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STREAMPLAY STUDIO LIMITED Annual Report 2007
65841_rns_2007-10-25_29eaa07c-9fab-4334-93a0-622025414e18.pdf
Annual Report
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ABN 31 004 766 376
Contents
| Corporate Directory | 2 |
|---|---|
| Highlights | 4 |
| Chairman's Report | 5 |
| Review Of Operations | 6 |
| Abu Dabbab – Tantalum | 7 |
| Nuweibi – Tantalum | 9 |
| Wadi Allaqi – Gold | 10 |
| Wadi Allaqi – Copper/nickel | 19 |
| Zeehan - Tin | 20 |
| Financial Statements | 21 |
| Corporate Governance Statement | 22 |
| Directors' Report | 24 |
| Auditor's Independence Declaration | 31 |
| Income Statement | 32 |
| Balance Sheet | 33 |
| Statement Of Changes In Equity | 34 |
| Cash Flow Statement | 35 |
| Notes To The Financial Statements | 36 |
| Directors' Declaration | 56 |
| Independent Audit Report | 57 |
| Asx Additional Information | 59 |
annual Report 2007
Gippsland Limited Annual Report 2007
Corporate Directory
| Directors | Robert John (Jack) Telford – Executive Chairman & Chief Executive OfficerJohn Morrison Chisholm – Executive DirectorJon Starink – Executive DirectorJohn Stuart Ferguson Dunlop – Non–Executive DirectorJohn Damian Kenny – Non–Executive Director | ||
|---|---|---|---|
| Company Secretary | Rowan St John Caren | ||
| RegisteredOffice | 207 Stirling HighwayClaremont WA 6010Australia | ||
| Postal Address | PO Box 352Nedlands WA 6909Australia | ||
| Telephone | +61 (08) 9340 6000 | ||
| Facsimile | +61 (08) 9340 6060 | ||
| E–mail | [email protected] | ||
| Website | www.gippslandltd.com | ||
| Auditors | WHK Horwath256 St George's TerracePerth WA 6000Australia | ||
| NominatedAdvisor (NOMAD) | Grant Thornton Corporate FinanceGrant Thornton HouseMelton Street, Euston SquareLondon NW1 2EPUnited Kingdom | ||
| Solicitors | Blakiston and Crabb1202 Hay StreetWest Perth WA 6005Australia | Trowers & Hamlins3rd Floor, 1 El Gabalaya Street,Zamalek, CairoArab Republic of Egypt | |
| CobbettsShip Canal HouseKing StreetManchester M2 4WBUnited Kingdom | Ibrahim Naji & CoSuite 409, Level 4102–B Margahny StreetHeliopolis, CairoArab Republic of Egypt |
| Share Registries | Security Transfer Registrars Pty LtdSuite 1, Alexandrea House770 Canning HwyApplecross WA 6153Australia | PO BOX 535Applecross WA 6953Australia |
|---|---|---|
| Website | www.securitytransfer.com.au | |
| Computershare LimitedP O Box 82The Pavilions, Bridgwater RoadBristol BS99 7NHUnited Kingdom | ||
| Website | www.computershare.com | |
| Australian Stock Exchange | The Company's securities are quoted on the official list of the ASX Ltd (ASX),the home exchange being:The ASX (Perth) Ltd2 The EsplanadePerth WA 6000Australia | |
| ASXCodes | Shares – GIPListed options – GIPO | |
| London Stock Exchange | The Company's securities are quoted on the London Stock Exchange Plc'sAIM Market (AIM):10 Paternoster SquareLondon, EC4M 7LSUnited Kingdom | |
| LSE– AIMCodes | Shares – GIPListed Options – GIPO | |
| plus market | The Company's securities are quoted on Plus Market Group Plc's PLUSMarket (PLUS) | |
| 21 Mansell StreetLondon, E1 8AAUnited Kingdon | ||
| PLUSCODES | Shares – GIPListed Options – GIPO |
- • Abu Dabbab feasibility study update highlights modest capital cost increase
- • Positive progress with Abu Dabbab project finance discussions with German banks
- • Commencement of Abu Dabbab access and road construction, mine grid survey and tantalum reserve upgrade drilling
- • Seiga 800m long zone of mineralisation defined by drilling
- • Seiga discontinuous zones of mineralisation extended to over 1,200m of strike length in places reaching a width of 120m
- • Seiga completion of preliminary JORC compliant resources
- • Shashoba high proportion of RC drill holes containing significant gold values indicate widespread mineralisation within shear system
- • UK£1.2 million (A$2.89m) Share placement to UK investors to accelerate exploration at Wadi Allaqi
- • Appointment of new, London-based Director
Chairman's report
The past year has been one of significant achievement for Gippsland Limited and its shareholders. Major successes have been achieved in advancing the Abu Dabbab tantalum-tin project and the Wadi Allaqi gold-copper-nickel project both of which are located in Egypt. The most advanced project is the 40 million tonne Abu Dabbab project located on the western shore of the Red Sea, which is being developed as a world class tantalum project.
Solid progress was made during 2007 in the development of the Abu Dabbab tantalum-tin deposit. The Company has entered into a long-term tantalum off-take agreement with a major industrial group for the supply of 2.4 million pounds of tantalum pentoxide over five years. During the past year the Company also advanced its negotiations with a number of German banks for the provision of project finance for the Abu Dabbab project. It is anticipated that finance facilities will be finalised early in the 2008 calendar year, which in turn will lead to the process plant being commissioned during early 2010.
During the year the Company successfully completed Abu Dabbab metallurgical testwork, designed to ensure minimal over-grinding of the tantalite in the primary mill. This work was delayed due to the nonavailability of process design engineers.
As a result of the testwork, Gippsland has optimised the Abu Dabbab flowsheet to deliver improved tantalum recovery, and offer an increased level of confidence in the project.
Having a combined resource base of 138 million tonnes, the Company's Abu Dabbab and Nuweibi tantalum deposits will establish Gippsland as a leading global tantalum producer for several decades.
Exploration within the Company's Wadi Allaqi project continued to produce encouraging results from a number of drilling campaigns completed throughout the year, although a failure of a major drill rig component delayed exploration. A gold resource of 85,000 ounces was delineated at Seiga, located some 200km south-east from Aswan, where drilling is currently under way to extend the resource by testing the depth and down-plunge extensions to the deposit.
During the year Gippsland, successfully completed a fund raising of UK£1.2 million (approximately A$2.89 million) to accelerate exploration at Wadi Allaqi.
Gippsland has focused on developing its Board and management team in preparation for the implementation of the Abu Dabbab project as it progresses into a world scale tantalum producer.
In May 2007 the Company welcomed Mr Jon Starink to the Board of Directors. He has a brilliant academic record and a widespread knowledge of the tantalum industry. For ten years he served in senior technical and engineering roles with the Sons of Gwalia Ltd Greenbushes tantalum-tin project where he was directly responsible for process development, project design and construction management for the tin smelter and tantalum extraction projects.
Once again, the Company acknowledges the high level of support it enjoys from our Egyptian partners. In particular, I wish to acknowledge and thank His Excellency Eng Sameh Fahmy, Minister of the Egyptian Ministry of Petroleum, First Undersecretary Eng Amgd Ghoneim of the same ministry and Dr Hussein Hammoudeh Chairman of Egyptian Mineral Resources Authority, for their substantial support and assistance during the past year.
RJ Telford Executive Chairman October 2007
Review of Operations
Gippsland has a controlling 50% interest in the Egyptian Abu Dabbab and Nuweibi tantalum-tin-feldspar deposits located on the western shore of the Red Sea coast. These two deposits have a combined resource of 138 million tonnes. It also has a similar interest in eight gold prospects and one copper-nickel prospect located in the Wadi Allaqi region situated to the south-east of Aswan in Egypt. Drilling on the Wadi Allaqi prospects during the year intersected significant gold mineralisation at the Haimur, Seiga, Garayat and Shashoba prospects and delineated an inferred gold resource totalling 85,000oz at Seiga. The Company also has a free-carried 40% interest in the Queen Hill tin deposit located at Zeehan in Tasmania, Australia.
Review of Operations
Project location plan
Abu Dabbab – proposed infrastructure plan
Abu Dabbab
Introduction
The Abu Dabbab deposit is covered by two Exploitation Leases (1658 & 1659) granted in the name of Tantalum Egypt JSC, a company incorporated in Egypt and held 50% by the Egyptian government owned Egyptian Mineral Resources Authority (EMRA) and 50% by Tantalum International Pty Ltd a wholly owned subsidiary of Gippsland Limited. The Abu Dabbab plant site of 14km2 in area is located 6km from the Red Sea coast and has been secured under Ministerial Decree No 11/2003.
Feasibility Study Up-date
During the year the Company took delivery of the updated feasibility study for the 40 million tonne Abu Dabbab tantalum-tin project located in Egypt. The updated study has estimated a total cost of US$115 million inclusive of capital costs (2Mtpa processing plant, mining fleet, haul roads, power plant, and general infrastructure) and financing costs during the construction period. The comparative estimated cost as at November 2005 was US$90 million.
The Company has been able to minimise the increase in Capex and Opex through the optimisation of the Abu Dabbab processing route as a result of discussions with the Company's off-take customer. The Company is presently in negotiation with its tantalum off-take partner to adjust tantalum contractual arrangements to take into account the revised capital and operating costs.
Additional metallurgical testwork which was designed to ensure minimal over-grinding of the tantalite in the primary mill, was completed following considerable delay due to the non-availability of process design engineers. The Abu Dabbab flowsheet has been adjusted accordingly which the Directors recognise will provide project financiers and investors with an increased level of confidence in the project.
Site Access and Road Construction
Earthworks were commenced during the year in order to provide heavy equipment access to the site and also to provide access to the upper levels of the deposit where the mining will commence. An access track to the north side of the deposit was constructed around the deposit providing full access to the three adits on the south side of the deposit. This work is preliminary to the drilling and preparing the first mining benches at the 455 level for Stage 1 mining – Task 500.
Tantalum Reserve Up-grade Drilling
Access and site preparation was completed for a nine hole combined RC and diamond drilling programme to upgrade a significant proportion of the inferred resources into the higher indicated category. The drilling will test the areas between the existing holes giving a greater density of drill intersections. Large drill pads have been constructed so that multiple holes could be drilled from the same location thus reducing site preparation costs.
Construction of the Abu Dabbab mine access road
Preparing the laydown area on the 440RL
Drilling commenced in October and is expected to be completed during November. The holes will be drilled by reverse circulation to the limit of the drilling rig which is anticipated to be 180 to 200m depending upon the amount of water encountered, then finished with diamond tails to the programmed depth.
Table 1: Abu Dabbab mineral resources
| Tonnes | |||||
|---|---|---|---|---|---|
| Category | (Mt) | Ta2O5(%) | SnO2(%) | ||
| Measured | 12 | 0.027 | 0.165 | ||
| Indicated | 2.1 | 0.026 | 0.20 | ||
| Inferred | 26 | 0.024 | 0.08 | ||
| Total all | |||||
| categories | 39.9 | 0.025 | 0.11 |
Table 2: Abu Dabbab ore reserves (included in the above resources)
| Tonnes | |||
|---|---|---|---|
| Category | (Mt) | Ta2O5(%) | SnO2(%) |
| Proven | 12.5 | 0.026 | 0.158 |
| Probable | 2.1 | 0.025 | 0.199 |
| Total reserves | 14.6 | 0.026 | 0.164 |
Mine Survey Grid
Quickbird pan-chromatic and multi-spectral satellite imagery over the immediate mine lease area was purchased to provide ground control for the mine survey grid. Ground control points were identified from the Quickbird image and located on the ground where permanent survey control points will be installed by the Company's contract surveyors.
Ikonos satellite imagery has been ordered to cover a 125km2 belt from the Abu Dabbab mine leases to the Red Sea coast. The Ikonos satellite with dual scanners will be specifically manoeuvred to the location to obtain the stereo data necessary for the generation of the 3D contours. Topographic contours to an accuracy of 2m will be generated from the stereoscopically acquired data which will be used for the mine and plant construction.
