CASSIUS MINING LIMITED — Interim / Quarterly Report 2009

Mar 4, 2009

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INTERIM FINANCIAL REPORT FOR THE HALF-YEAR ENDED 31 DECEMBER 2008

GULF RESOURCES LIMITED ABN 13 115 027 033 & CONTROLLED ENTITIES

ABN 13 115 027 033 & CONTROLLED ENTITIES

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DIRECTORS REPORT

Your Directors submit the financial report of the consolidated entity for the half-year ended 31 December 2008.

DIRECTORS

The names of the directors who held office during or since the end of the half-year:

	Date Appointed
S Reid	30 June 2005
W Kernaghan	30 June 2005
G Duncan	30 June 2005
P Treisman	14 August 2007

REVIEW & RESULTS OF OPERATIONS

Gulf Resources Limited is involved in mining and mineral exploration and infrastructure projects.

The net loss for the half-year ended 31 December 2008, after providing for income tax amounted to $1,698,909 (31 December 2007: loss of $1,575,067).

The principal activities of the consolidated group during the financial year were mining and mineral exploration and seeking mining infrastructure opportunities.

AUDITOR’S INDEPENDENCE DECLARATION

The lead auditor’s independence declaration under section 307C of the Corporation’s Act 2001 is set out on page 2 for the half year ended 31 December 2008.

This report is signed in accordance with a resolution of the Board of Directors:

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Wayne Kernaghan Director

Sydney, 5 March 2009

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ABN 13 115 027 033 & CONTROLLED ENTITIES

Auditor’s Independence Declaration Under Section 307C

of the Corporations Act 2001

To the Directors of Gulf Resources Limited

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I declare that, to the best of my knowledge and belief, during the half-year ended 31 December 2008 there have been:

• (a) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the review; and

• (b) no contraventions of any applicable code of professional conduct in relation to the review.

A D Danieli Chartered Accountants

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Sam Danieli Principal

Sydney, 3 March 2009

Liability limited by a scheme approved under Professional Standard Legislation

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ABN 13 115 027 033 & CONTROLLED ENTITIES

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CONSOLIDATED INCOME STATEMENT FOR THE HALF-YEAR ENDED 31 DECEMBER 2008

NOTE Revenue Depreciation expense Exploration expenditure written off Employee benefits expense Other expenses Loss before income tax Income tax expense Loss for the period 2 Loss attributable to members of Gulf Resources Ltd Basic loss per share (cents per share) Diluted loss per share (cents per share)	31 DEC 2008 $ 479,749 (62,367) (963,881) (302,407) (850,003) (1,698,909) - (1,698,909) (1,698,909) (2.4) (1.2)	31 DEC 2007 $ 33,590 (43,277) (823,114) (431,823) (310,443)
		(1,575,067) -
		(1,575,067)
		(1,575,067)
		(3.3) (2.2)

(The accompanying notes form part of these financial statements)

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ABN 13 115 027 033 & CONTROLLED ENTITIES

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CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2008

Note CURRENT ASSETS Cash and cash equivalents 3 Trade and other receivables 4 TOTAL CURRENT ASSETS NON-CURRENT ASSETS Deferred exploration costs 5 Financial assets 6 Property, plant and equipment 7 TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables 8 TOTAL CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital 9 Reserves Accumulated losses TOTAL EQUITY	31 DEC 2008 $ 1,446,678 305,007 1,751,685 - 44,786 207,991 252,777 2,004,462 67,390 67,390 67,390 1,937,072 8,958,467 1,070,737 (8,092,132) 1,937,072	30 JUN 2008 $ 2,825,199 265,902
		3,091,101
		301,650 122,187 264,740
		688,577
		3,779,678
		228,215
		228,215
		228,215
		3,551,463
		8,958,467 986,219 (6,393,223)
		3,551,463

(The accompanying notes form part of these financial statements)

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ABN 13 115 027 033 & CONTROLLED ENTITIES

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF-YEAR ENDED 31 DECEMBER 2008

Economic Entity Balance at 1 July 2007 Issue of share capital Share issue expense Fair value revaluation Loss for the period Balance at 31 December 2007 Economic Entity Balance at 1 July 2008 Issue of share option Fair value revaluation Loss for the period Balance at 31 December 2008	Issued Capital $ 4,740,963 1,342,500 (32,662) - - 6,050,801 8,958,467 - - - 8,958,467	Reserves $ 666,451 - - (327,661) - 338,790 986,219 160,000 (75,482) - 1,070,737	Accumulated Losses $ (2,314,698) - - - (1,575,067) (3,889,765) (6,393,223) - - (1,698,909) (8,092,132)	Total Equity $ 3,092,716
				1,342,500 (32,662) (327,661) (1,575,067)
				2,499,826
				3,551,463
				160,000 (75,482) (1,698,909)
				1,937,072

