Annual Report

2007

Cover Photo: Aeromagnetic image from an aerial geophysical survey of

Glengarry’s Snake Creek Project area in North Queensland, highlighting structures in the underlying bedrock.

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G L E N G A R RY R E S O U R C E S L I M I T E D A B N 4 0 0 0 9 4 6 8 0 9 9

Contents Page

Corporate Directory . . . . . . . . . . 2

Chairman’s Report . . . . . . . . . . 3

Operations Review . . . . . . . . . . 5

Directors’ Report . . . . . . . . . . 18

Auditor’s Independence Declaration . . . . . . . . . . 31

Corporate Governance Statement . . . . . . . . . . 32

Financial Report . . . . . . . . . . 37

Directors’ Declaration . . . . . . . . . . 73

Independent Audit Report to the Members . . . . . . . . . . 74

Mineral Resources . . . . . . . . . . 76

Mineral Tenement Interests . . . . . . . . . . 77

Shareholder Information . . . . . . . . . . 79

Notice of Annual General Meeting . . . . . . . . . . Insert

Proxy Form . . . . . . . . . . Insert

Glengarry Resources Limited – Directors and Company Secretary

From left: Geoff James, Bill Manning, Keith McKay, David Richards

Annual Report – 30 June 2007

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Directors

K G McKay BSc (Hons), FAusIMM, MAICDChairman

D R Richards BSc (Hons), MAIG, MAICDManaging Director

W F Manning BA, LLB, FAICD

Secretary

G A James, BBus, CA, ACIS

Share Register

Advanced Share Registry Services110 Stirling HighwayNedlands WA 6009Telephone (08) 9389 8033

Auditor

KPMGChartered AccountantsCentral Park152 - 158 St Georges TerracePerth WA 6000

Solicitors

Blakiston & Crabb1202 Hay StreetWest Perth WA 6005

Mark Edwards4 Kangaroo ParadeYallingup WA 6282

Bankers

National Australia Bank1232 Hay StreetWest Perth WA 6005

Stock Exchange Listing

Glengarry Resources Limited shares are listed on theAustralian Securities Exchange

Ordinary fully paid shares (ASX code GGY)

Principal Registered Office in Australia

35 Havelock StreetWest Perth WA 6005(PO Box 975, West Perth WA 6872)

Telephone (08) 9322 4929Facsimile (08) 9322 5510Email info@glengarry.com.auWebsite www.glengarry.com.au

Corporate Directory

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Dear Fellow Shareholder

On behalf of the Board of Glengarry Resources, it givesme great pleasure to introduce the Company’s AnnualReport for the financial year to 30 June 2007.

In the past twelve months Glengarry has continued tofocus most of its exploration effort on its wholly ownedGreenvale Project in North Queensland. Furtherdrilling has been undertaken on the Maitland copperdeposit with very positive results including a best everintersection of 41 metres @ 3.25% copper in theunweathered primary zone. Additionally, geochemicalsurveys have defined two new copper anomalies to thenorth and the south of the existing deposit that mayrepresent new mineralised zones. The new anomaliesare yet to be drill tested.

A decision has recently been made to conduct a majorresource/reserve drill-out of the potentially economicMaitland copper deposit with the drilling programscheduled to commence next month. Maitlanddevelopment options include a stand-alone operationor trucking the ore to a nearby third party mill.

In the past year your Company has conducted adynamic and sustained exploration effort despiteunseasonable wet weather at Greenvale and generalongoing problems caused by the “resources boom” suchas shortage of drilling rigs, skilled labour shortages andslow return of assays from over worked laboratories.

In addition to ongoing exploration at Maitland, yourCompany conducted exploration programs for gold,base metals and uranium on several other prospects onthe Greenvale Project and on its Cannington and SnakeCreek Projects in western Queensland with encouragingresults. Further details of this exploration are presentedin the Managing Director’s Operations Reviewfollowing my Report.

During the past financial year Glengarry expended a totalof $2.21 million on exploration and associated

Chairman’s Report

administration costs. A planned expansion of theCompany’s exploration effort, including hiringadditional skilled personnel, will see this amountincreased to approximately $5 million in the coming year.

Glengarry is in a strong financial position to fund itsongoing exploration with cash and investments in otherpublic listed companies presently totalling some $9million. This healthy financial situation is the result ofseveral timely capital raisings and divestments of non-core assets. Key deals were the sale of the small Oasisuranium deposit to Mega Uranium Limited and a shareplacement to Kagara Zinc Limited who is nowGlengarry’s largest shareholder with a holding of16.9%.

