UNITEDSTATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



FORM 20-F

(Mark One)



[   ]

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

[ü]

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended June 30, 2006

OR

[   ]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

[   ]

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report . . . . . . . . . . . . . . . . . . .



For the transition period from ___________________________to ___________________________



Commission file number 050963

KIMBER RESOURCES INC.

______________________________________________________________________________________

(Exact name of Registrant as specified in its charter)



______________________________________________________________________________________

(Translation of Registrants name into English)

British Columbia, Canada

______________________________________________________________________________________

(Jurisdiction of incorporation or organization)

Suite 215  800 West Pender Street, Vancouver, British Columbia, Canada, V6C 2V6

______________________________________________________________________________________

(Address of principal executive offices)



Securities registered or to be registered pursuant to Section 12(b) of the Act.

|Title of each class               | Name of each exchange on which registered
|--------------------------------- | -----------------------------------------
|Common Shares, without par value  | American Stock Exchange                  
|_________________________________ | _________________________________        
|                                  |                                          
|_________________________________ | _________________________________        



Securities registered or to be registered pursuant to Section 12(g) of the Act.

______________________________________________________________________________________

(Title of Class)



______________________________________________________________________________________

(Title of Class)



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Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.



______________________________________________________________________________________

(Title of Class)



Indicate the number of outstanding shares of each of the issuers classes of capital or common stock as of the close of the  period covered by the annual report.

As at June 30, 2006, 47,114,922 Common Shares without par value were issued and outstanding



Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.



[  ]Yes    [ü] No



If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.     [  ]Yes    [ü] No



Note  Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.                                       [ü]Yes    [  ] No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer

Accelerated filer

Non-accelerated filer  [ü]



Indicate by check mark which financial statement item the registrant has elected to follow.





Item 17



If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).                      [  ]Yes    [ü] No



(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)



Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.



[  ]Yes

[  ] No









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TABLE OF CONTENTS



GLOSSARY

5

FORWARD LOOKING STATEMENTS

12



PART I

13

ITEM 1 - IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

13

A.

Directors and Senior Management

13

B.

Advisers

13

C.

Auditors

13

ITEM 2 - OFFER STATISTICS AND EXPECTED TIMETABLE

13

A.

Offer Statistics

13

B.

Method and Expected Timetable

13

ITEM 3 - KEY INFORMATION

13

A.

Selected Financial Data

13

B.

Capitalization and Indebtedness

16

C.

Reasons for the Offer and Use of Proceeds

16

D.

Risk Factors

16

ITEM 4 - INFORMATION ON THE COMPANY

25

A.

History and Development of Kimber Resources Inc.

25

B.

Business Overview

26

C.

Organizational Structure

29

D.

Property, Plants and Equipment

29

ITEM 5 - OPERATING AND FINANCIAL REVIEW AND PROSPECTS

51

A.

Operating Results

51

B.

Liquidity and Capital Resources

55

C.

Research and Development, Patents and Licenses, Etc.

56

D.

Trend Information

56

E.

Off-Balance Sheet Arrangements

56

F.

Tabular Disclosure of Contractual Obligations

57

ITEM 6 - DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

57

A.

Directors and Senior Management

57

B.

Compensation

61

C.

Board Practices.

63

D.

Employees

64

E.

Share Ownership

64

ITEM 7 - MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

69

A.

Major Shareholders

69

B.

Related Party Transactions

69

C.

Interests of Experts and Counsel.

70

ITEM 8 - FINANCIAL INFORMATION

71

A.

Consolidated Statements and Other Financial Information

71

B.

Significant Changes

71

ITEM 9 - THE OFFERING AND LISTING

71

A.

Offer and Listing Details

71

B.

Plan of Distribution

72

C.

Markets.

73

D.

Selling Shareholders

73

E.

Dilution

73

F.

Expenses of the Issue

73







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ITEM 10 - ADDITIONAL INFORMATION

73

A.

Share Capital

73

B.

Notice of Articles and Articles

73

C.

Material Contracts.

78

D.

Exchange Controls

78

E.

Taxation

78

F.

Dividends and Paying Agents

87

G.

Statement by Experts.

87

H.

Documents on Display

87

I.

Subsidiary Information

87

ITEM 11 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET

RISK

87

ITEM 12 - DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

88

A.

Debt Securities

88

B.

Warrants and Rights

88

C.

Other Securities.

88

D.

American Depository Shares

88





PART II

88

ITEM 13 - DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

88

ITEM 14 - MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS

AND USE OF PROCEEDS

88

ITEM 15 - CONTROLS AND PROCEDURES

88

ITEM 16 - RESERVED

88

ITEM 16A - AUDIT COMMITTEE FINANCIAL EXPERT

88

ITEM 16B - CODE OF ETHICS

89

ITEM 16C - PRINCIPAL ACCOUNTANT FEES AND SERVICES

89

ITEM 16D - EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT

COMMITTEES

90

ITEM 16E - PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED

PURCHASERS

90





PART III

90

ITEM 17 - FINANCIAL STATEMENTS

90

ITEM 18 - FINANCIAL STATEMENTS

90

ITEM 19 - EXHIBITS

90









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GLOSSARY OF TERMS



Glossary of Non-Geological Terms



Certain terms and abbreviations used in this Annual Report are defined below:



AMEX means the American Stock Exchange



Atna means Atna Resources Ltd.;



Canaccord means Canaccord Capital Corporation, the agent for Kimbers Initial Public Offering;



Carmen deposit is the name given to the volume of gold and silver-bearing rock in and around the former Monterde mine. Until drilling is complete, the boundaries of the deposit will remain undefined. (See Figure 2, Figure 3 and Figure 4);



Carmen structure is a geological fracture, which was one of the principal conduits for the introduction of the mineral-bearing fluids which formed the Carmen deposit;



Chemex means ALS Chemex, Aurora Laboratory Services Ltd.;



Common Shares means the common shares without par value in the capital of Kimber Resources Inc.;



Ejido (aa-hee-do) is a Mexican legal entity, which owns a specific area of land and holds it collectively for its members. Ejidos were formed by way of a resolution from the Federal Government of Mexico under the Agrarian Act for the administration and development of collective property rights over agricultural land owned by the Federal Government. Ejidos are administered and controlled by an Ejido council. The consent of an Ejido council is a requirement for access to such lands for mineral exploration and development. Since 1990 Mexican law has permitted the "partition and privatization" of Ejido land from the Government to the Ejidos and from the Ejidos to individual members;



El Coronel Concessions means the mineral concessions located in the Monterde Mining District, State of Chihuahua, Mexico, listed under the heading El Coronel Concessions in Table 1of this Annual Report;



Golden Treasure means Golden Treasure Explorations Inc.;



Group 1 Concessions means the mineral concessions forming part of the Monterde Property, located in the Monterde Mining District, State of Chihuahua, Mexico, listed under the heading Group 1 Concessions in Table 1of this Annual Report;



Group 2 Concessions means the mineral concessions forming part of the Monterde Property, located in the Monterde Mining District, State of Chihuahua, Mexico, listed under the heading Group 2 Concessions in Table 1of this Annual Report;



Group 3 Concessions means the mineral concession forming part of the Monterde Property, located in the Monterde Mining District, State of Chihuahua, Mexico, listed under the heading Group 3 Concessions in Table 1of this Annual Report;



Group 4 Concessions means the mineral concession forming part of the Monterde Property, located in the Monterde Mining District, State of Chihuahua, Mexico, listed under the heading Group 4 Concessions in Table 1of this Annual Report;



IPO means the Initial Public Offering of Kimber Resources Inc., closed July 12, 2002;







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July 12 Warrants means the transferable share purchase warrants of Kimber issued July 12, 2002.  Each Warrant entitled the holder thereof to purchase one Common Share at a price of $0.45 until July 12, 2003 and thereafter at a price of $0.55 until January 12, 2004;



Kimber or the Companymeans Kimber Resources Inc., its wholly owned subsidiary Minera Monterde, S. de R.L. de C.V and its inactive, wholly owned subsidiaries Kimber Resources de Mexico S.A de C.V and Minera Pericones, S.A. de C.V. collectively;



Kimber Resources de Mexico means Kimber Resources de Mexico S.A. de C.V. the wholly owned, inactive subsidiary of Kimber Resources Inc.;



MineQuest means MineQuest Exploration Associates Ltd.;



Minera Monterde means Minera Monterde, S. de R.L. de C.V., the wholly owned subsidiary, and the holder of Mexican mineral properties, of Kimber Resources Inc.;



Minera Pericones means Minera Pericones, S.A. de C.V. the wholly owned, inactive subsidiary of Kimber Resources Inc.;



Monterde Property or the Property means the mineral concessions located in the Monterde Mining District, State of Chihuahua, Mexico, listed in Table 1of this Annual Report;



Monterde Concessions means the mineral concessions located in the Monterde Mining District, State of Chihuahua, Mexico, listed under the heading Monterde Concessions in Table 1of this Annual Report;



Option Plan means the Kimber Resources Inc. 2002 Stock Option Plan;



QA/QC means a quality assurance and quality control program;



Setago Property or Setago means the staked mineral concession located in the Monterde Mining District, State of Chihuahua, Mexico



Sierra Madre de Mexico means Sierra Madre Gold de Mexico, S.A. de C.V.;



Staked Concessions means the mineral concessions forming part of the Monterde Property located in the Monterde Mining District, State of Chihuahua, Mexico, listed under the heading Staked Concessions in Table 1of this Annual Report;



Subdivision means the subdivision of Kimbers share capital on the basis of 1.6 new shares for each old share on April 30, 2002.



TSX means the Toronto Stock Exchange







Geological or Technical Terms



AA means atomic absorption determination of metal content;



Agis the chemical symbol for silver;



aliquot is that portion of a sample that is actually analyzed;







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7





alteration is a change in the chemical and mineralogical composition of a rock caused by hydrothermal fluids;



alunitic refers to a type of hydrothermal alteration usually formed by sulphuric acid solutions acting on rocks rich in potash feldspar, and characterized by the mineral alunite;



andesite is a fine-grained volcanic rock, typically grey to dark grey, containing plagioclase, hornblende, biotite, or pyroxene phenocrysts;



aphanitic is a texture in igneous rock too fine to be observed with a naked eye;



aqua-regia leach means the dissolution of metals, especially gold and silver, in a mixture of concentrated hydrochloric and nitric acids;



argillic alteration is an alteration type characterized by the development of clay minerals at the expense of the original constituents of the rock;



Auis the chemical symbol for gold;



breccia is a rock that has been broken  by natural forces such as fault movements or volcanic explosions into very irregular fragments of varying sizes  with the spaces between the larger fragments filled by smaller fragments of the same material;



CIM Standards means the standards of disclosure for mineral projects under the guidelines set out in The Canadian Institute of Mining, Metallurgy and Petroleum;



caldera is a large basin-shaped volcanic depression, more or less circular in shape;



comagmatic is a term describing igneous rocks regarded as having been derived from common parent magma;



dikes are tabular bodies of igneous rock that cut structurally across adjacent rock;



dip is the maximum angle that a structural surface, such as layering in a rock or a fault makes with the horizontal, measured perpendicular to the strike and in the vertical plane;



epithermal refers to a hydrothermal mineral deposit formed within about 1 kilometre of the earths surface and in the temperature range of 50o to 200o C;



euhedra is a term describing mineral grains (crystals) with well-formed crystal faces;



fault is a fracture or fracture zone along which there has been displacement of the sides relative to one another;



feldspars are a group of aluminum-silica minerals with calcium, sodium or potassium.  They are major rock-forming minerals in igneous rocks;



felsic is a description applied to light-coloured igneous rock compositionally high in quartz, feldspars, feldspathiods, and muscovite;



fire assay is the assaying of metallic ores, usually of gold and silver, by methods requiring furnace heat;



g/t means grams per tonne;







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8





grade is the relative quantity or the percentage of a commodity content in a resource, expressed as grams per tonne or ounces per ton for precious minerals, such as gold, or as a weight percentage for most other metals;



hematite or hematitic refers to a common iron mineral consisting of iron and oxygen;



hornblende a dark mafic mineral, the commonest mineral in the amphibole family, and occurring as a primary constituent in igneous rocks of acidic and intermediate composition, and less frequently in basic igneous rocks;

hydrothermal - pertains to hot water or the action of heated water, often considered heated by magma or in association with magma;



hydrothermal alteration - alteration of rocks or minerals by the reaction of hot water (and other fluids) with pre-existing rocks. The hot water is generally heated groundwater with dissolved minerals;



hypabyssal is a term applied to minor igneous intrusions emplaced at a shallow depth, such as sills and dikes, and to the rocks that form these intrusions;



igneous rocks are rocks that have formed from lava;



Indicated Mineral Resource(1) is that part of a Mineral Resource for which quantity, grade or quality, densities, shape and physical characteristics can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit.  The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed;



Inferred Mineral Resource(1) is that part of a Mineral Resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity.  The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes;



intrusive is an igneous rock that has solidified below the Earth's surface;



latitic tuffs are pale colored fragmental volcanic rocks with almost equal proportions of plagioclase and potassium feldspar and a porphyritic texture;



leaching  means the separation, selective removal or dissolving-out of soluble constituents from a rock or ore body by the natural actions of percolating water or applied solutions;



lithologies are groupings of rocks displaying similar physical characteristics including colour, mineral composition and grain size;



magma is molten rock located below the Earth's surface. When a volcano erupts or a deep crack occurs in the Earth, the magma rises and overflows. When it flows out of the volcano or crack, usually mixed with steam and gas, it is called lava;



Measured Mineral Resource(1) is that part of Mineral Resource for which quantity, grade or quality, densities, shape, physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support production planning and evaluation of the economic viability of the deposit.  The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological and grade continuity;







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9





Mineral Resource(1) is a concentration or occurrence of natural, solid, inorganic or fossilized organic material in or on the Earths crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction.  The location, quantity, grade, geological characteristics and continuity of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge. The terms Mineral Resource, Measured Mineral Resource, Indicated Mineral Resource, Inferred Mineral Resource used in this Annual Report are Canadian mining terms as defined in accordance with NI 43-101 under the guidelines set out in the CIM Standards;



NI 43-101(1) means National Instrument 43-101  Standards of Disclosure for Mineral Projects.  A rule developed by the Canadian Securities Administrators (an umbrella group of Canadas provincial and territorial securities regulators) that governs public disclosure by mining and mineral exploration issuers. The rule establishes certain standards for all public disclosure of scientific and technical information concerning mineral projects;



ore is a naturally occurring material from which a mineral or minerals of economic value can be extracted at a profit under economic conditions that are specified and are generally accepted as reasonable, also, the mineral or minerals thus extracted;



phenocrysts are the larger crystals embedded in a finer-grained groundmass of surrounding igneous rock;



plagioclase is a feldspar series, that constitutes one of the most common of rock-forming minerals.  Potassium feldspars form the other feldspar series;



porphyry is an igneous rock with conspicuous well-formed crystals (phenocrysts) in a finer-grained groundmass;



preliminary feasibility study means a comprehensive study of the viability of a mineral project that has advanced to a stage where the mining method, in the case of underground mining, or the pit configuration, in the case of an open pit, has been established, and which, if an effective method of mineral processing has been determined, includes a financial analysis based on reasonable assumptions of technical, engineering, operating, economic factors and the evaluation of other relevant factors which are sufficient for a qualified person, acting reasonably, to determine if all or part of the mineral resource may demonstrate that economic extraction can be justified;



pyrophyllitic rock containing pyrophillite, a relatively rare clay mineral formed during metamorphism;



Qualified Person or QPconforms to that definition under NI 43-101 for an individual (a) to be an engineer or geoscientist with at least five years experience in mineral exploration, mine development or operation or mineral project assessment, or any combination of these; (b) with experience relevant to the subject matter of the mineral project and the technical report and (c) is a member in good standing of a professional association that, among other things, is self-regulatory, has been given authority by statute, admits members based on their qualifications and experience, requires compliance with professional standards of competence and ethics and has disciplinary powers to suspend or expel a member;



RC means reverse circulation, a type of drilling used to obtain mineral samples;



Reserve(2) (Mineral Reserve) is that portion of the Proven and Probable Reserves which may be mined and sold at a profit, taking in account all mining and licensing parameters;







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Resource(1) (Mineral Resource) is a concentration or occurrence of material of intrinsically economic interest in or on the Earth's crust in such forms or quantities that there are reasonable prospects for eventual economic extraction.  The location, quantity, grade, geological characteristics, and continuity are known, estimated, or interpreted from specific geological evidence and knowledge.  Resources are subdivided, in order of increasing geological confidence, into Inferred, Indicated, and Measured categories;



sanidine is a potassium feldspar, occurring as clear crystals in unaltered acidic volcanic rocks;



shear is a fracture or fracture zone along which there has been differential movement of the sides relative to one another, typically leading to crushing, brecciation, and subsidiary fractures;



siliceous alteration is an alteration type characterized by the addition of silica or quartz to the original rock;



stockwork refers to a network of closely spaced veins in several orientations;



tuff is a general term for all volcanic rocks explosively or aerially ejected from a volcanic vent;



UTM coordinates means Universal Transverse Mercator coordinates, measured in metres from some fixed datum; and



welded is a term that refers to a tuff that has been indurated by the welding together of the glass shards that constitute the tuff.





1.

Note to U.S. investors: The terms Mineral Resource, Measured Mineral Resource, Indicated Mineral Resource and Inferred Mineral Resource used in this Annual Report are Canadian mining terms as defined in accordance with National Instrument 43-101  Standards of Disclosure for Mineral Projects under the guidelines set out in the CIM Standards (The Canadian Institute of Mining, Metallurgy and Petroleum) on Mineral Resources and Mineral Reserves Definitions and guidelines adopted by the CIM Council on August 20, 2000.  A reader in the United States should be aware that the definition standards enunciated in National Instrument 43-101 differ in certain respect from those set forth in SEC Industry Guide 7.



While the terms Mineral Resource, Measured Mineral Resource, Indicated Mineral Resource and Inferred Mineral Resource are recognized and required by Canadian regulations, they are not defined terms under standards in the United States.  As such, information contained in this Annual Report concerning descriptions of mineralization and resources under Canadian standards may not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements of the SEC.  Indicated Mineral Resource and Inferred Mineral Resource have a great amount of uncertainty as to their existence and a great uncertainty as to their economic and legal feasibility.  It cannot be assumed that all or any part of an Indicated Mineral Resource or Inferred Mineral Resource will ever be upgraded to a higher category.  Investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into Reserves.



2.

Note to U.S. investors: The terms Mineral Reserve, Proven Mineral Reserve and Probable Mineral Reserve used in this Annual Report are Canadian mining terms as defined in accordance with National Instrument 43-101  Standards of Disclosure for Mineral Projects under the guidelines set out in the CIM Standards.  In the United States, a Mineral Reserve is defined as part of a mineral deposit which could be economically and legally extracted or produced at the time the mineral reserve determination is made.



The definition for Proven Mineral Reserves under CIM Standards differs from the standards in the United States, where Proven or Measured Reserves are defined as Reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; (b) grade and/or quality are computed from the results of detailed sampling and (c) the sites for inspection, sampling and measurement are spaced so closely and the geographic character is so well defined that size, shape, depth and mineral content of Reserves are well established.







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The definition for Probable Mineral Reserves under CIM Standards differs from the standards in the United States, where Probable Reserves are defined as reserves for which quantity and grade and/or quality are computed from information similar to that of Proven Reserves (under United States standards), but the sites for inspection, sampling and measurement are further apart or are otherwise less adequately spaced, and the degree of assurance, although lower than that for Proven Mineral Reserves, is high enough to assume continuity between points of observation.  The degree of assurance, although lower than that for Proven Mineral Reserves, is high enough to assume continuity between points of observation.







|Conversion Table    
|--------------------
|Metric              
|1.0 millimetre (mm) 
|1.0 metre (m)       
|1.0 kilometre (km)  
|1.0 hectare (ha)    
|1.0 gram (g)        
|1.0 metric tonne (t)
|1.0 g/t             



Unless otherwise indicated, all dollar ($) amounts referred to herein are in Canadian dollars.













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12





FORWARD LOOKING STATEMENTS



This Annual Report contains forward-looking statements concerning the Companys plans for its properties and other matters. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management.



Any statements that express or involve discussions with respect to predictions, expectations, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as expects or does not expect, is expected, anticipates or does not anticipate, plans, estimates or intends, or stating that certain actions, events or results may, could or would be taken, occur or be achieved) are not statements of historical fact and may be forward-looking statements.



Forward-looking statements are subject to a variety of risks and uncertainties which could cause actual events or results to differ from those reflected in the forward-looking statements, including, without limitation, risks and uncertainties relating to the interpretation of drill results, the geology, grade and continuity of mineral deposits, results of initial feasibility, pre-feasibility and feasibility studies, and the possibility that future exploration, development or mining results will not be consistent with Kimbers expectations, due to recovery, accidents, equipment breakdowns, labour disputes or other unanticipated difficulties with or interruptions in production, the potential for delays in exploration or development activities or the completion of feasibility studies, political risks involving operations in Mexico, and the policies of other nations towards companies doing business in such jurisdictions, the inherent uncertainty of production and cost estimates and the potential for unexpected costs and expenses, commodity price fluctuations, failure to obtain adequate financing on a timely basis and other risks and uncertainties.



Statements concerning mineral resource estimates may also be deemed to constitute forward-looking statements to the extent that they involve estimates of the mineralization that will be encountered if the property is developed, and in the case of reserves, such statements reflect the conclusion, based on certain assumptions, that the mineral deposit may be economically exploitable.



Some of the important risks and uncertainties that could affect forward-looking statements are described further in this document under headings ITEM 3D - Risk Factors, ITEM 4B - Business Overview, ITEM 4D  Property, Plants and Equipment and ITEM 5 - Operating and Financial Review and Prospects.  Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated or expected.  Kimber does not intend to update these forward-looking statements.  Investors are cautioned against attributing undue certainty to forward-looking statements.











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13





PART I





ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS



Not Applicable





ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE



Not Applicable





ITEM 3. KEY INFORMATION



A. Selected Financial Data



The following tables set forth and summarize selected consolidated financial data for Kimber, prepared in accordance with Canadian generally accepted accounting principles (Canadian GAAP).  The tables also summarize certain corresponding information prepared in accordance United States generally accepted accounting principles (U.S. GAAP).  Canadian GAAP, as applied to Kimber, materially differs from U.S. GAAP.  For a discussion of these differences and their effect on Kimbers financial statements, refer to Item 5 - Operating and Financial Review and Prospects.



For each of the fiscal years ended June 30 presented, the information in the tables was extracted from the more detailed financial statements of Kimber for those years presented, which have been audited.  All of the information contained in the selected financial data is qualified in its entirety by reference to the more detailed financial statements and related notes included in Item 17 - Financial Statements, and should be read in conjunction with such financial statements and with the information appearing in Item 5 - Operating and Financial Review and Prospects.



Kimber has financed operations principally through the sale of its equity securities and will require additional capital for its business operations. While Kimber believes it has sufficient capital and liquidity to finance current operations, nevertheless, its continued operations are dependent on its ability to obtain additional financing through the further sales of equity securities.  See Item 3D - Risk Factors.











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14







Under Canadian Generally Accepted Accounting Principles (in Canadian dollars):



|                                 | Year        | Year        | Year        | Year        | Year     
|-------------------------------- | ----------- | ----------- | ----------- | ----------- | ---------
|                                 | Ended       | Ended       | Ended       | Ended       | Ended    
|                                 | June 30,    | June 30,    | June 30,    | June 30,    | June 30, 
|                                 | 2006        | 2005        | 2004        | 2003        | 2002(1)  
|                                 | $           | $           | $           | $           | $        
|                                 |             |             |             |             |          
|Current Assets                   | 16,907,238  | 4,796,055   | 3,865,185   | 1,424,566   | 144,807  
|Equipment                        | 603,347     | 436,736     | 442,408     | 75,943      | 4,434    
|Investment                       | -           | 103,596     | 103,596     | 103,596     | 103,596  
|Deferred IPO Costs               | -           | -           | -           | -           | 127,755  
|Unproven mineral right interests | 21,749,820  | 11,601,330  | 5,382,011   | 1,727,596   | 274,673  
|Total Assets                     | 39,260,405  | 16,937,717  | 9,793,200   | 3,331,701   | 655,265  
|Current Liabilities              | 1,422,519   | 900,734     | 644,069     | 55,132      | 399,838  
|Total Liabilities                | 1,422,519   | 900,734     | 644,069     | 55,132      | 399,838  
|Net Assets (Liabilities)         | 37,837,886  | 16,036,983  | 9,149,131   | 3,276,569   | 255,427  
|Share Capital                    | 42,766,942  | 19,033,066  | 11,126,010  | 4,299,265   | 764,496  
|Contributed surplus              | 1,796,853   | 1,366,406   | 559,628     | -           | -        
|Obligation to Issue Shares       | -           | -           | -           | -           | -        
|Revenues                         | -           | -           | -           | -           | -        
|Deficit                          | (6,725,909) | (4,362,489) | (2,536,507) | (1,022,696) | (509,069)
|Net Loss for the Period          | (2,363,420) | (1,825,982) | (1,513,811) | (513,627)   | (125,308)
|Basic and Diluted Loss per Share | (0.06)      | (0.06)      | (0.07)      | (0.04)      | (0.03)   
|Weighted Average Number of       |             |             |             |             |          
|Common Shares Outstanding        | 40,026,359  | 30,612,668  | 21,977,441  | 13,381,406  | 3,747,610

Notes:

(1)  Common Shares of Kimber were not publicly traded prior to July 16, 2002



Under Canadian GAAP applicable to junior mining companies, mineral exploration expenditures are deferred for mineral properties under exploration or development until such time as it is determined that further exploration or development is not warranted, at which time the property costs are written-off.  Under U.S. GAAP, all exploration expenditures are expensed until an independent feasibility study has determined that the property is capable of economic commercial production. The following information has been reconciled for U.S. GAAP.



Under U.S. Generally Accepted Accounting Principles (in Canadian dollars):

|                                                     |              |              |             |             |          
|---------------------------------------------------- | ------------ | ------------ | ----------- | ----------- | ---------
|                                                     | Year         | Year         | Year        | Year        | Year     
|                                                     | Ended        | Ended        | Ended       | Ended       | Ended    
|                                                     | June 30,     | June 30,     | June 30,    | June 30,    | June 30, 
|                                                     | 2006         | 2005         | 2004        | 2003        | 2002(1)  
|                                                     | Audited      | Audited      | Audited     | Audited     | Audited  
|                                                     | $            | $            | $           | $           | $        
|                                                     |              |              |             |             |          
|Current Assets                                       | 16,907,238   | 4,796,055    | 3,865,185   | 1,424,566   | 144,807  
|Equipment                                            | 603,347      | 436,736      | 442,408     | 75,943      | 4,434    
|Investment                                           | -            | 103,596      | 103,596     | 103,596     | 103,596  
|Deferred IPO Costs                                   | -            | -            | -           | -           | 127,755  
|Total Assets                                         | 17,510,585   | 5,336,387    | 4,411,189   | 1,604,105   | 380,592  
|Current Liabilities                                  | 1,422,519    | 900,734      | 644,069     | 55,132      | 399,838  
|Total Liabilities                                    | 1,422,519    | 900,734      | 644,069     | 55,132      | 399,838  
|Net Assets (Liabilities)                             | 16,088,066   | 4,435,653    | 3,767,120   | 1,548,973   | (19,246) 
|Share Capital                                        | 42,766,942   | 19,033,066   | 11,126,010  | 4,299,265   | 764,496  
|Contributed surplus                                  | 1,796,853    | 1,366,406    | -           | -           | -        
|Obligation to Issue Shares                           | -            | -            | -           | -           | -        
|Deficit                                              | (28,475,729) | (15,963,819) | (7,918,518) | (2,750,292) | (783,742)
|Revenues                                             | -            | -            | -           | -           | -        
|Net Loss for the Period                              | (12,511,910) | (8,059,794)  | (5,168,226) | (1,966,550) | (280,581)
|Basic and Diluted Loss per Share                     | (0.31)       | (0.26)       | (0.24)      | (0.18)      | (0.07)   
|Weighted Average Number of Common Shares Outstanding | 40,026,359   | 30,612,668   | 21,977,441  | 10,708,817  | 3,747,610

Notes:

(1) Common Shares of Kimber were not publicly traded prior to July 16, 2002







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15







Except where otherwise indicated, all information extracted from or based on the Consolidated Financial Statements of Kimber are presented in accordance with Canadian GAAP.



Dividends



No cash dividends have been declared nor are any currently expected to be declared. Kimber is not subject to legal restrictions respecting the payment of dividends except that they may not be paid to render Kimber insolvent.  Dividend policy will be based on Kimbers cash resources and needs and it is anticipated that all available cash will be required to further Kimbers exploration activities for the foreseeable future.



Exchange Rates



Unless otherwise indicated, all reference to dollar ($) amounts are in Canadian dollars.  The following table sets out the noon exchange rates for one Canadian dollar expressed in terms of one U.S. dollar for the periods indicated.  Rates of exchange are obtained from the Bank of Canada and believed by Kimber to be the approximate noon buying rates in New York City for cable transfers as certified for customs purposes by the Federal Reserve Bank in New York.



Period End and Average - $C vs. $US

| |            | June 30, | June 30, | June 30, | June 30, | June 30,
| | ---------- | -------- | -------- | -------- | -------- | --------
| |            | 2006     | 2005     | 2004     | 2003     | 2002    
| |            |          |          |          |          |         
| | Period End | 0.8931   | 0.8142   | 0.7440   | 0.7378   | 0.6585  
| | Average    | 0.8600   | 0.80118  | 0.7453   | 0.6622   | 0.6374  





Monthly High and Low - $C vs. $US

| |                | June   | May    | April  | March  | February | January
| | -------------- | ------ | ------ | ------ | ------ | -------- | -------
| |                | 2006   | 2006   | 2006   | 2006   | 2006     | 2006   
| |                |        |        |        |        |          |        
| | High for Month | 0.9148 | 0.9111 | 0.8957 | 0.8850 | 0.8788   | 0.8746 
| | Low for Month  | 0.8857 | 0.8868 | 0.8493 | 0.8512 | 0.8610   | 0.8475 



As of June 30, 2006, the exchange rate to convert one Canadian dollar into the U.S. dollar was 0.8931.











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16







B. Capitalization and Indebtedness



Not Applicable





C. Reasons for the Offer and Use of Proceeds



Not Applicable





D. Risk Factors



The operations of the Company are speculative due to the high risk nature of its business which involves the exploration of mining properties.



Kimber is subject to a number of significant risks due to the nature of its business and the present stage of its business development.  The following factors should be considered:





INDUSTRY RISKS



Resource exploration and development is a high risk, speculative business



Resource exploration and development is a speculative business, characterized by a number of significant risks, including, among other things, unprofitable efforts resulting not only from the failure to discover mineral deposits but also from finding mineral deposits, which, though present, are insufficient in quantity and quality to return a profit from production.



Most exploration projects do not result in the discovery of commercially mineable ore deposits and no assurance can be given that any particular level of recovery or ore reserves will in fact be realized or that any identified mineral deposit will ever qualify as a commercially mineable (or viable) ore body which can be legally and economically exploited.





Mineral exploration is subject to governmental regulations and may become subject to additional governmental regulations in the future.  If Kimber is unable to comply with these new regulations, its operations may be adversely affected.



Mineral exploration on Kimbers properties are affected to varying degrees by: (i) government regulations relating to such matters as environmental protection, health, safety and labour; (ii) mining law reform; (iii) restrictions on production, price controls, and tax increases; (iv) maintenance of claims; (v) tenure; and (vi) expropriation of property.  Any mineral exploration activities conducted by Kimber, including commencement of production, require permits from governmental authorities and such operations are and will be governed by laws and regulations governing prospecting, mining, production, exports, taxes, labour standards, occupation health, waste disposal, toxic substances, land use, environmental protection, mine safety and other matters.



Companies engaged in the operation of mines and related facilities generally experience increased costs, and delays in production and other schedules as a result of the need to comply with applicable laws, regulations and permits.  All permits required for the conduct of mining operations, including the construction of mining facilities, may not be obtainable by Kimber on reasonable terms which would have an adverse effect on any mining project it might undertake.  Additionally, failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions.  Parties engaged in mining operations may be required to compensate those suffering loss or damage by reason of the mining activities and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations.







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Amendments to current governmental laws and regulations affecting mining companies, or the more stringent application thereof, could adversely affect Kimbers operations including the potential to curtail or cease exploration programs or to preclude entirely the economic viability of a mineral property.  The extent of any future changes to governmental laws and regulations cannot be predicted or quantified, but it should be assumed that such laws and regulations will become more stringent in the future.  Generally, new laws and regulations will result in increased compliance costs, including costs for obtaining permits, delays or fines resulting from loss of permits or failure to comply with the new requirements.





The Company has not completed an MIA, nor has it received the necessary permits for water or explosives to conduct mining operations.



The Companys current principle property is located in Mexico.



The department responsible for environmental protection in Mexico is SEMARNAT, which is similar to the U.S. Environmental Protection Agency and Canadas Environmental Assessment Agency,  has broad authority to shut down and/or levy fines against facilities that do not comply with environmental regulations or standards.



Regulations require that an environmental impact statement, known in Mexico as a Manifiesto de Impacto Ambiental(MIA), be prepared by a third-party contractor for submittal to SEMARNAT. An MIA is required prior to mine construction.  Studies required to support the MIA include a detailed analysis of the following areas:  soil, water, vegetation, wildlife, cultural resources and socio-economic impacts.  The regulatory process in Mexico does not have a public review component but proof of local community support for a project is required to gain final MIA approval.  A risk analysis must also be prepared in conjunction with the MIA for approval by SEMARNAT. To date this risk analysis has not been prepared



A number of other approvals, licenses and permits are required for various aspects of a mine development.  The most significant permits for the development of the Monterde Property, other than MIA approval, are water rights concessions, or permits to extract water, issued by the National Water Commission, and a permit for consumption, use and storage of explosives, or blasting permit, issued by the Mexican National Defence Secretariat.



Failure to obtain the necessary permits would adversely affect progress of its operations.



As of the date of this Form 20-F Annual Report, the Company has not obtained the explosives permit required for full-scale mining from the Mexican National Defence Secretariat and may not receive the permit in the future. The Company has applied for and has received a limited permit allowing small-scale blasting for operations such as road construction.



As of the date of this Form 20-F Annual Report, the Company has not obtained water rights concessions from the National Water Commission, the regulatory body of the Government of Mexico that issues permits for water extraction and may not receive the permit in the future.





Mineral exploration is subject to numerous industry operating hazards and risks, many of which are beyond Kimbers control and any one may have an adverse effect on its financial condition and operations.







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Mineral exploration involves many risks, including the inability of Kimber to locate commercially productive mineral reserves.  The operations in which Kimber has a direct or indirect interest will be subject to all the hazards and risks normally incidental to resource companies, any of which could result in work stoppages and damage to persons or property or the environment and possible legal liability for any and all damage.  Fires, power outages, labour disruptions, flooding, explosions, cave-ins, land slides and the inability to obtain suitable or adequate machinery, equipment or labour are some of the industry operating risks involved in the operation of mines and the conduct of exploration programs.  Other risks include injury or loss of life, severe damage to or destruction of property, clean-up responsibilities, regulatory investigation and penalties and suspension of operations.  The occurrence of any of these operating risks and hazards may have an adverse effect on Kimbers financial condition and operations.



Kimber will, when appropriate, secure liability insurance in an amount which it considers adequate, however the nature of claims may exceed policy limits, the liability and hazards might not be insurable.  Kimber might elect not to insure itself against such liabilities due to high premium costs or other reasons, in which event Kimber could incur significant costs that may have a material adverse effect upon its financial condition and operations.



The economics of developing gold, silver and other mineral properties is affected by many factors including the cost of operations, variations in the grade of ore mined, fluctuations in metal markets, costs of processing equipment and such other factors as government regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals and environmental protection. The Company does not have producing mines at this time.  Properties on which mineral reserves are not found will have to be discarded causing the Company to write each respective property off thus sustaining a loss.





Metal prices have fluctuated widely in the past and are expected to continue to do so in the future which may adversely affect the amount of revenues derived from production of mineral reserves.



Kimber does not hold any known mineral reserves of any kind. Future revenues, if any, are expected to be in large part derived from the future mining and sale of gold and silver or interests related thereto.  The prices of these commodities fluctuate and are affected by numerous factors beyond Kimbers control including international economic and political conditions, expectations of inflation or deflation, international currency exchange rates, interest rates, global or regional consumptive patterns, speculative activities, levels of supply and demand, increased production due to new mine developments, decreased production due to mine closures, and improved mining and production methods, availability and costs of metal substitutes, metal stock levels maintained by producers and others and inventory carrying costs.  The effect of these factors on the price of base and precious metals, and therefore the economic viability of Kimbers operations, cannot be accurately predicted.



Depending on the price to be received for any minerals produced, Kimber may determine that it is impractical to commence or continue commercial production.



The commercial feasibility of the Companys properties and its ability to arrange funding to conduct its planned exploration projects is dependent on the price of gold and silver.  The price of gold and silver may also have a significant influence on the market price of the Companys common shares and the value of the Companys properties.  A reduction in the price of gold or silver may prevent the Companys properties from being economically mined or result in the write-off of assets whose value is impaired as a result of low precious metals prices.







---

19





The price of gold and silver are affected by numerous factors beyond the Companys control, such as the level of inflation, fluctuation of the United States dollar and foreign currencies, global and regional demand, sales by central banks and the political and economic conditions of major precious metals producing countries throughout the world.



The Company faces substantial competition within the mining industry from other mineral companies with much greater financial and technical resources and may not be able to effectively compete which would have an adverse effect on Kimbers financial condition and operations.



The resource industry is intensively competitive in all of its phases, and Kimber competes with many companies possessing much greater financial and technical research resources.  Competition is particularly intense with respect to the acquisition of desirable undeveloped gold and silver properties.  The principal competitive factors in the acquisition of such undeveloped properties include the staff and data necessary to identify, investigate and purchase such properties, and the financial resources necessary to acquire and develop such properties.  Competition could adversely affect Kimbers ability to acquire suitable prospects for exploration in the future.





COMPANY RISKS



Kimbers exploration and development efforts may be unsuccessful in locating viable mineral resources.



Resource exploration and development is a speculative business, characterized by a number of significant risks, including, among other things, unprofitable efforts resulting not only from the failure to discover mineral deposits but also from finding mineral deposits, which, though present, are insufficient in quantity and quality to return a profit from production.



There is no certainty that the expenditures to be made by the Company on the exploration of its properties as described herein will result in discoveries of mineralized material in commercial quantities.



Most exploration projects do not result in the discovery of commercially mineable ore deposits and no assurance can be given that any particular level of recovery or ore reserves will in fact be realized or that any identified mineral deposit will ever qualify as a commercially mineable (or viable) ore body which can be legally and economically exploited.





The Companys future must be considered in light of the difficulties frequently encountered by companies in mineral exploration.



Kimber has a limited history as an exploration company. The Company does not hold any mineral reserves and does not generate any revenues from production.  Kimbers success will depend largely upon its ability to locate and develop commercially productive mineral reserves, which may never happen.  As a result of these factors, it is difficult to evaluate Kimbers prospects, and its future success is more uncertain than if it had a longer or more proven history.