Nuweibi project - drill hole location plan
NUWEIBI
The Nuweibi tantalum-niobium deposit is located 17km to the south-southwest of the Abu Dabbab deposit and 30km inland from the Red Sea.
Tin mineralisation was first discovered at Nuweibi in 1944 and it was not until 1970 that the more valuable tantalum mineralisation was recognised. The deposit was the subject of detailed exploration by the same joint Soviet-Egyptian team that explored Abu Dabbab. The previous work has included 23 diamond drill holes totalling 2,746m, four surface trenches and four bulk samples which were used for metallurgical testwork.
Resources
The resources at Nuweibi have been estimated by Gippsland using the ore block modelling method at a 0.01% Ta2 O5 cut-off.
Table 3: Nuweibi mineral resources
| Category | Tonnes(Mt) | Ta2O5(%) | SnO2(%) |
|---|---|---|---|
| Indicated | 48 | 0.015 | 0.009 |
| Inferred | 50 | 0.014 | 0.009 |
| Total all | |||
| categories | 98 | 0.014 | 0.009 |
There is the potential for a significant increase in Nuweibi resources to the east as most of the eastern diamond drill holes bottomed in mineralisation.
Review of Operations
Wadi Allaqi projection location plan
Wadi Allaqi
RC drilling was completed at the Garayat, Koleit, Haimur, Seiga and Shashoba prospects. No drilling was completed during the year on the Um Tiur prospect which is located 53km to the southeast of the Shashoba prospect. The drilling operations during the year were severely disrupted by the unwillingness of the Egyptian Government to issue security passes in a timely manner. Additional problems were encountered by the failure of the drill rig air compressor which restricted drilling operations for several weeks.
During the year, the Company's Wadi Allaqi gold exploration drilling programme continued to yield most encouraging results with the best results at the Seiga prospect.
Highlights of the drilling included:
- High grade shoots of up to 13.3g/t Au in CRC056
- 800m long zone of mineralisation defined by drilling
- Wide intersection of 48m at 1.60g/t Au in hole CRC056 including 8m at 7.75g/t Au
- Intersection of 28m at 1.30g/t Au in hole CRC060 including 12m at 2.23g/t Au
- Intersection of 15m at 1.64g/t Au in hole CRC075 extends zone 300m to south
- Intersection of 12m at 3.26g/t Au in CRC135
- Discontinuous zones of mineralisation extended to over 1,200m of strike length
- Open along strike and at depth
- Wide zones of anomalous gold in rock-chip sampling (up to 80m at 1.76g/t Au)
- Completion of preliminary JORC compliant resource estimate
- Intersection of 28m at 2.27g/t Au from surface in hole HRC034 at Haimur
Seiga
Work completed at Seiga included 90 RC drill holes totalling 3,204m, resource estimation, rock-chip and regolith sampling, and geological mapping.
The RC drilling confirmed the presence of a zone of discontinuous mineralisation within the shear system occurring over a strike length of at least 1,200m. Within this zone a small gold resource totalling 85,000oz was delineated. Subsequent drilling was focussed on increasing the size of the identified resource as well as finding additional deposits.
Table 4: Summary of best Seiga drilling intersections
| Intersection | Interval | Gold | |
|---|---|---|---|
| Hole | (m) | (m) | grade (g/t) |
| CRC052 | 12 – 30 | 18 | 0.37 |
| CRC053 | 1 – 12 | 11 | 0.62 |
| CRC056 | 40 – 88 | 48 | 1.60 |
| including | 60 – 68 | 8 | 7.75 |
| CRC057 | 20 – 52 | 32 | 0.52 |
| CRC058 | 40 – 76 | 36 | 1.04 |
| including | 40 – 48 | 8 | 3.24 |
| CRC059 | 1 – 24 | 23 | 1.16 |
| CRC060 | 32 – 60 | 28 | 1.30 |
| including | 32 – 44 | 12 | 2.23 |
| CRC065 | 1 – 56 | 55 | 0.19 |
| CRC068 | 1 – 4 | 3 | 2.78 |
| and | 24 – 48 | 24 | 0.53 |
| CRC069 | 16 – 40 | 44 | 0.64 |
| including | 20 – 32 | 12 | 1.18 |
| CRC074 | 1 – 16 | 15 | 0.61 |
| CRC075 | 1 – 16 | 15 | 1.64 |
| CRC077 | 4 – 8 | 4 | 0.51 |
| CRC078 | 4 – 32 | 26 | 0.50 |
| CRC100 | 24 - 32 | 8 | 1.59 |
| CRC133 | 1 - 20 | 19 | 1.17 |
| CRC135 | 40 - 52 | 12 | 3.26 |
RC drilling
RC drilling continued to test the limits of the Main Seiga mineralised zone and to test a 220m gap in the previous drilling. Encouraging results were obtained including:
- Hole CRC056 returned 48m at 1.60g/t Au from 40m depth, including 8m at 7.75g/t Au from 60m depth. This hole is located 50m north of the previously drilled hole CRC013 which intersected 24m at 5.21g/t Au from 48m.
- Hole CRC058 drilled 90m to the north of CRC056 intersected 36m at 1.04g/t Au from 40m including 8m at 3.24g/t Au from 40m. Hole CRC057 was drilled 10m north of CRC058 but from the opposite direction and intersected 32m at 0.52g/t Au from 20m.
- Hole CRC059 drill along the previously drilled section containing holes CRC014 to 016 and 28m north of Hole CRC060 intersected 23m at 1.16g/t Au from 1m depth.
- Hole CRC060 drilled 40m to the north of holes CRC057 and 058 intersected 28m at 1.30g/t Au from 32m including 12m at 2.23g/t Au from 32m.
- Hole CRC065 tested a gold intersection in Hole CRC017 which was at the eastern end of the drill profile. The hole intersected 55m at 0.19g/t Au from 1m.
- Hole CRC068 returned 3m at 2.78g/t Au from 1m and 24m at 0.53g/t Au from 24m.
- Hole CRC069 intersected 44m at 0.64g/t Au from 16m including 12m at 1.18g/t Au from 20m. This hole tested the lower part of the intersections in hole CRC040 which intersected 28m at 1.14g/t Au and adjacent hole CRC041 containing 22m at 1.74g/t Au.
Significant intersections from a third mineralised zone (Eastern Zone) include 11m at 0.62g/t Au from 1m in CRC053 and 18m at 0.37g/t Au from 12m in hole CRC052.
Drilling at Seiga
Review of Operations
Seiga prospect - drill hole location plan
Resource Drilling
A programme of drilling to increase the resource at Seiga by deeper drilling and testing the along strike extensions commenced during the June quarter but was interrupted by the compressor failure. The shorter holes were drilled using RC with the deeper holes pre-collared by RC drilling with diamond tails to be completed during October.
Two RC holes were completed as part of the resource infill drilling. They are located to the north of the defined resource zone. Hole CRC135 intersected 44m at 1.25g/t Au from 40m including 4m at 7.67g/t Au, and 4m at 1.52g/t Au from 116m to the end of the hole. The intersections in hole CRC135 are of particular interest as the current drilling programme is specifically designed to delineate mineralisation both at depth and down plunge to the north. Hole CRC134 was drilled to test the eastern margin of a rock chip anomaly and the results indicate that the mineralised zone is at least 60m wide.
Regional Reconnaissance Drilling
A series of RC drill profiles was completed to locate and test the Seiga shear beneath the wadi sands to the north and the south of the main workings. The shear is clearly identified in existing holes by gold values of greater than 0.1g/t. The drill profile at northing 2493450N identified a zone approximately 65m wide of >0.1g/t Au and the profile 225m to the south at 2493500N recorded a zone approximately 50m wide. The other two profiles were drilled in the southern part of the prospect to further extend the known position of the shear a further 500m to the south.
The profile of holes (CRC108 to 113) at 2493000N intersected a best value of 2m at 0.36g/t Au from 2m in CRC109. Anomalous gold values greater than 0.1g/t associated with shearing were intersected in the adjacent holes CRC108 and 110. The most southerly profile at 2492800N extended a previous profile to the west and three holes (CRC116, 117 & 118) recorded gold values greater than 0.1g/t.
It is likely that the shear extends further to the south and geological mapping will be required to locate the shear more accurately prior to drilling any further profiles.
Seiga Resource Estimation
A resource estimation was completed for a 525m strike length of the Seiga main zone incorporating the results of 25 RC drill holes. The inferred resources total 1.1Mt at 2.3g/t Au (uncut) and 2.0g/t Au (10g/t cut) to a maximum depth of 150m and a global SG of 2.5 at a 0.7g/t cut-off. The estimation method was by ore block modelling constrained within a wireframe model interpreted from drilling along ten sections.
Table 5: Seiga Main Zone – Inferred Resources
| Au | ||||
|---|---|---|---|---|
| Cut-off(g/t) | Tonnes(Mt) | uncut(g/t) | Au-10g/tcut (g/t) | Au(oz) |
| 1.0 | 0.8 | 3.0 | 2.5 | 76,000 |
| 0.7 | 1.1 | 2.3 | 2.0 | 85,000 |
| 0.5 | 1.5 | 1.7 | 1.6 | 93,000 |
| 0.4 | 1.9 | 1.6 | 1.4 | 98,000 |
Note: Figures in table may not tally due to rounding
The area included in the resource estimation comprises only a small part of the mineralised shear system. As drilling progresses, additional resources are expected to be defined below the current resources and also in close proximity to the Seiga main zone, along the Seiga south zone and in the two eastern zones. Drilling within the Seiga south zone mineralisation, located to the southeast which is at least 800m long and contains some previously reported intersections that include 28m at 1.14g/t Au in CRC040, 22m at 1.74g/t Au in CRC041 and 12m at 1.18g/t Au in CRC069.
Rock-chip Sampling Anomalies
A programme of continuous rock-chip sampling along 23 profiles was completed which was very successful in highlighting the known zones of mineralisation as well as identifying a number of new zones.
The sampling identified two new zones of mineralisation located to the east of the main zone over an interpreted strike length of approximately 800m. The best result included 25m at 1.14g/t Au in the eastern part of profile CP15. This anomaly is coincident with mineralisation previously intersected in holes CRC052 and CRC053 which returned values of 18m at 0.37g/t Au and 11m at 0.62g/t Au respectively. Four separate zones of mineralisation have now been located at Seiga.
The best results for each profile are summarised in the table below and include a 10m wide zone averaging 3.20g/t Au in profile CP21 In terms of exploration potential the wider zones of lower grade mineralisation are considered to be very significant as they represent a much larger target. The widest zone of anomalous gold values (>0.1g/t Au) is 120m with an average grade of 0.59g/t Au in CP20 and is of considerable interest as the lower cut-off for the previously announced Seiga Inferred Resource was 0.5g/t.
Table 6: Seiga - Summary of best rock-chip results (>0.1g/t Au)
| Profile | From - To(m) | Interval(m) | Gold grade(g/t) |
|---|---|---|---|
| CP10 | 10 to- 25 | 15 | 1.59 |
| CP11 | 60 to 70 | 10 | 1.64 |
| CP12 | 5 to 75 | 70 | 0.51 |
| including | 15 to 30 | 15 | 0.50 |
| 40 to 75 | 35 | 1.99 | |
| CP15 | 115 to 120 | 5 | 4.34 |
| CP16 | 30 to 45 | 5 | 0.80 |
| CP17 | 30 to 60 | 30 | 0.46 |
| CP18 | 0 to 15 | 15 | 0.33 |
| CP19 | 35 to 70 | 35 | 1.31 |
| CP19 | 90 to 105 | 15 | 0.96 |
| CP19 | 90 to 145 | 55 | 0.36 |
| CP20 | 40 to 160 | 120 | 0.59 |
| CP21 | 30 to 120 | 90 | 0.71 |
| CP21 | 85 to 95 | 10 | 3.20 |
| CP22 | 80 to 105 | 25 | 0.14 |
| CP23 | 95 to 110 | 15 | 0.53 |
The western end of profile CP19 (35m at 1.31g/t) represents the southern extension of the good intersections recorded in drill holes CRC040 & 041 located 50m to the north. These two holes intersected 28m at 1.14g/t Au and 22m at 1.74g/t Au respectively.
RC drilling to test the anomalies has commenced with eleven holes out of a total of seventeen completed to date.