There are obvious synergies between our proposedMaitland operation and Kagara Zinc’s nearbyBalcooma mining operation but Glengarry has retainedthe right to consider and initiate other options ifappropriate. We welcome Kagara Zinc’s investment inGlengarry and view it as a vote of confidence in thepotential of our Greenvale property.

Earlier this year, your Board decided to strengthen theCompany’s corporate business section with theappointment of a full-time Chief Financial Officer.Experienced Chartered Accountant Mr Geoff James hasassumed this role and also that of Company Secretary.Mr Desmond Kelly and Ms Janelle Burns hadundertaken these roles in a part-time capacity.Unfortunately they were not in a position to considerfull-time employment with Glengarry due to othercommitments and resigned. I would like to thank themfor their services over the past 18 months.

Subsequent to the end of the financial year, Non-Executive Director Mr Darren Gordon reluctantlyresigned due to other work commitments. Darren’svaluable corporate and financial advice will be missedand your Board is presently looking to secure areplacement director with similar experience.

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I am happy to advise that your Board is very optimisticabout Glengarry’s future. We have quality projects withdrill targets already defined and adequate funding toimplement our planned programs. The Company’sshare price has more than doubled since this time lastyear and we look forward to a further positive marketre-rating through exploration successes in the comingmonths.

In conclusion I would like to thank our ManagingDirector Mr David Richards and his Team for theirefforts in the past year. Also thanks to all of ourshareholders for your support and I look forward tomeeting you personally at the Company’s AnnualGeneral Meeting which this year will be held at theCeltic Club in Perth on Tuesday the 20th of November.

Keith G McKayChairman

25 September 2007

Chairman’s Report (continued)

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Summary

Glengarry Resources Limited is a Perth-based juniorexploration company undertaking mineral explorationin Australia. The Company’s main focus is exploring forcopper, gold, uranium and other base metals on whollyowned projects within Australia (Figure 1).

During the financial year (the year) Glengarry conductedexploration on four wholly owned projects while threeother projects where subject to joint ventures managedby other parties.

The Company focused its exploration effort at theGreenvale Project located in North Queensland.Exploration was also carried out at the Cannington andSnake Creek Projects in western Queensland and at RumJungle in the Northern Territory.

The highlight of exploration for the year was drillingat the Maitland copper deposit on the wholly ownedGreenvale Project where Hole MTRC18 intersected

Operations Review

41 metres @ 3.25% copper from 91 metres. Theintersection is the best ever recorded at Maitland andconfirms potential to upgrade the inferred resourceestimated last year of 1.6 million tonnes @ 1.29%copper. An economic scoping study indicates that if theresource is upgraded to a reserve then there is goodpotential for it to be mined and profitably treated throughexisting mills in the area. A reserve drilling program isscheduled to commence in October 2007.

There is good potential to significantly increase theresource at Maitland as the existing deposit remains openat depth (below 175 metres) and additional coppergeochemical anomalies have been defined north and southof the existing resource.

Elsewhere on the Greenvale Project, Glengarry plans tocontinue its multi-commodity exploration program withan emphasis on drill testing existing targets as quickly aspossible.

Figure 1: Locations of Current Glengarry Projects

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The wholly owned Cannington Project is located closeto the world-class Cannington silver-lead-zinc minecurrently operated by BHP Billiton. Drilling during theyear intersected anomalous uranium (0.9 lbs/t U3O8)and silver (up to 10 g/t) at the Crackpot prospect whichappears to be located within a structural corridorprospective for a number of commodities. This corridorwill be further assessed in the coming year.

The Snake Creek Project is located approximately 100kilometres north of Cannington and is bisected by thesame prospective corridor. Exploration at Snake Creekdefined multiple copper/gold and uranium targets overwhich infill soil sampling has been carried out. Resultsof the soil sampling will be used to plan future drilltesting.

At the Citadel Project in northwest Western Australia,a detailed review of previous exploration data hasidentified a number of targets warranting follow updrilling. Access negotiations are in progress with theNative Title owners and initial field work is scheduledto commence in 2008.

At the Rum Jungle Project located south of Darwin inthe Northern Territory, high grade gold mineralisationhas been identified at the Acacia North prospect. Drillfollow up will be completed as soon as a rig can besecured.

