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ANNUAL REPORT 2012

TNG Limited Corporate Directory

TNG Limited Annual Report 2012

DIRECTORS Jianrong Xu (Chairman) Paul Burton (Managing Director) Neil Biddle (Non-Executive Director) Geoffrey Crow (Non-Executive Director) Rex Turkington (Non-Executive Director) Wang Zhigang (Non-Executive Director)

COMPANY SECRETARY Simon Robertson REGISTERED OFFICE Level 1, 282 Rokeby Road Subiaco Western Australia 6008 PO Box 1126 Subiaco Western Australia 6904 Telephone:(08) 9327 0900 Facsimile: (08) 9327 0901 Website: www.tngltd.com.au SHARE REGISTRY Computershare Investor Services Pty Limited Level 2 45 St Georges Terrace Perth Western Australia 6000 Telephone:(08) 9323 2000 Facsimile: (08) 9323 2033 AUDITORS KPMG HOME STOCK EXCHANGE Australian Securities Exchange (ASX) Code: TNG INTERNATIONAL STOCK EXCHANGE German Stock Exchanges Code: HJI

http://www.tngltd.com.au/

TNG Limited

Review of Operations

TNG Limited Annual Report 2012 1

Review of Operations 2

Corporate Governance Statement 20

Directors’ Report 28

Auditor’s Independence Declaration 38

Consolidated Statement of Comprehensive Income 39

Consolidated Statement of Financial Position 40

Consolidated Statement of Cash Flows 41

Consolidated Statement of Changes in Equity 42

Notes to the Financial Statements 43

Directors’ Declaration 78

Independent Audit Report 79

ASX Additional Information 81

TNG Limited



HIGHLIGHTS & ACHIEVEMENTS Mount Peake Iron-Vanadium-Titanium Project, NT

The Mount Peake Pre-Feasibility Study (PFS) confirmed the potential to develop a robust mining operation capable of generating revenues of A$12 billion and operating cash flows of over A$5 billion over an initial 20-year life, with forecast production of 15,300tpa of high purity vanadium pentoxide (V2O5), 375,000tpa of titanium dioxide (TiO2) concentrate and 1.13Mtpa of high grade iron oxide (Fe2O3).

TNG’s Board is now reviewing the PFS results with a view to commencing a Definitive Feasibility Study (DFS) during Q4 of 2012. This is likely to be managed by a major global engineering firm with offices in China, with input from the Company’s Chinese partners.

RC drilling confirmed the potential to further increase the resource inventory in the Mount Peake region, indicating the presence of two large magnetite-gabbro structures which host the iron-vanadium-titanium mineralisation at Mount Peake. This work supports the broader Exploration Target1 for the Mount Peake area of 500-700Mt.

Initial metallurgical testwork was completed on graphite mineralisation intersected in drilling undertaken at Mount Peake during 2011, including a 40m graphite intersection achieved from drilling targeting base metal mineralisation. Testwork is continuing to establish the potential to produce an economic product.

TIVAN™ Hydrometallurgical Process

The PFS confirmed that TNG’s proprietary TIVAN™ metallurgical process will provide a commercial processing solution for the Mount Peake operation, with the ability to extract all three valuable metals from the ore.

Extensive pilot plant testwork was completed, delivering outstanding analytical results including recoveries of over 80% for V2O5, which was extracted to a purity of 99%, and over 90% recovery for Fe2O3 which was extracted to a purity of 99.9% (69.2% Fe). Final grades for the TiO2 are currently being assessed through additional analytical testwork.

An Australian Trade Mark Registration Certificate was received, protecting the use of the name “TIVAN™” for a period of 10 years: 100% owned by TNG.

Other Projects

TNG’s Northern Territory copper exploration portfolio was expanded to over 10,000 sq km with the acquisition of a key new tenement in the Mount Hardy region, representing the main portion of the historic Mount Hardy Copper Field, and the signing of a Joint Venture with Toro Energy to explore the tenements located immediately west of Mount Peake.

A major HELITEM® survey was completed over key copper exploration tenements. HELITEM® is the world’s most powerful helicopter time-domain electromagnetic (EM) system for detecting magnetic targets, with demonstrated success in locating buried sulphide mineralisation.

The HELITEM® results revealed a cluster of anomalies that are coincident with existing copper prospects. Follow-up ground EM work has commenced, and drill testing of key targets will commence in Q4 of 2012.

A Farm-in and Joint Venture agreement was agreed with Rio Tinto Exploration Pty Ltd to explore for bauxite on TNG’s Melville Island licence. Rio to spend $5 million over four years to earn an 80 per cent interest.

Corporate

A key strategic partnership was established with the leading Chinese State-owned enterprise Jiangsu Eastern China Non-Ferrous Metal Investment Holding Co Ltd., (“ECE”), to underpin development of Mount Peake Project and pursue other resource sector opportunities.

A $13.4M share placement was completed with ECE, comprising a $6.8M placement to ECE subsidiary Ao-Zhong International Mineral Resources Pty Ltd, and a $6.6M placement to a privately-owned Chinese high technology and industrial company, Aosu Investment & Development Co Pty Ltd, both at 11 cents per share, giving these groups a combined shareholding of 30 per cent in TNG.

Appointment of Mr Jianrong Xu, Deputy Director-General of the East China Mineral Exploration & Development Bureau (“ECMED”), as Chairman of TNG, and Mr Zhigang Wang, Chairman of Aosu, as a non-executive Director. Experienced corporate adviser and corporate finance executive, Mr Rex Turkington, was also appointed to the Board during the year as a non-executive Director.

1The potential quantity and grade is conceptual in nature, there has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resources.

TNG Limited



Dear Shareholder, I am pleased to present TNG’s 2012 Annual Report and to reflect on what has been a watershed year for the Company, with the completion of a $13.4 million investment and strategic alliance with the Jiangsu Eastern China Non-Ferrous Metals Investment Holding Co. Ltd (“ECE”) and the delivery of the Pre-Feasibility Study on TNG’s flagship Mount Peake Iron-Vanadium-Titanium Project. These twin milestones have considerable significance for the future the Company – the former because it has resulted in the introduction of two key strategic Chinese companies to TNG’s share register, creating an alliance that will underpin the Company’s development as a diversified resources group delivering strategic metals to global markets; the latter because it has confirmed the quality and robustness of TNG’s principal asset, and provided a clear development pathway to bring it into production. I was delighted to accept an invitation during the year to join the Board of TNG as Chairman following the completion of the strategic transaction between TNG and ECE. This saw Ao-Zhong International Mineral Resources Pty Ltd, a subsidiary of ECE, and privately owned industrial and high-technology company Aosu Investment and Development Co Pty Ltd (part of the Wanlong Group) inject a total of $13.4 million into the Company at 11 cents per share resulting in the acquisition of a combined 30 per cent stake. In addition to the immediate funding injection and strategic cooperation on the development of the Mount Peake Project, the establishment of this strategic alliance gives TNG access to high-quality Chinese technical, engineering and construction expertise, as well as the ability to access competitive project finance to underpin the progression of the project through the feasibility and development phase. The introduction of the high-technology Wanlong Group to the TNG register also introduces a key end-user and potential customer for the strategic metals to be produced by Mount Peake. Beyond Mount Peake, ECE and TNG have agreed to work together to identify and secure additional quality resource project opportunities in Australia and elsewhere, as part of a broader umbrella strategic alliance arrangement. This is a tremendous opportunity for both of our organisations, and we are very much looking forward to developing it further in the months and years ahead. The Mount Peake Pre-Feasibility Study (PFS), which was completed in July 2012, confirmed the potential to develop a robust mining operation capable of generating revenues of A$12 billion and operating cash flows of over A$5 billion over its initial 20-year life. Pleasingly, the PFS has also confirmed that our proprietary TIVAN™ metallurgical process, which has been jointly developed and patented with our metallurgical consultants, METS Pty Ltd, is reaching commercial viability and will provide a suitable processing solution for the Mount Peake mining operation. Extensive pilot plant testwork completed during the year returned outstanding analytical results, yielding recoveries of 80 per cent for vanadium pentoxide, which was extracted to a very high purity of 99 per cent. Exploration at Mount Peake has also continued to yield encouraging results, confirming the potential to further increase the resource inventory in the region. Two large magnetite-gabbro structures were identified from RC drilling conducted during the year. While further drilling is required, confirmation of additional magnetite-gabbro structures could significantly expand the resource potential in the Mount Peake Project Area, where TNG holds over 2,000 sq km of prospective ground. We are also conducting metallurgical testwork to assess the economic potential of some graphite mineralisation intersected in drilling on the tenements. Graphite is currently in high demand globally, and a successful outcome would add considerable value to the portfolio of strategic metals being developed at Mount Peake. Outside of Mount Peake, 2012 has delivered a number of exciting outcomes for TNG’s copper exploration initiatives, including the acquisition of an important new tenement covering much of the historic Mount Hardy Copper Field in the Northern Territory, and the signing of a Heads of Agreement with Australian uranium exploration and project development company, Toro Energy Limited (ASX: TOE), providing TNG with the right to explore for all minerals except uranium within Toro Energy’s EL 27115, EL 26848 and EL 27876 tenements. These transactions have significantly expanded and enhanced TNG’s copper exploration portfolio in the Northern Territory to some 10,000 sq km, which will be a key focus of the Company’s exploration initiatives over the forthcoming financial year. This now represents one of the largest copper exploration packages in the Northern Territory. A major HELITEM® survey has recently been completed over both of these project areas to identify initial drill targets, and preliminary results from the Mount Hardy survey area have proved very positive. In keeping with our growing focus on the development of Mount Peake and on our copper exploration portfolio, TNG’s intention is to seek development partners to progress the remaining projects within our portfolio. To this end, the Company was pleased to agree a Letter of Intent with Rio Tinto Exploration to establish a Joint Venture for the Company’s Melville Island licence, which is prospective for bauxite, with strong progress also made by our Joint Venture partners at the Manbarrum Zinc-Lead-Silver Project and the Rover Gold Project during the year. Our joint venture partner at Manbarrum, KBL Mining, is moving towards production at its nearby Sorby Hills Project, a development which will see Manbarrum developed as a satellite ore source.

