1 FORTE ENERGY NL ABN 59 009 087 852 HALF-YEAR FINANCIAL REPORT 31 DECEMBER 2011 Forte Energy NL Suite 3 Level 3 1292 Hay Street West Perth WA 6005 AUSTRALIA FORTE ENERGY NL (ABN 59 009 087 852) CONTENTS Directors' Report 2 Consolidated Statement of Comprehensive Income 5 Consolidated Statement of Financial Position 6 Consolidated Statement of Changes in Equity 7 Consolidated Statement of Cash Flow 8 Notes to the Half-Year Financial Report 9 Directors' Declaration 17 Auditor's Independence Declaration 18 Independent Review Report 19 FORTE ENERGY NL (ABN 59 009 087 852) DIRECTORS' REPORT The Board of Directors of Forte Energy NL present their half-year report on the Consolidated Entity consisting of Forte Energy NL ("the Company" or "Forte Energy") and the entities it controlled at the end of, or during, the half-year ended 31 December 2011 ("Consolidated Entity" or "Group"). Directors The names of the Company's Directors in office during the half-year and until the date of this report are as below. Directors were in office for this entire period unless otherwise stated. Glenn Robert Featherby - Chairman Lady Barbara Judge- Deputy Chairman Mark David Reilly - Managing Director Christopher David Grannell - Non-executive Director Bosse Gustafsson - Technical Director Review and Results of Operations The Consolidated Entity reported a loss for the half-year of $1,289,810 (2010: $1,150,674). The principal activity of the Consolidated Entity during the reporting period was the exploration for mineral resources. The Consolidated Entity continues to investigate resource opportunities. Currently these are focused on the Consolidated Entity's uranium exploration licences in West Africa in the Republic of Guinea and the Islamic Republic of Mauritania. Uranium Exploration - Mauritania * In September, Forte Energy announced the granting of two new uranium exploration permits, Licences 948 and 949, in Mauritania. Known as Hassi Baida and Gin Ouissat, the licences cover 1,790 km2 and are located near the Consolidated Entity's existing licences in the north of the country. An initial 3,000m Reverse Circulation ("RC") drilling programme is currently underway to test several near to surface calcrete deposits within Hassi Baida. * During the half-year, a follow-up RC drilling programme comprising 63 holes for 8,567m commenced at the A238 Prospect. Drilling has been completed and the majority of assay results received. A238 Prospect currently has a JORC resource of 26Mt @ 256ppm U3O8 for 14.9Mlbs contained U3O8 (100ppm cut off) and a revised JORC resource is expected by the end of March 2012. * Assay results received so far from the RC drilling at A238 include: o RC133: 25m @ 421ppm U3O8 o RC134: 16m @ 445ppm U3O8 o RC140: 10m @ 601ppm U3O8 o RC143: 10m @ 572ppm U3O8 & 6m @ 489ppmU3O8 o RC148: 22m @ 377ppm U3O8 o RC150: 15m @ 450ppm U3O8 & 12m @ 449ppm U3O8 o RC152: 24m @ 371ppm U3O8 * Extensive field surveys were carried out including mapping and trenching at the Tisram (284) licence, identifying over 31 radiometric surface anomalies. Uranium Exploration - Guinea * Following the 2011 wet season, rehabilitation and access works on roads and bridges was undertaken, including two substantial deviations around collapsed bridges on the main road into Firawa. Preparations were completed for the 2011-12 drilling programme. * A 4,712m RC programme at the Firawa project has been completed with 63 holes drilled with initial indications confirm extensions along strike to the east and west of the existing central resources. * Final assay results are expected in May, with compilation of the Firawa resource upgrade, currently 17.7Mt @ 296ppm U3O8 for 11.6Mlbs contained U3O8 (100ppm cut off), scheduled for completion by the end of June 2012. * A follow-up programme of RC drilling at Bohoduo consisting of 17 holes totalling 1,277m has also been completed. The holes were drilled over a strike length of 8km and 9 of the holes have identified mineralisation from surface down to 80m. This potentially extends the mineralised zone to over 3km strike length. Assay results are expected in April 2012. * A preliminary study of the baseline environmental and social impact assessment for Firawa has been completed by SGS Laboratory Services Ghana Ltd. Corporate * In July 2011 Forte Energy announced the appointment of Mr Scott Yelland as Chief Operating Officer to expedite the Consolidated Entity's exploration programmes in West Africa. Events subsequent to balance date On 6 February 2012 the Consolidated Entity announced that it had been granted two additional uranium exploration permits in Mauritania, West Africa: Licences 1588 - Nord Tmeimichat Rhall Amane and 1173 - Bir Ould Ben Nasser. The licences cover an area of 1,325km2 and are located near the Company's existing licences in the north of the country. The