The Lucky Creek and Mt Guide Joint Venture Projectsare located in Queensland close to known world classbase metal deposits. Exploration targeting base metaland gold mineralisation was carried out by BeaconMinerals and Summit Resources respectively. Bothcompanies are active explorers and work will continueon these Joint Ventures next year.

A proactive project generation strategy resulted in theacquisition of additional tenements which are yet to begranted but where exploration is planned to commencein 2008.

During the year, Glengarry divested two non-core assetswhich will provide additional funding and permit theCompany to significantly expand its exploration effortin Australia next year. The Charters Towers Project whichcontained the small Great Britain gold resource was sold

Operations Review (continued)

to ASX-listed Mantle Mining Corporation Limited. Theuranium rights for the Greenvale Project which includedthe small Oasis uranium deposit were sold to TSX-listedMega Uranium Limited.

Subsequent to the end of the year, respected miner KagaraZinc Ltd invested in Glengarry providing an additional$4.375 million dollars for future exploration. Kagara iscurrently mining high grade base metal deposits atBalcooma, located approximately 40 kilometres northeastof the Maitland copper deposit.

Glengarry’s direct exploration expenditure for the yearwas $1.25 million. This figure is budgeted to increasesubstantially next year to $4 million as the Companyincreases it exploration effort in Australia. A strongemphasis will be placed on drilling and other in-groundexploration.

QUEENSLAND PROJECTS

GREENVALE PROJECT(Glengarry 100%)

The Greenvale Project is situated 200 kilometres west ofTownsville in North Queensland (Figure 1) and is locatedimmediately east of the mined-out 4.5 million ounceKidston Gold Mine and just south of Kagara Zinc’scurrent Balcooma base metal operations (Figure 2). TheProject area covers approximately 1,860 squarekilometres and consists of 10 granted tenements.

During the year, Glengarry sold the uranium rights atGreenvale (including the small Oasis uranium deposit)to TSX listed Mega Uranium Limited and entered into afarm out agreement with ASX listed Beacon MineralsLimited over the tenements comprising the north easternportion (Lucky Creek JV) of the Project area (Figure 2).Glengarry retains 100% of all mineral rights (excludinguranium) for the western and southern tenements atGreenvale which cover 1,662 square kilometres,approximately 90% of the total Project area.

Field work including drilling, soil sampling andgeophysics was carried out at a number of prospectsduring the year and the results enhanced the economicpotential of the Project area.

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Operations Review (continued)

Maitland Prospect – (Copper)

The primary focus of Glengarry’s exploration activitiesis the Maitland prospect where a potentially economiccopper resource has been defined.

Copper ores were mined at the Maitland prospect from1909 to 1921 with approximate production of 1,250tonnes @ 17.4% copper. Exploratory drilling in the1960’s confirmed significant copper mineralisation overa 300 metre strike; however, at the time it was interpretedthat the deposit had limited depth potential and was toosmall to warrant further work. A review by Glengarryconcluded that the deposit plunged to the south and wasconsequently open at depth (Figure 3).

Glengarry subsequently completed 3 phases of drillingduring the 2005/2006 year confirming that the depositis open at depth and underscoring the potential for asignificant copper-molybdenum deposit at Maitland.

An inferred resource of 1.6 million tonnes @ 1.29%copper was estimated last year based on the drillingconducted by Glengarry and the 1960’s drilling. Apreliminary economic scoping study based on thisresource indicates that there is good potential to upgradethe resource to a reserve that could be mined and

Figure 2: Greenvale Project – Tenure and Prospects

profitably treated by a third party owned mill up toseveral hundred kilometres from the deposit. Initialmetallurgical test work also indicates excellent copperrecoveries (>90%) in the primary zone which containsapproximately 90% of the defined resource.

The resource was constrained by limited data below 50metres depth and additional drilling was required to testthe continuity of high grade mineralisation and forpossible extensions. An additional 4 RC percussion holesfor 570 metres were completed during the year.

Better results from the 2007 drilling are tabled below:

True widths are estimated to be 60-70% of the down hole intersections.

