Suite 34, 18 Stirling Highway, Nedlands WA 6009 PO Box 352, Nedlands WA 6909, Australia ABN 31 004 766 376 Tel: (08) 9389 8611 Fax: (08) 9389 8612 E-mail: [email protected] www.qippslanditd.com.au

27 September 2004

NO. OF PAGES LODGED:

$1 -$ Covering page 76 - 2004 Annual Report (including Full Financial Report)

Company Announcements Office Australian Stock Exchange Limited 4th Floor 20 Bridge Street SYDNEY NSW 2000

Dear Sir/Madam

2004 ANNUAL REPORT

Pursuant to Corporations Act 2001 and ASX Listing Rule 4.5, please find attached the Company's 2004 Annual Report (including Full Financial Report).

The 2004 Annual Report will be despatched to all shareholders today.

Yours faithfully GIPPSLAND LIMITED

ruperd

R J (Jack) Telford Executive Chairman

San San San San San San San Sa

IIMIHD GIPPSLAND LIMITED

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ANNUAL REPORT 2004

CORPORATE DIRECTORY

DIRECTORS	Robert John (Jack) Telford - Executive ChairmanJohn Morrison Chisholm - Non-Executive DirectorJohn Damien Kenny - Non-Executive Director
COMPANY SECRETARY	Julie A Wolseley
REGISTERED OFFICE	Level 2, 18 Stirling HighwayNedlands WA 6009Australia
POSTAL ADDRESS	PO Box 352Nedlands WA 6909Australia
TELEPHONE	+61 (08) 9389 8611
FACSIMILE	+61 (08) 9389 8612
EMAIL	[email protected]
WEBSITE	www.gippslandltd.com
AUDITORS	Grant Thornton Chartered AccountantsLevel 6, 256 St George's TerracePerth WA 6000Australia
NOMINATED ADVISOR (NOMAD)	Grant Thornton Corporate FinanceGrant Thornton HouseMelton Street, Euston SquareLondon NW1 2EPUnited Kingdom
SOLICITORS	Blakiston and Crabb1202 Hay StreetWest Perth WA 6005Australia
	CobbettsShip Canal HouseKing StreetManchester M2 4WBUnited Kingdom

SHARE REGISTRIES		Security Transfer Registrars Pty Ltd
	Alexandrea House
	Suite 1, 770 Canning Hwy
	Applecross WA 6153
	Australia

	PO BOX 535
	Applecross WA 6153
	Australia

	Telephone:	+61 8 9315 2333
	Facsimile:	+61 8 9315 2233
	Email:	[email protected]
	Computershare Limited
	P O Box 82
		The Pavilions, Bridgwater Road
	Bristol BS99 7NH
	United Kingdom
AUSTRALIAN STOCK EXCHANGE
		The Company's securities are quoted on the official list of the Australian Stock
		Exchange Ltd, the Home Exchange being:
		The Australian Stock Exchange (Perth) Ltd
	2 The Esplanade
	Perth WA 6000
	Australia
ASX CODES		Shares - GIP, Listed Options - GIPO
LONDON STOCK EXCHANGE		The Company's securities are quoted on the London Stock Exchange Plc's (LSE)
		Alternative Investment Market (AIM):
	10 Paternoster Square
	London EC4M 7LS
	United Kingdom

LSE - AIM CODES		Shares - GIP, Listed Options - GIPO

HIGHLIGHTS

ADMISSION TO THE LONDON STOCK EXCHANGE'S ALTERNATIVE ۰ INVESTMENT MARKET
COMPLETION OF ABU DABBAB JOINT VENTURE AGREEMENTS
COMPLETION OF ABU DABBAB PILOT PLANT METALLURGICAL TESTWORK IN AUSTRALIA
۰ ABU DABBAB EXPANDED PRODUCTION FROM IMTPA TO 1.26MTPA
TANTALUM RESOURCE EXPANSION FROM 40MT TO 138MT
COMPLETION OF ABU DABBAB BANKABLE FEASIBILITY STUDY ENDORSING ECONOMIC VIABILITY OF THE PROJECT.
OFF-TAKE HEADS OF AGREEMENTS SECURED FOR TANTALUM AND FELDSPAR
ACQUISITION OF 9 HIGHLY PROSPECTIVE GOLD/COPPER/NICKEL ۰ TENEMENTS IN EGYPT
COMPLETION OF CAPITAL RAISINGS TOTALLING $2.56 MILLION
COMPANY WELL POSITIONED TO BECOME MAJOR SUPPLIER TO EXPANDING GLOBAL TANTALUM MARKET

CHAIRMAN'S REPORT

It is my pleasure to report to shareholders on what is undoubtedly the most significant year in the history of Gippsland Limited.

During the past year the Company gained international recognition in the market place by being admitted to the London Stock Exchange plc (LSE) Alternative Investment Market (AIM) via the newly introduced Designated Markets Route. Being the first company to list on the LSE by this fast-track process, Gippsland and its world-scale 40 million tonne Abu Dabbab tantalum project enjoyed widespread press and media exposure in the United Kingdom and Australia.

The 2003/4 year saw plans for Gippsland's Abu Dabbab projected tantalum production expand from 1Mtpa to 1.26Mtpa with an associated economy of scale improvement.

The Abu Dabbab bankable feasibility study ("BFS") undertaken by the international engineering group Lycopodium Pty Limited confirmed that the Abu Dabbab is a world-scale project capable of producing a large proportion of the global tantalum requirements from a low cost base.

In light of very recent developments within the tantalum industry, the Company has been urged to consider expanding the Project to 2Mtpa. Accordingly, Lycopodium has been instructed to quantify the effect of increasing production to 2Mtpa, as the resulting economies of scale are expected to materially increase the projected IRR of the Project.

During the year Gippsland added to its tantalum resource base by acquiring the 98Mt Nuweibi tantalum deposit located some 17km from Abu Dabbab. The Abu Dabbab plant site has been strategically positioned to accept mill-feed from both Abu Dabbab and Nuweibi.

In order to further consolidate the Company's activities in Egypt, the Directors entered into a 50:50 joint venture agreement with the Egyptian Geological Survey & Mining Authority (EGSMA) to explore and develop eight highly prospective areas for gold and one area for copper-nickel in the Wadi Allagi region located to the south-east of Aswan. Seven of the eight gold tenements have historical gold production and exhibit obvious target areas for additional gold mineralisation. The initial exploration phase is scheduled to commence during October 2004 and is expected to yield encouraging results.

The Company has developed an excellent relationship with our Egyptian partners and the Egyptian Ministry for Industry and Trade which augers well in developing the Company's Egyptian assets quickly and efficiently.

On behalf of the Board of Directors may I thank our many loyal shareholders (both new and old) for their considerable support and encouraging feedback. Your Directors predict that the coming year will be exciting and rewarding for all associated with the Company.

RJ (Jack) Telford Executive Chairman September 2004

Swede Anders Gustaf Ekeberg (1767-1813) discovered and named tantalum in 1802. He called it tantalum after Tantalus, the son of Jupiter, who was condemned to eternal frustration and could not drink even though he was standing in water up to his neck. The isolation of this new element was a 'tantalizing' experience, hence the name.

TANTALUM SOURCES

Tantalum ores are found primarily in Australia. Africa, Canada and Brazil with some additional quantities located in Southeast Asia. Tantalum is typically hosted in relatively small pegmatites $(1 - 100$ million tonnes) and the generally larger apogranite bodies $(100 - 1,000$ million tonnes). The mineralisation in pegmatite deposits typically has a tantalum pentoxide (Ta2O5) content of 100 - 1,000g/t however the mineralisation is usually found to be quite variable throughout the deposit and often requiring underground mining. Conversely, the usually larger apogranite deposits tend to be of a lower grade, however this can be off-set by mineralisation which is uniformly distributed through the deposit, thus being ideal for open-pit bulk mining.

Both types of deposits can be either simple or complex, and thus difficult to process. Tantalum usually occurs with its relatively low value sister metal niobium plus tin. Deposits in which the tantalum is dominated by niobium are less economically viable while the development of tantalum resources containing excessive levels of uranium and thorium may be prevented due to international transport regulations pertaining to the transport of radioactive substances.

TANTALUM MINERAL PROCESSING

Tantalum ores are typically processed by careful milling of the ore to liberate the fine tantalum minerals. Following this initial stage, the milled ore is subjected to a series of physical or non-chemical processes involving the use of gravity separation techniques.

The gravity techniques utilise the earth's natural gravitational (1G) force to separate the heavy tantalum (plus tin and niobium) minerals from the lighter host rock or waste. The separation process also typically employs enhanced gravity equipment to separate the minerals from the host rock by applying centrifugal forces of up to 300G to separate heavy and light fractions.

The tantalum concentrate produced then undergoes a series of upgrading steps which separates the tantalum and tin whilst also removing certain impurities to produce a saleable concentrate containing between 10% and 30% Ta2O6.

TANTALUM APPLICATIONS

Tantalum is a grey metal, classed as a refractory metal because it is resistant to chemical attack. For industrial use, its important properties are a high melting point, ductility which allows it to be drawn into wire, and malleability which allows sheets and tubes to be made. Once exposed to air, the metal is covered with a thin layer of oxide which allows it to resist fluids in the human body, and also acids and other corrosive liquids, in the chemical industry. It has a high dielectric, which makes it so valuable in capacitors for the electronics industry.

PROPERTY	APPLICATIONS	MARKET %
High co-efficient of capacitanceproduction of electronic capacitors used in:• Mobile telephones• Telecommunications infrastructure• Still and video digital cameras• Laptop computers, servers and PCsAuto electrics	Processed in powder form for use in the	50
Resistance to corrosionconstruction of chemical plant and equipment	Milled tantalum metal products are used in the	15
High melting point $(2,997^{\circ}C)$ & lowco-efficient of thermal expansion	Manufacture of super-alloys for power generationand jet engine turbine blades	10
High density hard metal	Production of tantalum carbide for cutting tools	$10 -$
Other	Medical prosthetics, speciality chemicals production	15

TANTALUM MARKET

The majority of the world's tantalum is sold by way of long-term off-take agreements between the miner and the tantalum refiner/metal producer. Tantalum is not sold via a regulated market as is for gold, copper, zinc and tin.

The global tantalum (Ta2O5) market is estimated to be in the order of 4.5 - 4.8 million pounds ( $\approx$ 2.100 tonnes) per annum for the years 2004 -2005. Industry commentators suggest that the market is growing at a rate of about 7% per annum.

HC Starck GmbH, a subsidiary of the German company Bayer AG, is generally considered to be the world's leading tantalum concentrate consumer/processor followed (not in order) by Cabot Corporation (USA), Mitsul-Kinzoku (Japan), Ulba OJSC (Kazakstan) and Ningxia Non-Ferrous Metals (China) plus various other Chinese groups.

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ABUIDABBAB

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The Abu Dabbab tantalum-time feldspar deposit is located within the... Central Eastern Desert in the United Contract Contract Contract Contract Contract Arab Republic of Egypt. The deposit and all all is located about 16km from western than 1990 shore of the Red Sea and 17km to the north of the Nuwelbi deposit.

mananananan

ABU DABBAB

The Abu Dabbab tantalum-tin-feldspar deposit is located within the Central Eastern Desert in the United Arab Republic of Egypt. The deposit is located about 16km from western shore of the Red Sea and 17km to the north of the Company's Nuweibi deposit.

The deposit is covered by two Exploitation Leases (1658 & 1659) granted in the name of Tantalum Egypt LLC, a company incorporated in Egypt and owned 50% EGSMA and 50% by Tantalum International Pty Ltd which is a 100% owned subsidiary of Gippsland Ltd. The proposed plant site located 6km from the Red Sea coast has been secured under Ministerial Decree No. 11/2003 and provides for an area of 14km2.

Tin-tungsten mineralisation at Abu Dabbab has been known since the 1940s but it was not explored until the early 1970s when a joint Soviet-Egyptian team completed an extensive exploration programme. The work included 17 diamond drill holes, three adits, one crosscut, numerous trenches and surface sampling were completed during this period. Bulk sampling and processing tests were also carried out with a feasibility study report completed in 1975.

In the early 1990s the project was further explored by a joint venture between the Egyptian Government (EGSMA) and Geominera Italiana. The joint venturers drilled a further 11 holes totalling 667.2m, estimated the contained resources and conducted a range of metallurgical testwork

Gippsland carried out some re-sampling of the adits to verify the previous results, collected bulk samples totalling 43 tonnes and conducted additional detailed metallurgical testwork in Australia. Encouraged by the results of the testwork, Gippsland commenced a Bankable Feasibility Study, which was completed in September 2004 by the international engineering group Lycopodium Pty Ltd.

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RESOURCES FOR ABU DABBAB

The resources for Abu Dabbab at 0.01% Ta 2 O 5 cut-off now stand at:
Measured resources
Indicated resources	$-2.1$ Mt at 0.0260% Ta 2 O s , 0.009% Nb 2 O s & 0.16% Sn
Inferred resources	26Mt at 0.0240% Ta 2 O 6 , 0.0110% Nb 2 O 6 & 0.06% Sn
Total all categories	39.9Mt at 0.0252% Ta 2 O g , 0.0116% Nb 2 O g & 0.089% Sn

ABU DABBAB BANKABLE FEASIBILITY STUDY (1.26Mtpa)

The Abu Dabbab Bankable Feasibility Study ("BFS") released to the market on 14 September 2004, illustrates that the world-scale 40Mt Abu Dabbab deposit has the potential to become a major global supplier of tantalum whilst operating from a low cost basis.

The BFS was based upon the design throughput of 1.26Mtpa and evaluated the Project for the first 20 years of its mine life. The study determined that the Project will produce in excess of 420,000 pounds of Ta2O5 per year along with some 980 tonnes of tin metal during the first 20 years of production. The Company has executed a Heads of Agreement with two major tantalum consumers for the off-take of 412,000 pounds of Ta2O5 per annum for a 4-year period. Tin output will be sold via the London Metal Exchange.

Based upon a capital expenditure of US$65.5 million dollars, the Project is scheduled to generate an operating margin of US$112 million over the 20-year period covered by the BFS. The project is calculated to have an internal rate of return (IRR) (based on an all equity structure) of 11.2% over the 20 year period covered by the BFS.

Most significantly the US$65.5 capital expenditure for the 1.26Mtpa operation makes allowance for the over-sizing of a number of major components including jaw crushers, SAG mill and thickeners, to enable through-put to be expanded to 2Mtpa in a short time-frame. No additional mining equipment would be required to expand the operation from 1.26Mtpa to 2Mtpa. The additional positive cash flows that shall arise due to the expansion from 1.26Mtpa to 2Mtpa are not reflected in above IRR.

