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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Gippsland | LSE:GIP | London | Ordinary Share | AU000000GIP1 | ORD SHS NPV |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 2.125 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
RNS Number : 5790E Gippsland Limited 30 September 2008 Gippsland Limited (the "Company") Annual Financial Report The Company is pleased to announce its full year results for the year ended 30 June 2008. The annual report is available from the Company's website www.gippslandltd.com. Enquiries: Jack Telford Gippsland Limited T: +61 8 9340 6000 E: jtelford@gippslandltd.com Richard Hail John Gilbert Fox-Davies Capital Ltd Fox-Davies Capital Ltd T: +44 20 7936 5200 T: +44 20 7936 5200 E: richard.hail@fdcap.com E: john.gilbert@fdcap.com Nandita Sahgal Matthew Thomas Seymour Pierce Limited Seymour Pierce Limited T: +44 20 7107 8000 T: +44 20 7107 8000 E: nanditasahgal@seymourpierce.com E: matthewthomas@seymourpierce.com Jane Stacey Fiona Hyland Investor Relations Investor Relations M: +44 792 292 3306 M: +44 777 600 5847 E: jane@conduitpr.com E: fiona@conduitpr.com DIRECTORS' REPORT Your directors submit their report on the company and its controlled entities for the financial year ended 30 June 2008. DIRECTORS The names of the directors in office at any time during or since the end of the year are as below. Directors were in office for this entire period unless otherwise stated. Mr Robert John Telford Dr John Morrison Chisholm Mr John Stuart Ferguson Dunlop Mr John Damian Kenny Mr Jon Starink COMPANY SECRETARY The following person held the position of company secretary at the end of the financial year: Mr Rowan Caren - Bachelor of Commerce, Chartered Accountant. Mr Caren was employed by the chartered accountancy firm Price Waterhouse Coopers in Australia and overseas for six years and has been directly involved in the minerals exploration industry for a further ten years. Mr Caren also provides company secretarial and corporate advisory services to several exploration companies and is a member of the Institute of Chartered Accountants in Australia. PRINCIPLE ACTIVITIES The principal activities of the economic entity during the financial year were: * exploration and development of commercially and economically viable mineral resources. There were no significant changes in the nature of the consolidated group's principal activity during the financial year. OPERATING RESULTS The loss of the consolidated group after providing for income tax and eliminating minority equity interests amounted to $3,425,133 (2007: $4,191,218). Dividends No dividend was paid or declared during the financial year and the directors do not recommend the payment of a dividend for the financial year ended 30 June 2008. Review of Operations During the year the company continued to focus on the development of the Abu Dabbab tin/tantalum project in Egypt and the exploration for gold and base metals in the Wadi Allaqi region of Egypt. A detailed review of the company and the consolidated group's activities is set out in the company's Annual Report. Financial Position The net assets of the consolidated group have increased by $1,722,113 to $4,134,098 at 30 June 2008. The increase has largely resulted from the following factors: * proceeds from the share issue and option conversion raising $4,140,715 * following a review of the expenditure on the Abu Dabbab project, some costs were reclassified as operating expenses and the impairment of the project development expenditure was removed resulting in a net increase in value of $2,184,129 offset by: * * exploration expenditure of $1,064,693 * administration expenditure of $2,051,916 and * employee benefits of $1,247,101 The directors believe that the company is in a sound financial position to be able to continue with the development of the Abu Dabbab project, undertake further exploration at the Wadi Allaqi leases and to take advantage of further opportunities to grow the company, should they arise. SIGNIFICANT CHANGES IN STATE OF AFFAIRS The following significant changes in the state of affairs of the parent entity occurred during the financial year: * Completed the issue and allotment of 33,674,180 shares pursuant to the conversion of listed options having an exercise price of A$ 0.09 which expired on 31 December 2007. * Completed the issue and allotment of 12,655,553 shares at a placement price of £0.045 (A$ 0.093) on 26 June 2008. AFTER BALANCE DATE EVENTS On 25 July 2008, Gippsland Limited ("Gippsland") and Stellar Resources Limited ("Columbus") announced that they will merge their respective interests in the Tasmanian Heemksirk Tin project (formerly known as the Zeehan Tin project) into Stellar's subsidiary Columbus Metals Limited ("Columbus"). The agreement is conditional upon Columbus raising a minimum of A$10 million and being admitted to the official list of the ASX on or before 31 December 2008. Gippsland will be issued with 15 million A$0.25 fully paid ordinary shares or the same number of shares that Stellar will hold in Columbus at the time of its admission to the official list of the ASX, if that number is greater than 15 million shares. Upon listing, Columbus will also invite a nominee from Gippsland to join the board of Columbus as a non-executive director. No other matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future financial years. FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES Information as to likely developments in the operations of the Company and the consolidated group and the expected results of those operations in future financial years has not been included in this report because, in the opinion of the Directors, it would prejudice the interests of the Company and the consolidated group. ENVIRONMENTAL ISSUES The consolidated group's operations are not currently subject to any significant environmental regulations under either Australian or Egyptian legislation. However, the board is committed to achieving a high standard of environmental performance, and regular monitoring of potential environmental exposures is undertaken by management. The board considers that the consolidated group has adequate systems in place for the management of its environmental requirements and is not aware of any breach of those environmental requirements as they apply to the consolidated group. An environmental and social impact assessment was updated during the financial year for the Abu Dabbab project in Egypt. The consolidated group is required to carry out its activities in accordance with the Mining Laws and regulations in the areas in which it undertakes its exploration activities. INFORMATION ON DIRECTORS Robert John Telford - Chairman (Executive) AWAIT (Chem), MRACI Mr Telford holds an Associate degree in Pure Chemistry (Organic and Inorganic) having graduated from the Institute of Technology of Western Australia (now Curtin University) in 1967. Mr Telford has been a major shareholder in technology-based industries for some 30 years in the capacity of Chief Executive Officer ("CEO"). He has been involved in the pharmaceutical industry having been a past chairman and major shareholder of the company Inovax Limited. Mr Telford has held the position of CEO in companies involved in inorganic and organic chemical manufacture for over 15 years. He has been involved in the international resource industry for some 20 years via private and public companies and in the main is responsible for securing the Company's interest in its Egyptian resource projects. Mr Telford is a Member of the Royal Australian Chemical Institute. He is not currently a director of any other listed company nor has he been within the last three years. Interest in Shares and Options - 20,126,446 ordinary shares in Gippsland Limited. John Morrison Chisholm - Director (Executive) BSc (Hons), PhD, FAusIMM, FAIG Dr Chisholm is a geologist with wide experience in exploration geology and exploration management. His previous posts include lecturer at the University of Western Australia and Associate Professor at Curtin University. He has held senior positions with various mineral resource entities. In 1984 Dr Chisholm joined Western United Mining Services Pty Ltd and as Managing Director he led a large group of geoscientists. He was involved in the discovery of the Transvaal and Bounty mines. He is a Fellow of both the Australian Institute of Geoscientists and the Australasian Institute of Mining and Metallurgy with Chartered Practising status in Geology. Practising Chartered Status is the highest level of recognition that can be attained by professional geologists in Australia and Dr Chisholm was one of the first geologists in Australia to have been awarded this honour. He is not currently a director of any other listed company nor has he been within the last three years. Interest in Shares and Options - 2,420,000 ordinary shares in Gippsland Limited. Jon Starink - Director (Executive) BSC (Hons), BChemE(Hons), MApplSc, FAusIMM, FIEAust, FIChemE, MRACI, MTMS, CPEng, CChem, CSci Mr Starink's qualifications include Bachelor of Science with First Class Honours (University of Sydney), a Bachelor of Chemical Engineering with First Class Honours (University of Sydney) and a Master of Applied Science (University of Sydney). His academic achievements include the Union Carbide Prize in Inorganic Chemistry, Western Mining Prize in Chemical Engineering and the Beckman Coulter Postgraduate Prize for Best Overall Performance in Molecular Biotechnology. He held the position of Deputy Head Department of Chemical Engineering at Curtin University of Technology during 1984-85 & 1987. Based in London, Jon Starink is a Chartered Professional Engineer, a Chartered Scientist and a Chartered Industrial Chemist, a Fellow of the Institution of Engineers Australia, a Fellow of the Australasian Institute of Mining and Metallurgy, a Fellow of the Institution of Chemical Engineers, a Member of The Metallurgical Society and a Member of the Royal Australian Chemical Institute. He has 30 years experience in the mining industry in the role of both Executive and Non-Executive director. His extensive practical and operational experience includes engineering design and project management; mining exploration management; science and engineering research & development and process innovation & development. Mr Starink served in senior technical and engineering roles with the Sons of Gwalia Ltd Greenbushes tantalum-tin project for 10 years where he was directly responsible for process development, project design and construction management for the tin smelter and tantalum extraction projects. Other than as noted below he is not currently a director of any other listed company nor has he been within the last three years: * Director of Manaccom Corporation Limited until 22 November 2007 Interest in Shares and Options - 300,000 ordinary shares in Gippsland Limited. John Stuart Ferguson Dunlop - Director (Non-executive) BE, M