Europa Metals Regulatory News (EUZ)

Ferrum Crescent Limited

("Ferrum Crescent", the "Company" or the "Group")

(ASX: FCR, AIM: FCR, JSE: FCR)

Final Results for the Year Ended 30 June 2012

 Ferrum Crescent Limited, the ASX, AIM and JSE quoted iron ore developer in Northern South Africa, today announces its final results for the year ended 30 June 2012.

·; Phase 3 exploration drilling programme completed

o Consisting of 11 holes totalling 990m of diamond core drilling and 13 holes totalling 1,600m of reverse circulation (RC) drilling

·; New JORC compliant resource at Moonlight Iron Ore Project of 307.8 million tonnes ("Mt") @ 26.9% Fe

o Inferred category of 172.1 Mt @ 25.3% Fe, Indicated of 83.0 Mt @ 27.4% Fe, Measured of 52.6 Mt @ 31.3% Fe

·; Aeromagnetic survey over the Julietta and Gouda Fontein farms consisting of 2,827 line km on 50m line spacing completed in June 2012 and currently being analysed by The Mineral Corporation

·; Discussions to confirm logistical solutions (rail, power, water and port services) required for progressing detailed feasibility study

·; Several prospective targets identified to the south, east and west of the Moonlight Deposit

Financial Overview

·; Cash at 30 June 2012 of $3,340,076 (2011: $8,116,009)

·; Profit of $4,491,588 (2011: loss $8,141,794)

Corporate Highlights

·; Successful admission to the Johannesburg Stock Exchange on 11 November 2011

·; Mr Bob Hair appointed as Managing Director

Commenting on the final results, Chairman Ed Nealon said:

"This has been a year of significant progress for the Company. Following completion of our phase 3 drilling programme, we have a new JORC compliant resource, consisting of a larger tonnage than previously indicated. We have also identified several prospective targets around the Moonlight deposit. Our primary focus is on logistics and infrastructure solutions and we remain in discussions with various parties in order to progress our feasibility study. With work progressing well at Julietta and Gouda Fontein also, I expect 2013 to be a year of continued positive developments across all aspects of our operations. "

Directors Report

Operational

Moonlight Deposit

The Company's operational focus is the Moonlight Iron Ore Project in Limpopo Province in the Republic of South Africa, which hosts iron ore occurrences that are magnetite bearing banded iron formations ("BIF") that have undergone varying intensities of metamorphic alteration. The BIFs are of Archaean age and located in and adjacent to the Limpopo Mobile Belt ("LMB") in the Limpopo Province, some 350 km north-east of Johannesburg.

During the year, the Company continued various studies in relation to the Moonlight Iron Ore Project, with such studies including pipeline route, beneficiation processes and plant location and study of water and transport options. Various supporting plans and studies relating to the Group's mining right application were advanced, and the Company was in June 2012 notified by the Department of Mineral Resources that its application had been granted. As required under the Mineral and Petroleum Resources Development Act (Act No. 28 of 2002) and the National Environmental Management Act (Act 107 of 1998) of South Africa, the Group had completed and submitted an environmental impact assessment ("EIA") in support of the Mining Right application. This EIA was found to be in compliance with the relevant regulations, meaning that Turquoise Moon Trading 157 (Pty) Ltd, the Ferrum subsidiary that holds Moonlight, has its environmental and other regulatory authority for mining the Moonlight Deposit.

The Mineral Corporation Consultancy (Pty) Ltd of South Africa ("The Mineral Corporation") was during the year commissioned by Ferrum to carry out an updated JORC compliant Mineral Resource estimate taking into account the results of the Phase 3 drilling and assays on the Moonlight deposit ("the Report") that had been carried out in the previous financial year. Phase 3 consisted of 11 holes totalling 990m of diamond core drilling and 13 holes totalling 1,600m of RC drilling, and the final assay results for this drilling were received in July 2011.

The Table below contains details of the results of the Phase 3 drilling.

