GATEWAY MINING LIMITED — Interim / Quarterly Report 2011

Mar 14, 2011

GATEWAY MINING LIMITED ABN: 31 008 402 391

INTERIM FINANCIAL REPORT FOR THE HALF-YEAR ENDED 31 DECEMBER 2010

CONTENTS

Directors’ Report	2
Auditor’s Independence Declaration	4
Statement of Comprehensive Income	5
Statement of Financial Position	6
Statement of Changes in Equity	7
Statement of Cash Flows	8
Notes to the Financial Statements	9 – 12
Directors’ Declaration	13
Independent Auditor’s Review Report	14 – 15

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GATEWAY MINING LIMITED ABN: 31 008 402 391

DIRECTORS’ REPORT

Your directors submit the financial report of the company for the half-year ended 31 December 2010.

DIRECTORS

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

Mr. Brian Gomez (Chairman) Dr. Robert A. Creelman Mr. Brian F. Thornton (resigned 29 November 2010) Mr. Mark J. Lynch (appointed 29 November 2010)

REVIEW OF OPERATIONS

Activities for the six monthly-period were concentrated on the Gidgee Project in Western Australia, where drilling was carried out both by Gateway and joint venture partner Avenue Resources Ltd.

Avenue listed on the ASX on September 15, 2010, with its project portfolio including two JV’s Gateway; one over the Gateway/Goldfan held Mining leases covering the previously mined Montague area, and the second over a number of surrounding Exploration and Prospecting Licences.

The drilling was targeted at gold targets under and adjacent to the Montague pits, and base metal and gold mineralisation in a zone of prospective stratigraphy that hosts The Cup and Julia’s Fault mineralisation, and defined by previous air-core, RAB and RC drilling, and EM surveying.

The results of this drilling were very encouraging, with air-core work drilling defining further base metal anomalies associated with massive sulphides and gossans with the results confirming that the area is prospective for VMS-style mineralisation. An RC hole at the Rosie Northeast prospect intersected 120m@0.42 g/t gold to the end of the hole, with this hole located 50m from the WRC012, which intersected 102m@0.42g/t gold to the end of hole.

Follow up work, including EM surveying, is currently underway on targets defined from this drilling.

With Legend’s decision to withdraw from the Bungarra JV north of Montague, tenement E57/709 has reverted 100% to Gateway, and Gateway has also purchased the adjoining E57/706 tenement from Legend, which is considered prospective for ultramafic associated nickel and PGE mineralisation.

Work by JV partners at the Cowra Project has included ground follow-up of geological and geophysical targets, however this has not resulted in any significant results.

The company is considering relinquishing all the Surprise Project tenements.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

DIRECTORS’ REPORT (CONTINUED)

On 10[th] September 2010, the company raised $495,000 through a private placement of 15,000,000 fully paid ordinary shares at 3.3 cents per share with 7,500,000 options attached at an exercise price of 4 cents per share expiring on 1[st] September 2012.

AUDITOR’S INDEPENDENCE DECLARATION

The auditor’s independence declaration under Section 307C of the Corporations Act 2001 is set out on page 4 for the half-year ended 31 December 2010.

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

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BRIAN GOMEZ Director

Dated this 15th day of March 2011

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GATEWAY MINING LIMITED ABN: 31 008 402 391 [Priestley] &Morris AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 TO Chartered Accountants THE DIRECTORS OF GATEWAY MINING LIMITED

I declare that, to the best of my knowledge and belief, during the half-year ended 31 December 2010 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.

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Priestley & Morris Chartered Accountants

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M A Nevill

Partner Dated this 15th day of March 2011 Parramatta

Priestley & Morris - ABN: 51 502 720 047 Liability limited by a scheme Level 7, 3 Horwood Place, Parramatta NSW 2150 approved under PO Box 19, Parramatta NSW 2124 Professional Standards Tel: +61 2 8836 1500 Fax: +61 2 8836 1555 Legislation

E: email@priestleymorris.com.au W: www.priestleymorris.com.au

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GATEWAY MINING LIMITED ABN: 31 008 402 391

STATEMENT OF COMPREHENSIVE INCOME FOR THE HALF-YEAR ENDED 31 DECEMBER 2010

NOTE Revenue 2 Other income 2 Depreciation expense Employee benefits expense Professional services rendered Office expenses Compliance fees Share registry fees Other expenses (Loss) before income tax Income tax expense 3 (Loss) for the period Other comprehensive income: Net gain on revaluation of financial assets Other comprehensive income for the year, net of tax Total comprehensive income for the period attributable to members of the company Earnings per share Basic earnings per share Diluted earnings per share	31 December 2010
	$ 2,553 213,078
	(1,127) (83,671) (43,233) (26,480) (18,172) (9,091) (57,497)
	(23,640) -
	(23,640)
	241,113
	241,113
	217,473
	(0.0003)
	(0.0002)