Eng Sc, P Cert Arb, CP, FAusIMM, FIMMM, MSME, MCIMM, MMICA Mr Dunlop holds a Bachelor and Masters Degree in Mining Engineering from the University of Melbourne. He is a certified Mine Manager having approximately 40 years of international surface and underground mining experience in a variety of base metals, industrial and precious metals production. He is a former Director of the Australasian Institute of Mining and Metallurgy (AusIMM) and remains Chairman of its affiliate, the Mineral Industry Consultants Association (MICA). He is also Chairman of Alliance Resources Ltd, Drummond Gold Ltd and Alkane Resources Ltd. Mr Dunlop is a highly experienced mining professional having been involved in the design, construction and on-going operation of a number of major resource projects throughout the world. He has a detailed knowledge of the Company's 40Mt Abu Dabbab tantalum project in Egypt with his ongoing involvement in the preparation of the project's original Bankable Feasibility Study, and subsequent updates to the BFS. He has operated his own mining consulting firm based in Perth since 1992 and was previously a senior executive with BHP's (now BHP Billiton) Minerals Division, before becoming General Manager Operations for Aztec Mining Co Ltd until this company's takeover by Normandy Mining Ltd. Interest in Shares and Options - Nil. John Damian Kenny - Director (Non-executive) B Com (Hons), LLB Mr Kenny is a corporate and resources lawyer has a specialised interest in venture capital, initial public offerings and mergers and acquisitions. He has extensive experience in public equity fundraisings and the pricing of equity, debt and derivative securities. He is a Director of The Ark Fund Limited. Interest in Shares and Options - 2,250,000 ordinary shares in Gippsland Limited. REMUNERATION REPORT (Audited) This report details the nature and amount of remuneration for each director of Gippsland Limited, and for the executives receiving the highest remuneration. Remuneration Policy The remuneration policy of Gippsland Limited has been designed to align director and executive objectives with shareholder and business objectives by providing a fixed remuneration component and offering specific long-term incentives. The board of Gippsland Limited believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best executives and directors to run and manage the consolidated group, as well as create goal congruence between directors, executives and shareholders. The board's policy for determining the nature and amount of remuneration for board members and senior executives of the consolidated group is as follows: * The remuneration policy, setting the terms and conditions for the executive directors and other senior executives, was developed and approved by the board after seeking professional advice from independent external consultants. * All executives receive a base salary (which is based on factors such as length of service and experience). * The board reviews executive packages annually by reference to the consolidated group's performance, executive performance and comparable information from industry sectors. All remuneration paid to directors and executives is valued at the cost to the company and expensed. The board policy is to remunerate non-executive directors at market rates for time, commitment and responsibilities. The board determines payments to the non-executive directors and reviews their remuneration annually, based on market practice, duties and accountability. Independent external advice is sought when required. The maximum aggregate amount of fees that can be paid to non-executive directors is subject to approval by shareholders at the Annual General Meeting. Fees for non-executive directors are not linked to the performance of the consolidated group. However, to align directors' interests with shareholder interests, the directors are encouraged to hold shares in the company and are able to participate in the option plan. KEY MANAGEMENT PERSONNEL REMUNERATION 2008 Key Management Person Position Short-term Benefits Share-based Payment Post-employment Total Options Benefits $ $ Superannuation $ Cash, salary and commissions $ Mr RJ Telford Executive Chairman 260,211 - - 260,211 Dr JM Chisholm Executive Director 237,500 - - 237,500 Mr JSF Dunlop Non-executive 60,412 - - 60,412 Director Mr JD Kenny Non-executive 38,750 - - 38,750 Director Mr J Starink Executive Director 120,000 - - 120,000 Mr PR Sims Chief Financial 230,303 - 23,030 253,333 Officer Mr RS Caren Company Secretary 60,000 - - 60,000 1,007,176 - 23,030 1,030,206 2007 Key Management Person Position Short-term Benefits Share-based Payment Post-employment Total Options Benefits $ $ Superannuation $ Cash, salary and commissions $ Mr RJ Telford Executive Chairman 207,069 - - 207,069 Dr JM Chisholm Executive Director 177,917 - - 177,917 Mr JSF Dunlop Non-executive 44,648 - - 44,648 Director Mr JD Kenny Non-executive 38,333 - - 38,333 Director Mr J Starink Executive Director 17,742 - - 17,742 Mr PR Sims Chief Financial 188,294 60,975 18,827 268,096 Officer Mr RS Caren Company Secretary 52,500 - - 52,500 Mr RS Middlemas Company Secretary 4,580 - - 4,580 731,083 60,975 18,827 810,885 Options issued as part of remuneration for the year ended 30 June 2007 Options were issued to an executive as part of his remuneration. The options were not issued based on performance criteria, but are issued to the majority of directors and executives of Gippsland Limited and its subsidiaries to increase goal congruence between executives, directors and shareholders. Options Granted As Remuneration 2008 Terms & Conditions for Each Grant Key Management Personnel Granted No. Grant Date Value per Option at Exercise Price Exercise Date Grant Date $ $ Nil - - - - - 2007 Terms & Conditions for Each Grant Key Management Personnel Granted No. Grant Date Value per Option at Exercise Price Exercise Date Grant Date $ $ PR Sims 2,250,000 15.09.2006 0.03 0.15 31.12.2007 Meetings of Directors During the financial year, 12 meetings of directors were held. Attendances by each director during the year were as follows: Directors' Meetings Remuneration Committee Number eligible to Number attended Number eligible to attend Number attended attend RJ Telford 12 12 1 1 JM Chisholm 12 10 - - JSF Dunlop 12 11 1 1 JD Kenny 12 6 1 - J Starink 12 6 - - Indemnifying Officers or Auditor During or since the end of the financial year the company has given an indemnity or entered into an agreement to indemnify, or paid or agreed to pay an insurance premium as follows: The company has paid premiums to ensure any director or officer of Gippsland Limited against liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in the capacity of director or officer of the company, other than conduct involving a wilful breach of duty in relation to the company. The amount of the premium is $14,616. Options At the date of this report, the unissued ordinary shares of Gippsland Limited under option are as follows: Grant Date Date of Expiry Exercise Price Number under Option 16.05.2006 16.05.2012 $0.135 25,000,000 05.02.2008 15.12.2011 £0.07 4,000,000 During the year ended 30 June 2008, the following ordinary shares of Gippsland Limited were issued on the exercise of options granted. No amounts are unpaid on any of the shares. Grant Date Exercise Price Number of Shares Issued 31.12.2007 $0.09 33,674,180 No person entitled to exercise the option had or has any right by virtue of the option to participate in any share issue of any other body corporate. Proceedings on Behalf of Company No person has applied for leave of Court to bring proceedings on behalf of the company or intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for all or any part of those proceedings. The company was not a party to such proceedings during the year. Non-audit Services The board of directors is satisfied that the provision of non-audit services during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the services disclosed in Note 20 did not compromise the external auditor's independence for the following reasons: * The nature of the services provided do not compromise the general principles relating to auditor independence in accordance with APES 110: Code of Ethics for Professional Accountants set by the Accounting Professional and Ethical Standards Board. The following fees for non-audit services were paid / payable to the external auditors during the year ended 30 June 2008: $ Taxation Services 2,992 Corporate Advisory Fees 22,697 Auditors Independence Declaration The lead auditor's independence declaration for the year ended 30 June 2008 has been received and can be found on page 15 of the directors' report. Signed in accordance with a resolution of the Board of Directors. R J TELFORD, Director Dated this 30th day of September 2008. Income Statement FOR THE YEAR ENDED 30 JUNE 2008 Notes CONSOLIDATED PARENT 2008 2007 2008 2007 $ $ $ $ Continuing Operations Revenue Finance income 5(b) 77,542 125,262 74,152 125,226 77,542 125,262 74,152 125,226 Other Income 5(a) 3,338 10,168 1,835 1,935 Foreign exchange losses (935,947) (53,429) (5,189) (38,262) Exploration expense (59,515) (287,516) (59,515) (34,061) Project development expense (211,937) (35,526) - - Impairment reversal of 3 2,184,129 - - - exploration expenditure Depreciation and amortisation (70,353) (41,119) (22,216) (23,536) expense Impairment of intercompany 10 - - (3,219,534) (2,768,260) loans Impairment of exploration and 12 (1,109,807) (2,236,564) - - evaluation expenditure Employee benefits expense 5(d) (1,247,101) (671,932) (806,986) (579,374) Administration expense 5(c) (2,051,916) (1,000,497) (1,292,517) (955,541) Finance costs 5(b) (3,566) (65) (56) (65) Loss from continuing (3,425,133) (4,191,218) (5,330,026) (4,271,808) operations before tax Income tax expense 6 - - - - Loss after tax from continuing (3,425,133) (4,191,218) (5,330,026) (4,271,808) operations Loss attributable to minority - - - - interest Loss attributable to members 7 (3,425,133) (4,191,218) (5,330,026) (4,271,808) of the parent Earnings per share (cents per 7 share) - basic for loss for the year (1.24) (1.77) - basic for loss from (1.24) (1.77) continuing operations - diluted for loss for the (1.24) (1.77) year - diluted for loss from (1.24) (1.77) continuing operations - dividends paid per share - - Balance Sheet AS AT 30 JUNE 2008 Notes CONSOLIDATED PARENT 2008 2007 2008 2007 $ $ $ $ ASSETS Current Assets Cash and cash equivalents 8 1,592,840 2,611,219 1,328,816 2,315,359 Trade and other receivables 9 47,941 122,806 47,941 121,255 Prepayments 46,095 19,530 35,051 19,530 Total Current Assets 1,686,876 2,753,555 1,411,808 2,456,144 Non-Current Assets Other financial assets 10 - - 27,688 305 Property, plant and equipment 11 199,747 154,908 68,253 88,136 Exploration and evaluation 12 3,105,666 - - - expenditure Total Non-Current assets 3,305,413 154,908 95,941 88,441 TOTAL ASSETS 4,992,289 2,908,463 1,507,749 2,544,585 LIABILITIES Current Liabilities