Hole From To Intersection Cu(m) (m) (m) %

MTRC17 49 71 22 1.54

MTRC18 76 87 11 1.0191 132 41 3.25

Including the following higher grade intervals

104 117 13 6.31105 106 1 11.75115 117 2 14.30

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Figure 3: Maitland Copper Prospect – Long Section (looking west)

Operations Review (continued)

Hole MTRC18 was drilled into the southern shoot atMaitland (Figure 3 & 4) and the 41 metres @ 3.25%copper intersection reported is the best ever recordedfrom drilling at Maitland. The hole tested a 100 metregap between previous intersections and confirmed thecontinuity of high grade mineralisation which remainsopen at depth.

High grade molybdenum was also recorded in the HoleMTRC18 with 5 metres @ 0.47% intersected from 87metres (Figure 4). High grade molybdenum has beenintersected in a number of drill holes at Maitland (Figure3) and could add significant value to a future miningoperation; however, it has not yet been considered inany preliminary scoping studies. Holes drilled in the1960’s were not assayed for molybdenum.

The copper and molybdenum mineralisation occurs asdisseminated, primary chalcopyrite and molybdenitewithin demagnetised, silica–epidote–magnetite alteredmetasediments.

Following the positive results from the latest drilling,the Company has decided to carry out comprehensiveresource definition drilling at Maitland. The drilling will

Figure 4: Maitland Prospect – Drill Sectionshowing Hole MTRC18

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total 7,000 to 10,000 metres and is scheduled tocommence in October 2007. Environmental monitoringstudies will also be undertaken to facilitate the applicationfor a Mining Lease in the second half of next year.

Elsewhere at Maitland, geochemical exploration hasindicated potential for at least two additional zones ofmineralisation. The geochemical exploration comprisedseparate programs of soil sampling and shallow drilling(Figure 5).

The soil sampling program, carried out immediatelynorthwest of the existing copper resource at Maitland(Figure 5), delineated a 1 kilometre long, northeasttrending, plus 100 ppm copper anomaly with values upto 832 ppm copper (Northern Soil Anomaly). The soilanomaly increases in tenor towards the southwest, withthe highest values recorded on the southern most line.Additional soil sampling will be completed to define theextent of this potentially mineralised zone.

In a separate program, a line of 7 shallow drill holes(average depth 18 metres) spaced 50 metres apart wasdrilled across the alluvial flats approximately 1.3kilometres south of the known mineralisation atMaitland (Figure 5). The alluvial flats are part of theEinasleigh River flood plain and comprise transportedsediments approximately 6 metres thick which obscurethe prospective bedrock. The drill traverse intersectedup to 503 ppm copper (Southern Interface Anomaly).Anomalous silver (up to 0.9 ppm), lead (up to 203 ppm)and antimony (up to 229 ppm) were also recorded bythe drill hole immediately west of the anomalous copperzone (Figure 5). Elevated metal values were recordedby 3 adjacent holes which define a 150 metre wideanomalous zone that may represent the halo to base metalmineralisation at depth. The anomalous zone is openalong strike and additional shallow drilling will be carriedout to define the extents of this new target area.

The newly defined geochemical targets combined withthe known mineralisation being open at depth meansthere is excellent potential to significantly increase thesize of the resource at Maitland.

T3 Prospect – (Silver/Lead/Zinc/Copper)

The T3 area is underlain by the southern strike extensionof the geological sequence which hosts Kagara Zinc’sBalcooma base metal mining operations approximately70 kilometres to the northeast (Figure 2). Soil samplingby Glengarry last year defined two zones of extensive,high order base metal and silver anomalism (Figure 6)consistent with the style of mineralisation being minedby Kagara Zinc at Balcooma. Previous prospecting hadlocated a small outcrop (2 by 2 metres) containingprimary sulphide mineralisation and rock chip samplingrecorded up to 8% zinc, 11% lead and 52 g/t silver which,given the extent of the soil anomalism, indicated goodpotential for the discovery of economic mineralisation.

Five RC percussion drill holes totalling 295 metres weredrilled at the T3 prospect during the year to test thestrong base metal and silver anomalism. Several criticalholes could not be drilled due to the inability of the truckmounted drill rig to access some of the sites.

Moderate alteration and elevated silver-lead-zinc valueswere recorded in most holes with the best intersection

Operations Review (continued)

Figure 5: Maitland Prospect – Untestedgeochemical anomalies

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being 1 metre @ 7.9 g/t Ag, 0.48% Pb and 1.29% Zn.While the widths and grades are not economic they doindicate the potential for high-grade Balcooma stylemineralisation within the prospect area which remains onlypartially tested. A review of all available data will becompleted prior to planning further work at the prospect.