Additionally, the BFS is based on the production of $Ta_2O_5$ and tin alone and does not take into account 1Mtpa of ceramic grade feldspar which may be produced as a co-product to the tantalum and tin production. The additional positive cash flows that shall arise due to the sale of feldspar are also not reflected in the above IRR. Testwork undertaken in Italy demonstrated that the Abu Dabbab feldspar is ideally suited to the manufacture of high-quality ceramics such as floor tiles and sanitary ware. The Company has executed a Heads of Agreement with a large European group for the off-take of 2.65Mtpa of feldspar for delivery over a 5-year period.

The Directors instructed its engineering consultants to proceed with the BFS on the basis of $Ta2O5$ and tin production alone to enable the commencement of production in the shortest possible time-frame. Following start-up, priority will be given to the production of ceramic grade feldspar as the revenue from this product has the potential to equal that of tantalum.

ABU DABBAB BANKABLE FEASIBILITY STUDY (2MIba)

NUWEIBI

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Nuweibi is located 17km to the south-southwest of the Abu Dabbab deposit. The deposit was also the state of subject of detailed exploration by the wind same joint Soviet-Egyptian team that with the control explored Abu Dabbab. Manager

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NUWEIBI TANTALUM

Nuweibi is located 17km to the south-southwest of the Abu Dabbab deposit. The deposit was also the subject of detailed exploration by the same joint Soviet-Egyptian team that explored Abu Dabbab. The work included 23 diamond drill holes totalling 2,746m, four surface trenches and four bulk samples for metallurgical testwork. The results of this work were used to re-estimate the mineral resources to JORC standard.

RESOURCES FOR NUWEIBI

	The Nuweibi resources estimation with the ore block model method using 5m square blocks at a 0.01% Ta 2 O 5 cut-off now stand at:
	**************************************Indicated resources $(48Mt$ at 0.0147% Ta 2 O 5 & 0.009% Nb 2 O 5.
linferred resources	.Example 10.0138% Ta2O5 & 0.0095% Nb2O5 1 th
Total all categories	98Mt at 0.0143% Ta 2 O 5 & 0.0095% Nb 2 O 5

The total resources agree well with the Soviet results in that the Soviets estimated 82Mt at 0.0156% Ta2O5 whereas this study obtained 86Mt at 0.0149% (0.011% cut-off) or 80Mt at 0.0152% at a 0.012% cut-off.

Modelling undertaking by Gippsland indicates that the potential exists for a significant increase in Nuweibi resources to the east as most of the eastern diamond drill holes bottomed in mineralisation.

The Nuweibi mineralisation is hosted by an apogranite intrusive within a sequence of schists, gabbro, serpentinite, older granites and dykes of varying composition. The apogranite that hosts the mineralisation is comprised of three main facies, an upper, middle and lower, each separated by transition zones.

WADI ALLAQI

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During the year the Company was granted the right to explore eight with the gold areas plus one coppernickel deposit in the Wadi Allaqi region of South-Eastern Egypt.

. . . . . . . . . . . . . . . . . . . .

WADI ALLAQI

During the year the Company was granted the right to explore eight gold areas plus one copper-nickel deposit in the Wadi Allaqi region of Southeastern Egypt.

The Wadi Allaqi district is located 160km southeast from Aswan in the south-western part of the Eastern Desert of Egypt covering an area of about 12,000km2. The area, which is bounded to the west by Lake Nasser and to the east by the Red Sea is accessed via an asphaltic road from Aswan located 210km to the northwest. Elsewhere access is available by 4-wheel drive vehicles along the wadis.

WADI ALLAQI CONTINUED

GOLD

Egypt has a long history of gold mining with the earliest references to gold mining in the pre-4,000 BC period. Within the Wadi Allaqi region the earliest reference to mining is the Twelfth Dynasty of the Middle Kingdom (1991-1786BC) when the area was known as the region of Akita in the Land of Wawat. Mining probably continued in episodes during the Pharaonic period. Further mining took place during the Roman era from 181BC to 5AD and then again during Islamic times from the 9th century up until the 14th century, indicating that they were sites of significant mining activity by the ancients.

In the early 1900s the area was explored and mined by British companies, principally the Nile Valley Company Ltd, through to the 1920s. Some small time mining continued through to the early 1950s.

The historical mining was focused entirely on the near-surface high grade quartz veins and alluvial gold. Evidence of the historical mining activity is clearly seen in stoped out quartz veins at shallow depths by means of shafts and adits. Waste dumps and tailing are present at a number of these deposits indicating that they were sites of significant mining activity by the ancients. Apart from limited regional exploration during the 1960's and 70's under the auspices of the United Nations there has been no exploration or mining since the early 1950s when Egypt became a republic.

The eight (8) Wadi Allaqi gold projects, each 16km2 in area, include:

	Umm Garayat Controlled Controlled Koleit Umm Qurayyat
	$\mathbb{C}$ Nile Valley Block A $\sim$ $\mathbb{C}$ and $\mathbb{C}$ Nile Valley Block E $\sim$ $\mathbb{C}$ $\sim$
∵ Seiga ∶	Umm El Tuyer
Haimur	Umm Shashoba

The Um Garayat gold project includes one of the famous ancient mines known in the south-western part of the Eastern Desert. The mine is situated on the right side of Wadi Allaqi at Latitude 22° 34' 28.2" N and Longitude 33° 22' 33.7" E and is the largest in the Wadi Allaqi area. The gold mine area shows extensive mining activities including adits, shafts, dumps and tailings dating back to the beginning of the 20th Century. Another well known mine is the Umm El Tuyer mine located to the east and where there is evidence of previous mining activity over thousands of years.

ABUISWAYE

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The Abu Swayel is located 35km to the northeast of the Company's western group of Wadi Allaqi deposits. The contract of the contract of

Copper of Abu Swayel was mined by the ancient Egyptions from shallow open cut workings which can be iroced over a length of 1805.

ABU SWAYEL

The Abu Swayel is located 35km to the northeast of the Company's western group of Wadi Allaqi deposits.

Copper at Abu Swayel was mined by the ancient Egyptians from shallow open cut workings which can be traced over a length of 180m. Ancient furnaces, slag and pottery remains are evidence that some on site processing of the copper ore was completed. In the early part of the 1900s the Nile Valley Company sank a shallow shaft with a cross-cut at the 22m level to test the vertical continuity of the mineralisation.

In the early 1960s the shaft was deepened to 69m and ten diamond drill holes were completed to test the down dip continuity of the mineralisation over a strike length of 200m. Of the 1,205m of drilling completed, only 21 samples ranging from 1-2m in length were assayed. Three of the holes returned significant Cu and Ni values.

Except for geological mapping there has been no exploration outside of the immediate vicinity of the ancient workings since the early 1960s. The results of the previous exploration clearly show that mineralisation is present at grades and over widths that would be readily detected by geophysical methods such as electromagnetic ("EM") plus induced polarisation ("IP") techniques.

The Abu Swayel licence covers 16km2 of favourable stratigraphy along strike from the old workings which have not been tested for Cu-Ni mineralisation. Much of the area is covered by thin wadi sediments which can be readily explored by means of ground geophysical methods.

Location	From ${m}$	To (m)	Interval (m)	Cu (%)	Ni (%)
DH01	21.00	23.60	$-02.60$
$\Box$ DH02	25.70	29.95	04.25		0.23
D H14	48.55	49.85	01.30	2.23	0.20
Shaft	-30.00	40.00	- 10.00		.53
Cross-cut	07.50	15.50	08.00	4.11	1.77

An exploration programme of geological mapping, geochemical sampling, EM / IP together with follow-up drilling of the geophysical anomalies has been prepared.

The Zeehan tin deposit is located within a major tin province in the northwest of Tasmania approximately. The 15km from the large Renison tin deposit which was recently the lead the project in a prospectus issued by Biuestone Timilid.

ZEEHANII

ZEEHAN

The Zeehan tin deposit is located within a major tin province in the northwest of Tasmania approximately 15km from the large Renison tin deposit which was recently the lead project in a prospectus issued by Bluestone Tin Ltd.

At Zeehan the tin mineralization occurs as cassiterite and stannite in four deposits of which the Queen Hill and Severn are the most significant. These deposits are:

Queen Hill	Montana
Severn	Golf Course

Past drilling totalling 23,000m has established the presence of a substantial tin resource. The Severn deposit, the largest of the four, is located approximately 120m below the surface and is considered to be open at depth. To a depth of 500m below surface, the inferred resources include 5.1Mt at 0.6% Sn within the mineralised envelope. At Queen Hill the mineralization outcrops on a hill which will facilitate any future mining via a decline from the surface. This deposit is located approximately 300m due west of the Severn deposit and contains indicated resources of 1.8Mt at 0.82% Sn.

Gippsland has a joint venture at Zeehan with the insolvent public company Western Metals Limited which has had a Receiver and Manager appointed to administer its assets and affairs. Under the terms of this agreement Gippsland has a 40% interest in the project and is free carried to the end of feasibility. Western Metals may earn up to 70% equity in the project by completing a feasibility study acceptable to a project finance bank.

The Zeehan deposit is held in the form of a Retention Licence number 5/1997 which is in good standing with the Department of Infrastructure, Energy and Resources - Mineral Resources of Tasmanian.

In light of the recently improved price of tin, the Company is currently considering various commercial and technical options regarding the project.

MINERAL RESOURCES AT 30 JUNE 2004

EGYPT

Abu Dabbab (0.1% Ta 2 O 5 cut-off).		$\cdots \cdots \cdots \cdots \cdots \cdots \cdots \cdots \cdots \cdots \cdots \cdots \cdots \cd$, 1999, 1999, 1999, 1999, 1999, 1999, 1999, 1999, 1999, 1999, 1999, 1999, 1999, 1999, 1999, 1999, 1999, 1999,1999, 1999, 1999, 1999, 1999, 1999, 1999, 1999, 1999, 1999, 1999, 1999, 1999, 1999, 1999, 1999, 1999, 1999, 1
Measured	12.0	274	126	0.130
Indicated	2.1	260	90	0.16
Inferred	26	240	110	0.06
Total			1111111111111111116	0.089
				$\sim$ Nuweibi (0.1% Ta 2 O 5 cut-off) with an arrangement of the contract of the contract of $[0.1%$ Ta 2 O 5 cut-off) with the contract of the contract of the contract of the contract of the contract of the contract of
Indicated	48	147	90
Inferred	50	138	95
Total		98

ZEEHAN, AUSTRALIA

	Total mineralised Envelope (0.1% Sn cut-off)
Queen Hill	Indicated	1.8	0.82
Severn	Inferred	5.1	0.60
Montana	Inferred	0.4	1.22

			.
	Total mineralised Envelope (0.3% Sn cut-off)		.
Queen Hill	Indicated	0.93	1.39
Severn	Inferred	2.37	1.11
Montana	Inferred	0.31	1.45

PROJECT FINANCE

During the year the Company raised the sum of $2.56 million which was used in part to fund the execution of the Abu Dabbab BFS which was completed during September 2004 by the international engineering group Lycopodium Pty Ltd.

The Abu Dabbab project capital requirement of some US$65 million is expected to be funded by a combination of debt and equity. During the past year, the Company has kept a number of international and domestic resource project banks appraised of the progress of the BFS and the Abu Dabbab project in general. Having completed the BFS, the Company has commenced negotiations with such banks in order to secure project funding for the debt segment of the Abu Dabbab project capital requirement.

CORPORATE GOVERNANCE STATEMENT

The Board of Gippsland Limited is responsible for its corporate governance, that is, the system by which the Company and its controlled entities ("the Group") are managed.

1. BOARD OF DIRECTORS

1.1 ROLE OF THE BOARD AND MANAGEMENT

The Board represents shareholders' interests in continuing a successful business, which seeks to optimise medium to long-term financial gains for shareholders. By focusing on long-term gains for shareholders, the Board believes that this will ultimately result in the interests of all stakeholders being appropriately addressed when making business decisions.

The Board is responsible for ensuring that the Group is managed in such a way to best achieve this desired result. Given the current size and operations of the business, the Board currently undertakes an active, not passive role.

The Board is responsible for evaluating and setting the strategic directions for the Group, establishing goals for management and monitoring the achievement of these goals. The Executive Chairman is responsible to the Board for the day-to-day management of the Group.

The Board has sole responsibility for the following:

Appointing and removing the Executive Chairman and any other executives and approving their remuneration;
Appointing and removing the Company Secretary / Chief Financial Officer and approving their remuneration;
Determining the strategic direction of the Group and measuring performance of management against approved strategies;
Review of the adequacy of resources for management to properly carry out approved strategies and business plans;
Adopting operating and capital expenditure budgets at the commencement of each financial year and monitoring the progress by both financial and non-financial key performance indicators;
· Monitoring the Group's medium term capital and cash flow requirements;
Approving and monitoring financial and other reporting to regulatory bodies, shareholders and other organisations;
Determining that satisfactory arrangements are in place for auditing the Group's financial affairs;
Review and ratify systems of risk management and internal compliance and control, codes of conduct and compliance with legislative requirements; and
Ensuring that policies and compliance systems consistent with the Group's objectives and best practice are in place and that the Company and its officers act legally, ethically and responsibly on all matters.

The Board's role and the Group's corporate governance practices are being continually reviewed and improved as required.

1.2 COMPOSITION OF THE BOARD AND NEW APPOINTMENTS

The Company currently has the following Board members:

Robert John Telford	Executive Chairman and Managing Director
John Morrison Chisholm.	Non-Executive Director
John Damian Kenny	Non-Executive Director

The Company's Constitution provides that the number of directors shall not be less than three and not more than ten. There is no requirement for any shareholding qualification.

The Board considers that the Company is not currently of a size, nor are its affairs of such complexity to justify the appointment and further expense of an independent Non-Executive Chairman and additional independent Non-Executive Directors. The Board believes that the individuals on the Board can make, and do make, quality and independent judgments in the best interests of the Company on all relevant issues.

If the Company's activities increase in size, nature and scope the size of the Board will be reviewed periodically as well as the optimum number of directors required for the Board to properly perform its responsibilities and functions.

The membership of the Board, its activities and composition is subject to periodic review. The criteria for determining the identification and appointment of a suitable candidate for the Board shall include quality of the individual, background of experience and achievement, compatibility with other Board members, credibility within the Company's scope of activities, intellectual ability to contribute to Board's duties and physical ability to undertake Board's duties and responsibilities.