Trade and other payables 14 799,863 458,177 150,622 201,514 Provisions 15 58,328 38,301 21,243 11,476 Total Current Liabilities 858,191 496,478 171,865 212,990 TOTAL LIABILITIES 858,191 496,478 171,865 212,990 NET ASSETS 4,134,098 2,411,985 1,335,884 2,331,595 EQUITY Equity attributable to equity holders of the parent Issued capital 16 29,550,495 25,409,780 29,550,495 25,409,780 Retained earnings / (Accumulated losses) (26,561,730) (23,136,597) (28,547,013) (23,216,987) Other reserves 16 1,145,333 138,802 332,402 138,802 Parent interests 4,134,098 2,411,985 1,335,884 2,331,595 Minority interests - - - - TOTAL EQUITY 4,134,098 2,411,985 1,335,884 2,331,595 Cash Flow Statement FOR THE YEAR ENDED 30 JUNE 2008 Notes CONSOLIDATED PARENT 2008 2007 2008 2007 $'000 $'000 $'000 $'000 Cash flows from operating activities Payments to suppliers and (2,918,308) (1,559,832) (1,951,685) (1,615,754) employees Other 3,338 - 1,835 - Net cash flows used in 8 (2,914,970) (1,559,832) (1,949,850) (1,615,754) operating activities Cash flows from investing activities Interest received 80,423 132,549 77,032 124,280 Purchase of property, plant (46,130) (160,342) (2,333) (67,459) and equipment Increase in investment in - - (27,383) - subsidiary Purchase of exploration and (2,155,401) (2,437,175) - - evaluation expenditure Other - - (3,219,535) (2,773,570) Net cash flows used in (2,121,108) (2,464,968) (3,172,219) (2,716,749) investing activities Cash flows from financing activities Proceeds from issue of shares 16 4,140,715 2,751,505 4,140,715 2,751,505 (net of issue costs) Net cash flows from financing 4,140,715 2,751,505 4,140,715 2,751,505 activities Net decrease in cash and cash (895,363) (1,273,295) (981,354) (1,580,998) equivalents Net foreign exchange (123,016) (53,429) (5,189) (38,263) differences Cash and cash equivalents at 2,611,219 3,937,943 2,315,359 3,934,620 beginning of period Cash and cash equivalents at 8 1,592,840 2,611,219 1,328,816 2,315,359 end of period Statement Of Changes In Equity FOR THE YEAR ENDED 30 JUNE 2008 Minority Total Attributable to equity holders of the parent interest equity Issued Retained Other Total capital earnings Reserves $ $ $ $ $ $ CONSOLIDATED At 1 July 2006 22,658,274 (18,945,379) 77,827 3,790,722 3,790,722 Loss for the year - (4,191,218) - (4,191,218) - (4,191,218) Total income / expense for the - (4,191,218) - (4,191,218) - (4,191,218) year Issue of Share Capital 2,896,294 - - 2,896,294 - 2,896,294 Transaction Costs (144,788) - - (144,788) - (144,788) Cost of share-based payments - - 60,975 60,975 - 60,975 At 30 June 2007 25,409,780 (23,136,597) 138,802 2,411,985 - 2,411,985 Currency translation - - 812,931 812,931 - 812,931 differences Loss for the year - (3,425,133) - (3,425,133) - (3,425,133) Total income / expense for the - (3,425,133) - (3,425,133) - (3,425,133) year Issue of share capital 1,181,290 - - 1,181,290 - 1,181,290 Transaction Costs (71,251) - - (71,251) - (71,251) Exercise of options 3,030,676 - - 3,030,676 - 3,030,676 Cost of share-based payments - - 193,600 193,600 - 193,600 At 30 June 2008 29,550,495 (26,561,730) 1,145,333 4,134,098 - 4,134,098 FOR THE YEAR ENDED 30 JUNE 2008 Minority Total Attributable to equity holders of the parent interest Equity Issued Retained Other Reserves Total capital earnings $ $ $ $ $ $ PARENT At 1 July 2006 22,658,274 (18,945,179) 77,827 3,790,922 3,790,922 Loss for the year - (4,271,808) - (4,271,808) - (4,271,808) Total income / expense for the - (4,271,808) - (4,271,808) - (4,271,808) year Issue of share capital 2,896,294 - - 2,896,294 - 2,896,294 Transaction costs (144,788) - - (144,788) - (144,788) Cost of share-based payments - - 60,975 60,975 - 60,975 At 30 June 2007 25,409,780 (23,216,987) 138,802 2,331,595 - 2,331,595 Loss for the year - (5,330,026) - (5,330,026) - (5,330,026) Total income / expense for the - (5,330,026) - (5,330,026) - (5,330,026) year Issue of share capital 1,181,290 - - 1,181,290 - 1,181,290 Transaction costs (71,251) - - (71,251) - (71,251) Exercise of options 3,030,676 - - 3,030,676 - 3,030,676 Cost of share-based payments - - 193,600 193,600 - 193,600 At 30 June 2008 29,550,495 (28,547,013) 332,402 1,335,884 - 1,335,884 Notes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2008 1 CORPORATE INFORMATION The financial report of Gippsland Limited for the year ended 30 June 2008 was authorised for issue in accordance with a resolution of the directors on 23 September 2008. Gippsland Limited is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Securities exchange. The nature of the operations and principal activities of the Group are described in note 3. 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Basis of Preparation The financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001 and applicable Australian Accounting Standards. The financial report has also been prepared on a historical cost basis, except for investment properties, land and buildings, derivative financial instruments and available-for-sale financial assets that have been measured at fair value. The financial report is presented in Australian dollars. Australian Accounting Standards include Australian Equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the financial report complies with International Financial Report Standards ('IFRS'). (b) Going Concern The consolidated entity and the parent entity incurred a net loss of $3,425,133 and $5,330,026, respectively for the year then ended 30 June 2008. As at that date, the cash resources of the group totalled $1,592,840. The directors have prepared a cash flow forecast for the year ending 30 June 2009 which indicates that the current cash resources may not meet expected cash outgoings. The directors are currently seeking to raise additional equity funds to provide sufficient working capital for the company to continue through to finalising a loan agreement and further capital raising for the construction of the Abu Dabbab project in Egypt. The outcome of this pre project equity raising is not yet concluded. These conditions indicate a material uncertainty that may cast significant doubt about the consolidated entity's and parent entity's ability to continue as going concerns. The directors are well advanced in negotiations for project financing with Kfw Bankengruppe which is owned 80% by the German Federal Government and 20% by the German federal states (Bundeslander). The directors have prepared cash flow forecasts that indicate that the amount and type of funding the consolidated entity and the parent entity will require to construct the Abu Dabbab project. This forecast assumes that a loan agreement is finalised with a major bank and an equity component of the funding is raised from investors. The outcome of this debt and further equity raising is not yet confirmed or concluded. The ability of the consolidated entity and the parent entity to continue as going concerns is principally dependent upon raising additional capital and / or debt finance to fund exploration and project development, funding the Abu Dabbab project, other commitments, other principal activities and working capital. Should the consolidated entity and the parent entity be unable to continue as going concerns, they may be required to realise their assets and extinguish their liabilities other than in the ordinary course of business, and at amounts that differ from those stated in the financial statements. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts or classification of liabilities and appropriate disclosures that may be necessary should the consolidated entity and parent entity be unable to continue as going concerns. (c) Adoption of New Accounting Standards The company has adopted AASB 7 'Financial Instruments; Disclosures' and all consequential amendments which became applicable on 1 January 2007. The adoption of this standard has only affected the disclosure in these financial statements. There has been no affect on profit and loss or the financial position of the entity. (d) New Standards and Interpretations Not Yet Adopted Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2008 reporting periods. The Group's and the parent entity's assessment of the impact of these new standards and interpretations is set out below. New or revised requirement Effective for annual More information Impact on Group reporting periods beginning/ending on or after New or revised requirement Effective for annual More information Impact on Group reporting periods beginning/ending on or after New and revised Standards AASB 101 Presentation of Beginning 1 January This will be adopted This is a disclosure Financial Statements (Revised 2009 for the year ended standard and September 2007), AASB 2007-8 30 June 2010 therefore does not Amendments to Australian affect amounts Accounting Standards & recognised in the Interpretations and AASB financial 2007-10 Further Amendments to statements. AASBs arising from AASB 101 The revised standard affects the presentation of changes in equity and comprehensive income. It does not change the recognition, measurement or disclosure of specific transactions and other events required by other AASB standards. Australian issuers will need to make use in financial reports of the descriptions- Statement of Financial Performance and Position rather than Balance Sheet and Income Statement and use the term "financial report" and not "financial statement." The Amending Standard updates references in various other pronouncements. New or revised requirement Effective for annual More information Impact on Group reporting periods beginning/ending on or after New and revised Standards AASB 123 Borrowing Costs Beginning 1 January This will be adopted To date the company (Revised), AASB 2007-6 2009 for the year ended has not been Amendments to Australian 30 June 2010 involved in such Accounting Standards 1, 101, transactions, 107, 111, 116, 138 and therefore the impact Interpretations 1 & 12 is not expected to be material. This revision eliminates the option to expense borrowing costs on qualifying assets and requires that they be capitalised. The transitional provision provided allows for prospective application of this revision from either application date or adoption date if prior to 1 January 2009. The Amending Standard eliminates reference to the expensing option in various other pronouncements. AASB 3 Business Combinations Beginning 1 July This will be adopted If the group (Revised), AASB 127 2009 for the year ended undertakes such Consolidated and Separate 30 June 2010 transactions, this Financial Statements needs to be (Amended), AASB 2008-3 considered. Amendments to AASBs arising from AASB 3 and AASB 127 This revision changes the application of acquisition accounting for business combinations and accounting for non-controlling interests. The revised and amended standards incorporate many changes which will have a significant impact on the profit and loss for entities entering into business combinations. AASB 8 Operating Segments, Beginning 1 