Table: Intercepts of iron mineralisation greater than or equal to 5m in width 

The Mineral Corporation conducted a thorough re-interpretation of the geological structure of Moonlight, based on historical Iscor data collated and validated by the Group and the recent Group exploration results. Within the constraints of having a cut off grade of 16% iron, geological losses of 5% and a depth constraint of between 100m and 250m, depending upon dip and the number of mineralised zones present, the JORC compliant Mineral Resources at Moonlight are now estimated to be 307.8 million tonnes @ 26.9% and are shown as follows:

Tonnes are rounded

Note: Ferrum Crescent subsidiary is the operator and owns 81.4% (the beneficial ownership interest as accounted for at 30 June 2012 is 97%) of the Moonlight Iron Ore Project

Based on these results, the Board believes that whilst the total average Fe grade has decreased slightly (previously estimated to be a JORC compliant resource of 74Mt @ 33% Fe in the Indicated Resource category and 225Mt @ 29% Fe in the Inferred Resource category), the tonnage has increased proportionately along with a substantial increase in the confidence and classification of the Mineral Resource. Furthermore, the Board is of the opinion that the depth constraint of 250m (maximum) is conservative, particularly as the previous estimation was not constrained in this way.

The revised structural interpretation presented by The Mineral Corporation also identified several targets south, east and west of the Moonlight Deposit, which the Company believes warrant additional exploration by the commissioning of a high-resolution airborne magnetic survey and drilling. Given that the size of the resource is sufficient for in excess of 20 years of mining operations, management's attention remained primarily focused on finding definitive answers to logistical questions rather than on continued exploration. A summary of the Mineral Resource estimate parameters is set out below in Table 5.

Competent Persons' Statement:

The information that relates to Exploration Results and Mineral Resources in the report of which this statement is a summary, is based on information compiled by Stewart Nupen, who is registered with the South African Council for Natural Scientific Professionals (Reg. No. 400174/07) and is a member of the Geological Society of South Africa. Mr. Nupen is employed by The Mineral Corporation, which provides technical advisory services to the mining and minerals industry. Mr. Nupen has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the 'Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves' and as defined in the June 2009 Edition of the AIM Note for Mining and Oil and Gas Companies. Mr. Nupen consents to the inclusion in this statement of the matters based on his information in the form and context in which it appears.

Table: Mineral Resource Estimation Details

The Moonlight Deposit geological plan is set out in the following link

http://www.rns-pdf.londonstockexchange.com/rns/2681N_-2012-9-26.pdf

The Group now has a granted Mining Right with associated mining environmental approvals. It has sufficient resources to carry out mining operations for 20 years or more and confidence from historical exploration records and from the Group's own airborne and ground magnetic programs that there is significant scope for expansion of the mineralisation within the Mining Right area.

Moonlight Iron Ore Project Concept

Recognising that adding value within the country is a strategic preference for all mining operations within South Africa, Ferrum has consistently looked to planning the Project with beneficiation and other value-adding processes to take place within the country. Project concepts have previously included the production of pig iron at or near the Moonlight site. It has since been recognised by the Company, however, that the most sustainable development concept for the Project is likely to involve mining at site and the production there of an iron ore concentrate, which would be transported by way of slurry pipeline to a manufacturing facility located at a place near a railhead. High quality iron ore pellets (which would be a mixture of direct reduction iron ("DRI") or DRI quality pellets, which would be suitable for use in electric arc steel furnaces, and blast furnace pellets) would be transported by rail to local users and to a suitable port facility for export internationally.

Several pelletiser sites and rail and port combinations have been considered, and the Company has continued to seek confirmation from infrastructure providers (including rail, port and power suppliers) of allocation of capacity for the Company. During the reporting period, the South African Government announced that significant capital would be applied in upgrading rail and port facilities that service the Waterberg Region, which is close to where the Moonlight Deposit is situated. This followed strategic studies that revealed that the Waterberg Region, and the coal deposits in that region, are of critical importance to future supply for the country's power generation.