The Company may not be able to market the minerals acquired or discovered due to factors beyond the control of the Company.



The marketability of minerals acquired or discovered by the Company may be affected by numerous factors which are beyond the control of the Company and which cannot be accurately predicted, such as market fluctuations, the proximity and capacity of milling facilities, mineral markets and processing equipment, and such other factors as government regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals and environmental protection, the combination of which factors may result in the Company not receiving an adequate return on investment capital.







---

20





Kimber expects to continue to incur losses and may never achieve profitability, which in turn may harm the future operating performance and may cause the market price of Kimbers Common Shares to decline.



Kimber has incurred net losses every year since inception on March 31, 1995 and as of June 30, 2006, had an accumulated deficit of $6,725,909.  Kimber incurred a net loss of $2,363,420 for the year ended June 30, 2006 and $1,825,982 for the year ended June 30, 2005 (2004: $1,513,811; 2003: $513,627; 2002: $125,308).



Kimber anticipates significant expenditures for its mineral exploration programs, which are expensed under U.S. GAAP, and for the further acquisition of mineral property interests.  Since most exploration projects do not result in the discovery of commercially productive mineral reserves and are ultimately expensed in full, Kimber expects to report net losses for at least the foreseeable future.



The long-term profitability of Kimbers operations will be in part directly related to the success of its exploration programs, which are affected by numerous factors including the cost of such programs, the amount of mineral reserves discovered and fluctuations in the price of any minerals produced.  If Kimber does not become profitable within the time frame expected by its investors, which may never happen, the market price of Kimbers stock may decline.  If Kimber does achieve profitability, it may not be able to sustain or increase profitability in the future.





Kimber does not hold any known mineral reserves of any kind and may never be able to locate commercially productive mineral reserves. In the event such reserves are discovered, commercial production may not be possible or warranted.



All of Kimbers mineral properties are in the exploration stage and are without known mineral reserves. Kimber may discover mineral reserves through its exploration programs but commercial production may not be warranted due to any one or more possible reasons.  Further development of any of Kimbers properties will only follow upon obtaining satisfactory exploration results and adequate financing. Few mineral properties that are explored are ultimately developed into producing mines.



In the event a commercially productive mineral reserve is discovered, substantial expenditures are required to establish mineral reserves through drilling, to develop metallurgical processes for extraction and to develop the mining and processing facilities and infrastructure at the production site.  The marketability of any minerals discovered may be affected by numerous factors which are beyond Kimbers control and which cannot be predicted, such as market fluctuations, the proximity and capacity of milling facilities, mineral markets and processing equipment, and such other factors as government regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals, and environmental protection.  Depending on the price of minerals produced, Kimber may determine that it is impractical to commence or continue commercial production.





Kimbers title to its mineral properties and its validity may be disputed in the future by others claiming title to all or part of such properties.



Kimber owns the mining concessions, which constitute its property holdings.  However, the concessions may be subject to prior unregistered agreements or transfers, which may affect the validity of Kimbers ownership of such concessions. See Table 2 under Item 4D - Property, Plants and Equipment.







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21





Kimber is not aware of challenges to the location or area of its mining concessions.  Additionally, Kimber makes a search of mining records in accordance with mining industry practices to confirm that it has acquired satisfactory title to its mining concessions but does not obtain title insurance with respect to such concessions.  The possibility exists that title to one or more of its properties, particularly title to undeveloped concessions, might be defective because of errors or omissions in the chain of title, including defects in conveyances and defects in locating or maintaining such concessions.  Should any defect in title be discovered by or disclosed to Kimber, all reasonable steps would be taken to perfect title to the particular concessions in question.  Kimber is not aware of any material defect in the title to its mineral concessions.



A claim on any of Kimbers mineral properties, especially where commercially productive mineral reserves have been located, could adversely affect Kimbers long-term profitability as it may preclude entirely the economic development of a mineral property.  Also, such a claim may potentially affect Kimbers current operations due to the high costs of defending against such claims and its impact on senior management's time.





The Companys properties are located in Mexico and are subject to changes in political conditions and regulations in that country.  If Kimber is not able to comply with all Mexican laws and regulations, this could negatively impact current or planned exploration and development activities.



The Property, the Companys principal project, is located in Mexico.  Mexico has in the past been subject to political instability, changes and uncertainties, which, if they were to arise again, could cause changes to existing governmental regulations affecting mineral exploration and mining activities. The Companys operations and properties are subject to a variety of governmental regulations including, among others:  regulations promulgated by SEMARNAT, Mexicos environmental protection agency; the Mexican Mining Law; and the regulations of the Comisión National del Aquawith respect to water rights.  Mexican regulators have broad authority to shut down and/or levy fines against facilities that do not comply with regulations or standards.  The Companys mineral exploration and mining activities in Mexico may be adversely affected in varying degrees by changing government regulations relating to the mining industry or shifts in political conditions that increase the costs related to the Company activities or maintaining its properties.



Kimber's exploration and development activities are subject to extensive laws and regulations governing health and worker safety, employment standards, waste disposal, protection of historic and archaeological sites, mine development and protection of endangered and protected species and other matters. A number of other approvals, licenses and permits are required for various aspects of mine development. Obtaining and maintaining the necessary permits are critical to the Kimber's business and it is uncertain if all necessary permits will be obtained on acceptable terms or in a timely manner.  Future changes in applicable laws and regulations or changes in their enforcement or regulatory interpretation could negatively impact current or planned exploration and development activities or in any other projects that Kimber becomes involved. Any failure to comply with applicable laws and regulations or failure to obtain or maintain permits, even if inadvertent, could result in the interruption of exploration and development operations or material fines, penalties or other liabilities.



Operations could also be affected to varying degrees by government regulations with respect to restrictions on production, price controls, export controls, income taxes, expropriation of property, environmental legislation and mine safety, to the extent that such regulations may be imposed.  Mexicos status as a developing country may make it more difficult for the Company to obtain any required financing for its projects.







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22





Conflicts of interest may arise among Kimbers board members which may cause Kimber to enter into transactions on terms which place Kimber in a worse position than if no such conflicts existed.



Certain of Kimber's directors are also directors, officers or shareholders of other companies that are engaged in the business of acquiring, developing and exploring mineral resource properties.  Such associations may give rise to conflicts of interest from time to time.  Such conflicts pose the risk that Kimber may miss certain opportunities in the event that another company of which a director is associated may obtain prior knowledge which the director could not share with Kimber because of his fiduciary duty to that other company and Kimber may be in a worse position than if no conflict existed. Further, in the event of a conflict of interest, contracts may not be negotiated at arms length where negotiations take place with a company where a Kimber director is serving as a director of the other company.  The directors and officers of Kimber are aware of the existence of laws governing accountability of directors and officers for corporate opportunity and requiring disclosures by directors of conflicts of interest and Kimber will rely upon such laws in respect of any directors' and officers' conflicts of interest or in respect of any breaches of duty by any of its directors or officers. The existence of a conflict of interest, even when disclosed and the appropriate action is taken, could place Kimber at a disadvantage.





Kimber depends on key personnel for critical management decisions and industry contacts but does not maintain key person insurance.



Kimber is dependent on a relatively small number of key personnel, the loss of any of whom could have an adverse effect on the operations of Kimber.  The names of its key personnel are Robert V. Longe, Michael E. Hoole, J. Byron Richards, Darren E. C. Klinck and Gordon Cummings, all of whom are officers of Kimber.



Kimbers success is dependent to a great degree on its ability to attract and retain highly qualified management personnel.  The loss of such key personnel, through incapacity or otherwise, would require Kimber to seek and retain other qualified personnel and could compromise the pace and success of its exploration activities.  Kimber does not maintain key person insurance in the event of a loss of any such key personnel.  Also, certain management personnel of Kimber are officers and/or directors of other publicly traded companies.



Additionally, Kimber has relied on and is expected to continue relying upon consultants, contractors and others for exploration expertise.  In the event a body of ore is discovered on any of Kimbers properties, it will likely require the expertise of such consultants and others for the development and operations of a producing mine.



Kimber will need to raise additional capital though the sale of its securities, resulting in dilution to the existing shareholders, and which may not be available, adversely affecting its operations.





Kimber does not generate any revenues from production and does not have sufficient financial resources to undertake by itself all of its planned exploration programs.  Kimber has limited financial resources and has financed its operations primarily through the sale of Kimbers securities such as Common Shares.  Kimber will need to continue its reliance on the sale of its securities for future financing, resulting in dilution to existing shareholders.  The amount of additional funds required will depend largely on the success of Kimbers exploration programs.  Based on current plans, it is expected that Kimbers cash balance of approximately $13,529,338 as at September 12, 2006 will be sufficient to meet operating requirements untilapproximately the first quarter of 2007.







---

23





The current 2006 exploration program is expected to be ongoing. The budget for the 2007 exploration program has not been approved as of the date of this annual report.



Further exploration programs will depend on Kimbers ability to obtain additional financing which may not be available under favourable terms, if at all.  If adequate financing is not available, Kimber may not be able to commence or continue with its exploration programs.





Future issuance of Kimbers Common Shares will result in dilution to the existing shareholders.  Additionally, future sales of Kimbers Common Shares into the public market may lower the market price, which may result in losses to Kimbers shareholders.



As of June 30, 2006 Kimber had 47,114,922 Common Shares issued and outstanding.  In addition, 4,969,466 Common Shares were issuable upon exercise of outstanding stock options and share purchase warrants, all of which may be exercised in the future resulting in dilution to Kimbers shareholders.  Of these amounts, officers and directors of Kimber own, as a group, 7,337,079 Common Shares (15.6%) and stock options to acquire an additional 1,798,700 Common Shares. Kimbers management presently does not hold any share purchase warrants. Kimber may issue stock options to purchase an additional 767,613 Common Shares remaining under its existing stock option plan.  Most of these Common Shares, including the Common Shares to be issued upon exercise of the outstanding options and warrants, are freely tradable.



Sales of substantial amounts of Kimbers Common Shares into the public market, or even the perception by the market that such sales may occur, may lower the market price of its Common Shares.





Kimber has no history of paying dividends, does not expect to pay dividends in the immediate future and may never pay dividends.



Since incorporation, Kimber has not paid any cash or other dividends on its Common Shares and does not expect to pay such dividends in the foreseeable future, as all available funds will be invested primarily to finance its mineral exploration programs. Kimber will need to achieve profitability prior to any dividends being declared, which may never happen.





Mexico is a developing country and obtaining financing or finding or hiring qualified people or obtaining all necessary services for the Companys operations in Mexico may be difficult.



The Companys principal project is in Mexico which is a developing country and it may be difficult for the Company to obtain necessary financing for its planned exploration or development activities in Mexico.  The Company also plans to hire some of its employees or consultants in Mexico to assist the Company in conducting its operations in accordance with local laws in Mexico.  The Company also plans to purchase certain supplies and retain the services of various companies in Mexico to meet its future business plans.  It may be difficult to find or hire qualified people in the mining industry who are situated in Mexico or to obtain all of the necessary services or expertise in Mexico or to conduct operations on its projects at reasonable rates.  If qualified people and services or expertise cannot be obtained in Mexico, the Company may need to seek and obtain those services from people located outside of Mexico which will require work permits and compliance with applicable laws and could result in delays and higher costs to the Company to conduct its operations in Mexico.



The Companys business involves uninsurable risks and the Company does not have insurance for these risks.







---

24





In the course of exploration, development and production of mineral properties, certain risks, and in particular, unexpected or unusual geological operating conditions including rock bursts, cave-ins, fires, flooding and earthquakes may occur.  It is not always possible to fully insure against such risks. The Company does not currently have insurance against all such risks and may decide not to take out insurance against all such risks as a result of high premiums or other reasons.  Should such liabilities arise, they could reduce or eliminate any future profitability and result in increasing costs and a decline in the value of the securities of the Company.





Kimbers activities are subject to environmental liability, which would have an adverse effect on its financial condition and operations.



Kimber is not aware of any claims for damages related to any impact that its operations have had on the environment but it may become subject to such claims in the future.  An environmental claim could adversely affect Kimbers business due to the high costs of defending against such claims and its impact on senior management's time.



Kimber conducts exploration activities in Mexico.  Such activities are subject to various laws, rules and regulations governing the protection of the environment, including, in some cases, posting of reclamation bonds.  All phases of Kimbers operations are subject to environmental regulation in the jurisdictions in which it operates.  Environmental legislation is evolving in a manner requiring stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed properties and a heightened degree of responsibility for companies and their officers, directors, employees and contractors.



Kimber has adopted and is committed to an environmental policy designed to ensure compliance with all environmental regulations currently applicable, but environmental hazards may exist on Kimbers mineral properties that are not known to Kimber at present, caused by previous or existing owners or operators.



Also, environmental regulations may change in the future which could adversely affect Kimbers operations including the potential to curtail or cease exploration programs or to preclude entirely the economic development of a mineral property.  The extent of any future changes to environmental regulations cannot be predicted or quantified, but it should be assumed that such regulations would become more stringent in the future.  Generally, new regulations will result in increased compliance costs, including costs for obtaining permits, delays or fines resulting from loss of permits or failure to comply with the new regulations.





ADDITIONAL RISKS



U.S. investors may not be able to enforce their civil liabilities against Kimber or its directors and officers.



It may be difficult to bring and enforce suits against Kimber which is incorporated in the Province of British Columbia, Canada.  With the exception of one director who is a resident of the U.S., the officers and directors of Kimber are residents of British Columbia having all or a substantial portion of their assets located outside of the U.S.  As a result, it may be difficult for U.S. shareholders of Kimber to effect service of process on these persons within the U.S. or to enforce judgements obtained in the U.S. based on the civil liability provisions of the U.S. federal securities laws against Kimber or its officers and directors.  In addition, U.S. shareholders of Kimber should not assume that the courts of Canada (i) would enforce judgments of U.S. courts obtained in actions against Kimber, its officers or directors predicated upon the civil liability provisions of the U.S. federal securities laws or other laws of the U.S., or (ii) would enforce, in original actions, liabilities against Kimber, its officers or directors predicated upon the U.S. federal securities laws or other laws of the U.S.







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25





The Company could be deemed a Passive Foreign Investment Company which could have negative consequences for U.S. investors.



Potential investors who are U.S. taxpayers should be aware that Kimber may be a passive foreign investment company (PFIC) for the current fiscal year, and may also have been a PFIC in prior years and may also be a PFIC in subsequent years.  If Kimber is a PFIC for any year during a U.S. taxpayers holding period, then such U.S. taxpayer generally will be required to treat any so-called excess distribution received on its common shares, or any gain realized upon a disposition of common shares, as ordinary income and to pay an interest charge on a portion of such distribution or gain, unless the taxpayer makes a valid qualified electing fund (QEF) election or a mark-to-market election with respect to the shares of Kimber.  In certain circumstances, the sum of the tax and the interest charge may exceed the amount of the excess distribution received, or the amount of proceeds of disposition realized, by the taxpayer.  A U.S. taxpayer who makes a QEF election generally must report on a current basis its share of Kimbers net capital gain and ordinary earnings for any year in which Kimber is a PFIC, whether or not Kimber distributes any amounts to its shareholders. A QEF election will only be effective if Kimber provides certain information to the U.S. holders. There can be no assurances Kimber can, or will comply with these requirements.  A U.S. taxpayer who makes the mark-to-market election generally must include as ordinary income each year the excess of the fair market value of the common shares over the taxpayers tax basis therein. See Item 10 E  Additional Information - Taxation





ITEM 4. INFORMATION ON THE COMPANY



A. History and Development of Kimber



Kimber Resources Inc., a Canadian junior exploration company, was incorporated on March 31, 1995 by registration of its Memorandum and Articles under the Company Act (British Columbia) (which was replaced by the Business Corporations Act (British Columbia)that came into force on March 29, 2004), as amended effective on April 23, 1998, May 19, 1999, May 21, 2002 and June 3, 2004.



At the Extraordinary General Meeting of Kimber's shareholders held on April 30, 2002, a subdivision of Kimber's Common Shares on a 1.6 new shares for one old share basis (the Subdivision) was approved and the authorized capital of Kimber was increased to 80,000,000 Common Shares effective May 21, 2002.



At an Extraordinary General Meeting of Kimbers shareholders held on May 28, 2004, the shareholders approved the adoption of new Articles under the new Business Corporations Act (British Columbia) and the increase in the number of Kimber directors to six (6) from five (5) as well as electing Mr. James J. Puplava to Kimbers Board of Directors. The adoption of the new Articles became effective on June 3, 2004 upon filing a notice of alteration to the Notice of Articles with the Registrar of Companies on June 3, 2004.



Kimber became a reporting issuer in the provinces of British Columbia and Alberta on June 5, 2002 and its Common Shares and July 12 Warrants were listed on the TSX Venture Exchange and commenced trading on July 16, 2002. Kimber voluntarily delisted its shares from the TSX Venture Exchange at the end of trading on June 17, 2004 and its shares were listed and commenced trading on the TSX on June 18, 2004. Kimber is now also a reporting issuer in the Province of Ontario.



The head office and registered and records office of Kimber are located at Suite 215 - 800 West Pender Street, Vancouver, British Columbia, Canada V6C 2V6. Telephone: (604) 669-2251.







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The fiscal and head office of Minera Monterde, S. de R.L. de C.V. (Minera Monterde), a wholly owned subsidiary of Kimber, are located at Camino al Campestre # 4302, Col. Quintas Campestre, CP 31214, Chihuahua, Chihuahua State, Mexico. Telephone: 52 6144 105 403



The fiscal and head office of Kimber Resources de Mexico S.A. de C.V. (Kimber Resources de Mexico) and Minera Pericones S.A. de C.V. (Minera Pericones), both wholly owned subsidiaries of Kimber, are located at Avenida del Mar No. 1022 Oficina 5, Zona Costera, Mazatlan, Sinaloa, Mexico 82149. Telephone: 669-990-0548



Kimbers principal capital expenditures since inception relate to its mineral properties in Mexico.  At June 30, 2006, Kimber had a balance of $21,749,820 in unproven mineral right interests costs relating to expenditures on its mineral properties.  During the year ended June 30, 2006, Kimber incurred $10,148,490 in mineral property acquisition and exploration expenditures on the Monterde Property (the Property) ($744,440 for acquisition; $9,404,050 on exploration), the El Coronel Concessions ($300,000 for acquisition, $nil on exploration) and the Setago Property ($2,178 for acquisition; $nil on exploration).



At June 30, 2005, Kimber had a balance of $11,601,330 in unproven mineral right interests costs relating to expenditures on its mineral properties.  During the fiscal year ended June 30, 2005, Kimber incurred $6,231,521 in mineral property acquisition and exploration expenditures consisting of the Monterde Property ($525,103 for acquisition; $5,703,058 on exploration) and the El Coronel Concessions ($180,000 for acquisition; $5 on exploration) and the Setago Property ($3,355 for acquisition; $5 on exploration).



At June 30, 2004, Kimber had a balance of $5,382,011 in unproven mineral right interests costs relating to expenditures on its mineral properties.  During the fiscal year ended June 30, 2004, Kimber incurred $3,654,415 in mineral property acquisition and exploration expenditures consisting of the Monterde Property ($362,587 for acquisition; $3,109,768 on exploration), the El Coronel Concessions ($114,400 for acquisition), the Setago Property ($1,219 for acquisition; $54,239 on exploration) and the Oribo Property ($8,726 acquisition; $3,476 on exploration), which was subsequently written off during the year ended June 30, 2005.



At June 30, 2003, Kimber had a balance of $1,727,596 in unproven mineral right interests costs relating to expenditures on its mineral properties.  During the fiscal year ended June 30, 2003, Kimber incurred $1,444,300 in mineral property acquisition and exploration expenditures consisting of the Monterde Property ($207,594 for acquisition; $1,175,305 on exploration) and the El Coronel Concessions ($61,401 for acquisition).



At June 30, 2002, Kimber had a balance of $274,673 in unproven mineral right interests costs relating to expenditures on its mineral properties.  During the fiscal year ended June 30, 2002, Kimber incurred $155,273 in mineral property acquisition and exploration expenditures consisting of the Monterde Property ($99,609 for acquisition; $28,996 on exploration) and the El Coronel Concessions ($26,668 for acquisition).



B. Business Overview



Kimber is a British Columbia, Canada junior resource company engaged in the acquisition, exploration and development of mineral resource properties.  Where management determines that it is in Kimbers best interest, joint venture partners may be sought to further explore and/or develop certain properties.  Kimber is in the process of exploring its mineral properties located in Mexico and has yet to determine whether any of these properties contain ore reserves that are economically recoverable.  Refer to Item 4D - Property, Plants and Equipment for a description of each of these mineral properties.







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The Company is domiciled in British Columbia, Canada and is a valid company in good standing and operating under the Business Corporations Act (British Columbia)(came into force on March 29, 2004).



The Companys principal place of business is located at 215 - 800 Pender Street, Vancouver, British Columbia, Canada V6C 2V6, telephone (604) 669-2251, facsimile (604) 669-8577. The Company through its subsidiary, Minera Monterde, has an administration office in Chihuahua, Mexico.



All of the properties in which Kimber currently holds interests are without a known body of commercial ore.  Kimber is an exploration stage company and there is no assurance that a commercially viable mineral deposit exists on any of its mineral properties. Further exploration is required before a final evaluation as to the economic and legal feasibility can be determined.



As of June 30, 2006, Kimber had incurred $21,749,820 on the acquisition, exploration of the Property, of which Atna funded $444,628.  During the last five financial years ended June 30, 2006 Kimber has carried out a program of reverse circulation drilling, diamond core drilling, trenching and sampling on the Property.



COMPANY FINANCINGS



Initial Public Offering

On July 12, 2002, Kimber closed its Initial Public Offering with Canaccord Capital Corporation. Kimber placed a total of 7,000,000 units at $0.45 per unit for gross proceeds of $3,150,000. Each unit consisted of one share and one transferable share-purchase warrant exercisable at $0.45 until July 12, 2003 and thereafter at $0.55 until they expired on January 12, 2004. Canaccord received 10% of the gross proceeds totaling $315,000 and 1,400,000 non-transferable warrants exercisable at $0.45 until July 12, 2003 and $0.55 until January 12, 2004.  Kimber also issued Canaccord 250,000 Common Shares and paid a sponsorship fee of $30,000.



The Company issued the securities pursuant to its prospectus dated June 5, 2002 (effective date: June 6, 2002), and a sponsorship and agency agreement with Canaccord dated for reference April 29, 2002.  The prospectus was qualified only in the Provinces of British Columbia and Alberta.  The sponsorship and agency agreement authorized Canaccord to offer and sell the securities in the Selling Provinces, defined as the provinces of British Columbia and Alberta and such other Canadian provinces as may be agreed to between the Company and Canaccord.  No securities were issued to any U.S. Person (as defined in Rule 902 of Regulation S promulgated under the United States Securities Act of 1933, as amended) to Kimbers knowledge.



Private Placement No.1 (brokered)

As the prospectus for the IPO was not qualified in Ontario, following the initial public offering, Kimber completed a brokered private placement through Canaccord, as agent, of a further 500,000 units to Sprott Asset Management in Ontario at $0.45 per unit. Each unit consisted of one Common Share and one transferable share-purchase warrant entitling the holder to purchase an additional Common Share at a price of $0.45 to July 12, 2003 and then $0.55 until January 12, 2004. Canaccord received 10% of the gross proceeds for a total of $22,500 and was issued 100,000 non-transferable warrants exercisable at $0.45 until July 12, 2003 and thereafter $0.55 until January 12, 2004. The private placement was effective July 25, 2002. No securities were issued to any U.S. Person.



Private Placement No.2 (brokered)

On May 14, 2003, Kimber closed a private placement of 1,765,600 units at a price of $0.45 per unit to realize gross proceeds of $794,520.  Each unit consisted of one Common Share and one-half of one non-transferable share purchase warrant.  One whole warrant entitled the holder to purchase one additional Common Share of Kimber until November 14, 2004 at a price of $0.55.  Canaccord acted as agent for the offering, in consideration for which it received an 8% commission payable in cash and share purchase warrants for the purchase of 353,120 shares. Each warrant was exercisable into one Common Share until November 14, 2004 at a price of $0.55.  In addition, Kimber paid Canaccord a $4,000 administration fee.  The agency agreement specifically excluded U.S. Persons from the offering.







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Private Placement No.3 (non-brokered)

On December 16, 2003, Kimber closed a non-brokered private placement of 1,000,000 units to Puplava Securities Inc., related and other parties at a price of $0.70 per unit. Each unit consisted of one Common Share and one-half of one non-transferable share purchase warrant.  One whole warrant entitles the holder to purchase one additional Common Share of Kimber for 12 months at a price of $0.80. The securities were issued to U.S. Persons who were accredited investors for the purposes of the exemption from the registration requirements of the United States Securities Act of 1933, as amended, provided by section 4(6) of Regulation D of that Act.



Private Placement No.4 (brokered)

On December 16, 2003, Kimber also closed a brokered private placement of 1,000,000 units with Canaccord at a price of $0.70 per unit.  Each unit consisted of one Common Share and one-half of one non-transferable share purchase warrant.  One whole warrant entitled the holder to purchase one additional Common Share of Kimber for 12 months from the date of closing at a price of $0.80. Canaccord received an 8% commission (paid one-half in cash and one-half in units) and non-transferable share purchase warrants for the purchase of 200,000 Common Shares.  Each warrant was exercisable into one Common Share at $0.80 for a period of 12 months from the date of issue of the warrant.  In addition, Kimber paid Canaccord a $5,000 administration fee. The agency agreement between the Company and Canaccord dated for reference November 20, 2003 expressly excluded U.S. Persons from participating in the private placement.



Private Placement No.5 (brokered)

On September 9, 2004 the Company closed a brokered private placement for 1,270,000 units at a price of $1.50 per unit. Each unit consisted of one Common Share and half of one non-transferable share purchase warrant. One whole warrant entitles the holder to purchase an additional Common Share at a price of $1.80 until March 8, 2006. The agent received an 8% commission paid in cash and the agent and other members of the sales group received a non-transferable agents option to purchase a total of 127,000 units at $1.80 per unit, consisting of one Common Share and one-half of one non-transferable share purchase warrant. One whole warrant will entitle the holder to purchase an additional Common Share at $1.80 until March 8, 2006. The Company also paid the agent a corporate finance fee of 40,000 units having the same terms as the units described above. Some of the units were sold to U.S. Persons in reliance on the U.S. accredited investor exemption.



Private Placement No.6 (non-brokered)

On February 24, 2005 Kimber closed a non-brokered private placement of 3,290,324 units to raise gross proceeds of $5,100,002.20 with four investment funds. All of the units were issued at a price of $1.55 per unit and each unit consists of one common share and one-half of a non-transferable share purchase warrant, with one whole warrant entitling the holder to purchase one additional common share at $1.80 until March 8, 2006. Two of the investors have each purchased 1 million units. In addition, two other investors have each purchased 645,162 units.  No commissions or brokerage fees were paid with the exception of a finders fee of $31,000 in respect of 1 million units. The subscription agreements specifically excluded U.S. Persons from the financing.



Private Placement No.7 (non-brokered)

On August 26, 2005, the Company closed a non-brokered private placement of 3,333,332 units to raise gross proceeds of $4,999,998.  All of the units were issued at a price of $1.50 per unit and each unit consists of one common share and one-half of a non-transferable warrant, with one whole warrant entitling the holder to purchase one additional common share at $1.80 until February 26, 2007.  A finder's fee of $40,000 was paid to an investment brokerage firm in respect of 1,333,332 units. Some of the units were sold to U.S. Persons in reliance on the U.S. accredited investor exemption.







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Private Placement No.8 (brokered and non-brokered)

On March 1, 2006 the Company closed brokered and non-brokered private placements of a total of 7,047,500 common shares at a price of $2.00 for gross proceeds of $14,095,000. Puplava Securities Inc. ("PSI") of San Diego, California acted as agent for the brokered private placement and Ms. Leanne Baker, Managing Director of Investor Resources LLC, acted as a consultant in the United States. The Company paid cash commissions of 5.5% on the brokered placements to PSI. Mr. James Puplava, a Director and major shareholder of the Company, and a principal of PSI, did not acquire shares through the placement (see Note 10). The non-brokered private placement was to institutional and accredited investors in Canada and offshore. Blackmont Capital Inc., Canaccord Capital Corp., and PSI received finder's fees of 5.5% of the proceeds raised on certain placements. The total commissions and finder's fees paid on both the brokered and non-brokered placements was $428,725 and of that amount cash commissions and finders fees of $234,850 were paid by the Company to PSI.  No warrants were issued to investors or agents in connection with the offering.





C. Organizational Structure



Kimber Resources Inc. beneficially owns all of the corporate participation units in the capital stock of Minera Monterde, S. de R.L. de C.V.  Currently, Kimber Resources Inc. holds 2,997 corporate participation units of Minera Monterde and Robert V. Longe, Kimbers President and CEO, holds three (3) corporate participation units on Kimbers behalf.  The nominal value of the corporate participation units of Minera Monterde is one Mexican nuevo peso each.



Minera Monterde is a Mexican mining enterprise that was formed under the laws of Mexico on January 21, 2000 as a limited liability partnership with variable capital stock.  The business office of Minera Monterde is located at Camino al Campestre # 4302, Col. Quintas Campestre, CP 31214, Chihuahua, Chihuahua State, Mexico.



Kimber Resources de Mexico is an inactive Mexican subsidiary that was formed under the laws of Mexico on March 16, 2005 as a limited liability mercantile corporation.  The business office of Kimber Resources de Mexico is located at Avenida del Mar No. 1022 Oficina 5, Zona Costera, Mazatlan, Sinaloa, Mexico 82149. Kimber Resources de Mexico does not carry on any business at present.



Minera Pericones is also an inactive Mexican subsidiary that was formed under the laws of Mexico on December 16, 2005 as a limited liability mercantile corporation.  The business office of Minera Pericones is located at Avenida del Mar No. 1022 Oficina 5, Zona Costera, Mazatlan, Sinaloa, Mexico 82149. Kimber Minera Pericones does not carry on any business at present.





D. Property, Plants and Equipment



Cautionary Note to U.S. Investors concerning Estimates of Measured and Indicated Resources



This section uses the terms Measured Resources and Indicated Resources.  The Company advises U.S. investors that while those terms are recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission does not recognize them.  U.S. investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into reserves.



The Company is an exploration stage company, as the Companys properties are currently in the exploratory stage.  In order to determine if a commercially viable mineral deposit exists in any of the Companys properties further geological work will need to be done and a final evaluation based upon the results obtained to conclude economic and legal feasibility.







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The Property



The Property consists of the Monterde Concessions, the El Coronel Concessions and the Staked Concessions and is made up of a total of 34 mineral concessions described in the following Table 1. See Figure 1for reference to the Monterde Propertylocation in Mexico and Figure 2and Figure 3for the location of individual concessions.



Kimbers primary objective is the development of the Carmen deposit and the exploration of the rest of the Monterde Property located in the Monterde Mining District in the western part of the state of Chihuahua, Mexico.  The Carmen deposit is located in the Group 1 concession group seen below in Table 1 andFigure 2.



Kimbers principal targets on these properties are open-pittable ore bodies, where gold and silver are amenable to extraction by heap leaching and conventional milling.



Minera Monterde is the holder of a 100% interest in the Monterde Property and the Setago Property located in the Municipalities of Guazaparez and Chinipas, State of Chihuahua, Mexico, southwest of the city of Chihuahua, Mexico.



Table 1

THE PROPERTY



Monterde Concessions

Concession

Title

Title

Area in



Name

Number

Type

Hectares

Expiry Date



(mo/day/year)

Group 1 Concessions

Monte Verde

209794

Exploitation

26.0000



08/08/2049

Los Hilos

209793

Exploitation

6.0000

08/08/2049

El Carmen

210811

Exploitation

11.0000

11/29/2049

El Carmen II

209795

Exploitation

22.0000

08/08/2049



Group 2 Concessions

Anexas de Guazapares

212541

Exploitation

20.0000

10/30/2050

Anexas de Guazapares

212552

Exploitation

18.8947

10/30/2050

Anexas de Guazapares

212542

Exploitation

9.7535

10/30/2050



Group 3 Concessions

Anexas de Guazapares

112692

Exploitation

90.0000

04/08/2011



Group 4 Concessions

Ampliacion Guadalupe

226011

Exploitation

59.0799

11/14/2055



El Coronel Concessions

La Bonanza

192039

Exploitation

98.2751

12/18/2041

Montaña de Oro

205334

Exploitation

183.0045

08/07/2047

La Verde

217341

Exploitation

195.0000

07/01/2052

La Flor de Oro

217342

Exploitation

148.1485

07/01/2052

San Cristóbal

217344

Exploitation

196.1159

07/01/2052

El Carmen*

217345

Exploitation

10.8835

07/01/2052

Merlin

217346

Exploitation

3.9176

07/01/2052

La Morena

217348

Exploitation

53.5533

07/01/2052

La Malinche

217347

Exploitation

248.1107

07/01/2052

Bola de Oro

216991

Exploitation

100.6203

06/04/2052

Venadito II

217349

Exploitation

167.8195

07/01/2052



Staked Concessions

Stratus

219869

Exploration

45.1100

04/24/2053

Dakota

219107

Exploration

74.2600

2/06/2053



Rubia

223447

Exploration

780.4720

01/10/2055







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Concession

Title

Title

Area in



Name

Number

Type

Hectares

Expiry Date



(mo/day/year)



Rubia Fraccion 1

223448

Exploration

23.4900

01/10/2055

Rubia Fraccion 2

223449

Exploration

0.4950

01/10/2055

Los Abuelos Frac Oeste

218532

Exploration

0.9416

11/21/2052

Los Abuelos Frac Este

218533

Exploration

0.1974

11/21/2052

Rubia 2

226555

Exploration

11,360.3100

01/26/2056

Rubia 2 Fraccion 2

226556

Exploration

1.0214

01/26/2056

Rubia 3

226371

Exploration

15,258.0241

01/12/2056

Rubia 4

226372

Exploration

1.7752

01/12/2056

Rubia 5 Fraccion 1

226538

Exploration

12.8394

01/25/2056

Rubia 5 Fraccion 2

226539

Exploration

4.0546

01/25/2056

Rubia 5 Fraccion 3

226540

Exploration

35.2419

01/25/2056



Total Area:                      29,266.4096 hectares

Notes:

*- please note that claim #217345 (El Carmen) is a separate concession from claim #210811 (El Carmen) under the Group 1 heading.





THE SETAGO PROPERTY



Setago

220684

Exploration

3000.0000

09/29/2053





Table 2

PROPERTY PAYMENTS



Total



Due Date

Group 1

Group 2

Group 3

Group 4

El Coronel       Payments



Concessions  Concessions Concessions Concessions  Concessions    For Period



US $          US $

US $

US $

US $

US $

2000 Feb. 14

15,000

3,000

1,500

2,000

21,500

2000 July 27

3,000

2000 Aug. 14

17,000

4,000

2,000

26,000

2001 Jan. 27

4,000

2001 Feb. 14

19,000

4,000

2,000

29,000

2001 July 27

5,000

2001 Aug. 14

19,000

4,000

2,000

7,000

37,000

2002 Jan. 27

7,000

2002 Feb. 14

21,000

5,000

2,500

10,000

45,500

2002 July 27

8,000

2002 Aug. 14

21,000

5,000

2,500

15,000

51,500

2003 Jan. 27

8,000

2003 Feb. 14

54,000

18,000

8,000

25,000

113,000

2003 July 27

10,800

2003 Aug. 14

54,000

18,000

8,000

35,000

125,800



2004 Feb. 14

76,000

24,000

12,000

45,000

157,000

2004 Aug. 14

76,000

24,000

12,000

75,000

187,000

2005 Feb. 14

78,000

25,000

12,400

105,000

220,400

2005 Aug. 14

271,000

56,700

30,500

135,000

493,200

2006 Feb. 14

165,000

165,000

2006 Aug. 14

383,000

383,000



721,000

190,700

95,400

47,800

1,000,000

2,054,900

Notes:

As of July 31, 2006 all of the property payments have been made.







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In late 1999, Kimber pursued the acquisition of options on the Monterde Concessions with the assistance of Thorne International Ltd. (Thorne), a Virginia, U.S.A. corporation, and Minera Ayutla, S.A. de

C.V. (Ayutla), a Mexican corporation.  By agreement dated February 18, 2000, (the Carried Interest Agreement) entered into between Kimber, Thorne and Ayutla, the parties agreed that Thorne and Ayutla would give up any rights that they may have had in some of the Monterde Concessions and to assist Kimber and Minera Monterde in securing options on some of the Monterde Concessions in consideration for a 10% carried interest in some of the Monterde Concessions, convertible, following the occurrence of a triggering event (as defined in the Carried Interest Agreement), into 10% of the outstanding Common Shares of Kimber.  The triggering event occurred on November 17, 2000, and pursuant to the Carried Interest Agreement the conversion of that carried interest was completed on June 7, 2001 when 60,502 and 242,012 Common Shares were issued to Thorne and Ayutla, respectively.  The Carried Interest Agreement also provides that upon the occurrence of the triggering event, Thorne and Ayutla could have exercised a right to acquire an additional combined 15% of the then outstanding Common Shares by exercising their rights as provided in the Carried Interest Agreement.  Neither Thorne nor Ayutla exercised its right to acquire the additional interest in accordance with the terms of the Carried Interest Agreement.  Thorne and Ayutla have the right to acquire certain of the Monterde Concessions that Kimber may decide to abandon in the future.



By option agreement dated February 14, 2000, as amended from time to time, between Minera Monterde, Miguel Orozco Franco and his spouse Griselda Palma Heredia, Minera Monterde was granted an option to acquire a 100% interest in the Group 1 Concessions.  Subsequently, Minera Monterde determined that unregistered interests in the Group 1 Concessions had been transferred to Jose Gildardo Estrada Ramirez and Barney Green Lee Portillo and by agreement (the Acknowledgment Agreement) dated February 13, 2001 entered into between Minera Monterde, Miguel Orozco Franco and his spouse Griselda Palma Heredia, Jose Gildardo Estrada Ramirez, his spouse Lilia Olivia Moreno Urista, Barney Green Lee Portillo and his spouse Susana Alicia Trejo Rubio, Minera Monterde received the acknowledgment of the option agreement on the Group 1 Concessions and an option on all of their interests in the Group I Concessions.  By agreement dated June 20, 2003 Minera Monterde acquired registered title to the Group 1 Concessions, subject to the payments set out in Table 2.  The Company made the final payment for this group of concessions on August 14, 2005.



By option agreement dated February 16, 2000, as amended from time to time, between Minera Monterde and Carlos Munoz Caballero, represented by Vicente Arturo Caballero Olivas, Minera Monterde was granted an option to acquire a 100% interest in the Group 2 Concessions.  By agreement dated June 20, 2003, Minera Monterde acquired registered title to the Group 2 Concessions, subject to the payments set out in Table 2. The Company made the final payment for this group of concessions on August 14, 2005.