January This will be adopted This is a disclosure AASB 2007-3 Amendments to 2009 for the year ended standard and Australian Accounting 30 June 2010 therefore does not Standards 5, 6, 102, 107, 119, affect amounts 127, 134, 136, 1023 & 1038 recognised in the arising from AASB 8 financial statements. This standard supersedes AASB 114 Segment Reporting introducing a US GAAP approach of management reporting as part of the convergence project with FASB. New or revised requirement Effective for annual More information Impact on Group reporting periods beginning/ending on or after New and revised Standards AASB 2008- 1 - Amendments to Beginning 1 January This will be adopted The impact of this AASB 2 "Share Based Payments 2009 for the year ended standard will affect 30 June 2010 the valuation of options issued by The amendment clarifies that the company but is vesting conditions are not considered to be restricted to: material. * service conditions; and * Performance conditions only. Other features of a share-based payment are not vesting conditions. This means that all other terms and conditions are accounted for in the value of the share or option at grant date. (e) Basis of consolidation The consolidated financial statements comprise the financial statements of Gippsland Limited and its subsidiaries as at 30 June each year ('the Group'). The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. Adjustments are made to bring into line any dissimilar accounting policies that may exist. All intercompany balances and transactions, including unrealised profits arising from intra-group transactions, have been eliminated in full. Unrealised losses are eliminated unless costs cannot be recovered. Subsidiaries are consolidated from the date on which control is transferred to the group and cease to be consolidated from the date on which control is transferred out of the Group. Where there is loss of control of a subsidiary, the consolidated financial statements include the results for the part of the reporting period during which Gippsland Limited has control. (f) Interest in joint venture operation The Group's interest in its joint venture operation is accounted for by recognising the Group's assets and liabilities from the joint venture, as well as expenses incurred by the Group and the Group's share of income earned from the joint venture, in the consolidated financial statements. (g) Foreign currency translation Both the functional and presentation currency of Gippsland Limited and its Australian subsidiaries is Australian dollars ($AUD). Transactions in foreign currencies are initially recorded in the functional currency at the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance sheet date. (g) Foreign currency translation (continued) All differences in the consolidated financial report are taken to the income statement with the exception of differences on foreign currency borrowings that provide a hedge against a net investment in a foreign entity. These are taken directly to equity until the disposal of the net investment, at which time they are recognised in the income statement. Tax charges and credits attributable to exchange differences on those borrowings are also recognised in equity. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. The functional currency of the overseas subsidiaries Tantalum Egypt JSC, Nubian Resources JSC and Nubian Resources PLC is Egyptian pounds (EGP). As at the reporting date the assets and liabilities of these overseas subsidiaries are translated into the presentation urrency of Gippsland Limited at the rate of exchange ruling at the balance sheet date and the income statements are translated at the weighted average exchange rates for the year. The exchange differences arising on the retranslation are taken directly to a separate component of equity. On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised in the income statement. (h) Property, plant and equipment Plant and equipment is stated at cost less accumulated depreciation and any impairment in value. Depreciation is calculated on a straight-line basis over the estimated useful life of the asset as follows: Leasehold Improvements - over 2 to 5 years Plant and equipment - over 3 to 10 years Impairment The carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets or cash-generating units are written down to their recoverable amount. The recoverable amount of plant and equipment is the greater of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses are recognised in the income statement. (h) Property, plant and equipment (continued) An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued used of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the income statement in the period the item is derecognised. (i) Exploration and evaluation expenditure Exploration, evaluation and development expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves. Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area is made. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. (j) Recoverable amount of assets At each reporting date, the Group assesses whether there is any indication that an asset may be impaired. Where an indicator of impairment exists, the Group makes a formal estimate of recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount the asset is considered impaired and is written down to its recoverable amount. Recoverable amount is the greater of fair value less costs to sell and value in use. It is determined for an individual asset, unless the asset's value in use cannot be estimated to be close to its fair value less costs to sell and it does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case, the recoverable amount is determined for the cash-generating unit to which the asset belongs. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. (k) Investments All investments are initially recognised at cost, being the fair value of the consideration given and including acquisition charges associated with the investment. After initial recognition, investments are measured as fair value. Gains or losses on investments are recognised in the income statement. Non-derivative financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the Group has the positive intention and ability to hold to maturity. Investments intended to be held for an undefined period are not included in this classification. For investments where there is no quoted market price, fair value is determined by reference to the current market value of another instrument which is substantially the same or is calculated based on the expected cash flows of the underlying net asset base of the investment. (k) Investments (continued) Purchases and sales of financial assets that require delivery of assets within the time frame generally established by regulation or convention in the market place are recognised on the trade date i.e. the date that the Group commits to purchase the asset. (l) Trade and other receivables Trade receivables, which generally have 30-90 day terms, are recognised and carried at original invoice amount less an allowance for any uncollectible amounts. An estimate for impairment loss is made when collection of the full amount is no longer probable. Bad debts are written off when identified. (m) Cash and cash equivalents Cash and short-term deposits in the balance sheet comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less. For the purposes of the Cash Flow Statement, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts. (n) Trade and other payables Trade and other payables are carried at amortised cost due to their short term nature they are not discounted. They represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. The amounts are unsecured and are usually paid within 30 days of recognition. (o) Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the income statement net of any reimbursement. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost. (p) Share-based payment transactions The Group provides remuneration to employees (including directors) of the Group in the form of share-based payment transactions, whereby employees render services in exchange for shares or rights over shares ('equity-settled transactions'). The cost of these equity-settled transactions with employees is measured by reference to the fair value at the date at which they are granted. In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price if the shares of Gippsland Limited ('market conditions'). (p) Share-based payment transactions (continued) The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award ('vesting date'). The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which the vesting period has expired and (ii) the number of awards that, in the opinion of the directors of the Group, will ultimately vest. This opinion is formed based on the best available information at balance date. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date. No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition. Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any increase in the value of the transaction as a result of the modification, as measured at the date of modification. Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph. The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per share (see note 7). (q) Leases Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as the lease income. Operating lease payments are recognised as an expense in the income statement on a straight-line basis over the lease term. Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised: Interest Revenue is recognised as the interest accrues (using the effective interest method, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial instrument) to the net carrying amount of the financial asset. (r) Income tax Deferred income tax is provided on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for the financial reporting purposes. Deferred income tax liabilities are recognised for all taxable temporary differences: · except where the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and · in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, except where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilised: · except where the deferred income tax asset relating to the deductible temporary differences arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and · in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised. The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date. Income taxes relating to items recognised directly in equity are recognised in equity and not in the income statement. (s) Other taxes Revenues, expenses and assets are recognised net of the amount of GST except: * where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and * receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet. Cash flows are included in the Cash Flow statement on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority. (t) Derecognition of financial instruments The derecognition of a financial instrument takes place when the Group no longer controls the contractual rights that comprise the financial instrument, which is normally the case when the instrument is sold, or all the cash flows attributable to the instrument are passed through to an independent third party. (u) Critical Accounting Judgements and Key Sources of Estimation Uncertainty In the application of AIFRS management is required to make judgments, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstance, the results of which form the basis of making the judgments. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the year in which the estimate is revised if the revision affects only that year, or in the year of the revision and future years if the revision affects both current and future years. Judgments made by management that have significant effects on the financial statements and estimates with a significant risk of material adjustments in the next year are disclosed, these relate to impairment of inter-company loans and exploration and evaluation expenditure. Accounting policies are selected and applied in a manner which ensures that the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported. (v) Financial risk management objectives and policies The Group's principal financial instruments comprise receivables, payables, cash and short-term deposits. The Group manages its exposure to key financial risks, including interest rate and currency risk in accordance with the Group's financial risk management policy. The objective of the policy is to support the delivery of the Group's financial targets whilst protecting future financial security. The main risks arising from the Group's financial instruments are interest rate risk, foreign currency risk, credit risk and liquidity risk. The Group uses different methods to measure and manage different types of risks to which it is exposed. These include monitoring levels of exposure to interest rate and foreign exchange risk and assessments of market forecasts for interest rate, foreign exchange and commodity prices. Ageing analyses and monitoring of specific credit allowances are undertaken to manage credit risk, liquidity risk is monitored through the development of future rolling cash flow forecasts. The Board reviews and agrees policies for managing each of these risks as summarised below. Primary responsibility for identification and control of financial risks rests with the Board. The Board reviews and agrees policies for managing each of the risks identified below, including the setting of limits for credit allowances and future cash flow forecast projections. Risk Exposures and Responses Interest rate risk The Group's has no long-term debt obligations. The Group's exposure to market interest rates primarily relate to cash and cash equivalents. At balance date, the Group had the following mix of financial assets and liabilities exposed to Australian Variable interest rate risk that are not designated in cash flow hedges: Consolidated Parent 2008 2007 2008 2007 Financial Assets Cash and cash equivalents 1,592,840 2,611,219 1,328,816 2,315,359 1,592,840 2,611,219 1,328,816 2,315,359 Cash flow sensitivity analysis for variable rate instruments A change of 100 basis points in interest rates at the reporting date would have increased (decreased) equity and profit or loss by the amounts shown below. The analysis is performed on the same basis for 2007. 2008 Profit or Loss Equity Carrying Value 100bp increase 100bp decrease 100bp increase 100bp decrease $ $ $ $ $ Cash and cash equivalents 1,592,840 13,813 (13,813) 13,813 (13,813) Trade receivables 47,941 - - - - Cash flow sensitivity (net) 13,813 (13,813) 13,813 (13,813) 2007 Profit or Loss Equity Carrying Value 100bp increase 100bp decrease 100bp increase 100bp decrease $ $ $ $ $ Cash and cash equivalents 2,611,219 23,034 (23,034) 23,034 (23,034) Trade receivables 122,806 - - - - Cash flow sensitivity (net) 23,034 (23,034) 23,034 (23,034) Foreign currency risk As a result of operations in Egypt, the Group's balance sheet can be affected significantly by movements in the EGP/A$ exchange rates. The Group also has transactional currency exposures. Such exposure arises from sales or purchases by an operating entity in currencies other than the functional currency. Approximately 58% of costs are denominated in the unit's functional currency. At 30 June 2008, the Group had the following exposure to foreign currency that is not designated in cash flow hedges: Consolidated Parent 2008 2007 2008 2007 Financial Assets US$ Cash and cash equivalents 229,733 284,511 - - EGP Cash and cash equivalents 34,291 11,347 - - Trade and other receivables - 1,551 - - GBP Cash and cash equivalents 1,120,056 - 1,120,056 - 1,384,080 297,409 1,120,056 - Financial Liabilities US$ Trade and other payables 55,645 52,966 - - EGP Trade and other payables 6,375 28,340 - - Euro Trade and other payables 57,528 8,430 - - GBP Trade and other payables 118,860 - 41,145 238,408 89,736 41,145 - Net exposure 1,145,672 207,673 1,078,911 - The following sensitivity is based on the foreign currency risk exposures in existence at the balance sheet date: At 30 June 2008, had the Australian Dollar moved, as illustrated in the table below, with all other variables held constant, post tax profit and equity would have been affected as follows: Judgements of reasonably possible movements: Post Tax Loss (Higher)/Lower Equity Higher/(Lower) 2008 2007 2008 2007 $ $ $ $ Consolidated AUD/EGP +10% 561,219 637,183 (1,650,637) (630,467) AUD/EGP -10% (685,934) (778,779) 2,017,445 770,571 Parent AUD/EGP +10% - - - - AUD/EGP -10% - - - - The movements in equity in 2008 are more sensitive than in 2007 due to the higher level of EGP payables at balance date. Management believe the balance date risk exposures are representative of the risk exposure inherent in the financial instruments. Credit risk Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents, and trade and other receivables. The Group's exposure to credit risk arises from potential default of the counter party, with a maximum exposure equal to the carrying amount of these instruments. Exposure at balance date is addressed in each applicable note. The Group does not hold any credit derivatives to offset its credit exposure. In addition, receivable balances are monitored on an ongoing basis with the result that the Group's exposure to bad debts is not significant. There are no significant concentrations of credit risk within the Group. Liquidity risk The Group's objective is to maintain a continuity of funding to ensure sufficient working capital is available to meet the companies exploration and development commitments. The table below reflects all contractually fixed pay-offs and receivables for settlement, repayments and interest resulting from recognised financial assets and liabilities as of 30 June 2008. The values presented are the respective undiscounted cash flows for the respective upcoming fiscal years. Cash flows for financial assets and liabilities without fixed amount or timing are based on the conditions existing at 30 June 2008. The remaining contractual maturities of the Group's and parent entity's financial liabilities are: Consolidated Parent 2008 2007 2008 2007 6 months or less 836,948 458,177 150,622 201,514 6-12 months - - - - 1-5 years - - - - over 5 years - - - - 836,948 458,177 150,622 201,514 Maturity analysis of financial assets and liability based on management's expectation. The risk implied from the values shown in the table below, reflects a balanced view of cash inflows and outflows. These assets are considered in the Group's overall liquidity risk. To monitor existing financial assets and liabilities as well as to enable an effective controlling of future risks. *6 months 6-12 months 1-5 years >5 years Total Year ended 30 June 2008 $ $ $ $ $ Consolidated Financial Assets Cash and cash equivalents 1,592,840 - - - 1,592,840 Trade and other receivables 47,941 - - - 47,941 1,640,781 - - - 1,640,781 Consolidated Financial Liabilities Trade and other payables 799,863 - - - 799,863 799,863 - - - 799,863 Net maturity 840,918 - - - 840,918 *6 months 6-12 months 1-5 years >5 years Total Year ended 30 June 2008 $ $ $ $ $ Parent Financial Assets Cash and cash equivalents 1,328,816 - - - 1,328,816 Trade and other receivables 47,941 - - - 47,941 1,376,757 - - - 1,376,757 Parent Financial Liabilities Trade and other payables 150,622 - - - 150,622 150,622 - - - 150,622 Net maturity 1,226,135 - - - 1,226,135 *6 months 6-12 months 1-5 years >5 years Total Year ended 30 June 2007 $ $ $ $ $ Consolidated Financial Assets Cash and cash equivalents 2,611,219 - - - 2,611,219 Trade and other receivables 122,806 - - - 122,806 2,734,025 - - - 2,734,025 Consolidated Financial Liabilities Trade and other payables 458,177 - - - 458,177 458,177 - - - 458,177 Net maturity 2,275,848 - - - 2,275,848 *6 months 6-12 months 1-5 years >5 years Total Year ended 30 June 2007 $ $ $ $ $ Parent Financial Assets Cash and cash equivalents 2,315,359 - - - 2,315,359 Trade and other receivables 121,255 - - - 121,255 2,436,614 - - - 2,436,614 Parent Financial Liabilities Trade and other payables 201,514 - - - 201,514 201,514 - - - 201,514 Net maturity 2,235,100 - - - 2,235,100 3 REVERSAL OF IMPAIRMENT LOSS In the current period, the company has reversed the exploration and evaluation impairment losses previously recognised amounting to $2,184,129 in relation to the Abu Dabbab tantalite, tin and feldspar project. The main events and circumstances that led to the reversal of these impairment losses are as follows: * A 10 year off take agreement was signed with the German company HC Starck GmbH for the supply of 600,000 pounds of tantalum per annum. * Bankable Feasibility Study on the Abu Dabbab project has been completed. * Detailed negotiations with the Kfw German Bank to secure the debt portion of the project finance have commenced. The bank is continuing with its due diligence process. * An in fill drilling program at Abu Dabbab has been completed resulting in an increase in the project reserves. * A major equity raising is planned following the completion of the bank due diligence. 