TNG Limited



With the exceptionally strong foundations established by the Company over the past 12 months, 2013 is set to be another active and productive year. TNG now has a clear development pathway in place for the Mount Peake Project, leveraging off its key relationships and alliances in China, and the Company is well and truly moving into the “project realisation” phase – making the all-important transition from explorer to producer. Our key objectives over the coming 12 months include the commencement of a Definitive Feasibility Study for Mount Peake, the commencement of an Environmental Impact Statement (EIS) and other statutory approvals, the appointment of a partner for Engineering, Procurement & Construction Management (EPCM), and securing long-term sales contracts for Mount Peake ore. All of these objectives will be pursued in parallel with our planned aggressive exploration campaigns both at Mount Peake and across our copper exploration assets in the Northern Territory, which have the potential to deliver significant returns to the Company in the event of a new discovery. In conclusion, I would like to thank my fellow Directors for their support and input and express my appreciation to TNG’s Managing Director, Paul Burton, for his strong leadership and hard work during the year. I would also like thank TNG’s team of dedicated employees and consultants, who have worked tirelessly during the year. While I have only been involved with the Company for a short time, I have been extremely impressed by the drive and commitment of the TNG team, and I am very much looking forward to working with them to deliver further value to you, our shareholders. I look forward to sharing our continued growth with you. Jianrong Xu Chairman

TNG has outlined a clear development pathway, leveraging off its key relationships and alliances in China

TNG Limited Review of Operations


MAP OF OPERATIONS

The company has maintained and increased its significant presence in the key mineral fields of the Northern Territory in addition to its significant assets in Western Australia.



IRON-VANADIUM-TITANIUM MOUNT PEAKE PROJECT: TNG 100% The Mount Peake Project is located 235km north-northwest of Alice Springs in the highly prospective Arunta Province of the Northern Territory. The Project is strategically located close to existing power and transport infrastructure, including the Alice Springs-Darwin Railway, the Stuart Highway and the new LPG pipeline, 20km to the east. Mount Peake currently has a JORC Inferred Resource estimate of 160Mt @ 0.27% vanadium (V205), 5% titanium (TiO2) and 22% iron (Fe), with an Exploration Target

1 of 500 – 700Mt with a grade

range of 0.2 – 0.4% V205, 5 - 8% TiO2 and 25 – 35% Fe. The Project comprises Exploration Licences covering a total area of more than 2,000 square kilometres in a highly prospective but poorly explored area of the Western Arunta province. Mount Peake Pre-Feasibility Study In July 2012, TNG announced the results of the Pre-Feasibility Study for the Mount Peake Project, outlining a robust project capable of generating revenues of A$12 billion and operating cash flows of over A$5 billion over its initial 20-year life. On the strength of these results, the Board of TNG remains committed to continuing to evaluate the potential development of a substantial and financially robust strategic metals business at Mount Peake incorporating its new TIVAN™ hydrometallurgical process. The 2012 Pre-Feasibility Study was prepared by key consulting companies Snowden Mining Industry Consultants Pty Ltd (“Snowden”), Mineral Engineering Technical Services (“METS”) and Sinclair Knight Mertz (“SKM”) to an accuracy level of ±25 per cent, required for PFS.

*Including all infrastructure, ** including mining, processing, transport & royalties

1The potential quantity and grade is conceptual in nature, there has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resources.

Key Physicals

• Total material mined: 147.9Mt • Total waste movement: 72Mt • Total ore mined: 75.9Mt • Strip ratio: 0.95 • Mine life: 20 years • Processing rate: 2.5Mtpa, increasing to

5Mtpa in year 4 • Average head grade 0.39% V2O5, 27.09% Fe,

7.02% TiO2 • Average recoveries 80% V2O5, 66% Fe, 55% TiO2 • Total metal production 236kt V2O5, 17.4Mt Fe,

5,822kt TiO2

• Total revenue (LOM): A$11.8 billion • Operating cash flow (LOM): A$5.8 billion • Net cash flow (LOM): A$5.05 billion • Pre-production capital: A$563M* • Total operating costs: A$75.50/tonne

of plant feed** • Net annual cash flow: A$294M • IRR pre-tax: 31.8% • Exchange rate 1USD to 1AUD

Key Financial Outcomes



The Pre-Feasibility Study (PFS) was based on the updated JORC Indicated and Inferred Resource for Mount Peake published on 12 October 2011 of 160Mt @ 0.3% V2O5, 5% TiO2 and 23% Fe (Indicated 110Mt @ 0.29% V2O5, 5.3% TiO2 and 23% Fe; Inferred 48Mt @ 0.24% V2O5, 4.5% TiO2 and 21% Fe). In addition to this resource, TNG has published an Exploration Target

1

of 500-700Mt grading 0.2-0.4% V2O5 and 25-35% Fe. The updated resource model compiled by Snowden Mining Consultants revealed that the Mount Peake deposit itself remains open to the east. In addition, recent regional drilling has highlighted the potential to further increase the Company’s resource inventory in the region. Key assumptions at commencement of operations include:

Operating costs and pit slope angles related to mining estimated to a Pre-Feasibility Study level (±25%)

V2O5 price of US$19,841/tonne (>99% grade)2

TiO2 price of US$400/tonne (> 64% grade)2

Fe2O3 price of US$200/tonne (>99.9% grade)2

Royalty rate of 2.5% per tonne of plant feed

Discount rate of 8%

A$/US$ exchange rate of 1 US$ = 1A$

Nett annual cash flow is defined as the average discounted cash flow per annum after all CAPEX (pre-strip CAPEX,

initial CAPEX, and expansion CAPEX) has been deducted, but ignores cost or source of capital, hedging, tax,

depreciation, rehabilitation and salvage.

Estimate of capital costs (CAPEX) including direct, indirect and infrastructure costs (±25% accuracy)

Area Plant throughput

basis

PFS Revised Total

2.5Mt/a

PFS Revised Total

5.0 Mt/a

100 Crushing Circuit $28,671,591 $28,671,561

200 Grinding Circuit $35,825,064 $35,825,064

300 Beneficiation & Leaching $57,298,646 $79,160,587

400 Solvent Extraction $16,754,261 $23,701,009

500 Vanadium Precipitation & Packaging $13,190,986 $18,944,223

600 Acid Regeneration $181,914,654 $261,256,571

700 Tailings Filtration $24,238,940 $33,692,662

800 Reagents $3,872,378 $5,169,422

900 Plant Utilities $2,414,058 $3,305,699

Direct Costs Total $364,180,578 $489,726,828

Field Indirects (China supply) 2.0% $7,283,612 $9,794,567

EPCM (China supply) 4.0% $14,567,223 $19,589,073

Vendor Reps 1.5% $1,502,570 $1,863,847

Capital Spares 4.0% $4,006,855 $4,970,260

Commissioning Spares 0.5% $500,857 $621,282

First Fills $2,200,000 $2,200,000

Insurance 3.0% $3,005,141 $3,727,695

Indirect Costs Total $33,066,258 $42,766,694

Infrastructure & Other Fixed Assets (Non-Factored Costs)

000 Road $58,100,000 $58,100,000

000 Rail $47,900,000 $47,900,000

000 Power Station $22,519,750 $33,779,625

000 Water Supply $797,805 $997,256.56

000 Buildings $7,403,031 $7,403,031

000 Mobile Equipment $8,898,255 $8,898,255

000 Accommodation Village $15,587,137 $20,677,842

000 Laboratory $1,584,767 $1,584,767

Non-Factored Cost Total $162,790,745 $179,340,777

GRAND TOTALS $560,037,580 $711,834,299

1The potential quantity and grade is conceptual in nature, there has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resources. 2 Commodity pricing based on independent commodity trader valuations based on the high purity products produced by the TIVAN

process.