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By option agreement dated February 14, 2000, as amended from time to time, between Minera Monterde, Vicente Arturo Caballero Olivas, his spouse Susana Otilia Quevedo Almazan, Maria Estela Caballero de Swanson and Gloria Caballero de Munoz, all represented by Vicente Arturo Caballero Olivas, Minera Monterde was granted an option to acquire an 87.5% interest in the Group 3 Concessions with the understanding that the remaining 12.5% registered in the name of a deceased sister of  Vicente Arturo Caballero Olivas would also be included in the option upon resolution of the estate of the deceased sister. Minera Monterde acquired title to the full 100% interest in the Group 3 Concessions by completing the payments outlined in Table 2. The Company made the final payment for this group of concessions on June 22, 2004.



By option agreement dated February 8, 2001 between Ismael Quezada Campos and his spouse Francisca Giron Duarte and Minera Monterde, Minera Monterde acquired exploration rights and the option to purchase the Group 4 Concessions for the payments set out in Table 1. Subsequent to the death of Ismael Quezada Campos, by agreement dated June 20, 2003, entered into between Francisca Giron Duarte, the widow and beneficiary of the Estate, and Minera Monterde, Minera Monterde exercised its option and acquired a 100% interest in the Group 4 Concessions by completing the payments outlined in Table 2.



On November 16, 2000, Kimber entered into an option agreement with Atna Resources Ltd. and granted Atna the option to acquire all of Kimbers interest in and to the Monterde Concessions by, among other provisions, paying to Kimber a total of US$500,000 in periodic cash payments, incurring a total of US$2,500,000 in exploration expenditures and making all of the payments pursuant to the underlying option agreements between Kimber and the owners of the Monterde Concessions. Atna also entered into a separate agreement with Kimber pursuant to which Kimber agreed to carry out an exploration program at Atnas expense costing approximately US$250,000 on the Monterde Concessions.  After making certain payments and paying Kimber US$261,840 to carry out the exploration program Atna elected to terminate its option agreement with Kimber effective May 16, 2001.



By option agreement dated August 14, 2001 entered into between Minera Monterde and Cia Minera el Coronel, S.A. de C.V., Minera Monterde acquired the exploration rights and option to purchase a 100% interest in the El Coronel Concessions. By agreement dated September 8, 2003 Minera Monterde acquired title to the El Coronel Concessions, subject to making all of the payments set out in Table 2. The Company made the final payment set out in Table 2 on July 31, 2006



Property Payments

All taxes on the concessions making up the Property have been paid and are current. Property payments on the Monterde Concessions and the El Coronel Concessions were made as required in 2000 to August 2006. As of July 31, 2006 all of the payments due in respect of the purchase of the Property had been paid.



Property Description and Location

The Property, located in the Sierra Madre Mountains of southwestern Chihuahua State, is approximately 75 kilometres northwest of Glamis Gold Ltd.s El Sauzal Mining Project and approximately 50 kilometres southeast of the past-producing Ocampo Mining District.  It is located at approximate geographic coordinates 27°35.5' North latitude, 108° 05' West longitude, in Guazapares Municipality, approximately 260 road kilometres southwest of Chihuahua, Mexico.



Refer to Figure 1andFigure 5for the location and directions to the Monterde Property in Mexico and Figure 2andFigure 3for the location of individual concessions.







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Monterde Project Location Map

June 2006

Figure 1

[kimberkbr20fd7002.gif]







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Land Status  Core Concessions

May 2006

Figure 2

[kimberkbr20fd7004.gif]







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Monterde Project Claim Holdings

June 2006



[kimberkbr20fd7006.gif]









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Known Mineralization and Structure on the Monterde Property

As at June 30, 2006

Figure 4

[kimberkbr20fd7008.gif]







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Access to the Monterde Property

June 2006



Figure 5

[kimberkbr20fd7010.gif]







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Non-Reserves



Cautionary Note to U.S. Investors concerning estimates of Inferred Resources.This Section uses the term Inferred resources.  We advise U.S. investors that while this term is recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission does not recognize it.  Inferred resources have a great amount of uncertainty as to their existence, and great uncertainty as to their economic feasibility.  It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category.  Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases.  U.S. investors are cautioned not to assume that part or all of an inferred resource exists, or is economically mineable.



Cautionary Note to U.S. Investors concerning estimates of Measured and Indicated Resources.This section uses the terms Measured and Indicated resources.  We advise U.S. investors that while those terms are recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission does not recognize them.  U.S.  investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into reserves.



Resource Estimate M



On April 20, 2006, the Company announced a polygonal estimate based on 344 reverse circulation (RC) holes drilled on the Carmen deposit for which results were available to February 15, 2006. The estimate was prepared by the Companys geological and engineering staff.



The table below shows the Measured & Indicated resource categories in the Carmen deposit and the Inferred resources. The numbers shown differ slightly from those in the news release dated April 20, 2006 due to refinement in the data during report preparation.



|Carmen Deposit  Resource Estimate M  (Polygonal) |                  
|-------------------------------------------------- | -----------------
|                                                   | Tonnes
(millions)
|Measured                                           | 18.902           
|Indicated                                          | 3.808            
|Measured & Indicated                               | 22.710           
|Inferred                                           | 7.433            

*conversion factor of 75 ounces of silver to one ounce of gold



Boundaries to the mineralized body, incorporating the revised understanding of controls to mineralization, were drawn manually on each of 30 vertical sections 25 metres apart. Polygons were then drawn to outline mineralized blocks to cut-off grades at 0.3 g/t gold or 35 g/t silver, if the gold grade is below 0.3 g/t.



The same assay database on which the polygonal Estimate M was calculated was used to make a block model estimate (see table below).  The block model estimate was prepared by G. Giroux, P.Eng. of Micon International. His report dated July 17th, 2006 is filed on SEDAR.



A block model is a mathematical representation of the metal distribution on a regular grid of points in three dimensions that extend over the mineralized volume of rock tested by the drill holes.  It is based on the same volume of rock from which the polygonal estimate was made.  The grid intervals over which the estimate is made is set from assumptions made on how the deposit would be mined.  In this case, the block dimensions were set at 6 by 6 metres square on benches 6 metres high, that is 6 metre cubes.  A block model is desirable because it can be used as the input to computer software used in mine design.







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The grade distribution of both gold and silver separately were modeled by interpretation of assay data on bench plans within the previously determined mapable limits of 0.1 and 35 g/t for gold and silver, respectively.  The grade values at the block centres were estimated by ordinary kriging.  Kriged estimates typically contain more tonnes at lower grade than polygonal estimates due to the smoothing effect of averaging block grades from several adjacent drill holes.



As is usually the case, tonnage is higher and grade less than in the polygonal estimate.  The Measured and Indicated categories in the block model indicate similar metal content to the polygonal estimate.  Inferred resources are reduced because the criteria for this category in block models are more stringent than in polygonal estimates.  In any case Inferred resources cannot be raised to reserve status.





|Carmen Deposit  Resource Estimate M  (Block Model) above 0.3g/t Au |                  
|-------------------------------------------------------------------- | -----------------
|                                                                     | Tonnes
(millions)
|Measured                                                             | 21.2             
|Indicated                                                            | 8.7              
|Measured & Indicated                                                 | 29.9             
|Inferred                                                             | 2.9              

*conversion factor of 75 ounces of silver to one ounce of gold



Bulk Density

The bulk density value used in current resource estimates, 2.30 tonnes per cubic metre, is based on measurements using drill core.







Veta Minitas Resource Estimate



Veta Minitas is a 500 metre structure lying 250 metres to the west of the Carmen deposit. Resources outlined by 23 holes drilled on the first 150 metre portion of the structure are listed below. This resource estimate was reviewed and approved by Mr. J.B. Richards, P.Eng. in his capacity as Qualified Person.



The resource estimate on the partially-drilled Veta Minitas structure was originally reported in November, 2004.



|                   | Tonnes (millions) | Gold (g/t) | Silver (g/t) | Gold Eq  (g/t) * | Gold (oz) | Silver (oz) | Gold Eq (oz) 75:1
|------------------ | ----------------- | ---------- | ------------ | ---------------- | --------- | ----------- | -----------------
|Inferred Resources | .4                | 0.37       | 69           | 1.28             | 4,500     | 840,000     | 15,700           

*Gold-equivalent assumes equivalence of 75 units of silver to one unit of gold







|                     | Tonnes (millions) | Gold (g/t) | Silver (g/t) | Gold Eq  (g/t) * | Gold (oz) | Silver (oz) | Gold Eq (oz) 75:1
|-------------------- | ----------------- | ---------- | ------------ | ---------------- | --------- | ----------- | -----------------
|Measured  Resources  | .7                | 0.63       | 88           | 1.80             | 14,200    | 1,974,900   | 40,600           
|Indicated  Resources | .176              | 1.03       | 105          | 2.42             | 5,800     | 591,800     | 13,700           

*Gold-equivalent assumes equivalence of 75 units of silver to one unit of gold







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As with the Carmen deposit,grade cut-off is 0.3 grams gold per tonne or 35 grams silver per tonne if the gold grade is less than 0.3grams per tonne.



Carotare Resource Estimate



On November 8, 2005, the company delivered a resource estimate on the Carotare deposit based on the 28 holes drilled. This was the first mineral resource estimate since the Carotare was discovered in April 2005. The estimate was prepared under the supervision of external qualified person, Mr. A.A. Burgoyne, P. Eng. of Burgoyne Geological Inc.





|                   | Tonnes (millions) | Gold (g/t) | Silver (g/t) | Gold Eq  (g/t) * | Gold (oz) | Silver (oz) | Gold Eq (oz) 75:1
|------------------ | ----------------- | ---------- | ------------ | ---------------- | --------- | ----------- | -----------------
|Inferred Resources | 3.78              | 0.85       | 25           | 1.14             | 103,000   | 2,990,000   | 143,000          

*Gold-equivalent assumes equivalence of 75 units of silver to one unit of gold





|                     | Tonnes (millions) | Gold (g/t) | Silver (g/t) | Gold Eq  (g/t) * | Gold (oz) | Silver (oz) | Gold Eq (oz) 75:1
|-------------------- | ----------------- | ---------- | ------------ | ---------------- | --------- | ----------- | -----------------
|Measured  Resources  | 1.68              | 0.81       | 29           | 1.15             | 44,000    | 1,577,700   | 65,000           
|Indicated  Resources | 1.02              | 0.83       | 29           | 1.17             | 26,900    | 944,900     | 40,000           

*Gold-equivalent assumes equivalence of 75 units of silver to one unit of gold



Again,grade cut-off is 0.3 grams gold per tonne or 35 grams silver per tonne if the gold grade is less than 0.3grams per tonne.





Mineral Rights



In Mexico, companies incorporated pursuant to Mexican law and Mexican nationals may acquire mining exploration concessions, which are valid for a non-renewable term of six years.  Each mining exploration concession must be legally surveyed and is subject to a semi-annual tax for the mining rights and as well, a certain amount of work must be done annually; proof of which must be filed each year with the proper authorities. Failure to perform the required work and file the receipts, can lead to the concession being cancelled. The amount of the tax on mining exploration rights and work required increases with each passing year.



Prior to the expiration of the six year term of exploration, an application for a mining exploitation title must be filed to convert the title to an exploitation concession, with such title being valid for a renewable term of 50 years, subject to certain conditions.  On the conversion to exploitation, the size of the concession may be reduced to cover only the area of economic mineral occurrence.  Again, there is a semi-annual tax for the mining rights as well as a requirement that a certain amount of assessment work be done on the concession.  During exploitation, smelter receipts can be produced in the amount of the work required, if so desired.



As with the exploration phase, the semi-annual tax increases each year until the fifth year when it then becomes a fixed semi-annual amount.  In the exploitation phase, the work requirement is strictly based on concession size and does not change, except when the government adjusts the amount to account for inflation.







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In order to take advantage of the fact that in any given year, work might only be done in one area of a mining property the Mexican government allows claims or concessions to be grouped, and work done on one of the claims to be applied to the entire group.  However, in the event of grouping, each claim or concession in the group is deemed to be the same age as the oldest claim or concession in the group for the purpose of determining mining rights taxes.



Surface Rights



The land area encompassing the Monterde Property is subject to Ejido-controlled surface rights. Surface rights to the land required for mine development of the Group 1, Group 2, Group 3 and Group 4 concessions belong to the Ejido Monterde.



The ejido (ejido) system is a system where rural communities collectively own the surface rights to agricultural lands, which have been acquired from the federal government for the purposes of agricultural development and/or cattle ranching.  Based on the Agrarian Law of 1992, an ejido has the right to lease the property under its control and in some cases, can sell the land.



Residents of the community may belong to the ejido, however only one delegate per household can belong to the Asamblea de Ejidatarios,the governing body of the ejido.



By agreement dated July 13, 2003 (an Ocupación Temporal), as amended from time to time, between Minera Monterde and the Ejido Monterde the right to use and occupy land under the control of the Ejido Monterde for exploration and mining purposes was granted to Minera Monterde for a term of 30 years, subject to the payment of annual rent commencing 30 days following the commencement of commercial production. The rent is to be determined by the Commission for the Appraisal of National Property under the National Property Act of Mexico. The areas to be used for exploration and mining presently cover a total of 11,007 hectares of land.



By agreement dated May 7, 2006 (an Ocupación Temporal) between Minera Monterde and the Ejido Ocobiachi the right to use and occupy land under the control of the Ejido Ocobiachi for exploration and mining purposes was granted to Minera Monterde for a term of 30 years, subject to the payment of annual rent commencing 30 days following the commencement of commercial production. The rent is to be determined by the Commission for the Appraisal of National Property under the National Property Act of Mexico. Prior to that Minera Monterde has the obligation to provide community services to the Ejido for the improvement of the community infrastructure and the betterment of the community as a whole in an amount of not less than US$40,000 per year. The areas to be used for exploration and mining presently cover a total of 2,184 hectares of land. Certain procedural omissions in the manner in which of the Ejido called the meeting to approve the May 7, 2006 agreement necessitate the calling of a new meeting and the ratification of the existing agreement or the approval of a new agreement.



An Ocupación Temporal is analogous to a surface easement in that the area agreed upon with the surface rights holder is registered with the government and as such, the surface owner must allow the mining concession owner access and use.  The Agreements have been accepted and registered in the Registro Agrario Nacional,the government land registry.





Permits



The department responsible for environmental protection in Mexico is SEMARNAT, which is similar to the U.S. Environmental Protection Agency and Canadas Environmental Assessment Agency. SEMARNAT has broad authority to shut down and/or levy fines against facilities that do not comply with environmental regulations or standards.







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Regulations require that an environmental impact statement, known in Mexico as a Manifiesto de Impacto Ambiental(MIA), be prepared by a third-party contractor for submittal to SEMARNAT.  Studies required to support the MIA include a detailed analysis of the following areas:  soil, water, vegetation, wildlife, cultural resources and socio-economic impacts.  Although the regulatory process in Mexico does not have a public review component, proof of local community support for a project is required to gain final MIA approval.  A risk analysis must also be prepared in conjunction with the MIA for approval by SEMARNAT.



A number of other approvals, licenses and permits are required for various aspects of a mine development.  The most significant permits for the development of the Monterde Property, other than MIA approval, are water rights concessions, or permits to extract water, issued by the National Water Commission, and a permit for consumption, use and storage of explosives, or blasting permit, issued by the Mexican National Defence Secretariat.



The Company applied for and has received a limited permit that allows for small-scale blasting operations such as road construction. The Company will hire a professional consultant that holds a roaming license to perform the procedures on the Property as is permitted by the Government of Mexico. As of the date of this Annual Report, the Company has not applied for a explosives permit required for full-scale blasting operations from the Mexican National Defence Secretariat. Once the Companys operations require the permit, a powder magazine will be constructed based on projected need or usage and the permit would be applied for.



As of the date of this Form 20-F Annual Report, the Company has not obtained a water rights concession from the National Water Commission, the regulatory body of the Government of Mexico that issues permits for water extraction.  Under Mexican aquifer laws selected land areas do not require water rights permits for mining purposes. As the Companys Monterde Property is located in a designated non-controlled aquifer, water that derives from its mining concessions is open for usage by the Company.



Accessibility, Climate, Local Resources, Infrastructure and Physiography



Access to the Property is by approximately 230 km of paved highway via state Route 16 from the city of Chihuahua, the regional centre and nearest airport, to La Junta, south from La Junta to San Pedro, then from San Pedro to Creel. The paved Divisadero Highway connects Creel to San Rafael. A logging road leads to the Temoris Junction, a distance of 11 kilometres. Straight through the junction, a further 20 kilometres of logging road leadS to a sign to make a left turn and a further 6 kilometres along this road leads to the site.. Refer to Figure 5 for road access directions to the Property from San Rafael.



The unpaved road from San Rafael to Monterde is of varying quality. It is impassable by tractor-trailer units because of hairpin turns, and to automobiles because of the irregularity of the surface, but light trucks and SUVs can easily navigate the road. The road is heavily utilized by single-axle logging trucks.



A modern, standard gauge rail line called the Chihuahua el Pacifico Railway passes through San Rafael from Chihuahua to the Pacific Ocean port of Los Mochis to the west and the national network to the east.

There is excellent access by unpaved roads within the Property, particularly in the area of defined mineral resource and its projected extension.



Creel, with a population of approximately 3,200, is the closest town having a full service infrastructure base.  Creel is approximately a two and one half-hour drive east-northeast from the Property via San Rafael.



The region is one of deeply incised plateau with elevations ranging from 2,000 metres to over 2,400 metres.  Topography is locally steep, with a relatively high density of canyons and watercourses.  Numerous annual streams traverse the area. The Monterde area is forested with a variety of conifers; the predominant specie is Ponderosa pine.  Arbutus is locally seen.  Other tree species include oak, alder, and various poplars.  Shrubs include manzanita, magnolias, wild rose and numerous additional plants.  Two plant types of limited distribution are maguey and cacti, noted at scattered locales.







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Fauna in the area includes black-tailed jackrabbits, cottontail rabbits, mice, white-tailed deer, and possibly mule deer.  Cougars, bobcats, and ubiquitous coyote represent carnivorous animals.  Reptiles include rattlesnakes, king snakes, bull snakes and corn snakes. Lizards exist in abundance.



The climate is marked by dry, cold winters and a distinct rainy season.  During the winter, Monterde receives snow to depths of one metre on occasion.  Most of the snow falls from December to mid-February.  Temperature during the winter is variable, daytime highs range from 0 to 20 degrees Celsius, morning lows from -20 degrees to 5 degrees Celsius.  Temperatures during the summer, or rainy season, are moderate and range from 10 to 20 degrees Celsius.



The rainy season typically begins in May or June and continues until late September to October. In most years roads remain passable and exploration can be done throughout the rainy season. The amount of rainfall received and the frequency of storms are dependent on the severity of the hurricane season in the eastern Pacific Ocean.  The storms and thunderstorms that mark the rainy season are usually remnants of Pacific hurricanes that have moved inland, east into the Sierra Madre Occidental.  Spring and fall are generally cool and mild.



Numerous streams are present and water supply should not be a problem. Provision may have to be made for some water storage.  There is good local infrastructure centred on Creel, the local centre for supply. Abundant labour is available locally from Creel and the surrounding small towns and villages.  The region has a history of mining and the people are familiar with it and see it as an attractive way of earning a living.  Electricity is available from the national power grid at either 34 or 115 kilovolts at San Rafael. A substation and approximately 30 kilometres of line will be required.



History and Previous Work



Historic reports, copies of which have been obtained by Kimber, indicate production of gold and silver ores from the Monterde Property was underway during the period 1937 to 1944.  The reports indicate that the production was from two underground mines located on adjacent shears and total ore production was 68,000 tonnes grading 19.29 g/t gold and 311.5 g/t silver at a cut off grade of 15.0 g/t gold.  The historic records indicate all of the ore produced was oxide and mining depths were greater than 250 metres vertical.



The early reports state that the ore was processed in a 25 ton per day mill and gold and silver were extracted through cyanidization.  Based on the production records of tonnes mined and ounces of gold and silver sold, the gold recovery is estimated at 85% to 90% and silver recovery at 65% to 70%.



The records indicate that the mine shut down in June 1944.  Minor production of 1,810 tons was credited from July 1944 to October 16, 1944. Historic data states that the mine shut down due to a variety of factors, but not because of a lack of ore.



Modern exploration on any part of the Property began in 1994 when it was optioned by Pandora Industries Inc. (Pandora) of Vancouver, British Columbia.  Pandora then formed a joint venture with Mill City Gold Mining Corp. of Vancouver, British Columbia and commenced surface exploration.  The program results were encouraging and prompted the project geologist, Harold Jones, P.Eng., to recommend a drill program targeted at the historic underground mine.  However, the joint venture was dissolved prior to drilling.



Golden Treasure Explorations Inc. optioned the Monterde Concessions in June 1998, and initiated an exploration program consisting of mapping and rock chip sampling.  The results were positive and drilling was recommended.  The first ever drilling of the Monterde Concessions commenced in early December 1998 under the direction of Alan Hitchborn, formerly Vice President, Development of Kimber.  Approximately 760 metres in eight drill holes (MTR-01 through MTR-08) were completed shortly after.  Assay results were favourable, but in late summer 1999, Golden Treasure failed to make the required option payments under the option agreements with the vendors and relinquished control of the Monterde Concessions.







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In the fall of 1999 Kimber began negotiations with the owners of the Monterde Concessions. Option agreements between Minera Monterde and the owners were signed in February 2000.



Regional Geology



The Sierra Madre Occidental mountain range is a region of northwest trending volcanic intrusive centres and scattered calderas approximately 1,250 kilometres long and 250 kilometres wide, Tertiary to Late Cretaceous in age.  The geology is notable for the tremendous thickness of pyroclastics ranging in size from dust to boulder tuffs on an andesite basal unit, all on a basement of Jurassic marine sediments.   The Sierra Madre Occidental mountain range is recognized as having a high density of precious and base metal deposits genetically and spatially related to the volcanic-intrusive centres and associated faults. On the west the Sierra Madre is bounded by the Sonora Basin and Range Province and on the east by the central Mexican carbonate platform.



Three crudely defined stratigraphic units comprise the lithologic sequences.  The Jurassic marine sediments are overlain by an Upper Cretaceous to Lower Tertiary sub-aerial and submarine volcanic assemblage termed the Lower Volcanic Sequence ("LVS"), approximately 1,000 metres thick.  At the base of the LVS, the lithologies are predominately andesite flows and hypabyssal porphyry intrusives.  The LVS is unconformably overlain by a thick series of latitic tuffs, the Upper Volcanic Sequence ("UVS").  These units are Tertiary, possibly Oligocene in age.



Property Geology



The Monterde Mining District is emplaced in a volcanic complex typical of the Sierra Madre Volcanic belt.



The host lithologies are slightly welded to welded tuffs, intermediate in composition, intruded by variably altered comagmatic dikes.  The rocks lowest in the sequence, exposed below any known mineralization are andesitic in composition.  In some cases they are very strongly clay-altered.



The volcanic complex is localized at the intersection of two regional scale structural trends, one striking northwest with a right lateral sense of movement, and the other striking northeast with a left lateral sense of movement.  At the deposit scale, the controls to gold-silver mineralization reflect the regional right lateral strike slip shear system.



Alteration styles mapped include early stage propylitic, silicic, phyllic, argillic, quartz vein stockwork, and iron oxides.  Gold and silver mineralization is hosted in all of the stated alteration styles except propylitic and silicic.  The mapped alteration assemblages and quartz vein morphology suggests that the Carmen deposit is located in the upper levels of the hydrothermal system.



The system is characterized as low sulphidation epithermal.  The deposit is oxidized to a depth of at least three hundred metres.



Figure 4 is a geologic map showing the areas where drilling (on the Carmen and elsewhere) has been taking place.  Also shown are exploration targets, which have yet to be drilled.



Lithology









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The volcanic complex that hosts the Monterde District is composite in nature. The evolution of the complex follows a common extrusive rock pattern of lower intermediate rocks, followed by intermediate rocks with a slightly more felsic component, capped by a series of siliceous rocks. The discussion of the compositional classification of the following lithologies is from hand sample description, that has been confirmed by petrographic studies. Compositional classification is based on hand sample phenocryst mineralogy.



Intermediate Rocks: Lower Volcanic Series (LVS)



The lowest outcropping lithologies of the complex are porphyritic intermediate rocks.  Phenocryst content consists of plagioclase euhedra and well-formed hornblende phenocrysts.  The groundmass is aphanitic, grey to dark grey when fresh, greenish grey when propylitically altered.  Based on phenocryst mineralogy, the intermediate rocks would be classified as andesite, which occur as flows and perhaps minor tuffaceous rocks.



Outcrops of the andesitic lithologies are mapped south and west of the deposit area; they do not outcrop on the area covered by drilling.  The rocks rarely occur completely fresh. Most outcrops exhibit some propylitic alteration.  Supergene argillization present in some outcrops is the result of oxidation of pyrite, which was emplaced with the propylitic alteration event.  Sparse quartz veins are also noted in some areas.  No sampling has been conducted on these exposures.



Tuffaceous Rocks: Upper Volcanic Series (UVS)



Overlying the basement andesite is a series of three tuffaceous lithologies generally latitic in composition. The contact between the tuffaceous rocks and the underlying andesite are assumed to be unconformable.  Measured dips on the tuffs are gentle, 5 to 10 degrees southeast.  This series of tuffaceous lithologies hosts the gold-silver mineralization in the Monterde District.



The lowest unit is white to light grey, slightly to moderately welded, fine-grained lithic tuff.  The lithic tuff contains fragmentals of the parent tuff lithology and fragments of the underlying andesitic lithologies.  Phenocryst mineralogy suggests a latite composition for these tuffs. Phenocrysts consist of plagioclase, sanidine, quartz, and occasional biotite.  In some occurrences of biotite, it is not clear if the biotite is primary or secondary and related to alteration. The groundmass is generally fine to medium grained.  Where welding is more pronounced, the groundmass exhibits eutaxitic texture.  The andesitic lithic component of this unit is fine-grained.  Most lithic fragments are smaller than 2.5 centimetres in the largest dimension.



The next unit in the tuff series is a coarse-grained lithic tuff or breccia tuff. The designation, coarse grained is derived from the larger size of the andesite lithic fragments present in the unit.  The andesite lithic fragments range in largest dimension from less than 2.5 centimetres to over 2 metres.  At some mapped localities, the amount of andesite lithic component present in the tuff gives the rock the appearance of lahar.  The coarse grained lithic tuff has the same phenocryst composition as the fine-grained lower tuff unit and would be termed a latite on this basis.  The degree of welding present is mostly moderate to slight.



Capping the coarse grained lithic tuff is a welded tuff that displays distinct layered textures. This unit has the same phenocryst composition as the two underlying tuff units.  Minor andesite lithics are present in the unit.



Quartz Feldspar Intrusive: Pre-Mineralization (UVS)



Outcrop of pre-mineralization intrusive is present west and northwest of the Carmen deposit. This lithology occurs as plugs and dikes intruding the tuffaceous lithologies.  Phenocryst content is composed of plagioclase, quartz, sparse sanidine, and minor biotite.  The groundmass is aphanitic.  Based on phenocryst mineralogy, the interpretation is that this intrusive lithology is comagmatic with the tuffaceous rocks.







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The pre-mineralization intrusive is variably altered.  The most notable alteration style is hematization of the groundmass.  A clay mineral, possibly sericite, is on occasion seen to replace plagioclase phenocrysts.



Flow Dome Complex, Pre-Mineralization



This category of lithologies includes three distinct but probably related intrusive phases.  The intrusive rocks included in this category consist of flow-banded domal rocks, pink flow banded very fine-grained domal rocks, and obsidian dikes.



The domal rocks occur southwest of the deposit area.  These rocks are characterised by abundant spherical lithophysae and flow banding.  Auto-brecciation of the flow textures is common.  Multiple intrusive phases are present and consequently, this category includes some lumping of lithologies.  These rocks are categorised as rhyolite based on the quartz-sanidine phenocryst mineralogy.



No sequence of emplacement is implied in the following discussion on the three intrusive phases noted above.



Mapped exposures of the pink, flow-banded, very fine-grained domal rocks and associated obsidian dikes occur in fault and intrusive contact with altered tuffaceous lithologies northwest of the Carmen deposit.  Outcrop of the domal rocks is seen on the small hill northwest of the Carmen deposit.  Exposures sometimes exhibit a vitrophyric margin and base where the domal rocks are extruded and contact the underlying tuffs as a flow.  The obsidian dikes are interpreted as apophysis from the main domal body.  The phenocryst mineralogy is primarily quartz and sanidine.  This assemblage would suggest a rhyolite classification for these rocks.



Structure



Refer Figure 4 for locations of individual mineralized structures of the Monterde Property.



Primary structural control of the Carmen deposit is a northwest striking, northeast dipping shear zone with both right lateral movement and normal displacement.  The setting is in a half-graben or pull-apart basin.  Splays branching off the main shear are evident and are related to the extension of the half graben.  The intersection of north-east-striking steeply dipping normal faults and shallow easterly dipping faults, both of which were active at the time of the northwest shear features, contributes to the localization of the gold-silver mineralization, which is present on all of the noted structures.









Alteration & Mineralization



The earliest alteration event is propylitic alteration mostly confined to the footwalls of the Carmen and Las Minitas Shear Zones.  Greenish brown chlorite is seen to replace biotite phenocrysts of the various tuffaceous lithologies.  Additionally, the groundmass of the tuffs is greenish brown suggesting chloritic replacement of groundmass constituents. Propylitic alteration does not host gold and silver mineralization.



Two areas of silica replacement are mapped in the Carmen Shear Zone. These exposures are typically white to very light grey, forming resistant, cliff-like outcrop. Silica replacement is not gold-silver bearing.







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Two styles of phyllic alteration are mapped in the target areas. One is seen in limited outcrop exposure mostly along the footwall structures of the Carmen and Las Minitas Shear Zones.  This style of phyllic alteration, which manifests as sericite replacement of plagioclase phenocrysts, may be related to the lead-zinc mineralization.   Phyllic alteration also occurs as cross cutting, fracture-controlled coatings of clay minerals, probably sericite-illite. This implies that two separate phyllic events are present. Both styles of phyllic alteration host gold and silver mineralization.



Silica-hematite breccias commonly outcrop along gold and silver mineralized structures and are encountered in the drilling. These breccias typically are greyish, exhibiting multiple pulses of silica as matrix filling, quartz veins and breccia cement. Hematite occurrence is seen as fracture fillings, stains, and disseminations. Rock chip sampling and drilling establishes that silica-hematite breccias host gold and silver mineralization.



Argillic alteration ranges from incipient to pervasive. Incipient argillic alteration is marked by the replacement of plagioclase phenocrysts by clay. Progressing further, argillic alteration replaces the groundmass of the altered lithology and taken to the extreme, results in a rock that has undergone complete textural destruction.



Iron oxides mapped include hematite, goethite and limonite.  Hematite is defined as dark red stain or coating on rock surfaces, identified by a red streak on a porcelain plate. Goethite is defined, on a hand sample basis, as brownish to brown red iron oxides.   Limonite is defined as yellow to orange iron oxides.



Gold mineralization is associated with argillic alteration in both drill holes and surface sampling, and with goethite-hematite stained siliceous breccias. The goethite and hematite amounts range from sparse to pervasive.   Limonite is present in the hematite-goethite iron oxide regime, but where limonite is the most abundant iron oxide, gold and silver values are low.  Gold is not associated with massive (i.e. unbrecciated) silicification.  No gold has been seen and there is no known placer associated with the Monterde District.



Deposit Type



Based on the host lithologies and mapped alteration assemblages, the Property is classified as a low sulphidation, volcanic hosted, structurally controlled epithermal gold-silver deposit.  The presence of hypogene argillic alteration and banded quartz veins with a chalcedonic, waxy lustre, underlain by phyllic alteration, suggests the deposit is high in the hydrothermal regime.  Compared to other deposits hosted in similar geologic settings, the Carmen deposit should have greater than 500 metres of down dip extent.









Exploration



RC Drill Program



480 reverse circulation (RC) holes, totaling 96,725 metres, had been drilled on the Property to June 30, 2006.  Eight (8) holes were drilled by Golden Treasure, the remainder by Kimber. The holes drilled by zone, including the Golden Treasure drilling are: Carmen - 410 holes; La Veta Minitas - 25 holes; Carotare - 36 holes; El Orito Norte - 2 holes; El Orito Structure  5 holes and the Da Nada zone with 2 holes.  The holes range from 31 to 310 metres in depth.



Company personnel surveyed the drill collars with differential Global Positioning System (GPS). Down-hole deviation surveys were completed by a contractor or Company personnel on all holes deeper than 66m, which remained open after the drill pipe had been removed. In some cases, holes collapsed before the deviation survey could be done.







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The drill samples were collected on 2 metre intervals and assayed by Chemex in North Vancouver, British Columbia following sample preparation at their laboratory in Hermosillo, Mexico.



A series of duplicates, blanks, and reference samples served for quality assurance and quality control.



All field operations were under the direction of A.D. Hitchborn, B.Sc., and Vice-President, Development of Kimber until June 18, 2006. Since June 18, 2006 field operations have been under the direction of Robert V. Longe, B.A., M.Sc., President and CEO of Kimber.



J. Byron Richards, P. Eng., Vice-President, Engineering is responsible for Quality Control and is the designated Qualified Person.



Significant intersections from all the drill programs can be found in Kimbers news releases on its website at www.kimberresources.com and are filed on SEDAR at www.sedar.com and on EDGAR at www.sec.gov/edgar.shtml.



Metallurgy



Historically the Monterde mine (now part of Carmen Deposit) recovery from cyanide vat leaching ranged from 85 to 90% gold and 65 to 70% silver.



During 2003 Kimber completed a gold and silver cyanide recovery test program on 150 gold and silver bearing samples from rejects of 11 reverse circulation drill holes over the length and depth of the Carmen deposit. The objective of the test-work was to determine if there is some mapable variation in silver recovery that should be considered in sample site selection in ongoing metallurgical work.  These tests gave excellent gold recovery, from 60% to just under 100%, averaging over 90% and silver recovery varying over a wider range of 10% to over 90%, averaging over 50%. There was a strong correlation between recovery and grade and depth of the mineralization. The grade-weighted recovery of silver in the upper 100 metres of the resource was calculated to be 55%.  Silver is of much less importance below 100 metres depth.



Further testing done in 2004 on large samples from trenches and large diameter (PQ) drill core confirmed that the gold recovery was very good, but that the spatial variations in silver recovery were more complex than had been thought from the 2003 work.  Bottle roll cyanide leach tests on 93 samples of crusher rejects from diamond drill holes in 2005 again confirm the recoveries previously measured, see table below.





Carmen Deposit  2005 Bottle Roll Test Recoveries

|Gold Minimum Recovery %   | Gold Maximum Recovery %  | Gold Average  %  | Standard Deviation %
|------------------------- | ------------------------ | ---------------- | --------------------
|22.8                      | 99.4                     | 90               | 14                  
|                          |                          |                  |                     
|Silver Minimum Recovery % | Silver Maximum Recover % | Silver Average % | Standard Deviation %
|8.9                       | 97.9                     | 41.3             | 58                  





The "Relative Standard Deviation given in the right-most column above is a measure of the uncertainty of the average of the results.  Preliminary analysis of these results has indicated that the more complex pattern of silver recoveries may be mappable.  These studies will continue in 2006 with further work on process development as well.







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Gold Equivalence of Silver



The gold equivalence of silver is useful for comparing assay intercepts on a particular property.  It is calculated by taking into account the projected gold and silver prices and the estimated percentage of recoveries of each metal depending on the type of recovery method used (ie. mill processing vs. heap leach).  In a full analysis it would include all costs related to the production of each metal, including refining charges, freight and security etc.  At the present time Kimber is of the opinion that an average estimate of 75:1 (silver: gold) is appropriate until further metallurgical tests are performed.



Trenching



Approximately 465 metres of trench were cut in six trenches of the exploration targets, Las Minitas and El Orito areas of the concessions in 2002.  In 2003 a further 1,545 metres in 17 trenches were cut in the Las Minitas area and two new alteration zones, the Veta Minitas and De Nada zones, which were located in 2003 (See Figure 3).  The trenches were mapped and sampled by Kimber crews. Sampling was done by continuous chip sampling on lines marked on outcrop face with samples 1 to 3 metres long. Approximately 7 kg of chips were taken over each sample interval. Assaying of the chip samples was dealt with under the same assay protocol as the RC chips, except that no sample duplicates or standards were included.



Anomalous gold values in the trench samples confirm the Las Minitas and El Orito structures as being mineralized. Zones with gold in excess of 100 parts per billion (ppb) are of interest as drill targets. The RC drill results from the Las Minitas and Veta Minitas zones reinforce their value.



Other Significant Acquisitions and Dispositions





Setago and Oribo Properties

During the year ended June 30, 2003, Minera Monterde staked two (2) separate early stage exploration properties called Setago and Oribo.



The Setago Property lies approximately 24 kilometres to the west of Monterde and consists of one exploration concession (title number 220684) covering a rectangular area of 3,000 hectares (5 x 6 kilometres). With the exception of annual taxes ($3,355 in 2005), the property requires no significant payments as the staff of Minera Monterde staked the concession. The property covers well-altered Tertiary volcanics of the Upper Volcanic Series (similar to Monterde). Alteration types include argillic, alunitic, pyrophyllitic and silicification, together with siliceous breccias, quartz vein stockworks and extensive iron oxide features which are typical of high sulphidation epithermal systems. Kimbers geological team in Mexico completed a limited mapping and sampling program on the property in July 2003 resulting in anomalous gold values. Work to date on this property has been minimal.



Kimber also staked the Oribo Property. The Company abandoned the Oribo Property in 2005 due to difficulties working in the area.



Rubia 2, Rubia 3, Rubia 4, Rubia 5 (Fraccions 1 to 3) Properties

With some of the mineralized structures and exploration targets on the Monterde Concessions and the El Coronel Concessions trending towards the boundary of the claims, the Company decided to stake surrounding ground and in January, 2005 Minera Monterde expanded the Companys property holdings. A 37 kilometre stretch of ground has been staked around and to the southeast of the Monterde Concessions and the El Coronel Concessions to cover extensions of mineralized structures.  The land under Kimbers 100% control in the Monterde District is now in excess of 29,000 hectares. Refer to Figure 1for the location of the Property in Mexico and Figures 2 and 3for the location of the Rubia 2, Rubia 3, Rubia 4 and the Rubia 5(Fraccion 1-3) concessions.



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ITEM 4A. UNRESOLVED STAFF COMMENTS



Not applicable





ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS



The following discussion of the financial condition, changes in financial condition and results of operations of Kimber for each of the years in the four-year period ended June 30, 2006 should be read in conjunction with the financial statements of Kimber included in Item 17 - Financial Statements.  Kimbers financial statements are presented in Canadian dollars and have been prepared in accordance with Canadian generally accepted accounting principles (GAAP).



This section contains forward-looking statements involving risks and uncertainties. Kimbers actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under part Item 3 D - Risk Factors.



The Company prepares consolidated financial statements in accordance with Canadian generally accepted accounting principles in Canada (Canadian GAAP). The financial statements of the Company are prepared in Canadian dollars.  See Item 3A  Selected Financial Data for exchange rate information.