4 SEGMENT INFORMATION The Group's primary reporting format is business segments and its secondary format is geographical segments. The operating businesses are organised and managed separately according to the nature of the products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets. Transfer prices between business segments are set at an arms length basis in a manner similar to transactions with third parties. Business segments The following tables present revenue and profit information and certain asset and liability information regarding business segments for the years ended 30 June 2008 and 2007. Continuing Operations Total Operations Tantalum Gold Corporate $ $ $ $ Year ended 30 June 2008 Revenue Other revenues from external 1,966 1,425 77,489 80,880 customers Inter-segment sales - 23,934 - 23,934 Total segment revenue 1,966 25,359 77,489 104,814 Inter-segment elimination (23,934) Total consolidated revenue 80,880 Result Segment result (679,232) 1,995,375 2,108,990 3,425,133 Loss before income tax and 3,425,133 minority interest Income tax expense - Net loss for the year 3,425,133 Assets and liabilities Segment assets 3,215,400 296,828 1,480,061 4,992,289 Total assets 4,992,289 Segment liabilities 465,755 220,571 171,865 858,191 Total liabilities 858,191 Other segment information Capital expenditure 7,967 - 2,333 10,300 Depreciation 13,868 34,268 22,217 70,353 Impairment losses - 1,109,807 - 1,109,807 Reversal of impairment 2,184,129 - - 2,184,129 Continuing Operations Total Operations Tantalum Gold Corporate Year ended 30 June 2007 Revenue Other revenues from external - 8,269 127,161 135,430 customers Total segment revenue - 8,269 127,161 135,430 Inter-segment elimination - Total consolidated revenue 135,430 Result Segment result 825,198 1,862,473 1,503,548 4,191,219 Loss before income tax and 4,191,219 minority interest Income tax expense - Net profit for the year 4,191,219 Assets and liabilities Segment assets 235,388 128,793 2,544,282 2,908,463 Total assets 2,908,463 Segment liabilities 58,578 224,910 212,990 496,478 Total liabilities 496,478 Other segment information Capital expenditure - 66,635 93,707 160,342 Depreciation - 17,583 23,536 41,119 Impairment losses 742,670 1,493,894 - 2,235,564 Geographical segments The Group's geographical segments are determined by the location of the Group's assets and operations. The following tables present revenue, expenditure and certain asset information regarding geographical segments for the years ended 30 June 2008 and 2007 Australia Egypt Total Year ended 30 June 2008 Revenue Other revenues from external customers 77,490 3,390 80,880 Less revenue attributable to discontinued - - - operation Revenue from continuing operations 77,490 3,390 80,880 Inter-segment sales - - - Segment revenue 77,490 3,390 80,880 Other segment information Segment assets 1,480,061 3,512,228 4,992,289 Total assets 4,992,289 Capital expenditure 2,333 7,967 10,300 Year ended 30 June 2007 Revenue Other revenues from external customers 127,161 8,269 135,430 Less revenue attributable to discontinued - - - operation Revenue from continuing operations 127,161 8,269 135,430 Inter-segment sales - - - Segment revenue 127,161 8,269 135,430 Other segment information Segment assets 2,544,282 364,181 2,908,463 Total assets 2,908,463 Capital expenditure 93,707 66,635 160,342 5 REVENUES AND EXPENSES CONSOLIDATED PARENT 2008 2007 2008 2007 $ $ $ $ (a) Other income Other income 3,338 10,168 1,835 1,935 3,338 10,168 1,835 1,935 (b) Finance (costs) / income Bank loans and overdrafts (3,566) (65) (56) (65) Total finance costs (3,566) (65) (56) (65) Bank interest receivable 77,542 125,262 74,152 125,226 Total finance income 77,542 125,262 74,152 125,226 (c) Lease payments and other expenses included in income statement Included in administrative expenses: Minimum lease payments - operating 123,328 63,449 106,654 55,425 lease Option expense 193,600 60,975 193,600 60,975 Consultancy expense 140,953 117,169 57,405 105,202 (d) Employee benefits expense Wages and Salaries 1,217,380 589,554 778,916 496,996 Superannuation costs 29,721 21,403 28,069 21,403 Expense of share-based payments - 60,975 - 60,975 1,247,101 671,932 806,985 579,374 6 INCOME TAX Major components of income tax expense for the years ended 30 June 2008 and 2007 are: Income Statement Current income Current income tax charge - - - - Adjustments in respect of current income tax of previous years - - - - Deferred income tax Relating to origination and reversal of temporary differences - - - - Benefit from previously unrecognised tax loss used to reduce - - - - deferred tax expense Income tax expense reported in income statement - - - - CONSOLIDATED PARENT 2008 2007 2008 2007 $'000 $'000 $'000 $'000 Statement of changes in equity Deferred income tax Capital raising costs - - - - Income tax expense reported in equity - - - - A reconciliation of income tax expense (benefit) applicable to accounting profit before income tax at the statutory income tax rate to income tax expense at the Group's effective income tax rate for the years ended 30 June 2008 and 2007 is as follows: Accounting profit (loss) (3,425,133) (4,191,218) (5,330,027) (4,271,808) before tax from continuing operations Loss before tax from - - - - discontinued operations Accounting profit (loss) (3,425,133) (4,191,218) (5,330,027) (4,271,808) before income tax At the statutory income tax (1,027,540) (1,257,366) (1,599,008) (1,281,542) rate of 30% (2007: 30%) Provision for non-recovery of - 832,071 - 832,071 loans Exploration expenditure 17,855 10,218 17,855 10,218 incurred in relation to a foreign permanent establishment Non-deductible expenses 62,389 73,918 62,389 73,918 Temporary differences not 947,296 341,159 1,518,764 365,335 recognised Income tax expense - - - - Income tax expense reported in - - - - income statement Income tax attributable to - - - - discontinued operation - - - - Effective income tax rate 0% 0% 0% 0% CONSOLIDATED PARENT 2008 2007 2008 2007 $'000 $'000 $'000 $'000 Unrecognised deferred tax assets and liabilities Deferred tax assets and liabilities have not been recognised in respect of the following items: Interest receivable - (864) - (864) Business related costs 105,744 125,382 105,744 125,382 Accrued superannuation - 523 - 523 Accrued audit fees 8,724 6,000 4,989 6,000 Accrued directors fees - 5,000 - 5,000 Employee entitlements 6,373 4,665 6,373 3,443 Borrowing costs 1,454 2,181 1,454 2,181 Foreign exchange 110,695 12,078 1,557 11,118 Tax losses (domestic) 3,321,947 2,699,047 2,704,603 2,097,658 Trade and other receivables - - 4,062,664 3,096,804 Potential unrecognised tax benefit 3,554,937 2,854,012 6,887,384 5,347,245 @ 30% The deductible temporary differences and tax losses do not expire under current legislation. Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profit will be available against which the company can utilise benefits. 7 EARNINGS PER SHARE Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary shareholders (after deducting interest on the convertible redeemable preference shares) by the weighted average number of ordinary shares outstanding during the year (adjusted for the effects of dilutive options and dilutive convertible non-cumulative redeemable preference shares). The following reflects the income and share data used in the total operations basic and diluted earnings per share computations: CONSOLIDATED 2008 2007 $ $ Net loss attributable to ordinary shareholders for (3,425,133) (4,191,218) diluted earnings per share Shares Shares Weighted average number of ordinary shares for basic 276,638,760 237,310,914 earnings per share Adjusted weighted average number of ordinary shares 276,638,760 237,310,914 for diluted earnings per share The consolidated entity's options over ordinary shares could potentially dilute basic earnings per share in the future, however they have been excluded from the calculations of diluted earnings per share because they are anti-dilutive for the years presented. There have been no other transactions involving ordinary shares or potential ordinary shares since the reporting date and before the completion of these financial statements. To calculate earnings per share, the weighted average number of ordinary shares for both basic and diluted is as per the table above. The following table provides the profit figure used as the numerator: 2008 2007 cents cents Net loss attributable to ordinary shareholders from discontinued operations: - for basic earnings per share (1.24) (1.77) - for diluted earnings per share (1.24) (1.77) 8 CASH AND CASH EQUIVALENTS CONSOLIDATED PARENT 2008 2007 2008 2007 $ $ $ $ Cash at bank and in hand 1,551,516 338,362 1,328,816 42,502 Short term deposits 41,324 2,272,857 - 2,272,857 1,592,840 2,611,219 1,328,816 2,315,359 Cash at bank and in hand earns interest at floating rates based on daily bank rates. Short-term deposits are made for varying periods of between one day and one month depending on the immediate cash requirements of the Group, and earn interest at the respective short-term deposit rates. The fair value of cash and cash equivalents is $1,592,840 (2007: $2,611,219). Reconciliation of cash For the purposes of the Cash Flow Statement, cash and cash equivalents comprise the following at 30 June: Cash at bank and in hand 1,551,516 338,362 1,328,816 42,502 Short-term deposits 41,324 2,272,857 - 2,272,857 1,592,840 2,611,219 1,328,816 2,325,359 Reconciliation from the net profit after tax to the net cash flows from operations Net Loss (3,425,133) (4,191,218) (5,330,026) (4,271,808) Adjustments for: Depreciation and amortisation 70,353 41,119 22,216 23,536 Impairment losses (802,869) 2,236,564 3,219,535 2,768,260 Expenses capitalised (104,892) - - - Foreign exchange loss (gain) 935,947 53,429 5,189 38,262 Interest received (80,423) (132,549) (77,032) (124,280) Share options expensed 193,600 60,975 193,600 60,975 Changes in assets and liabilities (increase)/decrease in trade 74,864 (73,594) 73,314 (72,042) and other receivables (increase)/decrease in (26,565) (18,614) (15,521) (18,615) prepayments (decrease)/increase in 20,027 13,378 9,767 (13,447) provisions (decrease)/increase in trade 230,121 450,678 (50,892) (6,595) and other payables Net cash from operating (2,914,970) (1,559,832) (1,949,850) (1,615,754) activities 9 TRADE AND OTHER RECEIVABLES (CURRENT) CONSOLIDATED PARENT 2008 2007 2008 2007 $ $ $ $ Trade receivables 47,941 122,806 47,941 121,255 Trade receivables are non-interest bearing and are generally on 60-day terms. At 30 June, the ageing analysis of trade receivables is as follows: 0-30 31-60 61-90 61-90 +91 +91 Total Days Days Days Days Days Days PDNI* CI* PDNI* CI* 2008 Consolidated 47,941 47,941 - - - - - Parent 47,941 47,941 - - - - - 2007 Consolidated 122,806 122,806 - - - - - Parent 121,255 121,255 - - - - - * Past due not impaired ('PDNI') Considered impaired ('CI') The balances within trade and other receivables do not contain impaired assets and are not past due. It is expected that these other balances will be received when due. (a) Fair value and credit risk Due to the short term nature of these receivables, their carrying value is assumed to approximate their fair value. The maximum exposure to credit risk is the fair value of receivables. Collateral is not held as security, nor is it the Group's policy to transfer (on-sell) receivables to special purpose entities. (b) Foreign exchange and interest rate risk Detail regarding foreign exchange and interest rate risk exposure is disclosed in note 2 (v). 