The results of the RC holes drilled to test the rock-chip anomalies attest to the effectiveness of the sampling method. Quite subtle surface anomalies have yielded significant results in the drilling. Hole CRC133 drilled to test the eastern end of a rock-chip anomaly of 15m at 0.33g/t Au intersected 59m at 0.72g/t Au from 1m depth including 19m at 1.17g/t Au. This has increased the width of the mineralised zone as intersected by RC drilling to at least 60m.
A line of holes drilled to the east of the ancient pit, where access was available along a small wadi, intersected modest gold values below some very subtle but continuous rock-chip profile anomalies. The intersections included 2m at 0.47g/t in CRC125, 4m at 0.42g/t from 16m and 2m at 0.54g/t from 28m in CRC126 and 4m at 0.36g/t in CRC131.
The presence of mineralisation below the low order rock-chip profile anomalies are very encouraging as the highest order anomalies located in the south have yet to be drilled.
Regolith Sampling
A small regolith sampling programme was completed over an area of thin wadi sands adjacent to the southwest of the ancient workings. Samples were collected at 20m intervals along nine lines 100m apart. The programme was designed to test for mineralised shears below the wadi sands in an area that had not been systematically covered by trenching or RC drilling. Most of the samples contained anomalous gold, the highest being 3.06g/t. Infill sampling on a 20m basis highlighted three targets in areas where there has been no previous exploration and which have yet to be drill tested.
Topographic Surveys
A topographic survey was completed at the Seiga prospect to accurately locate all of the drill collars, ancient workings and topography in preparation of upgrading the currently defined resource at Seiga to a higher resource category once the current drilling programme has been completed.
Seiga prospect - results of rock chip sampling
Review of Operations
Shashoba - drill hole location plan
Shashoba prospect - results of regolith & rock chip sampling
SHASHOBA
Seventeen RC drill holes were completed at the Shashoba prospect totalling 738m. The drilling followed-up some previous drilling around historical workings, a new area of minor workings in the north and a geochemical anomaly in the south.
RC Drilling
Previous RC drilling at Shashoba has delineated gold mineralized up to 50m wide over an open-ended strike length of 2.2km. Eighteen RC drill holes totalling 819m were completed. The drilling followed-up some previous drilling around historical workings, a new area of minor workings in the north and a geochemical anomaly in the south.
The high proportion of holes containing significant gold values is indicative of the widespread mineralisation within the Shashoba shear system. Additional drilling will be required to follow-up the anomalous intersections and also to drill test the extensions to the shear zones.
Regolith and rock-chip Sampling
At Shashoba regolith sampling was completed over two areas of interest on a 100m x 40m grid. In the northeast area, two anomalous zones were delineated with four samples containing greater than 1g/t Au with a maximum value of 5.91g/t Au. The more easterly of the zones spans four lines giving it a length of at least 400m.
Three profiles of rock-chip sampling were completed over rugged terrain along the eastern trend with a number of number of anomalous samples recorded. These include:
- 55m at 0.46g/t between 55 100m in profile SP1
- 5m at 1.46g/t between 15 20m in profile SP2
- 5m at 0.27g/t between 100 105m in profile SP2
- 5m at 0.21g/t between 125 130 in profile SP2
- 20m at 0.44g/t between 95 115m in profile SP3
- 5m at 1.65g/t between 130 135m in profile SP3
These anomalies correspond with old gold workings and also to anomalous gold values in regolith samples collected further to the north
Topographic Survey
A topographic survey to 1m vertical accuracy was completed to accurately locate all of the drill collars, ancient workings and topography to assist with the exploration.
Haimur
Work completed during the quarter included the drilling of ten RC holes totalling 468m following up previous drilling results and geochemical anomalies. Hole HRC055 intersected a broad zone of low grade mineralisation averaging 0.53g/t Au over 56m from the surface.
Haimur prospect - geology and drill hole location plan
Garayat
At Garayat RC drilling tested the main Garayat mine workings Garayat South, Ivanov and Block E. 30 holes were completed for a total of 1,707m during the year.
The drilling tested shear structures adjacent to and along strike from old workings at the old Garayat mine, Garayat South, Block A and Wells Area E and Ivanov. The drilling identified the shear structures which were weakly mineralised with the best results recorded at Block E from hole GRC035 containing 12m at 5.73g/t Au from 8m down the hole, with a best interval of 4m at 14.07 g/t.
Review of Operations
Garayat prospect - location of gold occurrences
RC drilling operations at Abu Swayel
Abu Swayel prospect - drill hole location plan
Abu Swayel
A programme of thirteen holes totalling 776m of RC drilling were completed at the Abu Swayel coppernickel prospect during September. The drilling tested a conductor which was delineated by a transient electromagnetic survey completed during August. The relatively low amplitude conductor was modelled as having a westerly dip which is contrary to the easterly dip of the mineralisation in the ancient workings located 100m to the southeast. Thick wadi sands and conglomeratic sands made collaring the holes very difficult thus requiring excavations to be made to sufficient depths where more consolidated sediments were encountered. Two holes were drilled through the projected position of the conductor with only minor sulphides (pyrite) noted in the drill chips.
More encouraging results were obtained from the drilling closer to and beneath the ancient workings. Four metres of massive sulphide containing visible chalcopyrite (copper sulphide) were intersected in hole ASRC004. Ten metres of copper mineralisation comprised of oxide and sulphide minerals were intersected beneath the old workings in hole AS009. Copper mineralisation was also intersected in holes ASRC011 and 013.
The samples are currently being assayed by Genalysis Laboratory Services Pty Ltd in Perth.
Abu Swayel drill hole collar locations
| Hole | E-WGS84 | N-WGS84 | Depth (m) | Azimuth | Dip |
|---|---|---|---|---|---|
| ASRC001 | 565653.000 | 2519068.000 | 60.00 | 220.0 | -60.0 |
| ASRC002 | 565604.000 | 2519135.000 | 74.00 | 220.0 | -60.0 |
| ASRC003 | 565408.000 | 2519182.000 | 84.00 | 40.0 | -60.0 |
| ASRC004 | 565548.000 | 2519130.000 | 54.00 | 220.0 | -60.0 |
| ASRC005 | 565578.000 | 2519111.000 | 51.00 | 220.0 | -60.0 |
| ASRC006 | 565511.000 | 2519148.000 | 51.00 | 220.0 | -60.0 |
| ASRC007 | 565530.000 | 2519171.000 | 60.00 | 220.0 | -60.0 |
| ASRC008 | 565575.000 | 2519168.000 | 72.00 | 220.0 | -60.0 |
| ASRC009 | 565525.000 | 2519122.000 | 57.00 | 200.0 | -60.0 |
| ASRC010 | 565488.000 | 2519153.000 | 81.00 | 0.0 | -60.0 |
| ASRC011 | 565487.000 | 2519159.000 | 45.00 | 220.0 | -60.0 |
| ASRC012 | 565475.000 | 2519147.000 | 36.00 | 220.0 | -60.0 |
| ASRC013 | 565608.000 | 2519064.000 | 51.00 | 200.0 | -60.0 |
Review of Operations
Zeehan tin prospect Tasmania - TMI image
Zeehan
The Zeehan tin (Sn) deposit is located within a major tin province in the northwest of Tasmania approximately 15km from the large Renison tin deposit. Gippsland has a joint venture at Zeehan with Western Metals Limited whereby 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 Tasmania.
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 1% mineralised envelope. At Queen Hill the mineralization outcrops on a hill approximately 300m due west of the Severn deposit and contains indicated resources of 1.8Mt at 0.82% Sn. The mineralisation includes minor amounts of copper, lead, zinc and silver.
Financial Statements
Financial statements
GIPPSLAND LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376
The directors of Gippsland Limited believe firmly that benefits will flow from the maintenance of the highest possible standards of corporate governance and strive for compliance with best corporate governance practice where practicable.
Trading Policy
The company's policy regarding directors and employees trading in its securities is set by the board. The policy restricts directors and employees from acting on material information until it has been released to the market and adequate time has been given for this to be reflected in the security's prices. Additionally directors and employees are restricted from trading in the Company's securities during close periods preceding periodic lodgement dates.
Website Disclosure of Corporate Governance Practices and Policies
Further information relating to the company's corporate governance practices and policies has been made publicly available on the company's web site at www.gippslandltd.com
Commentary on 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 except as detailed below:
Council Recommendation 2.1
A majority of the Board should be independent directors.
The Board comprises two independent directors and three non-independent directors. Prior to the appointment of Mr J Starink as an executive director on 8 May 2007, the ratio was two independent directors to two non-independent directors. Therefore a majority of the Board is not independent.
While the Board strongly endorses the position that boards need to exercise independence of judgment, it also recognises 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 Dunlop are Non-Executive Directors of the Company. Both Non-Executive Directors are considered independent within the ASX Corporate Governance Council's guidelines.
Mr Dunlop is a principal at John Dunlop & Associates Pty Ltd, engineering service providers for the Company. Mr Dunlop has been directly involved in the provision of the engineering services by John Dunlop & Associates Pty Ltd, however the undertaking of this role does not constitute Mr Dunlop or John Dunlop & Associates Pty Ltd as being material service providers to the Company. Mr Dunlop does not participate in the discussions regarding the provision of engineering services.
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 judgement to all relevant issues falling within the scope of the role of 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 nonexecutive chairperson.
Council Recommendation 2.3
The roles of chairperson and chief executive officer should not be exercised by the same individual.
The company's chairman Mr Robert John Telford currently holds the position of both chairperson and chief executive officer. The board recognises the importance of independence in decisionmaking, however believes that Mr Telford is the most appropriate person for the position due to his extensive industry experience and previous record as chairman. The board recognises that Mr Telford has been a major force in the company's success and that as the company enters its next growth stage, Mr Telford's industrial experience and strong and effective leadership will be beneficial.
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 the process of reviewing the skill base and experience of existing Directors to enable identification of or attributes required in new Directors. Independent consultants are engaged to identify possible new candidates for the Board, when appropriate.
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.
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.
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;
- • at least three members.
Refer comments on council recommendation 4.2
Council Recommendation 4.4
The audit committee should have a formal operating charter.
Refer comments on council recommendation 4.2
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.
Your directors present their report on the company and its controlled entities for the financial year ended 30 June 2007.
Directors
The names of directors in office at any time during or since the end of the year are:
Mr Robert John Telford Dr John Morrison Chisholm Mr John Stuart Ferguson Dunlop Mr John Damian Kenny Mr Jon Starink (appointed 8 May 2007)
Directors have been in office since the start of the financial year to the date of this report unless otherwise stated.
Company Secretary
The following person held the position of company secretary at the end of the financial year:
Mr Rowan Caren – Bachelor of Commerce, Chartered Accountant. Mr Caren was employed by a first tier chartered accountancy firm in Australia and overseas for six years and has been directly involved in the minerals exploration industry for a further ten years. Mr Caren also provides company secretarial and corporate advisory services to several exploration companies and is a member of the Institute of Chartered Accountants in Australia.
Principal Activities
The principal activities of the economic entity during the financial year were:
• exploration and development of commercially and economically viable mineral resources.
There were no significant changes in the nature of the consolidated group's principal activity during the financial year.
Operating Results
The consolidated loss of the consolidated group after providing for income tax and eliminating minority equity interests amounted to $4,191,218.
Dividends
No dividend was paid or declared during the financial year and the directors do not recommend the payment of a dividend for the financial year ended 30 June 2007.
Review of Operations
During the year the company continued to focus on the development of the Abu Dabbab tin/tantalum project in Egypt and the exploration for gold and base metals in the Wadi Allaqi region of Egypt. A detailed review of the company and the consolidated group's activities is included in the Review of Operations.
Financial Position
The net assets of the consolidated group have decreased by $1,378,737 to $2,411,985 at 30 June 2007. This decrease has largely resulted from the following factors:
- • proceeds from share issue raising $2,751,505 offset by
- • exploration expenditure of $1,781,410
- • project development expenditure of $778,196 and
- • administration expenditure of $1,767,042.
The consolidated group's sound financial position has enabled the group to focus on:
- • completing the bankable feasibility study for the Abu Dabbab tantalum project in Egypt; and
- • continue with an active exploration strategy within the Wadi Allaqi region of Egypt.
