Beaconsfield Gold - Australia's Richest Gold Resource.

High Grade, Low Cost Gold Producer

2007 Annual Financial Report

ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED
30 JUNE 2007

www.beaconsfieldgold.com.au

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Corporate Information

Summary of the 2007 year

Chief Executive Officer’s Review of Results and Activities

1. REVIEW OF RESULTS

The Company's financial results for the year were again severely impacted by the suspension of mining following the 25 April 2006 incident in the underground workings of the Beaconsfield Mine.

Earnings before interest, tax, depreciation and amortisation (EBITDA) for the year ended 30 June 2007 was a loss of $8.391 million (2006: loss of $8.909 million). The consolidated net loss after tax and before minority interests for the year was $9.566 million (2006: loss of $14.290 million). The consolidated net loss after tax and after minority interests for the year was $9.537 million (2006: loss of $14.290 million). The financial results for the current year include those of Allstate Explorations NL and its controlled entities from the date of acquisition of that company on 30 April 2007.

Gold and silver sales revenue for the 2007 year was $3.256 million (2006: $24.228 million). The decrease reflects the cessation of ore production from April 2006 until May 2007, with only limited gold production from development ore during May and June 2007.

A $7.117 million benefit was recorded during the year reflecting the changes in the mark-to-market value of the Group's gold forward sales contracts. This was partly offset by a $3.366 million loss on the close-out of gold forward sales contracts during the year. As at 30 June 2007 the Group had 47,242 ounces of spot deferred and flat forward gold sales contracts at A$638 per ounce. The mark-to-market value of the hedge book as at 30 June 2007 was negative $6.449 million.

Since December 2006 a staged recommencement of underground mining operations has been undertaken following the progressive lifting of bans imposed in April 2006 by the Chief Inspector of Mines. Ore production from development recommenced in May 2007 and the ore treatment plant was fully recommissioned with 2,860 ounces of gold poured by 30 June 2007.

Stope production from the Eastern Zone of the mine recommenced in August 2007 after ground support was enhanced during the year. Following acceptance of the Case for Safety for the Western Zone ore production, extraction of high grade ore from that zone is planned for the second quarter of 2007/08 utilising remote, non-entry mining methods.

2. THE BEACONSFIELD MINE JOINT VENTURE (BMJV)

3. BEACONSFIELD MINE

4. BEACONSFIELD MINE OPERATIONS IN 2007

• Risk management processes (process mapping and risk assessments);
• Safety management processes in general;
• Geotechnical and underground engineering management and design (especially ground control & support);
• A communication and consultation plan;
• A high level review of key risk issues; and
• A sequential plan of return to work

5. BMJV EXPENDITURE IN 2007

6. BEACONSFIELD GOLD REVENUE FOR 2007

7. BMJV ORE RESERVES / RESOURCES

A Reserve Statement for the Tasmania Reef, including the conversion of additional F21 zone and 840E resources, will be released following the lifting of all mining restrictions. The Cases for Safety for both the Eastern and Western Zones incorporate mining methods that are not anticipated to result in any significant loss of reserves.

A drill program to test the depth extension of the Tasmania Reef is planned following the completion of the development of a hanging-wall drive on the 1090m level.

8. EXPLORATION

8.1 BMJV Tenements

A two-hole program at Middle Arm Gorge, located some 3km south of the Tasmania Reef, was completed during the March quarter. Despite encouraging indications from the first hole (B52), including 0.8 metres at 4.4 g/t, the second hole (B53), which was designed to follow up the intersection of a significant shear zone in B52, intersected no significant structures in the target zone.

The Company considers that the Beaconsfield Mining Lease and the surrounding exploration tenements represent an outstanding exploration opportunity. The endowment of the Tasmania Reef is now in excess of two million ounces at an extremely high grade. Modern exploration for repeats of the system has been restricted, initially by the focus on returning the Tasmania Reef to production, and later by the diversity of corporate ownership.

A number of compelling "walk-up" drill targets have been identified to the north of the Tasmanian Reef in addition to large areas of untested but prospective ground both north and south of the Tasmania Reef. In particular, limited drilling at Pease Creek during the 1990's recorded a best result of 3.5 metres at 11.1 g/t gold, within which 1.5 metres graded 21.1 g/t. Also, the North Tasmania Reef supported some limited historic production but has never been tested at depth. A program of RC and diamond holes to further test both of these targets is planned for the 2008 financial year.