Mt Remarkable Prospect – (Gold)

The geological setting of Mt Remarkable is similar to the3.5 million ounce Mt Leyshon gold deposit which islocated near Charters Towers approximately 230kilometres to the east-southeast. Exploration in the 1980’sand 1990’s recorded strongly anomalous gold from creeksdraining the Mt Remarkable prospect; however, the sourceof the anomalous gold was never located.

Soil sampling completed by Glengarry earlier this yeardefined a zone of strong (>0.1 g/t) gold-in-soil anomalismover 350 metres strike length, including values up to 0.73g/t gold, coincident with the Burdekin River Fault (Figure7), a major geological structure (Figure 2).

Seven drill holes totalling 842 metres were drilled at theMt Remarkable gold prospect to test the soil anomaly.

The drilling intersected weak to moderate alterationcoincident with the Burdekin River Fault (Figure 7)indicating potential for a mineralising system; however,assay results were low with the best result being 1 metre@ 1.42 g/t gold from 9 metres depth. The drilling doesnot appear to have intersected the source of the stronggold in soil anomaly (up to 750 ppb gold) and furtherwork is being considered to locate the source.

Operations Review (continued)

Figure 6: T3 Prospect – Soil sampling showinganomalous areas

Copper Creek Prospect –(Copper/Silver/Gold)

The Copper Creek area is located approximately 44kilometres south of the Maitland prospect in the samegeological sequence (Figure 2). It was identified by1980’s stream sampling which defined a coherent, 1kilometre long copper anomaly that has never beenpreviously followed up. Assays received for outcropsamples collected in December 2006 recorded up to 3.3%copper, 0.32 g/t gold and 19 g/t silver.

Reconnaissance soil sampling has been carried out alongstrike of the mineralised outcrop to determine the extentof the anomalous zone. Assay data are pending as at theend of the year.

Figure 7: Mt Remarkable Prospect – Soil samplingshowing area of >100 ppb gold in soils

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Greenvale Uranium Rights

In January 2007, the Company sold the Greenvaleuranium rights including the small Oasis uranium depositto Mega Georgetown Pty Ltd; a wholly owned subsidiaryof TSX listed Mega Uranium Limited. Details of the saleagreement are given on Page 17 under “Divestments”.

Mega holds tenements in the Greenvale regioncomprising more than 7,000 square kilometres includingtenure over the Ben Lomond and Maureen uraniumdeposits which have combined resources totalling over

17 million pounds of U3O8. The Greenvale Project isstrategically located between these two deposits. The salewill allow Glengarry to focus on the other commoditiesat Greenvale while significantly increasing the opportunityto benefit from the development of a uranium deposit inthe region. Glengarry’s investment in Mega also meansthe Company is well positioned to benefit from probablechanges to the regulatory environment for uranium inAustralia.

CANNINGTON PROJECT(Glengarry 100%)

This Project is located 300 kilometressoutheast of Mt Isa in western Queenslandand within 4 kilometres of the 60 milliontonne Cannington silver-lead-zinc mine(Figures 8 and 9). Cannington is ownedand operated by BHP Billiton Limited andis the world’s largest silver mine producing7% of total world production. Glengarry’stenements lie within the covered southeaststrike extension of the Cannington corridor- a structural/stratigraphic package of rockshosting the Cannington deposit and henceprospective for similar ore bodies.Exploration potential is also good for ironoxide copper/gold and uranium depositssimilar to those discovered elsewhere in theMt Isa region (Figure 8).

Geophysical surveying delineated a highlyconductive anomaly immediately east of theCrackpot prospect where previous samplinghad recorded strongly anomalous base metalvalues in float material. The conductivebody was interpreted to be due to sulphidemineralisation and the possible source of theanomalous float.

Two RC, percussion drill holes for a total290 metres were drilled into the Crackpotgeophysical anomaly. Both holes intersectedzones of disseminated to semi-massive

Figure 8: Glengarry Resources Limited – Mt Isa Project Areas

Operations Review (continued)

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pyrite mineralisation which is the probable cause of theanomaly. No significant base metal results were recorded;however, both holes intersected strongly anomalousuranium (up to 0.9 lbs/t U3O8) associated with elevatedsilver values (up to 10 g/t).

