Independant Audit Report

Report on the Financial Report
We have audited the accompanying financial report of Morning Star Gold N.L., which comprises the Balance Sheet as at 30th June, 2007, and the Income Statement, Statement of Changes in Equity and Cash Flow Statement for the year ended on that date, a summary of significant accounting policies and other explanatory Notes and the Directors’ Declaration.

As permitted by the Corporations Regulations 2001, the company has disclosed information about the remuneration of directors (remuneration disclosures) required by Accounting Standard AASB 124: Related Party Disclosures, under the heading “Remuneration Report” in the Directors’ Report and not in the financial report.

Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101: Presentation of Financial Statements, that compliance with the Australian equivalents to International Financial Reporting Standards (IFRS) ensures that the financial report, comprising the financial statements and notes, complies with IFRS. The directors are also responsible for preparation and presentation of the remuneration disclosures contained in the Directors’ Report in accordance with the Corporations Regulations 2001.

Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement and that the remuneration disclosures in the Directors’ Report comply with Accounting Standard AASB 124. An audit involves performing procedures to obtain evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report and the remuneration disclosures in the Directors’ Report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.

Auditor’s Opinion

In our opinion:

(a) the financial report of Morning Star Gold N.L. is in accordance with the Corporations Act 2001, including:

(1) giving a true and fair view of the company’s fi nancial position as at 30th June 2007 and of its performance for the year ended on that date; and

(2) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporation Regulations 2001;

(b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1; and

(c) the remuneration disclosures that are contained in the Directors’ Report comply with Accounting Standard AASB 124.

Graham Abbott Associates

Chartered Accountants

 

GRAHAM ABBOTT
Partner

10 Crown Street Sydney
Dated this 27th day of September, 2007