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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