The figure in the link below contains a map showing the planned upgrades to the rail infrastructure that is considered to be the most likely to be used for the Moonlight Project. The pelletising facility would be situated near rail at Lephalale or Thabazimbi, and export product would be railed to Richards Bay and shipped to customers in the Middle East and elsewhere.

http://www.rns-pdf.londonstockexchange.com/rns/2681N_1-2012-9-26.pdf

The Company in June 2011 entered into an offtake agreement with Swiss based Duferco SA, a leading private company in the trading, mining, and end use of iron and steel products and raw materials for the steel industry. Following due diligence on the mineral assets of the Company, Duferco concluded that the Group should be able to produce direct reduction and/or blast furnace pellets equal to or better than current world best product.

The offtake agreement with Duferco SA covers up to 6 Mpta of anticipated iron ore pellet production from Ferrum Crescent's Moonlight Project. Under the agreement, Ferrum Crescent will sell Duferco all of their production available for export (in total 4.5 Mpta) and will give Duferco a first right of refusal over an additional 1.5 Mpta per year to the extent that the product is not sold domestically, thus allowing Ferrum Crescent to follow a growth strategy at its South African projects.

Corporate

Board change

During the reporting period, Mr Robert Hair resigned from his position of joint company secretary and assumed the role of managing director.

JSE Listing and BEE Transaction

The Company entered onto the JSE Limited ("JSE") with effect from 11 November 2011. The JSE listing is in addition to the Company's primary ASX and secondary AIM listings.

The JSE inward listing was entered into partly to facilitate the Group's Black Economic Empowerment ("BEE") share exchange and investment at a listed company level, complying with the objectives of the South African Government's Mineral and Petroleum Resources Development Act ("MPRDA") and the revised Mining Charter. Ferrum Crescent's BEE partner, Mkhombi Investments (Pty) Limited ("Mkhombi"), owns a 26% stake in the Company's South African operating subsidiary, Turquoise Moon Trading 157 (Pty) Limited ("TMT") (but an effective project interest of 3%). Mkhombi is a partner with significant industry experience, and also includes two women's organisations and a community trust representing local Limpopo communities affected by the Company's Moonlight Iron Ore Project. Mr Kofi Morna, who is a director of Mkhombi, is also a director of Ferrum Crescent.

Shareholder approval for the "flip", as the share exchange is known, was obtained following the end of the reporting period.

Consolidated Statement of Comprehensive Income

For the year ended 30 June 2012

Consolidated Statement of Financial Position

As at 30 June 2012

This Statement of Financial Position is to be read in conjunction with the accompanying notes.

Consolidated Statement of Cash Flows

For the year ended 30 June 2012

The above Statement of Cash Flows should be read in conjunction with the accompanying notes.

Consolidated Statement of Changes in Equity

For the year ended 30 June 2012

The above Statement of Changes in Equity should be read in conjunction with the accompanying notes

Selected Notes to the financial statements:

Note 1: Corporate information

The consolidated financial report of Ferrum Crescent for the year ended 30 June 2012 was authorised for issue in accordance with a resolution of directors on 26 September 2012.

Ferrum Crescent Limited is a for profit company limited by shares domiciled and incorporated in Australia whose shares are publicly traded on the Australian Stock Exchange (ASX), the London Stock Exchange (AIM) and the JSE Limited (JSE).

The nature of operations and principal activities of the Group are described in the Directors' Report.

Note 2: Statement of significant accounting policies

(a) Basis of preparation

The Financial Report is a general purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and Interpretations and complies with other requirements of the law.

The accounting policies detailed below have been consistently applied to all of the years presented unless otherwise stated. The financial statements are for the consolidated entity consisting of Ferrum Crescent Limited and its subsidiaries.

The Financial Report has also been prepared on a historical cost basis, except for available-for-sale investments and derivative financial instruments which have been measured at fair value.

The Financial Report is presented in Australian dollars.

(b) Statement of compliance

The Financial Report complies with Australian Accounting Standards, as issued by the Australian Accounting Standards Board, and complies with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board.

Note 3: Revenue and expenses

Revenue and Expenses from Continuing Operations

(b) (i) During 2011 Ferrum Crescent Limited entered into and completed an agreement with Northern Uranium Limited ("Northern") (ASX: NTU) to dispose all of its Australian minerals exploration interests for a cash sum of $600,000. The offer from Northern was subject to both due diligence on the Company's tenement interests and the consent where relevant of joint venturers. Due diligence was concluded favourably, and a pre-emptive right was exercised, with the result that the Group's Australian exploration assets were all sold during 2011.

