Resources Limited - Annual Report 2013

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