(The accompanying notes form part of these financial statements)

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ABN 13 115 027 033 & CONTROLLED ENTITIES

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CONSOLIDATED CASH FLOW STATEMENT FOR THE HALF-YEAR ENDED 31 DECEMBER 2008

Cash flows from Operating Activities Receipts from customers Interest received Exchange gain realized Payments to suppliers and employees Net Cash (used in) provided by Operating Activities Cash flows from Investing Activities Loans to other entities Disposal of financial assets Acquisition of financial assets Exploration expenditure Payment for plant & equipment Net Cash (used in) provided by Investing Activities Cash flows from Financing Activities Proceeds from share and option issues Net Cash provided by (used in) Financing Activities Net increase (decrease) in cash held Cash at beginning of the period Cash at end of the period	31 DEC 2008 $ - 47,670 432,079 (1,196,737) (716,988) (170,000) 110,770 (94,454) (662,231) (5,618) (821,533) 160,000 160,000 (1,378,521) 2,825,199 1,446,678	31 DEC 2007 $ 12,453 21,137 - (1,653,496)
		(1,619,906)
		(300,000) - (333,768) (301,650) (78,079)
		(1,013,497)
		1,309,838
		1,309,838
		(1,323,565) 2,340,621
		1,017,056

(The accompanying notes form part of these financial statements)

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ABN 13 115 027 033 & CONTROLLED ENTITIES

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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

1. Basis of Preparation

The half-year consolidated financial statements of Gulf Resources Ltd are a general purpose financial report prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standard AASB 134: Interim Financial Reporting, Australian Accounting Interpretations and other authoritative pronouncements of the Australian Accounting Standards Board.

It is recommended that this financial report be read in conjunction with the annual financial report of for the year ended 30 June 2008 and any public announcements made by Gulf Resources Ltd and its controlled entities during the half-year in accordance with continuous disclosure requirements arising under the Corporations Act 2001.

The accounting policies have been consistently applied by the entities in the consolidated group and are consistent with those in the June 2008 financial report.

The half-year report does not include full disclosures of the type normally included in an annual financial report.

Reporting Basis and Conventions

The half-year report has been prepared on an accrual basis and is based on historical costs modified by the revaluation of selected non-current assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied.

2. Loss before income tax has been determined after: Loss before income tax has been determined after: The following revenue and expense items are relevant in explaining the financial performance for the interim period: (a) Revenue and other income Interest from other persons Foreign Exchange Gain Other (b) Charging as expense: Depreciation Exploration expenditure written off 3. Cash and cash equivalents Cash at bank and in hand Reconciliation of cash Cash at the end of the financial year as shown in the cash flow statement is reconciled to items in the balance sheet as above.	31 DEC 2008 $ 47,670 432,079 - 479,749 62,367 963,881 31 DEC 2008 $ 1,446,678 1,446,678	31 DEC 2007 $ 21,137 - 12,453
		33,590
		43,277 823,114 30 JUN 2008 $ 2,825,199
		2,825,199

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ABN 13 115 027 033 & CONTROLLED ENTITIES

4. Trade and other receivables Other receivables 5. Deferred exploration expenditure Deferred exploration expenditure 6. Financial Assets Listed investments, at fair value: Available-for- sale financial assets Available-for-sale financial assets comprise investments in the ordinary issued capital of listed entities. There is no fixed returns or maturity date attached to these investments. The fair value of listed investments have been valued at the quoted market bid price at balance date. 7. Property, plant and equipment Plant and equipment Less accumulated depreciation Leasehold improvements Less accumulated amortisation Motor Vehicles Less accumulated depreciation Total property, plant & equipment 8. Trade and other payables Trade creditors	31 DEC 2008 $ 305,007 305,007 - - 44,786 44,786 55,275 (20,047) 35,228 90,982 (43,249) 47,733 233,123 (108,093) 125,030 207,991 67,390 67,390	30 JUN 2008 $ 265,902
		265,902
		301,650
		301,650
		122,187
		122,187
		55,856 (11,724)
		44,132
		84,783 (27,978)
		56,805
		233,123 (69,320)
		163,803
		264,740
		228,215
		228,215

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ABN 13 115 027 033 & CONTROLLED ENTITIES