The sale of these Australian exploration interests has enabled the Company and its management to focus on developing its iron ore interests in Southern Africa and in particular to concentrate on progressing Moonlight Iron Ore Project and finalising the mining right application process in respect of the Moonlight Deposit.

 (ii) In August and September 2010, the Group disposed of its interest in 12,460,071 shares and 1,873,667 options held in Northern Uranium for $1,574,920. These financial assets were designated as available for sale, with all prior gains on such investments taken to equity. The fair value change of the financial assets of $665,242 from 1 July 2010 to the date of sale was taken to the available for sale reserve. The above amount represents the release of the unrealised gains reserve upon sale (gross of tax).

(iii) On 1 April 2012 the Group entered into an insurance investment portfolio. This investment is to ensure that the Group has funds available to facilitate Mine Rehabilitation.

Unused tax losses set out above have not been recognised due to uncertainty of future taxable profit streams.

Note 8: Earnings per share

There have been no transactions involving ordinary shares or potential shares that would significantly change the number of ordinary shares or potential ordinary shares outstanding between the reporting date and the date of completion of these financial statements.

Potential dilutive shares not included in dilutive earnings per share was 24,446,727 (2011: 66,529,842)

Note 9: Cash and cash equivalents

Note 10: Trade and other receivables

(i) Non-trade debtors are non-interest bearing and are generally on 30-90 days terms. The carrying amounts of these receivables represent fair value and are not considered to be impaired.

Note 11: Plant and equipment

Note 12: Other financial assets

An Investo Linked Investment portfolio has been setup with Momentum Insurance from 1 April 2012 to cover the rehabilitation of all subsidiary mining activities in accordance with the requirements of the mining leases.

This portfolio has an initial savings term of 10 years with an automatic increase of 10% to the contributions on an annual basis. After the initial 10 years the investment automatically continues in periods of 5 years. After automatic continuation the investment will qualify for a loyalty bonus at the end of each 5 year period. The investment will be levied with allocation and management fees on a monthly basis.

Cash withdrawals may be made up to a restricted percentage of the net fund value at the time of the withdrawal. The withdrawn amounts will not be taken into consideration when calculating the loyalty bonus due on the portfolio. Withdrawals may be made after the investment reaches R7,517,000 in value.

On 16th July 2012 a Deed of Surety and Indemnity was signed ceding this investment portfolio to Constantia Insurance Company Limited in return for a guarantee to the Directorate Mineral Regulation (DMR) for the confirmed amount of R7,517,000.

Note 13: Trade and other payables

(i) Trade and other payables are non-interest bearing and are normally settled on 30-day terms.

(ii) During the 2011 financial year, various agreements were entered into in respect of the minority interest in the Moonlight Iron Ore Project.

A company, Mkhombi Investments (Pty) Ltd ("Mkhombi Investments"), which meets the requirements

of applicable South African legislation in respect of historically disadvantaged persons (referred to in South Africa as being "BEE controlled"), entered into an agreement on 26 October 2010 with the then current holder of 26% of Turquoise Moon Trading 157 (Pty) Ltd ("TMT") to purchase that holder's right, title and interest in TMT for ZAR30 million (then approximately AUD4.4 million) ("TMT Sale Agreement"). The South African Department of Mineral Resources expressed its support of the transaction.

Nelesco 684 (Pty) Ltd ("Nelesco"), a wholly owned subsidiary of the Company, entered into agreements with Mkhombi Investments and its holding company, Mkhombi AmaMato (Pty) Ltd ("AmaMato"), the terms of which provide for the following to take place:

a) Nelesco would be issued shares in Mkhombi Investments such that it holds an initial 32.17% interest in Mkhombi Investments, with the remaining 67.83% held by AmaMato;

b) AmaMato lent the sum of ZAR 7.5 million to Mkhombi Investments, to be applied as part of the purchase price under the TMT Sale Agreement. The advance, which was made as at 31 December 2010, does not attract interest and is only repayable in certain circumstances (namely, the failure of the conditions precedent set out in the Subscription Agreement, as defined below);