Estimate of Total Operating Cost (OPEX) supplied by Snowden and METS (±25% accuracy) A$/t Waste 2.60

Ore 2.77

Grade control on ore 0.20

Administration 1.60

Total mining cost per tonne of ore 7.03

Total mining cost per tonne of ore moved 3.61

TOTAL MINING COST A$533M

Processing

Rehandle Stockpiles 10.7

Labour 7.20

Power 3.18

Consumables 1.49

Maintenance 5.28

Reagents at 2.5 Mtpa 34.12

Reagents at 5.0 Mtpa 34.12

Administration

Average cost per tonne of ore processed - Years 1 to 3 58.77

Average cost per tonne of ore processed - Year 4 onwards 51.24

Product Transport

V2O5 168.4

TiO2 48.4

Fe2O3 48.4

Total transport cost per tonne of concentrate 57.6

Total transport cost per tonne of ore 17.77

The current results are based on the original scenario of locating the plant adjacent to the mine site. The study also highlighted a number of other optimisation opportunities for the Mount Peake Project which include consideration to identifying potentially suitable offshore locations for the plant, which could bring both strategic and financial benefits to the Mount Peake Project. TNG will consider this option as part of any further evaluation of the project including moving to a decision on a Definitive Feasibility Study. The Board is now reviewing the results of the PFS and expects to make a decision on proceeding to a full Definitive Feasibility Study in the fourth quarter of 2012. Any DFS will consider all commercial options for product value-add and plant location options, which, following recent discussions with Chinese EPCM and financing companies, indicate that the option of building a plant offshore in Asia is a potential advantage. This could result in lower Capex and Opex, a simpler mining operation where magnetite concentrate is transported from site to the plant, and other strategic benefits. “TIVAN™” Hydrometallurgical Process – TNG’s competitive advantage TNG’s competitive advantage, the TIVAN™ process has proven to be technically and commercially suitable for the Mount Peake Project. Following the completion of detailed and exhaustive bench scale and optimisation testwork, TNG commenced a programme of pilot plant test work in March 2012 to test the proprietary TIVAN™ solvent extraction (SX) process. The pilot plant was assembled at a laboratory in Perth using existing SX equipment, under supervision by TNG’s metallurgical consultants, METS Pty Ltd. The aim of this testwork was to provide a definitive test of the commercial potential of the TIVAN™ process to produce a high-purity aqueous vanadium solution leading to production of vanadium pentoxide of commercial grade. The pilot plant testwork was completed in early April and returned outstanding analytical results which are summarised in the following table.



TIVANTM

Pilot Plant Analytical Results (source: METS)

PRODUCT Purity % Recovery %

Final V2O5 product 99 89-90

Final TiO2 product1 55-78 67-80

Final Fe2O3 product 99.9 63-80 1 Subject to final verification testwork

The grade and purity of V205 and Fe2O3 have been verified, the final grade of the Ti02 is currently being assessed via additional analytical testwork.

The pilot plant run was the culmination of an extensive pilot plant testwork program for the TIVAN

TM process, and these

final analytical grades represented a key input for the Mount Peake Pre-Feasibility Study detailed above. All testwork conducted to date has provided sufficient confidence that the TIVAN™ process is both economically scalable and feasible at this level of study and stage of the project. Consequently, TNG and its metallurgical consultants METS are satisfied that TIVAN

TM will provide a commercial process for

the Mount Peake operation. In addition, the results allow progression to larger throughput confirmatory testwork which will be undertaken with the Australian Commonwealth Scientific Industrial Research Organisation (CSIRO) prior to commissioning. Patent and Trade mark During the year, the international patent applications have progressed and the Australian Trade Mark Registration Certificate was issued for the name TIVAN

TM. The trade mark registration protects the use of the name “TIVAN

TM” for a

period of 10 years (to 9 June 2021) and may be renewed for successive periods of 10 years thereafter. The trade mark name is owned 100% by TNG. Resource Upgrade

In October 2011, TNG announced a substantial upgrade in the Mineral Resource estimate for the Mount Peake deposits incorporating the results of the 2011 drilling programs. The updated Indicated and Inferred Resource comprises:

Mount Peake Mineral Resource Estimate as at 12 October 2011

Category Oxidation

State Volume Tonnes V2O5% TiO2% Fe% Al2O3% SiO2%

Indicated Oxide 880,000 2,100,000 0.28 5.7 21 8.4 36

Transitional 3,600,000 12,000,000 0.32 6.2 23 7.8 33

Fresh 29,000,000 98,000,000 0.28 5.2 23 8.2 34

Sub-total 33,000,000 110,000,000 0.29 5.3 23 8.1 34

Inferred Oxide 310,000 730,000 0.25 4.9 18 9.6 39

Transitional 1,500,000 5,100,000 0.28 5.2 20 9.2 36

Fresh 13,000,0 43,000,000 0.23 4.4 21 8.7 35

Sub-total 14,000,000 48,000,000 0.24 4.5 21 8.8 35

Total 48,000,000 160,000,000 0.27 5.0 22 8.3 34



Mount Peake Deposit Schematic This updated resource represents a significant increase from the previous Inferred Resource estimate of 139Mt grading 0.29% V2O5, 5.3% TiO2, 23.6% Fe. Significantly, approximately 70 per cent of the resource, or 112 million tonnes, is now confirmed in the Indicated category, and available for conversion to Ore Reserves. The estimate has been completed by Snowden Mining Industry Consultants Pty Ltd (Snowden) and is reported in accordance with the JORC Code (2004), using a V2O5 cut-off of 0.1%. Snowden also noted that the deposit is horizontally zoned, with a higher-grade zone running through the length of the deposit, which includes the highest grades seen to date of 0.7% V2O5, 38% Fe and 12% TiO2 as shown below:

Mount Peake - High Grade Zone

Zone Results V2O5% TiO2% Fe% Al2O3% SiO2%

Zone 1 (0.1% - 0.3% V2O5)

Maximum 0.289 6.91 23.00 14.4 5.5

Zone 2 (>=0.3% V2O5)

Maximum 0.707 12.11 38.00 16.3 54.7

Zone 3 (0.1% - 0.3% V2O5)

Maximum 0.373 6.41 30.10 26.1 50.4

In addition, the drilling has revealed that the deposit remains open to the east, with a number of new targets identified in this area. This is a very positive development, as TNG previously believed that the resource was closed off in this direction. The results provide strong support for TNG’s previously published Exploration Target

1 of 500-700Mt with a grade range of

0.2-0.4% V2O5 for the Mount Peake Project. This confirms Mount Peake as one of the largest vanadium deposits in Australia, with significant potential to increase further with ongoing exploration. Commodity Outlook The companies TIVAN

TM process produces high purity products which will attract premium prices.

The outlook for vanadium and titanium prices is strong, with continued growth in demand from high tech steels and new opportunities emerging in medical products, industrial and vehicle battery markets. Vanadium is a critical element in the manufacture of:

Steel – rebar and structured beams as well as high speed tools and surgical steels;

Aerospace and defence – titanium vanadium alloys for all high-technology metals aircraft, missiles, personnel transports, etc;

Chemicals and Pollution Control – production of synthetic rubber, polyester, fibreglass, sulfuric acid etc and a critical component of catalytic converters to remove sulphur dioxide and other pollutants; and

Energy Store – the grid scale Vanadium Flow Battery and Lithium Vanadium Batteries for electric vehicles

Leading international metals and minerals research group, Roskill, recently published the following forecasts for vanadium prices and titanium production and prices:



Vanadium Price Forecast Titanium Production & Price Forecasts

Regional Exploration During the year the company completed extensive geophysics and fieldwork programs over the Mount Peake project area (MPPA) and successfully identified three large magnetic zones and one isolated magnetic anomaly at Mount Peake, which have the potential to emerge as new vanadium- and titanium-bearing magnetite zones. A Reverse Circulation (RC) drilling programme commenced in April 2012 to test these targets, aimed at confirming the presence of additional magnetite-gabbro – the host to the iron-vanadium-titanium mineralisation at the Mount Peake deposit. Two of these magnetic zones were confirmed by drilling as large magnetite-rich gabbro bodies while one drill hole intersected a large granitic body in the southern anomaly. The northern anomaly drill holes intersected gneissic. Four drill holes intersected significant true widths of magnetite-rich gabbro:

Significant intersections of magnetite-gabbro

Hole No. From (m)

To (m)

Intersection (m) Dip Azimuth

12MPBFRC001 2 206 204 -60° 060°

12MPBFRC002 50 198 148 -60° 060°

12MPBFRC003 23 198 175 -60° 060°

12MPBBERC001 64 180 116 -55° 180°

Drillhole 12MPBBERC001 is of particular interest as this anomaly formed part of a relatively subdued magnetic feature. The presence of magnetite gabbro in this region significantly enhances the Company’s understanding of the geology of the area and the potential for large magnetic gabbro bodies to be present even in relatively low magnetic areas. Assay results from these holes have produced grades consistent with those noted at the Mount Peake deposit and provide further encouragement that higher mineralised grades may exist within the magnetic features. Further drilling will be required to substantiate this but as mineralisation has been identified in this preliminary phase the potential is encouraging. It also provides encouragement to further assess untested magnetic features in the MPPA.