Company now holds ten uranium exploration permits within Mauritania for a combined area of over 9,925km2, in addition to its Firawa and Bohoduo uranium prospects in Guinea, which total 847km2. Apart from other events to the extent to which are described elsewhere in this Director's Report, there has not arisen in the interval between the end of the financial period and the date of this report any other item, transaction or event of a material or unusual nature likely, in the opinion of the Directors of the Company, to effect: i. the Consolidated Entity's operations in future financial years; or ii. the results of those operations in future financial years; or iii. the Consolidated Entity's state of affairs in future financial years. Dividends No dividend has been paid during the period (2010: $ nil). AUDITOR'S INDEPENDENCE DECLARATION A copy of the Auditor's Independence Declaration as required under section 307C of the Corporations Act is set out on page 18 and forms part of this report. Signed in accordance with a resolution of the directors. Mark Reilly Managing Director London 14 March 2012 Note: The information in this report that relates to Exploration Results is based on information compiled by Mr. Bosse Gustafsson, who is a Member of the European Federation of Geologists, a 'Recognised Overseas Professional Organisation' ('ROPO') included in a list promulgated by the ASX from time to time. Mr Gustafsson is a full time Technical Director of Forte Energy NL and is responsible for exploration activities in Mauritania and Guinea. Mr. Gustafsson has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr. Gustafsson consents to the inclusion in this report of the matters based on his information in the form and context in which it appears. The information in this report that relates to the Mineral Resource at the A238 prospect in Mauritania is based on information compiled by Mr. Bosse Gustafsson or Forte Energy NL and Mr Galen White BSc (hons) FGS, MAUSIMM, Principal Geologist of CSA Global Inc (UK). The information in this report that relates to the Mineral Resource at Bir En Nar in Mauritania is based on information compiled by Mr. Bosse Gustafsson of Forte Energy NL and Mr. Neil Inwood of Coffey Mining Ltd. The information in this report that relates to the Mineral Resource at Firawa in Guinea is based on information compiled by Mr. Bosse Gustafsson of Forte Energy NL and Mr. Doug Corley of Coffey Mining Ltd. Mr. Gustafsson, Mr. Corley, Mr. Inwood and Mr. White have sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they have undertaken 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". Mr. Gustafsson, Mr. Corley, Mr. Inwood and Mr. White consent to the inclusion in this report of the matters based on their information in the form and context in which it appears. FORTE ENERGY NL (ABN 59 009 087 852) CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE HALF-YEAR ENDED 31 DECEMBER 2011 Notes 2011 2010 $ $ Revenue 4 216,315 94,725 Exploration expenses (46,858) (1,455) Administrative expenses 5 (1,446,226) (1,233,835) Loss before income tax (1,276,769) (1,140,565) Income tax expense (13,041) (10,109) Loss after income tax (1,289,810) (1,150,674) Net loss for the period (1,289,810) (1,150,674) Other comprehensive income Gain/(loss) on available-for-sale financial assets, net (9,303) 734 of tax Impairment loss transferred to loss for the period 11,260 - Foreign currency translation (40,524) (10,011) Other comprehensive income for the period net of tax (38,567) (9,277) (1,328,377) (1,159,951) TOTAL COMPREHENSIVE INCOME FOR THE PERIOD ATTRIBUTABLE TO MEMBERS OF FORTE ENERGY NL Loss per share for loss attributable to the ordinary equity holders of the Company (cents per share) - basic loss per share (0.19) (0.20) - diluted loss per share (0.19) (0.20) This statement of comprehensive income should be read in conjunction with the accompanying notes. FORTE ENERGY NL (ABN 59 009 087 852) CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2011 Notes 31 December 2011 30 June 2011 $ $ ASSETS Current Assets Cash and cash equivalents 6 4,782,456 8,716,949 Trade and other receivables 508,227 486,848 Prepayments 297,272 56,926 5,587,955 9,260,723 Non-current assets classified as held for sale 7 144,231 132,776 Total Current Assets 5,732,186 9,393,499 Non-current assets Available-for-sale financial assets 12,220 21,523 Exploration and evaluation expenditure 9 25,191,403 22,758,353 Plant and equipment 268,580 212,496 Total Non-Current Assets 25,472,203 22,992,372 TOTAL ASSETS 31,204,389 32,385,871 LIABILITIES Current Liabilities Trade and other payables 814,172 739,290 Income tax payable 35,691 33,388 Provisions 65,406 66,079 915,269 838,757 Liabilities associated with assets held for sale 7 154 484 Total Current Liabilities 915,423 839,241 TOTAL LIABILITIES 