c) Nelesco lent the sum of ZAR 22.5 million to Mkhombi, to be applied as paying the balance of the purchase price under the TMT Sale Agreement. The advance, which was made as at 31 December 2010, does not attract interest and is repayable in certain circumstances (namely, the failure of the conditions precedent set out in the Subscription Agreement, as defined below);

d) Mkhombi Investments would issue shares and/ or Nelesco will transfer some of its shares in Mkhombi Investments so that 11.54% of Mkhombi Investment's shares on issue are held by a trust representing the locally impacted community, with the resulting shareholdings being AmaMato 60%, Nelesco 28.46%, and the locally impacted community 11.54%; and

e) AmaMato will, subject to the conditions precedent to the Subscription Agreement, as defined below, sell its entire right, title and interest in, and all of its claims against, Mkhombi Investments to Nelesco for ZAR 7.5 million (2012: A$863,250 / 2011:A$1,036,500).

A subscription agreement was entered into between the Company and AmaMato on 4 November 2010 (the "Subscription Agreement"). On completion of the Subscription Agreement (subject to the fulfilment of the conditions precedent to that agreement), AmaMato will subscribe for such number of shares in the Company as is equal to 7.8% of the issued shares at that time (the "First Subscription"). The price payable for the subscription of the Shares under the First Subscription will be ZAR 7.5 million.

AmaMato will also, on or before the later of (i) the date falling 10 business days after the Closing Date (as defined in the Subscription Agreement and extension to the Subscription Agreement) and (ii) 30 November 2012 (the "Subscription Period"), which period will be extended by the Company for a period of 1 year in the event that it raises not less than ZAR7.5 million in 2011, subscribe for a further 7.8% of the issued shares of the Company (calculated by reference to the issued share capital of the Company at the time of the First Subscription adjusted for any subsequent share splits, consolidations or bonus capitalisations) for a further ZAR 7.5 million.

The conditions precedent to the Subscription Agreement, include no insolvency event occurring, the granting of a mining right in respect of the Project, necessary South African Reserve Bank approvals and shareholder and other approvals required under the Corporations Act and the AIM/ASX listing rules, including shareholder approval.

In the event that the conditions precedent to the Subscription Agreement are not fulfilled by 1 November 2012, then AmaMato will have the right, for 60 days, to require Nelesco to purchase all of AmaMato's rights, title and interest in, and all its claims against, Mkhombi Investments for the price of ZAR 12.5 million.

Kofi Morna, a Director of Ferrum Crescent Limited ("Company"), is also a director of AmaMato and Mkhombi Investments. He became a Director of the Company during the 2011 financial year for the purposes of the above transaction. He holds an indirect non-controlling interest in AmaMato.

Upon completion of the Subscription Agreement, the Company will legally own directly and indirectly through its wholly owned subsidiary, Mkhombi Investments, 97% of Turquoise Moon Trading 157 (Pty) Ltd with the remaining 3% held by the GaSeleka Community. AmaMato will own 15.6% of the Company.

In the opinion of the Directors, the conditions precedent to the Subscription Agreement are essentially procedural in nature, following the completion of the Company's capital raising of 10 million pounds Sterling ("GBP") (equal to approximately AUD 16 million) before expenses, completed on 16 December 2010. As such, while the Company's legal interest in the Moonlight Iron Ore Project increased from 74% to approximately 81.5%, the Directors hold an effective interest in the underlying project of 97% as at 31 December 2010 as a result of the minority purchase obligation.

Note 14: Financial liability

The above liability will be settled in the Company's shares and not in cash.

As described above, in the opinion of the Directors, the remaining procedural conditions precedent under the Subscription agreement will be fulfilled within one year from balance date. Under the Subscription Agreement, the Company has agreed to issue shares to AmaMato equal to 15.6% of the issued share capital of the Company for ZAR15 million. The above financial liability, measured at fair value through profit and loss, represents the Company's best estimate of the fair value of this contractual arrangement. Refer to Note 25 for the Group's exposure to equity price risk on this amount. The gain on revaluation of the financial liability during the period amounts to $8,321,244 (2011 loss of $1,623,385) which has been recognised through the profit and loss.