Significant analytical results (XRF)

Hole No. From (m)

To (m)

Length (m)

Grade Fe₂O₃ (%)

Grade V₂O₅ (%)

Grade TiO₂ (%)

12MPNRC003 48 72 24 23.36 0.20 3.00

104 108 4 23.82 0.17 3.16

12MPBBERC001 130 164 34 21.94 0.20 4.63

Incl. 145 152 7 0.25 5.36

Incl. 159 164 5 0.30 4.60

The Company concludes that these results open up the potential in the MMPA for a substantial increase to the current Mount Peake JORC Indicated and Inferred Resource. The updated resource model compiled by Snowden Mining Consultants (published on 12

th October 2011) revealed that the

Mount Peake deposit itself remains open to the east. This, together with the latest encouraging drilling results, provides further support for the Company’s Exploration Target

1 for the Mount Peake Project Area (MPPA) of 500-700Mt with a

grade range of 0.2-0.4% V2O5, 20-40% Fe203, 4-6% Ti02.



Further drilling to substantiate the resource potential in the MPPA leading to additional JORC estimates will be carried out during the next diamond drilling programme. Graphite Potential During the year TNG also commenced metallurgical testwork on graphite mineralisation intersected in a previous regional diamond drilling program at Mount Peake. TNG decided to initiate the testwork program after inspecting drill core from a 2011 drilling program targeting a large 500m by 200m electromagnetic (EM) anomaly, BGC1, on the Mount Peake tenements. While this hole failed to intersect base metal mineralisation, subsequent visual inspection indicates that it intersected approximately 40m of graphite mineralisation. The mineralised intercept was located 100m south of an historic drill hole, ARD01, drilled by Discovery Nickel in 2006. Inspection of the ARD01 drill core has shown that it also intersected >80m of graphite, providing significant support that the EM anomaly is composed of the conductive graphite, not base metals as previously thought. Metallurgical testwork is now underway to assess the ability to upgrade the graphite to an economic grade using simple beneficiation (froth flotation). Further assessment of the economic potential of the graphite mineralisation is also underway. COPPER The company has compiled an extensive portfolio of highly prospective copper exploration licences and is now the largest holder of prospective copper tenements with over 10,000km

2 held.

MOUNT HARDY COPPER PROJECT: TNG 100% Mount Hardy – ELA 29219, EL 27892 The Mount Hardy Copper Project is located within the historical Mount Hardy Copper Field, approximately 300km north-west of Alice Springs. The project area is situated on the Mount Doreen (SF52-12) and Mount Theo (SF52-08) 1:250,000-scale sheets. Access to the Mount Hardy tenement is via the Tanami Highway. During the year, TNG successfully negotiated an agreement to acquire a key new tenement, EL 27892, in the Mount Hardy region. The acquisition agreement was with public unlisted company, Walla Mines Ltd, and the tenement covers 101.76km

2 representing the main portion of the historic

Mount Hardy Copper Field, which is located adjacent and immediately south of TNG’s existing tenement ELA 29219, covering the northern extension of the known copper field. The acquisition was completed on 10 July 2012, with TNG paying $200,000 cash as consideration for the tenement. The Mount Hardy copper mines and prospects were discovered in 1935 and are within the Lander Group geological formation, which is the dominant host rock for copper and gold mineralisation in the area. The Lander Group is interpreted to be stratigraphically equivalent to the Tanami Group, which hosts the significant gold discoveries at The Granites, Dead Bullock Soak and Coyote. Historical rock chip sampling in the Mount Hardy area by White Industries (early 1990’s) and Tanami Gold NL (2002) returned numerous anomalous copper results, with peak grades of up to 19% copper, 18% lead, 1.52% zinc, 2.66 g/t gold, and 170 g/t silver.

MOUNT HARDYCOPPER PROJECT

TNG 100%

WALABANBA HILLSCOPPER PROJECT

TORO ENERGY / TNG JV

MOUNT PEAKEFe - V - Ti PROJECT

TNG 100%

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TNG has established that these results may indicate additional potential for Volcanogenic Massive Sulphide mineralisation at depth. Previous work has been focused on near surface gold exploration, with only limited drilling to shallow depths of less than 50m and no modern geophysical surveys have been completed over the area. In July 2012 TNG commenced an extensive HELITEM® survey, flown by Fugro Airborne Surveys Pty Ltd, over the Mount Hardy Project area to identify targets for copper mineralisation. Fugro’s HELITEM

® system is the world’s most powerful

helicopter time-domain electromagnetic system and provides multiple coil measurements, allowing for more complete identification and interpretation of conductive features which represent potential accumulations of sulphide mineralisation. Results from the Mount Hardy Project show a cluster of five high priority Electro-Magnetic (EM) targets identified from the 900 line km HELITEM

® survey completed over this project area.

These represent discrete anomalies with a strike length of approximately 250m and indicate the presence of localised bedrock conductors at depths less than 100m from surface. All five are located close to or above existing copper prospects (see Figure 2). A further eight discrete anomalies and several broader regions have been identified within the survey area. These represent medium priority targets and will be the checked in future field programs Following these results, a high-powered ground-EM survey has been mobilised for each target to confirm and improve the resolution of the HELITEM

® anomalies prior to future drill

testing. The ground-based system also has the potential to penetrate deeper than the HELITEM

® survey and detect stronger

conductors below the existing anomalies. These surveys are scheduled to start in mid-August with results expected by early September. A drill rig has been secured to commence testing of the priority targets in late September 2012. WALABANBA HILLS PROJECT: TNG EARNING UP TO 80% EL 27115, EL 26848, EL 27876 During the year TNG signed a Heads of Agreement (HOA) with Australian uranium exploration and project development company, Toro Energy Limited (ASX: TOE), providing TNG with the right to explore for all minerals except uranium within Toro Energy’s EL 27115, EL 26848 and EL 27876 tenements. The tenements lie immediately west of TNG’s flagship Mount Peake Strategic Metals Project in the Northern Territory, and are considered to be highly prospective for copper and nickel mineralisation based on previous exploration results. The HOA will be known as the Walabanba Hills Project. Under the terms of the HOA, TNG must spend a total of A$500,000 on exploration activities within the first two years to earn a 51% interest in each of granted Exploration Licences (EL’s) 27115, 26848 and 27876, at which point a formal Joint Venture agreement between TNG and Toro will be signed, subject to meeting conditions precedent. TNG then has the right to increase its stake to 80% by spending a further A$1.5 million over the next five years. Toro can then elect to retain, assign or convert its remaining 20% interest to a 2% Net Smelter Royalty (NSR).