10 OTHER FINANCIAL ASSETS (NON-CURRENT) CONSOLIDATED PARENT 2008 2007 2008 2007 $ $ $ $ Loans receivable from controlled - - 13,542,214 10,322,679 entities (a) Provision for impairment of - - (13,542,214) (10,322,679) receivables Investments in controlled entities - - 27,688 305 (note 18) 27,688 305 The impairment of loans to subsidiaries was $3,219,534 (2007: $ 2,768,260). All amounts are receivable in Australian Dollars. (a) Loans receivable from controlled entities The loans to controlled entities are advanced interest free, are unsecured and will be repaid when the respective subsidiary is generating sufficient funds and has the financial capacity to meet the loan commitment. (b) Fair values The fair values and carrying values of non-current receivables of the Group are as follows: Consolidated Parent 2008 2007 2008 2007 $000 $000 $000 $000 Loan receivables - - - - (c) Interest rate risk Details regarding interest rate risk exposure are disclosed in note 2 (v). (d) Credit risk The maximum exposure to credit risk at the reporting date is the higher of the carrying value and fair value of each class of receivables. No collateral is held as security. 11 PROPERTY, PLANT AND EQUIPMENT CONSOLIDATED PARENT Leasehold Plant and equipment Total Leasehold Plant and equipment Total Improvements Improvements $ $ $ $ $ $ Year ended 30 June 2008 At 1 July 2007, Net of accumulated 31,055 123,853 154,908 16,552 71,584 88,136 depreciation Additions - 10,300 10,300 - 2,333 2,333 Disposals - - - - - - Transfers (14,503) 119,395 104,892 - - - Depreciation charge for the (3,650) (66,703) (70,353) (3,650) (18,566) (22,216) year At 30 June 2008, Net of accumulated 12,902 186,845 199,747 12,902 55,351 68,253 depreciation At 1 July 2007 Cost or fair value 33,385 225,697 259,082 18,251 143,379 161,630 Accumulated depreciation and (2,330) (101,844) (104,174) (1,699) (71,795) (73,494) impairment Net carrying amount 31,055 123,853 154,908 16,552 71,584 88,136 At 30 June 2008 Cost or fair value 18,251 316,165 334,416 18,251 110,104 128,355 Accumulated depreciation and (5,349) (129,320) (134,669) (5,349) (54,753) (60,102) impairment Net carrying amount 12,902 186,845 199,747 12,902 55,351 68,253 CONSOLIDATED PARENT Leasehold Plant and equipment Total Leasehold Plant and equipment Total Improvements Improvements $ $ $ $ $ $ Year ended 30 June 2007 At 1 July 2006, Net of accumulated - 35,685 35,685 - 35,685 35,685 depreciation Additions 33,385 126,957 160,342 18,251 75,456 93,707 Transfers - - - - (17,720) (17,720) Depreciation charge for the (2,330) (38,789) (41,119) (1,699) (21,837) (23,536) year At 30 June 2007, Net of accumulated 31,055 123,853 154,908 16,552 71,584 88,136 depreciation At 1 July 2006 Cost or fair value - 195,502 195,502 - 195,502 195,502 Accumulated depreciation and - (159,817) (159,817) - (159,817) (159,817) impairment Net carrying amount - 35,685 35,685 - 35,685 35,685 At 30 June 2007 Cost or fair value 33,385 225,697 259,082 18,251 143,379 161,630 Accumulated depreciation and (2,330) (101,844) (104,174) (1,699) (71,795) (73,494) impairment Net carrying amount 31,055 123,853 154,908 16,552 71,584 88,136 12 EXPLORATION AND EVALUATION EXPENDITURE CONSOLIDATED PARENT Evaluation Exploration costs Total Evaluation Exploration costs Total expenditure expenditure $ $ $ $ $ Year ended 30 June 2008 At 1 July 2007, net of accumulated - - - - - - amortisation Additions 1,204,358 1,064,693 2,269,051 - - - Impairment 2,184,129 (1,109,807) 1,074,322 - - - Exchange adjustment (282,821) 45,114 (237,707) - - - At 30 June 2008, net of accumulated 3,105,666 - 3,105,666 - - - amortisation At 1 July 2007 Cost (gross carrying amount) 3,784,660 2,809,451 6,594,111 - - - Accumulated amortisation and (3,784,660) (2,809,451) (6,594,111) - - - impairment Net carrying amount - - - - - - At 30 June 2008 Cost (gross carrying amount) 3,105,666 3,664,199 6,769,865 - - - Accumulated amortisation and - (3,664,199) (3,664,199) - - - impairment Net carrying amount 3,105,666 - 3,105,666 - - - For the year ended 30 June 2008, evaluation expenditure is capitalised at cost. This project cost will be amortised over the life of the Abu Dabbab operation once production has commenced. This asset is tested for impairment where an indicator of impairment arises. The exploration costs represent the expenditure on the Wadi Allaqi leases in Egypt. The exploration asset has been impaired because, at this stage of the project, there is insufficient resource to justify a project and hence the recovery of the asset. The impairment loss of $1,109,807 was charged in the 2008 financial year. A previous impairment on the Abu Dabbab project was reversed as per note 3. 13 EMPLOYEE BENEFITS Key management personnel Names and positions held of economic and parent entity key management personnel in office at any time during the financial year are: Key Management Person Position Mr RJ Telford Chairman - Executive Dr JM Chisholm Director - Executive Mr JSF Dunlop Director - Non-executive Mr JD Kenny Director - Non-executive Mr J Starink Director - Executive Mr PR Sims Chief Financial Officer Mr RS Caren Company Secretary Key management personnel remuneration has been included in the Remuneration Report section of the Directors Report. Options and Rights Holdings The Group had an option plan for the granting of non-transferable options to certain directors and senior executives. The relevant terms and conditions applicable to options granted under the option plan include: * The exercise price of the options was set at a agreed price at the date of granting the options; * Any options that are unvested on the 31 December 2007 lapsed. On 30 June 2008, Nil (2007: 15,568,322) options were held by key management personnel. Number of Options held by Key Management Personnel Balance 1.7.2007 Granted as Options Exercised Options Lapsed Balance 30.6.2008 Compensation Mr RJ Telford 6,558,322 - 6,558,322 - - Dr JM Chisholm 2,260,000 - 2,260,000 - - Mr JSF Dunlop 2,250,000 - - 2,250,000 - Mr JD Kenny 2,250,000 - 2,250,000 - - Mr J Starink - - - - - Mr PR Sims 2,250,000 - - 2,250,000 - Mr RS Caren - - - - - 15,568,322 - 11,068,322 4,500,000 - Balance 1.7.2006 Granted as Options Exercised Options Lapsed Balance 30.6.2007 Compensation Mr RJ Telford 6,558,322 - - - 6,558,322 Dr JM Chisholm 2,260,000 - - - 2,260,000 Mr JSF Dunlop 2,250,000 - - - 2,250,000 Mr JD Kenny 2,250,000 - - - 2,250,000 Mr J Starink - - - - - Mr PR Sims - 2,250,000 - - 2,250,000 Mr RS Caren - - - - - 13,318,322 2,250,000 - - 15,568,322 Shareholdings Number of Shares held by Key Management Personnel Balance 1.7.2007 Received as Options Exercised Net Change Other* Balance 30.6.2008 Compensation Mr RJ Telford 13,568,124 - 6,558,322 - 20,126,446 Dr JM Chisholm 160,000 - 2,260,000 - 2,420,000 Mr JSF Dunlop - - - - - Mr JD Kenny - - 2,250,000 - 2,250,000 Mr J Starink - - - 300,000 300,000 Mr PR Sims - - - - - Mr RS Caren - - - - - 13,728,124 - 11,068,322 300,000 25,096,446 Balance 1.7.2006 Received as Options Exercised Net Change Other* Balance 30.6.2007 Compensation Mr RJ Telford 13,568,124 - - - 13,568,124 Dr JM Chisholm 60,000 - - 100,000 160,000 Mr JSF Dunlop - - - - - Mr JD Kenny - - - - - Mr J Starink - - - - - Mr PR Sims - - - - - Mr RS Caren - - - - - 13,628,124 - - 100,000 13,728,124 * Net change refers to shares purchased or sold during the financial year. 14 TRADE AND OTHER PAYABLES (CURRENT) CONSOLIDATED PARENT 2008 2007 2008 2007 $ $ $ $ Other payables 799,863 396,193 150,622 139,530 Related party payables ( b) : Other related parties - 61,984 - 61,984 799,863 458,177 150,622 201,514 (a) Fair value Due to the short term nature of these payables, their carrying value is assumed to approximate their fair value. (b) Related party payables For terms and conditions relating to related party payables refer to note 18. (c) Interest rate, foreign exchange and liquidity risk Information regarding interest rate, foreign exchange and liquidity risk exposure is set out in note 2(v). 15 PROVISIONS Annual leave Total $ $ CONSOLIDATED At 1 July 2007 38,301 38,301 Arising during the year 35,823 35,823 Utilised (15,796) (15,796) At 30 June 2008 58,328 58,328 Current 2008 58,328 58,328 Non-current 2008 - - 58,328 58,328 Current 2007 38,301 38,301 Non-current 2007 - - 38,301 38,301 PARENT At 1 July 2007 11,476 11,476 Arising during the year 25,324 25,324 Utilised (15,557) (15,557) At 30 June 2008 21,243 21,243 Current 2008 21,243 21,243 Non-current 2008 - - 21,243 21,243 Current 2007 11,476 11,476 Non-current 2007 - - 11,476 11,476 16 ISSUED CAPITAL AND RESERVES CONSOLIDATED PARENT 2008 2007 2008 2007 $ $ $ $ Ordinary Shares Issued and fully paid 29,550,495 25,409,780 29,550,495 25,409,780 CONSOLIDATED PARENT Shares $ Shares $ Movement in ordinary shares on the issue At 1 July 2006 232,851,926 22,658,274 232,851,926 22,658,274 Issued on 7 February 2007 for 6,000 540 6,000 540 cash on exercise of share options at 9 cents each Issued on 1 May 2007 for cash 26,666,666 2,895,754 26,666,666 2,895,754 at 10.9 cents each Issue costs associated with - (144,788) - (144,788) capital raising At 1 July 2007 259,524,592 25,409,780 259,524,592 25,409,780 Issued on 31 December 2007 for 33,674,180 3,030,676 33,674,180 3,030,676 cash on exercise of share options at 9 cents each Issued on 26 February 2008 in 500,000 - 500,000 - accordance with an employment contract for nil consideration Issued on 27 June 2008 for 12,655,553 1,181,290 12,655,553 1,181,290 cash at 9.3 cents each Issue costs associated with - (71,251) - (71,251) capital raising At 30 June 2008 306,354,325 29,550,495 306,354,325 29,550,495 Options 2008 Number 2008 WAEP 2007 Number 2007 WAEP Outstanding at the beginning 83,232,393 0.11 80,988,393 0.11 of the year Granted during the year 4,000,000 0.16 2,250,000 0.15 Exercised during the year (33,674,180) (0.09) (6,000) (0.09) Expired during the year (24,558,213) (0.10) - - Outstanding at the end of the 29,000,000 0.14 83,232,393 0.11 year * WAEP refers to weighted average exercise price (a) Capital management The Board's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. There were no changes in the Group's approach to capital management during the year. Neither the company nor any of its subsidiaries are subject to externally imposed capital requirements. (b) Share-based payments On 5 February 2008, the company stockbrokers Fox Davies Holdings Limited and Seymour Pierce Limited were granted 2,000,000 options each with an exercise price of £0.07 on or before 15 December 2011. Using the Binomial Tree option valuation, the fair value of the options was calculated. The model takes into account share price volatilities and the risk that the company is not listed. The following inputs were used: Strike price A$ 0.15 Stock price A$ 0.10 Valuation date 05/02/2008 Expiry date 15/12/2011 Volatility 70% Risk free rate 6.75% Value per option A$ 0.0484 Number of options 4,000,000 Value of options A$ 193,600 The value of options issued was fully expensed at 30 June 2008. Other Reserves CONSOLIDATED PARENT Option reserve Foreign currency Total Option reserve Foreign currency Total translation translation $ $ $ $ $ $ At 1 July 2006 77,827 - 77,827 77,827 - 77,827 Share based payment 60,975 - 60,975 60,975 - 60,975 At 30 June 2007 138,802 - 138,802 138,802 - 138,802 Currency translation - 812,931 812,931 - - - differences Share based payment 193,600 - 193,600 193,600 - 193,600 As at 30 June 2008 332,402 812,931 1,145,333 332,402 - 332,402 Nature and purpose of reserves Option reserve The option reserve is used to record items recognised as expenses on valuation of share options. Foreign currency translation reserve The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries. It is also used to record the net investment hedged in these subsidiaries. 