Directors are initially appointed by the full Board subject to election by shareholders at the next Annual General Meeting. Under the Company's Constitution the tenure of Directors (other than the Managing Director) is subject to reappointment by shareholders not later than the third anniversary following his last appointment. Subject to the requirements of the Corporations Act 2001, the Board does not subscribe to the principle of retirement age and there is no maximum period of service as a Director. A Managing Director may be appointed for any period and on any terms the Directors think fit and, subject to the terms of any agreement entered into, the Board may revoke any appointment.

1.3 COMMITTEES OF THE BOARD

The Board considers that the Company is not currently of a size, nor are its affairs of such complexity to justify the formation of separate or special committees at this time. The Board as a whole is able to address the governance aspects of the full scope of the Company's activities and to ensure that it adheres to appropriate ethical standards.

The Board has also established a framework for the management of the Group including a system of internal controls, a business risk management process and the establishment of appropriate ethical standards.

The full Board currently holds meetings at such times as may be necessary to address any general or specific matters as required.

In the absence of an audit committee, the Board when required sets aside time at Board meetings to deal with the issues and responsibilities usually delegated to the audit committee so as to ensure the integrity of the financial statements of the Company and the independence of the external auditor.

The Board in it's entirety reviews the audited annual and half-yearly financial statements and any reports which accompany published financial statements.

The Board in it's entirety considers the appointment of the external auditor and reviews the appointment of the external auditor, their indepenence, the audit fee and any questions of resignation or dismissal.

If the Group's activities increase in size, scope and nature, the appointment of separate or special committee's will be reviewed by the Board and implemented if appropriate.

1.4 CONFLICTS OF INTEREST

In accordance with the Corporations Act 2001 and the Company's Constitution, Directors must keep the Board advised, on an ongoing basis, of any interest that could potentially conflict with those of the Company. Where the Board believes that a significant conflict exists the Director concerned does not receive the relevant board papers and is not present at the meeting whilst the item is considered.

1.5 INDEPENDENT PROFESSIONAL ADVICE

The Board has determined that individual Directors have the right in connection with their duties and responsibilities as Directors, to seek independent professional advice at the Company's expense. The engagement of an outside adviser is subject to prior approval of the Chairman and this will not be withheld unreasonably. If appropriate, any advice so received will be made available to all Board members.

ETHICAL STANDARDS ク.

The Board acknowledges the need for continued maintenance of the highest standard of corporate governance practice and ethical conduct by all Directors and employees of the Group.

2.1 CODE OF CONDUCT FOR DIRECTORS

The Board has adopted a Code of Conduct for Directors to promote ethical and responsible decision-making by the Directors. The code is based on a code of conduct for Directors prepared by the Australian Institute of Company Directors.

The principles of the code are:

A Director must act honestly, in good faith and in the best interests of the Company as a whole.
. A Director has a duty to use due care and diligence in fulfilling the functions of office and exercising the powers attached to that office.
A Director must use the powers of office for a proper purpose, in the best interests of the Company as a whole.
A Director must recognise that the primary responsibility is to the Company's shareholders as a whole but should, where appropriate, have regard for the interest of all stakeholders of the Company.
A Director must not make improper use of information acquired as a Director.
. A Director must not take improper advantage of the position of Director.
A Director must not allow personal interests, or the interests of any associated person, to conflict with the interests of the Company.
A Director has an obligation to be independent in judgment and actions and to take all reasonable steps to be satisfied as to the soundness of all decísions taken as a Board.
Confidential information received by a Director in the course of the exercise of directorial duties remains the property of the Company and it is improper to disclose it, or allow it to be disclosed, unless that disclosure has been authorised by the Company, or the person from whom the information is provided, or is required by law.
A Director should not engage in conduct likely to bring discredit upon the Company.
A Director has an obligation at all times, to comply with the spirit, as well as the letter of the law and with the principles of the Code.

The principles are supported by guidelines as set out by the Australian Institute of Company Directors for their interpretation. Directors are also obliged to comply with the Company's Code of Ethics and Conduct, as outlined below.

$2.2$ CODE OF ETHICS AND CONDUCT

The Company has implemented a Code of Ethics and Conduct, which provides guidelines almed at maintaining high ethical standards, corporate behaviour and accountability within the Company. A summary of the Company's Code of Ethics and Conduct is also available on the Company's website.

All employees and Directors are expected to:

respect the law and act in accordance with it;
respect confidentiality and not misuse Company information, assets or facilities;
value and maintain professionalism;
avoid real or perceived conflicts of interest;
act in the best interests of shareholders;
by their actions contribute to the Company's reputation as a good corporate citizen which seeks the respect of the community and environment in which it operates;
perform their duties in ways that minimise environmental impacts and maximise workplace safety;
exercise faimess, courtesy, respect, consideration and sensitivity in all dealings within their workplace and with customers, suppliers and the public generally; and
act with honesty, integrity decency and responsibility at all times.

An employee that breaches the Code of Ethics and Conduct may face disciplinary action. If an employee suspects that a breach of the Code of Ethics and Conduct has occurred or will occur, he or she must report that breach to management. No employee will be disadvantaged or prejudiced if he or she reports in good faith a suspected breach. All reports will be acted upon and kept confidential.

2.3 DEALINGS IN COMPANY SECURITIES

The Company's Securities Trading Policy imposes basic trading restrictions on all employees of the Company with 'inside information', and additional trading restrictions on the Directors of the Company.

'Inside information' is information that:

· is not generally available; and
. If it were generally available, it would, or would be likely to influence investors in deciding whether to buy or sell the Company's securities.

If an employee possesses inside information, the person must not:

trade in the Company's securities; ۰
advise others or procure others to trade in the Company's securities; or
pass on the inside information to others including colleagues, family or friends knowing (or where the employee or Director should have reasonably known) that the other persons will use that information to trade in, or procure someone else to trade in, the Company's securities.

This prohibition applies regardless of how the employee or Director learns the information (eg. even if the employee or Director overhears it or is told in a social setting).

In addition to the above, Directors must notify the Company Secretary as soon as practicable, but not later than 5 business days, after they have bought or sold the Company's securities or exercised options. In accordance with the provisions of the Corporations Act 2001 and the Listing Rules of the ASX, the Company on behalf of the Directors must advise the ASX of any transactions conducted by them in the securities of the Company.

A summary of the Company's Securities Trading Policy is available on the Company's website.

Breaches of this policy will be subject to disciplinary action, which may include termination of employment.

2.4 INTERESTS OF OTHER STAKEHOLDERS

The Company's objective is to continue to develop and ultimately aim to commence production from the Abu Dabbab Project in Egypt. As the Company embarks upon the development and production phases it will aim to ensure the highest standard of environmental care is achieved in all its operations.

To assist in meeting its objective, the Company conducts its business within the Code of Ethics and Conduct, as outlined in section 2.2 above.

DISCLOSURE OF INFORMATION 3.

3.1 CONTINUOUS DISCLOSURE TO ASX

The continuous disclosure policy requires all executives and Directors to inform the Executive Chairman or in his absence the Company Secretary of any potentially material information as soon as practicable after they become aware of that information. The Company's Continuous Disclosure Policy is available on its website.

Information is material if it is likely that the information would influence investors who commonly acquire securities on ASX in deciding whether to buy, sell or hold the Company's securities.

Information is not material and need not be disclosed if:

a) A reasonable person would not expect the information to be disclosed or is material but due to a specific valid commercial reason is not to be disclosed: and
b) The information is confidential; or
c) One of the following applies:
- ί. It would breach a law or regulation to disclose the information;
- ä. The information concerns an incomplete proposal or negotiation;
- 羅. The information comprises matters of supposition or is insufficiently definite to warrant disclosure;
- įν. The information is generated for internal management purposes;
- v. The information is a trade secret:
- It would breach a material term of an agreement, to which the Company is a party, to disclose the information; vi.
- It would harm the Company's potential application or possible patent application; or vii.
- The information is scientific data that release of which may benefit the Company's potential competitors. viii.

The Executive Chairman is responsible for interpreting and monitoring the Company's disclosure policy and where necessary informing the Board. The Executive Chairman or the Company Secretary is responsible for all communications with ASX.

3.2 COMMUNICATION WITH SHAREHOLDERS

The Company places considerable importance on effective communications with shareholders. The Company's Shareholder Communications Strategy is available on the Company's website.

The Group's communication strategy requires communication with shareholders and other stakeholders in an open, regular and timely manner so that the market has sufficient information to make informed investment decisions on the operations and results of the Group. The strategy provides for the use of systems that ensure a regular and timely release of information about the Group is provided to shareholders. Mechanisms employed include:

· Announcements lodged with ASX;
ASX Quarterly Cash Flow Reports;
Half Yearly Report;
Presentations at the Annual General Meeting/General Meeting's; and
· Annual Report.

The Board encourages full participation of shareholders at the Annual General Meeting to ensure a high level of accountability and understanding of the Group's strategy and goals.

The Company also posts all reports, ASX and media releases and coples of significant business presentations on the Company's website at www.gippsfandftd.com

RISK MANAGEMENT Δ,

IDENTIFICATION OF RISK $\mathbb{A}$ .

The Board is responsible for the oversight of the Group's risk management and control framework. Responsibility for control and risk management is delegated to the appropriate level of management within the Group with the Executive Chairman and Chief Financial Officer having ultimate responsibility to the Board for the risk management and control framework.

Arrangements put in place by the Board to monitor risk management include monthly reporting to the Board in respect of operations and the financial position of the Group.

4.2 INTEGRITY OF FINANCIAL REPORTING

Commencing 30 June 2004, the Company's Executive Chairman and Chief Financial Officer (or equivalent) report in writing to the Board that:

the consolidated financial statements of the Company and its controlled entities for each half and full year present a true and fair view, in all material aspects, of the Company's financial condition and operational results and are in accordance with accounting standards;
the above statement is founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the Board; and
the Company's risk management and internal compliance and control framework is operating efficiently and effectively in all material respects.

4.3 ROLE OF AUDITOR

The Company's practice is to invite the auditor to attend the Annual General Meeting and be available to answer shareholder questions about the conduct of the audit and the preparation and content of the Auditor's Report.

5. PERFORMANCE REVIEW

The Board has adopted a self-evaluation process to measure its own performance during each financial year. Also, an annual review is undertaken in relation to the composition and skills mix of the Directors of the Company.

Arrangements put in place by the Board to monitor the performance of the Group's executives include:

· a review by the Board of the Group's financial performance; and
annual performance appraisal meetings incorporating analysis of key performance indicators with each individual to ensure that the level of reward ۰ is aligned with respective responsibilities and individual contributions made to the success of the Company.

REMUNERATION ARRANGEMENTS 6.

The broad remuneration policy is to ensure that remuneration properly reflects the relevant persons duties and responsibilities, and that the remuneration is competitive in attracting, retaining and motivating people of the highest quality. The Board believes that the best way to achieve this objective is to provide Executive Directors and executives with a remuneration package consisting of fixed components that reflect the person's responsibilities, duties and personal performance.

The remuneration of Non-Executive Directors is determined by the Board as a whole having regard to the level of fees paid to Non-Executive Directors by other companies of similar size in the industry.

The aggregate amount payable to the Company's Non-Executive Directors must not exceed the maximum annual amount approved by the Company's shareholders.

ASX CORPORATE GOVERNANCE COUNCIL'S PRINCIPLES OF GOOD CORPORATE GOVERNANCE AND BEST PRACTICE RECOMMENDATIONS

The Company is committed to implementing the highest standards of corporate governance. In determining what those high standards should involve, the Company has turned to the ASX Corporate Governance Council's Principles of Good Corporate Governance and Best Practice Recommendations. As consistency with the ASX guidelines has been a gradual process, where the Company did not have certain policies or committees recommended by the ASX Corporate Governance Council ("the Council") in place for the entire reporting period, the Company has identified when such policies or committees were introduced.

Where the Company's corporate governance practices do not correlate with the practices recommended by the Council, the Company does not consider that the practices are appropriate for the Company due to the size of the Company and its current operations.

To illustrate where the Company has addressed each of the Council's recommendations, the following summary cross-references each recommendation with sections of the Corporate Governance Statement. Details of all of the recommendations can be found on the ASX Corporate Governance Council's website at http://www.asx.com.au/about/CorporateGovernance\_AA2.shtm.

INTRODUCTION

Gippsland Limited has adopted systems of control and accountability as the basis for the administration of corporate governance. Some of these policies and procedures are summarised below.

The following additional information about the Company's corporate governance practices is set out on the Company's website at www.gippslanditd.com:

· Corporate Governance Statement including disclosures and explanations;
· Summary of Code of Conduct for Directors;
· Summary of Securities Trading Policy;
Summary of Continuous Disclosure Policy;
Summary of Shareholder Communications Strategy; and
Summary of Company Code of Ethics and Conduct.

EXPLANATIONS FOR DEPARTURES FROM BEST PRACTICE RECOMMENDATIONS

During the financial year the Company has complied with the majority of the Ten Essential Corporate Governance Principles and the corresponding Best Practice Recommendations as published by the ASX Corporate Governance Council ("ASX Principles and Recommendations"), and as detailed below:

1. ROLE OF THE BOARD AND MANAGEMENT

COUNCIL PRINCIPLE 1:

Lay solid foundations for management and oversight.

COUNCIL RECOMMENDATION 1.1:

Formalise and disclose the functions reserved to the Board and those delegated to management.

The Company complies with this recommendation. Refer Section 1.1 of the Corporate Governance Statement.

2. COMPOSITION OF THE BOARD

COUNCIL PRINCIPLE 2:

Structure the Board to add value.

Gippsland Limited Annual Report 2004

COUNCIL RECOMMENDATION 2.1:

A majority of the Board should be independent directors.

The Board considers that a majority of its Board is independent and it does comply with Recommendation 2.1. Refer Section 1.2 of the Corporate Governance Statement

While the Board strongly endorses the position that boards need to exercise independence of judgment, it also recognises (as does ASX Corporate Governance Council Principle 2) that the need for independence is to be balanced with the need for skills, commitment and a workable board size. The Board believes it has recruited members with the skills, experience and character to discharge its duties and that any greater emphasis on independence would be at the expense of the Board's effectiveness.

Messrs Kenny and Chisholm are Non-Executive Directors of the Company. Both Non-Executive Directors are considered independent within the ASX Corporate Governance Council's guidelines.

It is noted that Mr Kenny is a solicitor at Blakiston & Crabb, the major legal providers for the Company. Mr Kenny has been directly involved in the provision of the legal services by Blakiston & Crabb however the undertaking of this role does not constitute Mr Kenny or Blakiston & Crabb as being material service providers to the Company. Mr Kenny does not participate in the discussions regarding the provision of legal services and his knowledge of the law is a skill that the Board considers necessary to have on the Board.