U.S. GAAP requires that all exploration and general and administrative costs related to projects be charged to expense as incurred.  As such, some of the costs accounted for as deferred mineral acquisition and exploration expenditures under Canadian GAAP would have been charged to earnings under U.S. GAAP.  Property acquisition costs are capitalized under both Canadian and U.S. GAAP.



The Company has not recorded revenue or cash flow from mining operations, and has experienced losses from operations for each of the last five years.  The Company is an exploration stage company and none of its properties have any known mineral reserves and the development of exploration properties, including the Companys Monterde Property or inclusive Carmen Deposit, and is subject to significant uncertainty and risk.  The Company anticipates that it will not record any significant revenue or cash flow from operations and that it will incur significant losses until the Property is fully developed and successfully put into production.  The Company intends to continue to rely upon the issuance of securities to finance its operations and exploration activities to the extent such instruments are issuable under terms acceptable to the Company.



The information contained herein should be read in conjunction with the consolidated financial statements of the Company.



Factors Affecting the Companys Business



Management periodically reviews results of operations both internally and externally through mining professionals. Decisions to abandon, reduce or expand exploration efforts are based upon many factors including general and specific assessments of mineral deposits, the likelihood of increasing or decreasing those deposits, land costs, estimates of future mineral prices, potential extraction methods and costs, the likelihood of positive or negative changes to the environment, permitting, taxation, labour and capital costs. There cannot be a pre-determined hold period for any property as geological or economic circumstances render each property unique.



Critical Accounting Policies and Estimates







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52







The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues earned and expenses incurred during the reporting period.  Actual results could differ from those estimates.



The Companys financial statements are presented on a going concern basis, which assumes that the Company will continue to realize its assets and discharge its liabilities in the normal course of operations. If future financing is unavailable, the Company may not be able to meet its ongoing obligations, in which case the realizable value of its assets may decline materially from current estimates.



Property acquisition costs and related direct exploration costs are deferred until the properties are placed into production, sold or abandoned.  These mineral property costs will be amortized on the unit-of-production basis over the estimated useful life of the properties, or written-off if the properties are abandoned.  Cost includes any cash consideration paid and the fair market value of shares issued, if any, on the acquisition of property interests.



Properties acquired under option agreements, whereby payments are made at the sole discretion of the Company, are recorded in the accounts when the payments are made.  The recorded amounts of property claim acquisition costs and their related deferred exploration costs represent actual expenditures incurred and are not intended to reflect present or future values.  The Company reviews capitalized costs on its property interests on a periodic, or annual, basis and will recognize an impairment in value based upon current exploration results and upon managements assessment of the future probability of profitable revenues from the property or from the sale of the property.  As the carrying value and amortization of the Companys mineral property assets is, in part, related to managements assessment of the property, such estimations are significant to the Companys financial position and results of operations.



Effective July 1, 2003 the Company has adopted the new accounting standard of the Canadian Institute of Chartered Accountants (CICA) for accounting for stock-based compensation.  The Company has adopted the fair value method of accounting for all stock options granted.  Under this method, stock-based compensation on options granted to employees, directors and consultants is recorded as an expense in the period the options are vested, based on the estimated fair value at the measurement date using the Black-Scholes Option Pricing Model.



A. Operating Results



Kimber has financed its operations principally through the sale of its equity securities.Kimber does not have any sales or revenue from its mineral properties. The Company receives nominal interest income earned from funds held on deposit and from short-term marketable securities. Interest income earned is dependent on the amount of funds available for deposit and changes in the interest rates.  Unless Kimber is able to obtain additional funds through the sale of its equity securities, the amount of interest income earned is expected to decrease as Kimber continues exploring its mineral properties.



Year Ended June 30, 2006 Compared to Year Ended June 30, 2005



The Companys net loss for the fiscal year ended June 30, 2006 was $2,363,420 or $0.06 per common share compared with $1,825,982 or $0.06 per share loss for the same period ended June 30, 2005. The Companys increase in net loss for the year was $537,438.



In accordance with stock-based compensation policy required by the Canadian Institute of Chartered Accountants, the Company recorded an expense of $760,324 ($720,469 in 2005) on 527,000 stock options granted in the year and prior year options which vested during the year. This is a non-cash expense and does not affect the Companys operations. Without this non-cash expense, the Company would have recorded a loss of $1,603,096 or $0.04 weighted average loss per share during the year.







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During the fiscal year ended June 30, 2006 the Company spent $10,148,490 on its mineral properties; $744,440 for property acquisition payments and had mineral property expenditures of $9,404,050. Drilling costs of $4,600,027 were the highest cost activity, representing 45% of expenditures, as a result of increased drilling activity ($2,251,312 or 35% in 2005). Geological and geophysical expenditures were $1,300,005 or 13% of property expenditures in 2006 compared to $861,051 or 15% in 2005.  The increase in geological costs represents increases in personnel required to supervise and process data from the increased drilling activity.  Also in line with higher drilling expenditures, assay testing was the third highest cost category in fiscal year ending June 30, 2006 at $827,288 or 8% of property expenditures ($647,785 or 10% in fiscal year ended June 30, 2005). Other significant cost categories and increases in expenditure were engineering, increasing by $460,632 to $636,299 and field supplies increasing by $334,389 to $516,519 in fiscal year ending June 30, 2006.  These latter increases were also derived from greater project activity at Monterde.



Salary and benefits expenses rose during the year ended June 30, 2006 to $726,239 from $570,991 in the year ended June 30, 2005 due to salary increases and administrative demands that have grown with the Companys operating activities and regulatory compliance.



Investor relations and shareholder communications expenses of $309,669 (2005  $195,163) were larger as a result of additional advertising, conference attendance and direct communication with a growing shareholder group to create greater awareness of the Companys progress.



Office and miscellaneous expenses increased during the year by $63,193 to $186,614 in 2006. The increase is mainly attributable to increased office supplies, printing costs and computer service and maintenance costs.



Rent expense for the head office increased to $72,775 in the year ended June 30, 2006 from $64,365 in the comparable period ended 2005 as the result of an increase in rent and additional office space occupied.



The Company recorded a loss from foreign exchange of $22,636 during the year ended June 30, 2006 as opposed to a gain of $17,103 in the period ended 2005. The loss originates from funds advanced to Mexico during the year that have depreciated in value due to fluctuations in the Mexican peso relative to the Canadian dollar. The rate of exchange for the Mexican peso began the fiscal year at 0.1147 and closed the year lower at 0.09832.



Year Ended June 30, 2005 Compared to Year Ended June 30, 2004



The Companys net loss for the fiscal year ended June 30, 2005 was $1,825,982 or $0.06 per common share compared with $1,513,811 or $0.07 per share loss for the same period ended June 30, 2004. The Companys increase in net loss for the year was $312,171.



In accordance with stock-based compensation policy required by the Canadian Institute of Chartered Accountants the Company recorded an expense of $720,469 on 982,000 stock options granted in the year ($533,448 in 2004). This is a non-cash expense and does not affect the Companys operations. Without this non-cash expense, the Company would have recorded a loss of $1,105,513 or $0.04 weighted average loss per share during the year.



During the fiscal year ended June 30, 2005 the Company spent $6,233,521 on its mineral properties; $528,458 for property acquisition payments and had mineral property expenditures of $5,703,063. Drilling costs of $2,251,312 were the highest cost activity, representing 36% of expenditures, as a second drill rig was added in March, 2004 ($1,069,739 or 29% in 2004). Geological and geophysical expenditures were $861,051 or 15% of property expenditures in 2005 compared to $495,843 or 14% in 2004.  The increase in geological staff represents personnel required to supervise and process data from the second drill rig. Also in line with higher drilling expenditures, assay testing was the third highest cost category in fiscal year ending June 30, 2005 at $647,785 or 10% of property expenditures ($443,757 or 12% in fiscal year ended June 30, 2004). The results of these expenditures are explained in the Mineral Properties section below.







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Salary and benefits expenses rose during the year ended June 30, 2005 to $570,991 from $479,017 in the year ended June 30, 2004 due to salary increases and administrative demands that have grown with the Companys operating activities and regulatory compliance.



Investor relations and shareholder communications expenses of $195,163 (2004  $163,673) were larger as a result of additional advertising and attending investment conferences to create greater awareness of the Companys progress.



Office and miscellaneous expenses increased during the year by $45,816 to $123,421 in 2005. The increase is mainly attributable to increased printing costs and computer service and maintenance costs.



Rent expense for the head office increased to $64,365 in the year ended June 30, 2005 from $43,016 in the comparable period ended 2004 as the result of an increase in rent and additional office space occupied.



The Company recorded a gain from foreign exchange of $17,103 during the year ended June 30, 2005 as opposed to a loss of $10,554 in the period ended 2004. The gain originates from funds advanced to Mexico during the year that have appreciated in value due to fluctuations in the Mexican peso relative to the Canadian dollar. The rate of exchange for the Mexican peso began the fiscal year at 0.1163 and closed the year lower at 0.1147.



Year Ended June 30, 2004 Compared to Year Ended June 30, 2003



During the fiscal year ended June 30, 2004 the Company made mineral property expenditures of $3,654,415 including $486,932 for property acquisition payments and $3,167,483 on development and exploration primarily in and around the Carmen deposit. Drilling represented 34% of these expenditures or $1,069,739 and assays 14% or $438,190.



The Companys net loss for the fiscal year ended June 30, 2004 was $1,513,811 or $0.07 per common share compared with $513,627 or $0.04 per share loss for the same period ended June 30, 2003. The Company experienced an increase in net loss for the year of $1,000,184 primarily as the result of recording stock option expenses of $533,448 ($0 in 2003) in accordance with new stock-based compensation policy required by the Canadian Institute of Chartered Accountants. This is a non-cash expense and does not affect the Companys operations. Without this non-cash expense, the Company would have recorded a loss of $980,363 or $0.04 weighted average loss per share during the year.



Salary and benefits expenses rose during the year ended June 30, 2004 to $479,017 from $187,128 in the year ended June 30, 2003 due to increased administrative demands that have grown with the Companys operating activities and regulatory compliance obligations.



Investor relations and shareholder communications expenses of $163,673 (2003  $123,835) were larger as a result of additional advertising and attending more investment conferences to create greater awareness of the Companys progress. This also contributed to the Companys travel and accommodation expenses, which rose from $34,681 in 2003 to $82,804 during the year ended June 30, 2004.



The office and miscellaneous expenses for the Company increased to $77,605 from $51,438 because of higher operating activities, printing costs and insurance premiums.



Rent expenses for the head office increased to $43,016 in the year ended June 30, 2004 from $33,623 in the comparable year ended 2003 as the result of an increase in rent and leasing additional premises to accommodate a larger staff.







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The Company recorded a loss from foreign exchange of $10,554 during the fiscal year ended June 30, 2004 as opposed to a loss of $24,419 in the same period ended 2003. The loss derives from funds advanced to Mexico that have lost a portion of their value due to short-term fluctuations in the Mexican peso relative to the Canadian dollar. The rate of exchange for the Mexican peso began the fiscal year at 0.1292 and closed the year lower at 0.1163. This represents a 10% decline in the value of the peso compared to its Canadian counterpart and has caused the Companys expenses in Mexico to be lower.



B. Liquidity and Capital Resources



Kimber is presently exploring its properties for sufficient mineral reserves to justify production.  None of Kimbers properties are yet in production and consequently do not produce any revenue.  As a result, Kimbers ability to conduct operations, including the acquisition and exploration of mineral properties, is based on its ability to raise funds, primarily from equity sources.  While Kimber believes it has sufficient capital and liquidity to finance operations for the next fiscal year, its ability to continue operations and the recoverability of amounts recorded for mineral properties are dependent on the discovery of economically recoverable reserves on its mineral properties, the ability of Kimber to obtain additional financing to complete its exploration and upon future profitable production or on sufficient proceeds from disposition of such properties if they are sold or joint ventured.



Kimber will have to obtain financing in the future primarily through equity financing, and/or debt financing.  There can be no assurance that Kimber will succeed in obtaining additional financing, now or in the future.  Failure to raise additional financing on a timely basis could cause Kimber to suspend its operations and eventually to forfeit or sell its interest in its properties. In the past, Kimber has been successful at raising funds to continue work on its mining properties, including a financing completed in March 2006 for gross proceeds of $14,095,000. However, there are no certainties that the Company will be able to raise additional funding on reasonable terms if at all, in which case the property may be joint ventured, sold, abandoned or the outstanding agreements renegotiated.



At June 30, 2006, the Company had working capital of $15,484,719 (2005 - $3,895,321). The Company has no long-term indebtedness or long-term obligations. The change in working capital is the result of increased available cash of $15,866,960 compared to the previous year (2005  $4,288,648). In the fiscal year ended June 30, 2006 the Company received $4,413,050 from the exercise of 2,451,692 warrants, $540,218 from the exercise of 549,570 stock options and $18,450,731 (net of expenses) from two private placements aggregating 10,380,832 shares issued. As at September 12, 2006 the Company had $13,529,338 in cash and liquid short-term bankers acceptance notes.



Current liabilities increased to $1,422,519 as at June 30, 2006 from $900,734 on June 30, 2005. This was primarily due to drilling and assay expenditures that were in routine accounts payable at the end of the fiscal year and were paid subsequent to the period.



The Company is committed to paying approximately $1,821,703 at September 12, 2006 for expenses billed, primarily drilling, geological contractors and assays.



Up to June 30, 2006 the Company had made expenditures totalling $10,148,490 on its mineral properties (Monterde - $10,146,312; Setago - $2178). These costs include property and mineral rights, capitalized exploration costs, equipment expenditures and on-going property management expenses.



If existing warrants and vested options were exercised, the Company would generate $7,117,237 (warrants - $2,819,999; options -$4,297,238).



Capital resources of the Company consist primarily of cash and liquid short-term investments. As at September 12, 2006 the Company had cash and bankers acceptance notes totaling $13,529,338 and approximately $1,355,000 in receivables.



At present, management believes that it has sufficient financial resources to complete planned expenditures to the first quarter of 2007.







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The Company does not anticipate the payment of dividends in the foreseeable future.



As of the date of this Annual Report Kimber has not fixed its planned expenditures on the Monterde Property for 2007.



Kimber generates cash flow from selling its shares either through financings or the exercise of existing share purchase warrants and stock options.  There is a liquidity risk that these warrants and options may not be exercised if the price of Kimbers share price falls due to market conditions.



Share capital increased cash inflows by an aggregate of $23,403,999 through the issuance of 13,382,094 common shares during the fiscal year ended June 30, 2006 as follows:

| |                                                               | Number of Shares | Share Capital $
| | ------------------------------------------------------------- | ---------------- | ---------------
| | Balance, June 30, 2005                                        | 33,732,828       | 19,033,066     
| |                                                               |                  |                
| | 1Private placements                                           | 10,380,832       | 18,450,731     
| | Exercise of warrants                                          | 2,451,692        | 4,413,050      
| | Exercise of options                                           | 549,570          | 540,218        
| |                                                               | 13,382,094       | 23,403,999     
| | 2Reallocation from contributed surplus on exercise of options |                  | 329,877        
| | Balance, June 30, 2006                                        | 47,114,922       | 42,766,942     
| | 1Net of share issuance costs of $644,307                      |                 
| | 2Non-cash transfer from Contributed Surplus                   |                 



Kimber had no long-term debt as of June 30, 2006 or at the time of filing this Annual Report and no significant expenditure commitments unrelated to exploration activities.  Kimbers current working capital position provides sufficient liquidity for its short-term requirements.



The Company does not anticipate the payment of dividends in the foreseeable future.



C. Research and Development, Patents and Licenses, Etc.



Kimbers main activity is the exploration of its mineral properties (see Item 4D - Property, Plants, and Equipment) and it does not engage in conventional research and development.  It has not incurred research and development expenses or adopted research and development policies.



D. Trend Information



Kimbers main activity is the exploration of its mineral properties and it has no production, sales, or inventory in the conventional sense.  Kimbers financial success will be dependent upon the extent to which it can demonstrate mineralization and the economic viability of developing such properties.  Such development may take years to complete and the amount of resulting income, if any, is difficult to determine with any certainty.  The sales value of any mineralization discovered by Kimber is largely dependent upon factors beyond Kimbers control such as the market value of the metals produced.



Kimber is not aware of any trends, uncertainties, demands, commitments or events which are reasonably likely to have a material effect upon Kimbers net sales or revenues, income from continuing operations, profitability, liquidity or capital resources, or that would cause reported financial information not necessarily to be indicative of future operating results or financial condition.



E. Off-Balance Sheet Arrangements



Kimber has no off-balance sheet arrangements.







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F. Tabular Disclosure of Contractual Obligations



In the table below, sets forth the enforceable and legally binding obligations as of June 30 2006:



|Contractual Obligations            | Total    | Less than 1 Year | 1-3 Years | 3-5 Years | Over 5 Years
|---------------------------------- | -------- | ---------------- | --------- | --------- | ------------
|Rental Operating Lease Obligations | $397,427 | $85,163          | $170,326  | $141,938  | $ nil       



In addition, under the lease the Company has the obligation to pay its proportionate share of operating costs and taxes for the building.



ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES



A. Directors and Senior Management



The members of the board of directors and senior officers of Kimber including a brief biography of each as at September 25, 2006 are as follows:

|Name and Position in Kimber                                                                                                                                                                                                                                                                                                                     | Age | Other Principal Directorships                                          
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --- | -----------------------------------------------------------------------
|R. Dennis Bergen (1)(2)(3)(4)
Director

Mr. Bergen is an independent director of the Company, is a member and Chairman of Compensation Committee, a member of the Audit Committee and a member of Nomination Committee.                                                                                                                         | 54  | None                                                                   
|Gordon Cummings
Chief Financial Officer

Mr. Cummings is responsible for the financial affairs of the Company, including the strategic financial direction of the Company, the financial control activities (record keeping, payroll, accounts payable, cash management, budget forecasts) and presenting all financial analysis and reporting. | 38  | CSI Holdings Ltd. (Barbados IBC not connected with the mining industry)
|Clifford A. Grandison (2)(4)
Director

Mr. Grandison is an independent director of the Company, is a member and Chairman of the Audit Committee and a member of the Nominating Committee.                                                                                                                                                       | 68  | Director, Skyline Gold Corp.                                           
|Michael E. Hoole
Vice-President, Secretary and Director

Mr. Hoole provides management services to the Company and is in charge of compliance with corporate regulatory bodies.                                                                                                                                                                 | 62  | None                                                                   







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|Darren E. C Klinck
Vice President, Corporate and Investor Relations

Mr. Klinck provides management services to the Company and is responsible for developing and maintaining relations with the Companys investors and the investing public. He is also responsible for furthering the Companys relations with third parties. | 30 | None                                                                                                                                                                                                                                                                                                                  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Robert V. Longe(3)
President, Chief Executive
Officer and Director

Mr. Longe provides management services and is responsible for the overall affairs of the Company.                                                                                                                                                            | 68 | Director, Huntingfield Investments Ltd. (owned by Mr. Longe and his wife)
Director, MineQuest Exploration Associates Ltd. (inactive mining consultant owned by Huntingfield Investments Ltd.)                                                                                                                         
|Luard J. Manning (1)(2)(4)
Director

Mr. Manning is an independent director for Kimber, is a member of Compensation Committee a member of the Audit Committee and a member and Chairman of Nomination Committee.                                                                                                                 | 79 | Director, Cusac Gold Mines Ltd.
Director, FM Resources Corp.
Director, Highbank Resources Ltd.
Director, Nustar Resources Inc.
Director, Discovery Ventures Ltd.
Director, Verona Development Corp
Director, Riverbank Resources Ltd.
L.J. Manning and Associates Ltd. (mining consultant wholly-owned by Mr. Manning)
|James J. Puplava(3)(4)
Director

Mr. Puplava is a director for Kimber and a member of the Corporate Governance Committee and a member of Nomination Committee.                                                                                                                                                                   | 56 | Puplava Financial Services Inc.
Puplava Securities Inc.                                                                                                                                                                                                                                                               
|J. Byron Richards
Vice-President, Engineering
Mr. Richards is the designated Qualified Person for the Monterde Project and is responsible for quality control, sampling protocol, resource estimation process and verifies data before it is disclosed.                                                                          | 62 | JB Engineering Ltd. (mining consultant owned by Mr. Richards and his wife)                                                                                                                                                                                                                                            

Notes:

(1)Member of Compensation Committee

(2)Member of Audit Committee

(3)Member of Corporate Governance Committee

(4)Member of Nominating Committee



There are no familial relationships between any director or senior officer and any other director or senior officer.



There are no arrangements or understandings with major shareholders, customers, suppliers or others, pursuant to which any person referred to above was selected as a director or senior officer.



The business experience of each director and senior officer, including activities performed outside Kimber, are as follows:







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59





R. Dennis Bergen



Mr. Bergen is a mining engineer with over 25 years of experience in the mining industry. A graduate of BCIT (Mining Technology 1972) and UBC (Bachelor of Applied Science -Mineral Engineering 1979), he is a Professional Engineer registered in B.C. and licensed in the Northwest Territories.  Mr. Bergens experience includes open pit and underground gold and base metal mines and his responsibilities have ranged from mine technician to mine engineering and supervisory positions, including mine manager and Vice President, Operations.  In these roles he worked on project construction, operations, mine closure and reclamation in a number of different remote locations.  He has spent considerable time in project evaluation and acquisition for several companies evaluating projects in Canada and abroad.  He was responsible for the reopening and subsequent operation of the Cantung mine after a 2 year suspension of operations and is currently engaged in mining consulting assignments.  Mr Bergen became an independent director of Kimber in December 2005.



Gordon Cummings, Chief Financial Officer



Mr. Cummings holds a Bachelor of Accountancy from the University of Glasgow (1988) and a postgraduate Diploma in Systems Analysis and Design from Glasgow College (1989). His career in finance started with KPMG in London, England in 1989 where he later qualified as a Chartered Accountant (1993) specializing in financial services.  After 6 years with KPMG , London, Mr. Cummings took on the role of Group Accountant with Terra Nova Insurance Group, a London, England based insurance group listed on the New York Stock Exchange.  He moved to Barbados in 1997 where, he was a senior audit manager at PricewaterhouseCoopers.  From early 2000 until March 2006 Mr Cummings was an officer of the Horizons Funds Group, initially as CFO and then subsequently CEO and Director.  Horizons Funds is a Canadian group distributing public alternative investment funds. Mr Cummings was appointed CFO of Kimber on July 18, 2006.



Clifford A. Grandison, Director



Clifford Grandison holds a Bachelor of Arts in Mathematics and Economics from the University of British Columbia (1962) and received a Diploma from the Banff School of Advanced Management. Mr. Grandison, a business manager and executive, is currently the Chairman of Skyline Gold Corp. and has been with that company since 2000. He was President and CEO of Coast Mountain Power Corp. and was with that company from January 1999 to August 2006. Mr. Grandison has been the President of Grandison Executive Management Inc., an independent firm which provides management services to companies, since July 1992. He served as President and Chief Executive Officer of Skyline Gold Corporation (formerly International Skyline Gold Corporation), a mining company listed on the TSX, from July 1992 to April 2000. From December 1987 to July 1992 he held a number of senior management positions with Placer Dome, Inc., a large multinational mining company, including Vice-President and Treasurer (December 1987 to January 1991) and most recently as Vice-President, Corporate Development (January 1991 to July 1992). Mr. Grandison became an independent director of Kimber in December, 2003.



Michael E. Hoole, Vice President, Secretary and Director



Mr. Hoole is a lawyer (Barrister & Solicitor #2922) who has worked in legal and management positions in resource industries (forestry and mining) for more than 25 years.  Mr. Hoole was Vice President, Secretary and Counsel of Westmin Resources Ltd. from November 1996 to August 1997. He was the Secretary of Kit Resources Ltd. from September 1998 to March 1999.  He was a self-employed legal consultant from September 1997 to December 2002. He has been employed in executive and/or legal capacities for a number of large public corporations, including Placer Development Ltd. (now Placer Dome Inc.), British Columbia Forest Products Ltd. (now Catalyst Paper Corp.) and Gibraltar Mines Ltd/Westmin Resources Ltd. (now Boliden Limited). Mr. Hoole became an inside director of Kimber in April, 2002.







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60





Darren E. C. Klinck, Vice President, Corporate and Investor Relations



Mr. Klinck holds a Bachelor of Commerce (B.Comm) degree (1999) from the University of Calgary. He joined the Company in February 2005 as Manager, Corporate communications. His experience spans the areas of marketing, communications, business development and project management in both the public and private sectors. He also brings with him a wide range of international experience in client and public relations having worked as a Business Development Officer in Bangkok, Thailand and as the manager of international marketing and recruitment for the Sauder School of Business, University of British Columbia.



Robert V. Longe, President, Chief Executive Officer and Director



Mr. Longe is a Professional Engineer (B.C. Association of Professional Engineers and Geoscientists #118426) and has had a 35-year career in the mineral exploration and development business.  He has worked with both multinational and junior mining companies and as an independent consultant in North and South America and Africa.  Mr. Longe is currently President of MineQuest, an inactive exploration consulting company, which he co-founded in 1980.  MineQuest is owned as to 100% by Huntingfield Investments Ltd., which in turn is owned by Mr. Longe (as to 51%) and his wife (as to 49%).  Mr. Longe obtained a Bachelor of Arts degree from Cambridge University and Masters in Science from McGill University.  Mr. Longe became a director of Kimber in May, 1995 and became the President and Chief Executive Officer in November, 1999.



James J. Puplava, Director



Mr. Puplava, CFP is President of Puplava Financial Securities Inc. (PFS), an investment advisory and money management firm. Founded in 1985, PFS specializes in investment, retirement, tax, and estate planning services. Mr. Puplava is also President of Puplava Securities Inc. a Broker-Dealer and Member of NASD/SIPC. He is a member of the Market Technicians Association and a CMT candidate. Mr. Puplava graduated cum laude in History and Economics from Arizona State University. He then went on to graduate summa cum laude with a Masters Degree in Finance and Accounting from the American Graduate School of International Management (Thunderbird). Among his many awards and achievements, Mr. Puplava was honoured in 1992 as one of America's top ten Financial Representatives by Registered Representative Magazine.  Mr. Puplava became an independent director of Kimber in May 2004 and ceased to be independent under the AMEX rules in March 2006 after Puplava Securities Inc.(PSI), a company of which Mr Puplava is a principal, earned commissions and finders fees from the Company. See ITEM 4 B  Company Financings  Private Placement No. 8 (brokered and non-brokered)

The Company paid cash commissions and finders fees of $234,850 to PSI.





Luard J. Manning, Director



Mr. Manning is a Professional Engineer (Professional Engineer, Mining - B.C. Association of Professional Engineers and Geoscientists #5711) with over 45 years mining experience, the last 30 of which he spent as a mining consultant practising out of Vancouver, British Columbia.  He has extensive expertise in operating underground mines and has also operated small open pit mines.  Mr. Manning is President of L.J. Manning and Associates Limited, a mining consultant wholly-owned by Mr. Manning.  He is also a director, Secretary and Chief Financial Officer of L.E.H. Ventures Ltd. and a director of several other junior mining companies including Cusac Gold Mines Ltd. (from 1991 to present), Nustar Resources Inc. (From 1998 to present), Highbank Resources Ltd. (from 2003 to present). Mr. Manning became an independent director of Kimber in June 1995.









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61





J. Byron Richards, Vice-President, Engineering



Mr. Richards is a Professional Engineer (Professional Engineer - B.C. Association of Professional Engineers and Geoscientists #8909) with 36 years experience in the mineral exploration and development business.  He and his wife own JB Engineering Ltd. (as to 50% each), a private consulting company providing services, particularly on resource estimation and sampling procedures, to the mining industry.  Mr. Richards provides ongoing services to Kimber on a consulting basis, as required, pursuant to a Management Agreement. Mr. Richards became Kimbers Vice-President, Engineering in March, 2002.



Cease Trade Orders or Bankruptcies



None of the directors, officers or promoters are, or have been within the past five years from June 30, 2006, directors, officers or promoters of other reporting companies which, during the period such position was held, were struck from the registry of the British Columbia Registrar of Companies or whose securities were the subject of a cease trading order or suspension order or order that denied the issuer access to any statutory exemptions for a period of more than 30 consecutive days.



None of the directors, officer or promoters are, or have been within the past five years from June 30, 2006, directors, officers or promoters of other issuers which were declared bankrupt or made a voluntary assignment in bankruptcy, made a proposal under any legislation relating to bankruptcy or insolvency or been subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold the assets of that issuer.  None of the directors, officers or promoters during the past five years were declared bankrupt or made a voluntary assignment in bankruptcy or insolvency or been subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold the assets of that person.



B. Compensation



The following table sets forth all compensation paid by Kimber to its directors and members of its administrative, supervisory or management bodies during its fiscal year ended June 30, 2006.







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62







|Name and Principal Position                                                                  | Annual Compensation | Long Term Compensation         | All Other Compen-
sation
($)             
|-------------------------------------------------------------------------------------------- | ------------------- | ------------------------------ | -----------------------------------------
|Awards                                                                                       | Payouts            
|Salary ($)                                                                                   | Bonus
($)           | Other Annual Compen-sation
($) | Securities Under Options/SARs Granted
(#)
|Dennis Bergen
Director                                                                       | 16,400              | Nil                            | Nil                                      
|Gordon Cummings
Chief Financial Officer(appointed July 18,2006)                              | Nil                 | Nil                            | Nil                                      
|Clifford A. Grandison
Director                                                               | 21,200              | Nil                            | Nil                                      
|Alan D. Hitchborn
Former Vice-President, Development and
Director-General of
Minera Monterde | 139,296             | Nil                            | Nil                                      
|Michael E. Hoole
Vice-President, Secretary & Director                                        | 153,756             | Nil                            | Nil                                      
|J. John Kalmet
Former Director                                                               | 4,000               | Nil                            | Nil                                      
|Darren E. C. Klinck
Vice President, Corporate and Investor Relations                         | 78,000              | Nil                            | Nil                                      
|Robert V. Longe
President, CEO & Director                                                    | 153,756             | Nil                            | Nil                                      
|Luard J. Manning
Director                                                                    | 21,700              | Nil                            | Nil                                      
|James J. Puplava,
Director                                                                   | 11,100              | Nil                            | Nil                                      
|J. Byron Richards
Vice-President, Engineering                                                | Nil                 | Nil                            | 143,637                                  
|Peter J.A. de Visser,
Former Chief Financial Officer                                         | 34,500              | Nil                            | Nil                                      
|Abraham Urias,
Secretary of Kimber Resources de Mexico                                       | 87,360              | Nil                            | Nil                                      



Kimber does not have a pension plan, retirement fund or similar benefits plan or other arrangement for non-cash compensation to the directors or senior officers of Kimber, with the exception of incentive stock options.







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63





Kimber entered into Change of Control Agreements with five corporate executive Officers, two of whom are also currently Directors and Officers of the Company. Two of the five Officers have left the Company in 2006 without triggering their rights under the agreements. The agreements, dated January 13, 2004, provide for payment to the Officers of up to 36 months salary, plus the costs to Kimber of the benefits provided by Kimber to them, in the event of their resignation after a material adverse change in their position occurring within 12 months following a change in control of Kimber or dismissal by Kimber of the Officer without cause within two (2) years following a change in control of Kimber.



C. Board Practices



The Board of Directors consists of six (6) directors, all of whom were elected at meetings of the shareholders of Kimber.  The Directors have staggered terms of office.  Two (2) directors, Messrs. Grandison and Manning, were elected at Kimbers Annual General Meeting in 2003 for a three (3) year term expiring at the Annual General Meeting in 2006; two (2) directors, Messrs. Hoole and Longe, were elected at an Annual General Meeting of Kimber in 2004 for a three (3) year term expiring at the Annual General Meeting in 2007; and two (2) Directors, Mr. Puplava and Mr. Bergen were elected at the Annual General Meeting of Kimber on December 7, 2005 for a term expiring at the Annual General Meeting in 2008.



Robert V. Longe has served as a director of Kimber since March 1995, President of Kimber since November 1999 and Chief Executive Officer of Kimber since April 2002.  Michael E. Hoole has served as Vice-President and Secretary of Kimber since November 1999 and a director and Chief Financial Officer of Kimber since April 2002. Peter de Visser replaced Mr. Hoole as Chief Financial Officer on January 14, 2004.  Luard Manning has served as a director of Kimber since May 1995. Clifford Grandison has served as a director of Kimber since December 2003 and James Puplava has served as a director since May 2004.  Dennis Bergen has served since December 7, 2005. J. Byron Richards was appointed as Vice-President, Engineering of Kimber in April 2002. Darren E. C. Klinck was appointed as Vice President, Corporate and Investor Relations of Kimber in June, 2006.  Gordon Cummings was appointed as Chief Financial Officer of Kimber in July, 2006.



Pursuant to Section 224 of the Business Corporations Act (British Columbia), Kimber is required to have an Audit Committee.  As at September 25, 2006, the members of the Audit Committee are Clifford Grandison, Luard Manning and Dennis Bergen.  The Business Corporations Act requires the directors of a public company to elect from among their number a committee composed of not fewer than three directors, of whom a majority must not be officers or employees of Kimber or an affiliate of Kimber.  The election must occur at the first meeting of the directors following each annual general meeting, and those elected will hold office until the next annual general meeting.  Section 225 provides that before the annual financial statements are published, the financial statements and the auditors report must be submitted to the audit committee for review with the auditor, and, after that, the report of the audit committee on the financial statement must be submitted to the directors.  Section 224(5) provides that the auditor must be given notice of, and has the right to appear before and to be heard at, every meeting of the audit committee, and must appear before the audit committee when requested to do so by the committee.  Finally, section 224(6) provides that on the request of the auditor, the chair of the audit committee must convene a meeting of the audit committee to consider any matters the auditor believes should be brought to the attention of the directors or shareholders.



The Directors have established a Compensation Committee and as at September 25, 2006 the members of Kimbers Compensation Committee are Luard Manning and Dennis Bergen.  The mandate established for the Compensation Committee is for the purposes of:



1.

considering alternative types of compensation for the Directors and Officers of Kimber and making recommendations to the Board for the establishment of appropriate compensation plans, strategies and policies:

2.

considering appropriate levels of compensation for the Directors and Officers of Kimber and making recommendations to the Board as to the remuneration and other compensation to be provided to the Directors, the President and the other Officers of Kimber;







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64





3.

reviewing personnel policies and benefit plans available to the employees of Kimber and making recommendations to the Board; and

4.

carrying out periodic performance assessments of the President.



D. Employees



Kimber has a total of twelve employees in Canada and 32 employees in Mexico.



At Kimbers head office in Vancouver, there are ten full-time employees and two part-time employee as at September 25, 2006. These numbers include five members of senior management, three full time employees provide technical expertise in the Companys engineering area and one part-time employee provide administrative support. One part-time employee has a separate office in Vancouver and provides legal services relating to operations in Mexico. One part-time employee provides financial advice to the Company and manages his accounting and auditing practice in a separate office in Vancouver. All employees are non-union and Kimber is not subject to any collective bargaining agreements.



Minera Monterde employs additional full-time or part-time employees or consultants to assist with the ongoing exploration work at the Monterde Property in Mexico. All employees of Kimbers subsidiary in Mexico, Minera Monterde, S. de R.L. de C.V., are non-union and Kimber is not subject to any collective bargaining agreements.



Kimber competes with other mining companies in connection with hiring and retaining qualified employees. At the present time a sufficient supply of qualified workers is available for operations in Vancouver and in Mexico. The continuation of such supply depends upon a number of factors, including, principally, the demand occasioned by other companies. There can be no assurance that Kimber will continue to be able to retain or attract qualified employees. There is a risk that increased labour costs could have a material adverse effect on its operations.





E. Share Ownership



With respect to the persons referred to above in Item 6B  Compensation, the following table discloses the number of Common Shares (each Common Share possessing identical voting rights) beneficially held by those persons including the percentage of the shares outstanding as at September 25, 2006.









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65







|Name and Title                                                                                                                 | No. of Shares | Percent of Shares Outstanding | No. of Options     
|------------------------------------------------------------------------------------------------------------------------------ | ------------- | ----------------------------- | -------------------
|R. Dennis Bergen
Director                                                                                                      | -0-           | 0.0%                          | 80,000             
|Clifford A. Grandison
Director                                                                                                 | -0-           | 0.0%                          | 110,000            
|Alan D. Hitchborn
Former Vice-President,
Development and
Director-General of
Minera Monterde (resigned effective July 7, 2006) | Note (4)      | Note (4)                      | 741,100 (1)        
|Michael E. Hoole
Vice-President, CFO, Secretary & Director                                                                     | 552,000       | 1.16%                         | 530,000
200,000 (2)
|Robert V. Longe
President, CEO & Director                                                                                      | 1,544,525 (3) | 3.26%                         | 540,000            
|Luard E. Manning
Director                                                                                                      | 136,122       | 0.29%                         | 160,000            
|James J. Puplava
Director                                                                                                      | 4,792,000     | 10.12%                        | 140,000            
|Roger C. Connors
Former Comptroller and Assistant Secretary  (resigned effective May15, 2006)                                  | Note (4)      | Note (4)                      | 0                  
|J. Byron Richards
Vice-President, Engineering                                                                                  | 329,332       | 0.70%                         | 333,700            
|Peter J.A. de Visser
Former Chief Financial Officer                                                                            | 0             | 0%                            | 67,000             
|Darren E. V. Klinck
Vice President, Investor and Corporate Relations                                                           | 13,100        | 0.03%                         | 180,000            
|Gordon Cummings
Chief Financial Officer                                                                                        | 0             | 0%                            | 150,000            

Notes:

(1)550,000 of these options are performance based (see Note 1 and 2 on Page 66 and 67)

(2)Grant of personal stock options to purchase an additional 200,000 shares from Robert V. Longe

(3)200,000 of these shares are subject to a personal option to Michael E. Hoole

(4)The exact number of shares owned by these former officers is unknown.



On April 6, 2004, James Puplava, a fund manager and analyst from San Diego, California, announced that he and a number of persons acting jointly with him had acquired a 19.9% interest in Kimber and that he intended to buy additional Common Shares through a Stock Exchange Take-Over Bid.  On April 16, 2004, following a halt in the trading of Kimbers shares, Mr. Puplava announced his offering to purchase 1,000,000 Common Shares at a price of $2.50 per share.  On April 19, 2004, Mr. Puplava withdrew his take-over bid in response to a delay in regulatory approval of his bid and to the general drop in the markets for gold and silver shares.   On May 28, 2004, Mr. Puplava was elected as a member of the board of directors of Kimber.







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66





On September 22, 2006 Mr. Puplava announced that he and those acting jointly with him had acquired 69,100 Common Shares in market transactions and an additional 70,000 Common Shares upon the exercise of stock options.  He reported that the 139,100 Common Shares acquired together with all other Common Shares  owned or controlled by him and those acting jointly with him represent 10.12% of the Companys outstanding Common Shares.  He reported that the Common Shares have been acquired for investment purposes only and not for the purpose of exercising control over the Company.  Mr. Puplava further reported that he and those acting jointly with him intend to acquire additional securities of the Company through market transactions.