As part of an aggressive strategy to rapidly advance exploration at Beaconsfield, the Company has prioritised targets for an extensive surface drilling program. Post 30 June 2007 a low level helicopter aeromagnetic survey was carried out as an initial stage of this program. Results are expected to assist in target definition for drilling programs in 2007/08 and 2008/09.

Mine geologists have identified underground drilling targets in the immediate hangingwall and footwall of the Tasmania Reef. Underground diamond drilling commenced in July 2007 targeting the North Reef in the western part of the mine, where host rocks are known to favour much stronger reef development and gold deposition in the Tasmania Reef.

8.2 Beaconsfield Gold Group Licenses - No Allstate Group Participation

(a) A subsidiary of Beaconsfield Gold NL has an option to acquire a 100% interest, subject to a 3% net smelter return royalty.

STAVELY PROJECT, WESTERN VICTORIA

During the year three field programs were completed at the Stavely Project in western Victoria. A soil survey was conducted over the Balbeggie gold prospect, thirteen aircore/RC percussion holes were drilled on the Thursdays Gossan supergene copper prospect and a high resolution aeromagnetic/radiometric survey was flown over the apparent structurally controlled trend along which the Fairview, Junction and Thursdays Gossan prospects are aligned.

Thursdays Gossan

A program of 13 vertical drill holes for 969 metres was completed on a shallow chalcocite target in October 2006. The holes were designed to test the grade and continuity of mineralisation along the axis of an anomalous zone indicated by results from previous drilling by Penzoil, North Ltd and Newcrest Mining. There is evidence from more widely spaced previous drilling over other parts of the Thursdays Gossan prospect that additional similar sized zones of shallow chalcocite mineralisation could be drilled up if this initial program demonstrated sufficient scope for the potential viability of an open cut heap leach operation.

The drilling intersected wide intervals of potentially ore grade copper mineralisation at shallow depths with the main body of continuous mineralisation extending over some 600 metres. The blanket of supergene mineralisation is generally around 20 to 40 metres thick and is overlain by an upper oxide zone layer that ranges from about 20 metres thick in the north to about 40 metres thick in the south. More significant results, based on a total copper assay, included:

(1) All holes drilled vertically
(2) Hole ended in copper mineralisation

The most southerly hole drilled, TGAC13, also intersected 9 metres at 1.8 g/t gold from 26 metres depth in the oxide zone overlying the supergene copper zone.

The program highlighted the scope for a substantial deposit of supergene copper which remains open to the south. Exploration during the coming year will concentrate on testing the full potential of the chalcocite deposit with a combination of drilling and further metallurgical testwork.

Fairview

Fairview is a very compelling target with soil sampling having previously defined a strong, very coherent gold-in-soil anomaly over the full 4.8 km length tested. The previously reported initial drilling has confirmed that gold mineralisation is present in both the shallow oxide zone and in the deeper primary rocks.

A geophysical program was designed to refine the geological/structural model and help in the design of follow-up drilling programs. In December 2006 low-level, detailed aeromagnetics were flown over an area of some 170 square kilometres. Data quality was excellent and several fault structures potentially linked to primary mineralization at both Fairview and Thursdays Gossan have been identified. Identified linear trends and discontinuities will be used to target drilling for structurally hosted gold mineralisation at Fairview during 2007-2008.
No drilling was carried out during the year.

Balbeggie

The 11 line 424 sample soil survey at Balbeggie indicated modest gold, zinc, lead and copper anomalism. Aircore drilling is required to test the source of these anomalies. As the anomalies are weaker than the extremely strong and extensive Fairview anomaly follow up work on the Balbeggie prospect has lower priority.


NORTH PEASE CREEK GOLD PROSPECT, TASMANIA

There was no significant activity during the year on the North Pease Creek property, around 4km northwest of the Beaconsfield Mine.

9. GOLD HEDGING

10. CLAIM AGAINST ALLSTATE'S PREVIOUS LEGAL ADVISOR

11. INSURANCE CLAIM RELATING TO ANZAC DAY INCIDENT

12. MELICK INVESTIGATION

12. CONSOLIDATION OF MINE OWNERSHIP

14. SHARE PLACEMENTS

• November 2006
  
  27.6 million shares (15% of existing issued shares) were placed to sophisticated and professional investors, at 23 cents per share, raising $6.348 million.
  

• April/May 2006
  
  Two placements of 14.25 million shares and 14.4 million shares, at 34 cents and 36 cents per share respectively, raised $10.029 million. The shares were issued in accordance with approval given by shareholders, at a general meeting held on 10 January 2007, for the placement of up to 60 million shares to sophisticated and professional investors to increase the Company's beneficial interest in the Beaconsfield Mine.
  