Dr JM Chisholm is also a principal at Continental Resource Management Pty Ltd, geological service providers for the Company. Dr Chisholm has been directly involved in the provision of the geological services by Continental Resource Management Pty Ltd, however the undertaking of this role does not constitute Dr Chisholm or Continental Resource Management Pty Ltd as being material service providers to the Company. Where required Dr Chisholm does not participate in the discussions regarding the provision of geological services and his knowledge of this specialised field is a skill that the Board considers necessary to have on the Board.

At present the Company believes that the individuals on the Board can make, and do make, quality and independent judgments in the best interests of the Company on all relevant issues. Directors having a conflict of interest in relation to a particular item of business must absent themselves from the Board Meeting before commencement of discussion on the topic.

The Board considers that the Company is not currently of a size, nor are its affairs of such complexity to justify the expense of appointing additional independent Non-Executive Directors.

COUNCIL RECOMMENDATION 2.2:

The chairperson should be an independent director.

The Company's Chairman, Mr Robert John Telford, is considered by the Board not to be independent in terms of the ASX Corporate Governance Council's definition of independent Director. However the Board believes that the Chairman is able and does bring quality and independent judgment to all relevant issues falling within the scope of the role of a Chairman.

The Board considers that the Company is not currently of a size, nor are its affairs of such complexity to necessitate the appointment of an independent Nor-Executive Chairman.

Refer Section 1.2 of the Corporate Governance Statement.

COUNCIL RECOMMENDATION 2.3:

The roles of chairperson and chief executive officer (Managing Director) should not be exercised by the same individual.

While the Board recognises the importance of independence in decision-making, it does not comply with Recommendation 2.2 as Mr Robert John Telford, the current Executive Chairman is not an independent Director. Although Mr Telford has a substantial interest via his substantial shareholding, the Board believes that his extensive industry experience and previous record as Chairman makes him the most appropriate person for the position. It is recognised by the Board that Mr Telford has been a major force in the Company's success. In addition the Board considers that as the Company enters its next growth stage Mr Telford's industrial experience and strong and effective leadership will be beneficial.

Refer Section 1.2 of the Corporate Governance Statement.

COUNCIL RECOMMENDATION 2.4:

The Board should establish a nomination committee.

The Board considers that the Company is not currently of a size to justify the formation of a nomination committee. The Board as a whole undertakes process of reviewing the skill base and experience of existing Directors to enable identification or attributes required in new Directors. Where appropriate independent consultants are engaged to identify possible new candidates for the Board.

The Board acknowledges this does not comply with Recommendation 2.4 of the ASX Corporate Governance Guidelines. If the Company's activities increase in size, scope and nature, the appointment of a nomination committee will be reviewed by the Board and implemented if appropriate.

Refer Section 1.3 of the Corporate Governance Statement.

3. ETHICAL AND RESPONSIBLE DECISION-MAKING.

COUNCIL PRINCIPLE 3:

Actively promote ethical and responsible decision-making.

COUNCIL RECOMMENDATION 3.1:

Establish a code of conduct to guide the Directors, the chief executive officer (or equivalent), the chief financial officer (or equivalent) and any other key executives as to:

3.1.1 the practices necessary to maintain confidence in the Company's integrity;

3.1.2 the responsibility and accountability of individuals for reporting and investigating reports of unethical practices.

The Company complies with this recommendation and has a Code of Conduct to guide the Directors and key executives. Refer Section 2.1 of the Corporate Governance Statement.

COUNCIL RECOMMENDATION 3.2:

Disclose the policy concerning trading in Company securities by Directors, officers and employees.

The Company complies with this recommendation. Refer Section 2.3 of the Corporate Governance Statement.

4. INTEGRITY OF FINANCIAL REPORTING

COUNCIL PRINCIPLE 4:

Safeguard integrity in financial reporting.

COUNCIL RECOMMENDATION 4.1:

Require the chief executive officer (or equivalent) and the chief financial officer (or equivalent) to state in writing to the board that the Company's financial reports present a true and fair view, in all material respects, of the Company's financial condition and operational results and are in accordance with relevant accounting standards.

The Company complies with this requirement. Refer Section 4.2 of the Corporate Governance Statement.

COUNCIL RECOMMENDATION 4.2:

The Board should establish an audit committee.

The Board considers that the Company is not of a size, nor are its financial affairs of such complexity to justify the formation of an audit committee. The Board as a whole undertakes the selection and proper application of accounting policies, the identification and management of risk and the review of the operation of the internal control systems.

The Board acknowledges this does not comply with Recommendation 4.2. If the Company's activities increase in size, scope and nature, the appointment of an audit committee will be reviewed by the Board and implemented if appropriate.

Refer Section 1.3 of the Corporate Governance Statement.

COUNCIL RECOMMENDATION 4.3:

Structure the audit committee so that it consists of:

only non-executive directors;
a majority of independent directors;
an independent chairperson, who is not chairperson of the board; $\mathcal{L}^{\mathcal{A}}$
at least three members.

Refer Council Recommendation 4.2.

COUNCIL RECOMMENDATION 4.4

The audit committee should have a formal operating charter.

Refer Council Recommendation 4.2.

5. MAKE TIMELY AND BALANCED DISCLOSURE

COUNCIL PRINCIPLE 5:

Promote timely and balanced disclosure of all material matters concerning the Company.

COUNCIL RECOMMENDATION 5.1:

Establish written policies and procedures designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior management level for that compliance.

The Company complies with this recommendation. Refer Section 3.1 of the Corporate Governance Statement.

6. RESPECT THE RIGHTS OF SHAREHOLDERS

COUNCIL PRINCIPLE 6:

Respect the rights of shareholders and facilitate the effective exercise of those rights.

COUNCIL RECOMMENDATION 6.1:

Design and disclose a communications strategy to promote effective communication with shareholders and encourage effective participation at general meetings.

The Company complies with this recommendation. Refer Section 3.2 of the Corporate Governance Statement.

COUNCIL RECOMMENDATION 6.2:

Request the external auditor to attend the annual general meeting and be available to answer shareholder questions about the conduct of the audit and the preparation and content of the auditor's report.

The Company complies with this recommendation. Refer Section 4.3 of the Corporate Governance Statement.

7. RECOGNISE AND MANAGE RISK

COUNCIL PRINCIPLE 7:

Establish a sound system of risk oversight and management and internal control.

COUNCIL RECOMMENDATION 7.1:

The Board or appropriate board committee should establish policies on risk oversight and management. The Company complies with this recommendation. Refer Section 4.1 of Corporate Governance Statement.

COUNCIL RECOMMENDATION 7.2

The chief executive officer (or equivalent) and the chief financial officer (or equivalent) should state in writing that:

$7.2.1$ the statement given in accordance with best practice recommendation 4.1 (the integrity of financial statements) is founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the Board;
$7.2.2$ the Company's risk management and internal compliance and control system is operating efficiently and effectively in all material respects.

The Company complies with this recommendation. Refer Sections 4.1 and 4.2 of the Corporate Governance Statement.

8. ENCOURAGE ENHANCED PERFORMANCE

COUNCIL PRINCIPLE 8:

Fairly review and actively encourage enhanced board and management effectiveness.

COUNCIL RECOMMENDATION 8.1:

Disclose the process for performance evaluation of the board, its committees and individual directors, and key executives.

The Company complies with this recommendation. Refer Section 5 of the Corporate Governance Statement.

9. REMUNERATE FAIRLY AND RESPONSIBLY

COUNCIL PRINCIPLE 9:

Ensure that the level and composition of remuneration is sufficient and reasonable and that its relationship to corporate and individual performance is defined.

COUNCIL RECOMMENDATION 9.1:

Provide disclosure in relation to the Company's remuneration policies to enable investors to understand (i) the costs and benefits of those policies and (ii) the link between remuneration paid to directors and key executives and corporate performance.

The Company complies with this recommendation. Refer Section 6 of the Corporate Governance Statement.

COUNCIL RECOMMENDATION 9.2

The Board should establish a remuneration committee.

The Board considers that the Company is not currently of a size, nor are its affairs of such complexity to justify the formation of a remuneration committee. The Board as a whole is responsible for the remuneration arrangements for Directors and executives of the Company.

The Board acknowledges this does not comply with Recommendation 9.2. If the Company's activities increase in size, scope and nature, the appointment of a remuneration committee will be reviewed by the Board and implemented if appropriate.

Refer Section 1.3 of the Corporate Governance Statement.

COUNCIL RECOMMENDATION 9.3

Clearly distinguish the structure of non-executive directors' remuneration from that of executives.

The Company complies with this recommendation. Refer Section 6 of the Corporate Governance Statement.

COUNCIL RECOMMENDATION 9.4

Ensure that payment of equity-based executive remuneration is made in accordance with thresholds set in plans approved by shareholders.

The Company complies with this recommendation. The Company currently has no equity-based remuneration plan.

RECOGNISE THE LEGITIMATE INTERESTS OF STAKEHOLDERS

COUNCIL PRINCIPLE 10:

Recognise legal and other obligations to all legitimate stakeholders.

COUNCIL RECOMMENDATION 10.1:

Establish and disclose a code of conduct to guide compliance with legal and other obligations to legitimate stakeholders.

The Company complies with this recommendation. Refer Section 2.2 of the Corporate Governance Statement.

DIRECTORS' REPORT

The Directors present their report on Gippsland Limited ("the Company" or "Parent Entity") and of the consolidated entity, being Gippsland Limited and its controlled entities, for the financial year ended 30 June 2004 and the auditor's report theron.

DIRECTORS

The names and details of the Directors of Gippsland Limited during the financial year and until the date of this report are:

Robert John Telford

John Morrison Chisholm

John Damian Kenny

DIRECTORS QUALIFICATIONS AND EXPERIENCE

Robert John Telford (Executive Chairman)

A.W.A.LT (Chem.) M..R.A.C.L

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 some 15 years. He has been involved in the international resource industry for some 15 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 has an interest in 13,788,124 ordinary shares and 6,658,280 listed options to acquire ordinary shares exercisable at 9 cents each on or hefore 31 December 2007

John Morrison Chisholm (Non-Executive Director)

B.Sc (Hons), PhD., FAusIMM, F.AIG

Dr Chisholm is a consulting geologist with a wide experience in exploration geology and exploration management having worked as a lecturer at the University of Western Australia and Curfin University prior to working for various international mining companies.

In 1984 he joined Western United Mining Services Pty Ltd during which time as managing director he managed a large group of geoscientists and was involved in the discovery of the Transvaal and Bounty mines.

Dr Chisholm formed a private geological consulting company, Continental Resource Management Pty Ltd in 1989, which specialises in exploration management, resource estimations, structural geology and applied geochemistry. He was formerly an adjunct associate professor in economic geology at Curtin University.

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. Dr Chisholm was one of the first geologists in Australia to have been awarded Practising Chartered Status in geology by the Australasian Institute of Mining and Metallurgy which is the highest level of recognition that can be attained by professional geologists.

Dr Chisholm has an interest in 50,000 ordinary shares and 2,260,000 listed options to acquire ordinary shares exercisable at 9 cents each on or before 31 December 2007.

John Damian Kenny (Non-Executive Director)

B. Com (Hons), LLB

Mr Kenny practices law with Blakiston & Crabb, a specialist corporate and resources law firm. He is also an executive director of investment bankers Chatsworth Stirling Pty Ltd, the corporate advisors to the Company. Mr Kenny 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.

Mr Kenny has an interest in 2,250,000 listed options to acquire ordinary shares exercisable at 9 cents each on or before 31 December 2007.

PRINCIPAL ACTIVITIES

The principal activity of the consolidated entity during the financial year was the prospecting and exploration for commercially and economically viable mineral resources.

There were no significant changes in the nature of the consolidated entity's principal activity during the year.

OPERATING RESULTS

The consolidated loss after providing for income tax for the year ended 30 June 2004 amounted to $1.411,990 (2003: $754,635).

DIVIDENDS

No dividend was paid or declared during the year and the Directors do not recommend the payment of a dividend for the year ended 30 June 2004.

REVIEW OF OPERATIONS

A detailed review of the Company and consolidated entity's activities during the financial year is set out in the section titled "Review of Operations" in this Annual Report.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

During the year and to the date of this report, there has not arisen any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company, which may significantly affect the operations of the Company, the results of those operations, or the state of affairs of the Company, in future financial years other than:

份. On 5 August 2003 the Company issued 14,000,000 ordinary shares at an issue price of 4 cents each and 14,000,000 free attaching listed options raising a total of $560,000 (before issue costs) for the purpose of furthering the bankable feasibility study for the Abu Dabbab Project;
On 5 December 2003 the Company issued 6,000,000 ordinary shares at an issue price of 5 cents each and 3,000,000 free attaching listed 鸻. options to sophisticated investors raising a total of $300,000 (before issue costs) for the purpose of furthering the bankable feasibility study for the Abu Dabbab Project; and
(iii) On 8 March 2004 the Company issued 25,000,000 ordinary shares at an issue price of 6.8 cents (2.8 UK pence) each to private and institutional investors in conjunction with the Company being admitted to the London Stock Exchange's Alternative Investment Market ("AIM") raising a total of $1,701,052 (before issue costs) for the purpose of furthering the bankable feasibility study for the Abu Dabbab Project.

AFTER BALANCE DATE EVENTS

No 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 except:

BANKABLE FEASIBILITY STUDY - ABU DABBAB

Subsequent to the end of the financial year the Company has completed its Bankable Feasibility Study ("BFS") on its Abu Dabbab Project.

The BFS is based upon a design throughput of 1.26Mtpa and evaluated the Project for the first 20 years of its mine life. The study determined that the Project is anticipated to produce in excess of 412,000 pounds of tantalum pentoxide ("Ta2O5") per year along with some 980 tonnes of tin metal during the first 20 years of production. The Company has executed a Heads of Agreement with two major tantalum consumers for the off-take of 420,000 pounds of Ta2O5 per annum for a 4-year period. Tin output will be sold via the London Metal Exchange.

Based upon a capital expenditure of US$65.5 million dollars, the Project is scheduled to generate an operating margin of US$112 million over the 20-year period covered by the BFS.

The Project is calculated to have an internal rate of return ("IRR") (based on an all equity structure) of 11.2% over the 20 year period covered by the 858

Most significantly the US$65.5 million capital expenditure for the 1.26Mtpa operation makes allowance for the over-sizing of a number of major components including jaw crushers, SAG mill and thickeners, to enable throughput to be expanded to 2Mtpa in a short time-frame. No additional mining equipment would be required to expand the operation from 1.26Mtpa to 2Mtpa. The additional positive cash flows that shall arise due to the expansion from 1.26Mtpa to 2Mtpa are not reflected in the above IRR.