The accompanying notes form part of these financial statements

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GATEWAY MINING LIMITED ABN: 31 008 402 391

STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2010

TATEMENT OF FINANCIAL POSITION S AT 31 DECEMBER 2010
NOTE ASSETS CURRENT ASSETS Cash and cash equivalents Trade and other receivables TOTAL CURRENT ASSETS NON-CURRENT ASSETS Trade and other receivables Financial assets 4 Plant and equipment Deferred exploration and evaluation expenditure TOTAL NON-CURRENT ASSETS TOTAL ASSETS LIABILITIES CURRENT LIABILITIES Trade and other payables TOTAL CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Reserves Accumulated losses TOTAL EQUITY	31 Dec 2010		30 June 2010
	$ 116,110 91,570		$ 35,640 79,244
	207,680		114,884
	12,608 1,187,609 6,066 8,818,727		12,608 935,348 6,041 8,485,445
	10,025,010		9,439,442
	10,232,690		9,554,326
	75,154		84,513
	75,154		84,513
	75,154		84,513
	10,157,536		9,469,813
	22,362,410 549,479 (12,754,353)		21,892,160 308,366 (12,730,713)
	10,157,536		9,469,813

The accompanying notes form part of these financial statements

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GATEWAY MINING LIMITED ABN: 31 008 402 391

STATEMENT OF CHANGES IN EQUITY FOR THE HALF-YEAR ENDED 31 DECEMBER 2010

Balance at 1.7.2009 Share issued during the period Transaction costs Gain on available-for-sale financial assets Loss for the period Balance at 31.12.2009 Balance at 1.7.2010 Shares issued during the period Transaction costs Gain on available-for-sale financial assets Loss for the period Balance at 31.12.2010	Issued **Capital **	Accumulated losses	Investments revaluation reserve	Share Based payments reserve	**Total **
	$ 20,897,760 1,060,000 (65,600) - -	$ (12,235,933) - - - (253,676)	$ - - - 532,438 -	$ 133,000 - - - -	8,794,827 1,060,000 (65,600) 532,438 (253,676)
	21,892,160	(12,489,609)	532,438	133,000	10,067,989
	21,892,160 495,000 (24,750) - -	(12,730,713) - - - (23,640)	175,366 - - 241,113 -	133,000 - - - -	9,469,813 495,000 (24,750) 241,113 (23,640)
	22,362,410	(12,754,353)	416,479	133,000	10,157,536

The accompanying notes form part of these financial statements

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GATEWAY MINING LIMITED ABN: 31 008 402 391

STATEMENT OF CASH FLOWS FOR THE HALF-YEAR ENDED 31 DECEMBER 2010

STATEMENT OF CASH FLOWS FOR THE HALF-YEAR ENDED 31 DECEMBER 2010
CASH FLOWS FROM OPERATING ACTIVITIES Payments to suppliers and employees Interest and other income received NET CASH USED IN OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of non-current assets Purchase of plant & equipment Purchase of non-current assets Expenditure on mining interests NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares Placement fees NET CASH FROM FINANCING ACTIVITIES NET INCREASE (DECREASE) IN CASH HELD Cash at 1 July 2010 CASH AT 31 DECEMBER 2010	31 December 2010		31 December 2009
	$ (284,578) 2,553		$ (285,824) 2,119
	(282,025)		(283,705)
	219,744 (1,152) (17,815) (333,282)		- - (14,459) (320,577)
	(132,505)		(335,036)
	495,000 -		1,060,000 (65,600)
	495,000		994,400
	80,470		375,659
	35,640		126,550
	116,110		502,209

The accompanying notes form part of these financial statements

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2010

NOTE 1: BASIS OF PREPARATION

These general purpose financial statements for the interim half-year reporting period ended 31 December 2010 have been prepared in accordance with requirements of the Corporations Act 2001 and Australian Accounting Standards including AASB 134: Interim Financial Reporting. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards.

This interim financial report is intended to provide users with an update on the latest annual financial statements of Gateway Mining Limited. As such, it does not contain information that represents relatively insignificant changes occurring during the half-year within the company.

It is therefore recommended that this financial report be read in conjunction with the annual financial statements of the company for the year ended 30 June 2010, together with any public announcements made during the half-year.

The same accounting policies and methods of computation have been followed in this interim financial report as were applied in the most recent annual financial statements.

Accounting Policies

(a) Exploration and Development 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.

When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves.

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.

(b) Income Tax

The charge for current income tax expense is based on the profit or loss for the period adjusted for any non-assessable or disallowed items. It is calculated using tax rates that have been enacted or are substantively enacted by the balance sheet date.

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the economic entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2010

NOTE 1: BASIS OF PREPARATION (continued)

(c ) Impairment of Assets

At each reporting date, the company reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to profit or loss or other comprehensive income.