The EL’s 27115, 26848 and 27876 tenements were previously held by Western Mining Corporation (WMC) in the mid-1990s and Anglo American Corporation between 2003 – 2004, who conducted aeromagnetic surveys over the region and focused on magnetic and Electro-Magnetic (EM) anomalies. These surveys identified numerous targets anomalous in nickel, copper and Platinum Group Elements (PGM), suggesting the presence of sulphide-bearing intrusive rocks. Based on available data, six areas have been identified as highly prospective for immediate follow up using a combination of soil geochemistry, magnetic and electro-magnetic geophysics to rapidly advance targets for drilling. In July 2012 TNG conducted a HELITEM® survey over portions of the Walabanba Hills Project area to identify targets for copper mineralisation. HELITEM® technology has already proved successful in identifying EM anomalies in the Mount Hardy Project area (see above). Results from the Walabanba Hills survey were being processed at the time of finalising this report. SANDOVER COPPER PROJECT: TNG 100% ELA 29252, ELA 29253 and ELA 29254 The Sandover Copper Project tenements are located approximately 100km north-east of Alice Springs just north of the Plenty Highway. The project area is situated on the Alcoota (SF53-10) 1:250,000 scale map sheet. The area is highly prospective for copper and volcanogenic massive sulphides. MCARTHUR RIVER PROJECT: TNG 100%

During the year, negotiations with Traditional Owners regarding access to McArthur, Yah Yah and Black Springs exploration licences were progressed, and preparations for a detailed exploration programme are in progress. McArthur – EL 27711 The McArthur River tenement, which is located approximately 50km south of McArthur township along the Tablelands Highway, covers part of the prospective McArthur Basin geology, 65km south-west of the McArthur Zinc mine. The licence has two major copper targets – Kilgour Crossing and Donkey Yard, both of which have been explored intermittently over the past 50 years and have recorded rock chip grades up to 2% copper. Mineralisation at McArthur River is hosted by the Mallapunyah Formation, in two dolomitic and variably bituminous intervals informally termed the ‘upper’ and ‘lower’ copper beds, which are 1m to 150mm thick, respectively. Chalcocite and chalcopyrite are present in the ‘lower copper bed’ along its strike length of 500m. Copper mineralisation in the lower copper bed 5km north of the Kilgour Crossing prospect comprised approximately equal quantities of chalcocite and bornite. TNG plans to complete a thorough rock chip sampling program over the region in order to confirm the scope and tenor of mineralisation, and will potentially also conduct a VTEM survey to map the host rock. Yah Yah – EL 28509 The Yah Yah tenement, located approximately 50km south-west of the McArthur township, contains the historical Yah Yah copper mine, which produced some 40 tonnes of hand-picked, high-grade copper (20-30% Cu) ore prior to 1912. A grab sample collected from a Yah Yah waste dump by CRA Exploration assayed 30.4% Cu. In addition, BHP completed a soil survey which returned best results of up to 562ppm Cu from a 300m wide zone over the old structure. TNG plans to complete a thorough rock chip sampling programme over the region in order to confirm the scope and tenor of mineralisation, and will potentially also conduct a VTEM survey to map the host rock. Access by TNG to the Yah Yah tenement was declined by the traditional owners during the June 2012 Quarter, and at the end of the reporting period a second meeting with the traditional owners was being sought. Black Springs – EL 28503 The Black Springs tenement is located 4km south of McArthur EL 27711 covering southern extensions of the prospective McArthur stratigraphy. During the year, negotiations with Traditional Owners regarding access to Black Springs were progressed.



JOINT VENTURE PROJECTS Manbarrum Joint Venture: TNG 100% (Sorby Hills JV earning 51% with scope to earn up to 80%) The Manbarrum Project remains a significant asset in a highly prospective region, in which the Company maintains a strategic ground holding. Two deposits totalling in excess of 35Mt of combined zinc-lead-silver mineralisation has been discovered to date, with a number of untested targets, generating a significant Exploration Target of 80-100Mt with a grade range of 1.5%-2% Zn1. Located 82 kilometres north east of the township of Kununurra in the Northern Territory, The Manbarrum Project comprises three Exploration Licenses and two Authority to Prospect licenses (under section 178) covering a combined area of 407 square kilometres. Sandy Creek Zinc Mineral Resource, as at March 2010 at a 1.0% Zn cut-off.

Material Classification Tonnes ZN PB AG

Oxide Indicated 575,000 1.45 0.43 5.14

Inferred 877,000 1.26 0.28 3.24

Total 1,452,000 1.34 0.34 3.99

Primary Indicated 12,906,000 2.07 0.57 4.77

Inferred 10,023,000 1.54 0.30 4.40

Total 22,929,000 1.84 0.45 4.61

Total

24,381,000 1.81 0.45 4.57

Djibitgun Total Ag Mineral Resource

Classification Resource Commodity Tonnes Zn % Pb % Ag g/t

Inferred Oxide Silver 19,930,000 0.5 0.2 16.4

Note: This resource includes 9.5Mt @ 0.6% Zn, 0.2% Pb, 20.2g/t Ag at a lower cut-off grade of +15g/t Ag

Djibitgun Zn Mineral Resource

Classification Resource Commodity Tonnes Zn % Pb % Ag g/t

Inferred Oxide Zinc 6,720,000 1.8 0.6 14.0

Note: This resource is reported above a 1% Zn lower cut-off grade, and includes 3.8Mt @ 2.2% Zn, 0.5% Pb, 15.3g/t Ag above a lower cut-off grade of 1.5% Zn.

1The potential quantity and grade is conceptual in nature, and there has been insufficient exploration to define a Mineral

Resource. It is uncertain if further exploration will result in the determination of a Mineral Resource.



Sorby Hills Joint Venture In February 2011, TNG signed a Joint Venture Heads of Agreement on its Manbarrum Zinc-Lead-Silver Project in the Northern Territory with the Sorby Hills Joint Venture (“SHJV”), a joint venture between ASX-listed KBL Mining Limited (ASX: KBL) and Yuguang (Australia) Pty Ltd, a subsidiary of China’s largest lead producer, Hunan Yuguang Gold & Lead Co. Under the terms of the agreement, TNG will receive a cash payment of $2.5 million, comprising an initial payment of $0.5 million upon the signing of a definitive sales agreement (this payment was received on 17 February 2011) with a final payment of $2 million due by December 2013. In addition, the SHJV must spend a further $2 million on exploration at Manbarrum over the next three field seasons.On completion of SHJV’s total earn-in expenditure of $4.5 million, a formal Joint Venture will be formed between TNG and SHJV for the ongoing development of the Manbarrum Project, with TNG retaining a 49% stake. The SHJV can elect to increase its stake in the Manbarrum Project to 80% by sole funding all exploration and development activities through to a Decision to Mine, and will have first right to purchase a further 10% stake in the Manbarrum Joint Venture from TNG by making a further payment of $3 million. The transaction is consistent with TNG’s focus on the continued evaluation and development of its flagship Mount Peake Project. It has been structured so that TNG will retain a 49% interest in the Manbarrum Project, giving it continued exposure to the substantial exploration upside of the Project and the potential for significant synergies to be unlocked by the SHJV through a coordinated exploration and development effort focused on the two projects. During the 2012 financial year, KBL completed negotiations with the traditional owners and commenced a review of data received from the Manbarrum Project to date. Field work commenced at Manbarrum in the March Quarter of 2012, focusing on the evaluation of the Sandy Creek Deposit. KBL sees excellent potential for a shallow high grade Pb-Zn-Ag resource within the larger lower grade deposit. KBL has progressed with their development plans for their Sorby Hills Project, which will have direct implications for the future development of Manbarrum. The Sandy Creek deposit is currently under MLA application and all statutory reports have been prepared and submitted. Melville Island Joint Venture: TNG 100% (Rio Tinto Exploration earning 80%) During the year, TNG agreed in-principle terms for a farm-in and joint venture agreement on its 100% owned Melville Island licence ELA 28617 in the Northern Territory with Rio Tinto Exploration Pty Ltd (RTX). Under the in-principle terms, TNG will receive an initial cash payment of $50,000, and RTX will progress negotiations and grant of the licence application for bauxite exploration. Following the grant of the licence RTX must spend $5M within 4 years to earn 80% equity in the project with TNG retaining 20% equity at which point TNG may elect to contribute, sell or convert its equity to a 2% Net Smelter Royalty (NSR). The Melville Island Exploration licence application has been a strategic licence for TNG being located in a prospective area for bauxite and other minerals. The licence area covers approximately 1400km. The transaction is consistent with TNG’s focus on the continued evaluation and development of its flagship Mount Peake Project. It has been structured so that TNG will retain either a 20% interest or 2% NSR giving it continued exposure to the potential exploration upside of the project. McTavish Project Joint Venure: TNG 3% Royalty, Crucible 100% TNG retains a 3% gold royalty in these prospective tenements. Kintore East Joint Venture: TNG 2% Gold Royalty, La Mancha TNG retains a 2% gold royalty in these prospective tenements.



Rover Project Joint Venture: TNG 100% (Western Desert Resources earning 51% with scope to earn up to 80%) The Rover Project Joint Venture area comprises two granted exploration licences in the lucrative Tennant Creek goldfields - EL24471 and EL25581. During the year, WDR completed a reinterpretation of the airborne EM data flown in 2011, which identified defined conductive responses adjacent to the Rover 1 ore deposit. A total of 14 “Priority 1” conductive responses have been observed. A ground IP survey commenced in July to pinpoint drilling targets based on their conductive responses and gravity signatures. Drilling of these targets is expected later in 2012. Approvals have been obtained to commence a four-hole diamond drilling program at BIF Hill. This is a Tennant Creek-style target, which has seen minimal past exploration, but has strongly elevated gold in the near surface (including 15m@ 1.03 g/t from 3m depth). Nickel Cawse Extended Joint Venture: TNG 20%, Norilsk 80% The Cawse laterite nickel operation has been placed on indefinite care and maintenance by Norilsk Nickel Australia.