Additionally, the BFS is based on the production of Ta2O5 and tin alone and does not take into account 1Mtpa of ceramic grade feldspar which may be produced as a co-product to the tantalum and tin production. The additional positive cash flows that shall arise due to the sale of feldspar are also not reflected in the above IRR. Testwork undertaken in Italy demonstrated that the Abu Dabbab feldspar is ideally suited to the manufacture of high-quality ceramics such as floor tiles and sanitary ware. The Company has executed a Heads of Agreement with a large European group for the off-take of 2.65Mtpa of feldspar for delivery over a 5-year period.

The Directors instructed its engineering consultants to proceed with the BFS on the basis of Ta2O5 and tin production alone to enable the commencement of production in the shortest possible time-frame. Following start-up, priority will be given to the production of ceramic grade feldspar as the revenue from this product has the potential to equal that of tantalum.

In light of very recent developments within the tantalum industry, the Company has been urged to consider expanding the Project to 2Mtpa. Accordingly, Lycopodium Pty Ltd has been instructed to quantify the effect of increasing production to 2Mtpa, as the resulting economies of scale are expected to materially increase the projected IRR of the Project.

The Abu Dabbab Project capital requirement of some US$65.5 million is expected to be funded by a combination of debt and equity. During the past year, the Company has kept a number of international and domestic resource project banks appraised of the progress of the BFS and the Abu Dabbab project in general. Having completed the BFS, the Company will commence negotiations with such banks in order to secure project funding for the debt segment of the Abu Dabbab Project capital requirement.

FUTURE DEVELOPMENTS

Information as to likely developments in the operations of the Company and the consolidated entity 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 consolidated entity.

ENVIRONMENTAL REGULATION

The consolidated entity's operations are not subject to any significant environmental regulations under either Commonwealth or State 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 entity 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 entity.

The consolidated entity is required to carry out its activities in accordance with the Mining Laws and requiations in the areas in which it undertakes its exploration activities.

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 any such proceedings during the year.

LEGAL PROCEEDINGS

One of Gippsland Limited's investee companies is Here2win.com Pty Ltd in which Gippsland Limited owns a 90% interest. Here2win.com Pty Ltd is the owner of various Internet horse racing gaming concepts. On 14 August 2000 Gippsland Limited announced to the Australian Stock Exchange Ltd that the services of the Chief Executive Officer of Here2win.com Pty Ltd, Mr Alex Aguero, had been terminated. Mr Aguero, through Highforce Investments Pty Ltd, continues to hold a 10% equity stake in Here2win.com Pty Ltd. Mr Aguero has commenced litigation against Gippsland Limited seeking payment of what he alleges is unpaid compensation for his services rendered while CEO. The statement of claim filed by Mr Aguero with the Supreme Court of Western Australia claims, amongst other things, damages or alternatively the sum of $1,840,000 plus costs. Gippsland Limited holds the view that the claim is completely without merit and accordingly the claim is being vigorously defended.

OPTIONS OVER UNISSUED CAPITAL LISTED OPTIONS

As at 30 June 2004 and the date of this report the following listed options were on issue:

Option expiry date	Exercise price	Number on issue
31 December 2007	9 cents.	43.771.393

During the financial year a total of 17,000,000 listed options exercisable at 9 cents each on or before 31 December 2007 were issued as securities in conjunction with share placements undertaken. In addition 100,000 listed options exercisable at 9 cents each on or before 31 December 2007 were issued as part consideration for consultancy services provided. During the financial year there were no listed options exercised.

UNLISTED OPTIONS

As at 30 June 2004 and the date of this report the following unlisted options were on issue:

Option expiry date	Exercise price	Number on issue
8 March 2007	2.8 UK bence	2.790.567

During the financial year a total of 11,000,000 unlisted options exercisable at 14 cents each on or before 11 July 2004 were voluntarily cancelled for no consideration. The options were cancelled in order to simplify the Company's capital structure prior to its AIM listing on the London Stock Exchange.

On 16 February 2004, 250,000 unlisted options exercisable at 20 cents each and 250,000 unlisted options exercisable at 30 cents each lapsed and were cancelled. During the financial year there were no unlisted options exercised.

MEETINGS OF DIRECTORS

During the financial year, 8 meetings of Directors were held. Attendances were as follows:

	NUMBER OF MEETINGS	NUMBER OF MEETINGS
	ATTENDED	ELIGIBLE TO ATTEND
- Robert John Telford	8
-John Marríson Chisholm		я
John Damian Kenny

DIRECTORS' AND EXECUTIVES' EMOLUMENTS

The Company's policy for determining the nature and amount of emoluments of Board members and senior executives of the Company is considered by the Directors following a review of the market rates and performance.

Non-Executive Directors are remunerated on a fixed fee basis for the performance of services as a Director.

Details of the nature and amount of each element of the emoluments of each Director are as set out in the following table:

Directors

Consolidated Entity and Parent Entity

	Director's	Consulting and
Name	Faes	Management Fees	Superannuation	Total
	S	S	5	S
- Robert John Telford	$\overline{\phantom{a}}$	169,220 带		169.220
John Morrison Chisholm	16.000	18,000 份	1.350	34,350
John Damian Kenny	Section	36.000 (i)	Section	36,000

The consulting and management fees include fees paid to related parties of the Directors.

During the financial year the Company entered into a consulting arrangement with a company controlled by Mr RJ Telford to carry out management ⊙. and administration services on behalf of the Company based upon an annual fee of $175,000. A company in which Dr J M Chisholm has an interest supplies geological services to the Company (Refer Note 17). The Company has an arrangement with a company associated with Mr J Kenny to supply corporate services to the Company at normal commercial rates and conditions (Refer Note 17). There are no other contracts to which a Director is a party or under which a Director is entitled to a benefit other than as disclosed in these financial statements.

Other than the Directors there are no executive officers of the Company or parent entity.

INDEMNIFYING OFFICERS AND AUDITOR

During or since the end of the financial year, the Company has not given an indemnity or entered into an agreement to indemnify, or paid or agreed to pay an insurance premium for Officers and Auditors indemnity. The Constitution of the Company allows for an indemnity in respect of legal liability for damages and legal costs arising from claims made by reason of any omissions or acts (ofher than dishonesty) by them, whilst acting in their individual or collective capacity as Directors or Officers of the Company or its controlled entities.

Dated at Perth this 20th day of September 2004.

Signed in accordance with a resolution of the Board.

RUTELFORD DIRECTOR

STATEMENTS OF FINANCIAL POSITION AS AT 30 JUNE 2004

			CONSOLIDATED ENTITY		PARENT ENTITY
	NOTE	2004$	2003$	2004$	2003$
CURRENT ASSETS
Cash Assets	$\mathfrak{S}$	1,050,459	91,013	1,050,359	90,913
Receivables	6	46,343	17,492	46,343	17,492
Other financial assets	7	15,249		15,249
TOTAL CURRENT ASSETS		1,112,051	108,505	1,111,951	108,405
NON CURRENT ASSETS
Receivables	6	$\alpha$
Other financial assets	7	à.		300	300
Property, plant and equipment	8	13,476	11,859	13,476	11,859
TOTAL NON CURRENT ASSETS		13,476	11,859	13,776	12,159
TOTAL ASSETS		1,125,527	120,364	1,125,727	120,564
CURRENT LIABILITIES
Payables	S.	218,014	60,892	218,014	60,892
Provisions	10	5,042	6,489	5,042	6,489
TOTAL CURRENT LIABILITIES		223,056	67,381	223,056	67,381
TOTAL LIABILITIES		223,056	67,381	223,056	67,381
NET ASSETS		902,471	62,983	902,671	53,183
EQUITY
Contributed equity	12	14,203,912	11,942,434	14,203,912	11,942,434
Accumulated losses	11	(13,301,441)	(11,889,451)	(13,301,241)	(11,889,251)
TOTAL EQUITY	13	902,471	62,983	902,671	53,183

The statements of financial position are to be read in conjunction with the accompanying notes to the financial statements.

STATEMENTS OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 30 JUNE 2004

		CONSOLIDATED ENTITY			PARENT ENTITY
	NOTE	2004$	2003$	2004$	2003$
Revenue from ordinary activities	2	14,539	9,577	14,539	9,677
Unrealised foreign exchange gains	3	79,950		79,950
Employee experises		(68,313)	(66, 182)	(63,313)	(65, 182)
Management and consulting expenses		(134, 269)	(205, 715)	(134, 269)	(205,715)
Exploration and feasibility expenses	3	(941,081)	(367,040)	(941,081)	(367,040)
Corporate office expenses		(47,922)	(63,024)	(47,922)	(63,024)
Depreciation expense	З	(6,465)	(7, 366)	(6,465)	(7,366)
Provision for non-recovery of loans	3	(59,039)		(126, 687)
Provision for diminution in the value of investment	3	(59,039)
AIM administration expenses		(66, 229)		(66, 229)
Other expenses from ordinary activities		(124, 122)	(55, 885)	(115,513)	(55,885)
Loss from ordinary activities before income tax expense		(1,411,990)	(754, 635)	(1,411,990)	(754, 635)
Income tax expense relating to ordinary activities	4
Net loss attributable to members of the parent entity	13	(1,411,990)	(754, 635)	(1,411,990)	(754.635)
Total revenues, expenses and valuation adjustmentsattributable to members of the parent entity andrecognised directly in equity	12(a)	(299.574)		(299, 574)
Total changes in equity other than those resultingfrom transactions with owners as owners attributableto members of the parent entity		${1,711,564}$	(754, 635)	(1,711,564)	(754, 635)
Basic loss per share (cents per share)	16	(1.2)	(0.8)
Diluted loss per share (cents per share)	16	(1.2)	(0.8)

The statements of financial performance are to be read in conjunction with the accompanying notes to the financial statements.

		CONSOLIDATED ENTITY			PARENT ENTITY
	NOTE	2004Š,	2003$	2004$	2003$
CASH FLOWS FROM OPERATING ACTIVITIES
Other reciepts		83,653	44,704	83,653	44.704
Interest received	2	14,539	9,577	14,539	9,577
Payments for exploration and feasability expenditure		(808, 168)	(403,744)	(808, 168)	(403, 744)
Payments for administrative expenditure		(528, 973)	(299, 912)	(520, 364)	(286,075)
Net cash used in operating activities	14(b)	(1,238,949)	(649, 375)	(1,230,340)	(635, 538)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for investment in Tantalum Egypt LLC	7	(59,039)
Loan to Egyptian Company for Mineral Resources	6	(59,039)
Loans to subsidiaries				(126, 687)	(13, 837)
Purchase of plant and equipment		(8,062)		(8,082)
Net cash used in investing activities		(126, 160)		(134, 769)	(13,837)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares		2,561,052	469,634	2,561,052	469,634
Transaction costs from issue of shares		(316, 447)		(316, 447)
Net cash provided by financing activities		2,244,605	469,634	2,244,605	469,634
Net increase/(decrease) in cash held		879,496	(179, 741)	879,496	(179, 741)
Effects of exchange rate changes on cash		79,950		79,950
Cash at the beginning of the financial year		91,013	270,754	90,913	270,654
Cash at the end of the financial year	14(a)	1,050,459	91,013	1,050,359	90,913

The statements of cash flows are to be read in conjunction with the accompanying notes to the financial statements.

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial report is a general purpose financial report that has been prepared in accordance with applicable Accounting Standards, Urgent Issues Group Consensus Views, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.

This financial report has been prepared on the basis of accounting principles applicable to a going concern, which assumes the commercial realisation of the future potential of the consolidated entity's assets and the discharge of its liabilities in the normal course of business. The financial report has been prepared on an accruals basis and is based on historical costs and does not take into account changing money values, or, except where stated, current valuations of non-current assets. Cost is based on the fair values of the consideration given in exchange for assets.

The accounting policies have been consistently applied, unless otherwise stated.

The following is a summary of the material accounting policies adopted by the consolidated entity in the preparation of the financial report.

PRINCIPLES OF CONSOLIDATION $(A)$

The consolidated financial statements comprise the financial statements of Gippsland Limited and all of its controlled entities. A controlled entity is any entity controlled by Gippsland Limited. Control exists where Gippsland Limited has the capacity to dominate the decision-making in relation to the financial and operating policies of another entity so that the other entity operates with Gippsland Limited to achieve the objectives of Gippsland Limited. A list of controlled entities is contained in Note 7 to the financial statements.

All inter-company balances and transactions between entities in the consolidated entity, including any unrealised profits or losses, have been eliminated on consolidation.

Outside interests in the equity and results of the entities that are controlled are shown as a separate item in the consolidated financial report.

INCOME TAX {B}

The consolidated entity adopts the income statement liability method of tax-effect accounting. Income tax expense is calculated on the operating result adjusted for permanent differences.

Timing differences which arise due to the different accounting periods in which items of revenue and expense are included in the determination of accounting profit and taxable income are brought to account as either a provision for deferred income tax or as a future income tax benefit at the rate of income tax applicable to the period in which the benefit will be received or the liability will become payable.

Future incorne tax benefits are not brought to account unless realisation of the asset is assured beyond any reasonable doubt. Future income tax benefits in relation to tax losses are not brought to account unless there is virtual certainty of realisation of the benefit. 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 consolidated 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.

MINERAL EXPLORATION EXPENDITURE ${\mathbb{C}}$

Exploration, evaluation and development costs include expenditure on prospects still at an exploratory or development stage and are expensed as incurred. These costs include costs of acquisition, exploration, determination of recoverable reserves, economic feasibility studies and all technical and administrative overheads directly associated with those projects.

Recoupment of capitalised exploration, evaluation and development costs is dependent upon the successful development and commercial exploitation of each area of interest and are amortised over the expected commercial life of each area once production commences.

NOTE I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

$(D)$ PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are carried at cost, less, where applicable, any accumulated depreciation or amortisation. The carrying amount of property, plant and equipment is reviewed annually by the Directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows which will be received from the assets employment and subsequent disposal. The expected net cash flows have not been discounted to their present values in determining recoverable amounts.

The depreciable amount of all fixed assets is depreciated on a straight line basis over their useful lives to the consolidated entity commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.

The depreciation rates for each class of asset are:

Class of fixed asset	Depreciation Rate
Leasehold Improvements	4% - 5%
Plant and Equipment	13% - 33%

FOREIGN CURRENCY TRANSACTIONS $E$

Foreign currency transactions during the year are converted to Australian currency at the rates of exchange applicable at the dates of the transactions. Amounts receivable and payable in foreign currencies at the reporting date are translated at the rates of exchange ruling on that date. Exchange differences relating to amounts payable and receivable in foreign currencies are brought to account as exchange gains or losses in the statement of financial performance in the year in which the exchange rates change.

${F}$ LEASES

Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses in the periods in which they are incurred.