Incentive Stock Options



The following table discloses the stock options beneficially held by the aforementioned persons, as at September 25, 2006.  The stock options are for Common Shares of Kimber:



|Name of Person        | Number of Shares Subject to Issuance | Exercise Price per Share | Expiry Date       
|--------------------- | ------------------------------------ | ------------------------ | ------------------
|R. Dennis Bergen      | 25,000                               | $2.05                    | January 16, 2009  
|R. Dennis Bergen      | 5,000                                | $2.14                    | October 6, 2009   
|R. Dennis Bergen      | 50,000                               | $1.50                    | December 7, 2010  
|Gordon Cummings       | 150,000                              | $2.40                    | July 18, 2011     
|Clifford A. Grandison | 50,000                               | $2.05                    | January 16, 2009  
|Clifford A. Grandison | 30,000                               | $2.14                    | October 6, 2009   
|Clifford A. Grandison | 30,000                               | $1.65                    | September 19, 2010
|Alan D. Hitchborn (1) | 300,000                              | $0.45                    | October 5, 2006   
|Alan D. Hitchborn (2) | 301,100                              | $0.73                    | October 5, 2006   
|Alan D. Hitchborn     | 90,000                               | $2.14                    | October 5, 2006   
|Alan D. Hitchborn     | 50,000                               | $1.65                    | October 5, 2006   
|Michael E. Hoole      | 80,000                               | $0.45                    | June 6, 2007      
|Michael E. Hoole      | 200,000                              | $0.45                    | July 12, 2007     
|Michael E. Hoole      | 100,000                              | $0.73                    | August 13, 2008   
|Michael E. Hoole      | 100,000                              | $2.14                    | October 6, 2009   
|Michael E. Hoole      | 50,000                               | $1.65                    | September 19, 2010
|Darren Klinck         | 100,000                              | $2.40                    | July 18, 2011     
|Darren Klinck         | 40,000                               | $1.70                    | April 18, 2010    
|Darren Klinck         | 40,000                               | $1.65                    | Sept 19, 2010     
|Robert V. Longe       | 80,000                               | $0.45                    | June 6, 2007      
|Robert V. Longe       | 200,000                              | $0.45                    | July 12, 2007     
|Robert V. Longe       | 100,000                              | $0.73                    | August 13, 2008   
|Robert V. Longe       | 110,000                              | $2.14                    | October 6, 2009   
|Robert V. Longe       | 50,000                               | $1.65                    | September 19, 2010
|Luard J. Manning      | 50,000                               | $0.45                    | July 12, 2007     
|Luard J. Manning      | 50,000                               | $0.73                    | August 13, 2008   
|Luard J. Manning      | 30,000                               | $2.14                    | October 6, 2009   
|Luard J. Manning      | 30,000                               | $1.65                    | September 19, 2010
|James J. Puplava      | 50,000                               | $1.77                    | May 28, 2009      
|James J. Puplava      | 130,000                              | $2.14                    | October 6, 2009   
|James J. Puplava      | 10,000                               | $1.65                    | September 19, 2010
|J. Byron Richards     | 43,700                               | $0.45                    | June 6, 2007      
|J. Byron Richards     | 25,000                               | $0.45                    | July 12, 2007     
|J. Byron Richards     | 25,000                               | $0.45                    | October 29, 2007  
|J. Byron Richards     | 100,000                              | $0.73                    | August 13, 2008   
|J. Byron Richards     | 90,000                               | $2.14                    | October 6, 2009   
|J. Byron Richards     | 50,000                               | $1.65                    | September 19, 2010
|Peter J.A. de Visser  | 50,000                               | $2.05                    | January 16, 2009  
|Peter J.A. de Visser  | 10,000                               | $2.14                    | October 6, 2009   
|Peter J.A. de Visser  | 7,000                                | $1.65                    | September 19, 2010







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67





Notes:

(1)

300,000 of these options are performance based and vest in stages upon the Company attaining the following milestones:



a)

30% of the Option shall vest upon management of the Company establishing to the satisfaction of the Board of Directors that the Company has developed a Measured and Indicated Resource, as those terms are defined by the Canadian Institute of Mining, Metallurgy and Petroleum, of not less than 1,000,000 ounces of gold and gold equivalent silver (calculated on the basis of 70 grams of silver = 1 gram of gold) at a grade of not less than 2.5 g/tonne;



b)

a total of 65% of the Option shall vest upon management of the Company establishing to the satisfaction of the Board of Directors that the Company has developed a Measured and Indicated Resource, as those terms are defined by the Canadian Institute of Mining, Metallurgy and Petroleum, of not less than 2,000,000 ounces of gold and gold equivalent silver (calculated on the basis of 70 grams of silver = 1 gram of gold) at a grade of not less than 2.5 g/tonne;



c)

a total of 100% of the Option shall vest upon management of the Company establishing to the satisfaction of the Board of Directors that the Company has developed a Measured and Indicated Resource, as those terms are defined by the Canadian Institute of Mining, Metallurgy and Petroleum, of not less than 3,000,000 ounces of gold and gold equivalent silver (calculated on the basis of 70 grams of silver = 1 gram of gold) at a grade of not less than 2.5 g/tonne;



d)

a total of 50% of the Option shall vest upon management of the Company establishing to the satisfaction of the Board of Directors that the Company has developed a Proven and Probable Reserve, as those terms are defined by the Canadian Institute of Mining, Metallurgy and Petroleum, of not less than 1,000,000 ounces of gold and gold equivalent silver (calculated on the basis of 70 grams of silver = 1 gram of gold) at a grade of not less than 2.5 g/tonne;



e)

a total of 100% of the Option shall vest upon management of the Company establishing to the satisfaction of the Board of Directors that the Company has developed a Proven and Probable Reserve, as those terms are defined by the Canadian Institute of Mining, Metallurgy and Petroleum, of not less than 2,000,000 ounces of gold and gold equivalent silver (calculated on the basis of 70 grams of silver = 1 gram of gold) at a grade of not less than 2.5 g/tonne;



(2)

250,000 of these options are performance based and vest in stages upon the Net Present Value, as defined in the option agreement, of Kimbers interest in Measured and Indicated Resources, as defined by the Canadian Institute of Mining, Metallurgy and Petroleum, in the Setago and Oribo properties reaching certain increasing milestones or upon Kimber receiving a net amount of $5 million after deduction of all expenses incurred in respect to such properties as follows:



a)

30% of the Option shall vest upon the Net Present Value of the Companys interest in Measured and Indicated Resources (as those terms are defined by the Canadian Institute of Mining, Metallurgy and Petroleum) contained in all mineral properties identified as prospective sites for gold/silver deposits by the Optionee prior to becoming an employee of the Company and acquired by the Company, other than the Monterde Concessions and El Coronel Concessions, being not less than US$30,000,000;



b)

a total of 65% of the Option shall vest upon the Net Present Value of the Companys interest in Measured and Indicated Resources (as those terms are defined by the Canadian Institute of Mining, Metallurgy and Petroleum) contained in all mineral properties identified as prospective sites for gold/silver deposits by the Optionee prior to becoming an employee of the Company and acquired by the Company, other than the Monterde Concessions and El Coronel Concessions, being not less than US$60,000,000;







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68





c)

a total of 100% of the Option shall vest upon the Net Present Value of the Companys interest in Measured and Indicated Resources (as those terms are defined by the Canadian Institute of Mining, Metallurgy and Petroleum) contained in all mineral properties identified as prospective sites for gold/silver deposits by the Optionee prior to becoming an employee of the Company and acquired by the Company, other than the Monterde Concessions and El Coronel Concessions, being not less than US$90,000,000; and



d)

a total of 100% of the Option shall vest upon the Company receiving a net amount of $5,000,000 (the Proceeds) after deduction of all expenses incurred by the Company on or on account of the property or properties identified as prospective sites for gold/silver deposits by the Optionee prior to becoming an employee of the Company and acquired by the Company, other than the Monterde Concessions and the El Coronel Concessions, in respect of which the Proceeds were received.



(3)As at September 25, 2006 the former Controller Roger Connors no longer holds stock options to acquire common shares of the Company.



The Option Plan provides for the issuance of stock options to acquire up to a total of 5,294,613 Common Shares for a period not exceeding five years, subject to standard anti-dilution adjustments was approved December 10, 2003. The Directors may, from time to time, appoint an administrator (the Administrator) for the purposes of administering the Option Plan.  Initially, the Administrator will be the Secretary of Kimber.



The subscription price at which a stock option may be exercised shall be:

a)

the closing trading price of the Common Shares on the stock exchange on which the Common Shares are traded at the Date of Grant on the last trading day before the Date of Grant;

b)

if the Board determines that the Subscription Price determined in accordance with paragraph a) above is not a representative price, the weighted average of the trading prices for the Common Shares on the five trading days before the Date of Grant, subject to regulatory and exchange approval of any stock exchange having jurisdiction; or

c)

if the Common Shares are listed on more than one stock exchange at the Date of Grant, then as calculated in a) and b) above using the trading price or prices on the stock exchange on which the majority of the Common Shares traded, subject to the approval of any stock exchange having jurisdiction;



The stock options will be non-assignable, except that they will be exercisable by the personal representative of the stock option holder in the event of the stock option holders death for a period of up to one year from the date of the option holders death.  The stock options will expire not more than 90 days after the director or employee ceases to be a director or employee of Kimber or, in the alternative, if they are fired or removed from their office, as the case may be, for cause, then 10 days following the date of their termination.



If a stock option expires or otherwise terminates for any reason without having been exercised in full, the number of shares in respect of which that stock option expired or terminated shall again be available for the purposes of the Option Plan.



The Option Plan provides that other terms and conditions may be attached to a particular stock option.



Prior to the issuance of Kimbers Common Shares for any exercise of stock options, the Common Shares must be fully paid for.  Kimber will not provide financial support to assist holders in exercising their stock options.



The Option Plan provides that it is solely within the discretion of the Directors to determine who should receive stock options and in what amounts.  The Directors may from time to time amend the Option Plan and may seek shareholder approval for such amendments as required by law or under the policies of the TSX and any regulatory authority.  Disinterested shareholder approval must be obtained if Kimber proposes to decrease the exercise price of previously granted stock options to insiders, or if the Option Plan, together with any previously issued or proposed stock option grants, could at any time result in:







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69







i)

the number of Common Shares reserved for issuance under stock options granted to insiders of Kimber exceeding 10% of the outstanding Common Shares;

ii)

the issuance to insiders, within a one year period, of a number of shares exceeding 10% of the outstanding Common Shares; or

iii)

the issuance to any one insider and such insiders associates, within a one year period, of a number of Common Shares exceeding 5% of the outstanding Common Shares.



Disinterested shareholders are defined as the shareholders of Kimber other than the insiders and their associates to whom stock options may be issued under the Option Plan.



ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS



A. Major Shareholders



As of September 22, 2006, the following table sets forth the beneficial ownership of each major shareholder, defined as beneficial owners of 5% or more of Kimbers issued and outstanding Common Shares, known to exist by Kimber:



|Identity of Person or Group | No. of Shares | Percent of Shares Outstanding                                                                                                                                                                                               
|--------------------------- | ------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|James J. Puplava            | 4,792,000     | 10.12% as of September 22, 2006

To the best of the Companys knowledge the percentage ownership held by Mr. Puplava has ranged since the commencement of the financial year ended June 30, 2004 from 0% to a high of 19.9%.





The Common Shares held by each of the major shareholders have the same voting rights as all other shareholders of Kimber. To the best of Kimbers knowledge, it is not owned or controlled, directly or indirectly, by another company, by any foreign government or by any other natural or legal person severally or jointly.  To the best of Kimbers knowledge, there are no arrangements, the operation of which at a subsequent date will result in a change in control of Kimber.





B. Related Party Transactions



None of the directors, officers or principal shareholders of the Company, nor any associates or affiliates of the Company, have any material interest, direct or indirect in any transactions in which the Company participated during the period commencing July 1, 2003 and ending on the date hereof which transactions were material to the Company, or its subsidiary, except as stated elsewhere in this Annual Report or as indicated below.  See Item6B  Directors, Senior Management and Employees - Compensation.  None of the directors, officers or principal shareholders of the Company, or any associates or affiliates of the Company, were involved in any transaction with the Company, or subsidiary, that was unusual in its nature or conditions, involving goods, services, or tangible or intangible assets except as herein disclosed.



Directors and officers of Kimber were paid an aggregate of $864,705during the year ended June 30, 2006 ($725,085 during the year ended June 30, 2005, $445,341 during the year ended June 30, 2004) for wages, directors fees, consulting, legal, accounting and administrative services.  These transactions have occurred in the normal course of operations and were measured at the exchange amount, which is that amount of consideration established and agreed to by the related parties.







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Until June 15, 2006 the Company held 103,596 non-voting preferred shares of 616800 B.C. Ltd. These preferred shares were redeemable for $1 per share and therefore were carried on the books of the Company at $103,596. The non-voting preferred shares were redeemed by 616800 B.C. Ltd. on June 15, 2006. Kimber has two directors in common with 616800 B.C. Ltd.



A former officer of the Company, Alan D. Hitchborn, owed Kimber $22,702 as at July 1, 2003 ($19,702 as at June 30, 2004, $16,702 as at June 30, 2005) that was derive from tax deductions remitted on behalf of the officer in a previous fiscal year. The amount outstanding was repaid in full on June 28, 2006



On March 1, 2006 the Company closed brokered and non-brokered private placements of a total of 7,047,500 common shares at a price of $2.00 for gross proceeds of $14,095,000. Puplava Securities Inc. ("PSI") of San Diego, California acted as agent for the brokered private placement. The Company paid cash commissions and finders fees of $234,850 to PSI. Mr. Puplava, a Director and major shareholder of the Company, is a principal of PSI.  See Item 4B  Information on the Company  Business Overview  Company Financings  Private Placement No. 8



On January 14, 2004, Peter de Visser, a managing partner of De Visser Gray, Chartered Accountants was appointed Chief Financial Officer of Kimber. De Visser Gray was Kimbers auditor and audited the financial statements in this Annual Report for the fiscal years ended June 30, 2003, 2002 and 2001.  Kimber appointed Mr. de Visser following a search for a Chief Financial Officer, a position that required the individual to have an accounting designation as a listing requirement by the Toronto Stock Exchange. Mr. de Visser was selected over other applicants based on his extensive knowledge of the industry and familiarity with the operations of the Company. To the knowledge of Kimber there are no conflicts of interest between Kimber and Mr. de Visser or any other companies or parties that he is affiliated with.



On April 6, 2004, James Puplava, a director, announced that he and a number of persons acting jointly with him had acquired a 19.9% interest in Kimber and that he intended to buy additional Common Shares through a Stock Exchange Take-Over Bid.  On April 16, 2004, following a halt in the trading of Kimbers shares, Mr. Puplava announced his offering to purchase 1,000,000 Common Shares at a price of $2.50 per share.  On April 19, 2004, Mr. Puplava withdrew his take-over bid in response to a delay in regulatory approval of his bid and to the general drop in the markets for gold and silver shares.  On May 28, 2004, Mr. Puplava was elected as a member of the board of directors of Kimber.



On December 16, 2003, Kimber closed a non-brokered private placement of 1,000,000 units that included family members of James Puplava, a director, Puplava Securities Inc. and other parties at a price of $0.70 per unit. Each unit consisted of one Common Share and one-half of one non-transferable share purchase warrant.  One whole warrant entitled the holder to purchase one additional Common Share of Kimber for 12 months at a price of $0.80. A list of the placees with relations to Mr. Puplava is below:



|Name                             | Shares Purchased | Cash Proceeds | Warrants Received
|-------------------------------- | ---------------- | ------------- | -----------------
|Mary Puplava                     | 580,000          | $464,000      | 290,000          
|Puplava Securities Inc.          | 75,000           | $60,000       | 37,500           
|Puplava Financial Services, Inc. | 40,000           | $32,000       | 20,000           
|Ryan Puplava                     | 10,000           | $8,000        | 5,000            



Other than as disclosed above, there have been no transactions or proposed transactions, which have materially affected or will materially affect the Company in which any director, executive officer, or beneficial holder of more than 10% of the outstanding common stock, or any of their respective relatives, spouses, associates or affiliates has had or will have any direct or material indirect interest.





C. Interests of Experts and Counsel



Not Applicable







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ITEM 8. FINANCIAL INFORMATION



A. Consolidated Statements and Other Financial Information



Financial Statements



Attached hereto are the audited financial statements of Kimber for the year ended June 30, 2006 and 2005, which were prepared by management and have been audited by Kimbers auditors, D&H Group LLP.  Also attached are the audited financial statements of Kimber for the fiscal years ended June 30, 2004, which were audited by the Companys auditors, D&H Group LLP.



The financial statements are accompanied by auditors reports and related notes.  See Item 17. -Financial Statements.



Legal Proceedings



There are no legal or arbitration proceedings, including those relating to bankruptcy, receivership or similar proceedings and those involving any third party, which may have, or have had in the recent past, significant effects on Kimbers financial position or profitability.  There are no legal proceedings to which Kimber is a party, nor to the best of the knowledge of Kimbers management are any legal proceedings contemplated except as herein disclosed.



Dividend Policy



Kimber has not paid dividends in the past and it has no present intention of paying dividends on its shares as it anticipates that all available funds will be invested to finance the growth of its business.  The Directors of Kimber will determine if and when dividends should be declared and paid in the future based upon Kimbers financial position at the relevant time.  The Common Shares of Kimber are entitled to an equal share of any dividends declared and paid.



B. Significant Changes



Since June 30, 2006, the date of the most recent consolidated financial statements, no significant changes have occurred that have not been disclosed elsewhere in this Annual Report.





ITEM 9. THE OFFERING AND LISTING



A. Offer and Listing Details



The authorized capital of Kimber consists of 80,000,000 Common Shares without par value, of which 47,383,922 were issued, outstanding and fully paid for as at September 25, 2006 (June 30, 2006  47,114,922). No Common Shares have been issued subject to call or assessment.  There are no pre-emptive or conversion rights, and no provisions for redemption, purchase or cancellation, surrender, sinking fund or purchase fund.  Provisions as to the creation, modification, amendment or variation of such rights or such provisions are contained in the Business Corporations Act(British Columbia).  There is no offer associated with this Annual Report.







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Effective July 16, 2002, Kimbers Common Shares and the July 12 Warrants had been listed and traded on the TSX Venture Exchange (TSX-V) under the symbols KBR and KBR.WT, respectively.  Prior to July 16, 2002, Kimbers Common Shares were not listed or traded on any stock exchange or other regulated market. The July 12 Warrants issued in 2002 had been trading on the TSX Venture Exchange, however, they were 18 month warrants and were either exercised prior to January 12, 2004 or expired unexercised and are no longer trading. On the close of trading on June 17, 2004, Kimber voluntarily delisted its shares from the TSX Venture Exchange and Kimbers shares were listed for trading on the Toronto Stock Exchange (TSX). Kimber was listed for trading on the American Stock Exchange (AMEX) on December 22, 2005.  The high and low sales prices for Kimbers Common Shares that traded through the TSX-V, TSX and AMEX and the average daily trading volumes are set out below.



|Period                       | TSX-V /TSX
High | TSX-V /TSX
Low | Average Daily Trading Volume on the TSX-V/TSX in Period | AMEX
High | AMEX
Low | Average Daily Trading Volume on the AMEX in Period
|---------------------------- | --------------- | -------------- | ------------------------------------------------------- | --------- | -------- | --------------------------------------------------
|Year ended June 30, 2002     | N/A             | N/A            | N/A                                                     |           |          |                                                   
|Year ended June 30, 2003     | $0.70           | $0.25          | 25,487                                                  |           |          |                                                   
|Year ended June 30, 2004     | $3.00           | $0.36          | 95,789                                                  |           |          |                                                   
|                             | TSX
High        | TSX
Low        | Average Daily Trading Volume on the TSX in Period       | AMEX
High | AMEX
Low | Average Daily Trading Volume on the AMEX in Period
|Year ended June 30, 2005     | $2.20           | $1.18          | 54,257                                                  |           |          |                                                   
|Year ended June 30, 2006     | $3.95           | $1.37          | 76,683                                                  | US$3.43   | US$1.77  | 204,258                                           
|                             |                 |                |                                                         |           |          |                                                   
|Year Ended June 30, 2005     |                 |                |                                                         |           |          |                                                   
|Quarter ended Sept. 30, 2004 | $2.15           | $1.55          | 46,993                                                  |           |          |                                                   
|Quarter ended Dec. 31, 2004  | $2.20           | $1.50          | 61,600                                                  |           |          |                                                   
|Quarter Ended March 31, 2005 | $2.69           | $1.30          | 60,794                                                  |           |          |                                                   
|Quarter ended June 30, 2005  | $1.92           | $1.18          | 35,823                                                  |           |          |                                                   
|                             |                 |                |                                                         |           |          |                                                   
|Year Ended June 30, 2006     |                 |                |                                                         |           |          |                                                   
|Quarter ended Sept. 30, 2005 | $1.77           | $1.41          | 35,760                                                  |           |          |                                                   
|Quarter ended Dec. 31, 2005  | $2.30           | $1.37          | 49,586                                                  | US$2.34   | US$1.70  | 263,233                                           
|Quarter Ended March 31, 2006 | $3.73           | $2.01          | 127,246                                                 | US$3.20   | US$1.77  | 188,877                                           
|Quarter ended June 30, 2006  | $3.95           | $2.26          | 94,138                                                  | US$3.43   | US$2.11  | 219,639                                           
|                             |                 |                |                                                         |           |          |                                                   
|Most Recent Six Months       |                 |                |                                                         |           |          |                                                   
|March, 2006                  | $3.73           | $2.40          | 130,280                                                 | US$3.20   | US$2.08  | 224,557                                           
|April 30, 2006               | $3.95           | $3.05          | 146,542                                                 | US$3.43   | US$2.75  | 326,800                                           
|May 31, 2006                 | $3.45           | $2.26          | 96,089                                                  | US$2.95   | US$2.11  | 187,864                                           
|June 30, 2006                | $2.96           | $2.22          | 46,929                                                  | US$2.65   | US$2.01  | 145,361                                           
|July 31, 2006                | $2.68           | $1.81          | 30,725                                                  | US$2.38   | US$1.92  | 133,825                                           
|August 31, 2006              | $2.61           | $2.18          | 36,090                                                  | US$2.38   | US$1.93  | 87,596                                            
|                             |                 |                |                                                         |           |          |                                                   



B. Plan of Distribution

Not Applicable







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C. Markets



Kimbers Common Shares began trading on the TSX Venture Exchange (TSX-V) on July 16, 2002. After the close of trading on June 17, 2004, Kimber voluntarily delisted its shares from the TSX Venture Exchange. On June 18, 2004 Kimbers Common Shares were listed and began trading under the symbol KBR on the TSX in Toronto, Ontario, Canada.  On December 22, 2005 Kimbers common shares began trading on AMEX under the symbol KBX.



The July 12 Warrants issued in relation with the 2002 Initial public offering were 18 month warrants and were either exercised prior to January 12, 2004 or expired unexercised and are no longer trading.



Kimbers initial public offering prospectus was filed with and receipted by the British Columbia and Alberta Securities Commissions on June 5, 2002.  Kimber is currently a reporting issuer in the Provinces of British Columbia, Alberta and Ontario.





D. Selling Shareholders



Not Applicable





E. Dilution



Not Applicable



F. Expenses of the Issue



Not Applicable





ITEM 10. ADDITIONAL INFORMATION



A. Share Capital



Not Applicable



B. Notice of Articles and Articles.



This information is incorporated by reference to our Form 20-F filed with the SEC on May 13, 2005.



Objects and Purposes of Kimber



The charter documents of Kimber place no restrictions upon Kimbers objects and purposes.



Directors Powers



Section 17.4 of the Articles of Kimber (the Articles) provides that a director or senior officer who holds any office or possesses any property, right or interest that could result, directly or indirectly, in the creation of a duty or interest that materially conflicts with that individual's duty or interest as a director or senior officer, must disclose the nature and extent of the conflict as required by the Business Corporations Act(British Columbia).  Furthermore, section 17.2 provides that a director who holds a disclosable interest (as that term is defined in the Business Corporations Act)in a contract or transaction into which Kimber has entered or proposes to enter is not entitled to vote on any directors' resolution to approve that contract or transaction, unless all the directors have a disclosable interest in that contract or transaction, in which case any or all of those directors may vote on such resolution.







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Section 18.10 of the Articles provides that the quorum necessary for the transaction of the business of the directors may be set by the directors and, if not so set, is deemed to be set at two directors or, if the number of directors is set at one, is deemed to be set at one director, and that director may constitute a meeting.



Section 13.5 of the Articles provides that the directors are entitled to the remuneration for acting as directors as the directors may determine from time to time.  If the directors so decide, the remuneration of the directors, if any, will be determined by the shareholders.  There are no restrictions in the Articles upon the directors power, in the absence of an independent quorum, to vote compensation to themselves or any members of their body.



The borrowing powers of Kimber are set out in Article 8 of the Articles.  Kimber, if authorized by the directors, may:

a)

borrow money in the manner and amount, on the security, from the sources and on the terms and conditions that they consider appropriate;

b)

issue bonds, debentures and other debt obligations either outright or as security for any liability or obligation of Kimber or any other person and at such discounts or premiums and on such other terms as they consider appropriate;

c)

guarantee the repayment of money by any other person or the performance of any obligation of any other person; and

d)

mortgage, charge, whether by way of specific or floating charge, grant a security interest in, or give other security on, the whole or any part of the present and future assets and undertaking of Kimber.



The borrowing powers set forth in the Articles can be varied by amending the Articles.  Section 9.4 of the Articles and Section 259 of the Business Corporations Act(British Columbia) have the effect of requiring a special resolution to be adopted by Kimber and a notice of alteration to the notice of articles to be filed with the Registrar of Companies for the Province of British Columbia.  A special resolution is a resolution passed by a majority of not less than three quarters of the votes cast by those members of a company who, being entitled to do so, vote in person or by proxy at a general meeting of Kimber, or consented to in writing by every member of a company who would have been entitled to vote in person or by proxy at a general meeting of Kimber.  Under the Business Corporations Act(British Columbia), an ordinary resolution of shareholders requires approval by a majority of the votes cast at a meeting of shareholders, present in person or represented by proxy.



Qualifications of Directors



There is no provision in the Articles imposing a requirement for retirement or non-retirement of directors under an age limit requirement.



Section 13.4 of the Articles provides that a director is not required to hold a Common Share as qualification for his or her office but must be qualified as required by the Business Corporations Act(British Columbia) to become, act or continue to act as a director.  Section 124(2) of the Business Corporations Act(British Columbia) provides that no person is qualified to act as a director if that person is:



(a)

under the age of 18 years;

(b)

found to be incapable of managing the persons own affairs;







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(c)

an undischarged bankrupt;

(d)

convicted of an offence in connection with the promotion, formation or management of a corporation, or unincorporated business, or involving fraud, unless:

i)

the court orders otherwise;

ii)

5 years have elapsed since the expiration of the period set for suspension of the passing of sentence without sentencing or since a fine was imposed, or the term of imprisonment and probation imposed, if any, was concluded, whichever is the latest;

iii)

a pardon was granted under the Criminal Records Act(Canada).



Every person who acts as a director of a company and who is not qualified to act as a director of Kimber under section 124(2) commits an offence.



Sections 14.10 and 14.11 of the Articles provides for the removal of a director.  Kimber may remove any director before the expiration of his or her term of office by special resolution. In that event, the shareholders may elect, or appoint by ordinary resolution, a director to fill the resulting vacancy. Further, the directors may remove any director before the expiration of his or her term of office if the director is convicted of an indictable offence, or if the director ceases to be qualified to act as a director of a company and does not promptly resign, and the directors may appoint a director to fill the resulting vacancy



Share Rights



All of the authorized shares of common stock of Kimber are of the same class and, once issued, rank equally as to dividends, voting powers, and participation in assets and in all other respects, on liquidation, dissolution or winding up of Kimber, whether voluntary or involuntary, or any other distribution of the assets of Kimber among its shareholders for the purpose of winding up its affairs after Kimber has paid out its liabilities.  The issued Common Shares are not subject to call or assessment rights or any pre-emptive or conversion rights.  The holders of common shares are entitled to one vote for each Common Share on all matters to be voted on by the shareholders.  The directors have staggered terms of office but there are no cumulative voting rights.  There are no provisions for redemption, purchase for cancellation, surrender or purchase funds.



Pursuant to section 61 of the Business Corporations Act(British Columbia) the rights attached to an issued class or series of shares must not be prejudiced or interfered with, unless the consent by a special separate resolution of the holders of the class or series of shares, as the case may be, is obtained. A special resolution requires a majority of 75% of the votes cast.



Meetings



Section 182(1) of the Business Corporations Act(British Columbia) provides that Kimber must hold an annual general meeting at least once in every calendar year and not more than 15 months after the date that the last annual general meeting was held.  Under section 10.4 of the Articles Kimber must give to its members entitled to receive notice of a general meeting not less than 21 days notice of any general meeting.  Section 169(1) of the Business Corporations Act(British Columbia) provides that the notice of a general meeting be sent not more than 2 months before the meeting.  The directors of a public company are required to provide, in addition to the notice of a general meeting, a form of proxy for use by every member entitled to vote at such meeting as well as an information circular containing prescribed information regarding the matters to be dealt with and conduct of the general meeting.  Prior to each annual general meeting of its shareholders the directors of Kimber must place before the shareholders comparative financial statements, made up to a date not more than 6 months before the annual general meeting, and the report of the auditor.







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Section 167(2) of the Business Corporations Act(British Columbia) provides that shareholders of a company holding not less than 1/20 of the issued shares of the company may requisition the holding of a general meeting by delivering or sending notice to the company in accordance with the provisions of the Business Corporations Act(British Columbia).



Limitations on Ownership of Securities



There are no limitations on the right to own securities, imposed by foreign law or by the charter or other constating documents of Kimber.



The Investment Canada Act (the Act), enacted on June 20, 1985, requires prior notification to the Government of Canada on the acquisition of control of Canadian businesses by non-Canadians, as defined in the Act. Certain acquisitions of control, discussed below, are reviewed by the Government of Canada. The term acquisition of control is defined as any one or more non-Canadian persons acquiring all or substantially all of the assets used in carrying on the Canadian business, or the acquisition of the voting shares of a Canadian corporation carrying on the Canadian business or the acquisition of the voting interests of an entity carrying on the Canadian business. The acquisition of the majority of the outstanding shares of another entity is deemed to be an acquisition of control of a corporation. The acquisition of less than a majority, but one-third or more, of the voting shares of a corporation is presumed to be an acquisition of control of a corporation unless it can be established that the purchaser does not in fact  control the corporation through the ownership of voting shares.



An investment requiring notification and review is any direct acquisitions of a Canadian business with assets of CDN$5,000,000 or more (subject to the comments below on World Trade Organization (WTO) investors; any indirect acquisition of a Canadian business (subject to the comments below on WTO investors) where the purchaser acquires control of entities in Canada having assets valued at CDN$50,000,000 or more; or any acquisition of a business with assets between CDN$5,000,000 and CDN$50,000,000 which represent more than 50% of the value of the total international transaction. In addition, specific acquisitions or new businesses in designated types of business activities related to Canadas cultural heritage or national identity could be reviewed if the Government of Canada considers that it is in the public interest to do so.



The Act was amended with the implementation of the Agreement establishing the WTO to provide for special review thresholds for WTO investors, as defined in the Act. WTO investor generally means (i) an individual, other than a Canadian, who is a national of a WTO member (such as, for example, the United States), or who has the right of permanent residence in relation to that WTO member, (ii) governments of WTO members, and (iii) entities that are not Canadian controlled, but which are WTO investor controlled, as determined by rules specified in the Act. The special review thresholds for WTO investors do not apply, and the general rules described above do apply, to the acquisition of control of certain types of businesses specified in the Act, including a business that is a engages in the production of uranium and owns an interest in a producing uranium property in Canada. If the WTO investor rules apply, an investment in the shares of Kimber by or from a WTO investor will be reviewable only if it is an investment to acquire control of Kimber and the value of the assets of Kimber is equal to or greater than a specified amount (the WTO Review Threshold). The WTO Review Threshold is adjusted annually by a formula relating to increases in the nominal gross domestic product of Canada.  The 2006 WTO Review Threshold is CDN$265,000,000.



If any non-Canadian, whether or not a WTO investor, acquires control of Kimber by the acquisition of shares, but the transaction is not reviewable as described above, the non-Canadian is required to notify the Canadian government and to provide certain basic information relating to the investment. A non-Canadian, whether or not a WTO investor, is also required to provide a notice to the government on the establishment of a new Canadian business. If the business of Kimber is then a prescribed type of business activity related to Canadas cultural heritage or national identity, and if the Canadian government considers it to be in the public interest to do so, then the Canadian government may give notice in writing within 21 days requiring the investment to be reviewed.







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If an investment is reviewable, an application for review in the form prescribed by the regulations is normally required to be filed with the Director appointed under the Act (the Director) prior to the investment taking place and the investment may not be consummated until the review has been completed and the Minister (a person designated as such under the Act) is satisfied or is deemed to be satisfied that the investment is likely to be of net benefit to Canada. There are, however, certain exceptions. Applications concerning indirect acquisitions may be filed up to 30 days after the investment is consummated and applications concerning reviewable investments in culture-sensitive sectors are required upon receipt of a notice for review. In addition, the Minister (a person designated as such under the Act) may permit an investment to be consummated prior to completion of the review, if he is satisfied that delay would cause undue hardship to the acquiror or jeopardize the operations of the Canadian business that is being acquired. The Director will submit the application to the Minister, together with any other information or written undertakings given by the acquiror and any representation submitted to the Director by a province that is likely to be significantly affected by the investment.



The Minister will then determine whether the investment is likely to be of net benefit to Canada, taking into account the information provided and having regard to certain factors of assessment where they are relevant. Some of the factors to be considered are (i) the effect of the investment on the level and nature of economic activity in Canada, including the effect on employment, on resource processing, and on the utilization of parts, components and services produced in Canada; (ii) the effect of the investment on exports from Canada; (iii) the degree and significance of participation by Canadians in the Canadian business and in any industry in Canada of which it forms or would form a part; (iv) the effect of the investment on productivity, industrial efficiency, technological development, product innovation and product variety in Canada; (v) the effect of the investment on competition within any industry or industries in Canada; (vi) the compatibility of the investment with national industrial, economic and cultural policies taking into consideration industrial, economic and cultural objectives enunciated by the government or legislature of any province likely to be significantly affected by the investment; and (vii) the contribution of the investment to Canadas ability to compete in world markets.



The Act sets certain time limits for the Director and the Minister. Within 45 days after a completed application has been received, the Minister must notify the acquiror that (a) he is satisfied that the investment is likely to be of net benefit to Canada, or (b) he is unable to complete his review, in which case he shall have 30 additional days to complete his review (unless the acquiror agrees to a longer period), or (c) he is not satisfied that the investment is likely to be of net benefit to Canada.



Where the Minister has advised the acquiror that he is not satisfied that the investment is likely to be of net benefit to Canada, the acquiror has the right to make representations and submit undertakings within 30 days of the date of the notice (or any further period that is agreed upon between the acquiror and the Minister). On the expiration of the 30 day period (or the agreed extension), the Minister must quickly notify the acquiror (i) that he is now satisfied that the investment is likely to be of net benefit to Canada or (ii) that he is not satisfied that the investment is likely to be of net benefit to Canada. In the latter case, the acquiror may not proceed with the investment or, if the investment has already been consummated, must divest itself of control of the Canadian business.



The Act provides civil remedies for non-compliance with any provision. There are also criminal penalties for breach of confidentiality or providing false information.



Change in Control of Registrant



No provision of Kimbers Articles or other constating documents would have the effect of delaying, deferring, or preventing a change in control of Kimber, and operate only with respect to a merger, acquisition or corporate restructuring involving Kimber or any of its subsidiaries.



Ownership Threshold







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78





There are no provisions of Kimbers Articles or other documents governing the ownership threshold above which shareholder ownership must be disclosed.



C. Material Contracts



The material contracts of Kimber are listed under Item 19  Exhibits and copies are appended to this Form 20-F



D. Exchange Controls



Canada has no system of exchange controls. There are no exchange restrictions on borrowing from foreign countries, nor on the remittance of dividends, interest, royalties and similar payments, management fees, loan repayments, settlement of trade debts, or the repatriation of capital. Any such remittances to United States residents, however, may be subject to a withholding tax pursuant to the Canadian Income Tax Act as modified by the reciprocal tax treaty between Canada and the United States. Refer to Item 10E  Taxation.



E. Taxation



A brief description of certain provisions of the tax treaty between Canada and the United States is included below, together with a brief outline of certain taxes, including withholding provisions, to which United States security holders are subject under existing laws and regulations of Canada. The consequences, if any, of provincial, state and local taxes are not considered.





THE FOLLOWING INFORMATION IS GENERAL AND SECURITY HOLDERS SHOULD SEEK THE ADVICE OF THEIR OWN TAX ADVISORS, TAX COUNSEL OR ACCOUNTANTS WITH RESPECT TO THE APPLICABILITY OR EFFECT ON THEIR OWN INDIVIDUAL CIRCUMSTANCES OF THE MATTERS REFERRED TO HEREIN AND OF ANY PROVINCIAL, STATE OR LOCAL TAXES.  NO OPINION WAS REQUESTED BY KIMBER, OR IS PROVIDED BY ITS LEGAL COUNSEL AND/OR AUDITORS.





Certain Canadian Federal Income Tax Consequences



The discussion under this heading summarizes the principal Canadian federal income tax consequences of acquiring, holding and disposing of shares of Common Shares of Kimber for a shareholder of Kimber who is not a resident of Canada but is a resident of the United States and who will acquire and hold shares of Common Shares of Kimber as capital property for the purposes of the Income Tax Act (Canada) (the Canadian Tax Act). This summary does not apply to a shareholder who carries on business in Canada through a permanent establishment situated in Canada or performs independent personal services in Canada through a fixed base in Canada if the shareholders holding in Kimber is effectively connected with such permanent establishment or fixed base. This summary is based on the provisions of the Canadian Tax Act and the regulations thereunder and on an understanding of the administrative practices of Canada Revenue Agency, and takes into account all specific proposals to amend the Canadian Tax Act or regulations made by the Minister of Finance of Canada as of the date hereof. It has been assumed that there will be no other relevant amendment of any governing law although no assurance can be given in this respect. This discussion is general only and is not a substitute for independent advice from a shareholders own Canadian and U.S. tax advisors.







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The provisions of the Canadian Tax Act are subject to income tax treaties to which Canada is a party, including the Canada-United States Income Tax Convention (1980), as amended (the Convention).



Dividends on Common Shares and Other Income



Under the Canadian Tax Act, a non-resident of Canada is generally subject to Canadian withholding tax at the rate of 25 percent on dividends paid or deemed to have been paid to him or her by a corporation resident in Canada. The Convention limits the rate to 15 percent if the shareholder is a resident of the United States and the dividends are beneficially owned by and paid to such shareholder and to 5 percent if the shareholder is also a corporation that beneficially owns at least 10 percent of the voting stock of the payor corporation.



The amount of a stock dividend (for tax purposes) would generally be equal to the amount by which the paid up or stated capital of Kimber had increased by reason of the payment of such dividend. The Corporation will furnish additional tax information to shareholders in the event of such a dividend.



The Convention generally exempts from Canadian income tax dividends paid to a religious, scientific, literary, educational or charitable organization or to an organization constituted and operated exclusively to administer a pension, retirement or employee benefit fund or plan, if the organization is a resident of the United States and is exempt from income tax under the laws of the United States.