The directors believe the company is in a strong and stable financial position to expand and grow its current operations.
Significant Changes in State of Affairs
The following significant changes in the state of affairs of the parent entity occurred during the financial year:
a) On 1 May 2007 the company issued 26,666,666 ordinary shares at $0.109 each, raising $2,895,753.
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 group, the results of those operations, or the state of affairs of the consolidated group in future financial years.
Future Developments, Prospects and Business Strategies
Information as to likely developments in the operations of the Company and the consolidated group and the expected results of those operations in future financial years has not been included in this report because, in the opinion of the Directors, it would prejudice the interests of the Company and the consolidated group.
Environmental Issues
The consolidated group's operations are not currently subject to any significant environmental regulations under either Australian or Egyptian legislation. However, the board is committed to achieving a high standard of environmental performance, and regular monitoring of potential environmental exposures is undertaken by management. The board considers that the consolidated group has adequate systems in place for the management of its environmental requirements and is not aware of any breach of those environmental requirements as they apply to the consolidated group.
An environmental and social impact assessment has been completed for the Abu Dabbab project in Egypt.
The consolidated group is required to carry out its activities in accordance with the Mining Laws and regulations in the areas in which it undertakes its exploration activities.
Information on Directors
Robert John Telford - Chairman (Executive) AWAIT (Chem), M RACI
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 technologybased 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.
Interest in Shares and Options - 13,568,124 ordinary shares in Gippsland Limited and options to acquire a further 6,558,322 ordinary shares
John Morrison Chisholm - Director (Executive) B Sc (Hons), PhD, F AusIMM, F AIG
Dr Chisholm is a consulting geologist with wide experience in exploration geology and exploration management having worked as a lecturer at the University of Western Australia and Curtin University prior to working for various international mining companies. He was formerly an adjunct associate professor in economic geology at Curtin University.
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.
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.
Interest in Shares and Options - 150,000 ordinary shares and listed options to acquire a further 2,260,000 ordinary shares.
Directors' Report
Jon Starink – Director (Executive) BSC (Hon1), BChemE(Hon1), MApplSc, F AusIMM, FIEAust, FIChemE, MRACI, MTMS, CPEng, CChem, CSci
Mr Starink's qualifications include Bachelor of Science with First Class Honours (University of Sydney), a Bachelor of Chemical Engineering with First Class Honours (University of Sydney) and a Master of Applied Science (University of Sydney). His academic achievements include; Union Carbide Prize in Inorganic Chemistry, Western Mining Prize in Chemical Engineering and Beckman Coulter Postgraduate Prize for Best Overall Performance in Molecular Biotechnology. He held the position of Deputy Head Department of Chemical Engineering at Curtin University of Technology during 1984-85 & 1987.
Based in London, Jon Starink is a Chartered Professional Engineer, a Chartered Scientist and a Chartered Industrial Chemist, a Fellow of the Institution of Engineers Australia, a Fellow of the Australasian Institute of Mining and Metallurgy, a Fellow of the Institution of Chemical Engineers, a Member of The Metallurgical Society and a Member of the Royal Australian Chemical Institute.
He has 30 years experience in the mining industry in the role of both executive and non-executive director. His extensive practical and operational experience includes engineering design and project management; mining exploration management; science and engineering research & development and process innovation & development.
Of particular relevance, for ten years he served in senior technical and engineering roles with the Sons of Gwalia Ltd Greenbushes tantalum-tin project where he was directly responsible for process development, project design and construction management for the tin smelter and tantalum extraction projects.
Interest in Shares and Options – nil.
John Stuart Ferguson Dunlop – Director (Non-executive) BE, M Eng Sc, P Cert Arb, CP, F AusIMM, F IMMM, M SME, M CIMM, M MICA
John Stuart Ferguson Dunlop holds Bachelors and Masters Degrees in Mining Engineering from the University of Melbourne. He is a certified Mine Manager having approximately 35 years of international surface and underground mining experience in a variety of base metal, industrial and precious metal production and management situations.
He is a former Director of the Australasian Institute of Mining and Metallurgy (AusIMM) and remains Chairman of its affiliate, the Mineral Industry Consultants Association (MICA). He is also Chairman of Alliance Resources Ltd and Alkane Resources Ltd.
Mr Dunlop is a highly experienced mining professional having been involved in the design, construction and on-going operation of a number of major resource projects throughout the world. He has a detailed knowledge of the Company's 40Mt Abu Dabbab tantalum project in Egypt having been involved in the initial preparation of the project's Bankable Feasibility Study in 2004.
He has operated his own mining consulting firm based in Perth since 1992 and was previously a senior executive with BHP's (now BHP Billiton) Minerals Division, before becoming General Manager Operations for Aztec Mining Co Ltd until this company's takeover by Normandy Mining Ltd.
Interest in Shares and Options - Unlisted options to acquire 2,250,000 ordinary shares.
John Damian Kenny – Director (Non-executive) B Com (Hons), LLB
Mr Kenny a corporate and resources lawyer has a specialised interest in venture capital, initial public offerings and mergers and acquisitions. He has extensive experience in public equity fundraisings and the pricing of equity, debt and derivative securities.
Interest in Shares and Options - Listed options to acquire 2,250,000 ordinary shares.
REMUNERATION REPORT
This report details the nature and amount of remuneration for each director of Gippsland Limited, and for the executives receiving the highest remuneration.
Remuneration Policy
The remuneration policy of Gippsland Limited has been designed to align director and executive objectives with shareholder and business objectives by providing a fixed remuneration component and offering specific long-term incentives. The board of Gippsland Limited believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best executives and directors to run and manage the consolidated group, as well as create goal congruence between directors, executives and shareholders.
The board's policy for determining the nature and amount of remuneration for board members and senior executives of the consolidated group is as follows:
- • The remuneration policy, setting the terms and conditions for the executive directors and other senior executives, was developed and approved by the board after seeking professional advice from independent external consultants.
- • All executives receive a base salary (which is based on factors such as length of service and experience) and options.
- • The board reviews executive packages annually by reference to the consolidated group's performance, executive performance and comparable information from industry sectors.
All remuneration paid to directors and executives is valued at the cost to the company and expensed. Options are valued using the Black-Scholes methodology.
The board policy is to remunerate non-executive directors at market rates for time, commitment and responsibilities. The board determines payments to the non-executive directors and reviews their remuneration annually, based on market practice, duties and accountability. Independent external advice is sought when required. The maximum aggregate amount of fees that can be paid to non-executive directors is subject to approval by shareholders at the Annual General Meeting. Fees for non-executive directors are not linked to the performance of the consolidated group. However, to align directors' interests with shareholder interests, the directors are encouraged to hold shares in the company and are able to participate in the option plan.
Company performance, shareholder wealth and director and executive remuneration
The remuneration policy has been tailored to increase goal congruence between shareholders, directors and executives. The achievement of this aim has been through the issue of options to the majority of directors and executives to encourage the alignment of personal and shareholder interests. The company believes this policy to have been effective in increasing shareholder wealth over the past four years.
The following table shows the share price at the end of the respective financial years. The improvement in the future outlook for the company is reflected in the share price which has increased over the period of the past four years with the exception of 2006, when the share price fell slightly. The board is of the opinion that these results can be attributed in part to the previously described remuneration policy.
| 2003 | 2004 | 2005 | 2006 | 2007 | |
|---|---|---|---|---|---|
| Share Price at Year-end | $0.045 | $0.076 | $0.11 | $0.10 | $0.12 |
Key Management Personnel Remuneration Policy
The board's policy for determining the nature and amount of remuneration of key management for the group is as follows:
The remuneration structure for key management personnel is based on a number of factors, including length of service, particular experience of the individual concerned, and overall performance of the company. The contracts of service between the company and key management personnel are on a continuing basis, the terms of which are not expected to change in the immediate future. Any options not exercised before or on the date of termination lapse.
Key Management Personnel Remuneration
2007
| Key ManagementPerson | Short-term BenefitsCash, salary andcommissions$ | Share-basedPaymentOptions$ | Post-employmentBenefitsSuperannuation$ | Total$ |
|---|---|---|---|---|
| Mr RJ Telford | 207,069 | - | - | 207,069 |
| Dr JM Chisholm | 177,917 | - | - | 177,917 |
| Mr JSF Dunlop | 44,648 | - | - | 44,648 |
| Mr JD Kenny | 38,333 | - | - | 38,333 |
| Mr J Starink | 17,742 | - | - | 17,742 |
| Mr PR Sims | 188,294 | 60,975 | 18,827 | 268,096 |
| Mr RS Caren | 52,500 | - | - | 52,500 |
| Mr RS Middlemas | 4,580 | - | - | 4,580 |
| 731,083 | 60,975 | 18,827 | 810,885 |
2006
| Key ManagementPerson | Short-term BenefitsCash, salary andcommissions$ | Share-basedPayment Options$ | Post-employmentBenefitsSuperannuation$ | Total$ |
|---|---|---|---|---|
| Mr RJ Telford | 174,960 | - | - | 174,960 |
| Dr JM Chisholm | 160,417 | - | - | 160,417 |
| Mr JSF Dunlop | 78,910 | 77,827 | - | 156,737 |
| Mr JD Kenny | 36,000 | - | - | 36,000 |
| Mr RS Middlemas | 43,400 | - | - | 43,400 |
| 493,687 | 77,827 | - | 571,514 |
Options issued as part of remuneration for the year ended 30 June 2007
Options are issued to directors and executives as part of their remuneration. The options are not issued based on performance criteria, but are issued to the majority of directors and executives of Gippsland Limited and its subsidiaries to increase goal congruence between executives, directors and shareholders.
Options Granted As Remuneration
| Terms & Conditions for Each Grant | |||||
|---|---|---|---|---|---|
| Key Management Personnel | Granted No. | Grant Date | Value per Optionat Grant Date$ | Exercise Price$ | Exercise Date |
| Mr PR Sims | 2,250,000 | 15.9.2006 | 0.03 | 0.15 | 31.12.2007 |
All options were granted for nil consideration.
Meetings of Directors
During the financial year, 10 meetings of directors were held. Attendances by each director during the year were as follows:
| Directors' Meetings | |||||
|---|---|---|---|---|---|
| Number eligibleto attend | Numberattended | ||||
| RJ Telford | 10 | 10 | |||
| JM Chisholm | 10 | 9 | |||
| JSF Dunlop | 10 | 9 | |||
| JD Kenny | 10 | 5 | |||
| J Starink | 1 | 1 |
Indemnifying Officers
During or since the end of the financial year the company has given an indemnity or entered into an agreement to indemnify, or paid or agreed to pay an insurance premium as follows:
The company has paid premiums to insure any director or officer of Gippsland Limited against liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in the capacity of director or officer of the company, other than conduct involving a wilful breach of duty in relation to the company. The amount of the premium is $9,500.
Options
At the date of this report, the unissued ordinary shares of Gippsland Limited under option are as follows:
| Grant Date | Date of Expiry | Exercise Price | Number under Option |
|---|---|---|---|
| Jan 2003 – Mar 2004 | 31.12.2007 | $0.09 | 43,732,393 |
| 21.01.2005 | 31.12.2007 | £0.04 | 10,000,000 |
| 15.02.2006 | 31.12.2007 | $0.15 | 2,250,000 |
| 15.09.2006 | 31.12.2007 | $0.15 | 2,250,000 |
| 16.05.2006 | 16.05.2012 | $0.135 | 25,000,000 |
During the year ended 30 June 2007, the following ordinary shares of Gippsland Limited were issued on the exercise of options granted. No further shares have been issued since that date. No amounts are unpaid on any of the shares.
| Grant Date | Exercise Price | Number of Shares Issued |
|---|---|---|
| Jan 2003 – Mar 2004 | $0.09 | 6,000 |
No person entitled to exercise the option had or has any right by virtue of the option to participate in any share issue of any other body corporate.
Proceedings on Behalf of Company
No person has applied for leave of Court to bring proceedings on behalf of the company or intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for all or any part of those proceedings.
The company was not a party to such proceedings during the year.