The anomalous uranium values are coincident with asheared, pyritic black shale unit which is is thought todefine the southern extension of the regionally extensiveCloncurry Fault which aeromagnetic data clearly definesover a 15 kilometre strike length within Glengarry’s tenure(Figure 9). Research indicates that the Fault is analogousto other structures associated with structurally controlled,high grade uranium deposits elsewhere in the world.

Figure 9: Cannington Project showing prospects

The highly encouraging uranium drill results provideadditional justification for Glengarry to conduct uraniumexploration on the Cannington Project which is locatedin same geological sequence that hosts the Mary Kathleenuranium mine (Figure 8). Follow up exploration willcomprise soil sampling across the northern Glenholmetenement block where regional radiometric data hasdefined a strong uranium anomaly (Figure 9) and shallow

geochemical drilling across the Crackpot trend on thesouthern tenement. The Crackpot area is largely obscuredby transported sediments and is not conducive toconventional surface exploration techniques.

SNAKE CREEK PROJECT(Glengarry 100%)

The Snake Creek Project is located in northwestQueensland approximately 125 kilometres east-southeastof Mt Isa (Figure 8) and on the northern extension ofthe Cloncurry Fault. It is prospective for copper-goldand uranium mineralisation.

Until December 2006, the Project was subject to a jointventure agreement with Xstrata Copper who completedwide spaced soil sampling (500 by 100 m) and limitedrock chip sampling. Despite recording stronglyanomalous copper, gold and uranium, Xstrata withdrewfrom the JV as they did not consider that potential targetswould meet their corporate requirements.

A review completed by Glengarry of all available datagenerated by Xstrata and previous explorers indicatedmultiple targets warranting infill soil sampling. Targetsinclude a number of uranium anomalies (Figure 10),multiple copper-gold anomalies defined by Xstrata’s widespaced soil sampling and several EM anomalies definedby BHP in the 1990’s.

Figure 10: Snake Creek Project showing uranium targets

Operations Review (continued)

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Rock chip samples collected during reconnaissance fieldchecking, recorded anomalous uranium (up to 319 ppmU3O8), copper (up to 0.5%) and gold (up to 1.9 g/t)indicating potential for significant mineralisation withinthe Project. An infill soil sampling program totalling

deposits including Kintyre (36 Kt tonnes U3O8), Telfer(26 M oz gold, 1 Mt copper) and Nifty (1 Mt copper).

The prospective bedrock within the Project area is entirelycovered by barren, transported sediments which preventthe effective use of traditional exploration techniques.Consequently, the Project remains very underexploreddespite its obvious metal potential.

WESTERN AUSTRALIA

CITADEL PROJECT (Glengarry 100%)

The wholly owned Citadel Project covers approximately1,700 sq. kilometres in the Paterson geological provinceand is located 100 kilometres north of the Telfer gold mine(Figure 11). The region contains several world class metal

675 samples has been completed across the highestpriority targets. Assay data had not been received by theend of the year; however the Company is confident thatdrill follow up will be warranted.

Figure 11: Citadel Project Area

Operations Review (continued)

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Limited drilling by previous explorers indicates that theProject is prospective for high grade gold and coppermineralisation. At the Magnum prospect, drilling recordedup to 15 metres @ 14.1 g/t gold (from 464 metres) and8 metres @ 4.4% copper (from 279 metres) and multiplezones of ore grade mineralisation remain open along strikeand at depth. The Project is also considered highlyprospective for Kintyre-style uranium deposits but therehas been no previous exploration for this commodity.

A detailed review of previous exploration work andregional datasets was completed during the year. Multiplegold/copper/uranium targets have been defined withinthe Project area which warrant further work. Beyond theimmediate Magnum prospect, where follow up diamonddrilling is planned along strike of known high grademineralisation, eight other targets have been indentifiedwhere anomalous gold and copper values have beenrecorded coincident with prospective lithostructuralsettings. The anomalous geochemical values wererecorded in wide spaced aircore drill holes at the interfacebetween post mineralising sedimentary cover and theprospective Proterozoic bedrock. The gold and coppervalues recorded are similar or better than thoseencountered in the initial aircore drilling across theMagnum prospect area. Initial follow up explorationwill largely comprise infill aircore drilling.

Glengarry had intended to commence field activities atCitadel this year but work has been delayed due toprotracted access negotiations with the Martu people whoare the Traditional Owners of the southern two thirds ofthe Project area. Field work is now scheduled tocommence during the second quarter of 2008.