The 2008 Cawse Mineral Resource, which was estimated using Vulcan block modelling techniques, based on a 0.5% Ni cut-off grade (for Upgrade ore) and 0.8% Ni cut-off grade (for Grind ore) within a grade defined mineralisation envelope and in accordance with the Australian JORC Code, is summarised in the following table:

Material Indicated

Tonnes Grade Grade Metal Metal

kt Ni% Co% Ni t Co t

Cawse Extended 80% NNAu - Upg 16,045 0.75 0.03 120,158 5,108

Cawse Extended 80% NNAu - Grd 232 1.19 0.19 2,756 437

Total 16,276 0.76 0.03 122,914 5,545

Measured




Cawse Extended 80% NNAu - Grd 51 1.07 0.27 541 138

Total 3,092 0.69 0.04 21,482 1,217

Total




Cawse Extended 80% NNAu - Grd 283 1.17 0.2 3,298 575

Total 19,368 0.75 0.03 144,396 6,763

Inferred

Tonnes Grade Grade

kt Ni% Co%

Cawse Extended 80% NNAu - Upg 62,469 0.69 0.03

Cawse Extended 80% NNAu - Grd 134 1.24 0.21

Total 62,603 0.69 0.03



CORPORATE Transaction with ECE In May 2012, TNG completed the $13.4 million transaction with two key strategic Chinese companies, cementing the strategic alliance outlined in last year’s Annual Report with Jiangsu Eastern China Non-Ferrous Metals Investment Holding Company Ltd., (ECE), a leading Chinese State-owned enterprise part of the East China Mineral Exploration & Development Bureau. The overall transaction has resulted in the introduction to the Company’s register of Ao-Zhong International Mineral Resources Pty Ltd (“Ao-Zhong”), a subsidiary of ECE, and a privately owned Chinese industrial and high-technology company, Aosu Investment and Development Co Pty Ltd (“Aosu”) – with a combined cornerstone holding of approximately 30 per cent. The first stage of the transaction was completed on 18 January 2012, under which Aosu subscribed for 59,808,643 shares at 11 cents per share, resulting in a cash injection of $6.6 million (before costs). The second and final stage of the transaction was completed on 25 May 2012, with AoZhong subscribing for 62,249,812 TNG shares at 11 cents per share raising a total of $6.8 million (before costs). The Ao-Zhong investment followed approval from Australia’s Foreign Investment Review Board (“FIRB”) for the transaction and Ao-Zhong obtaining all necessary waivers, consents and approvals from the Department of Commerce of Jiangsu Province, Jiangsu Development & Reform Commission and the State Administration of Foreign Exchange Jiangsu Branch. TNG shareholders approved the overall $13.4 million transaction with ECE at a general meeting held on 21 December 2011. Completion of ECE transaction provides continued funding to enable progression of TNG’s flagship Mount Peake Iron-Vanadium-Titanium Project and commercialisation of the TIVAN™ hydrometallurgical process; the funds will also underpin continued activity at the Company’s other projects. Board Changes Under the terms of the ECE Subscription Agreement outlined above, during the year TNG appointed Mr Jianrong Xu as Chairman of the Company. Mr Xu is Deputy Director General of East China Mineral Exploration & Development Bureau (“ECMED”). Mr Xu obtained his BA in Geophysics from Central South University in 1983, and has worked with ECMED since graduating. He has successively held the posts of Head of Geophysics Prospecting Team, Project Manager, Deputy Director and Director. In January 2007, he was appointed Deputy Director General of ECMED. Mr Xu is also the current General Manager of ECE, Deputy Managing Director of Jiangsu Geophysical Society, the Chairman of HK ECE, Hong Kong East China Non-Ferrous International, Mineral Development Co Ltd, Namibia East China Non-ferrous Investment Pty Ltd and other ECMED wholly owned subsidiaries. Mr Xu is also a director of AIM-listed company, China Africa Resources Plc. In addition, during the year TNG appointed Mr Rex Turkington and Mr Zhigang Wang as Non-Executive Directors. Mr Turkington is a highly experienced corporate advisor and economist who has worked extensively in the financial services industry in Australia, specializing in the exploration and mining sectors. Mr Wang is Chairman of Aosu, part of the Wanlong Group of companies which comprises Suzhou Wanlong Electric Group Co. Ltd (Wanlong) and Suzhou Beijia Investment Co Ltd. (Beijia). Wanlong holds 51% of the issued capital of Aosu and Beijia holds the remaining 49%.

Cash and Investments At year-end, the Company had cash and current investments totalling $10,229,0000.



Davis Samuel TNG is a party to proceedings instituted by the Commonwealth of Australia (Commonwealth) in the Supreme Court of the Australian Capital Territory in which the Commonwealth claims that it is entitled to a constructive trust over shares held by TNG in Kanowna Lights NL (now Peninsula Minerals Limited). The Commonwealth has claimed that as constructive trustee, TNG is liable to account for the highest market value at which the shares could have been sold; and interest on that market value. The Commonwealth claims that it is entitled to an amount of $1,274,400 for the value of the Kanowna Lights NL shares and interest thereon since early 2000, bringing the theoretical liability to an expanded maximum of $3,400,000 TNG has issued cross-claims against Davis Samuel including Messrs Allan Endresz, Peter Cain, William Forge, David Muir and Peter Clark. TNG is also vigorously defending the Commonwealth claims. The court hearing commenced in June 2008 and concluded in the last quarter of 2008. The court has reserved its decision. In November 2009 TNG advised that certain of the other defendants had sought to have the case re-opened. The submissions to re-open were heard on 9 November 2009 and 5 February 2010. The Commonwealth and TNG opposed the application to reopen. The court also reserved its decision on that application. TNG has been advised by the court that the decisions were anticipated to be handed down on various dates which have since passed and has through its lawyers and the ACT Law Society sought further information as to when the decisions will be given. The latest information in 2012 was that a decision was likely to be given toward the end of the calendar year 2012. TNG through its lawyers has made further enquiries recently and is awaiting a reply. Any adverse finding made against TNG which cannot be successfully recovered from cross claims made against other parties may result in TNG being liable to pay up to the amount claimed by the Commonwealth. TNG may also be liable for costs of the proceedings if awarded against it, as well as its own legal cost. Presentations During the year the company presented at several international and national conferences. Appointment of Institutional Broker TNG appointed UK-based institutional stockbroker Old Park Lane Capital Plc to provide corporate advisory, fundraising and strategic investor relations assistance in the London and European markets. The appointment, which includes research consultancy services, follows recent investor roadshows by TNG to Europe and the UK during which there was a high level of interest in the Mount Peake Project. Competent Person’s Statement The information in this report that relates to Exploration Results and Exploration Targets is based on information compiled by Mr Paul Burton who is a Member of The Australasian Institute of Mining and Metallurgy and a Director of TNG Limited. Paul Burton has sufficient experience 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 of Exploration Results, Mineral Resources and Ore Reserves’. Paul Burton consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. Mr Damian Connelly, MAAusIMM, Chartered Processional (MET), MMICA, MSME, MSAIMM was responsible for the preparation of the metallurgical test work results reported herein. Mr Connelly has sufficient experience 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 of the Exploration Results, Mineral Resources and Ore Reserves. Mr Connelly consents to the inclusion in the report of the matters based on his information in the form and context in which is appears.

The information in this report that relates to Mineral Resources is based on information compiled by Mr Jeremy Peters who is a Member of The Australasian Institute of Mining and Metallurgy and a full time employee of Snowden Mining Industry Consultants Pty Ltd. Jeremy Peters has sufficient experience 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 of Exploration Results, Mineral Resources and Ore Reserves’. Jeremy Peters consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

TNG Limited Corporate Governance


Corporate Governance Statement The Board of Directors of TNG Ltd (the “Company”) is responsible for the corporate governance of the Company. The Board guides and monitors the business and affairs of the Company on behalf of the shareholders by whom they are elected and to whom they are accountable. Since the introduction of the ASX Principles of Good Corporate Governance and Best Practice Recommendations (“ASX Guidelines”), the Company has made it a priority to adopt systems of control and accountability as the basis for the administration of corporate governance. Some of these policies and procedures are summarised in this report. Commensurate with the spirit of the ASX Guidelines, the Company has followed each Recommendation where the Board has considered the Recommendation to be appropriate. Where, after due consideration, the Company’s corporate governance practices depart from the Recommendations, the Board has offered full disclosure of the nature of, and reason for, the adoption of its own practice. The table below summarises the Company’s compliance with the Corporate Governance Council’s Recommendations.

Recommendation Comply Yes / No

Reference / Explanation

1.1 Companies should establish the functions reserved to the board and those delegated to senior executives and disclose those functions.