915,423 839,241 NET ASSETS 30,288,966 31,546,630 EQUITY Contributed equity 11 81,287,225 81,287,225 Reserves 2,349,754 2,317,608 Accumulated losses (53,348,013) (52,058,203) TOTAL EQUITY 30,288,966 31,546,630 This statement of financial position should be read in conjunction with the accompanying notes. FORTE ENERGY NL (ABN 59 009 087 852) CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF -YEAR ENDED 31 DECEMBER 2011 Contributed Accumulated AFS financial Equity Foreign Total equity losses assets benefits currency equity reserve reserve translation $ $ $ $ $ $ At 1 July 2011 81,287,225 (52,058,203) (1,957) 2,331,334 (11,769) 31,546,630 - (1,289,810) - - - (1,289,810) (Loss) for the period Other comprehensive - - 1,957 - (40,524) (38,567) income Total comprehensive - (1,289,810) 1,957 - (40,524) (1,328,377) income for the half year net of tax Equity transactions: Share-based payment - - - 70,713 - 70,713 Balance At 81,287,225 (53,348,013) - 2,402,047 (52,293) 30,288,966 31 December 2011 At 1 July 2010 67,486,567 (49,645,222) (9,542) 2,303,522 (1,763) 20,133,562 - (1,150,674) - - - (1,150,674) (Loss) for the period Other comprehensive - - 734 - (10,011) (9,277) income Total comprehensive - (1,150,674) 734 - (10,011) (1,159,951) income for the half year net of tax Equity transactions: Share-based payment - - - 36,257 - 36,257 Exercise of options 110,000 - - - - 110,000 Transaction costs (1,543) - - - - (1,543) Balance At 67,595,024 (50,795,896) (8,808) 2,339,779 (11,774) 19,118,325 31 December 2010 This statement of changes in equity should be read in conjunction with the accompanying notes. FORTE ENERGY NL (ABN 59 009 087 852) CONSOLIDATED STATEMENT OF CASH FLOW FOR THE HALF -YEAR ENDED 31 DECEMBER 2011 2011 2010 $ $ Cash flows from operating activities Payments to suppliers and employees (1,547,655) (1,138,870) Income tax paid (10,739) - Interest and other income received 392,185 142,007 Net cash flows used in operating activities (1,166,209) (996,863) Cash flows from investing activities Payment for purchase of equipment (101,266) (7,223) Payment for exploration and evaluation expenditure (2,667,908) (2,134,898) Net cash flows used in investing activities (2,769,174) (2,142,121) Cash flows from financing activities Proceeds from issue of shares - 110,000 Transaction costs relating to issue of shares - (1,542) Net cash flows from financing activities - 108,458 Net decrease in cash and cash equivalents (3,935,383) (3,030,526) Effects of exchange rate changes on cash and cash equivalents 890 (4,247) Cash and cash equivalents at beginning of the period 8,716,949 4,091,528 Cash and cash equivalents at end of period 4,782,456 1,056,755 This statement of cash flow should be read in conjunction with the accompanying notes. FORTE ENERGY NL (ABN 59 009 087 852) NOTES TO THE FINANCIAL REPORT FOR THE HALF-YEAR ENDED 31 DECEMBER 2011 1. CORPORATE INFORMATION The half-year report of Forte Energy NL and its controlled entities ("Consolidated Entity") for the period ended 31 December 2011 was authorised for issue in accordance with a resolution of the directors on 14 March 2012. Forte Energy NL is a company limited by shares incorporated in Australia, whose shares are publicly traded on the Australian Stock Exchange (ASX code "FTE"), and on the AIM Board of the London Stock Exchange. The nature of operations and principal activities of the Consolidated Entity during the half-year was the exploration for minerals. There have been no significant changes in the nature of these activities during the half-year. 2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (a) Basis of Preparation This general purpose condensed consolidated financial report for the half-year ended 31 December 2011 has been prepared in accordance with AASB 134 "Interim Financial Reporting" and the Corporations Act 2001. The half-year financial report does not include all notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the Consolidated Entity as the full financial report. It is recommended that the half-year financial report should be read in conjunction with the annual financial report of Forte Energy NL for the year ended 30 June 2011 and considered together with any public announcements made by Forte Energy NL during the half-year ended 31 December 2011 in accordance with the continuous disclosure obligations of the ASX Listing Rules. The half-year financial report has been prepared on a historical cost basis, except for available-for- sale investments, which have been measured at fair value. The financial report is presented in Australian dollars ($). For the purpose of preparing the half-year financial report, the half-year has been treated as a discrete reporting period. Going Concern This report has been prepared on the going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and settlement