17 COMMITMENTS AND CONTINGENCIES Operating lease commitments - Group as lessee The Group has entered into commercial leases for office accommodation in Perth, Australia and Cairo Egypt. Perth Office Lease The property lease is a non-cancellable lease with a five year term, with rent payable monthly in advance. Contingent rental provisions within the lease agreement require the minimum lease payments shall be increased by the lower of CPI or 5% per annum. An option exists to renew the lease at the end of the five year term for an additional five years. Cairo Office Lease The property lease is a non-cancellable lease with a two year term, with rent payable monthly in advance. Operating Lease Commitments CONSOLIDATED PARENT 2008 2007 2008 2007 $ $ $ $ Within one year 140,925 114,612 123,704 96,000 After one year but not more than five 281,327 328,282 281,327 314,323 years More than five years - - - - 422,252 442,894 405,031 410,323 Capital commitments There were no capital commitments at reporting date. 18 RELATED PARTY DISCLOSURE The consolidated financial statements include the financial statements of Gippsland Limited and the subsidiaries listed in the following table: Country of Equity interest (%) Investment ($) incorporation 2008 2007 2008 2007 Abutan Pty Ltd Australia 100 100 100 100 Tantalum International Pty Ltd Australia 100 100 100 100 Here2win.com Pty Ltd Australia 100 100 100 100 Nubian Resources plc United Kingdom 100 100 27,388 5 Tantalum Egypt JSC Egypt 50 50 - - Nubian Resources JSC Egypt 100 - - - 27,688 305 Gippsland Limited is the ultimate Australian parent entity and ultimate parent of the Group. The following table provides the total amount of transactions which have been entered into with related parties for the relevant financial year: CONSOLIDATED PARENT 2008 2007 2008 2007 $ $ $ $ Eco International Pty Ltd - a company 260,211 207,069 260,211 207,069 controlled by Mr RJ Telford received management fees. Mandu Pty Ltd - a company controlled 237,500 211,054 237,500 211,054 by Dr JM Chisholm received geological consulting fees. John S Dunlop and Associates Pty Ltd 60,412 45,640 60,412 45,640 - a company controlled by Mr JSF Dunlop received directors and mining consulting fees. Ventureworks Pty Ltd - a company 38,750 38,333 38,750 38,333 controlled by Mr JD Kenny received director's fees. The parent entity, Gippsland Limited, - - 3,219,535 7,054,347 has made loans to its controlled entities. These loans are interest free, unsecured and at call. 19 EVENTS AFTER THE BALANCE SHEET DATE On 25 July 2008, Gippsland Limited ("Gippsland") and Stellar Resources Limited ("Columbus") announced that they will merge their respective interests in the Tasmanian Heemksirk Tin project (formerly known as the Zeehan Tin project) into Stellar's subsidiary Columbus Metals Limited ("Columbus"). The agreement is conditional upon Columbus raising a minimum of A$10 million and being admitted to the official list of the ASX on or before 31 December 2008. Gippsland will be issued with 15 million A$0.25 fully paid ordinary shares or the same number of shares that Stellar will hold in Columbus at the time of its admission to the official list of the ASX, if that number is greater than 15 million shares. Upon listing, Columbus will also invite a nominee from Gippsland to join the board of Columbus as a non-executive director. No other matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future financial years. 20 AUDITORS' REMUNERATION CONSOLIDATED PARENT 2008 2007 2008 2007 $ $ $ $ Amounts received or due and receivable by PKF Australia for: * an audit or review of the financial report 42,834 - 42,834 - of the entity and any other entity in the consolidated entity * other services in relation to the entity and any other entity in the consolidated entity (a) tax compliance 2,992 - 500 - (b) corporate advisory fees 22,697 - 10,902 - 68,523 - 54,236 - Amounts received or due and receivable by auditors other than PKF Australia for: * an audit or review of the financial report 89,037 29,670 12,422 29,670 of subsidiary entities 157,560 29,670 66,658 29,670 21 JOINT VENTURE At 30 June 2008, the company has interests in the following joint ventures whose principal activities are the exploration for gold, precious metals and base metals. Name of Project Interests Other Parties 2008 2007 Heemskirk Tin Deposit - 40% 40% Stellar Resources Limited - 60% Tasmania, Australia Seiga - Wadi Allaqi, Egypt 50% 50% Egyptian Mineral Resources Authority - 50% Um Shashoba - Wadi Allaqi, 50% 50% Egyptian Mineral Resources Authority - 50% Egypt Haimur - Wadi Allaqi, Egypt 50% 50% Egyptian Mineral Resources Authority - 50% Nile Valley Block E - Wadi 50% 50% Egyptian Mineral Resources Authority - 50% Allaqi, Egypt Nile Valley Block A - Wadi 50% 50% Egyptian Mineral Resources Authority - 50% Allaqi, Egypt Um Garayat - Wadi Allaqi, 50% 50% Egyptian Mineral Resources Authority - 50% Egypt Koleit - Wadi Allaqi, Egypt 50% 50% Egyptian Mineral Resources Authority - 50% Um Tiur - Wadi Allaqi, Egypt 50% 50% Egyptian Mineral Resources Authority - 50% Abu Swayel - Wadi Allaqi, 50% 50% Egyptian Mineral Resources Authority - 50% Egypt The joint ventures are of the type where initially one party contributes tenements with the other party earning a specified percentage by funding exploration activities. The Joint Venture does not hold any assets and accordingly the Company's share of exploration expenditure is accounted for in accordance with the policy set out in Note 2 (f). Directors' Declaration The directors of Gippsland Limited declare that: (a) in the directors* opinion the financial statements and notes on pages 16 to 56, and the remuneration disclosures that are contained in the Directors* report, set out on pages 7 to 14, are in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the company's and the consolidated entity's financial position as at 30 June 2008 and of their performance, for the year ended on that date; and (ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and Corporations Regulations 2001. (b) the financial report also complies with International Financial Reporting Standards as disclosed in note 1; and (c) the remuneration disclosures that are contained in the Remuneration report in the Directors* report comply with Australian Accounting Standard AASB 124 Related Party Disclosures, the Corporations Act 2001 and the Corporations Regulations 2001; and (d) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable. At the date of this declaration there are reasonable grounds to believe that the company and the group entities identified in note 18 will be able to meet any obligations or liabilities to which they are or may have become subject to by virtue of the Deed of Cross Guarantee between the company and those group entities pursuant to ASIC Class Order 98/1418. The directors have been given the declarations by the chief executive officer and chief financial officer for the financial year ended 30 June 2008, required by Section 295A of the Corporations Act 2001. Signed in accordance with a resolution of the directors. Dated 30th day of September 2008. R J Telford Director Shareholder Information set out as at 17 September 2008 A TOTAL EQUITY Shares Options ex 26/5/2012 Options ex SECURITIES at 13.5 cents 15/12/2011 at 7 pence Totals on Issue 306,354,325 25,000,000 4,000,000 B DISTRIBUTION OF EQUITY SECURITIES 1 - 1,000 68 1,001 - 5,000 164 5,001 - 10,000 246 10,001 - 100,000 626 100,001 and over 260 1 2 1,364 1 2 No of shareholders 240 holding an unmarketable parcel C TOP 20 SHAREHOLDERS Number % 1 International 25,000,000 8.16 Finance Corporation 2 ANZ Nominees Limited 17,735,143 5.79 3 Taveroam Pty Ltd 16,600,000 5.42 4 Situate Pty Ltd 14,750,000 4.81 5 Eco International 13,256,985 4.33 Pty Ltd 6 King Town Holdings 12,000,000 3.92 Pty Ltd 7 Barclayshare 7,668,971 2.50 Nominees Limited 8 L R Nominees Limited 7,667,682 2.50 9 Smith & Williamson 7,200,000 2.35 Nominees Limited 10 Mr Robert John 6,869,461 2.24 Telford & Robin K Telford 11 TD Waterhouse 6,390,188 2.09 Nominees (Europe) Limited 12 Alsanto Nominees Pty 6,390,000 2.09 Ltd 13 Pershing Nominees 5,834,444 1.90 Limited 14 Starvest PLC 4,500,000 1.47 15 HSBC Custody 4,329,600 1.41 Nominees 16 Sunvest Corporation 4,266,665 1.39 Limited 17 The Bank of New York 3,522,222 1.15 (Nominees) Limited 18 HSBC Marking Name 2,611,111 0.85 Nominee (UK) Limited 19 HSBC Global Custody 2,331,166 0.76 Nominee (UK) Limited 20 Mandu Superannuation 2,320,000 0.76 Fund 171,243,638 55.90 D UNLISTED OPTION HOLDERS Number Exercise Price Expiry International Finance Corporation 25,000,000 13.5 cents 26/05/2012 FD Holdings Ltd 2,000,000 7 pence 15/12/2011 Seymour Pierce Limited 2,000,000 7 pence 15/12/2011 E SUBSTANTIAL SHAREHOLDERS Number % Situate Pty Ltd, Taveroam Pty Ltd and RW Beale 31,500,000 10.28 International Finance Corporation 25,000,000 8.16 Eco International Pty Ltd and Mr Robert John Telford & Robin K 20,126,446 6.57 Telford ANZ Nominees Pty Ltd 17,735,143 5.79 F VOTING RIGHTS Under the Company's constitution, all ordinary shares carry one vote per share without restriction. Options over ordinary shares do not carry any voting rights. F EXPLORATION INTERESTS As at 25 September, the company has an interest in the following tenements: Country Project Tenement Status Interest Egypt Abu Dabbab Exploitation Licence 1658 Granted 50% Egypt Abu Dabbab Exploitation Licence 1659 Granted 50% Egypt Nuweibi Exploitation Licence 1785 Granted 50% Egypt Wadi Allaqi - Seiga Exploration Licence 1 Granted 50% Egypt Wadi Allaqi - Exploration Licence 1 Granted 50% Shashoba Egypt Wadi Allaqi - Haimur Exploration Licence 1 Granted 50% Egypt Wadi Allaqi - Exploration Licence 1 Granted 50% Garayat Egypt Wadi Allaqi - Koleit Exploration Licence 1 Granted 50% Egypt Wadi Allaqi - Nile Exploration Licence 1 Granted 50% Valley A Egypt Wadi Allaqi - Nile Exploration Licence 1 Granted 50% Valley E Egypt Wadi Allaqi - Abu Exploration Licence 1 Granted 50% Swayel Egypt Wadi Allaqi - Um Exploration Licence 1 Granted 50% Tiur Eritrea Adobha Application 2 Pending 90% Eritrea Adobha Application 2 Pending 90% Eritrea Adobha Application 2 Pending 90% Australia Heemskirk (Tasmania) Retention Licence No.5/1997 Granted 40% Notes: 1 Tenements granted subject to an agreement with the Egyptian Government (EMRA) dated 21 June 2004. 2 Applications submitted 20 February 2008. This information is provided by RNS The company news service from the London Stock Exchange END FR SEDFDUSASEIU
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