NORTHERN TERRITORY

RUM JUNGLE PROJECT(Glengarry 100%)

The Rum Jungle Project comprises three contiguousexploration licences covering an area of approximately140 square kilometres located 65 kilometres south ofDarwin in the Northern Territory (Figure 12). TheProject is proximal to the historical Rum Jungle uraniummine (3,530 tonnes U3O8) and the Woodcutters lead-zinc mine (~6 Mt @ 12% zinc and 6% lead).

At the Acacia North prospect, drilling by earlier explorersintersected 6 metres @ 11.3 g/t gold (Figure 13) from72 metres depth. The mineralisation which is open inall directions, is coincident with a mafic sill/sedimentcontact and geochemically anomalous gold values havebeen intersected over a 1 kilometre strike length.Attempts to carry out follow up drilling at the prospectduring the year were unsuccessful due to the lack ofavailable drill rigs; however, it is hoped to secure asuitable rig early in the coming year.

Operations Review (continued)

Figure 12: Rum Jungle location plan showingprospects and mineral deposits

Figure 13: Acacia North drill section

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Operations Review (continued)

Regional radiometric data defines a number of uraniumanomalies within the Project area. Field reconnaissancehas been completed across these and a number of rockchip samples submitted for assay. Results are pending,at the end of the year.

Join Venture Farm-Outs

Glengarry has three other properties being managed byjoint venture partners.

Lucky Creek JV Project (North Queensland)

The Lucky Creek JV tenements are located immediatelynortheast of Glengarry’s wholly owned Greenvale Project(Figure 2) and are subject to a Joint Venture Agreementwith Beacon Minerals Limited (Beacon) which wasfinalised in November 2006. Under the terms of theAgreement, Beacon can earn an 80% equity in the “LuckyCreek” JV, with Glengarry free carried until thecompletion of a positive feasibility study.

During the year, Beacon carried out drill testing at theSteam Engine gold prospect and completed an airborneelectro-magnetic survey (VTEM) over the northern partof the JV area.

Drilling at the Steam Engine prospect confirmed thecontinuity and depth extensions of gold mineralisationdefined by drilling in the early 1990s. Better intersectionsrecorded by Beacon included 6 metres @ 5.5 g/t goldfrom 95 metres, 12 metres @ 3.5 g/t gold from 10 metresand 5 metres @ 4.5 g/t gold from 19 metres.

The VTEM survey was designed to define buried massivesulphide deposits similar to those currently being minedby Kagara Zinc at Balcooma approximately 20 kilometresto the northwest (Figure 2). Previous drilling withinthe JV area has reported low to moderate grade goldand base metal mineralisation at Galah Dam (up to 16m @ 4.5% Zn, 0.5% Cu, 1.1 g/t Au, 13 g/t Ag)indicating potential for economic mineralisation.

Further drilling within the JV area will be planned oncedata from the VTEM survey, which was flown late in theyear, have been processed and assessed.

Mt Guide JV Project (Western Queensland)

The Mt Guide Project is located in western Queenslandapproximately 35 kilometres south of Mt Isa and isprospective for base metal and gold mineralisation. TheProject was joint ventured to Summit Resources Limitedin March 2005. The tenement covers 13 kilometres ofthe southern strike extension of the Mt Isa Paroo Fault,which is known to be the structural control on a numberof world class deposits to the north including the Mt Isaand Hilton base metal mines.

Glengarry has a 10% Joint Venture interest which is tobe free carried until completion of a Bankable FeasibilityStudy.

During the year, Summit completed an IP geophysicalsurvey comprising a total 100 line kilometres over theprospective 13 kilometres strike extension of the Mt IsaParoo Fault. Due to corporate activity related to PaladinResources partial takeover of Summit, the results fromthe IP survey have not yet been fully assessed but will beused to target additional drilling next year.

Inningarra JV Project (Northern Territory)

The Inningarra Project is located in the NorthernTerritory approximately 35 kilometres southwest of themulti-million ounce Callie gold deposit near the southernmargin of the prospective Tanami-Granites geologicalcomplex. Rocks belonging to the prospective DeadBullock Formation, which hosts the Callie Deposit, areinterpreted to occur beneath younger transportedsediments which cover most of the 193 square kilometreproperty.