of liabilities in the normal course of business. The Consolidated Entity has incurred a net loss after tax for the half year ended 31 December 2011 of $1,289,810 (31 December 2010: $1,150,674) and has net current assets at 31 December 2011 of $4,816,763 (30 June 2011: $8,554,258). The Consolidated Entity's cash flow forecast shows that the Consolidated Entity will require further funds to enable it to continue to meet its ongoing administrative and exploration expenditure for at least twelve months from the date of signing these financial statements. The Directors recognise that additional funding either through the issue of equity or the sale of non- core assets will be required for the Consolidated Entity to continue to actively explore its mineral properties, and are currently pursuing options to obtain that funding. The Directors are satisfied that, at the date of the signing of the financial statements, there are reasonable grounds to believe that the Consolidated Entity will be able to raise sufficient funds to meet its obligations as and when they fall due and continue to proceed with the Consolidated Entity's strategic objectives. Should the directors not achieve the matters set out above, there is significant uncertainty whether the Consolidated Entity will continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business and at amounts stated in the financial report. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or to the amounts or classification of liabilities that might be necessary should the Consolidated Entity not be able to continue as a going concern. (b) Significant accounting policies The accounting policies and methods of computation adopted in the preparation of the half-year financial report are consistent with those adopted and disclosed in the Company's annual financial report for the year ended 30 June 2011. The Group has adopted all new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) that are relevant to the consolidated entity and effective for annual reporting periods beginning on or after 1 July 2011. The adoption of new and revised Standards and Interpretations has not affected the amounts reported for the current or prior half-year. (c) Basis of consolidation The consolidated financial statements comprise the financial statements of Forte Energy NL and the entities it controlled at the end of, or during, the half year ended 31 December 2011 ("Consolidated Entity"). The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and profit and losses resulting from intra-group transactions have been eliminated in full. Subsidiaries are fully consolidated from the date on which control is transferred to the Consolidated Entity and cease to be consolidated from the date on which control is transferred out of the Consolidated Entity. 3. SEGMENT INFORMATION Identification of reportable segments: For management purposes, the Consolidated Entity is organised into two business segments based on geographical exploration regions. Management monitors the operating results of business segments separately for the purpose of making decisions about resources to be allocated and of assessing performance. Segment performance is evaluated based on exploration costs and results obtained. Finance costs, finance income and income taxes are managed on a group basis. The reportable segments of the Consolidated Entity are as follows: o Uranium exploration in Mauritania. o Uranium exploration in Guinea. Accounting policies and inter-segment transactions: The accounting policies used by the Consolidated Entity in reporting segments are consistent with those used to prepare the half-year financial report and are the same as those used in the prior year. It is the Consolidated Entity's policy that if items of revenue and expenses are not allocated to operating segments then any associated assets and liabilities are also not allocated to segments. This is to avoid asymmetrical allocations within segments which management believe would be inconsistent. The following items and associated assets and liabilities are not allocated to operating segments as they are not considered part of the core operations of any segment: o Interest income and cash balances o Net gains and losses on disposal of available-for-sale investments o Non-current assets classified as held for sale, and o Corporate and administrative income and expenses other than the depreciation of fixed assets. Operating segments - 31 December 2011 Mauritania Guinea uranium Total uranium exploration exploration $ $ $ Half year ended 31 December 2011 Revenues Other Revenue from external customers - - - Total Segment revenue - - - Unallocated items Interest Income 190,888 Other unallocated revenue 25,427 Total revenue per statement of comprehensive 216,315 income Results Segment results (30,657) (48,769) (79,426) Unallocated items Unallocated revenue 216,315 Unallocated expenses (1,413,658) Net loss before tax (1,276,769) Segment assets 18,259,587 7,082,449 25,342,036 Cash and cash equivalents 4,782,456 Non-current assets classified as held for 144,231 sale Other unallocated assets 935,667 Total assets per statement of financial 31,204,389 position Segment liabilities (497,566) (31,336) (528,902) Unallocated liabilities (386,521) Total liabilities (915,423) Operating segments - 31 December 2010 Half year ended 31 December 2010 Revenues Other Revenue from external customers - - - Total Segment revenue - - - Unallocated items Interest Income 60,115 Other unallocated revenue 34,610 Total revenue per statement of comprehensive 94,725 income Results Segment results (9,805) (13,812) (23,617) Unallocated items Unallocated revenue 94,725 Unallocated expenses (1,211,673) Net loss before tax (1,140,565) Segment assets as at 30 June 2011 16,271,747 6,662,594 22,934,341 Cash and cash equivalents 8,716,949 Non-current assets classified as held for 132,776 sale Other unallocated assets 601,805 Total assets per statement of financial 32,385,871 position as at 30 June 2011 Segment liabilities as at 30 June 2011 (532,493) (16,980) (549,473) Unallocated liabilities (289,768) Total liabilities as at 30 June 2011 (839,241) 4 REVENUE 2011 2010 $ $ Interest income 190,888 60,115 Office sub-lease rent 24,996 34,610 Other revenue 431 - Total other revenue 216,315 94,725 5 ADMINISTRATIVE EXPENSES Accounting and audit fees 32,108 28,780 Consulting fees 119,470 45,240 Depreciation of plant and equipment 45,281 28,696 Employee benefits expense (i) 523,394 482,515 Other employment expenses 13,653 2,645 Foreign exchange differences (331) 25,524 Impairment loss on available for sale assets 11,260 - Legal fees 55,095 15,452 Media and public relations 59,074 52,723 Nominated adviser and broker fees 69,832 51,483 Promotions, roadshows and conferences - 22,419 Reporting and listing costs 54,268 55,294 Share based payments - contractors 40,158 - Telecommunication and computing 36,930 66,079 Travel and accommodation 182,763 145,404 Minimum lease payments - operating lease 125,561 142,593 Other 77,710 68,988 Total administrative expenses 1,446,226 1,233,835 (i) Employee benefits expense is comprised of: Salaries and wages 389,196 336,532 Employee provisions (648) 23,447 Share based payments - employees and officers 30,555 36,257 Other staff costs 104,291 86,279 Total 523,394 482,515 6. CASH AND CASH EQUIVALENTS 31 December 30 June 2011 2011 $ $ Cash at bank and in hand 1,781,972 3,216,949 Short term deposits 3,000,484 5,500,000 4,782,456 8,716,949 Cash at bank earns interest at floating rates based on daily bank deposit rates. The carrying amounts of cash and cash equivalents represent fair value. Short term deposits are held with banks with maturities of three months. 7. NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE In line with the Consolidated Entity's focus on progressing its uranium exploration projects, the Consolidated Entity has entered into a sale agreement to realise value for its non-uranium assets and has therefore recognised these exploration assets as assets held for sale. The assets and liabilities associated with the non-uranium assets are as follows: Capitalised exploration and evaluation expenditure 144,231 132,776 Liabilities (154) (484) 144,077 132,292 8. DIVIDENDS There were no dividends proposed or paid during the half-year ended 31 December 2011 (2010: nil). 9. EXPLORATION AND EVALUATION EXPENDITURE Movements in carrying amounts 31 December 2011 30 June $ 2011 $ Carrying amount at 1 July 22,758,353 16,388,381 Additions 2,433,050 6,369,972 Carrying amount at end of period net of impairment 25,191,403 22,758,353 Exploration and evaluation costs have been capitalised at cost. No impairment loss was recognised during the half-year ended 31 December 2011 (2010: nil ) because either: * The exploration and evaluation activities are expected to be recouped through successful development and exploitation of the area of interest or, alternatively, by its sale; or * Exploration and evaluation activities in each area of interest have not at the reporting date reached a stage that permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or relevant to, the area of interest are continuing. 10. COMMITMENTS AND CONTINGENCIES There have been no material changes to the commitments and contingencies disclosed in the most recent annual financial report. 