Note 15: Provisions

Note 16: Issued Capital

Capital management

When managing capital (which is defined as the Company's total equity), management's objective is to ensure the entity continues as a going concern as well as to maintain optimal returns to shareholders and benefits for other stakeholders. Management also aims to maintain a capital structure that ensures the lowest cost of capital available to the entity. As the equity market is constantly changing management may issue new shares to provide for future exploration and development activity. The Company is not subject to any externally imposed capital requirements.

If, any time during the exercise period, an employee ceases to be the employee, all share options held by that employee will lapse one month after the employment end date. Therefore above employee shares are recognised in issued capital when issued to the employees.

This account is used to record the value of shares issued under the Executive Share Incentive Plan (ESIP). The ESIP is accounted for as an "in-substance" option plan due to the limited recourse nature of the loan between employees and the Company to finance the purchase of ordinary shares. The total fair value of the "in substance" options issued under the plan is recognised as a share-based payment expense over the vesting period, with a corresponding increase in equity. Information on the valuation of shares issued under the ESIP during the period is disclosed in Note 19.

Note 18: Reserves

Nature and purpose of reserves

Share based payments reserve

This reserve is used to record the value of equity benefits provided to employees, consultants and directors as part of their remuneration.

Options reserve

This reserve is used to record the value of options issued, other than share-based payments to directors, employees and consultants as part of their remuneration.

Foreign Currency Translation Reserve

The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries.

Equity Reserve

The Equity reserve is used to record the acquisition of the non-controlling interest by the Group and to record differences between the carrying value of non-controlling interests and the consideration paid / received, where there has been a transaction involving non-controlling interests that do not result in a loss of control.

The reserve is attributable to the equity of the parent.

Note 19: Accumulated losses

Note 20: Share Based Payments

Expenses arising from share-based payment transactions

Total expenses arising from share-based payment transactions recognised during the year were as follows:

(i) Options issued in consideration for services

On 30 November 2010, the Company issued 2,950,000 options with an exercise price of 19.80 cents to employees as approved by then shareholders meeting held on 30 November 2010. There are no voting rights attached to the options and they may be exercised from 7 December 2011.

Fair value of options granted

The fair value at grant date of options issued is determined using a binomial option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the non-tradable nature of the option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option.

There were no options issued in 2012.

The table below summarises the model inputs (post consolidation) for options granted during the period year ended 30 June 2011:

The expected price volatility is based on the historic volatility of the Company's share price in the market.

(ii) Shares issued under the Executive Share Incentive Plan (ESIP)

Executive Share Incentive Plan

Under the plan, eligible employees are offered shares in The Company at prices determined by the Board. The Board has the ultimate discretion to impose special conditions on the shares issued under the ESIP and can grant a loan to a participant for the purposes of subscribing for plan shares. Shares issued under loan facilities are held on trust for the benefit of the participant and will only be transferred into the participant's name once the loan has been fully repaid. ESIP participants receive all the rights associated with the ordinary shares.

Loans granted to participants are limited recourse and interest free unless otherwise determined by the Board. The loans are to be repaid via the application of any dividends received from the shares and/or the sale of the plan shares. Where the loan is repaid by the sale of shares, any remaining surplus on sale is remitted to the participant while any shortfall is borne by the Group.

 (ii) Shares issued under the Executive Share Incentive Plan (ESIP) (continued)

During the prior reporting period, the Company issued the following shares under the ESIP:

1. 350,000 shares at 19.8 cents per share to Mr Robert Van der Laan, Chief Financial Officer, on 30 November 2010 after shareholder approval.

2. 350,000 shares at 19.8 cents per share to Mr Lindsay Cahill, Mine Services Manager, on 30 November 2010 after shareholder approval.

3. 500,000 shares at 19.8 cents per share to Mr Grant Button, Non-executive director, on 30 November 2010 after shareholder approval.

4. 75,000 shares at 19.8 cents per share to Ms Theresa Miloseski, Administration Officer, on 30 November 2010 after shareholder approval.