• Share Purchase Plan ("SPP")
  
  11.6% of shareholders took up additional shares, through a SPP at 34 cents per share, raising $2.161 million of working capital.
  

15. CONVERTIBLE NOTES PLACEMENT

• Each note is convertible into one Beaconsfield Gold fully paid share at any time;
• Notes are redeemable at the end of two years if not converted; and
• Notes earn interest of 6% p.a., payable six-monthly in arrears.

Directors’ Report

The Directors present their report together with the financial report of Beaconsfield Gold NL ("the Company") and of the Consolidated Entity, being the Company and its controlled entities, for the year ended 30 June 2007 and the Auditor's Report thereon.

DIRECTORS

The names and details of the Directors of the Company in office during the financial year and until the date of this report are as detailed below. Directors were in office for the entire year and up until the date of this report unless otherwise stated.

Dr. Denis Edmund Clarke, Ph.D.(Geology), B.Sc.(Geology), B.A.(Economics & Statistics), F.Aus.IMM
Non-Executive Chairman (aged 66)

Dr. Clarke has broad technical, financial and corporate experience in the mining and mineral exploration industry. Over sixteen years in various senior positions he contributed significantly to the outstanding success of Plutonic Resources Limited which developed rapidly from a small explorer / non-producer into one of Australia's largest gold producers operating five mines. In 1998 Plutonic was absorbed by Homestake Mining Company, the merger valuing Plutonic at about A$1 billion. Subsequently, he has consulted to, and accepted board positions with, a range of miners and explorers. Since 1999 as Non-Executive Director and Consultant he has contributed to the rapid growth of Troy Resources NL from $10 million market capitalisation to $190 million.

Dr. Clarke joined the board on 25 November 2004, and was elected Chairman of the Company on 28 February 2005. He is a member of the Company's Audit and Risk Management Committee and Chairman of the Remuneration and Appointments Committee.

During the past three years Dr. Clarke has also served as a director of the following companies:

• Troy Resources NL (1999 to date);
• Cullen Resources Ltd (1999 to date);
• Anglo Australian Resources NL (1999 to date); and
• Allstate Explorations NL (27 February 2007 to date).

• Panaegis Gold Mines Limited (2005 to date); and
• Allstate Explorations NL (23 August 2007 to date).

• Allstate Explorations NL (23 August 2007 to date).

• Allstate Explorations NL (27 February 2007 to date).

• to produce gold through its participation in, and subsequent ownership and control of, the Beaconsfield Mine Joint Venture (BMJV) which operates the Beaconsfield Gold Mine in north-east Tasmania; and
• mineral exploration in Australia.

• 56,250,000 fully paid ordinary shares placed to sophisticated and professional investors to raise $16.377 million;
• 6,355,948 fully paid ordinary shares issued under the terms of a share purchase plan to raise $2.161 million; and
• 12,000,000 convertible notes issued to raise $4.080 million.

• On 12 July 2007, the offer extended to minority interests on 11 June 2007 for the acquisition of their interests in Allstate Explorations NL closed. During this period and up to this date, Beaconsfield Gold acquired an additional 4.15% ownership interest in Allstate Explorations NL. This increased Beaconsfield Gold's total ownership interest to 88.82% (90.06% of voting rights).
• On 5 September 2007, the report by the Special Investigator Mr. Greg Melick SC was tabled at the re-opening of the Coronial Inquiry into the 25 April 2006 incident. Whilst the report was not made public, a summary of the findings and recommendations released publicly noted that recommendations made by consultants before the incident had been adopted and that there was no suggestion that the 925m level not be mined.
• On 14 September 2007, a placement of 33,580,000 fully paid ordinary shares was made to sophisticated and professional investors at 23 cents per share to raise $7.723 million of working capital.
• On 14 September 2007, 2,000,000 convertible notes were issued at 25 cents per note to raise $0.500 million of working capital.
• On 28 September 2007 Workplace Standards Tasmania accepted the Case for Safety for Western Zone ore production, thereby lifting the final restriction on underground production at the Beaconsfield Mine.

• Mr William Colvin (800,000 options) (2006: 800,000) as part of the Chief Executive Officer's remuneration package; and
• Mr Brian Coulter (250,000 options).