Non-audit Services
The board of directors is satisfied that the provision of non-audit services during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the services disclosed in Note 6 did not compromise the external auditor's independence for the following reasons:
• The nature of the services provided do not compromise the general principles relating to auditor independence in accordance with APES 110: Code of Ethics for Professional Accountants set by the Accounting Professional and Ethical Standards Board.
The following fees for non-audit services were paid / payable to the external auditors during the year ended 30 June 2007:
| $ | |
|---|---|
| Taxation Services | 9,000 |
Auditor's Independence Declaration
The lead auditor's independence declaration for the year ended 30 June 2007 has been received and can be found on page 31 of the directors' report.
Signed in accordance with a resolution of the Board of Directors.
R J TELFORD, Director Dated this 27th day of September 2007.
Auditor's Independence Declaration
AUDITOR'S INDEPENDENCE DECLARATION
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Gippsland Limited for the year ended 30 June 2007, I declare that, to the best of my knowledge and belief, there have been:
- (a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
- (b) no contraventions of any applicable code of professional conduct in relation to the audit.
WHK HORWATH PERTH AUDIT PARTNERSHIP
CYRUS PATELL Principal Perth, WA
Dated this 27th day of September 2007
| Consolidated Group | Parent Entity | ||||
|---|---|---|---|---|---|
| Note | 2007$ | 2006$ | 2007$ | 2006$ | |
| Revenue | 2 | 135,430 | 30,345 | 127,161 | 30,345 |
| Foreign exchange gains (losses) | (53,429) | 43,441 | (38,262) | 43,441 | |
| Management and employee expenses | (671,932) | (469,752) | (579,374) | (469,752) | |
| Exploration expenses | (287,516) | (15,407) | (34,061) | (15,407) | |
| Project development expenses | (35,526) | - | - | - | |
| Corporate office expenses | (85,459) | (88,045) | (85,287) | (88,045) | |
| Depreciation expense | (41,119) | (20,496) | (23,536) | (20,496) | |
| Impairment of non-current investments | (2,236,564) | (2,082,011) | (2,768,260) | (2,571,632) | |
| Travel and accommodation expenses | (306,016) | (215,149) | (298,854) | (215,149) | |
| AIM administration expenses | (209,387) | (163,527) | (209,387) | (163,527) | |
| Administration expenses | (399,700) | (668,128) | (361,948) | (178,507) | |
| Loss before income tax | 3 | (4,191,218) | (3,648,729) | (4,271,808) | (3,648,729) |
| Income tax expense | 4 | - | - | - | - |
| Net loss attributable to members of the parent entity | (4,191,218) | (3,648,729) | (4,271,808) | (3,648,729) | |
| Adjustments recognised directly in equity. | 17 | (144,788) | (69,444) | (144,788) | (69,444) |
| Total Equity changes | (4,336,006) | (3,718,173) | (4,416,596) | (3,718,173) | |
| Basic and diluted loss per share(cents per share) | 7 | (1.77) | (1.98) |
The income statements are to be read in conjunction with the accompanying notes to the financial statements.
Balance Sheet AS AT 30 JUNE 2007
| Consolidated Group | Parent Entity | |||||
|---|---|---|---|---|---|---|
| Note | 2007$ | 2006$ | 2007$ | 2006$ | ||
| CURRENT ASSETS | ||||||
| Cash and cash equivalents | 8 | 2,611,219 | 3,937,943 | 2,315,359 | 3,934,620 | |
| Trade and other receivables | 9 | 119,925 | 49,212 | 118,374 | 49,212 | |
| Other current assets | 13 | 22,411 | 914 | 22,411 | 915 | |
| TOTAL CURRENT ASSETS | 2,753,555 | 3,988,069 | 2,456,144 | 3,984,747 | ||
| NON-CURRENT ASSETS | ||||||
| Property, plant and equipment | 12 | 154,908 | 35,685 | 88,136 | 35,685 | |
| Other non-current assets | 13 | - | - | 305 | 3,522 | |
| TOTAL NON CURRENT ASSETS | 154,908 | 35,685 | 88,441 | 39,207 | ||
| TOTAL ASSETS | 2,908,463 | 4,023,754 | 2,544,585 | 4,023,954 | ||
| CURRENT LIABILITIES | ||||||
| Trade and other payables | 14 | 458,177 | 208,109 | 201,514 | 208,109 | |
| Short-term provisions | 16 | 38,301 | 9,923 | 11,476 | 9,923 | |
| TOTAL CURRENT LIABILITIES | 496,478 | 218,032 | 212,990 | 218,032 | ||
| NON CURRENT LIABILITIES | ||||||
| Other long-term provisions | 16 | - | 15,000 | - | 15,000 | |
| TOTAL NON-CURRENT LIABILITIES | - | 15,000 | - | 15,000 | ||
| TOTAL LIABILITIES | 496,478 | 233,032 | 212,990 | 233,032 | ||
| NET ASSETS | 2,411,985 | 3,790,722 | 2,331,595 | 3,790,922 | ||
| EQUITY | ||||||
| Issued capital | 17 | 25,409,780 | 22,658,274 | 25,409,780 | 22,658,274 | |
| Reserves | 18 | 138,802 | 77,827 | 138,802 | 77,827 | |
| Retained earnings | (23,136,597) | (18,945,379) | (23,216,987) | (18,945,179) | ||
| Parent interest | 2,411,985 | 3,790,722 | 2,331,595 | 3,790,922 | ||
| Minority equity interest | - | - | - | - | ||
| TOTAL EQUITY | 2,411,985 | 3,790,722 | 2,331,595 | 3,790,922 |
The balance sheets are to be read in conjunction with the accompanying notes to the financial statements.
Statement of Changes in Equity FOR YEAR ENDED 30 JUNE 2007
Consolidated Group
| Share CapitalOrdinary | RetainedEarnings | OptionReserve | Total |
|---|---|---|---|
| 15,868,236 | (15,296,650) | - | 571,586 |
| - | (3,648,729) | - | (3,648,729) |
| 6,859,482 | - | - | 6,859,482 |
| (69,444) | - | - | (69,444) |
| - | - | 77,827 | 77,827 |
| 22,658,274 | (18,945,379) | 77,827 | 3,790,722 |
| 22,658,274 | (18,945,379) | 77,827 | 3,790,722 |
| - | (4,191,218) | - | (4,191,218) |
| 2,896,294 | - | - | 2,896,294 |
| (144,788) | - | - | (144,788) |
| - | - | 60,975 | 60,975 |
| 25,409,780 | (23,136,597) | 138,802 | 2,411,985 |
| 25,409,780 | (23,136,597) | 138,802 | 2,411,985 |
Parent Entity
| Share CapitalOrdinary | RetainedEarnings | OptionReserve | Total | |
|---|---|---|---|---|
| Balance at 1 July 2005 | 15,868,236 | (15,296,450) | - | 571,786 |
| Loss attributable to members of parent entity | - | (3,648,729) | - | (3,648,729) |
| Shares issued during the year | 6,859,482 | - | - | 6,859,482 |
| Transaction costs | (69,444) | - | - | (69,444) |
| Option reserve on recognition of bonus | ||||
| element of options | - | - | 77,827 | 77,827 |
| Sub-total | 22,658,274 | (18,945,179) | 77,827 | 3,790,922 |
| Balance at 30 June 2006 | 22,658,274 | (18,945,179) | 77,827 | 3,790,922 |
| Loss attributable to members of parent entity | - | (4,271,808) | - | (4,271,808) |
| Shares issued during the year | 2,896,294 | - | - | 2,896,294 |
| Transaction costs | (144,788) | - | - | (144,788) |
| Option reserve on recognition of bonus | ||||
| element of options | - | - | 60,975 | 60,975 |
| Sub-total | 25,409,780 | (23,216,987) | 138,802 | 2,331,595 |
| Balance at 30 June 2007 | 25,409,780 | (23,216,987) | 138,802 | 2,331,595 |
The statements of changes in equity are to be read in conjunction with the accompanying notes to the financial statements.
| 2007200620072006Note$$$$CASH FLOWS FROM OPERATING ACTIVITIESInterest received132,54930,345124,28030,345Payments to suppliers and employees(1,559,832)(1,419,153)(1,615,754)(929,532)Net cash provided by (used in) operating21(1,427,283)(1,388,808)(1,491,474)(899,187)activitiesCASH FLOWS FROM INVESTING ACTIVITIESLoans to subsidiaries--(2,773,570)(2,566,322)Payment for investment in subsidiary---(8,528)Purchase of property, plant and equipment(160,342)(14,239)(67,459)(14,239)Purchase of other assets(2,437,175)(2,082,011)--Net cash provided by (used in) investing(2,597,517)(2,096,250)(2,841,029)(2,589,089)activitiesCASH FLOWS FROM FINANCING ACTIVITIESProceeds from issue of shares2,751,5056,790,0382,751,5056,790,038Net cash provided by (used in) financing activities2,751,5056,790,0382,751,5056,790,038Net increase/(decrease) in cash held(1,273,295)3,304,980(1,580,998)3,301,762Cash at beginning of the financial year3,937,943589,5223,934,620589,417 | Consolidated Group | Parent Entity | |||
|---|---|---|---|---|---|
| Effects of exchange rate changes on cash(53,429)43,441(38,263)43,441holdings in foreign currencies | |||||
| Cash at end of the financial year82,611,2193,937,9432,315,3593,934,620 |
The cash flow statements are to be read in conjunction with the accompanying notes to the financial statements.
Note 1 Statement of Significant Accounting Policies
The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards, including Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.
The financial report covers the consolidated group of Gippsland Limited and controlled entities, and Gippsland Limited as an individual parent entity. Gippsland Limited is a listed public company, incorporated and domiciled in Australia.
This financial report of Gippsland Limited and controlled entities, and Gippsland Limited as an individual parent entity comply with all International Financial Reporting Standards (IFRS) in their entirety.
The following is a summary of the material accounting policies adopted by the consolidated group in the preparation of the financial report. The accounting policies have been consistently applied, unless otherwise stated.
Basis of Preparation
The accounting policies set out below have been consistently applied to all years presented.
Reporting Basis and Conventions
The financial report has been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected non-current assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied.
Accounting Policies
a. Principles of Consolidation
A controlled entity is any entity Gippsland Limited has the power to control the financial and operating policies of so as to obtain benefits from its activities.
All inter-company balances and transactions between entities in the consolidated group, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistencies with those policies applied by the parent entity.
Where controlled entities have entered or left the consolidated group during the year, their operating results have been included/excluded from the date control was obtained or until the date control ceased.
Minority equity interests in the equity and results of the entities that are controlled are shown as a separate item in the consolidated financial report.
b. Income Tax
The charge for current income tax expense is based on the profit for the year adjusted for any nonassessable or disallowed items. It is calculated using the tax rates that have been enacted or are substantially enacted by the balance sheet date.
Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the income statement except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.
Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised.
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 group will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.
c. Property, Plant and Equipment
Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and impairment losses.
Plant and Equipment
Plant and equipment are measured on the cost basis.
The carrying amount of plant and equipment is reviewed annually by 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 that will be received from the asset's employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts.
The cost of fixed assets constructed within the consolidated group includes the cost of materials, direct labour, borrowing costs and an appropriate proportion of fixed and variable overheads.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial year in which they are incurred.
Depreciation
The depreciable amount of all fixed assets including building and capitalised leased assets, but excluding freehold land, is depreciated on a straight-line basis over their useful lives to the consolidated group 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 used for each class of depreciable assets are:
| Class of Fixed Asset | Depreciation Rate |
|---|---|
| Plant and Equipment | 20 - 33% |
| Leasehold Improvements | 20 - 50% |
The asset's residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.
An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the income statement. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings.
d. Exploration and Development Expenditure
Exploration, evaluation and development expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves.
Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area is made.
A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. Refer to Note 25 for further details on changes in accounting policy.
e. 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.
f. Financial Instruments
Recognition
Financial instruments are initially measured at cost on trade date, which includes transaction costs, when the related contractual rights or obligations exist. Subsequent to initial recognition these instruments are measured as set out below.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are stated at amortised cost using the effective interest rate method.