Glengarry entered into a joint venture with NewmontTanami Pty Ltd in 2003 whereby Newmont must spend$275,000 to earn 70% equity in the Inningarra Project.Newmont is responsible for negotiating access to thetenement with the Traditional Owners. Thesenegotiations are yet to be finalised and exploration hasnot yet commenced.

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Operations Review (continued)

Abbreviations

Ag Silver

Au Gold

Cu Copper

EPM Exploration Permit for Minerals

GGY Glengarry Resources Limited

g/t grams per tonne

IP Induced Polarisation

JORC Joint Ore Reserve Committee

JV Joint venture

km kilometres

Kt Thousand tonnes

lbs/t Pounds per tonne

Mo Molybdenum

Moz Million ounces

Mt Million tonnes

m metres

Pb Lead

ppb parts per billion (1ppb = 0.001 gram pertonne)

ppm parts per million (1ppm = 1 gram pertonne)

RC Reverse Circulation (drilling)

U3O8 Uranium oxide

Zn Zinc

CORPORATE MATTERS

CASH POSITION ANDINVESTMENTS

At the end of June 2007, Glengarry had approximately$1.04 million in cash.

Glengarry investments in other public listed companieswere valued at approximately $5.5 million.

EXPLORATION EXPENDITURE

Glengarry expended a total of $2.21 million onexploration and associated administration costs in theyear under review. Expenditure on direct exploration wasapproximately $1.25 million compared with $1.47million dollars last year. Administration costs increased23% to approximately $965,000.

The Company’s commitment to drill out the Maitlandcopper deposit combined with its intention to maintaina dynamic exploration program on the other AustralianProjects will result in budgeted expenditure being approx-imately 175% higher next year. Administration costs willalso rise due to the employment of additional staff.

CAPITAL RAISINGS

During September 2006, the Company undertook acapital raising that raised $1,632,166 (before costs). Thecapital raising was completed in two parts – a placementto clients of Patersons Securities Limited and an offer toshareholders to participate in the Company’s SharePurchase Plan (SPP). A placement of 24,000,000ordinary shares at an issue price of 4.2 cents each to raise$1,008,000 was made to sophisticated and professionalinvestors who were clients of Patersons. Under the SPP,192 shareholders participated in the SPP raising a totalof $624,166.

Subsequent to the end of the year, Glengarry announcedon 3 August 2007 that it had raised $4,375,000 via aplacement of 35,000,000 ordinary shares fully paid at12.5 cents per share to Kagara Zinc Ltd. The shareswere issued at a premium to the share price. The fundswill be used to aggressively expand the Company’sexploration effort on its Australian Projects.

Ann

ual R

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t 200

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Operations Review (continued)

As at 25 September 2007, Glengarry Resources Limitedhad 284,177,528 fully paid shares on issue and a totalof 4,100,000 unlisted options.

DIVESTMENTS

The Charters Towers Project was sold to Mantle MiningCorporation Limited which listed on the ASX on 14November 2006. Glengarry has been allocated3,000,000 shares in Mantle (equating to some 6.5% ofMantle Mining) which are escrowed for 12 months fromthe date of listing.

The Company announced the sale of the Greenvaleuranium rights on 25 January 2007 to Mega GeorgetownPty Ltd, a wholly owned subsidiary of TSX listed MegaUranium Limited. In return for the Greenvale uraniumrights, Glengarry received 750,000 Mega shares(escrowed until 13th July 2007) and a 1% NSR on futureuranium production from the Greenvale Project.Subsequent to the end of the year, Glengarry sold175,000 Mega shares realising $963,061 after costs.

NEW APPOINTMENTS

Mr Geoffrey James was appointed as Company Secretaryand Chief Financial Officer on 19 March 2007. Mr Jamesis a Chartered Accountant, a member of CharteredSecretaries Australia and has approximately 20 yearsrelevant industry experience. He was formally the GroupFinancial Accountant with Clough Limited where he wasemployed since January 1996. The appointment is anew full time position.

Previous Joint Company Secretaries, Mr Des Kelly andMs Janelle Burns, who were operating in a part timerole, stepped down on 30 March 2007.

Subsequent to the end of the year, Glengarry announcedon 23 July 2007 that Mr Darren Gordon stepped downas a non-executive Director due to other workcommitments. It is the Company’s intention to appointanother non-executive Director as soon as a suitablyqualified and experienced individual can be identified.

David Richards25 September 2007