DIRECTORS' MEETINGS

The number of meetings of Directors (including meetings of committees of Directors) held during the year, the number of meetings attended by each Director, and the number of meetings held while they were a Director (or Committee Member) was as follows:

COMMITTEE MEMBERSHIP

As at the date of this report, the Company had an Audit and Risk Management Committee and a Remuneration and Appointments Committee.

Members acting on the Committees of the board during the year were:

Note:

(c) Designates the chair of the committee.


INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS

The Company has entered into a Deed of Access, Insurance and Indemnity with each Director of the Company that indemnifies the Director, to the extent permitted by law, against liabilities and legal costs incurred by the Director as an officer of the Company.

The Company maintains a Directors' and Officers' insurance policy that, subject to some exceptions, provides insurance cover to past, present and future Directors, Secretaries and Executive Officers of the Company and its controlled entities. The Company has paid an insurance premium for the policy. The contract of insurance prohibits disclosure of the amount of the premium and the nature of the liabilities insured.


REMUNERATION REPORT - AUDITED

This report outlines the remuneration arrangements in place for Directors and executives of Beaconsfield Gold NL ("the Company").

Remuneration Philosophy

The performance of the Company depends upon the quality of its Directors and executives. To prosper, the Company must attract, motivate and retain highly skilled Directors and executives.
To this end, the Company embodies the following principles in its remuneration framework:

• Alignment of shareholders' interests with interests of Directors and executives.
• Engage and retain appropriately qualified and high-calibre executives.
• Maintain the integrity of the Company's reward program.
• Portion of executive remuneration may be "at risk", dependent upon meeting pre-determined performance benchmarks.
• Non-Executive Directors may receive part of their remuneration in the form of shares, whether fully or partly-paid.

• reward executives for Company and individual performance against targets set by reference to appropriate benchmarks;
• align the interests of executives with those of shareholders;
• link reward with the strategic goals and performance of the Company; and
• ensure total remuneration is competitive by market standards.

• Fixed Remuneration
• Variable Remuneration
  - Short Term Incentive ("STI"); and
  - Long Term Incentive ("LTI").

• The Agreement sets out Mr. Colvin's duties and responsibilities.
• Base salary of $250,000 per annum to be reviewed annually.
• Discretionary performance remuneration to be determined annually, by the Board.
• Grant of 800,000 options on 1 September 2005, for nil consideration, at an exercise price of $0.374, half of which are exercisable any time after 1 September 2006, and the balance at any time after 1 September 2007. The Board to discuss with Mr Colvin, by 1 September 2006, the grant of further options based on performance. All options will be issued under the rules of the Beaconsfield Gold NL Option Scheme.
• Mr. Colvin may resign from his position and thus terminate the Agreement by giving not less than three months' written notice.
• The Company may terminate the Service Agreement by providing three months' prior written notice and making a payment of:
  (1) three months' base remuneration; plus
  (2) two weeks' base remuneration for each completed year of continuous service (pro-rata for part-completed year).
• The Company may terminate the Agreement at any time without notice if serious misconduct has occurred.

Notes:
(1) The Constitution provides that any Director who is called upon to perform services for the Company over and above that normally expected of a Non-Executive Director may be paid special remuneration in addition to normal Directors' fees. Approval by the Chairman is required before such special remuneration is paid.
(2) W Tsingos' fees were paid to Ramon Cove Pty Ltd.
(3) The amounts disclosed as "superannuation" represents the payments made directly to superannuation funds as directed by the director or executive.
(4) D E Clarke and K J Perrin are Directors of Allstate Explorations NL. Included in post employment superannuation are their director's fees received from Allstate Explorations NL post 30 April 2007 of $7,500 and $5,000 respectively.
(5) Represents the value of options and partly paid shares included in remuneration as a percentage of total remuneration.
(6) Represents performance related remuneration as a percentage of total remuneration.


Compensation options: Granted and vested during the year

On 5 April 2007 options were granted to the Chief Executive Officer, and Chief Financial Offer/Company Secretary pursuant to the Beaconsfield Gold NL Option Scheme, as equity compensation benefits under the long-term incentive plan. The options were issued for nil consideration. Each option entitles the holder to subscribe for one fully paid ordinary share in the entity at an exercise price of $0.34 per share. No options have been granted to the Non-Executive Directors under this scheme.
The terms of the options are as follows:

1. The options vest as to 50% on the first anniversary of issue and the balance on the second anniversary of issue.
2. All options issued must be exercised within 5 years after their date of issue.
3. Options can be exercised at any time after vesting and before their expiry. Termination of employment triggers expiry of the options.
4. The options are only transferable with prior approval of the Board.