$(G)$ INVESTMENTS

Non-current investments are measured on the cost basis. The carrying amount of non-current investments is reviewed annually by Directors to ensure it is not in excess of the recoverable amount of these investments. The recoverable amount is assessed from the shares' current market value or the underlying net assets in the particular entities.

Associates are those entities over which the consolidated entity exercises significant influence and which are not intended for sale in the near future.

In the consolidated financial statements, investments in unlisted shares of associates are carried at the lower of the equity accounted cost and recoverable amount.

INTERESTS IN JOINT VENTURES ${}$ }

Interests in joint ventures are brought to account by including in the respective classifications the share of individual assets employed and liabilities and expenses incurred in the Statement of Financial Position and Statement of Financial Performance.

${{}$ EMPLOYEE BENEFITS

Provision is made for the Company's liability for employee benefits arising from services rendered by employees to balance date. Employee benefits are expected to be settled within one year together with benefits arising from wages and salaries, annual leave and sick leave which will be settled after one year, have been measured at their nominal value.

Liabilities for other employee entitlements, which are not expected to be paid or settled within 12 months of balance date, are accrued at undiscounted amounts, where material, in respect of all employees at the present values of future amounts expected to be paid.

Contributions are made by the consolidated entity to employee superannuation funds and are charged as expenses when incurred.

(月) $CASH$

For the purpose of the statement of cash flows, cash includes cash on hand and at call deposits with banks or financial institutions, net of bank overdrafts.

RECEIVABLES AND REVENUE RECOGNITION ${K}$

Interest revenue is recognised on an accruals basis taking into account the interest rates applicable to the financial assets.

Sundry debtors are settled within 60 days and are carried at amounts due. The collectibility of debts is assessed at the reporting date and specific provision is made for any doubtful debts.

GOODS AND SERVICES TAX ${{}$

Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO). In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of expense.

Receivables and payables are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the Statement of Financial Position.

Cash flows are included in the Statement of Cash Flows on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to the ATO are classified as operating cash flows.

$[M]$ PAYABLES

These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial year and which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.

CONTRIBUTED EQUITY (N)

Issued capital is recognised as the fair value of the consideration received by the Company.

Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received.

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(O) EARNINGS PER SHARE

Basic earnings per share ("EPS") are calculated based upon the net loss divided by the weighted average number of ordinary shares. Diluted EPS are calculated as the net loss divided by the weighted average number of ordinary shares and dilutive potential ordinary shares.

${P}$ COMPARATIVE FIGURES

Where required by Accounting Standards comparative figures have been adjusted to conform with changes in presentation for the current financial year.

NOTE 2	REVENUE FROM ORDINARY ACTIVITIES	CONSOLIDATED ENTITY			PARENT ENTITY
		2004$	2003Š,	2004$	2003S
Operating activities:
	- Interest recieved from other persons	14,539	9.677	14,539	9,577
	Total revenue from ordinary activities	14,539	9,577	14,539	9,577
NOTE 3	LOSS FROM ORDINARY ACTIVITIES	CONSOLIDATED ENTITY			PARENT ENTITY
		2004$	2003$	2004$	2003$
	The loss from ordinary activities before income taxhas been determined after:
Expenses:
	Rental experise on operating leases	21,600	29.484	21,800	29,484
	Contributions to employees superannuation plans	5,760		5,760
	Depreciation of plant and equipment	6,465	7,366	6.465	7,366
	Movements in provisions:
	- Employee entitlements	(1, 447)	(9,994)	(1, 447)	(9,994)
	- Provision for non-recovery of loan to Tantalum
	International Pty Ltd			118,079
	- Provision for non-recovery of loan to Here2win.com Pty Ltd			8,608	13,837
	- Provision for non-recovery of loan to other parties	59,039
	- Provision for diminution	59,039

79,950 79,950 Unrealised foreign exchange gains

	CONSOLIDATED ENTITY		PARENT ENTITY
	2004$	2003$	2004Ŝ	2003$
(a) Income Tax Expense
The aggregate amount of income tax attributable to thefinancial year differs by more than 15% from theprima facie tax benefit on the operating loss.The differences are reconciled as follows:
Loss from ordinary activities	(1,411,990)	(754, 635)	(1,411,990)	(754, 635)
Prima facie tax benefit on operating loss beforeincome tax at 30% (2003: 30%)	${423,597}$	(226, 390)	(423,597)	(226, 390)
Add: tax effect of non-allowable items	38,006	4.151	38,006	4,151
Income tax benefit attributable to operating lossnot brought to account	(385, 591)	(222, 239)	(385, 591)	(222, 239)
Future income tax benefit not brought into account	385.591	222.239	385,591	222,239
Income tax expense shown in the financial statements			×
(b) Future Income Tax Benefit
Future income tax benefits relating to tax losses notbrought to account as their recoverability is not virtually certain	2,517,385	1,407.013	1,768,850	1,407,013

The benefit will only be obtained if:

. the Company derives future assessable income of a nature and of an amount sufficient to enable the benefits from the deductions for these losses to be realised;
. the Company continues to comply with the condition for deductibility imposed by tax legislation; and
. no changes to tax legislation adversely affect the Company in realising the benefit from the deductions for the losses.

No income tax is payable by the consolidated entity as it incurred losses for income tax purposes for the year.

The consolidated entity has not entered into a tax consolidated group and there has been no impact on the tax position as a consequence of the introduction of the revised tax legislation.

NOTE 5CASH ASSETS	CONSOLIDATED ENTITY		PARENT ENTITY
	2004$	2003Š	2004$	2003Ş,

Cash at bank and on hand	59,607	91.013	59,507	90,913
Cash held in foreign currency	990,852		990,852
Cash at bank and on hand	1,050,459	91,013	1,050,359	90,913
The cash held in foreign currency pays interest at an average annual rateof 4.25% at 30 June 2004.
NOTE 6RECEIVABLES		CONSOLIDATED ENTITY		PARENT ENTITY
	2004$	2003Ŝ	2004$	2003$
CURRENT
Sundry debtors	46,343	17.492	46,343	17,492
NON CURRENT
Amounts owed from controlled entities (i)			2,628,737	2,502,050
Provision for non-recovery			(2,628,737)	(2,502,050)
	÷.		×
Amounts owed from Egyptian Company for Mineral Resources	59,039
Provision for non-recovery	(59,039)
	×.		ú

			w

(i) The loans to controlled entities are advanced interest free, are unsecured and there are no set terms for repayment.

OTHER FINANCIAL ASSETS.NOTE 7			CONSOLIDATED ENTITY		PARENT ENTITY
			2004	2003	2004	2003
			$	$	Š,	$
CURRENT
Prepayments			15,249		15,249
NON CURRENT
Shares in subsidiaries, at cost
	Country ofincorporation	Class of Shares	Percentage Holding		Cost of Parent Entity'sInvestment
			2004	2003	2004	2003
			$%$	%	Ś	$
Abutan Pty Ltd	Australia	Ordinary	100	100	100	100
Tantalum international Pty Ltd	Australia	Ordinary	100	100	100	100
Here2win.com Pty Ltd	Australia	Ordinary	90	90	100	100

The controlled entities are not audited as they are small proprietary companies not required to prepare financial statements. $(a)$

The ultimate parent entity is Gippsland Limited. $(b)$

$\langle c \rangle$ On 20 May 2004 Nubian Resources Pfc was incorporated in the United Kingdom for the purpose of exploring eight gold areas and one copper nickel area in the Wadi Allaqi region of Egypt. All the issued shares were held in trust as at 30 June 2004 and have been transferred to Gippsland Limited subsequent to the end of the financial year.

On 10 October 2003 a wholly-owned subsidiary of the Company, Tantalum International Pty Ltd acquired a 50% interest in Tantalum Egypt LLC for cash consideration of $59,039. The remaining 50% interest in Tantalum Egypt LLC is held by the Egyptian Company for Mineral Resources which in turn is 100% owned by the Egyptian Geological Survey and Mining Authority, which is itself owned by the sovereign state that is the Arab Republic of Egypt. The investment by Tantalum International Pty Ltd has been fully provided against as at 30 June 2004.

300

NOTE 8PROPERTY, PLANT AND EQUIPMENT	CONSOLIDATED ENTITY		PARENT ENTITY
	2004	2003	2004	2003
	$	$	$	$
Plant and equipment - at cost	137,352	129,270	137,352	129,270
Less: Accumulated depreciation	(123, 876)	(117, 411)	(123, 876)	(117, 411)
Total property, plant and equipment	13,476	11,869	13,476	11,859
Movement in carrying amounts:Movement in the carrying amounts for each class of property, plant andequipment between the beginning and end of the current financial year.
Balance at the beginning of the year	11,859	19,225	11,859	19,225
Additions	8,082		8,082
Depreciation experise	(6,465)	(7,336)	(6,465)	(7,336)
	13,476	11,869	13,476	11,859
NOTE 9PAYABLES	CONSOLIDATED ENTITY			PARENT ENTITY
	2004$	2003$	2004$	2003$
CURRENT (Unsecured)
Sundry creditors and accrued expenses	208,114	54,892	208,114	54,892
Amounts payable to Director related entities (Refer Note 17(e))	9,900	6,000	9,900	6,000
	218,014	60,892	218,014	60,892
NOTE 10PROVISIONS	CONSOLIDATED ENTITY			PARENT ENTITY
	2004	2003	2004	2003
	$	$	$	$
CURRENT
Employee entitlements	5,042	6,489	5,042	6,489
Number of employees at year end	1	1	挛	1

NOTE 11ACCUMULATED LOSSES	CONSOLIDATED ENTITY		PARENT ENTITY
	2004$	2003$	2004Ŝ	2003$
Accumulated losses at the beginning of the financial year	(11, 889, 451)	(11, 134, 816)	{11,889,251}	(11, 134, 616)
Net loss attributable to members of the parent entity	(1,411,990)	(754, 635)	(1,411,990)	(754, 635)
Accumulated losses at the end of the financial year	(13,301,441)	(11,889,451)	(13,301,241)	(11,889,251)
NOTE 12CONTRIBUTED EQUITY	CONSOLIDATED ENTITY			PARENT ENTITY
	2004$	2003$	2004S	2003$
(a) Paid up capital:
139,528,359 (2003: 94,528,359) ordinary shares	14,203,912	11.942.434	14.203.912	11,942,434
Share Movements
Opening balance۰	11,942,434	11,397,800	11,942,434	11,397,800
On 5 August 2003 via a prospectus the Company issued۰14,000,000 ordinary shares at an issue price of 4 centseach and 14,000,000 free attaching listed options for thepurpose of furthering the bankable feasibility study forthe Abu Dabbab Project	560,000		560,000
Less: Issue costs associated with 5 August 2003 capital۰raising	(10, 430)		${10,430}$
On 5 December 2003 the Company issued 6,000,000٠ordinary shares at an issue price of 5 cents each and3,000,000 free attaching listed options to sophisticatedinvestors for the purpose of furthering the bankablefeasibility study for the Abu Dabbab Project	300,000		300,000
Less: Issue costs associated with 5 December 2003 capitalraising	(21,000)		(21,000)
On 8 March 2004 the Company issued 25,000,000 ordinaryshares at an issue price of 6.8 cents (2.8 UK pence) centseach to private and institutional investors in conjunction withthe Company being admitted on the London Stock Exchange'sAlternative investment Market ("AIM") for the purpose offurthering the bankable feasibility study for the Abu Dabbab Project	1,701,052		1,701,052
Less: Issue costs associated with 8 March 2004 capital۰raising	(268, 144)		(268, 144)

note 12	CONTRIBUTED EQUITY (CONTINUED)	CONSOHDATED ENTITY		PARENT ENTITY
		2004$	-2003S	2004	2003Ş
	Share Movements (Continued)
۰	Issue of 15,671,393 shares at an issue price of 3 centseach - Abu Dabbab Project	$\infty$	469.634		469.634
۰	Issue of 625,000 shares at an issue price of 12 cents -consultants services		75,000		75,000
٠	Closing balance	14,203,912	11,942,434	14.203.912	11.942.434

The purpose of the share issues above were to support the ongoing operations of the Company.

NOTES:

(i) Ordinary shares have the right to receive dividends as declared and, in the event of winding up the Company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held.
(ii) Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company.

	PARENT ENTITY
	2004	2003
	NUMBER	NUMBER
(b) Options on issue
The following options over ordinary shares are on issue:
Options exercisable at 9 cents on or before 31/12/2007 (listed) (i)	43,771,393	26.671,393
Options exercisable at 14 cents on or before 11/07/2004 (unlisted) (ii)	×.	11,000,000
Options exercisable at 20 cents on or before 15/02/2004 (unlisted) (ii)	$\mathbf{r}$	250.000
Options exercisable at 30 cents on or before 15/02/2004 (unlisted) (ii)	$\mathbf{r}$	250,000
Options exercisable at 2.8 UK pence on or before 8/03/2007 (unlisted) (iii)	2,790,567

	46,561,960	38.171.393

During the year a total of 17,000,000 listed options exercisable at 9 cents on or before 31/12/2007 were issued as securities offered $\left(\stackrel{.}{\scriptstyle 3}\right)$ under capital raising initiatives (Refer Note 12(a)). In addition 100,000 listed options exercisable at 9 cents on or before 31/12/2007 were issued as part consideration for consultancy services provided.
(道) During the year a total of 11,500,000 unlisted options were cancelled and/or lapsed.
$\langle \hat{m} \rangle$ During the year a total of 2,790,567 unlisted options exercisable at 2.8 UK pence on or before 8/03/2007 were issued as part consideration for broking services provided.