5. 500,000 shares at 19.8 cents per share to Mr Robert Hair, Company Secretary, on 30 November 2010 after shareholder approval.

6. 350,000 shares at 19.8 cents per share to Mr Christian Kunze, Engineering Manager, on 30 November 2010 after shareholder approval.

7. 200,000 shares at 19.8 cents per share to Mr Andrew Nealon, Joint Company Secretary, on 30 November 2010 after shareholder approval.

8. 600,000 shares at 19.8 cents per share to Mr Ed Nealon, Non-Executive chairman, on 30 November 2010 after shareholder approval.

During the reporting period, the Company issued the following shares under the ESIP:

1. 150,000 shares at 10 cents per share to Ms Jackie Barry, Administration Officer, on 23 February 2012 after shareholder approval.

The above shares vest as follows:

·; one third of shares vest after 12 months;

·; one third of shares vest after 24 months; and

·; one third of shares vest after 36 months.

If any time during the exercise period an employee ceases to be the employee, all options held by that employee vest immediately and will lapse one month after the employment end date. As such, there is not considered to be any service conditions attaching to the grant of shares under the ESIP, and the full expense is recognised at grant date.

Fair value of award granted

Shares granted under the ESIP are accounted for as "in-substance" options due to the limited recourse nature of the loan between the employees and the Company to finance the purchase of ordinary shares. The fair value at grant date for the various tranches of rights issued under the ESIP is determined using a binomial model using the following model inputs:

Note 21: Commitments

(i) At this stage the Company has no minimum obligations with respect to tenements expenditure requirements.

(ii) Operating lease commitments are as follows:

The Company disposed of its Australian tenements during 2011 and whilst the Company still holds tenements in South Africa, expenditure commitments in relation to these tenements have been met. The Company has converted their South African prospecting rights into mining rights and applied for new prospecting rights over adjacent land. The Company is subject to new commitments in relation to mining and prospecting expenditure.

 A subsidiary of the Group entered into a 36 month commercial office lease on 01 April 2012, with an 8% annual escalation, for their head office in Johannesburg, South Africa. The value of the lease has been annualised over the life of the Lease agreement as per the above.

Note 22: Contingent liabilities

There are no contingent liabilities as at 30 June 2012 other than an obligation under the BEE transaction (detailed in note 13) to buy out the BEE shareholding in Mkhombi Investments for ZAR 12.5 million, should one or more of the subscription agreement conditions not be met by the Company. Should this occur and the Company not make alternative arrangements, the Company's holding in the Moonlight Iron Ore Project could cease to be in compliance with the BEE requirements of the MPRDA. The Company believes this to be an unlikely scenario and in any event would endeavour to make alternative arrangements in order to remain compliant with the MPRDA.

Note 23: Related party transactions

Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.

Subsidiaries

The consolidated financial statements include the financial statements of Ferrum Crescent Limited and the subsidiaries listed in the following table.

Ferrum Crescent Limited is the ultimate Australian parent entity and the ultimate parent of the Group. Transactions between Ferrum Crescent Limited and its controlled entities during the year consisted of loan advances by Ferrum Crescent Limited. All intergroup transactions and balances are eliminated on consolidation.

Loans to / (from) related parties

The following transactions were undertaken between the Company, executive officers and director-related entities during 2011 and 2012

Kofi Morna, a Director of the Company, is also a director and shareholder of Mkhombi AmaMato, who, prior to entering into the BEE subscription agreement had a majority interest in Mkhombi Investments. Upon completion of the subscription agreement detailed in the review of operations section and Note 12 above, Mkhombi AmaMato will directly own 15.6% or approximately 55,208,419 shares in the Company.

Note 24: Cash flow information

Note 27: Subsequent events

At a meeting on 8 August 2012 it was ratified that the "Remuneration Sacrifice Share Plan" was approved and that some liabilities existing at 30 June 2012 will be settled in shares during the 2013 financial year.

On 18 July 2012 the Momentum Investment policy was ceded to Constantia Insurance Company as collateral to cover the value of R7,517,000 for the guarantee issued by them to the DMR (Department of Minerals and Resources) for the Mine Rehabilitation provision.