The tax payable on dividends is to be withheld at source by Kimber or people acting on its behalf. Kimber is liable for the amount of the tax, penalties and interest if it fails to so withhold. The taxpayer is liable in any event if Kimber fails to withhold.





Dispositions of Common Shares



Under the Canadian Tax Act, a taxpayers capital gain or capital loss from a disposition of a share of Common Shares of Kimber is the amount, if any, by which his or her proceeds of disposition exceed (or are exceeded by, respectively) the aggregate of his or her adjusted cost base of the share and reasonable expenses of disposition. The capital gain or loss must be computed in Canadian currency using a weighted average adjusted cost base for identical properties. Fifty percent of a capital gain are included in income. The amount by which a shareholders capital loss exceeds the capital gain in a year may be deducted from a capital gain realized by the shareholder in the three previous years or any subsequent year, subject to certain restrictions in the case of a corporate shareholder.



Under the Canadian Tax Act, a non-resident of Canada is subject to Canadian tax on taxable capital gains, and may deduct allowable capital losses, realized on a disposition of taxable Canadian property. Shares of Common Shares of Kimber will constitute taxable Canadian property of a shareholder at a particular time if the shareholder used the shares in carrying on business in Canada, or if at any time in the five years immediately preceding the disposition 25% or more of the issued shares of any class or series in the capital stock of Kimber belonged to one or more persons in a group comprising the shareholder and persons with whom the shareholder and persons with whom the shareholder did not deal at arms length and in certain other circumstances.



The Convention relieves United States residents from liability for Canadian tax on capital gains derived on a disposition of shares unless:



(a) the value of the shares is derived principally from real property situated in Canada, including the right to explore for or exploit natural resources and rights to amounts computed by reference to production,







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(b) the shareholder was resident in Canada for 120 months during any period of 20 consecutive years preceding, and at any time during the 10 years immediately preceding, the disposition and the shares were owned by him when he or she ceased to be resident in Canada, or

(c) the shares formed part of the business property of a permanent establishment that the holder has or had in Canada within the 12 months preceding the disposition.



United States Federal Income Tax Consequences



The following is a general discussion of certain possible U.S. federal income tax consequences, under current law, generally applicable to a U.S. Holder (as hereinafter defined) of Common Shares of Kimber. This discussion is of a general nature only and does not take into account the particular facts and circumstances, with respect to U.S. federal income tax issues, of any particular U.S. Holder. In addition, this discussion does not cover any state, local or foreign tax consequences. (See Canadian Federal Income Tax Consequences above).



The following discussion is based upon the sections of the Internal Revenue Code of 1986, as amended (the Code), Treasury Regulations, published Internal Revenue Service (IRS) rulings, published administrative positions of the IRS and court decisions that are currently applicable, any or all of which could be materially and adversely changed, possibly on a retroactive basis, at any time and which are subject to differing interpretations. This discussion does not consider the potential effects, both adverse and beneficial, of any proposed legislation, which, if enacted, could be applied, possibly on a retroactive basis, at any time.



This discussion is for general information only and it is not intended to be, nor should it be construed to be, legal or tax advice to any U.S. Holder or prospective U.S. Holder of Common Shares of Kimber, and no opinion or representation with respect to the U.S. federal income tax consequences to any such U.S. Holder or prospective U.S. Holder is made. Accordingly, U.S. Holders and prospective U.S. Holders of Common Shares of Kimber should consult their own financial advisor, legal counsel or accountant regarding the U.S. federal, state, local and foreign tax consequences of purchasing, owning and disposing of Common Shares of Kimber.



U.S. Holders



As used herein, a U.S. Holder means a holder of Common Shares of Kimber who is (i) a citizen or individual resident of the U.S., (ii) a corporation (other than a corporation subject to Subchapter S of the Code) created or organized in or under the laws of the U.S. or of any political subdivision thereof, (iii) an estate whose income is taxable in the U.S. irrespective of source or (iv) a trust subject to the primary supervision of a court within the U.S. and control of a U.S. fiduciary as described Section 7701(a)(30) of the Code.



Persons Not Covered



This summary does not address the U.S. federal income tax consequences to persons (including persons who are U.S. Holders) subject to special provisions of U.S. federal income tax law, including (i) tax-exempt organizations, (ii) qualified retirement plans, (iii) individual retirement accounts and other tax-deferred accounts, (iv) financial institutions, (v) insurance companies, (vi) real estate investment trusts, (vii) regulated investment companies, (viii) broker-dealers, (ix) persons or entities that have a functional currency other than the U.S. dollar, (x) persons subject to the alternative minimum tax, (xi) persons who own their Common Shares of Kimber as part of a straddle, hedging, conversion transaction, constructive sale or other arrangement involving more than one position, (xii) persons who acquired their Common Shares of Kimber through the exercise of employee stock options or otherwise as compensation for services, (xiii) persons that own an interest in an entity that owns Common Shares of Kimber, (xiv) persons who own, exercise or dispose of any options, warrants or other rights to acquire Common Shares of Kimber, (xv) entities treated as partnerships for U.S. federal income tax purposes, (xvi) corporations subject to Subchapter S of the Code, or (xvii) persons who own their Common Shares of Kimber other than as a capital asset within the meaning of Section 1221 of the Code.







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Distributions on Common Shares of Kimber



U.S. Holders receiving distributions (including constructive distributions) with respect to Common Shares of Kimber are required to include in gross income for U.S. federal income tax purposes the gross amount of such distributions, equal to the U.S. dollar value of such distributions on the date of receipt (based on the exchange rate on such date), to the extent that Kimber has current or accumulated earnings and profits, without reduction for any Canadian income tax withheld from such distributions.  Canadian income tax withheld from distributions may result in a credit or deduction for United States federal income tax purposes. (See more detailed discussion at Foreign Tax Credit below). To the extent that distributions from Kimber exceed current or accumulated earnings and profits of Kimber, such distributions will be treated first as a return of capital, to the extent of the U.S. Holders adjusted basis in the Common Shares, and thereafter as gain from the sale or exchange of the Common Shares of Kimber. (See more detailed discussion at Disposition of Common Shares of Kimber below)  In general, dividend distributions are taxed as ordinary income.  At present, such dividends may be subject to a preferential tax rate for individuals, estates and trusts of no more than 15% if such dividends are qualified dividends.  However, this preferential tax rate may not be available if Kimber is, or was, a Passive Foreign Investment Company (PFIC). (See Passive Foreign Investment Company discussion below).



In the case of foreign currency received as a distribution that is not converted by the recipient into U.S. dollars on the date of receipt, a U.S. Holder will have a tax basis in the foreign currency equal to its U.S. dollar value on the date of receipt. Generally any gain or loss recognized upon a subsequent sale or other disposition of the foreign currency, including the exchange for U.S. dollars, will be ordinary income or loss.



Certain information reporting and backup withholding rules may apply with respect to certain payments related to Kimbers Common Shares. In particular, a payor or middleman within the U.S., or in certain cases outside the U.S., will be required to withhold 28% of any payments to a U.S. Holder of Kimbers Common Shares of dividends on, or proceeds from the sale of, such Common Shares within the U.S., if a U.S. Holder fails to furnish its correct taxpayer identification number or otherwise fails to comply with, or establish an exemption from, the backup withholding tax requirements. Any amounts withheld under the U.S. backup withholding tax rules will be allowed as a refund or a credit against the U.S. Holders U.S. federal income tax liability, provided the required information is furnished to the IRS.



U.S. Holders should consult their own financial advisor, legal counsel or accountant regarding the information reporting and backup withholding rules applicable to Kimbers Common Shares.





Foreign Tax Credit



A U.S. Holder who pays (or has withheld from distributions) Canadian or other foreign income tax with respect to the ownership of Common Shares of Kimber may be entitled, at the option of the U.S. Holder, to either receive a deduction or a tax credit for U.S. federal income tax purposes with respect to such foreign tax paid or withheld.  This election is made on a year-by-year basis and applies to all foreign taxes paid by (or withheld from distributions to) the U.S. Holder during that year.  If the taxpayer chooses to deduct foreign taxes, the allowable deduction may be limited by various tax rules.







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There are significant and complex limitations that apply to the foreign tax credit, among which is the general limitation that the credit cannot exceed the proportionate share of the U.S. Holders U.S. income tax liability that the U.S. Holders foreign source income bears to his or its worldwide taxable income. In applying this limitation, the various items of income and deduction must be classified as either foreign source or U.S. source. Complex rules govern this classification process. In addition, this limitation is calculated separately with respect to specific classes of income such as passive income, high withholding tax interest, financial services income, shipping income, and certain other classifications of income. Dividends distributed by Kimber will generally constitute foreign source income, and will be classified as passive income or, in the case of certain U.S. Holders, financial services income for these purposes.



Recent legislation will significantly modify the foreign tax credit rules discussed above.  Effective for tax years beginning after December 31, 2006, there will be only two specific classes of income for purposes of calculating foreign tax credit limitations (a passive category and a general category).  Other income that would have been included in one of the current categories will be included in one of these two categories.



In some limited circumstances, a U.S. individual taxpayer may be able to claim a foreign tax credit without regard to the foregoing limitation.  This would be the case if the taxpayers entire foreign source income for such year was passive income subject to information reporting (generally Form 1099) and the associated foreign income taxes were no more than $300 ($600 in the case of a joint return).



In addition, U.S. Holders that are corporations and that own 10% or more of the voting stock of Kimber may be entitled to an indirect foreign tax credit under Section 902 of the Code with respect to the payment of dividends by Kimber under certain circumstances and subject to complex rules and limitations.



The availability of the foreign tax credit and the application of the limitations with respect to the foreign tax credit are fact specific, and each U.S. Holder of Common Shares of Kimber is urged to consult their own financial advisor, legal counsel or accountant regarding the foreign tax credit rules.





Disposition of Common Shares of Kimber



A U.S. Holder will recognize gain or loss upon the sale or other taxable disposition of Common Shares of Kimber equal to the difference, if any, between (i) the amount of cash plus the fair market value of any property received, and (ii) the shareholders tax basis in the Common Shares of Kimber. This gain or loss will be capital gain or loss if the Common Shares are a capital asset in the hands of the U.S. Holder, which will be long-term capital gain or loss if the Common Shares of Kimber are held for more than one year.



Preferential tax rates apply to long-term capital gains of U.S. Holders that are individuals, estates or trusts. There are currently no preferential tax rates for long-term capital gains for a U.S. Holder that is a corporation. Deductions for net capital losses are subject to significant limitations. For U.S. Holders that are not corporations, any unused portion of such net loss may be carried over to be used in later tax years until such net capital loss is thereby exhausted. For U.S. Holders that are corporations, an unused net capital loss may be carried back three years and carried forward five years from the loss year to be offset against capital gains until such net capital loss is thereby exhausted.  The availability of preferential tax rates on capital gains is subject to Kimbers status as a PFIC. (See Passive Foreign Investment Company discussion below).







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Other Considerations for U.S. Holders



In the following circumstances, the above sections of this discussion may not describe the U.S. federal income tax consequences to U.S. Holders resulting from the ownership and disposition of Common Shares of Kimber:





Controlled Foreign Corporation



If more than 50% of the total voting power or the total value of Kimbers outstanding shares is owned, directly, indirectly, or by attribution by citizens or residents of the U.S., U.S. partnerships or corporations, or U.S. estates or trusts (as defined by the Code Section 7701(a)(30)), each of which own, directly, indirectly, or by attribution 10% or more of the total voting power of Kimbers outstanding shares (each a 10% Shareholder), Kimber could be treated as a Controlled Foreign Corporation (CFC) under Section 957 of the Code.



The classification of Kimber as a CFC would effect many complex results, including that 10% Shareholders of Kimber would generally (i) be treated as having received a current distribution of their pro rata shares of Kimbers Subpart F income and (ii) would also be subject to current U.S. federal income tax on their pro rata shares of Kimbers earnings invested in U.S. property. The foreign tax credit may reduce the U.S. federal income tax on these amounts for such 10% Shareholders who are corporations (See more detailed discussion at Foreign Tax Credit above). In addition, under Section 1248 of the Code, gain from the sale or other taxable disposition of Common Shares of Kimber by a U.S. Holder that is or was a 10% Shareholder at any time during the five-year period ending with the sale is treated as ordinary (dividend) income to the extent of earnings and profits of Kimber attributable to the Common Shares sold or exchanged.



If Kimber is classified as both a Passive Foreign Investment Company as described below and a CFC, Kimber generally will not be treated as a Passive Foreign Investment Company with respect to 10% Shareholders. This rule generally will be effective for taxable years of 10% Shareholders beginning after 1997 and for taxable years of Kimber ending with or within such taxable years of 10% Shareholders.



Kimber does not believe that it currently qualifies as a CFC. However, there can be no assurance that Kimber will not be considered a CFC for the current or any future taxable year.



The CFC rules are very complex, and U.S. Holders should consult their own financial advisor, legal counsel or accountant regarding the CFC rules and how these rules may impact their U.S. federal income tax situation.





Passive Foreign Investment Company



Certain U.S. income tax legislation contains rules governing PFICs, which can have significant tax effects on U.S. Holders of foreign corporations. Section 1297 of the Code defines a PFIC as a corporation that is not formed in the U.S. and, for any taxable year, either (i) 75% or more of its gross income is passive income or (ii) the average percentage, by fair market value (or, if the corporation is not publicly traded and either is a controlled foreign corporation or makes an election, by adjusted tax basis), of its assets that produce or are held for the production of passive income is 50% or more. Passive income includes, for example, dividends, interest, certain rents and royalties, certain gains from the sale of stock and securities, and certain gains from commodities transactions. However, gains resulting from commodities transactions are generally excluded from the definition of passive income if such gains arise out of commodity hedging transactions or are active business gains, but only if substantially all the corporations commodities are inventory or other certain ordinary income property.







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For purposes of the PFIC income test and the assets test, if a foreign corporation owns (directly or indirectly) at least 25% by value of the stock of another corporation, such foreign corporation shall be treated as if it (a) held a proportionate share of the assets of such other corporation, and (b) received directly its proportionate share of the income of such other corporation. Also, for purposes of such PFIC tests, passive income does not include any interest, dividends, rents or royalties that are received or accrued from a related person to the extent such amount is properly allocable to the income of such related person which is not passive income. For these purposes, a person is related with respect to a foreign corporation if such person controls the foreign corporation or is controlled by the foreign corporation or by the same persons that control the foreign corporation. For these purposes, control means ownership, directly or indirectly, of stock possessing more than 50% of the total voting power of all classes of stock entitled to vote or of the total value of stock of a corporation.



Kimber believes that it may have qualified as a PFIC for its most recent taxable year, may have qualified as a PFIC in prior years and may qualify as a PFIC in subsequent years. There can be no assurance that Kimbers determination concerning its PFIC status will not be challenged.



A U.S. Holder who holds stock in a foreign corporation during any year in which such corporation qualifies as a PFIC is subject to U.S. federal income taxation under one of three alternative tax regimes at the election of each such U.S. Holder. The following is a discussion of such three alternative tax regimes applied to such U.S. Holders of Kimber. In addition, special rules apply if a foreign corporation qualifies as both a PFIC and a CFC (as defined above) and a U.S. Holder owns, actually or constructively, 10% or more of the total combined voting power of all classes of stock entitled to vote of such foreign corporation (see more detailed discussion at Controlled Foreign Corporation above).



QEF Election



A U.S. Holder who elects in a timely manner to treat Kimber as a QEF (an Electing U.S. Holder) will be subject, under Section 1293 of the Code, to current U.S. federal income tax for any taxable year in which Kimber qualifies as a PFIC on his or its pro rata share of Kimbers (i) net capital gain (the excess of net long-term capital gain over net short-term capital loss), which will be taxed as long-term capital gain to the Electing U.S. Holder and (ii) ordinary earnings (the excess of earnings and profits over net capital gain), which will be taxed as ordinary income to the Electing U.S. Holder, in each case, for the shareholders taxable year in which (or with which) Kimbers taxable year ends, regardless of whether such amounts are actually distributed.  If Kimber has a deficit in earnings and profits for the year, there will be no income inclusion for the U.S. Holders but no loss will flow through to the U.S. Holders.



A QEF election will only be effective if Kimber provides certain information to the U.S. Holders.  There can be no assurances that Kimber can, or will, comply with these requirements.  U.S. Holders are urged to consult a tax advisor regarding the availability of and procedure for making a QEF election.



An effective QEF election, if in force for all PFIC years in the U.S. Holders holding period, or if made in conjunction with an election to purge the PFIC taint, also allows the Electing U.S. Holder to (i) generally treat any gain realized on the disposition of his or its Kimber Common Shares as capital gain; and (ii) either avoid interest charges resulting from PFIC status altogether, or make an annual election, subject to certain limitations, to defer payment of current taxes on his share of Kimbers annual realized net capital gain and ordinary earnings subject, however, to an interest charge. If the Electing U.S. Holder is not a corporation, such an interest charge would be treated as personal interest that is not deductible.  If no QEF election is in force for all PFIC years in a taxpayers holding period, Section 1291 treatment, discussed below, will apply.







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The U.S. federal income tax consequences of the QEF election will depend on whether the year of the election is the first year in the U.S. Holders holding period in which Kimber is a PFIC. If Kimber qualified as a PFIC in a prior year in the holding period, then in order to purge the PFIC taint for prior years, in addition to making the QEF election, the U.S. Holder must elect to recognize (i) under the rules of Section 1291 of the Code (discussed herein), any gain that he or it  would otherwise recognize if the U.S. Holder sold his stock on the qualification date or (ii) if Kimber is a controlled foreign corporation, the U.S. Holders pro rata share of Kimbers post-1986 earnings and profits as of the qualification date. The qualification date is the first day of Kimbers first tax year in which Kimber qualified as a QEF with respect to such U.S. Holder.   U.S. Holders are urged to consult a tax advisor regarding the availability of and procedure for electing to recognize gain or earnings and profits under the foregoing rules. In addition to the above rules, under very limited circumstances, a U.S. Holder may make a retroactive QEF election if such U.S. Holder failed to file the QEF election documents in a timely manner.



A QEF election, once made with respect to Kimber, applies to the tax year for which it was made and to all subsequent tax years, unless the election is invalidated or terminated, or the IRS consents to revocation of the election. If a QEF election is made by a U.S. Holder and Kimber ceases to qualify as a PFIC in a subsequent tax year, the QEF election will remain in effect, although not applicable, during those tax years in which Kimber does not qualify as a PFIC. Therefore, if Kimber again qualifies as a PFIC in a subsequent tax year, the QEF election will be effective and the U.S. Holder will be subject to the rules described above for Electing U.S. Holders in such tax year and any subsequent tax years in which Kimber qualifies as a PFIC. In addition, the QEF election remains in effect, although not applicable, with respect to an Electing U.S. Holder even after such U.S. Holder disposes of all of his or its direct and indirect interest in the shares of Kimber. Therefore, if such U.S. Holder reacquires an interest in Kimber, that U.S. Holder will be subject to the rules described above for Electing U.S. Holders for each tax year in which Kimber qualifies as a PFIC.



Section 1291 Rules



If a U.S. Holder does not have a QEF election in effect during a year in which it holds the Common Shares in question and Kimber is a PFIC (a Non-Electing U.S. Holder), then special  punitive taxation rules under Section 1291 of the Code will apply to (i) gains realized on the disposition (or deemed to be realized by reasons of a pledge) of his or its Common Shares and (ii) certain excess distributions (generally, distributions received in the current taxable year that are in excess of 125% of the average distributions received during the three preceding years or, if shorter, the U.S. Holders holding period) by Kimber.



A Non-Electing U.S. Holder generally would be required to pro rate all gains realized on the disposition of Kimber Common Shares and all excess distributions on Kimber Common Shares over the entire holding period for the Common Shares. All gains or excess distributions allocated to prior years of the U.S. Holder (other than years prior to the first taxable year of Kimber during such U.S. Holders holding period for which it was a PFIC) would be taxed at the highest tax rate for each such prior year applicable to ordinary income. The Non-Electing U.S. Holder also would be liable for interest on the foregoing tax liability for each such prior year calculated as if such liability had been due with respect to each such prior year. A Non-Electing U.S. Holder that is not a corporation must treat this interest charge as personal interest which, as discussed above, is wholly non-deductible. The balance of the gain or the excess distribution will be treated as ordinary income in the year of the disposition or distribution, and no interest charge will be incurred with respect to such balance.



The punitive consequences of Section 1291 fund status extend beyond the rules discussed above.  For example, under Section 1291(f) of the Code, the IRS has issued Proposed Treasury Regulations that, subject to certain exceptions, would treat as taxable certain transfers of PFIC stock by Non-Electing U.S. Holders that are generally not otherwise taxed, such as gifts, exchanges pursuant to corporate reorganizations, and transfers at death. Generally, in such cases the basis of Kimber Common Shares in the hands of the transferee and the basis of any property received in the exchange for those Common Shares would be increased by the amount of gain recognized. However, the specific U.S. federal income tax consequences to the U.S. Holder and the transferee may vary based on the manner in which the Common Shares are transferred.







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In addition, certain special adverse rules may apply with respect to the holding of Kimber Common Shares while Kimber is a PFIC. For example under Section 1298(b)(6) of the Code, a U.S. Holder who uses PFIC stock as security for a loan (including a margin loan) will, except as may be provided in regulations, be treated as having made a taxable disposition of such shares.



If Kimber is a PFIC for any taxable year during which a Non-Electing U.S. Holder holds Kimber Common Shares, then Kimber will continue to be treated as a PFIC with respect to such Kimber Common Shares, even if it is no longer a PFIC by definition. A Non-Electing U.S. Holder may terminate this deemed PFIC status by electing to recognize gain (which will be taxed under the rules discussed above for Non-Electing U.S. Holders) as if such Kimber Common Shares had been sold on the last day of the last taxable year for which it was a PFIC.



Mark-to-Market Election



U.S. Holders who hold, actually or constructively, marketable stock (as specifically defined in the Treasury Regulations) of a foreign corporation that qualifies as a PFIC may annually elect to mark such stock to the market (a mark-to-market election). If such an election is made, such U.S. Holder will generally not be subject to the special taxation rules of Section 1291 discussed above. However, if the mark-to-market election is made by a Non-Electing U.S. Holder effective after the beginning of the holding period for the PFIC stock, then the Section 1291 rules will apply to certain dispositions of, distributions on and other amounts taxable with respect to Kimber Common Shares (including any gain from the initial mark-to-market). A U.S. Holder who makes the mark-to-market election will include in income for the taxable year for which the election was made and subsequent years an amount equal to the excess, if any, of the fair market value of the Common Shares of Kimber as of the close of such tax year over such U.S. Holders adjusted basis in such Common Shares. In addition, the U.S. Holder is allowed a deduction for the lesser of (i) the excess, if any, of such U.S. Holders adjusted tax basis in the Common Shares over the fair market value of such shares as of the close of the tax year, or (ii) the excess, if any, of (A) the mark-to-market gains for the Common Shares in Kimber included by such U.S. Holder for prior tax years, including any amount which was included pursuant to the Section 1291 rules discussed above, over (B) the mark-to-market losses for shares that were allowed as deductions for prior tax years. A U.S. Holders adjusted tax basis in the Common Shares of Kimber will be adjusted to reflect the amount included in or deducted from income as a result of a mark-to-market election. A mark-to-market election applies to the taxable year in which the election is made and to each subsequent taxable year Kimber is a PFIC, unless Kimber Common Shares cease to be marketable, as specifically defined, or the IRS consents to revocation of the election. U.S. Holders should consult their tax advisor regarding the manner of making such an election.



Kimber believes that its Common Shares should presently qualify as marketable stock for purposes of Section 1296, but there is no assurance that the Common Shares will continue to so qualify.



The PFIC rules are very complex, and U.S. Holders should consult their own financial advisor, legal counsel or accountant regarding the PFIC rules, including the advisability of and procedure for making a QEF election or a mark-to-mark election, and how these rules may impact their U.S. federal income tax situation.



Other Reporting Rules



Under a number of circumstances, United States investors acquiring Common Shares may be required to file an information return with the Internal Revenue Service Center where they are required to file their tax returns with a duplicate copy to the Internal Revenue Service Center, Philadelphia, PA, USA 19255. In particular, any United States investor who becomes the owner, directly or indirectly, of 10% or more of the Common Shares will be required to file such a return. Other filing requirements may apply and United States investors should consult their own tax advisors concerning these requirements.







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F. Dividends and Paying Agents



Not applicable



G. Statement by Experts



Not applicable.



H. Documents on Display



The documents described herein may be inspected at the head office of Kimber at Suite 215 - 800 West Pender Street, Vancouver, British Columbia, Canada V6C 2V6, during normal business hours.



The current Annual Report, including all exhibits has been filed with the Securities and Exchange Commission and it is available for review in the Commissions public reference room or on the Commissions website at www.sec.gov.



I. Subsidiary Information



The following is information regarding the Companys wholly owned subsidiaries:



|Business
Name                           | Jurisdiction of Incorporation | Office
Address                                                                       | Telephone      
|--------------------------------------- | ----------------------------- | ------------------------------------------------------------------------------------ | ---------------
|Minera Monterde, S. de R.L. de C.V.     | Mexico                        | Camino al Campestre # 4302
Col. Quintas Campestre, CP 31214
Chihuahua, Chih.  Mexico | 52-614-410-8344
|Kimber Resources de Mexico S.A. de C.V. | Mexico                        | Avenida del Mar No. 1022 Oficina 5, Zona Costera, Mazatlan, Sinaloa, Mexico 82149    | 52 6699 900 548
|Minera Pericones S.A. de C.V.           | Mexico                        | Avenida del Mar No. 1022 Oficina 5, Zona Costera, Mazatlan, Sinaloa, Mexico 82149    | 52 6699 900 548





ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



In summary, the principal market risks which the Company is exposed to are changes in the price of gold and silver and adverse movements in foreign exchange rates.  The Company uses the Canadian dollar as its reporting currency and is therefore exposed to foreign exchange movements in the United States Dollar and the Mexican Peso. For more detailed disclosure of industry risks please see above Item 3 D Risk Factors  Industry Risks.



During the financial year and up to the date of this report the Company has not used financial instruments to reduce its exposure to market risks.  Additional disclosure on financial instruments held by the Company at June 30, 2006 is contained in note 2 Financial instruments to the financial statements.









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88





ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES



A. Debt Securities



Not Applicable



B. Warrants and Rights



Not Applicable



C. Other Securities



Not Applicable



D. American Depository Shares



Not Applicable





PART II



ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES



Not Applicable





ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS



Not Applicable





ITEM 15. CONTROLS AND PROCEDURES



As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision of the Companys Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Companys disclosure controls and procedures pursuant to Rule 13a-15 of the United States Securities Exchange Act of 1934 (Exchange Act). Based upon that evaluation, the Companys Chief Executive Officer and Chief Financial Officer have concluded that the Companys disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.





ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT



The Companys Board of Directors has determined that Clifford Grandison, a member of its audit committee, qualifies as an audit committee financial expert as defined in Item 16.A of Form 20-F. The Company has adopted the criteria for director independence and unrelatedness for members of public company audit committees that are consistent with the criteria prescribed by the Sarbanes-Oxley Act of 2002, Section 10A(m)(3) of the Exchange Act and Rule 10A-3(b)(1) promulgated thereunder, and the rules of the American Stock Exchange as currently in effect. Each member of the Companys audit committee satisfies the criteria for director independence.







---

89





ITEM 16B. CODE OF ETHICS



Kimbers Code of Conduct is available on the Companys website at www.kimberresources.com.





ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES



Audit Fees



The Companys audit committee appointed D&H Group LLP (D&H Group) as independent auditors to audit the Companys financial statements for the fiscal year ended June 30, 2006. The aggregate fees billed by D&H Group for professional services rendered and expenses for the audit of our annual financial statements included in this Annual Report for the fiscal year ended June 30, 2006 were $27,210.



Audit Related Fees



For the fiscal year ended June 30, 2006, the aggregate fees billed for assurance and related services by D&H Group relating to our quarterly financial statements which are not reported under the caption Audit Fees above, were $992.



Tax Fees



For the fiscal year ended June 30, 2006, the aggregate fees billed for tax compliance, tax advice and tax planning on United States tax matters by D&H Group were $1,870.



All Other Fees



For the fiscal year ended June 30, 2006, the aggregate fees billed by D&H Group for other non-audit professional services, other than those services listed above, totalled $ nil.





Effective May 6, 2003, the Securities and Exchange Commission adopted rules that require that before D&H Group is engaged by the Company or our subsidiaries to render any auditing or permitted non-audit related service, the engagement be approved by the audit committee; or entered into pursuant to pre-approval policies and procedures established by the audit committee, provided the policies and procedures are detailed as to the particular service, the audit committee is informed of each service, and such policies and procedures do not include delegation of the audit committees responsibilities to management.



The audit committee pre-approves all services provided by our independent auditors. The pre-approval process has just been implemented in response to the new rules. Therefore, the audit committee does not have records of what percentage of the above fees were pre-approved. However, all of the above services and fees were reviewed and approved by the audit committee either before or after the respective services were rendered.



The audit committee has considered the nature and amount of the fees billed by D&H Group and believes that the provision of the services for activities unrelated to the audit is compatible with maintaining D&H Group independence.









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90





ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES



Not Applicable





ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS



None





PART III



ITEM 17. FINANCIAL STATEMENTS



The financial statements were prepared in accordance with Canadian GAAP and are presented in Canadian dollars.  There are material differences between United States and Canadian GAAP.



The financial statements are in the following order:



1.

Auditors' Reports;

2.

Consolidated Balance Sheets;

3.

Consolidated Statements of Operations and Deficit;

4.

Consolidated Statements of Cash Flows;

5.

Consolidated Statement of Unproven Mineral Right Interests; and

6.

Notes to the Consolidated Financial Statements.





ITEM 18. FINANCIAL STATEMENTS



Not Applicable



ITEM 19. EXHIBITS



The exhibits included in this Form 20-F are in the following order:



1.

Articles of Incorporation and Bylaws



This information is incorporated by reference to our Form 20-F filed with the SEC on May 13, 2005.



3.

Voting Trust Agreements



Not Applicable



4.

Material Contract



Except for contracts made in the ordinary course of the Company's business, the following are the material contracts to be performed in whole or in part on or after the date of filing this Form 20-F or entered into by Kimber or Minera Monterde within two years before the date of this Form 20-F:







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91







a.

Sale and Purchase of Mining Concessions Agreement dated June 20, 2003, between Miguel Orozco Franco and his spouse Griselda Palma Heredia, Jose Gildardo Estrada Ramirez and his spouse Olivia Moreno Urista, Barney Green Lee Portillo and his spouse Susana Alicia Trejo Rubio as the Vendor and Minera Monterde as the Purchaser in respect to the Group 1 Concessions 1;



b.

Sale and Purchase of Mining Concessions Agreement dated June 20, 2003 between Carlos Humberto Munoz Caballero, represented by Vicente Arturo Caballero Olivas, Jose Gildardo Estrada Ramirez and his spouse Olivia Moreno Urista as Vendors and Minera Monterde as the Purchaser, in respect to the Group 2 Concessions 1;



c.

Sale and Purchase of Mining Concession Agreement dated June 22, 2004 between Vicente Arturo Caballero Olivas and his spouse Susana Otilia Quevedo Almazan, Maria Estela Caballero de Swanson, Gloria Caballero de Munoz, Joseph Vicente Vere Caballero, Olivas, Sylvia Margarita Vere Caballero de Ramos, also known as Sylvia Margarita Ramos, all represented by Vicente Arturo Caballero Olivas, as Vendors and Minera Monterde as the Purchaser, in respect to the Group 3 Concessions 1;



d.

Sale and Purchase of Mining Concessions Agreement dated June 20, 2003 between Francisca Giron Duarte, the beneficiary of the estate of Ismael Quezada Campos and Minera Monterde as the Purchaser, in respect to the Group 4 Concessions 1;



e.

Carried Interest Agreement dated February 18, 2000 among Kimber, Thorne International Ltd. and Minera Ayutla S. A. de C. V. 1;



f.

Sale and Purchase of Mining Concessions Agreement dated September 8, 2003 between Cia Mineral el Coronel, S. A. de C. V. as Vendor and Minera Monterde as the Purchaser in respect to the El Coronel Concessions 1;



g.

Temporary Occupation of Ejido Land Agreement dated July 13, 2004 between the Ejido Monterde, represented by the members of its board of directors, Blas Quezada Ozuna, Ramon Balois Munoz, Miguel Palacios Trias, and Manuel Quezada Ponce and Minera Monterde 1;



h.

Management Agreement dated as of the 15th day of March 2002, between Kimber and Robert V. Longe, subsequently amended as to a salary by verbal agreement 1;



i.

Management Agreement dated as of the 15th day of March 2002, between Kimber and Michael E. Hoole, subsequently amended as to a salary and employment status rather than independent consultant status by verbal agreement 1;



j.

Management Agreement dated as of the 15th day of March 2002, between Kimber and Alan D. Hitchborn 1;



k.

Intentionally left blank



l.

Transfer Agent, Registrar and Dividend Disbursing Agent Agreement dated as of the 29th day of April 2002 between Kimber and Computershare Trust Company of Canada 1;



m.

Stock Option Plan dated for reference March 28, 2002, as amended by Shareholder resolutions passed December 10, 2003 1;



n.

Stock Option Agreements between Kimber and various directors, consultants, employees and officers of and to Kimber. Samples of the various standard form option agreements are attached 1.







---

92







The following is a list of optionees and details of their option agreements as at September 25, 2006:



| | Optionee           | Date of
Grant | Number of Options | Exercise
Price | Expiry
Date
| | ------------------ | ------------- | ----------------- | -------------- | -----------
| | Carlos Bell        | Aug 3/03      | 30,000            | $0.73          | Aug 13/08  
| | Carlos Bell        | Oct 6/04      | 10,000            | $2.14          | Oct 6/09   
| | Carlos Bell        | Sep 19/05     | 10,000            | $1.65          | Sep 19/10  
| | Dennis Bergen      | Jan 16/04     | 25,000            | $2.05          | Jan 16/09  
| | Dennis Bergen      | Oct 6/04      | 5,000             | $2.14          | Oct 6/09   
| | Dennis Bergen      | Dec 7/05      | 50,000            | $1.50          | Dec 7/10   
| | Damir Cucor        | Oct 6/04      | 20,000            | $2.14          | Oct 6/09   
| | Damir Cucor        | Sep 19/05     | 20,000            | $1.65          | Sep 19/10  
| | Gordon Cummings    | July 18/06    | 150,000           | $2.40          | July 18/11 
| | Peter de Visser    | Jan 16/04     | 50,000            | $2.05          | Jan 16/09  
| | Peter de Visser    | Oct 6/04      | 10,000            | $2.14          | Oct 6/09   
| | Peter de Visser    | Sep 19/05     | 7,000             | $1.65          | Sep 19/10  
| | Clifford Grandison | Jan 16/04     | 50,000            | $2.05          | Jan 16/09  
| | Clifford Grandison | Oct 6/04      | 30,000            | $2.14          | Oct 6/09   
| | Clifford Grandison | Sep 19/05     | 30,000            | $1.65          | Sep 19/10  
| | Alan Hitchborn     | May 30/02     | 300,000           | $0.45          | Oct 5/06   
| | Alan Hitchborn     | Aug 13/03     | 301,100           | $0.73          | Oct 5/06   
| | Alan Hitchborn     | Oct 6/04      | 90,000            | $2.14          | Oct 5/06   
| | Alan Hitchborn     | Sep 19/05     | 50,000            | $1.65          | Oct 5/06   
| | Denise Hitchborn   | Oct 6/04      | 7,000             | $2.14          | Sept 28/06 
| | Denise Hitchborn   | Sep 19/05     | 3,000             | $1.65          | Sept 28/06 
| | Elisa Hoole        | Feb 27/03     | 30,000            | $0.46          | Feb 27/08  
| | Elisa Hoole        | Aug 13/03     | 5,000             | $0.73          | Aug 13/08  
| | Elisa Hoole        | Oct 6/04      | 15,000            | $2.14          | Oct 6/09   
| | Elisa Hoole        | Sep 19/05     | 7,000             | $1.65          | Sep 19/10  
| | Michael E. Hoole   | Apr 3/02      | 80,000            | $0.45          | Jun 6/07   
| | Michael E. Hoole   | May 30/02     | 200,000           | $0.45          | Jul 12/07  
| | Michael E. Hoole   | Aug 13/03     | 100,000           | $0.73          | Aug 13/08  
| | Michael E. Hoole   | Oct 6/04      | 100,000           | $2.14          | Oct 6/09   
| | Michael E. Hoole   | Sep 19/05     | 50,000            | $1.65          | Sep 19/10  
| | Darren Klinck      | Apr 18/05     | 40,000            | $1.70          | Apr 18/10  
| | Darren Klinck      | Sep 19/05     | 40,000            | $1.65          | Sep 19/10  
| | Darren Klinck      | Jul 18/06     | 100,000           | $2.40          | Jul 18/11  
| | Laura Leal         | Oct 6/04      | 20,000            | $2.14          | Oct 6/09   
| | Laura Leal         | Sep 19/05     | 5,000             | $1.65          | Sep 19/10  
| | Robert V. Longe    | Apr 3/02      | 80,000            | $0.45          | Jun 6/07   
| | Robert V. Longe    | May 30/02     | 200,000           | $0.45          | Jul 12/07  
| | Robert V. Longe    | Aug 13/03     | 100,000           | $0.73          | Aug 13/08  
| | Robert V. Longe    | Oct 6/04      | 110,000           | $2.14          | Oct 6/09   
| | Robert V. Longe    | Sep 19/05     | 50,000            | $1.65          | Sep 19/10  
| | Luard Manning      | May 30/02     | 50,000            | $0.45          | Jul 12/07  
| | Luard Manning      | Aug 13/03     | 50,000            | $0.73          | Aug 13/08  
| | Luard Manning      | Oct 6/04      | 30,000            | $2.14          | Oct 6/09   
| | Luard Manning      | Sep 19/05     | 30,000            | $1.65          | Sep 19/10  
| | Rene Navarette     | Oct 6/04      | 20,000            | $2.14          | Oct 6/09   
| | Rene Navarette     | Sep 19/05     | 5,000             | $1.65          | Sep 19/10  
| | James Puplava      | Oct 6/04      | 130,000           | $2.14          | Oct 6/09   
| | James Puplava      | Sep 19/05     | 10,000            | $1.65          | Sep 19/10  
| | J. Byron Richards  | Apr 3/02      | 43,700            | $0.45          | Jun 6/07   
| | J. Byron Richards  | May 30/02     | 25,000            | $0.45          | Jul 12/07  
| | J. Byron Richards  | Nov 2/02      | 25,000            | $0.45          | Oct 29/07  
| | J. Byron Richards  | Aug 13/03     | 100,000           | $0.73          | Aug 13/08  
| | J. Byron Richards  | Oct 6/04      | 90,000            | $2.14          | Oct 6/09   
| | J. Byron Richards  | Sep 19/05     | 50,000            | $1.65          | Sep 19/10  
| | Kyanoosh Rouhi     | Oct 6/04      | 10,000            | $2.14          | Oct 6/09   
| | Kyanoosh Rouhi     | Sep 19/05     | 15,000            | $1.65          | Sep 19/10  
| | Abraham Urias      | Jan 16/04     | 50,000            | $2.05          | Jan 16/09  
| | Abraham Urias      | Oct 6/04      | 25,000            | $2.14          | Oct 6/09   
| | Abraham Urias      | Sep 19/05     | 30,000            | $1.65          | Sep 19/10  







---

93







o.