Yes Page 22

1.2 Companies should disclose the process for evaluation of the performance of senior executives.

Yes Page 26

2.1 A majority of the Board should be independent directors. No Page 22/27

2.2 The chairperson should be an independent director. No Page 27

2.3 The roles of chairperson and Managing Director should not be exercised by the same individual.

Yes

2.4 The Board should establish a nomination committee. No Page 27

2.5 Companies should disclose the process for evaluating the performance of the board, its committees and individual directors.

Yes Page 26

3.1 Establish a code of conduct to guide the directors, the Managing Director, the chief financial officer (or equivalent) and any other key executives as to:

- the practices necessary to maintain confidence in the Company’s integrity;

- the practices necessary to take into account their legal obligations and the reasonable expectations of their stakeholders;

- the responsibility and accountability of individuals for reporting and investigating reports of unethical practices.

Yes Page 23

3.2 Companies should establish a policy concerning diversity and disclose the policy or a summary of the policy. The policy should include requirements for the board to establish measureable objectives for achieving gender diversity for the board to assess annually both the objectives and progress in achieving them.

Yes Page 26

3.3 Companies should disclose in each annual report the measurable objectives for achieving gender diversity for the Board in accordance with the diversity policy and progress to achieving them.

No Page 26

3.4 Companies should disclose in each annual report the proportion of women employees in the whole organisation, women in senior executive positions and women on the board.

Yes Page 26

4.1 The Board should establish an audit committee. Yes Page 22

4.2 Structure the audit committee so that it consists of:

- only non-executive directors; - a majority of independent directors; - an independent chairperson, who is not chairperson of the Board; - at least three members.

No Page 27



Recommendation

Comply Yes / No

Reference / Explanation

4.3 The audit committee should have a formal charter. Yes Website

5.1 Establish written policies and procedures designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior executive level for that compliance and disclose those policies or a summary of those policies.

Yes Website

6.1 Design and disclose a communications strategy to promote effective communications with shareholders and encourage effective participation at general meetings and disclose their policy or a summary of that policy.

Yes Website

7.1 The Board or appropriate Board committee should establish policies on risk oversight and management.

Yes Page 25

7.2 The Board should require management to design and implement the risk management and internal control system to manage the Company’s material business risks and report to it on whether those risks are being managed effectively. The Board should disclose that management has reported to it as to the effectiveness of the Company’s management of its material business risks.

Yes Page 25

7.3 Disclose whether the Board has received assurance from the CEO or equivalent and CFO that the declaration provided in accordance with CA section 295A is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks.

Yes Page 25

8.1 The Board should establish a remuneration committee. No Page 27

8.2 (i) The remuneration committee should be structured so that it:

- consists of a majority of independent directors; - is chaired by an independent chair; and - has at least 3 directors.

No Page 27

8.3 Clearly distinguish the structure of non-executive directors’ remuneration from that of executives.

Yes Page 22

The Company’s corporate governance practices were in place throughout the year ended 30 June 2012.

Further information about the Company’s corporate governance practices is set out on the Company’s website at www.tngltd.com.au. In accordance with the recommendations of the ASX, information published on the Company’s website includes charters (for the Board and its sub-committees), codes of conduct and other policies and procedures relating to the Board and its responsibilities. Board of Directors

Role of the Board and Management

The Board's primary role is the protection and enhancement of medium to long term shareholder value. To fulfil this role, the Board is responsible for the overall Corporate Governance of the consolidated entity including its strategic direction, establishing goals for management and monitoring the achievement of these goals. The Managing Director is responsible to the Board for the day to day management of the Company. The Board has sole responsibility for the following:

Appointing and removing the Managing Director and any other executive director and approving their remuneration;

Appointing and removing the Company Secretary and approving their remuneration;

Determining the strategic direction of the Company and measuring performance of management against approved strategies;

Reviewing the adequacy of resources for management to properly carry out approved strategies and business plans;

Adopting operating and capital expenditure budgets at the commencement of each financial year and monitoring the progress by both financial and non-financial key performance indicators;



Monitoring the Company’s medium term capital and cash flow requirements;

Approving and monitoring financial and other reporting to regulatory bodies, shareholders and other organisations;

Determining that satisfactory arrangements are in place for auditing the Company’s financial affairs;

Reviewing and ratifying systems of risk management and internal compliance and control, codes of conduct and compliance with legislative requirements; and

Ensuring that policies and compliance systems consistent with the Company’s objectives and best practice are in place and that the Company and its officers act legally, ethically and responsibly on all matters.

The Board’s role and the Company’s corporate governance practices are being continually reviewed and improved as the Company’s business develops. Composition of the Board The Company currently has the following Board members: Jianrong XU (Chairman) Paul Burton (Managing Director) Neil Biddle (Non-Executive Director) Geoffrey Crow (Non-Executive Director) Rex Turkington (Non-Executive Director) Wang Zhigang (Non-Executive Director) The Company’s Constitution provides that the number of Directors shall not be less than three and not more than ten. There is no requirement for any share holding qualification. The Board composition comprises of 3 non-independent directors. The Board believes that all the individuals on the Board can make, and do make, quality and independent judgements in the best interests of the Company and possess the skills and experience suitable for building the Company. Directors having a conflict of interest in relation to a particular item of business must absent themselves from the Board meeting before commencement of discussion on the topic.

The Board considers that its structure has been, and continues to be, appropriate in the context of the Company's history and the size and scale of operations. As the Company’s activities increase in size, nature and scope, the size of the Board will be reviewed and the optimum number of Directors required for the Board to properly perform its responsibilities and functions assigned. The membership of the Board, its activities and composition is subject to periodic review. The criteria for determining the identification and appointment of a suitable candidate for the Board shall include quality of the individual, background of experience and achievement, compatibility with other Board members, credibility within the Company’s scope of activities, intellectual ability to contribute to Board duties and physical ability to undertake Board duties and responsibilities. Directors are initially appointed by the full Board subject to election by shareholders at the next annual general meeting. Under the Company’s Constitution the tenure of Directors (other than Managing Director) is subject to reappointment by shareholders not later than the third anniversary following his last appointment. Subject to the requirements of the Corporations Act 2001, the Board does not subscribe to the principle of retirement age and there is no maximum period of service as a Director. A Managing Director may be appointed for any period and on any terms the Directors think fit and, subject to the terms of any agreement entered into, the Board may revoke any appointment.

Committees of the Board

To assist the Board in carrying out its responsibilities, the Board has established the following committees:

Audit Committee The Audit Committee operates under a charter approved by the Board. It is the Board’s responsibility to ensure that an effective internal control framework exists within the entity. This includes internal controls to deal with both the effectiveness and efficiency of significant business processes, the safeguarding of assets, the maintenance of proper accounting records, and the reliability of financial information as well as non-financial considerations The Committee also provides the Board with additional assurance regarding the reliability of financial information for inclusion in the financial reports.

The Full Board were members of the Audit Committee.



Qualifications of audit committee members For details of the qualifications of the audit committee members, the number of Audit Committee meetings held during the year and the attendees at those meetings, refer to the Directors’ Report.

Conflicts of Interest

In accordance with the Corporations Act 2001 and the Company’s Constitution, Directors must keep the Board advised, on an ongoing basis, of any interest that could potentially conflict with those of the Company. Where the Board believes that a significant conflict exists the Director concerned is not present at the meeting whilst the item is considered.

Independent Professional Advice

The Board has determined that individual Directors have the right in connection with their duties and responsibilities as Directors, to seek independent professional advice at the Company’s expense. The engagement of an outside adviser is subject to prior approval of the Chairman and this will not be withheld unreasonably. If appropriate, any advice so received will be made available to all Board members. Ethical Standards The Board acknowledges the need for continued maintenance of the highest standard of corporate governance practice and ethical conduct by all Directors and employees of the Company.

Code of Conduct for Directors

The Board has adopted a Code of Conduct for Directors to promote ethical and responsible decision-making by the Directors. The code is based on a code of conduct for Directors prepared by the Australian Institute of Company Directors. The principles of the code are:

A Director must act honestly, in good faith and in the best interests of the Company as a whole.

A Director has a duty to use due care and diligence in fulfilling the functions of office and exercising the powers attached to that office.

A Director must use the powers of office for a proper purpose, in the best interests of the Company as a whole.

A Director must recognise that the primary responsibility is to the Company’s shareholders as a whole but should, where appropriate, have regard for the interest of all stakeholders of the Company.

A Director must not make improper use of information acquired as a director.

A Director must not take improper advantage of the position of director.

A Director must not allow personal interests, or the interests of any associated person, to conflict with the interests of the Company.

A Director has an obligation to be independent in judgment and actions and to take all reasonable steps to be satisfied as to the soundness of all decisions taken as a Board.