11. CONTRIBUTED EQUITY 31 December 2011 30 June 2011 $ $ Ordinary shares 695,589,311 (30 June 2011: 695,589,311) ordinary shares, fully paid 81,264,725 81,264,725 2,250,000 (30 June 2010: 2,250,000) 25 cent value ordinary shares, partly paid to 1 cent 22,500 22,500 81,287,225 81,287,225 (i) Ordinary shares Movement in ordinary shares on issue Number $ 580,658,031 67,464,067 At 1 July 2010 Shares issued from exercise of options 2,000,000 110,000 Transaction costs - (1,543) Balance at 31 December 2010 582,658,031 67,572,524 695,589,311 81,264,225 At 1 July 2011 Share issues - - Transaction costs - - Balance at 31 December 2011 695,589,311 81,264,225 (ii) Options Options over ordinary shares: During the financial period: * 1,000,000 options expired with an exercise price of 6 pence, * 1,000,000 options were granted with an exercise price of 6 pence with 500,000 vesting after 12 months and 500,000 vesting after two years, * 2,000,000 options were granted with an exercise price of 10 pence vesting over three years subject to continuing employment and performance conditions, * 5,000,000 options were granted with an exercise price of 12.5 cents vesting after achievement of performance milestones. 12. EVENTS AFTER THE BALANCE SHEET DATE There have been no significant events that have occurred after Balance Sheet date. FORTE ENERGY NL (ABN 59 009 087 852) DIRECTORS' DECLARATION In accordance with a resolution of the Directors of Forte Energy NL, I state that: In the opinion of the Directors: (a) the financial statements and notes of the Consolidated Entity are in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the financial position as at 31 December 2011 and the performance for the half-year ended on that date of the Consolidated Entity; and (ii) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001; and (b) subject to the matters described in Note 2 Going Concern, there are reasonable grounds to believe that the Consolidated Entity will be able to pay its debts as and when they become due and payable. On behalf of the Board Mark D Reilly Managing Director London 14 March 2012 Ernst & Young Ernst & Young Building 121 King William Street Adelaide SA 5000 Australia GPO Box 1271 Adelaide SA 5001 Tel: +61 8 8417 1600 Fax: +61 8 8417 1775 [ www.ey.com.au ] Auditor's Independence Declaration to the Directors of Forte Energy NL In relation to our review of the financial report of Forte Energy NL for the half-year ended 31 December 2011, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct. Ernst & Young T S Hammond Partner Perth 14 March 2012 Ernst & Young Ernst & Young Building 121 King William Street Adelaide SA 5000 Australia GPO Box 1271 Adelaide SA 5001 Tel: +61 8 8417 1600 Fax: +61 8 8417 1775 [ www.ey.com.au ] To the members of Forte Energy NL Report on the Half-Year Financial Report We have reviewed the accompanying half-year financial report of Forte Energy NL, which comprises the statement of financial position as at 31 December 2011, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the half-year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information, and the directors' declaration of the consolidated entity comprising the company and the entities it controlled at the half-year end or from time to time during the half-year. Directors' Responsibility for the Half-Year Financial Report The directors of the company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal controls as the directors determine are necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity's financial position as at 31 December 2011 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 . As the auditor of Forte Energy NL and the entities it controlled during the half-year, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report. A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Independence In conducting our review, we have complied with the independence requirements of the Corporations Act 2001. We have given to the directors of the company a written Auditor's Independence Declaration, a copy of which is included in the Directors' Report. Conclusion Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Forte Energy NL is not in accordance with the Corporations Act 2001, including: a) giving a true and fair view of the consolidated entity's financial position as at 31 December 2011 and of its performance for the half-year ended on that date; and b) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. Material Uncertainty Regarding Continuation as a Going Concern Without qualification to the conclusion expressed above, we draw attention to the following matter. As a result of the matters described in Note 2 Going Concern to the financial report, there is significant uncertainty whether the consolidated entity will continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report. The financial report does not include any adjustments relating to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that might be necessary should the consolidated entity not continue as a going concern. Ernst & Young T S Hammond Partner Perth 14 March 2012 

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