Impairment
At each reporting date, the group assess whether there is objective evidence that a financial instrument has been impaired. Impairment losses are recognised in the income statement.
g. Impairment of Assets
At each reporting date, the group reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset's fair value less costs to sell and value in use, is compared to the asset's carrying value. Any excess of the asset's carrying value over its recoverable amount is expensed to the income statement.
Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
h. Interests in Joint Ventures
The consolidated group's share of the assets, liabilities, revenue and expenses of joint venture operations are included in the appropriate items of the consolidated financial statements. Details of the consolidated group's interests are shown at Note 10.
i. Foreign Currency Transactions and Balances
Functional and presentation currency
The functional currency of each of the group's entities is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity's functional and presentation currency.
Transaction and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in the income statement, except where deferred in equity as a qualifying cash flow or investment hedge.
Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity, otherwise the exchange difference is recognised in the income statement.
Group Companies
The financial results and position of foreign operations whose functional currency is different from the group's presentation currency are translated as follows:
- assets and liabilities are translated at year-end exchange rates prevailing at the reporting date;
- income and expenses are translated at average exchange rates for the period; and
- retained earnings are translated at the exchange rates prevailing at the date of the transaction.
Exchange differences arising on translation of foreign operations are transferred directly to the group's foreign currency translation reserve in the balance sheet. These differences are recognised in the income statement in the period in which the operation is disposed.
j. Employee Benefits
Provision is made for the company's liability for employee benefits arising from services rendered by employees to balance date. Employee benefits expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled, plus related on-costs. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits.
Equity-settled compensation
The group operates a share option arrangement. The bonus elements over the exercise price of the employee services rendered in exchange for the grant of options is recognised as an expense in the income statement. The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted.
k. Provisions
Provisions are recognised when the group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.
l. Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less and bank overdrafts.
m. Revenue
Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets.
All revenue is stated net of the amount of goods and services tax (GST).
n. Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Taxation Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the balance sheet are shown inclusive of GST.
Cash flows are included in the cash flow statement on a gross basis, except for the GST component of investing and financing activities which are disclosed as operating cash flows.
o. Comparative Figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.
Critical Accounting Estimates and Judgments
The directors evaluate estimates and judgements incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the group.
Key Estimates – Impairment
The group assesses impairment at each reporting date by evaluating conditions specific to the group that may lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined. Value-in-use calculations performed in assessing recoverable amounts incorporate a number of key estimates.
| Note | Consolidated Group | Parent Entity | |||
|---|---|---|---|---|---|
| 2007$ | 2006$ | 2007$ | 2006$ | ||
| Note 2 | Revenue | ||||
| Sales Revenue | |||||
| -interest received2a | 125,262 | 30,345 | 125,226 | 30,345 | |
| -other revenue | 10,168 | - | 1,935 | - | |
| Total Revenue | 135,430 | 30,345 | 127,161 | 30,345 | |
| a | Interest revenue from: | ||||
| -other persons | 125,262 | 30,345 | 125,226 | 30,345 | |
| Note 3 | Loss for the Year | ||||
| Expenses | |||||
| Impairment of non-currentinvestmentsForeign currency translation losses / | 2,236,564 | 2,082,011 | 2,768,260 | 2,571,632 | |
| (gains)Rental expense on operating leases | 53,429 | (43,441) | 38,262 | (43,441) | |
| -minimum lease payments | 63,449 | 32,966 | 55,425 | 32,966 | |
| Exploration expenditure | 287,516 | 15,407 | 34,061 | 15,407 | |
| Note 4 | Income Tax Expense | ||||
| The prima facie tax on loss beforeincome tax is reconciled to theincome tax as follows: | |||||
| Prima facie tax on loss before income | |||||
| tax at 30% (2006: 30%)-economic entity | (1,257,366) | (1,094,619) | (1,281,542) | (1,094,619) | |
| Add: | |||||
| Tax effect of: | |||||
| -provision for non recovery of loans | 832,071 | 146,886 | 832,071 | 146,886 | |
| -exploration expenditure incurredin relation to a foreign permanent | |||||
| establishment | 10,218 | 627,632 | 10,218 | 627,632 | |
| -non-deductible expenses | 73,918 | 62,008 | 73,918 | 62,008 | |
| Temporary differences not | |||||
| brought to account | 341,159 | 258,093 | 365,335 | 258,093 | |
| Income tax expense | - | - | - | - |
Note 5 Key Management Personnel Compensation
a Names and positions held of economic and parent entity key management personnel in office at any time during the financial year are:
| Key Management Person | Position |
|---|---|
| Mr RJ Telford | Chairman – Executive |
| Dr JM Chisholm | Director – Executive |
| Mr JSF Dunlop | Director – Non-executive |
| Mr JD Kenny | Director – Non-executive |
| Mr J Starink | Director – Executive |
| Mr PR Sims | Chief Financial Officer |
Key management personnel remuneration has been included in the Remuneration Report section of the Directors Report.
b Options and Rights Holdings
Number of Options held by Key Management Personnel
| Balance1.7.2006 | Granted asCompensation | OptionsExercised | Balance30.6.2007 | |
|---|---|---|---|---|
| Mr RJ Telford | 6,558,322 | - | - | 6,558,322 |
| Dr JM Chisholm | 2,260,000 | - | - | 2,260,000 |
| Mr JSF Dunlop | 2,250,000 | - | - | 2,250,000 |
| Mr JD Kenny | 2,250,000 | - | - | 2,250,000 |
| Mr J Starink | - | - | - | - |
| Mr PR Sims | - | 2,250,000 | - | 2,250,000 |
| Total | 13,318,322 | 2,250,000 | - | 15,568,322 |
c. Shareholdings
Number of Shares held by Key Management Personnel
| Balance1.7.2006 | Received asCompensation | OptionsExercised | Net ChangeOther* | Balance30.6.2007 | |
|---|---|---|---|---|---|
| Mr RJ Telford | 13,568,124 | - | - | - | 13,568,124 |
| Dr JM Chisholm | 50,000 | - | - | 100,000 | 150,000 |
| Mr JSF Dunlop | - | - | - | - | - |
| Mr JD Kenny | - | - | - | - | - |
| Mr J Starink | - | - | - | - | - |
| Mr PR Sims | - | - | - | - | - |
| Total | 13,618,124 | - | - | 100,000 | 13,718,124 |
* Net Change Other refers to shares purchased or sold during the financial year.
| Consolidated Group | Parent Entity | ||||
|---|---|---|---|---|---|
| 2007$ | 2006$ | 2007$ | 2006$ | ||
| Note 6 | Auditors' Remuneration | ||||
| Remuneration of the auditor of the parententity for: | |||||
| -auditing or reviewing the financial report | 29,670 | 14,500 | 29,670 | 14,500 | |
| -taxation services | 9,000 | - | 9,000 | - | |
| Note 7 | Earnings per Share | ||||
| a | Loss | (4,191,218) | (3,648,729) | ||
| Earnings used to calculate basic anddilutive EPS | (4,191,218) | (3,648,729) | |||
| b | Weighted average number of ordinaryshares outstanding during the year usedin calculating basic and dilutive EPS | 237,310,914 | 184,346,151 | ||
| Note 8 | Cash and Cash Equivalents | ||||
| Cash at bank and in hand | 338,362 | 3,937,943 | 42,502 | 3,934,620 | |
| Short-term bank deposits | 2,272,857 | - | 2,272,857 | - | |
| Cash at bank and on hand | 2,611,219 | 3,937,943 | 2,315,359 | 3,934,620 | |
| The effective interest rate on short-termbank deposits was 4.97% (2006: 4.7%).These deposits have an average maturity of30 days. | |||||
| Reconciliation of CashCash at the end of the financial year as shown in the cashflow statement is reconciled to items in the balance sheetas follows: | |||||
| Cash and cash equivalents | 2,611,219 | 3,937,943 | 2,315,359 | 3,934,620 | |
| Note 9 | Trade and Other Receivables | ||||
| CURRENT | |||||
| Other receivables | 119,925 | 49,212 | 118,374 | 49,212 | |
| NON-CURRENT | |||||
| Amounts receivable from: | |||||
| Wholly-owned entities (a) | - | - | 10,322,679 | 7,599,109 | |
| Provision for impairment of receivables- wholly-owned subsidiaries | - | - | (10,322,679) | (7,599,109) | |
| - | - | - | - |
a The loans to controlled entities are advanced interest free, are unsecured and will be repaid when the respective subsidiary is generating sufficient funds and has the financial capacity to meet the loan commitment.
Note 10 Joint Venture
At 30 June 2007, the Company has interests in the following joint ventures whose principal activities are the exploration for gold, precious metals and base metals.
| Name of Project | % Interests | Other Parties | |
|---|---|---|---|
| 2007 | 2006 | ||
| Zeehan Tin Deposit – Tasmania | 40% | 40% | Western Metals Ltd 60% |
| Seiga – Wadi Allaqi, Egypt | 50% | 50% | Egyptian Mineral Resources Authority – 50% |
| Um Shashoba – Wadi Allaqi, Egypt | 50% | 50% | Egyptian Mineral Resources Authority – 50% |
| Haimur – Wadi Allaqi, Egypt | 50% | 50% | Egyptian Mineral Resources Authority – 50% |
| Nile Valley Block E – Wadi Allaqi, Egypt | 50% | 50% | Egyptian Mineral Resources Authority – 50% |
| Nile Valley Block A – Wadi Allaqi, Egypt | 50% | 50% | Egyptian Mineral Resources Authority – 50% |
| Um Garayat – Wadi Allaqi, Egypt | 50% | 50% | Egyptian Mineral Resources Authority – 50% |
| Koleit – Wadi Allaqi, Egypt | 50% | 50% | Egyptian Mineral Resources Authority – 50% |
| Um Tiur – Wadi Allaqi, Egypt | 50% | 50% | Egyptian Mineral Resources Authority – 50% |
| Abu Swayel – Wadi Allaqi, Egypt | 50% | 50% | Egyptian Mineral Resources Authority – 50% |
The Joint Ventures are of the type where initially one party contributes tenements with the other party earning a specified percentage by funding exploration activities. The Joint Venture does not hold any assets and accordingly the Company's share of exploration expenditure is accounted for in accordance with the policy set out in Note 1(h).
Note 11 Controlled Entities
| Controlled Entities Consolidated | Country ofIncorporation | Percentage Owned (%) | |
|---|---|---|---|
| 2007 | 2006 | ||
| Parent Entity: | |||
| Gippsland Ltd | Aust | ||
| Subsidiaries of Gippsland Ltd: | |||
| Abutan Pty Ltd | Aust | 100 | 100 |
| Tantalum International Pty Ltd | Aust | 100 | 100 |
| Here2Win.com Pty Ltd | Aust | 100 | 100 |
| Nubian Resources plc | UK | 100 | 100 |
| Tantalum Egypt LLC | Egypt | 50 | 50 |
Controlled Entities with Ownership Interest of 50% or Less
The parent entity holds 50% of the ordinary shares of Tantalum Egypt LLC. Under the Articles of Association, Tantalum International Pty Ltd has the sole right to nominate the Chairman of the Board of Directors and the Chief Executive Officer and has the casting vote at Board meetings.