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9. Issued capital Ordinary shares (issues and fully paid) 69,758,055 (30 June 2008: 69,758,055) Movements in issued shares for the half year: Beginning of the financial period 20.11.07 Performance rights 10.12.07 issued at 27.5 cents 10.12.07 issued at 26.5 cents 27.05.08 exercise of options at 20 cents 28.05.08 exercise of options at 20 cents 28.05.08 issue at 20 cents Share issue expenses	31 DEC 2008 No. of Shares 69,758,055 - - - - - - - 69,758,055	31 DEC 2008 $ 8,958,467 - - - - - - - 8,958,467		31 DEC 2008 $ 8,958,467 30 JUN 2008 No. of Shares 46,559,271 3,000,000 545,454 4,500,000 21,666 356,664 14,775,000 - 69,758,055	30 JUN 2008 $ 8,958,467
					30 JUN 2008 $ 4,740,963 - 150,000 1,192,500 4,333 71,333 2,955,000 (155,662)
					8,958,467

Note 10: Segment information

The consolidated entity operated during the period in two geographical locations, namely Australia and Africa.

Geographical Location Revenue Unallocated revenue Total revenue Result Segment result Loss before income tax Income tax expense Loss after income tax Assets Total assets Liabilities Total liabilities Other Depreciation and amortisation of segment assets	Australia		Australia		Africa		Africa		Consolidated Group	Consolidated Group	Consolidated Group
	31 Dec 2008		30 Jun 2008		31 Dec 2008		30 Jun 2008		31 Dec 2008		30 Jun 2008
	$		$		$		$		$		$
	479,749		90,895		-		-		479,749		90,895
	479,749		90,895		-		-		479,749		90,895
	(1,595,876)		(3,909,490)		(103,033)		(169,035)		(1,698,909)		(4,078,525)
	(1,595,876)		(3,909,490)		(103,033)		(169,035)		(1,698,909)		(4,078,525)
	-		-		-		-				-
	(1,595,876)		(3,909,490)		(103,033)		(169,035)		(1,698,909)		(4,078,525)
	1,924,345		3,638,226		80,117		141,452		2,004,462		3,779,678
	64,190		228,215		3,200		-		67,390		228,215
	(43,681)		(82,324)		(18,686)		(19,410)		(62,367)		(101,734)

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ABN 13 115 027 033

& CONTROLLED ENTITIES

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Note 11: Contingent liabilities

There are no known contingent liabilities. There have been no changes in contingent liabilities or contingent assets since the last annual reporting date.

Note 12: Events subsequent to reporting date

There are no known events subsequent to balance date that would have a material effect on these financial statements.

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ABN 13 115 027 033 & CONTROLLED ENTITIES

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DIRECTORS’ DECLARATION

The directors of the company declare that:

1. The financial statements and notes as set out on pages 3 to 10:

2. (a) comply with Accounting Standard AASB 134: Interim Financial Reporting and the Corporations Regulations; and

3. (b) give a true and fair view of the economic entity’s financial position as at 31 December 2008 and of its performance for the half-year ended on that date.

4. In the directors’ opinion there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors.

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Wayne Kernaghan Director

Sydney 5 March 2009

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ABN 13 115 027 033 & CONTROLLED ENTITIES

Independent Review Report To the Members of

Gulf Resources Limited

ABN: 13 115 027 033

Report on the Half–Year Financial Report

We have reviewed the accompanying half-year financial report of Gulf Resources Limited and Controlled Entities (the consolidated entity) which comprises the balance sheet as at 31 December 2008, and the income statement, statement of changes in equity and cash flow statement for the half-year ended on that date, a statement of accounting policies, other selected explanatory notes and the directors’ declaration.

Directors’ responsibility for the Half–Year Financial Report

The directors of the consolidated entity are responsible for the preparation and fair presentation of the halfyear financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001 . This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the half-year financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor’s responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of an Interim Financial Report Performed by the Independent Auditor of the Entity , in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity’s financial position as at 31 December 2008 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134: Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of Gulf Resources Limited and Controlled Entities, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001 . We confirm that the independence declaration required by the Corporations Act 2001 , provided to the directors of Gulf Resources Limited and Controlled Entities on 3 March 2009, would be in the same terms if provided to the directors as at the date of this auditor’s review report.

Liability limited by a scheme approved under Professional Standard Legislation

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ABN 13 115 027 033 & CONTROLLED ENTITIES

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Gulf Resources Limited and Controlled Entities is not in accordance with the Corporations Act 2001 including:

• (a) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2008 and of its performance for the half-year ended on that date; and

• (b) complying with Accounting Standard AASB 134 Interim Financial Reporting and Corporations Regulations 2001.

A D DANIELI

Chartered Accountants

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Sam Danieli Principal Sydney, 5 March 2009

Liability limited by a scheme approved under Professional Standard Legislation

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