TOTAL EQUITY RECONCILIATIONNOTE 13	CONSOLIDATED ENTITY			PARENT ENTITY
	2004	2003	2004	2003
	$	$	Ŝ	S
Balance at the beginning of the year	52,983	262.984	53,183	263,184
Total changes in equity recognised in the Statement ofFinancial Performance attributable to members of the
parent entity	(1,411,990)	(754, 635)	(1,411,990)	(754, 635)
Net proceeds from the issue of shares	2,261,478	544.634	2,261,478	544,634
Balance at the end of the year	902,471	52.983	902,671	53,183

CASH FLOW INFORMATIONNOTE 14	CONSOLIDATED ENTITY			PARENT ENTITY
	2004	2003	2004	2003
	$	$	Ŝ	Ŝ
(a) Reconciliation of cash
Cash at the end of the financial year as shown in theStatements of Cash Flows is reconciled to the related itemsin the Statements of Financial Position as follows:
Cash on hand and foreign currency cash reserves	1,050,459	91.013	1,050,359	90,913
The Company has no unused, standby or other credit facilities.
(b) Reconciliation of cash flow from operations to loss from ordinaryactivities after income tax
Loss from ordinary activities after income tax	${1,411,990}$	(754, 635)	${1,411,990}$	(754, 635)
Non cash items:
Depreciation	6,465	7.366	6,465	7,366
Provision for non-recovery of loans to subsidiaries	$\ddot{\phantom{a}}$		126,687	13,837
Provision for non-recovery of other loans	59,039
Provision for diminution in investments	59.039
Unrealised foreign exchange gain	(79, 950)		(79,950)
Issue of shares -- non cash		75.000		75.000

ż,

NOTE 14	CASH FLOW INFORMATION (CONTINUED)	CONSOLIDATED ENTITY		PARENT ENTITY
		2004$	2003$	2004$	2003$
	(b) Reconciliation of cash flow from operations to loss from ordinaryactivities after income tax (Continued)
	Changes in assets and liabilities:
	(increase) decrease in sundry debtors	(11, 978)	7,469	(11,978)	7,469
	(increase) decrease in prepayments	(15,248)		(15,248)
	increase (decrease) payables	157,121	23,473	157,121	23,473
	increase (decrease) in provisions	(1,447)	(8,048)	(1,447)	(8,048)
	Net cash flow used in operating activities	(1,238,949)	(649,375)	(1,230,340)	(635, 538)
	(c) There we no material non cash items during the financial year.
NOTE 15	AUDITORS' REMUNERATION	CONSOLIDATED ENTITY		PARENT ENTITY
		2004$	2003$	2004$	2003$
	Remuneration of the auditors of the parent entity for auditingand review of the financial and half yearly reports	11,350	8,500	11,350	8,500
Other services		4,000		4,000
	Grant Thornton - United Kingdom	88,976		88,976
		104,326	8.500	104,326	8,500
NOTE 16	LOSS PER SHARE	2004CENTS PER SHARE CENTS PER SHARE	CONSOLIDATED ENTITY	2003
Loss per share
	Basic loss per share (cents per share)	(1.2)		(0.8)
Diluted loss per share
	Difuted loss per share (cents per share)	(1.2)		(0.8)
(a)	The weighted average number of ordinary sharesused in calculating basic loss per share	117,020,162	86,286,413
(行)	Adjusted weighted average number of ordinary sharesused in calculating diluted loss per share	117,828,359	86,286,413
$\langle c \rangle$	Loss used in the calculation of basic and dilutedloss per share	(1,411,990)	(754,635)
(d)	The 2,790,567 unlisted options exercisable at 2.8 UK pence each on or before 8 March 2007 have been included as potentia

at. ordinary shares in the determination of diluted loss per share. The 43,771,393 listed options exercisable at 9 cents each on or before 31 December 2007 have not been included as potential ordinary shares in the determination of diluted loss per share.

NOTE 17 DIRECTORS' AND EXECUTIVES' DISCLOSURES

(a) Remuneration of Specified Directors and Specified Executives by the consolidated entity

Remuneration levels are competitively set to attract and retain appropriately qualified and experienced Directors and senior executives. The Board obtains independent advice on the appropriateness of remuneration packages, given trends in comparative companies both locally and internationally. Remuneration packages include fixed remuneration with bonuses or equity based remuneration entirely at the discretion of the Board based on the performance of the consolidated entity.

Non-Executive Directors' base fees are presently $36,000 per annum. Non-Executive Directors do not receive bonuses. Directors' fees cover all main Board activities.

The following table provides the details of all Directors of the Company ("Specified Directors") and the nature and amount of the elements of their remuneration for the year ended 30 June 2004. There are no "Specified Executives" that are involved in the strategic direction of the Company, as this role is completed by the Executive Chairman and the Non-Executive Directors.

2004
	Primary	Consulting	Post Employment	Retirement
Specified Directors	Directors' Fees	& Management Fees	Superannuation	Benefits	Total
	$	S	S	S	S
RJ Telford	-	169.220			169.220
JM Chisholm	16,000	18.000	1.350		34,350
JD Kenny		36.000			36,000
	15,000	223.220	1.350	٠	239,570

2003

	Primary	Consulting	Post Employment	Retirement
Specified Directors	Directors' Fees	& Management Fees	Superannuation	Benefits	Total
	S	S	S	S	S
RJ Telford		144.000			144,000
JM Chisholm	15,000	448	1.350.	$\overline{\phantom{a}}$	16.798
JD Kenriy		36.000		$\overline{\phantom{a}}$	36,000
	15,000	180.448	1.350.	$\overline{\phantom{a}}$	196,798

There were no loans made to any Directors as at 30 June 2004 (30 June 2003: $Nil).

NOTE 17. DIRECTORS' AND EXECUTIVES' DISCLOSURES (CONTINUED).

Equity instruments ${b}$

All options refer to options over ordinary shares of Gippsland Limited, which are exercisable on a one for one basis.

Options over equity instruments granted as remuneration

During the reporting period there were no options over ordinary shares granted and/or vested to Specified Directors or their nominees.

No options have been granted to Specified Directors since the end of the financial year.

During and since the reporting period no options have been exercised by Specified Directors.

Specified Directors' Share and Option holdings in the Parent Entity ${c}$

2004

The aggregate numbers of ordinary shares and options of the Company held directly, indirectly or beneficially by Specified Directors of the Company or their personally-related entities is as follows:

Specified

Specified -
Directors	Ordinary Shares				Listed Options
	1 July	Purchases	Sales	30 June	30 June	30 June
	2003			2004	2004	2003
RJ Telford	13.973,124		(185,000)	13.788,124	6,658.280(i)	6,758,280
JM Chisholm	50.000	$\ddotsc$	$\ddot{\phantom{0}}$	50.000	2.260.000	2,260,000
JD Kenriy	$\cdots$	$\cdots$	$\cdots$	-	2,250.000	2,250,000

During the financial year Mr RJ Telford sold 100,000 listed options on market $(3)$

2004

$\frac{1}{2}$

Specified
Directors	Ordinary Shares				Listed Options
	1 July	Purchases	Sales	30 June	30 June	30 June
	2002			2003	2003	2002
RJ Tefford	9,903,395	4.069.729		13.973.124	6,758.280
JM Chisholm	50.000			50.000	2,260.000
JD Kenriy	$\sim$	$\ddotsc$	$\cdots$	Section	2,250,000	$\sim$

During the financial year the Specified Directors and/or their nominees of the Company agreed to cancel their unlisted option holding in order to simplify the Company's capital structure prior to the Company's AIM listing on the London Stock Exchange. Accordingly the following unlisted options which were exercisable at 14 cents each on or before 11 July 2004 were cancelled for no consideration:

эреспеа
Directors	Unlisted Options
	t July	Exercised	Cancelled	30 June
	2003			2004
BJ Telford	4,750.000		(4,750,000)	۰
JM Chisholm	2.250.000	$\cdots$	(2,250,000)	-
JD Kenny	2,250,000	--	(2,250,000)	$\overline{\phantom{a}}$

$(d)$ Other Transactions with the Company or its controlled entities

A number of Specified Directors or their personally-related entities, hold positions in other entities that result in them having control or significant influence over the financial or operating policies of those entities.

A number of these entities transacted with the Company or its subsidiaries in the reporting period. The terms and conditions of those transactions were no more favourable than those available, or might reasonably be expected to be available, on similar transactions to unrelated entities on an arm's length basis.

The aggregate amounts recognised during the year relating to Specified Directors and their personally-related entities were as detailed below:

		Consolidated Entity &
		Parent Entity
Specified Directors	Transaction	30 June 04	30 June 03
		S	S
JM Chisholm	Geological consulting services (i)	2.915	448
JD Kenny	Legal services (ii)	11.842	$\cdots$

Fees for geological consulting services were paid to an entity in which Dr JM Chisholm has an interest. Amounts were billed based on normal 份 market rates for such services and were due and payable under normal payment terms.

$\langle \hat{n} \rangle$ Fees for legal services were paid to an entity in which MrJD Kenny has an interest. Amounts were billed based on normal market rates for such services and were due and payable under normal payment terms.

Fees for management and administration were paid to an entity controlled by Mr RJ Telford. These fees have been disclosed in Note 17(a).

Payables to Specified Directors of the Company and their personally related entities $^{(e)}$

Consolidated Entity &
Parent Entity	30 June 04	30 June 03
	S	S.
Aggregate amount payable at balance date
Current - Accounts payable (Refer Note 9)	9.900	6.000

The amounts payable as at 30 June 2004 comprised amounts owed in relation to Director consultancy fees owed to Dr JM Chisholm of $6,600 (2003: $3,000) and Director consultancy fees owed to Mr JD Kenny of $3,300 (2003: $3000).

NOTE 18 RELATED PARTY TRANSACTIONS

Gippsland Limited is the ultimate parent entity.

The only non Director related party to the Company are its controlled entities. Refer Note 7 for further details.

Gippsland Limited (the parent entity) has made loans to its controlled entities totalling $2,628,737 (2003: $2,502,050). Refer Note 6 for further details

There were no other related party transactions during the year.

NOTE 19 STATEMENT OF OPERATIONS BY SEGMENT

The Company operates within the mineral exploration industry predominantly in the geographical segment of Egypt. There are no assets or liabilities recorded with respect to the operations in Egypt and all expenditure is written off to the Statement of Financial Performance.

NOTE 20 CONTINGENT HABILITIES

In accordance with normal industry practice the Company has entered into a joint venture agreement with other parties for the purpose of $(a)$ exploring and developing various mineral interests. If a party to a joint venture defaults and does not contribute its share of joint venture obligations, then the other joint venturers are liable to meet those obligations. In this event the interest in the permit held by the defaulting party may be redistributed to the remaining joint venturers.
$\langle \mathbb{C} \rangle$ In June 1992 the High Court of Australia held in "the Mabo case" that the common law of Australia recognises a form of native title. The full impact that the Mabo decision may have on tenements held by the Company is not yet known.

$(c)$ One of Gippsland Limited's investee companies is Here2win.com Pty Ltd in which Gippsland Limited owns a 90% interest. Here2win.com Pty Ltd is the owner of various Internet horse racing gaming concepts. On 14 August 2000 Gippsland Limited announced to the Australian Stock Exchange Ltd that the services of the Chief Executive Officer of Here2win.com Pty Ltd, Mr Alex Aguero, had been terminated. Mr Aguero, through Highforce Investments Pty Ltd, continues to hold a 10% equity stake in Here2win.com Pty Ltd. Mr Aguero has commenced lifigation against Gippsland Limited seeking payment of what he alleges is unpaid compensation for his services rendered while CEO. The statement of claim filed by Mr Aguero with the Supreme Court of Western Australia claims, amongst other things, damages or alternatively the sum of $1,840,000 plus costs. Gippsland Limited holds the view that the claim is completely without merit and accordingly the claim is being vigorously defended.

NOTE 21 COMMITMENTS FOR EXPENDITURE

In order to maintain the mining and exploration tenements in which the Company and consolidated entity is involved, the Company and consolidated entity is committed to meet the conditions under which the tenements were granted and the obligations of the joint venture arrangement which is subject to the conditions contained in the Joint Venture Agreement and the Mining Licence. As at balance date, total estimated exploration expenditure commitments on tenements held by the consolidated entity have not been provided for in the financial statements and which cover the following twelve month period amount amount to up to $1,000,000 (2003: $500,000).

	CONSOLIDATED ENTITY			PARENT ENTITY
	2004	2003	2004	2003
				S
Total operating lease expenditure contracted for at balance date but notprovided for in the consolidated financial statements, payable:
- not later than 1 year.	20,400	22.671	20,400	22,671
- later than 1 year but not later than 5 years.	23,800	45.900	23,800	45,900
Total Operating Lease Commitments	44.200	68.571	44,200	68.571

Gippsland Limited Annual Report 2004

NOTE 23 SUPERANNUATION COMMITMENTS

The Company contributes to individual employee superannuation plans at the statutory rate of the employee's wages and salaries, in accordance with statutory requirements, to provide benefits to employees on retirement, death or disability.

FINANCIAL INSTRUMENTS NOTE 24

Interest Rate Risk ${a}$

The consolidated entity's exposure to the interest rate risk which is the risk that a financial instrument's value will fluctuate as a result of changes in market interest rate and the effective weighted average interest rates on classes of financial assets and financial liabilities, is as follows:

		WEIGHTED AVERAGEEFFECTIVE INTERESTrate		FLOATINGINTEREST RATE		NON INTERESTBEARING		TOTAL
	2004	2003	2004	2003	2004	2003	2004	2003
			$	$	Ś	$	$	Ś.
Financial assets
Cash assets	3.40%	2.50%	1,050,459	91,013	$\alpha$		1,050,459	91,013
Receivables			$\sim$	$\overline{\phantom{a}}$	46,343	17,492	46,343	17,492
Total financial assets			1,050,459	91,013	46,343	17,492	1,096,802	108,505
Financial liabilities:Payables			$\infty$	$\overline{\phantom{a}}$	218,014	60,892	218,014	60.892
Total financial liabilities			₩		218,014	60,892	218,014	60.892

$(b)$ Credit Risk

The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised financial assets is the carrying amount, net of any provisions for doubtful debts of those assets, as disclosed in the statement of financial position and notes to the financial statements.

The consolidated entity does not have any material credit risk exposure to any single debtor or group of debtors under financial instruments entered into by the consolidated entity.

Net Fair Values $\langle c \rangle$

For other assets and other liabilities the net fair value approximates their carrying value.

No financial assets and financial liabilities are readily traded on organised markets in standardised form.

NOTE 24 FINANCIAL INSTRUMENTS (CONTINUED)

${\mathrm{d}}$ Currency Risk

The Company has a Great British Pound foreign currency cash account as at 30 June 2004 holding £378,158 which equates to $990,852 based upon the year end exchange rate of A$1: GBP 0.382. The Company has no hedging in place in relation to managing any foreign exchange currency exposure.

INTERESTS IN JOINT VENTURES NOTE 25

At 30 June 2004, the Company has interests in the following joint venture whose principal activities are the exploration for gold, precious metals and base metals.

Name of Project	% Interests		Other Parties
	2004	2003.
Zeehan Tin Deposit – Tasmania	40%	40%	Western Metals Ltd 60%
- Abu Dabbab Project – Egypt	50%	50%	EGSMA -- 50%

The Joint Venture is 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 1(h).

NOTE 26 SUBSEQUENT EVENTS

$(3)$ Bankable Feasibility Study

Subsequent to the end of the financial year the Company has completed its Bankable Feasibility Study ("BFS") on its Abu Dabbab Project.