Confidential information received by a director in the course of the exercise of directorial duties remains the property of the Company and it is improper to disclose it, or allow it to be disclosed, unless that disclosure has been authorised by the Company, or the person from whom the information is provided, or is required by law.

A Director should not engage in conduct likely to bring discredit upon the Company.

A Director has an obligation at all times, to comply with the spirit, as well as the letter of the law and with the principles of the Code.

The principles are supported by guidelines as set out by the Australian Institute of Company Directors for their interpretation. Directors are also obliged to comply with the Company’s Code of Ethics and Conduct, as outlined below.

Code of Ethics and Conduct

The Company has implemented a Code of Ethics and Conduct, which provides guidelines aimed at maintaining high ethical standards, corporate behaviour and accountability within the Company.

All employees and Directors are expected to:

respect the law and act in accordance with it;

respect confidentiality and not misuse Company information, assets or facilities;

value and maintain professionalism;

avoid real or perceived conflicts of interest;

act in the best interests of shareholders;



by their actions contribute to the Company’s reputation as a good corporate citizen which seeks the respect of the community and environment in which it operates;

perform their duties in ways that minimise environmental impacts and maximise workplace safety;

exercise fairness, courtesy, respect, consideration and sensitivity in all dealings within their workplace and with customers, suppliers and the public generally; and

act with honesty, integrity, decency and responsibility at all times.

An employee that breaches the Code of Ethics and Conduct may face disciplinary action. If an employee suspects that a breach of the Code of Ethics and Conduct has occurred or will occur, he or she must report that breach to management. No employee will be disadvantaged or prejudiced if he or she reports in good faith a suspected breach. All reports will be acted upon and kept confidential.

Dealings in Company Securities

The Company’s share trading policy imposes basic trading restrictions on all employees of the Company with ‘inside information’, and additional trading restrictions on the Directors, Officers, Employees and Consultants of the Company. ‘Inside information’ is information that:

is not generally available; and

if it were generally available, it would, or would be likely to influence investors in deciding whether to buy or sell the Company’s securities.

If an employee possesses inside information, the person must not:

trade in the Company’s securities;

advise others or procure others to trade in the Company’s securities; or

pass on the inside information to others – including colleagues, family or friends – knowing (or where the employee or Director should have reasonably known) that the other persons will use that information to trade in, or procure someone else to trade in, the Company’s securities.

This prohibition applies regardless of how the employee or Director learns the information The securities trading policy provides prescribed closed periods during which Employees are prohibited from dealing in the Company’s securities (subject to certain limited exceptions). In addition to the above, Directors must notify the Company Secretary as soon as practicable, but not later than 5 business days, after they have bought or sold the Company’s securities or exercised options. In accordance with the provisions of the Corporations Act and the Listing rules of the ASX, the Company on behalf of the Directors must advise the ASX of any transactions conducted by them in the securities of the Company. Breaches of this policy will be subject to disciplinary action, which may include termination of employment.

Interests of Other Stakeholders The Company’s objective is to develop and commercialise its exploration tenements to create wealth for shareholders and add value for other stakeholders. To assist in meeting its objective, the Company conducts its business within the Code of Ethics and Conduct, as above. Disclosure of Information

Continuous Disclosure to ASX

The continuous disclosure policy requires all executives and Directors to inform the Chairman, Managing Director or the Company Secretary, of any potentially material information as soon as practicable after they become aware of that information. The Company must immediately notify the market (via an announcement to ASX) of any information concerning the Company which a reasonable person with experience in the minerals industry would expect to have a material effect on the price or value of the Company’s securities.



Information need not be disclosed if:

(i) A reasonable person would not expect the information to be disclosed; and (ii) The information is confidential; and (iii) One or more of the following applies: (iv) It would breach a law or regulation to disclose the information; (v) The information concerns an incomplete proposal or negotiation; (vi) The information comprises matters of supposition or is insufficiently definite to warrant disclosure; (vii) The information is generated for internal management purposes; and (viii) The information is a trade secret.

The Chairman andManaging Director are responsible for interpreting and monitoring the Company’s disclosure policy and where necessary informing the Board. The Company Secretary is responsible for all communications with ASX.

Communication with Shareholders

The Company places considerable importance on effective communications with shareholders. The Company’s communication strategy requires communication with shareholders and other stakeholders in an open, regular and timely manner so that the market has sufficient information to make informed investment decisions on the operations and results of the Company. The strategy provides for the use of systems that ensure a regular and timely release of information about the Company is provided to shareholders. Mechanisms employed include:

Announcements lodged with ASX;

ASX Quarterly Cash Flow Reports;

Half Yearly Report;

Annual Report.

Presentations at the Annual General Meeting/General Meetings; and

Periodic presentations to investors.

The Board encourages full participation of shareholders at the Annual General Meeting to ensure a high level of accountability and understanding of the Company’s strategy and goals. The Company also posts all reports, ASX and media releases and copies of significant business presentations on the Company’s website. Risk Management

Identification of Risk

The Board is responsible for the oversight of the Company’s risk management and control framework. Responsibility for control and risk management is delegated to the appropriate level of management within the Company with the Managing Director and Chief Financial Officer (or equivalent) having ultimate responsibility to the Board for the risk management and control framework. Areas of significant business risk to the Company are highlighted in the Key Risk Analysis presented to the Board each year. Arrangements put in place by the Board to monitor risk management include:

regular reporting to the Board in respect of operations and the financial position of the Company; and

where appropriate the appointment of appropriately skilled consultants to provide independent assessment of operational results and proposals.

Integrity of Financial Reporting

The Company’s Managing Director and Chief Financial Officer (or equivalent) report in writing to the Board that:

the consolidated financial statements of the Company and its controlled entity for each half and full year present a true and fair view, in all material aspects, of the Company’s financial condition and operational results and are in accordance with accounting standards;

the above statement is founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the Board; and

the Company’s risk management and internal compliance and control framework is operating efficiently and effectively in all material respects.



Role of Auditor

The Company’s practice is to invite the auditor to attend the annual general meeting and be available to answer shareholder questions about the conduct of the audit and the preparation and content of the auditor’s report. Remuneration Arrangements The Board has not established a Remuneration Committee responsible for making recommendations to the Board on remuneration arrangements for Directors and executives of the Company.

All of the Directors with the exception of the Managing Director receive a separate Directors’ fee of $60,000 per annum, plus statutory superannuation.

There is no direct link between remuneration paid to any of the Directors and corporate performance such as bonus payments for achievements of key performance indicators. Remuneration of Directors and key executives is competitively set with the assistance of externally prepared surveys and reports, taking into account the experience and qualifications of each individual. The aggregate amount payable to the Company’s Non-Executive Directors for undertaking their duties as Directors must not exceed the maximum annual amount approved by the Company’s shareholders (currently $300,000). For a full discussion of the Company’s remuneration philosophy and framework, and the remuneration received by directors and executives in the current period, please refer to the Remuneration Report, which is contained within the Directors’ Report.

Performance Review The Board has adopted a self-evaluation process to measure its own performance and the performance of its committee during each financial year. Also, an annual review is undertaken in relation to the composition and skills mix of the Directors of the Company. Arrangements put in place by the Board to monitor the performance of the Company’s executives include:

a review by the Board of the Company’s financial performance; and

annual performance appraisal meetings incorporating analysis of key performance indicators with each individual.

Diversity

The Company recognizes the value contributed to the organization by employing people with varying skills, cultural backgrounds, ethnicity and experience. In line with the Corporate Governance recommendations, the Company has implemented a Diversity Policy. The Managing Director is responsible for the ongoing implementation of the diversity policy. As at 30 June 2012, the Company does not have any female Board Members or senior managers (2011: Nil). Of the balance of the Company’s employees, 50% are female (2011: 57%).



Compliance with ASX Corporate Governance Recommendations During the Company’s 2011/2012 financial year, the Company complied with the ASX Principles and Recommendations other than in relation to the matters specified below.

Principle Reference

Recommendation Reference

Notification of Departure Explanation for Departure

2 2.1 The Board does not comprise a majority of independent Directors

(ii) Whilst only three members of the Board are considered independent, the Board believes that all the individuals on the Board can make, and do make, quality and independent judgements in the best interests of the Company and possess the skills and experience suitable for building the Company. Directors having a conflict of interest in relation to a particular item of business must absent themselves from the Board meeting before commencement of discussion on the topic.

2 2.1

2.2

2.4

A majority of the Board are not independent directors

The Chairperson is not an independent director.

The Board has not established a separate Nomination Committee.

Given the present size of the Company, the composition of the Board and its Chairperson is considered appropriate. The Board will consider the appointment of further independent directors as the Company increases in its size and complexity.

The full Board carries out the role of a Nomination Committee in accordance with its Charter (whi

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