Note 12 Property, Plant and Equipment
| Consolidated Group | Parent Entity | |||
|---|---|---|---|---|
| 2007$ | 2006$ | 2007$ | 2006$ | |
| PLANT AND EQUIPMENT | ||||
| Plant and equipment: | ||||
| At cost | 225,696 | 195,502 | 143,379 | 195,502 |
| Accumulated depreciation | (101,843) | (159,817) | (71,795) | (159,817) |
| Total Plant and equipment | 123,853 | 35,685 | 71,584 | 35,685 |
| Leasehold improvements: | ||||
| At cost | 33,385 | - | 18,251 | - |
| Accumulated amortisation | (2,330) | - | (1,699) | - |
| Total Leasehold improvements | 31,055 | - | 16,552 | - |
| Total Property, Plant and Equipment | 154,908 | 35,685 | 88,136 | 35,685 |
a Movements in Carrying Amounts
Movement in the carrying amounts of each class of property, plant and equipment between the beginning and the end of the current financial year
| Consolidated Group | Plant and Equipment | LeaseholdImprovements | Total |
|---|---|---|---|
| Balance at 1 July 2005 | 41,942 | - | 41,942 |
| Additions | 14,239 | - | 14,239 |
| Depreciation Expense | (20,496) | - | (20,496) |
| Balance at 30 June 2006 | 35,685 | - | 35,685 |
| Additions | 126,957 | 33,385 | 160,342 |
| Depreciation Expense | (38,789) | (2,330) | (41,119) |
| Balance at 30 June 2007 | 123,853 | 31,055 | 154,908 |
| Parent Entity | Plant and Equipment | LeaseholdImprovements | Total |
|---|---|---|---|
| Balance at 1 July 2005 | 41,942 | - | 41,942 |
| Additions | 14,239 | - | 14,239 |
| Depreciation Expense | (20,496) | - | (20,496) |
| Balance at 30 June 2006 | 35,685 | - | 35,685 |
| Additions | 75,456 | 18,251 | 93,707 |
| Transfer to Subsidiary | (17,720) | - | (17,720) |
| Depreciation Expense | (21,837) | (1,699) | (23,536) |
| Balance at 30 June 2007 | 71,584 | 16,552 | 88,136 |
Note 13 Other Assets
| Consolidated Group | Parent Entity | |||
|---|---|---|---|---|
| 2007$ | 2006$ | 2007$ | 2006$ | |
| CURRENT | ||||
| Prepayments | 19,530 | 914 | 19,530 | 915 |
| Accrued revenue | 2,881 | - | 2,881 | - |
| 22,411 | 914 | 22,411 | 915 | |
| NON CURRENT | ||||
| Investment in Subsidiaries | - | - | 305 | 3,522 |
| Exploration expenditure capitalised | ||||
| -exploration and evaluation phases | 2,809,451 | 1,315,557 | - | - |
| -provision for impairment | (2,809,451) | (1,315,557) | - | - |
| - | - | - | - | |
| Project development expenditure capitalised | ||||
| -development phase | 3,784,660 | 3,041,990 | - | - |
| -provision for impairment | (3,784,660) | (3,041,990) | - | - |
| - | - | - | - |
a Movements in Carrying Amounts
Movement in the carrying amounts of exploration expenditure and project development expenditure between the beginning and the end of the current financial year
| Consolidated Group | Exploration Expenditure | Project Development Expenditure |
|---|---|---|
| Expenditure | ||
| Balance at 1 July 2006 | 1,315,557 | 3,041,990 |
| Additions | 1,493,894 | 742,670 |
| Balance at 30 June 2007 | 2,809,451 | 3,784,660 |
| Impairment | ||
| Balance at 1 July 2006 | (1,315,557) | (3,041,990) |
| Impairment | (1,493,894) | (742,670) |
| Balance at 30 June 2007 | (2,809,451) | (3,784,660) |
Note 14 Trade and Other Payables
| Consolidated Group | Parent Entity | ||||
|---|---|---|---|---|---|
| 2007$ | 2006$ | 2007$ | 2006$ | ||
| CURRENT | |||||
| Sundry payables and accrued expensesAmounts payable to: | 396,193 | 190,529 | 139,530 | 190,529 | |
| -key management personnel related entities | 61,984 | 17,580 | 61,984 | 17,580 | |
| 458,177 | 208,109 | 201,514 | 208,109 |
Note 15 Tax
Assets
Deferred tax assets not brought to account, the benefits of which will only be realised if the conditions of deductibility set out in Note 1b occur
Prior year tax losses brought forward 1,661,650 1,393,412 1,661,650 1,393,412 Additional tax losses 391,762 268,238 391,762 268,238 Tax losses carried forward 2,053,412 1,661,650 2,053,412 1,661,650
The company continues to comply with the condition for deductibility imposed by tax legislation; and no changes to tax legislation adversely affected the Company in realising the benefit from the deductions for the losses.
The economic entity has not entered into a tax consolidated group.
Note 16 Provisions
| Long-termEmployeeBenefits | Total | ||
|---|---|---|---|
| Consolidated Group | |||
| Opening balance at 1 July 2006 | 24,923 | 24,923 | |
| Additional provisions | 42,724 | 42,724 | |
| Amounts used | (29,346) | (29,346) | |
| Balance at 30 June 2007 | 38,301 | 38,301 | |
| Parent Entity | |||
| Opening balance at 1 July 2006 | 24,923 | 24,923 | |
| Additional provisions | 15,899 | 15,899 | |
| Amounts used | (29,346) | (29,346) | |
| Balance at 30 June 2007 | 11,476 | 11,476 | |
| Consolidated Group | Parent Entity |
| 2007$ | 2006$ | 2007$ | 2006$ | |
|---|---|---|---|---|
| Analysis of Total Provisions | ||||
| Current | 38,301 | 9,923 | 11,476 | 9,923 |
| Non-current | - | 15,000 | - | 15,000 |
| 38,301 | 24,923 | 11,476 | 24,923 |
Provision for Long-term Employee Benefits
A provision has been recognised for employee entitlements relating to long service leave. In calculating the present value of future cash flows in respect of long service leave, the probability of long service leave being taken is based on historical data. The measurement and recognition criteria relating to employee benefits has been included in Note 1 to this report.
Note 17 Issued Capital
| Consolidated GroupParent Entity | |||||
|---|---|---|---|---|---|
| 2007$ | 2006$ | 2007$ | 2006$ | ||
| 259,524,592 (2006: 232,851,926)ordinary shares | 25,409,780 | 22,658,274 | 25,409,780 | 22,658,274 | |
| The company has no maximumauthorised share capital. | |||||
| a | Ordinary SharesAt the beginning of reporting periodShares issued during the year•On 10 October 2005 the Company | 22,658,274 | 15,868,236 | 22,658,274 | 15,868,236 |
| issued 15,000,000 ordinary sharesat 9.3 cents each•On 17 January and 21 April 2006the Company issued 1,000 &32,000 ordinary shares respectivelyfollowing an option conversion at 9 | - | 1,388,889 | - | 1,388,889 | |
| cents each•On 17 March 2006 the Companyissued 24,000,000 ordinary shares | - | 2,970 | - | 2,970 | |
| at 11.5 cents each•On 27 March 2006 the Companyissued 6,000,000 ordinary shares | - | 2,767,623 | - | 2,767,623 | |
| as settlement of a dispute for nil•On 31 May 2006 the Companyissued 25,000,000 ordinary shares | - | - | - | - | |
| at 10.8 cents each•On 7 February 2007 the companyissued 6,000 ordinary sharesfollowing an option conversion at 9 | - | 2,700,000 | - | 2,700,000 | |
| cents each•On 1 May 2007 the Companyissued 26,666,666 ordinary shares | 540 | - | 540 | - | |
| at 10.9 cents each•Less: Issue costs associated with | 2,895,754 | - | 2,895,754 | - | |
| capital raisings | (144,788) | (69,444) | (144,788) | (69,444) | |
| At reporting date | 25,409,780 | 22,658,274 | 25,409,780 | 22,658,274 |
| Consolidated Group | |
|---|---|
| 2007 | 2006 |
| $ | $ |
| Number of | Number of |
| Options | Options |
83,232,393 80,988,393
b Options
The following options over ordinary shares are on issue:
| Options exercisable at 9 cents on or before 31/12/2007 (listed) | 43,732,393 | 43,738,393 |
|---|---|---|
| Options exercisable at 4 UK pence on or before 31/12/2007 (unlisted)) | 10,000,000 | 10,000,000 |
| Options exercisable at 15 cents on or before 31/12/2007 (unlisted)) | 4,500,000 | 2,250,000 |
| Options exercisable at 13.5 cents on or before 16/05/2012 (unlisted)) | 25,000,000 | 25,000,000 |
Note 18 Reserves
Option Reserve
The option reserve records items recognised as expenses on valuation of employee share options.
| Consolidated Group | Parent Entity | |||||
|---|---|---|---|---|---|---|
| 2007$ | 2006$ | 2007$ | 2006$ | |||
| Note 19 | Capital and Leasing Commitments | |||||
| a | Operating Lease Commitments | |||||
| Non-cancellable operating leasescontracted but not capitalised in thefinancial statements | ||||||
| Payable – minimum lease payments | ||||||
| -not later than 12 months | 114,612 | 73,662 | 96,000 | 73,662 | ||
| -between 12 months and 5 years | 328,282 | 306,600 | 314,323 | 306,600 | ||
| -greater than 5 years | - | 6,388 | - | 6,388 | ||
| 442,894 | 386,650 | 410,323 | 386,650 |
Perth Office Lease
The property lease is a non-cancellable lease with a five year term, with rent payable monthly in advance. Contingent rental provisions within the lease agreement require the minimum lease payments shall be increased by the lower of CPI or 5% per annum. An option exists to renew the lease at the end of the five-year term for an additional term of five years.
Cairo Office Lease
The property lease is a non-cancellable lease with a two year term, with rent payable monthly in advance.
b Capital Expenditure Commitments
There were no capital commitments at reporting date
Note 20 Segment Reporting
Segment Reporting – Geographical Segments
| Segment Revenues fromExternal Customers | Carrying Amount ofSegment Assets | ||||
|---|---|---|---|---|---|
| 2007$ | 2006$ | 2007$ | 2006$ | ||
| Geographical Location: | |||||
| Australia | 127,161 | 30,345 | 2,544,282 | 4,020,531 | |
| Egypt | 8,269 | - | 364,181 | 3,223 | |
| 135,430 | 30,345 | 2,908,463 | 4,023,754 |
Business Segments
The economic entity only operates in the mining and exploration segment.
| Consolidated Group | Parent Entity | ||
|---|---|---|---|
| 2007 | 2006 | 2007 | 2006 |
| $ | $ | $ | $ |
Note 21 Cash Flow Information
a Reconciliation of cash flow from operations with loss after income tax
| Loss after income tax | (4,191,218) | (3,648,729) | (4,271,808) | (3,648,729) | |||
|---|---|---|---|---|---|---|---|
| Non cash flows in loss | |||||||
| DepreciationProvision for impairment of | 41,119 | 20,496 | 23,536 | 20,496 | |||
| non-current investments | 2,236,564 | 2,082,011 | 2,768,260 | 2,571,632 | |||
| Foreign exchange loss (gain) | 53,429 | (43,441) | 38,262 | (43,441) | |||
| Issue of options – non cash | 60,975 | 77,827 | 60,975 | 77,827 | |||
| Changes in assets and liabilities:-(increase) decrease in sundrydebtors | (73,594) | (16,134) | (72,042) | (16,134) | |||
| -(increase) decrease in | |||||||
| prepayments | (18,614) | 14,355 | (18,615) | 14,355 | |||
| -increase (decrease) in payables | 450,678 | 108,884 | (6,595) | 108,884 | |||
| -increase (decrease) in provisions | 13,378 | 15,923 | (13,447) | 15,923 | |||
| Cash flow from operations | (1,427,283) | (1,388,808) | (1,491,474) | (899,187) |
There were no material non cash items during the financial year.
Note 22 Subsequent 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.
Note 23 Related Party Transactions
Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.
Transactions with related parties:
| Consolidated Group | Parent Entity | ||||
|---|---|---|---|---|---|
| 2007$ | 2006$ | 2007$ | 2006$ | ||
| a) | A company controlled by Mr RJ Telford, EcoInternational Pty Ltd, received management fees. | 207,069 | 174,960 | 207,069 | 174,960 |
| b) | A company controlled by Dr JM Chisholm, ManduPty Ltd, received geological consulting fees. | 211,054 | 160,417 | 211,054 | 160,417 |
| c) | A company controlled by Mr JSF Dunlop,John S Dunlop & Associates Pty Ltd, received | ||||
| directors and mining consulting fees. | 45,640 | 78,910 | 45,640 | 78,910 | |
| d) | A company controlled by Mr JD Kenny, | ||||
| Ventureworks Pty Ltd, received director's fees. | 38,333 | 36,000 | 38,333 | 36,000 | |
| e) | The parent entity, Gippsland Limited, has madeloans to its controlled entities. These loans are | ||||
| interest free, unsecured and at call. | - | - | 7,054,347 | 3,227,981 |
Note 24 Financial Instruments
a Financial Risk Management
The group's financial instruments consist mainly of deposits with banks, short-term investments, accounts receivable and payable, loans to and from subsidiaries and leases.