Change of Control Agreements dated January 13, 2004, between Kimber and each of Robert V. Longe, Michael E. Hoole and J. Byron Richards. A sample of the agreement is attached 1;



p.

Listing Agreement dated June 11, 2004 between the Toronto Stock Exchange, the TSX, and Kimber 1;



q.

Agency Agreement  Unit Private Placement dated March 26, 2003 between Kimber and Canaccord and Amendment Agreement dated May 8, 2003 between the same parties 1;



r.

Various Private Placement Subscription Agreements in connection with the brokered private placement of a total of 1,765,000 Units of Kimber consisting of one (1) share and one-half (1/2) warrant which closed on May 14, 2003. An unsigned copy of the form of the Private Placement Subscription Agreements is attached 1;



s.

Agency Agreement  Unit Private Placement dated November 20, 2003 between Kimber and Canaccord;



t.

Various Private Placement Subscription Agreements in connection with the brokered private placement of a total of 1,000,000 Units of Kimber consisting of one (1) share and one-half (1/2) warrant which closed on December 16, 2003. An unsigned copy of the form of the Private Placement Subscription Agreements is attached 1;



u.

Various Private Placement Subscription Agreements in connection with the non-brokered private placement of a total of 1,000,000 Units of Kimber consisting of one (1) share and one-half (1/2) warrant which closed on December 16, 2003. A signed copy of the form of the Private Placement Subscription Agreements is attached as an example 1;



v.

Sale and Purchase of Mining Concessions Agreement dated May 18, 2004 between Lilia Olivia Moreno, also known as Lilia Oliva Moreno Urista and her spouse Gildardo Estrada Ramirez as Vendor and Minera Monterde as the Purchaser, in respect to certain staked concessions being part of the Monterde Property 1;



w.

Agency Agreement  Unit Private Placement dated September 9, 2004 of 1,270,000 units priced at $1.55 between Kimber and Haywood 1;



x.

Various Private Placement Subscription Agreements in connection with the brokered private placement of a total of 1,270,000 Units of Kimber consisting of one (1) share and one-half (1/2) warrant which closed on September 9, 2004. A copy of the two forms (one US and one non-US) of the Private Placement Subscription Agreements are attached as an example 1;







---

94







y.

Various Private Placement Subscription Agreements in connection with the non-brokered private placement of a total of 3,290,324 Units of Kimber consisting of one (1) share and one-half (1/2) warrant which closed on February 22, 2005. A copy of the form of the Private Placement Subscription Agreements is attached as an example 1;



z.

Various Private Placement Subscription Agreements in connection with the non-brokered private placement of a total of 3,333,332 Units of Kimber consisting of one (1) share and one-half (1/2) warrant which closed on August 21, 2005. A copy of the form of the Private Placement Subscription Agreements is attached as an example 2;



aa.

Agency Agreement  Private placement of up to 9,400,000 Common Shares dated January 31, 2006 between Puplava Securities Inc. and Kimber Resources Inc.



bb.

Financial Advisory Agreement dated January 30, 2006 between Investor Resources LLC and Kimber Resources Inc.



cc.

Finders fee agreement dated February 22, 2006 between Blackmont Capital Inc. and Kimber Resources Inc.



dd.

Various Private Placement Subscription Agreements in connection with the brokered and non-brokered private placement of a total of 7,047,500 Common Shares of Kimber consisting of one which closed on March 1, 2006. An unsigned copy of the form of the forms of Private Placement Subscription Agreements are attached as an examples;



ee.

Temporary Occupation of Ejido Land Agreement dated May 7, 2006 between the Ejido Ocobiachi, represented by the members of its board of directors, Octavio Castro Marquez, Guadalupe Ortiz Rivas, and the President of its Supervisopry Board, Fernando Trias Aranda and Minera Monterde.



1These material contracts (items a to y) are incorporated by reference to our Form 20-F filed with the SEC on May 13, 2005.



2This material contract (item z) is incorporated by reference to our annual Form 20-F filed with the SEC on December 20, 2005.



10.

Additional Exhibits



Not Applicable





RECENT DEVELOPMENTS



On September 6, 2006 the Board of Directors of the Company received a letter from legal counsel for Mr. James Puplava, a director and significant shareholder of Kimber, making allegations against current management of the Company and advising that Mr. Puplava intends to commence a proxy battle with the objective of replacing the majority of the Board of Directors and current management of Kimber.  Management has made certain allegations against Mr. Puplava and the Board of Directors has appointed a committee of independent directors to retain and instruct special counsel, who is independent of Kimber, the director and management, for the purpose of investigating all allegations and making recommendations to the Board.









---

95





On September 12th, 2006 an employee of Minera Monterde was involved in a motor vehicle accident.  The employee, driving a pick-up truck, collided with a group of cyclists returning from training in the outskirts of Chihuahua City, Mexico.  One fatality and injuries were reported but details are yet to be confirmed.  The driver was taken into police custody and was tested for alcohol consumption.  No action has been taken against the Company as of September 25, 2006.























































---

96









SIGNATURE PAGE





Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, Kimber Resources Inc. certifies that it meets all of the requirements for filing on Form 20-F and has duly caused this Annual Report be signed on its behalf by the undersigned, thereunto duly authorized.





Dated: September 25, 2006





On Behalf of KIMBER RESOURCES INC.,





R.V. Longe

________________________

Robert V. Longe

President, Chief Executive Officer and Director





M.E. Hoole

________________________

Michael E. Hoole

Vice-President, Corporate Secretary and Director































---

































KIMBER RESOURCES INC.



Consolidated Financial Statements

(stated in Canadian dollars)



June 30, 2006

June 30, 2005

June 30, 2004

(Audited)



(An exploration stage Company)





































---







[kimberkbr20fd7011.jpg]

AUDITORS' REPORT





To the Shareholders of

Kimber Resources Inc.





We have audited the consolidated balance sheets of Kimber Resources Inc. as at June 30, 2006 and 2005 and the consolidated statements of operations and deficit and cash flows for the years ended June 30, 2006, 2005 and 2004.  These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audits.



We conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.



In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at June 30, 2006 and 2005 and the results of its operations and cash flows for the years ended June 30, 2006, 2005 and 2004 in accordance with Canadian generally accepted accounting principles.



Canadian generally accepted accounting principles vary in certain significant respects from accounting principles generally accepted in the United States.  Application of accounting principles generally accepted in the United States would have affected assets and shareholders equity as at June 30, 2006 and 2005 and results of operations and cash flows for the years ended June 30, 2006, 2005 and 2004 to the extent summarized in Note 12 to the consolidated financial statements.



On September 1, 2006 we reported separately to the shareholders of Kimber Resources Inc. on the consolidated balance sheets as at June 30, 2006 and 2005 and the consolidated statements of operations and deficit and cash flows for the years ended June 30, 2006, 2005 and 2004 audited in accordance with Canadian generally accepted auditing standards.





Vancouver, B.C.

September 1, 2006, except as to notes 13 (d),

which is as of September 6, 2006, and 13 (e),

D&H Group LLP

which is as of September 12, 2006

Chartered Accountants





D&H Group LLP

a B.C. Limited Liability Partnership of Corporations

member of BHD Association with affiliated offices across Canada and Internationally

10th Floor, 1333 West Broadway, Vancouver, B.C. V6H 4C1  ̈  www.dhgroup.ca  ̈ F (604) 731-9923  ̈ T (604) 731-5881







---





KIMBER RESOURCES INC.

Consolidated Balance Sheets

(stated in Canadian dollars)



|                                                        |  |  | June 30,
|------------------------------------------------------- |  |  | --------
|                                                        |  |  |         
|                                                        |  |  |         
|A S S E T S                                            
|Current Assets                                          |  |  |         
|Cash and cash equivalents                               |  |  |         
|Amounts receivable (note 4 and 10)                      |  |  |         
|Due from related parties                                |  |  |         
|Prepaid expenses                                        |  |  |         
|                                                        |  |  |         
|                                                        |  |  |         
|Equipment (note 6)                                      |  |  |         
|Investment (note 5)                                     |  |  |         
|Unproven mineral right interests (Schedule, note 2 & 3) |  |  |         
|                                                        |  |  |         
|                                                        |  |  |         
|L I A B I L I T I E S                                  
|Current liabilities                                     |  |  |         
|Accounts payable and accrued liabilities                |  |  |         
|Due to related party                                    |  |  |         
|                                                        |  |  |         
|Commitment (note 14)                                    |  |  |         
|S H A R E H O L D E R S   E Q U I T Y                 
|                                                        |  |  |         
|Share capital (note 8)                                  |  |  |         
|Contributed surplus (note 9)                            |  |  |         
|Deficit                                                 |  |  |         
|                                                        |  |  |         
|                                                        |  |  |         
|                                                        |  |  |         
|Nature of operations (note 1)                           |  |  |         
|Subsequent events (note 13                              |  |  |         



|Approved on behalf of the Board of Directors:
|---------------------------------------------
|R. V. Longe                                
|Robert V. Longe, Director                    

See notes to consolidated financial statements







---





KIMBER RESOURCES INC.

Consolidated Statements of Operations and Deficit

(stated in Canadian dollars)



|                                               |  |  |  | Years ended
June 30,
|---------------------------------------------- |  |  |  | --------------------
|                                               |  |  |  | 2006                
|                                               |  |  |  |                     
|                                               |  |  |  |                     
|Revenue                                        |  |  |  | $                 - 
|                                               |  |  |  |                     
|Expenses                                       |  |  |  |                     
|Amortization of equipment                      |  |  |  | $       38,406      
|Foreign exchange (gain)/loss                   |  |  |  | 22,636              
|General exploration                            |  |  |  | 124,730             
|Interest and bank charges                      |  |  |  | 1,671               
|Investor relations                             |  |  |  | 309,669             
|Office and miscellaneous                       |  |  |  | 186,614             
|Legal and audit                                |  |  |  | 150,424             
|Rent                                           |  |  |  | 72,775              
|Salaries and benefits                          |  |  |  | 726,239             
|Stock-based compensation                       |  |  |  | 760,324             
|Transfer and filing fees                       |  |  |  | 133,767             
|Travel and accommodation                       |  |  |  | 132,127             
|                                               |  |  |  |                     
|Net loss before other items                    |  |  |  | (2,659,382)         
|Other items                                    |  |  |  |                     
|Interest income                                |  |  |  | 295,962             
|Unprovenmineral right interests written-off    |  |  |  | -                   
|Net loss for the year                          |  |  |  | (2,363,420)         
|Deficit - beginning of year                    |  |  |  | (4,362,489)         
|Deficit - end of year                          |  |  |  | $ (6,725,909)       
|                                               |  |  |  |                     
|Loss  per share, basic and diluted (note 2(g)) |  |  |  | $         (0.06)    
|                                               |  |  |  |                     
|Weighted average number of shares outstanding  |  |  |  | 40,026,359          

See notes to consolidated financial statements







---





KIMBER RESOURCES INC.

Consolidated Statements of Cash Flows

(stated in Canadian dollars)



|                                                   | Years ended
June 30,
|-------------------------------------------------- | --------------------
|                                                   | 2006                
|Cash provided by (used for):                       |                     
|Operating Activities                               |                     
|Net loss for the year                              | $  (2,363,420)      
|Items not involving cash:                          |                     
|Amortization of equipment                          | 38,406              
|Stock-based compensation                           | 760,324             
|Unproven mineral right interests written-off       | -                   
|                                                   | (1,564,690)         
|Changes in the following:                          |                     
|Amounts receivable                                 | (542,970)           
|Due from related parties                           | 16,702              
|Prepaid expenses                                   | (6,603)             
|Accounts payable and accrued liabilities           | 522,250             
|Due to related party                               | (465)               
|                                                   | (1,575,776)         
|                                                   |                     
|Investing Activities                               |                     
|Redemption of preferred shares                     | 103,596             
|Purchase of equipment                              | (269,079)           
|Unproven mineral right interests                   | (10,084,428)        
|                                                   | (10,249,911)        
|Financing Activities                               |                     
|Common shares issued for cash                      | 24,048,306          
|Share issuance costs                               | (644,307)           
|                                                   | 23,403,999          
|                                                   |                     
|Increase in cash during the year                   | 11,578,312          
|Cash and cash equivalents - beginning of year      | 4,288,648           
|Cash and cash equivalents - end of year            | $  15,866,960       
|Supplementary financial information                |                     
|Financing activities                               |                     
|Shares and securities issued for finders fees     | $                  -
|Share issue costs                                  | --
*                
|*  includes $86,309 fair value of agents options  |                     
|** includes $26,180 fair value of agents warrants |                     
|                                                   |                     
|Cash and cash equivalents comprise of:             |                     
|Cash                                               | 799,808             
|Bankers acceptance notes                          | 15,067,152          
|                                                   | $   15,866,960      

See notes to consolidated financial statements







---





KIMBER RESOURCES INC.

Consolidated Statements of Unproven Mineral Right Interests (note 2 & 3)

(stated in Canadian dollars)



|                                       |  | June 30,
2004     |  | Net
Costs        |  | June 30,
2005  |  | Net
Costs       |  | June 30,
2006  
|-------------------------------------- |  | ----------------- |  | ---------------- |  | -------------- |  | --------------- |  | ---------------
|MEXICO                                 |  |                   |  |                  |  |                |  |                 |  |                
|Monterde Property                      |  |                   |  |                  |  |                |  |                 |  |                
|Acquisition                            |  | $         971,243 |  | $        525,103 |  | $    1,496,346 |  | $       742,262 |  | $     2,238,608
|Exploration                            |  |                   |  |                  |  |                |  |                 |  |                
|Amortization                           |  | 12,665            |  | 45,289           |  | 57,954         |  | 64,062          |  | 122,016        
|Assays                                 |  | 556,514           |  | 647,785          |  | 1,204,299      |  | 827,288         |  | 2,031,587      
|Drilling                               |  | 1,393,297         |  | 2,251,312        |  | 3,644,609      |  | 4,600,027       |  | 8,244,636      
|Engineering                            |  | 197,864           |  | 175,667          |  | 373,531        |  | 636,299         |  | 1,009,830      
|Environmental study                    |  | 133,382           |  | 288,034          |  | 421,416        |  | 225,175         |  | 646,591        
|Field, office                          |  | 204,750           |  | 83,919           |  | 288,669        |  | 108,015         |  | 396,684        
|Geological, geophysical                |  | 716,653           |  | 861,051          |  | 1,577,704      |  | 1,300,005       |  | 2,877,709      
|Legal                                  |  | 116,424           |  | 86,051           |  | 202,475        |  | 98,408          |  | 300,883        
|Maps, reports, reproductions           |  | 148,581           |  | 148,346          |  | 296,927        |  | 217,230         |  | 514,157        
|Metallurgy                             |  | 33,078            |  | 184,054          |  | 217,132        |  | 50,360          |  | 267,492        
|Road construction                      |  | 228,864           |  | 435,658          |  | 664,522        |  | 321,967         |  | 986,489        
|Salaries and wages                     |  | 86,070            |  | 96,743           |  | 182,813        |  | 124,794         |  | 307,607        
|Scoping study                          |  | 11,392            |  | -                |  | 11,392         |  | -               |  | 11,392         
|Socioeconomic studies                  |  | -                 |  | -                |  | -              |  | 26,619          |  | 26,619         
|Stakeholder costs                      |  | 6,430             |  | 15,610           |  | 22,040         |  | 20,235          |  | 42,275         
|Supplies                               |  | 204,276           |  | 182,130          |  | 386,406        |  | 516,519         |  | 902,925        
|Travel, accommodation                  |  | 302,799           |  | 201,409          |  | 504,208        |  | 267,047         |  | 771,255        
|Third party recoveries                 |  | (9,931)           |  | -                |  | (9,931)        |  | -               |  | (9,931)        
|                                       |  | 4,343,108         |  | 5,703,058        |  | 10,046,166     |  | 9,404,050       |  | 19,450,216     
|                                       |  | 5,314,351         |  | 6,228,161        |  | 11,542,512     |  | 10,146,312      |  | 21,688,824     
|Setago Property                        |  |                   |  |                  |  |                |  |                 |  |                
|Acquisition                            |  | 1,219             |  | 3,355            |  | 4,574          |  | 2,178           |  | 6,752          
|Exploration                            |  |                   |  |                  |  |                |  |                 |  |                
|Assays                                 |  | 5,567             |  | -                |  | 5,567          |  | -               |  | 5,567          
|Engineering                            |  | 535               |  | -                |  | 535            |  | -               |  | 535            
|Field, office                          |  | 413               |  | -                |  | 413            |  | -               |  | 413            
|Geological, geophysical                |  | 33,204            |  | -                |  | 33,204         |  | -               |  | 33,204         
|Maps, reports, reproductions           |  | 145               |  | -                |  | 145            |  | -               |  | 145            
|Road construction                      |  | 7,695             |  | -                |  | 7,695          |  | -               |  | 7,695          
|Supplies                               |  | 914               |  | 5                |  | 919            |  | -               |  | 919            
|Travel, accommodation                  |  | 5,766             |  | -                |  | 5,766          |  | -               |  | 5,766          
|                                       |  | 54,239            |  | 5                |  | 54,244         |  | -               |  | 54,244         
|                                       |  | 55,458            |  | 3,360)           |  | 58,818         |  | 2,178)          |  | 60,996         
|Oribo Property                         |  |                   |  |                  |  |                |  |                 |  |                
|Acquisition                            |  | 8,726             |  | (8,726)          |  | -              |  | -               |  | -              
|Exploration                            |  |                   |  |                  |  |                |  |                 |  |                
|Geological                             |  | 2,858             |  | (2,858)          |  | -              |  | -               |  | -              
|Travel, accommodation                  |  | 618               |  | (618)            |  | -              |  | -               |  | -              
|                                       |  | 3,476             |  | (3,476)          |  | -              |  | -               |  | -              
|                                       |  | 12,202            |  | (12,202)         |  | -              |  | -               |  | -              
|Total unproven mineral right interests |  | $      5,382,011  |  | $     6,219,319  |  | $  11,601,330  |  | $  10,148,490   |  | $   21,749,820 
|                                       |  |                   |  |                  |  |                |  |                 |  |                

See notes to consolidated financial statements







---







KIMBER RESOURCES INC.

Notes to Consolidated Financial Statements

For the Years Ended June 30, 2006, 2005 and 2004

(stated in Canadian dollars)





1.

NATURE OF OPERATIONS



The Company is incorporated in British Columbia, Canada, and is involved in the acquisition and exploration of mineral right interests in Mexico.  At the date of these financial statements, the Company has not yet determined whether any of its mineral rights contain economically recoverable mineral reserves.  Accordingly, the carrying amount of deferred unproven mineral rights represents expenditures made to date and does not necessarily reflect present or future values.  The recovery of these costs is dependent upon the discovery of economically recoverable mineral reserves and the ability of the Company to obtain the necessary financing to complete their exploration and development and to resolve any environmental, regulatory, or other constraints.



The Company has taken steps to verify title to its mineral right interests in accordance with industry standards for the current stage of exploration of these properties, however, these procedures do not guarantee that title to these rights may be subject to unregistered prior agreements or other undetected defects.



The Company does not generate cash flow from operations and accordingly, the Company will need to raise additional funds through future issuance of securities.  Although the Company has been successful in raising funds in the past, there can be no assurance the Company will be able to raise sufficient funds in the future, in which case the Company may be unable to meet its obligations as they come due in the normal course of business.  Should the Company be unable to realize its assets and discharge its liabilities in the normal course of business, the net realizable value of its assets may be materially less than the amounts on the balance sheet.





2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



a)

Basis of Presentation



These consolidated financial statements have been prepared by management in accordance with Canadian generally accepted accounting principles (GAAP) and are reconciled to U.S. GAAP in note 12.



The Company changed the description of its deferred mineral property costs in its prior year financial statements, to unproven mineral right interests, upon the filing of its Form 20-F Registration Statement with the U.S. Securities and Exchange Commission in order to comply with their disclosure standards.



The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Minera Monterde S. de R.L. de C.V. (Mexico).  Intercompany balances and transactions are eliminated on consolidation.



b)

Estimates





The preparation of financial statements requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements, and the reported amounts of expenses incurred during the reporting period.  Significant areas requiring the use of management estimates relate to the determination of environmental obligations, stock compensation, impairment of deferred mineral right interests and amortization.  Actual results could differ from those estimates.



c)

Unproven Mineral Right Interests



Mineral right acquisition costs, exploration and direct field costs are deferred until the rights to which they relate are placed into production, at which time these deferred costs will be amortized over the estimated useful life of the rights following commencement of production, or written-off if the rights are disposed of.  Administration costs and other exploration costs that do not relate to a specific mineral right are expensed as incurred.







---





KIMBER RESOURCES INC.

Notes to Consolidated Financial Statements

For the Years Ended June 30, 2006, 2005 and 2004

(stated in Canadian dollars)



2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued)





c)

Unproven Mineral Right Interests(continued)





Cost includes the cash consideration and the fair value of shares issued on the acquisition of mineral rights.  Rights acquired under option agreements or joint ventures, whereby payments are made at the sole discretion of the Company, are recorded in the accounts when the payments are made.  Proceeds from property option payments received by the Company are netted against the deferred costs of the related mineral rights, with any excess being included in operations.



Management reviews the carrying amounts of mineral rights on a periodic basis and will recognize impairment based upon current exploration results and upon assessment of the probability of profitable exploitation of the rights.  Managements assessment of the mineral rights fair value is also based upon a review of other mineral right transactions that have occurred in the same geographic area as that of the rights under review.





d)

Equipment



Equipment is carried at cost less accumulated amortization.  Amortization is provided over the estimated useful life of the equipment using the declining balance method at an annual rate of 20% for office fixtures and equipment; 30% for computer equipment and automobiles; 100% for computer software and 10% for camp and equipment.



e)

Translation of Foreign Currencies



The Company translates monetary items at the rate of exchange in effect at the balance sheet date.  Non-monetary items are translated at average rates in effect during the period in which they are incurred.  Expenses are translated at average rates in effect during the period except for amortization, which is translated using historical rates.  Gains and losses resulting from the fluctuations in foreign exchange rates have been included in the determination of income (loss).



f)

Investments



Investments are carried at cost and are classified as a non-current asset as the Company intends to hold them for a period greater than one year.  A provision for impairment would be made if there were a loss in value that was believed to be other than temporary.



g)

Loss Per Share



Basic earnings (loss) per share is computed based upon the weighted average number of common shares outstanding during the year.  Fully diluted earnings per share is disclosed when the conversion, exercise or issuance of securities would have a dilutive effect on earnings per share.  The Company has a loss per share and accordingly basic and fully diluted loss per share are the same.



h)

Stock-Based Compensation



Stock-based compensation is accounted for at fair value as determined by the Black-Scholes option pricing model using amounts that are believed to approximate the volatility of the trading price of the Companys stock, the expected lives of awards of stock-based compensation, the fair value of the Companys stock and the risk-free interest rate. The estimated fair value of awards of stock-based compensation are charged to expense as awards vest, with offsetting amounts recognized as contributed surplus.



i)

Income Taxes



Income tax liabilities and assets are recognized for the income tax consequences attributable to differences between their carrying amounts in the financial statements and their tax bases.  The effect of a change in







---





KIMBER RESOURCES INC.

Notes to Consolidated Financial Statements

For the Years Ended June 30, 2006, 2005 and 2004

(stated in Canadian dollars)



2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued)



i)

Income Taxes(continued)



income tax rates on future income tax liabilities and assets is recognized in income in the period that the change occurs.  Future income tax assets are recognized to the extent that they are considered more likely than not to be recognized.  The Company has taken a valuation allowance against all of its potential tax assets.



j)

Asset Retirement Obligations



The fair value of a liability for an asset retirement obligation is recognized when a reasonable estimate of its fair value can be made.  The asset retirement obligation is recorded as a liability with a corresponding increase to the carrying amount of the related long-lived asset.  Subsequently, the asset retirement cost is allocated to expenses using a systematic and rational method and is adjusted to reflect period-to-period changes in the liability resulting from the passage of time and revisions to either timing or the amount of the original estimate of the undiscounted cash flow.  As at June 30, 2006, the Company does not have any asset retirement obligations.



k)

Impairment of Long-Lived Assets



Long-lived assets are assessed for impairment when events and circumstances warrant. The carrying value of a long-lived asset is impaired when the carrying amount exceeds the estimated undiscounted net cash flow from use and fair value. In that event, the amount by which the carrying value of an impaired long-lived asset exceeds its fair value is charged to earnings.



l)

Financial Instruments



The Companys financial instruments consist of cash and cash equivalents, amounts receivable, amounts due from related parties and accounts payable and accrued liabilities, the fair value of which approximates their carrying value due to the short term to maturity.  The fair value of the investment is approximated by its carrying amount.



The Company carries on business operations in Mexico and is exposed to foreign exchange risk due to fluctuations in the relative values of the Canadian dollar, the Mexican nuevo peso and the United States dollar.  The Company currently does not use any financial instruments to reduce this exposure.



m) Cash Equivalents



Bankers acceptances maturing within 90 days of the original date of acquisition are considered to be cash equivalents.



n)  Comparative figures



Certain 2005 and 2004 figures have been reclassified to conform to the presentation used in the current year.



3.

UNPROVEN MINERAL RIGHT INTERESTS



The Companys mineral rights are located in the State of Chihuahua, Mexico.



Monterde Property



The Monterde Property consists of the Monterde concessions, the contiguous El Coronel concessions and staked concessions. The entire Monterde Property comprises of 34 mineral concessions in the Sierra Madre in the State of Chihuahua, Mexico.







---





KIMBER RESOURCES INC.

Notes to Consolidated Financial Statements

For the Years Ended June 30, 2006, 2005 and 2004

(stated in Canadian dollars)



3.

UNPROVEN MINERAL RIGHT INTERESTS(continued)



Monterde concessions

The Company owns a 100% interest in the Monterde concessions having acquired the concessions by payment of total consideration of US$1,054,900.



El Coronel concessions

The Company owns a 100% interest in the El Coronel mineral concessions by having made the payment of US$1,000,000, US$617,000 of which had been paid at June 30, 2006. The remaining US$383,000 was paid on July 31, 2006.



Staked concessions



The Company has a 100% interest in concessions that were staked adjacent to the Monterde concessions and El Coronel concessions.  There are no payment obligations for these staked concessions aside from annual taxes.



Setago Property



The Company staked the Setago Property in 2004, which lies approximately 24 kilometres to the west of the Monterde Property and consists of one exploration concession.  The property requires no payments, other than for annual taxes ($2,178 in 2006).



Oribo Property



The Company staked the Oribo Property in 2004.  This property is located approximately 30 kilometres west of the Monterde Property and is comprised of 2 exploration concessions.  In 2005, the Oribo Property was abandoned and written-off due to the difficulty of working in the area.





4.

AMOUNTS RECEIVABLE





Amounts receivable at June 30, 2006 are comprised mainly of an IVA TAX refundable from the Government of Mexico.  The IVA Tax is 15% of expenditures in Mexico and amounts due were $862,803 at June 30, 2006 (2005 - $293,701).  The Company has received amounts due for IVA up to December 2005.  The Company also is due a refund for an advance payment of $56,844 (2005 - $56,844) which was made to the Government of Mexico to acquire claims within the Monterde property in the 2004 fiscal year.





5.

INVESTMENT





On June 15, 2006 616800 B.C. Ltd. (616800) redeemed 103,596 non-voting preferred shares held by the Company at $1 per share for a total of $103,596. As a result of the redemption the Company has a nil balance for investments at June 30, 2006.  616800s asset is 2,250,000 common shares of Jasper Mining Corporation, a publicly traded corporation.  The Company has directors in common with 616800.







---





KIMBER RESOURCES INC.

Notes to Consolidated Financial Statements

For the Years Ended June 30, 2006, 2005 and 2004

(stated in Canadian dollars)





6.

EQUIPMENT



| |                               | 2006   
| | ----------------------------- | -------
| |                               | Cost   
| |                               | $      
| | Camp and equipment            | 377,708
| | Camp vehicles                 | 221,010
| | Computer equipment            | 126,776
| | Computer software             | 49,053 
| | Office fixtures and equipment | 36,216 
| |                               | 810,763









| |                               | 2005   
| | ----------------------------- | -------
| |                               | Cost   
| |                               | $      
| | Camp and equipment            | 342,538
| | Camp vehicles                 | 54,220 
| | Computer equipment            | 72,132 
| | Computer software             | 45,398 
| | Office fixtures and equipment | 26,682 
| |                               | 540,970









7.

SEGMENTED INFORMATION



| |                                       | 2006            |  | 2005             |  | 2004             
| | ------------------------------------- | --------------- |  | ---------------- |  | -----------------
| | Assets by geographic segment, at cost |                 |  |                  |  |                  
| | Canada                                |                 |  |                  |  |                  
| | Current                               | $    15,613,404 |  | $      3,855,613 |  | $       3,284,694
| | Equipment                             | 77,503          |  | 90,339           |  | 77,004           
| | Investment                            | -               |  | 103,596          |  | 103,596          
| |                                       | 15,690,907      |  | 4,049,548        |  | 3,465,294        
| | Mexico                                |                 |  |                  |  |                  
| | Current                               | 1,293,834       |  | 940,442          |  | 580,491          
| | Unproven mineral right interests      | 21,749,820      |  | 11,601,330       |  | 5,382,011        
| | Equipment                             | 525,844         |  | 346,397          |  | 365,404          
| |                                       | 23,569,498      |  | 12,888,169       |  | 6,327,906        
| |                                       | $    39,260,405 |  | $     16,937,717 |  | $       9,793,200









---





KIMBER RESOURCES INC.

Notes to Consolidated Financial Statements

For the Years Ended June 30, 2006, 2005 and 2004

(stated in Canadian dollars)



8.

SHARE CAPITAL AND RELATED INFORMATION



a)

Authorized:80,000,000 common shares without par value



b)

Issued and outstanding:



| |                                | Number of Shares |  | Amount              
| | ------------------------------ | ---------------- |  | --------------------
| |                                |                  |  |                     
| | Balance - June 30, 2003        | 15,175,084       |  | $          4,299,265
| |                                |                  |  |                     
| | Private placements             | 2,040,000        |  | 1,428,000           
| | Exercise of options            | 233,333          |  | 105,000             
| | Exercise of warrants           | 9,953,123        |  | 5,415,438           
| | Less share issue costs         | -                |  | (121,693)           
| |                                | 12,226,456       |  | 6,826,745           
| | Balance - June 30, 2004        | 27,401,540       |  | 11,126,010          
| |                                |                  |  |                     
| | Private placements             | 4,600,324        |  | 7,065,002           
| | Exercise of options            | 233,217          |  | 155,200             
| | Exercise of warrants           | 1,497,747        |  | 1,119,315           
| | Less share issue costs         | -                |  | (346,152)           
| | Less stock-based-compensation  | -                |  | (86,309)            
| |                                | 6,331,288        |  | 7,907,056           
| | Balance  June 30, 2005        | 33,732,828       |  | 19,033,066          
| |                                |                  |  |                     
| | Private placements             | 10,380,832       |  | 19,095,038          
| | Exercise of options            | 549,570          |  | 540,218             
| | Exercise of warrants           | 2,451,692        |  | 4,413,050           
| | Less share issue costs         | -                |  | (644,307)           
| | Reallocation from contributed  |                  |  |                     
| | surplus on exercise of options | -                |  | 329,877             
| |                                | 13,382,094       |  | 23,733,876          
| | Balance  June 30, 2006        | 47,114,922       |  | $        42,766,942 







c)

Warrants



| |                             | 2006        | 2005        | 2004       
| | --------------------------- | ----------- | ----------- | -----------
| |                             |             |             |            
| | Balance - beginning of year | 2,355,712   | 1,489,797   | 10,223,120 
| | Issued                      | 1,666,666   | 2,363,662   | 1,220,000  
| | Expired                     | (4,020)     | -           | (200)      
| | Exercised                   | (2,451,692) | (1,497,747) | (9,953,123)
| | Balance - end of year       | 1,566,666   | 2,355,712   | 1,489,797  





At June 30, 2006, 1,566,666 warrants are outstanding which are excisable at $1.80 per share to February 26, 2007.





d)

Stock Options





The Companys stock option plan allows the Company to grant up to 5,294,613 stock options, exercisable at the market price as determined on the last trading date preceding their grant, and vesting as to 1/3 of their number on the date of their grant and then 1/3 in each nine month period thereafter.







---





KIMBER RESOURCES INC.

Notes to Consolidated Financial Statements

For the Years Ended June 30, 2006, 2005 and 2004

(stated in Canadian dollars)



8.

SHARE CAPITAL AND RELATED INFORMATION(continued)





d)  Stock Options(continued)





Summary of stock option activity:



| |                            | 2006                | 2005                           
| | -------------------------- | ------------------- | -------------------------------
| |                            | Options
Outstanding | Weighted average
exercise price
| |                            |                     |                                
| | Balance, beginning of year | 3,435,450           | $  1.11                        
| | Granted                    | 527,000             | 1.64                           
| | Issued                     | -                   | -                              
| | Exercised                  | (549,570)           | 1.26                           
| | Cancelled                  | (10,080)            | 1.80                           
| | Balance, end of year       | 3,402,800           | $  1.21                        





Stock options outstanding and exercisable at June 30, 2006 are as follows:



| | Exercise
price | Number outstanding | Number exercisable | Expiry
date             
| | -------------- | ------------------ | ------------------ | ------------------------
| | $              |                    |                    |                         
| | 0.45           | 1,057,700          | 757,700            | June 2007  October 2007
| | 0.46           | 30,000             | 30,000             | February 2008           
| | 0.73           | 716,100            | 466,100            | August 2008             
| | 2.05           | 175,000            | 175,000            | January 2009            
| | 1.77           | 60,000             | 60,000             | May 2009                
| | 2.14           | 772,000            | 772,000            | October 2009            
| | 1.80           | 25,000             | 25,000             | December 2009           
| | 1.70           | 40,000             | 26,666             | April 2010              
| | 1.65           | 477,000            | 317,995            | September 2010          
| | 1.50           | 50,000             | 16,666             | December 2010           
| |                | 3,402,800          | 2,647,127          |                         





e)

Private Placements



On September 9, 2004, the Company closed a brokered private placement for 1,270,000 units at a price of $1.50 per unit. Each unit consisted of one common share and half of one non-transferable share purchase warrant. One whole warrant entitles the holder to purchase an additional common share at a price of $1.80 until March 8, 2006. The agent received an 8% commission paid in cash and the agent and other members of the sales group received a non-transferable agents option to purchase a total of 127,000 units at $1.80 per unit, consisting of one common share and one-half of one non-transferable share purchase warrant. One whole warrant will entitle the holder to purchase an additional common share at $1.80 until March 8, 2006. The Company also paid the agent a corporate finance fee of 40,000 units having the same terms as the units described above.



On February 10, 2005, the Company announced a non-brokered private placement of securities with three placees including a one-year, 5% convertible debenture of $2,000,000 to be issued to a director. Subsequently, the private placement units were over-subscribed and the convertible debenture with the director was not completed. On February 22, 2005 the Company closed a non-brokered private placement of 3,290,324 units to raise gross proceeds of $5,100,002 with four investment funds. All of the units were issued at a price of $1.55 per unit and each unit consists of one common share and one-half of a non-transferable share purchase warrant, with one whole warrant entitling the holder to purchase one additional common share at $1.80 until March 8, 2006. Two of the funds each purchased 1 million units. In addition, two other funds each purchased 645,162 units.  A finder's fee of $31,000 was paid to an investment brokerage firm in respect of 1 million units.







---







KIMBER RESOURCES INC.

Notes to Consolidated Financial Statements

For the Years Ended June 30, 2006, 2005 and 2004

(stated in Canadian dollars)



8.

SHARE CAPITAL AND RELATED INFORMATION(continued





e)  Private Placements(continued)



On August 26, 2005, the Company closed a non-brokered private placement for 3,333,332 units at $1.50 per unit.  Each unit consists of one common share and half of one non-transferable share purchase warrant.  One whole warrant entitles the holder to purchase an additional common share at a price of $1.80 until February 26, 2007.  There was a finders fee of $40,000 paid on behalf of one of the placees.





On March 1, 2006 the Company closed brokered and non-brokered private placements of a total of 7,047,500  common shares at a price of $2.00 for gross proceeds of $14,095,000. Puplava Securities Inc. ("PSI") of San Diego, California acted as agent for the brokered private placement and Ms. Leanne Baker, Managing Director of Investor Resources LLC, acted as a consultant in the United States. The Company paid cash commissions of 5.5% on the brokered placements. Mr. James Puplava, a Director and major shareholder of the Company, and a principal of PSI, did not acquire shares through the placement (see Note 10). The non-brokered private placement was to institutional and accredited investors in Canada and offshore. Blackmont Capital Inc., Canaccord Capital Corp., and PSI received finder's fees of 5.5% of the proceeds raised on certain placements. The total commissions and finder's fees paid on the both brokered and non-brokered placements was $428,725.  No warrants were issued to investors or agents in connection with the offering.



9.

CONTRIBUTED SURPLUS AND STOCK-BASED COMPENSATION



The fair value of stock options granted are estimated using the Black-Scholes option pricing model with the following assumptions:





| |                                  | 2006          | 2005          | 2004         
| | -------------------------------- | ------------- | ------------- | -------------
| | Risk-free interest rate          | 3.2  3.3     | 3.1 - 3.6     | 3.1  4.2%   
| | Estimated share price volatility | 41  45%      | 59 - 62%      | 79  137%    
| | Expected life                    | 1.5 - 5 years | 1.5 - 5 years | 1.5  5 years





Option pricing models require the use of estimates and assumptions including the expected volatility.  Changes in these underlying assumptions can materially affect the fair value estimates and, therefore, existing models do not necessarily provide a reliable measure of the fair value of the Companys stock options.



Contributed Surplus





Stock-based compensation has been recognized in Contributed Surplus for the following grants:



| | Balance - June 30, 2002 and 2003                   |  | $                         -
| | -------------------------------------------------- |  | ---------------------------
| | Options granted to employees and consultants       |  | 533,448                    
| | Warrants issued to agent for private placement     |  | 26,180                     
| | Balance and expense at June 30, 2004               |  | 559,628                    
| |                                                    |  |                            
| | Options granted to employees and consultants       |  | 720,469                    
| | Options granted to agent for private placement     |  | 86,309                     
| | Expense - June 30, 2005                            |  | 806,778                    
| | Balance - June 30, 2005                            |  | 1,366,406                  
| |                                                    |  |                            
| | Options granted to employees and consultants       |  | 760,324                    
| | Options granted to agent for private placement     |  | -                          
| | Expense - June 30, 2006                            |  | 760,324                    
| | Share options exercised, transfer to share capital |  | (329,877)                  
| | Balance - June 30, 2006                            |  | $           1,796,853      









---





KIMBER RESOURCES INC.