The BFS is based upon a design throughput of 1.26Mtpa and evaluated the Project for the first 20 years of its mine life. The study determined that the Project is anticipated to produce in excess of 412,000 pounds of tantalum pentoxide ("Ta2O5") per year along with some 980 tonnes of tin metal during the first 20 years of production. The Company has executed a Heads of Agreement with two major tantalum consumers for the off-take of 420,000 pounds of Ta2O5 per annum for a 4-year period. Thi output will be sold via the London Metal Exchange.

Based upon a capital expenditure of US$65.5 million dollars, the Project is scheduled to generate an operating margin of US$112 million over the 20-year period covered by the BFS.

The Project is calculated to have an internal rate of return ("IRR") (based on an all equity structure) of 11.2% over the 20 year period covered by the BFS.

Additionally, the BFS is based on the production of Ta2Os and tin alone and does not take into account 1Mtpa of ceramic grade feldspar which may be produced as a co-product to the tantalum and tin production. The additional positive cash flows that shall arise due to the sale of feldspar are also not reflected in the above IRR. Testwork undertaken in Italy demonstrated that the Abu Dabbab feldspar is ideally suited to the manufacture of high-quality ceramics such as floor tiles and sanitary ware. The Company has executed a Heads of Agreement with a large European group for the off-take of 2.65Mtpa of feldspar for delivery over a 5-year period.

(ii) International Financial Reporting Standards

For reporting periods beginning on or after 1 January 2005, the consolidated entity must comply with international Financial Reporting Standards ("IFRS") as issued by the Australian Accounting Standards Board.

This financial report has been prepared in accordance with Australian accounting standards and other financial reporting requirements (Australian GAAP). The differences between Australian GAAP and IFRS identified to date as potentially having a significant effect on the consolidated entity's financial performance and financial position are summarised below. The summary should not be taken as an exhaustive list of all the differences between Australian GAAP and IFRS. No attempt has been made to identify all disclosure, presentation or classification differences that would affect the manner in which transactions or events are presented.

The consolidated entity has not quantified the effects of the differences discussed below. Accordingly, there can be no assurances that the consolidated financial performance and financial position as disclosed in this financial report would not be significantly different if determined in accordance with IFRS.

The key potential implications of the conversion to IFRS on the consolidated entity are as follows:

financial instruments must be recognised in the statement of financial position and all derivatives and most financial assets must be carried at fair value.
equity-based compensation in the form of shares and options will be recognised as expenses in the periods during which the employee provides related services,
joint ventures investments held by venture capital orginisations in joint ventures will be excluded from the scope of Australian equivalent standard and will therefore need to be measured at fair value under standard AASB 131. The option of using either proportionate consolidation or equity accounting for jointly controlled entities (allowed under the international standard) will not be available - equity accounting must continue to be used. Existing Australian disclosure requirements regarding joint ventures will also be retained.
changes in accounting policies will be recognised by restating comparatives rather than making current year adjustments with note disclosure of prior year effects.

At this stage the Company has not commenced its conversion and implementation of IFRS.

The financial effect of this event has not been brought to account at balance date.

DIRECTORS' DECLARATION

The Directors of the Company declare that:

The financial statements and notes set out on pages 43 to 64, are in accordance with the Corporations Act 2001: $\mathbf{I}$
- comply with Accounting Standards and the Corporations Regulations 2001; and $(a)$
- give a true and fair view of the financial position as at 30 June 2004 and of the performance for the year ended on that date of the Company $(b)$ and consolidated entity.
$\overline{2}$ . 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 on 20 September 2004.

RUTELFORD DIRECTOR

INDEPENDENT AUDIT REPORT TO THE MEMBERS OF GIPPSLAND LIMITED

SCOPE

The financial report and directors' responsibility

The financial report comprises the statement of financial position, statement of financial performance, statement of cash flows, accompanying notes to the financial statements, and the directors' declaration for both Gippsland Limited ("the Company") and Gippsland Limited ("the consolidated entity"), for the year ended 30 June 2004. The consolidated entity comprises both the Company and the entities it controlled during that year.

The Directors of the Company are responsible for the preparation and true and fair presentation of the financial report in accordance with the Corporations Act 2001. This includes responsibility for the maintenance of adequate accounting records and internal controls that are designed to prevent and detect fraud and error, and for the accounting policies and accounting estimates inherent in the financial report.

AUDIT APPROACH

We conducted an independent audit in order to express an opinion to the members of the Company. Our audit was conducted in accordance with Australian Auditing Standards, in order to provide reasonable assurance as to whether the financial report is free of material misstatement. The nature of an audit is influenced by factors such as the use of professional judgement, selective testing, the inherent limitations of internal control, and the availability of persuasive rather than conclusive evidence. Therefore, an audit cannot guarantee that all material misstatements have been detected.

We performed procedures to assess whether in all material respects the financial report presents fairly, in accordance with the Corporations Act 2001, including compliance with Accounting Standards and other mandatory financial reporting requirements in Australia, a view which is consistent with our understanding of the Company's and the consolidated entity's financial position, and of their performance as represented by the results of their operations and cash flows.

Gippsland Limited Annual Report 2004

INDEPENDENT AUDIT REPORT CONTINUED

We formed our audit opinion on the basis of these procedures, which included:

examining, on a test basis, information to provide evidence supporting the amounts and disclosures in the financial report, and
assessing the appropriateness of the accounting policies and disclosures used and the reasonableness of significant accounting estimates made by the directors.

While we considered the effectiveness of management's internal controls over financial reporting when determining the nature and extent of our procedures, our audit was not designed to provide assurance on internal controls.

Our audit did not involve an analysis of the prudence of business decisions made by the directors or management.

We have read the other information in the annual report to determine whether it contained any material inconsistencies with the financial report.

INDEPENDENCE

In conducting our audit, we followed applicable independence requirements of Australian professional ethical pronouncements and the Corporations Act 2001.

AUDIT OPINION

In our opinion, the financial report of Gippsland Limited is in accordance with:

a) the Corporations Act 2001, including:
giving a true and fair view of the Company's and consolidated entity's financial position as at 30 June 2004 and of their performance for the i. financial year ended on that date; and
il. complying with Accounting Standards in Australia and the Corporations Regulations 2001; and
b) other mandatory professional reporting requirements in Australia.

GRANT THORNTON

Chartered Accountants

SEAN MCGURK

Partner

Perth, Western Australia Dated this 20th day of September 2004

ASX ADDITIONAL INFORMATION

Pursuant to the Listing Requirements of the Australian Stock Exchange Limited, the shareholder information set out below was applicable as at 6 September 2004.

A, Distribution of Equity Securities

Analysis of numbers of shareholders and optionholders by size of holding:

Spread of Holdings	Number of Holders
	Ordinary Shares	Listed Options
$1 - 1,000$	626	55
$1.001 - 5.000$	280	49
5001 - 10.000	195	21
10.001 - 100.000	433	108
100,001 and over	138	70

TOTAL	1,672	383

The total number of securities on issue	139,528,359	43,771,393
The number of holders holding less thana marketable parcel of securities	843

The total number of securities comprising

745,879

219,040

.............................

B. Twenty Largest Shareholders

less than a marketable parcel of securities

Name	Number of Shares	℆
Computershare Services PLC	18.508.963	13.26%
Situate Pty Ltd	12.600.000	9.03%
Eco International Pty Ltd	11.171.695	8.01%
King Town Holdings Pty Ltd.	6,500,000	4.66%
Sandstone Securities Pty Ltd	6,200,000	4.44%
Taveroam Pty Ltd	5,900,000	4.23%
Sunvest Corporation Limited	5.166.665	3.70%
The Web Shareshop Limited	4,500,000	3.23%
Robert and Robin Telford	2,616,429	1.88%
Trafalgar Resource Finance	2,608,332	1.87%
Brewin Nominees Limited	1,321.500	0.96%
Garry William Thomas	1,300,000	0.93%

Gippsland Limited Annual Report 2004

Name	Number of Shares	%
Yellowrock Pty Ltd	1,300.000	0.93%
Gordon Edward Alexander	1.266.301	0.91%
Cobolt Investments Ltd	1,220.481	0.87%
Philip and Jennifer Wheatley	1.075.500	0.77%
ANZ Nominees Limited	1.060.153	0.76%
KHH (Aus) Holdings Pty Ltd	1.056.705	0.76%
Tricom Nominees Pty Limited	1.049.364	0.75%
Lycopedium Pty Ltd	1.000.000	0.72%

87,422,088

. . . . .

Ċ. Twenty Largest Listed Optionholders

Name	Number of Options	%
Eco International Pty Ltd	6,359,708	14.53%
Mandu Superarmuation Fund	2,260.000	5.16%
Ventureworks JDK Pty Ltd	2,250.000	5.14%
David James Gray	2,110,000	4.82%
Situate Pty Ltd	1,600,000	3.66%
Sandstone Securities Pty Ltd	1,550,000	3.64%
King Town Holdings Pty Ltd	1,500.000	3.43%
Tricom Nominees Pty Ltd	1,300,000	2.97%
Windowland Pty Ltd	1,000.000	2.28%
Goffacan Pty Ltd	1,000.000	2.28%
Averon Holdings Limited	1,000,000	2.28%
Edgewater Estates Limited	1,000.000	2.28%
Broko Investments Pty Ltd	850,000	1.94%
Rosewarne Superarmuation	750,000	1.71%
Highplus Holdings Pty Ltd	650,000	1.48%
Robert Anthony Healy	570,000	1.30%
Helena Nemchin	500,000	1.14%
Tromso Pty Limited	500,000	1.14%
Mark Koussas	500,000	1.14%
Cumbak Pty Ltd	500,000	1.14%

27,749,708 $\equiv$

63.36%

................

$62.66%$

.......................................

Đ. Unlisted Optionholders

Options exercisable at 2.8 UK Pence on or before 8 March 2007

	Name	Number of Options		℆
	Hoodless Brennan & Partners PLC	2,790,567		100%

		2,790,567		100%

e.	Substantial Shareholders		Number of Ordinary Shares
		in which interests held		%

	Situate Pty Ltd and Taveroam Pty Ltd	18.500,000		13.26%
	Eco International Pty Ltd and RJ & R Telford	13.788,124		9.88%
	Sandstone Securities Pty Ltd and
	King Town Holdings Pty Ltd	12.700.000		9.10%
F.	Schedule of Interests

	Name of Project	% Interests		Other Parties
		2004	2003
	Zeehan Tin Deposit -- Tasmania	40%	40%	Western Metals Ltd
	Abu Dabbab Project - Egypt	50%	50%	EGSMA - 50%

60%

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www.

OFFICE ADDRESS Level 2 18 Stirling Highway, Nedlands, WA, 6009, AustraliaPOSTAL ADDRESS PO Box 352 Nedlands, WA, 6909, AustraliaTELEPHONE +61 8 9389 8611 | FACSIMILE +61 8 9389 8612 | EMAIL [email protected]

AI assistant

STREAMPLAY STUDIO LIMITED — Annual Report 2004

65841_rns_2004-09-26_ff3a5e9a-6f55-4bdd-88a9-14eb03d7dfac.pdf

2004 ANNUAL REPORT

IIMIHD GIPPSLAND LIMITED

CONTENTS

CORPORATE DIRECTORY

HIGHLIGHTS

CHAIRMAN'S REPORT

TANTALUM SOURCES

TANTALUM MINERAL PROCESSING

TANTALUM APPLICATIONS

TANTALUM MARKET

REVIEW OF OPERATIONS

ABUIDABBAB

ABU DABBAB

RESOURCES FOR ABU DABBAB

ABU DABBAB BANKABLE FEASIBILITY STUDY (1.26Mtpa)

ABU DABBAB BANKABLE FEASIBILITY STUDY (2MIba)

NUWEIBI

NUWEIBI TANTALUM

RESOURCES FOR NUWEIBI

WADI ALLAQI

WADI ALLAQI

WADI ALLAQI CONTINUED

GOLD

ABUISWAYE

ABU SWAYEL

ZEEHAN

MINERAL RESOURCES AT 30 JUNE 2004

EGYPT

ZEEHAN, AUSTRALIA

PROJECT FINANCE

CORPORATE GOVERNANCE STATEMENT

1. BOARD OF DIRECTORS

1.1 ROLE OF THE BOARD AND MANAGEMENT

1.2 COMPOSITION OF THE BOARD AND NEW APPOINTMENTS

1.3 COMMITTEES OF THE BOARD

1.4 CONFLICTS OF INTEREST

1.5 INDEPENDENT PROFESSIONAL ADVICE

ETHICAL STANDARDS ク.

2.1 CODE OF CONDUCT FOR DIRECTORS

$2.2$ CODE OF ETHICS AND CONDUCT

2.3 DEALINGS IN COMPANY SECURITIES

2.4 INTERESTS OF OTHER STAKEHOLDERS

DISCLOSURE OF INFORMATION 3.

3.1 CONTINUOUS DISCLOSURE TO ASX

3.2 COMMUNICATION WITH SHAREHOLDERS

RISK MANAGEMENT Δ,

IDENTIFICATION OF RISK $\mathbb{A}$ .

4.2 INTEGRITY OF FINANCIAL REPORTING

4.3 ROLE OF AUDITOR

5. PERFORMANCE REVIEW

REMUNERATION ARRANGEMENTS 6.

ASX CORPORATE GOVERNANCE COUNCIL'S PRINCIPLES OF GOOD CORPORATE GOVERNANCE AND BEST PRACTICE RECOMMENDATIONS

INTRODUCTION

EXPLANATIONS FOR DEPARTURES FROM BEST PRACTICE RECOMMENDATIONS

1. ROLE OF THE BOARD AND MANAGEMENT

COUNCIL PRINCIPLE 1:

Lay solid foundations for management and oversight.

2. COMPOSITION OF THE BOARD

COUNCIL PRINCIPLE 2:

COUNCIL RECOMMENDATION 2.1:

A majority of the Board should be independent directors.

COUNCIL RECOMMENDATION 2.2:

The chairperson should be an independent director.

COUNCIL RECOMMENDATION 2.3:

COUNCIL RECOMMENDATION 2.4:

3. ETHICAL AND RESPONSIBLE DECISION-MAKING.

COUNCIL PRINCIPLE 3:

Actively promote ethical and responsible decision-making.

COUNCIL RECOMMENDATION 3.1:

COUNCIL RECOMMENDATION 3.2:

4. INTEGRITY OF FINANCIAL REPORTING

COUNCIL PRINCIPLE 4:

COUNCIL RECOMMENDATION 4.1:

COUNCIL RECOMMENDATION 4.2:

COUNCIL RECOMMENDATION 4.3:

COUNCIL RECOMMENDATION 4.4

5. MAKE TIMELY AND BALANCED DISCLOSURE

STREAMPLAY STUDIO LIMITED Annual Report 2004