(d) Financial Instruments

Recognition

Financial instruments are initially measured at cost on trade date, which includes transaction costs, when the related contractual rights or obligations exist. Subsequent to initial recognition these instruments are measured as set out below.

Available-for-sale financial assets

Available-for-sale financial assets are reflected at fair value. Unrealised gains or losses arising from changes in fair value are taken to other comprehensive income.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2010

NOTE 2: REVENUE AND OTHER INCOME

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31 December 31 December
2010 2009
$ $
Interest received from:
- other persons 2,553 2,119
Other income:
- gain on disposal of non-current investments 213,078 -
NOTE 3: INCOME TAX EXPENSE
31 December 31 December
2010 2009
$ $
Prima facie tax payable (benefit) on profit (loss) from
ordinary activities before income tax at 30% (7,092) (76,103)
- -
Add tax effect of permanent difference
Tax effect of capital losses used and carried forward
- -
separately
Income tax expense (benefit) arising from profit (loss)
(7,092) (76,103)
Benefit of tax loss not brought to account 7,092 76,103
- -
Income tax expense attributable to profit (loss)
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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2010

NOTE 4: OTHER FINANCIAL ASSETS

Available for sale financial assets: Shares in listed corporations at fair value Shares in unlisted corporations	31 December 2010		30 June 2010
	$ 1,171,248 16,361		$ 921,802 13,546
	1,187,609		935,348

NOTE 5: SEGMENT INFORMATION

The company operates in Australia predominantly in the mineral exploration industry and mainly in gold.

NOTE 6: EVENTS SUBSEQUENT TO REPORTING DATE

There is no significant event subsequent to reporting date.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

DIRECTORS’ DECLARATION

The directors of the company declare that:

1. The financial statements and notes, as set out on pages 5 – 12 are in accordance with the Corporations Act 2001, including:

2. a. comply with Accounting Standard AASB 134: Interim Financial Reporting;

3. b. giving a true and fair view of the company’s financial position as at 31 December 2010 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 when they become due and payable.

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

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BRIAN GOMEZ Director

Dated this 15th day of March 2011

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GATEWAY MINING LIMITED ABN: 31 008 402 391 [Priestley] INDEPENDENT AUDITOR’S REVIEW REPORT &Morris TO THE MEMBERS OF GATEWAY MINING LIMITED Chartered Accountants

Report on the Half-year Financial Report

We have reviewed the accompanying half-year financial report of Gateway Mining Limited which comprises the statement of financial position as at 31 December 2010, the statement of comprehensive income, the statement of changes in equity, the statement of cash flows for the half-year ended on that date, notes comprising a summary of significant accounting policies and other explanatory notes and the directors’ declaration.

Directors’ Responsibility for the Half-Year Financial Report

The directors of Gateway Mining Limited are responsible for the preparation and fair presentation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards (including Australian Accounting Interpretations) and the Corporations Act 2001 and for such control as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410: Review of 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 entity’s financial position as at 31 December 2010 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 Gateway Mining Limited, 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 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.

Matters Relating to Electronic Publication of the Audited Financial Report

This review report relates to the financial report of Gateway Mining Limited for the half-year ended 31 December 2010 included on the website of Gateway Mining Limited. The directors of the company are responsible for the integrity of the website and we have not been engaged to report on its integrity. This review report refers only to the subject matter described above. It does not provide an opinion on any other information which may have been hyperlinked to or from the financial report. If users of the financial report are concerned with the inherent risk arising from the publication on a website, they are advised to refer to the hard copy of the reviewed financial report to confirm information contained in this website version of the financial report.

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, provided to the directors of Gateway Mining Limited on 15 March 2011, would be in the same terms if provided to the directors as at the date of this auditor’s review report.

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GATEWAY MINING LIMITED ABN: 31 008 402 391 INDEPENDENT AUDITOR’S REVIEW REPORT [Priestley] TO THE MEMBERS OF GATEWAY MINING LIMITED &Morris (CONTINUED) Chartered Accountants

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 Gateway Mining Limited is not in accordance with the Corporations Act 2001 including:

• giving a true and fair view of the company’s financial position as at 31 December 2010 and of its performance for the half-year ended on that date; and

• complying with AASB 134: Interim Financial Reporting and the Corporations Regulations 2001.

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Priestley & Morris Chartered Accountants

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M A Nevill

Partner Dated this 15th day of March 2011 Parramatta

Liability limited Priestley & Morris - ABN: 51 502 720 047 by a scheme approved under Level 7, 3 Horwood Place, Parramatta NSW 2150 Professional PO Box 19, Parramatta NSW 2124 Standards Legislation Tel: +61 2 8836 1500 Fax: +61 2 8836 1555 E: email@priestleymorris.com.au W: www.priestleymorris.com.au

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