Notes to Consolidated Financial Statements

For the Years Ended June 30, 2006, 2005 and 2004

(stated in Canadian dollars)



9.

CONTRIBUTED SURPLUS AND STOCK-BASED COMPENSATION(continued)





For stock options granted and not vested, compensation expense is recognizable in future periods as follows:



| | June 30, 2007 | $      240,014
| | ------------- | --------------
| | June 30, 2008 | -             
| |               | $      240,014



10.

RELATED PARTY TRANSACTIONS



Unless otherwise stated, related party transactions are measured at the exchange amount, being the amount of consideration established and agreed to by the related parties.  Amounts due to or from related parties are unsecured, non-interest bearing and are due on demand.



Included in amounts receivable is $5,432 due from corporations with common directors as the Company, the majority of which was received by the Company subsequent to June 30, 2006.



During the year, commissions of $234,850 were paid to Puplava Securities Inc. (PSI).  A director of the Company is a principal at PSI.



11.

INCOME TAXES



Future income tax assets and liabilities of the Company as at June 30, 2006 and 2005 are as follows:



| |                              |  |  | 2006                     |  | 2005                    
| | ---------------------------- |  |  | ------------------------ |  | ------------------------
| |                              |  |  |                          |  |                         
| | Future income tax assets     |  |  |                          |  |                         
| |                              |  |  |                          |  |                         
| | Losses carried forward       |  |  | $        3,911,000       |  | $         2,230,000     
| | Share issue costs            |  |  | 315,000                  |  | 235,000                 
| | Other                        |  |  | 31,000                   |  | 17,000                  
| |                              |  |  |                          |  |                         
| |                              |  |  | 4,257,000                |  | 2,482,000               
| | Valuation allowance          |  |  | (4,257,000)              |  | (2,482,000)             
| |                              |  |  |                          |  |                         
| | Net future income tax assets |  |  | $                      - |  | $                      -
| |                              |  |  |                          |  |                         



The recovery of income taxes shown in the consolidated statements of operations and deficit differs from the amounts obtained by applying statutory rates to the loss before provision for income taxes due to the following:



| |                                                 |  |  | 2006                     |  | 2005                    
| | ----------------------------------------------- |  |  | ------------------------ |  | ------------------------
| |                                                 |  |  |                          |  |                         
| | Income tax rate reconciliation                  |  |  |                          |  |                         
| |                                                 |  |  |                          |  |                         
| | Combined federal and provincial income tax rate |  |  | 34.12%                   |  | 35.62%                  
| |                                                 |  |  |                          |  |                         
| | Expected income tax recovery                    |  |  | $        (761,000)       |  | $         (620,000)     
| | Share issue costs                               |  |  | (115,000)                |  | (79,000)                
| | Other                                           |  |  | 259,000                  |  | 256,000                 
| | Unrecognized benefit of income tax losses       |  |  | 617,000                  |  | 443,000                 
| |                                                 |  |  |                          |  |                         
| | Actual income tax recovery                      |  |  | $                      - |  | $                      -
| |                                                 |  |  |                          |  |                         







---







KIMBER RESOURCES INC.

Notes to Consolidated Financial Statements

For the Years Ended June 30, 2006, 2005 and 2004

(stated in Canadian dollars)





11.

INCOME TAXES(continued)



At June 30, 2006, the Company has non-capital losses of approximately $5,400,000 in Canada (which expire between 2007 and 2016) and $6,300,000 in Mexico available to reduce taxable income earned during future years.  The potential future tax benefits relating to these amounts have not been reflected in the financial statements as their utilization is currently not considered likely.





12.

DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP)



Under Canadian GAAP mineral exploration expenditures can be deferred on prospective mineral rights until such time as it is determined that further exploration work is not warranted, at which time the mineral right costs are written-off.  Under U.S. GAAP, all exploration expenditures are expensed until an independent feasibility study has determined that the mineral rights are capable of economic commercial production.  The following items (a) to (g) provide a summary of the adjustments required to reconcile Canadian GAAP to U.S. GAAP.



| |                                                                                                  |  | For the years ended
June 30,
| | ------------------------------------------------------------------------------------------------ |  | ----------------------------
| |                                                                                                  |  | 2006                        
| | a)
Assets

Unproven Mineral Right Interests                                                      |  |                             
| | Unproven Mineral Right Interests  Canadian GAAP                                                 |  | $     21,749,820            
| | Less Unproven Mineral Right Interests                                                            |  | (21,749,820)                
| | Unproven Mineral Right Interests - U.S. GAAP                                                     |  | -                           
| |                                                                                                  |  |                             
| | b)
Operations                                                                                    |  |                             
| | Net loss - Canadian GAAP                                                                         |  | (2,363,420)                 
| | Unproven Mineral Right Interests expensed under U.S. GAAP                                        |  | (10,148,490)                
| | Net loss - U.S. GAAP                                                                             |  | (12,511,910)                
| |                                                                                                  |  |                             
| | c)
Deficit                                                                                       |  |                             
| | Closing deficit - Canadian GAAP                                                                  |  | (6,725,909)                 
| | Adjustment to deficit for accumulated

Unproven Mineral Right Interests expensed under U.S. GAAP |  | (21,749,820)                
| | Closing deficit - U.S. GAAP                                                                      |  | (28,475,729)                
| |                                                                                                  |  |                             
| | d)
Cash Flows  Operating Activities                                                             |  |                             
| | Cash applied to operations - Canadian GAAP                                                       |  | (1,575,776)                 
| | Add net loss - Canadian GAAP                                                                     |  | 2,363,420                   
| | Less net loss - U.S. GAAP                                                                        |  | (12,511,910)                
| | Cash applied to operations - U.S. GAAP                                                           |  | (11,724,266)                
| |                                                                                                  |  |                             
| | e)
Cash Flows  Investing Activities                                                             |  |                             
| | Cash applied - Canadian GAAP                                                                     |  | (10,249,911)                
| | Add Unproven Mineral Right Interests
expensed - U.S. GAAP                                        |  | 10,148,490                  
| | Cash applied under U.S. GAAP                                                                     |  | $        (101,421)          







---







KIMBER RESOURCES INC.

Notes to Consolidated Financial Statements

For the Years Ended June 30, 2006, 2005 and 2004

(stated in Canadian dollars)





12.

DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP)(continued)



f)

Stockholders Equity





Common Stock



Under U.S. GAAP compensation expense must be disclosed for all stock options granted, requiring the Company to utilize either the intrinsic or the fair value based method of accounting for stock-based compensation.  Under Canadian GAAP, no such costs or related disclosures were required to be recognized prior to 2002.



The Company, if required to report under U.S. GAAP, would elect to apply Accounting Principles Board Opinion No. 25: Accounting for Stock Issued to Employees (APB 25) to account for all stock options granted in 2003 and to disclose on a pro-forma basis the effect of using a fair-value based method.



Under APB 25, compensation cost must be recognized for all compensatory stock options granted whenever the market price of the Companys shares on the date of grant exceeds the exercise price.



OTHER DIFFERENCES BETWEEN CANADIAN AND U.S. GAAP

The following table discloses the pro-forma effect of accounting for stock-based compensation on net loss and net loss per share under U.S. GAAP for 2003.  For the years ended June 30, 2006, 2005 and 2004 there is no difference in the Companys accounting disclosure for stock options between Canadian and U.S. GAAP.



| |                                                    | 2003            
| | -------------------------------------------------- | ----------------
| |                                                    | $               
| | Net loss under U.S. GAAP                           | (1,966,550)     
| | Pro-forma effect of following SFAS 123             | (12,976)        
| | Pro-forma net loss following SFAS 123              | (1,979,526)     
| |                                                    |                 
| | Weighted-average number of shares under

U.S. GAAP | 10,708,817      
| |                                                    |                 
| | Pro-forma loss per share following SFAS 123        | $         (0.19)



g)

Loss Per Share







Under Canadian GAAP, shares held in escrow and contingently issuable are included in the calculation of loss per share, however under U.S. GAAP, these shares are excluded until the shares are released for trading.  Diluted loss per share is not presented as it is anti-dilutive.







---





KIMBER RESOURCES INC.

Notes to Consolidated Financial Statements

For the Years Ended June 30, 2006, 2005 and 2004

(stated in Canadian dollars)



12.

DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP)(continued)





The following is a reconciliation of the numerators and denominators of the basic and fully diluted loss per share calculations:

| |                                                                    |  | For the years ended
June 30,
| | ------------------------------------------------------------------ |  | ----------------------------
| |                                                                    |  | 2006                        
| | Numerator: Net loss for the year under U.S. GAAP                   |  | $  (12,511,910)             
| | Denominator: Weighted-average number of shares under Canadian GAAP |  | 40,026,359                  
| | Adjustment required under U.S. GAAP (escrow shares)                |  | -                           
| | Weighted-average number of shares under U.S. GAAP                  |  | 40,026,359                  
| | Basic and fully diluted loss per share under U.S. GAAP             |  | $             (0.31)        



13.

SUBSEQUENT EVENTS



a)

On July 18, 2006, 250,000 stock options were granted, exercisable at $2.40 per share for a period of five years.



b)

On July 31, 2006, the Company made the final payment of US$383,000 for the El Coronel concessions.



c)

Since the year end of June 30, 2006, 269,000 common shares have been issued upon exercise of stock    options for total proceeds of $395,400.



d)

On September 6, 2006 the Board of Directors received a letter from legal counsel for a director and significant shareholder of Kimber making allegations against current management and advising that he intends to commence a proxy battle with the objective of replacing the majority of the Board of Directors and current management.



e)

On September 12, 2006 an employee of Minera Monterde, S. de R.L. de C.V., a subsidiary of Kimber Resources Inc., was involved in a road collision with a group of cyclists while driving a truck owned by the subsidiary. Injuries and a fatality have been reported but details are yet to be confirmed.  The financial impact of this event, if any, is indeterminable.



14.

COMMITMENT



The Company leases its premise under an operating lease which expires in the fiscal year ending June 30, 2011.  The Company is obligated to make the following basic rent payments under its operating lease in each of the fiscal years ending:



June 30, 2007

$

85,163

June 30, 2008

85,163

June 30, 2009

85,163

June 30, 2010

88,438

June 30, 2011

53,500



$

397,427



In addition, under the lease the Company has the obligation to pay its proportionate share of operating costs and taxes for the building.









---





Kimber Resources Inc.

Managements Discussion and Analysis

September 25, 2006



The following management discussion and analysis of the Companys financial position is for the year ended June 30, 2006 compared to June 30, 2005 and covers information up to the date of this report. This discussion should be read in conjunction with the attached financial statements and related Notes to the Consolidated Financial Statements which have been prepared in accordance with Canadian Generally Accepted Accounting Principles (GAAP).  The discussion and analysis may contain certain forward-looking statements about the Companys future prospects, and the Company provides no assurance that actual results will meet managements expectations.



All amounts are stated in Canadian dollars unless indicated otherwise. Additional information regarding the Company is available on SEDAR at www.sedar.com and on the Companys website at www.kimberresources.com.



The information is current to September 12, 2006 and the Companys auditor has audited the financial statements to June 30, 2006.





Introduction



Kimber Resources Inc. is a Canadian-based company engaged in the exploration of the Monterde gold/silver property (the Property) located in the Monterde Mining District in the state of Chihuahua, Mexico. The Companys primary targets are open-pittable ore bodies, where gold and silver are amenable to extraction by heap leaching and, possibly, conventional milling. Until January 2005, the Companys policy was to allocate the greater part of its funds to development and exploration on its principal asset, the Carmen deposit. The Company is currently also exploring for additional gold-silver resources on the Monterde Property.



The Company intends to bring the Carmen to positive feasibility status so that increased value can be recognized.





Results of Operations



The Companys net loss for the fiscal year ended June 30, 2006 was $2,363,420 or $0.06 per common share compared with $1,825,982 or $0.06 per share loss for the same period ended June 30, 2005. The Companys increase in net loss for the year was $537,438.



In accordance with stock-based compensation policy required by the Canadian Institute of Chartered Accountants, the Company recorded an expense of $760,324 ($720,469 in 2005) on 527,000 stock options granted in the year and prior year options which vested during the year. This is a non-cash expense and does not affect the Companys operations. Without this non-cash expense, the Company would have recorded a loss of $1,603,096 or $0.04 weighted average loss per share during the year.







---







During the fiscal year ended June 30, 2006 the Company spent $10,148,490 on its mineral properties; $744,440 for property acquisition payments and had mineral property expenditures of $9,404,050. Drilling costs of $4,600,027 were the highest cost activity, representing 45% of expenditures, as a result of increased drilling activity ($2,251,312 or 35% in 2005). Geological and geophysical expenditures were $1,300,005 or 13% of property expenditures in 2006 compared to $861,051 or 15% in 2005.  The increase in geological costs represents increases in personnel required to supervise and process data from the increased drilling activity.  Also in line with higher drilling expenditures, assay testing was the third highest cost category in fiscal year ending June 30, 2006 at $827,288 or 8% of property expenditures ($647,785 or 10% in fiscal year ended June 30, 2005). Other significant cost categories and increases in expenditure were engineering, increasing by $460,632 to $636,299 and field supplies increasing by $334,389 to $516,519 in fiscal year ending June 30, 2006.  These latter increases were also derived from greater project activity at Monterde. The results of these expenditures are explained in the Mineral Properties section below.



Salary and benefits expenses rose during the year ended June 30, 2006 to $726,239 from $570,991 in the year ended June 30, 2005 due to salary increases and administrative demands that have grown with the Companys operating activities and regulatory compliance.



Investor relations and shareholder communications expenses of $309,669 (2005  $195,163) were larger as a result of additional advertising, conference attendance and direct communication with a growing shareholder group to create greater awareness of the Companys progress.



Office and miscellaneous expenses increased during the year by $63,193 to $186,614 in 2006. The increase is mainly attributable to increased office supplies, printing costs and computer service and maintenance costs.



Rent expense for the head office increased to $72,775 in the year ended June 30, 2006 from $64,365 in the comparable period ended 2005 as the result of an increase in rent and additional office space occupied.



The Company recorded a loss from foreign exchange of $22,636 during the year ended June 30, 2006 as opposed to a gain of $17,103 in the period ended 2005. The loss originates from funds advanced to Mexico during the year that have depreciated in value due to fluctuations in the Mexican peso relative to the Canadian dollar. The rate of exchange for the Mexican peso began the fiscal year at 0.1147 and closed the year lower at 0.09832.







---





Selected Annual Information



The following information is for each of the three fiscal years ended June 30, 2006, 2005 and 2004:



|                                       | 2006        | 2005        | 2004       
|-------------------------------------- | ----------- | ----------- | -----------
|Interest / investment income           | 295,962     | 74,784      | 64,316     
|Net loss                               | (2,363,420) | (1,825,982) | (1,513,811)
|Net loss per share  basic and diluted | (0.06)      | (0.06)      | (0.07)     
|Total assets                           | 39,260,405  | 16,937,717  | 9,793,200  
|Long-term liabilities                  | -           | -           | -          
|Dividends                              | -           | -           | -          





The Companys income from interest and investments increased over the past three fiscal years due to higher amounts of cash and cash equivalents that were available for short-term investment. The net losses for the Company in the fiscal years ended June 30, 2006 and 2005 include non-cash charges for stock-option compensation expenses of $760,324 in 2006 and $720,469 in 2005.



The Companys net assets have increased over the fiscal periods mainly because of share capital proceeds raised through private placements and increased deferred mineral property expenditures capitalized during the years.



Summary of Quarterly Results September 30, 2004 to June 30, 2006



|                | Q1
Sep30/04 | Q2
Dec31/04 | Q3
Mar31/05 | Q4
Jun30/05
|--------------- | ----------- | ----------- | ----------- | -----------
|Interest income | 12,326      | 13,828      | 22,093      | 26,537     
|Total Loss      | (318,889)   | (469,966)   | (500,446)   | (536,681)  
|Loss per share  | (0.01)      | (0.02)      | (0.02)      | (0.01)     





|                | Q1
Sep30/05 | Q2
Dec31/05 | Q3
Mar31/06 | Q4
Jun30/06
|--------------- | ----------- | ----------- | ----------- | -----------
|Interest income | 24,456      | 34,169      | 74,470      | 162,867    
|Total Loss      | (502,769)   | (608,484)   | (546,797)   | (705,370)  
|Loss per share  | (0.01)      | (0.02)      | (0.01)      | (0.02)     





The Company is in the exploration stage, and therefore, variances in its quarterly losses are not affected by sales or production-related factors. Increases in costs are generally attributed to growth in operations and success in financing activities, which allow the Company to undertake further development and exploration on its properties.



Revenues for the Company are for interest and gains received on cash or short-term investments (low-risk bankers acceptance notes that yield 2.43% to 4.10% on an annual basis) classified as cash.  Interest revenues fluctuate according to the amounts of funds held in deposit and interest rates offered during the period. Kimber does not have revenues from mining operations and does not expect to have revenues in the near future other than interest received on cash balances.







---





Financial Condition



At June 30, 2006, the Company had working capital of $15,484,719 (2005 - $3,895,321). The Company has no long-term indebtedness or long-term obligations. The change in working capital is the result of increased available cash of $15,866,960 compared to the previous year (2005  $4,288,648). In the fiscal year ended June 30, 2006 the Company received $4,413,050 from the exercise of 2,451,692 warrants, $540,218 from the exercise of 549,570 stock options and $18,450,731 (net of expenses) from two private placements aggregating 10,380,832 shares issued. As at September 12, 2006 the Company had $13,529,338 in cash and liquid short-term bankers acceptance notes.



Current liabilities increased to $1,422,519 as at June 30, 2006 from $900,734 on June 30, 2005. This was primarily due to drilling and assay expenditures that were in routine accounts payable at the end of the fiscal year and were paid subsequent to the period.



The Company is committed to paying approximately $1,821,703 at September 12, 2006 for expenses billed, primarily drilling, geological contractors and assays.





Cash Flows



The Company generates cash inflow from selling its shares either through financings or the exercise of existing share purchase warrants and stock options. There is a liquidity risk that these warrants and options may not be exercised if the price of the Companys share price falls below the exercise price due to market conditions.



Amounts receivable increased by $542,970 to $993,441 during the fiscal year ended June 30, 2006 mainly because of increased IVA Tax receivable from the Government of Mexico. Receivables for IVA, which is 15% of expenditures in Mexico, increased during the year by $569,102 to $862,803, as a result of increased expenditure and the pending receipt of IVA tax refunds for the first six months of 2006. An advance payment made to the Government of Mexico during the previous fiscal year ended June 30, 2004 to acquire claims within the Monterde Property totaling $56,844 remains due. Other receivables decreased by $36,996 to $73,794 at June 30, 2006 mostly due to collection of a deposit from a Mexican supplier of rental equipment.



Prepaid expenses increased by $6,603 to $46,837 during the year mainly due to advance payments for various insurance policies and an advance retainer for services not yet rendered at the end of the period.



The Company made equipment purchases of $269,793 during the year ended June 30, 2006 including: $166,790 for camp vehicles, $58,299 for computer equipment and software; $35,170 for the exploration camp and related equipment and $9,534 for office fixtures and equipment.









---





Property acquisition costs of $744,440 were incurred for option payments and concession taxes on the Monterde Property ($742,262) and the Setago Property ($2,178). The amount paid for Monterde includes the acquisition of concessions that were staked adjacent to the Property and not previously held by the Company. Future acquisition expenditures on these staked concessions will be minimal as there are no property payments.



Share capital increased cash inflows by an aggregate of $23,403,999 through the issuance of 13,382,094 common shares during the fiscal year ended June 30, 2006 as follows:



|                          | Number of Shares | Share Capital $
|------------------------- | ---------------- | ---------------
|Balance, June 30, 2005    | 33,732,828       | 19,033,066     
|                          |                  |                
|Private placements        | 10,380,832       | 18,450,731     
|Exercise of warrants      | 2,451,692        | 4,413,050      
|Exercise of options       | 549,570          | 540,218        
|                          | 13,382,094       | 23,403,999     
|2Stock based compensation |                  | 329,877        
|Balance, June 30, 2006    | 47,114,922       | 42,766,942     

1Net of share issuance costs of $644,307

2Non-cash transfer from Contributed Surplus



Financings



On September 9, 2004, the Company closed a brokered private placement for 1,270,000 units at a price of $1.50 per unit. Each unit consisted of one Common Share and half of one non-transferable share purchase warrant. One whole warrant entitled the holder to purchase an additional Common Share at a price of $1.80 until March 8, 2006. The agent received an 8% commission paid in cash and the agent and other members of the sales group received a non-transferable agents option to purchase a total of 127,000 units at $1.80 per unit, consisting of one Common Share and one-half of one non-transferable share purchase warrant. One whole warrant entitled the holder to purchase an additional Common Share at $1.80 until March 8, 2006. The Company also paid the agent a corporate finance fee of 40,000 units having the same terms as the units described above.



On February 10, 2005, the Company announced a non-brokered private placement of securities with three placees including a one-year, 5% convertible debenture of $2,000,000 to be issued to a director. Subsequently, the private placement units were over-subscribed and the convertible debenture with the director was not completed. On February 22, 2005 the Company closed a non-brokered private placement of 3,290,324 units to raise gross proceeds of $5,100,002 with four investment funds. All of the units were issued at a price of $1.55 per unit and each unit consisted of one Common Share and one-half of a non-transferable share purchase warrant, with one whole warrant entitling the holder to purchase one additional Common Share at $1.80 until March 8, 2006. Two of the funds each purchased 1 million units. In addition, two other funds each purchased 645,162 units.  A finder's fee of $31,000 was paid to an investment brokerage firm in respect of 1 million units.







---





On August 26, 2005, the Company closed a non-brokered private placement for 3,333,332 units at $1.50 per unit.  Each unit consisted of one common share and half of one non-transferable share purchase warrant.  One whole warrant entitles the holder to purchase an additional common share at a price of $1.80 until February 26, 2007.  There was a finders fee of $40,000 paid in respect of 1,333,332 units.



On March 1, 2006 the Company closed brokered and non-brokered private placements of a total of 7,047,500 common shares at a price of $2.00 per share for gross proceeds of $14,095,000. Puplava Securities Inc. ("PSI") of San Diego, California acted as agent for the brokered private placement and Ms. Leanne Baker, Managing Director of Investor Resources LLC, acted as a consultant in the United States. The Company paid cash commissions of 5.5% on the brokered placements. Mr. James Puplava, a Director and major shareholder of the Company, and a principal of PSI, did not acquire shares through the placement. The non-brokered private placement was to institutional and accredited investors in Canada and offshore. Blackmont Capital Inc., Canaccord Capital Corp., and PSI received finder's fees of 5.5% of the proceeds raised on certain placements. The total commissions and finder's fees paid on the both brokered and non-brokered placements was $428,725.  No warrants were issued to investors or agents in connection with the offering.





Contractual Obligations



The Company has no long-term debt and does not anticipate that it will require debt financing for current planned expenditures. Kimber has no future contractual obligations to property vendors for the Monterde Property.



The Company leases its premises under an operating lease which expires in the fiscal year ending June 30, 2011.  The Company is obligated to make basic rent payments under its operating lease in each of the fiscal years from 2007 to 2011 totaling $397,427. In addition, under the lease the Company has the obligation to pay its proportionate share of operating costs and taxes for the building.





Capital Resources and Liquidity



Capital resources of the Company consist primarily of cash and liquid short-term investments. As at September 12, 2006 the Company had cash and bankers acceptance notes totaling $13,529,338 and approximately $1,355,000 in receivables.



If existing warrants and vested options were exercised, the Company would generate $7,117,237 (warrants - $2,819,999; options -$4,297,238).



At present, management believes that it has sufficient financial resources to complete planned expenditures to early 2007.



The Company does not anticipate the payment of dividends in the foreseeable future.







---





Related Party Transactions



Unless otherwise stated, related party transactions are measured at the exchange amount, being the amount of consideration established and agreed to by the related parties.



Included in amounts receivable is $5,432 due from corporations with common directors as the Company, the majority of which was received by the Company subsequent to June 30, 2006.



During the year, commissions and finders fees of $234,850 were paid to Puplava Securities Inc. (PSI) in respect to brokered and non-brokered private placements. (See Financings)  A director of the Company is a principal at PSI.





Mineral Properties



MONTERDE PROJECT



The Monterde Property is the Companys principal asset, located in the Sierra Madre Mountains of southwestern Chihuahua State, approximately 75 kilometres northwest of Glamis Gold Ltd.s El Sauzal Project and approximately 50 kilometres southeast of the Ocampo Mining District.  It is located in the Guazapares Municipality, approximately 260 road kilometres southwest of Chihuahua, Mexico. The Property is held through Kimbers 100% owned Mexican subsidiary, Minera Monterde, S. de R.L. de C.V.



Mr. Alan Hitchborn, B. Sc., Vice President, Development managed the field program on the Monterde Project until June 18, 2006.  Since June 18, 2006 field operations have been under the direction of Robert Longe, P. Eng, President and CEO of Kimber. Mr. J.B. Richards, P. Eng., Vice-President, Engineering, is the designated internal Qualified Person for the Project, responsible for quality control and verifying all data.



The Company has been actively drilling on the Monterde Property throughout the year and has expanded from one reverse circulation rig (RC) in July 2004 to three drills; a core drill and two reverse-circulation (RC) drills. The Company drills for twenty-day periods followed by ten-day breaks. This pattern allows geologists and engineers essential time to review and interpret incoming assay data that reveal the direction of mineralized structures for targeting future step-out holes. By avoiding blind holes drilling success rates have been high.



To June 30, 2006 there have been 480 reverse-circulation (RC) holes drilled on the Monterde Property totaling 96,725 metres and 93 core holes drilled over 20,308 metres. 410 of the RC holes were drilled on the Carmen deposit (84868 metres); 25 holes on La Veta Minitas structure; 2 on the De Nada zone, 2 on El Orito Norte, 5 on the El Orito structure and 36 holes drilled on the recently discovered Carotare deposit. Results of individual drill holes can be found on the Companys website or on Sedar.



In January 2005, the Company expanded its property holdings by staking concessions adjacent to the Monterde Property. Ground measuring 37 kilometres in length was staked around and to the southeast both new structures and extensions of those already known.  The land under Kimbers 100% control in the Monterde District is now approximately 29,000 hectares.







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Development of Carmen and Resource Estimate M



On April 20, 2006, the Company announced a polygonal estimate based on 344 reverse circulation (RC) holes drilled on the Carmen deposit for which results were available to February 15, 2006. The estimate was prepared by the Companys geological and engineering staff.



The table below shows the Measured & Indicated resource categories in the Carmen deposit and the Inferred resources. The numbers shown differ slightly from those in the news release dated April 20, 2006 due to refinement in the data during report preparation.



|Carmen Deposit  Resource Estimate M  (Polygonal) |                  
|-------------------------------------------------- | -----------------
|                                                   | Tonnes
(millions)
|Measured                                           | 18.902           
|Indicated                                          | 3.808            
|Measured & Indicated                               | 22.710           
|Inferred                                           | 7.433            

*conversion factor of 75 ounces of silver to one ounce of gold



Boundaries to the mineralized body, incorporating the revised understanding of controls to mineralization, were drawn manually on each of 30 vertical sections 25 metres apart. Polygons were then drawn to outline mineralized blocks to cut-off grades at 0.3 g/t gold or 35 g/t silver, if the gold grade is below 0.3 g/t.



The same assay database on which the polygonal Estimate M was calculated was used to make a block model estimate (see table below).  The block model estimate was prepared by G. Giroux, P.Eng. of Micon International. His report dated July 17th, 2006 is filed on SEDAR.



A block model is a mathematical representation of the metal distribution on a regular grid of points in three dimensions that extend over the mineralized volume of rock tested by the drill holes.  It is based on the same volume of rock from which the polygonal estimate was made.  The grid intervals over which the estimate is made is set from assumptions made on how the deposit would be mined.  In this case, the block dimensions were set at 6 by 6 metres square on benches 6 metres high, that is 6 metre cubes.  A block model is desirable because it can be used as the input to computer software used in mine design.



The grade distribution of both gold and silver separately were modeled by interpretation of assay data on bench plans within the previously determined mapable limits of 0.1 and 35 g/t for gold and silver, respectively.  The grade values at the block centres were estimated by ordinary kriging.  Kriged estimates typically contain more tonnes at lower grade than polygonal estimates due to the smoothing effect of averaging block grades from several adjacent drill holes.







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As is usually the case, tonnage is higher and grade less than in the polygonal estimate.  The Measured and Indicated categories in the block model indicate similar metal content to the polygonal estimate.  Inferred resources are reduced because the criteria for this category in block models are more stringent than in polygonal estimates.  In any case Inferred resources cannot be raised to reserve status.





|Carmen Deposit  Resource Estimate M  (Block Model) above 0.3g/t Au |                  
|-------------------------------------------------------------------- | -----------------
|                                                                     | Tonnes
(millions)
|Measured                                                             | 21.2             
|Indicated                                                            | 8.7              
|Measured & Indicated                                                 | 29.9             
|Inferred                                                             | 2.9              

*conversion factor of 75 ounces of silver to one ounce of gold



Bulk Density

The bulk density value used in current resource estimates, 2.30 tonnes per cubic metre, is based on measurements using drill core.



Cost of Resource Ounces

The cost of resource ounces to date (using all property-related costs, exclusive of overhead and purchase payments, applied to all resource categories, including Inferred) is approximately $10 per gold-equivalent ounce.



Metallurgical Testing

Metallurgical testing to determine silver and gold recovery rates is ongoing. The most recent cyanide leach tests completed on 93 samples of drill core from the Carmen and related splays gave average recoveries of 90% for gold and 41% for silver. Silver has a particularly wide range (9% to 98%). Petrographic studies to determine the reasons for the variation and other leach tests are in progress.



The silver recovery measurements from the only column tests completed to date have been very low. Since these samples were taken, silver recovery has been found to vary with location within the deposit. Some zones within the deposit indicate high recovery. Additional metallurgical testing remains a high priority. In the meantime, the low silver recoveries from the column tests will have a negative impact on the pre-feasibility study.









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Veta Minitas



|Veta Minitas Resource Estimate of November 2004 (Polygonal) |        
|----------------------------------------------------------- | -------
|                                                            | Tonnes 
|Measured                                                    | 701,000
|Indicated                                                   | 176,000
|Measured & Indicated                                        | 877,000
|Inferred                                                    | 381,000

*conversion factor of 75 ounces of silver to one ounce of gold



As with the Carmen deposit,grade cut-off is 0.3 grams gold per tonne or 35 grams silver per tonne if the gold grade is less than 0.3 grams per tonne.



Carotare Resource Estimate

On November 8, 2005, the Company delivered a resource estimate on the Carotare deposit based on the 28 holes drilled. This is the first mineral resource estimate since the Carotare was first discovered in April 2005. The estimate was prepared under the supervision of External Qualified Person, Mr. A.A. Burgoyne, P. Eng. of Burgoyne Geological Inc.  As shown in the table below, the Carotare estimate outlines a Measured & Indicated resource of 105,000 gold equivalent ounces and an Inferred resource of 143,000 gold equivalent ounces.



|Carotare Resource Estimate of November 2005 (Polygonal) |          
|------------------------------------------------------- | ---------
|                                                        | Tonnes   
|Measured                                                | 1,680,000
|Indicated                                               | 1,020,000
|Measured & Indicated                                    | 2,700,000
|Inferred                                                | 3,780,000

*conversion factor of 75 ounces of silver to one ounce of gold



Gold to Silver Equivalent Values

At approximately 40 million ounces of silver in Measured & Indicated and more than 9 million ounces in the Inferred category, silver remains a very important component of the deposit. During the period, the Company began using a conversion factor of 75 ounces of silver for one ounce of gold for calculating gold-equivalent values, to reflect changes in the prices of both metals and the expected recoveries of each. The conversion factor may be revised as prices change and as more is known about recoveries.









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Potential of the Monterde Property (29,000 hectares)

Although an increase in the value of the Carmen deposit may follow from further enlargement and from upgrading resources to reserves (expected from a pre-feasibility study), the greatest potential for the Monterde Property lies in its exploration targets. Two exploration targets (the Carotare and El Orito Norte) have already been identified and one already has become a deposit with a mineral resource defined.



Drilling on the Carmen deposit continues to be directed at locating additional resources and converting those in the Inferred category to Measured & Indicated.



Drilling to date has been confined to less than 50 hectares of the 29,000 hectare property.



Objectives

The Company is advancing the Carmen Deposit towards pre-feasibility and has expanded its focus to include exploration of areas outside the Carmen. Now, with two excellent exploration targets, Carotare (33 holes), and El Orito Norte (7 holes), Kimber's objectives include a significant increase of gold-equivalent resource ounces. There is, of course, no guarantee that any such objective can be achieved, but management believes there is significant potential for additional resources in the currently identified discovery areas of the Monterde Property.



Earlier Resources Estimates within Financial Year



Development of Carmen and Resource Estimate L

On September 6, 2005 the Company announced Estimate L, (since superseded by Estimate M) a polygonal estimate using a 273) reverse circulation holes drilled on the Carmen for which results were available by August 18, 2005. The estimate was prepared by the Companys geological and engineering staff under the supervision of External Qualified Person, Mr. A.A. Burgoyne, P.Eng of Burgoyne Geological Inc.



Monterde Property Payments

The Company owns a 100% interest in the Monterde concessions having acquired the concessions by payment of total consideration of US$1,054,900.



El Coronel concessions

The Company owns a 100% interest in the El Coronel mineral concessions by having made the payment of US$1,000,000, US$617,000 of which had been paid at June 30, 2006. The remaining US$383,000 was paid on July 31, 2006.









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Safety



On August 14, 2005 a drill company employee was injured when a hose from a high pressure booster attached to an RC drill rig burst and struck him.  He was sent to hospital with non-life threatening injuries.  The drill rig was shut down for 2 days until the drill company sent a safety engineer to the site to check and clear the equipment for work.



On April 2, 2006, a fuel hose on a drill broke causing a fire. There were no injuries. On August 12, 2006, a geologist mapping underground in one of the old workings fell from some timbers and sprained some muscles, but returned to work for the next period.



Kimber continues to encourage a safe work environment and has performed an independent safety audit of the camp and on-site operating conditions. Regular safety meetings are held and protective equipment is mandatory.





Off-Balance Sheet Arrangements



The Company has no off-balance sheet arrangements or transactions and none are contemplated.





Financial and Other Instruments



Up to the present time, the Company has maintained its cash balances in Canadian dollars and converts them to United States dollars or Mexican Pesos when payments are required.  No hedging has been undertaken to date as management has viewed the Canadian dollar as the stronger currency in recent years.



The Companys financial instruments consist of cash, amounts receivable, amount due from related parties, prepaid expenses, investments, accounts payable and accrued liabilities and amounts due to related parties. The balances in these accounts are reported in Canadian dollars and are recorded at their fair value. Property payment commitments are due in United States dollars so there is a risk of increased costs on these payments as a result of fluctuations in foreign exchange rates.





Legal Proceedings



The Company and its subsidiary are not parties to any legal proceedings and have no contingent liabilities.











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Subsequent Events



a)

On July 18, 2006, 250,000 stock options were granted, exercisable at $2.40 per share for a period of five years.



b)

On July 31, 2006, the Company made the final payment of US$383,000 for the El Coronel concessions.



c)

Since the year end of June 30, 2006, 269,000 common shares have been issued upon exercise of stock options for total proceeds of $395,400.



d)

On September 6, 2006 the Board of Directors of the Company received a letter from legal counsel for Mr. James Puplava, a director and significant shareholder of Kimber, making allegations against current management of the Company and advising that Mr. Puplava intends to commence a proxy battle with the objective of replacing the majority of the Board of Directors and current management of Kimber.  Management will oppose Mr. Puplava's proxy solicitation. Management has made certain allegations against Mr. Puplava and the Board of Directors has appointed a committee of independent directors to retain and instruct special counsel, who is independent of Kimber, the director and management, for the purpose of investigating all allegations and making recommendations to the Board.



e)

On September 12, 2006 an employee of Minera Monterde, S. de R.L. de C.V., a subsidiary of Kimber Resources Inc., was involved in a road collision with a group of cyclists while driving a truck owned by the subsidiary. Injuries and a fatality have been reported but details are yet to be confirmed.  The financial impact of this event, if any, is indeterminable.





Critical Accounting Estimates  the following estimates were made.



Stock-based compensation  a non-cash cost determined by the Black Scholes Option Pricing Model (BS), a formula which is purported to represent the fair value for stock options granted and for warrants issued for services.  The BS formula is subject to estimates of share price volatility and option/warrant life and does not necessarily generate values which are fair.  Changes in these estimates will affect the values generated and may materially impact the loss recorded in the period.



Unproven Mineral Right Interests  represents costs incurred to date which management believes will be ultimately recoverable, but for which there is no assurance of recovery.







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Changes in Accounting Policy



There were no changes to accounting policies adopted in the fiscal year ended June 30, 2006.





Disclosure Controls and Procedures



The Company hasdisclosure controls and procedures in place to provide reasonable assurance that material information is made known to the President and Chief Financial Officer and other officers and have concluded that its disclosure controls and procedures are effective.





Outstanding Share Data



The Company has one class of shares and there were 47,114,922 shares issued as at June 30, 2006. As at September 12, 2006 the Company had 47,383,922 shares issued and would have 52,334,388 outstanding on a fully diluted basis.



The Company has a stock option plan and at September 12, 2006 there were 3,368,800 options outstanding. Of the 3,368,800 options granted to employees, directors and consultants 2,461,460 have vested.



The Company has 1,566,666 warrants outstanding as at September 12, 2006 all exercisable at $1.80.











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Risk and Uncertainties



Except for historical information contained in this discussion and analysis, disclosure statements contained herein are forward-looking, which statements are subject to risks and uncertainties, which could cause actual results to differ materially from those in such forward-looking statements.



The Company is a mineral exploration company and is exposed to a number of risks and uncertainties that are common to other companies in the same business; some of these risks have been discussed elsewhere in this report and in the notes to financial statements.



The Companys financial success is subject to general market conditions, which affect mining and exploration companies.  The value of the Companys mineral resources and future operating profit and loss may be affected by fluctuations in precious metal prices, over which the Company has no control, although it may choose to hedge some of its future production.  The cost of exploration and future capital and operating costs are affected by foreign exchange rates for the Canadian dollar, United States dollar and Mexican peso.  The Company can mitigate the effects of these rate fluctuations, to some extent, through forward purchases.  Because of its limited operating record and history of losses, it may not be able to hedge future risk to the extent it feels is warranted.  The Company also competes with other mining companies, which are larger and have more economic resources to acquire prospective exploration properties or producing mines.



The Company also faces certain risks and uncertainties specific to its circumstances.  The Companys ability to obtain financing to explore for mineral deposits and to continue and complete the exploration of those properties it has classified as assets is not assured; nor is there assurance that the expenditure of funds will result in the discovery of an economic mineral deposit.  The Company has not completed a feasibility study on any of its deposits to determine if it hosts a mineral resource that can be economically developed and profitably mined. While the Company has used its best efforts to secure title to all its properties and secured access to surface rights, these titles or rights may be disputed.



Additional risks and uncertainties are set out in the Companys Form 20-F available on SEDAR at www.sedar.com, and on the SEC website www.sec.gov under Filings and Forms (EDGAR).