The main purpose of non-derivative financial instruments is to raise finance for group operations. The group does not speculate in the trading of derivative instruments.
Financial Risks
The main risks the group is exposed to through its financial instruments are foreign currency risk, liquidity risk and credit risk.
Foreign currency risk
The group is exposed to fluctuations in foreign currencies arising from the purchase of goods and services in currencies other than the group's measurement currency.
Liquidity risk
The group manages liquidity risk by monitoring forecast cash flows and ensuring that adequate funds are maintained.
Credit risk
The consolidated group does not have any material credit risk exposure to any single receivable or group of receivables under financial instruments entered into by the consolidated group.
b Financial Instruments
Interest Rate Risk
The consolidated group exposure to interest rate risk, which is the risk that a financial instrument's value will fluctuate as a result of changes in market interest rates and the effective weighted average interest rates on classes of financial assets is as follows:
| Weighted AverageEffective Interest Rate | Floating Interest Rate | Non Interest Bearing | Total | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2007 | 2006 | 2007 | 2006 | 2007 | 2006 | 2007 | 2006 | |||
| Financial assets | ||||||||||
| Cash assets | 4.97% | 4.70% | 2,611,219 3,937,943 | - | - | 2,611,219 3,937,943 | ||||
| Receivables | - | - | 119,925 | 49,212 | 119,925 | 49,212 | ||||
| Total financialassets | 2,611,219 3,937,943 | 119,925 | 49,212 | 2,731,144 3,987,155 | ||||||
| Financialliabilities: | ||||||||||
| Payables | - | - | 458,177 | 208,109 | 458,177 | 208,109 | ||||
| Total financialliabilities | - | - | 458,177 | 208,109 | 458,177 | 208,109 |
Note 25 Changes in Accounting Policy
a. The consolidated group changed its accounting policy for the financial year ending 30 June 2007 relating to the capitalisation of exploration and project development expenditure. Exploration and project development expenditure was previously expensed by the parent entity in the year it was incurred. The group has now elected to capitalise exploration and project development expenditure in the appropriate subsidiary company. This change has been implemented as the directors believe it will provide more relevant information and ensure that the free carried share of the joint venture partner in the exploration and development of the projects is recovered from the cash flow of the project when it reaches the production stage.
The aggregate effect of the change in accounting policy on the annual financial statements for the year ended 30 June 2007 is as follows:
| Previously | Previously | |||||
|---|---|---|---|---|---|---|
| Stated | Adjustment | Restated | Stated | Adjustment | Restated | |
| 2007 | 2007 | 2007 | 2006 | 2006 | 2006 | |
| Consolidated Group | ||||||
| Income Statement | ||||||
| Exploration | (1,781,410) | 1,493,894 | (287,516) | (1,294,545) | 1,279,138 | (15,407) |
| Project Development | (778,196) | 742,670 | (35,526) | (797,563) | 797,563 | - |
| Impairment | - | (2,236,564) | (2,236,564) | (5,310) | (2,076,701) | (2,082,011) |
| Loss before income taxBasic and diluted loss | (4,191,218) | - | (4,191,218) | (3,648,729) | - | (3,648,729) |
| per share | (1.77) | - | (1.77) | (1.98) | - | (1.98) |
| Balance Sheet | ||||||
| Exploration | 36,419 | 2,773,032 | 2,809,451 | 36,419 | 1,279,138 | 1,315,557 |
| Project Development | - | 3,784,660 | 3,784,660 | - | 3,041,990 | 3,041,990 |
| Provision for Impairment | (36,419) | (6,557,692) | (6,594,111) | (36,419) | (4,321,128) | (4,357,547) |
| Parent Entity | ||||||
| Income Statement | ||||||
| Exploration | (1,527,955) | 1,493,894 | (34,061) | (1,294,545) | 1,279,138 | (15,407) |
| Project Development | (742,670) | 742,670 | - | (797,563) | 797,563 | - |
| Impairment | (531,696) | (2,236,564) | (2,768,260) | (494,931) | (2,076,701) | (2,571,632) |
| Loss before income tax | (4,271,808) | - | (4,271,808) | (3,648,729) | - | (3,648,729) |
| Balance Sheet | ||||||
| Intercompany Loans | 3,764,987 | 6,557,692 | 10,322,679 | 3,277,981 | 4,321,128 | 7,599,109 |
| Provision for Impairment | (3,764,987) | (6,557,692) | (10,322,679) | (3,277,981) | (4,321,128) | (7,599,109) |
Note 25 Changes in Accounting Policy (continued)
b. The following Australian Accounting Standards have been issued or amended and are applicable to the parent and consolidated group but are not yet effective. They have not been adopted in preparation of the financial statements at reporting date.
| AASBAmendment | Standards Affected | Outline of Amendment | ApplicationDate ofStandard | ApplicationDate forGroup | |
|---|---|---|---|---|---|
| AASB 2005-10Amendmentsto AustralianAccountingStandardsAASB 7 | AASB 1AASB 4AASB 101AASB 114AASB 117AASB 133AASB 1023AASB 1038AASB 139 | First time adoption ofAIFRSInsurance ContractsPresentation of FinancialStatementsSegment ReportingLeasesEarnings per ShareGeneral InsuranceContractsLife Insurance ContractsFinancial Instruments:Recognition andMeasurement | The disclosure requirementsof AASB 132: FinancialInstruments: Disclosureand Presentation havebeen replaced due to theissuing of AASB 7: FinancialInstruments: Disclosuresin August 2005. Theseamendments will involvechanges to financialinstrument disclosures withinthe financial report. However,there will be no direct impacton amounts included in thefinancial report as it is adisclosure standard. | 1 Jan 2007 | 1 July 2007 |
| FinancialInstruments:Disclosures | AASB 132 | Financial Instruments:Disclosure andPresentation | As above. | 1 Jan 2007 | 1 July 2007 |
Note 26 Company Details
The registered office of the company is:
Gippsland Limited
207 Stirling Highway
Claremont WA 6010
DIRECTORS' DECLARATION
The directors of Gippsland Limited declare that:
-
- the financial statements and notes are in accordance with the Corporations Act 2001 and:
- (a) comply with Accounting Standards and Corporations Regulations 2001; and
- (b) give a true and fair view of the financial position as at 30 June 2007 and of the performance for the year ended on that date of the Company and economic entity;
-
- the Chief Executive Officer and Chief Financial Officer have declared that:
- (a) the financial records of the company for the financial year have been properly maintained in accordance with section 286 of the Corporation Act 2001; and
- (b) the financial statements and notes for the financial year comply with Accounting Standards; and
- (c) the financial statements and notes for the financial year give a true and fair view.
-
- 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 dated this 27th day of September 2007.
R J TELFORD, Director
We have audited the accompanying financial report of Gippsland Limited (the company) and Gippsland Limited and Controlled Entities (the consolidated entity), which comprises the balance sheet as at 30 June 2007, and the income statement, statement of changes in equity and cash flow statement for the year ended on that date, a summary of significant accounting policies and other explanatory notes and the directors' declaration of the consolidated entity comprising the company and the entities it controlled at the year's end or from time to time during the financial year.
As permitted by the Corporations Regulations 2001, the company has disclosed information about the remuneration of directors and executives (remuneration disclosures), required by Accounting Standard AASB 124: Related Party Disclosures, under the heading 'Remuneration Report' in pages 27 to 29 of the directors' report and not in the financial report.
Directors' Responsibility for the Financial Report
The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In Note1, the directors also state, in accordance with Accounting Standard AASB 101: Presentation of Financial Statements, that compliance with the Australian equivalents to International Financial Reporting Standards (IFRS) ensures that the financial report, comprising the financial statements and notes, complies with IFRS.
The directors also are responsible for preparation and presentation of the remuneration disclosures contained in the directors' report in accordance with the Corporations Regulations 2001.
Auditor's Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement and that the remuneration disclosures in the directors' report comply with Accounting Standard AASB 124.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, provided to the directors of Gippsland Limited on 26 September 2007 would be in the same terms if provided to the directors as at the date of this auditor's report.
Auditor's Opinion
In our opinion, the financial report of Gippsland Limited is in accordance with the Corporations Act 2001 including:
- (a) (i) giving a true and fair view of the company's and consolidated entity's financial position as at 30 June 2007 and of their performance for the year ended on that date; and
- (ii) complying with Australian Accounting Standards (including Australian Accounting Interpretations) and the Corporations Regulations 2001.
- (b) the remuneration disclosures that are contained in pages 27 to 29 of the directors' report comply with Accounting Standard AASB 124.
- (c) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.
WHK HORWATH PERTH AUDIT PARTNERSHIP
CYRUS PATELL Principal Perth, WA
Dated this 27th day of September 2007
Pursuant to the Listing Requirements of the Australian Stock Exchange Limited, the shareholder information set out below was applicable as at 21 September 2007.
A. Distribution of Equity Securities
Analysis of numbers of shareholders and option holders by size of holding:
| Number of Holders | ||||
|---|---|---|---|---|
| Spread of Holdings | OrdinaryShares | Listed Options | ||
| 1 - 1,000 | 59 | 53 | ||
| 1,001 – 5,000 | 159 | 43 | ||
| 5,001 – 10,000 | 217 | 20 | ||
| 10,001 – 100,000 | 630 | 81 | ||
| 100,001 and over | 228 | 67 | ||
| TOTAL | 1,293 | 264 | ||
| The total number of securities on issue | 259,524,592 | 43,732,393 | ||
| The number of holders holding less than a marketableparcel of securities | 224 |
B. Twenty Largest Shareholders
| Name | Number ofShares | % |
|---|---|---|
| International Finance Corporation | 25,000,000 | 9.63% |
| Euroclear Nominees Limited | 19,328,333 | 7.45% |
| Taveroam Pty Ltd | 15,500,000 | 5.97% |
| Smith & Williamson Nominees Limited | 12,450,000 | 4.80% |
| ANZ Nominees Limited | 10,935,138 | 4.21% |
| Situate Pty Ltd | 10,200,000 | 3.93% |
| King Town Holdings Pty Ltd | 9,525,000 | 3.67% |
| Eco International Pty Ltd | 6,997,235 | 2.70% |
| J M Finn Nominees Limited | 5,579,000 | 2.15% |
| Sunvest Corporation Limited | 5,166,665 | 1.99% |
| Starvest PLC | 4,500,000 | 1.73% |
| Barclayshare Nominees Limited | 4,107,490 | 1.58% |
| Teawood Nominees Limited | 3,750,000 | 1.44% |
| L R Nominees Limited | 3,415,016 | 1.32% |
| Mr Robert John Telford & Robin K Telford | 3,336,429 | 1.29% |
| RJ & RK Telford | 3,234,460 | 1.25% |
| Alsanto Nominees Pty Ltd | 3,100,000 | 1.19% |
| Pershing Keen Nominees Limited | 3,021,332 | 1.16% |
| HSBC Custody Nominees | 2,637,600 | 1.02% |
| Giltspur Nominees Limited | 2,531,691 | 0.98% |
| 154,315,389 | 59.46% |
C. Twenty Largest Listed Option Holders
| Name | Number ofOptions | % |
|---|---|---|
| Eco International Pty Ltd | 6,259,750 | 14.31% |
| King Town Holdings Pty Ltd | 3,350,000 | 7.66% |
| Situate Pty Ltd | 3,070,000 | 7.02% |
| Mandu Superannuation Fund | 2,260,000 | 5.17% |
| Ventureworks JDK Pty Ltd | 2,250,000 | 5.14% |
| David James Gray | 2,050,000 | 4.69% |
| Alsanto Nominees Pty Ltd | 2,000,000 | 4.57% |
| Averon Holdings Limited | 1,000,000 | 2.29% |
| Edgewater Estates Limited | 1,000,000 | 2.29% |
| Windowland Pty Ltd | 1,000,000 | 2.29% |
| Anthony John Vetter | 1,000,000 | 2.29% |
| SH & PA Hellsing (Hellsing Super Fund Account) | 880,000 | 2.01% |
| Broko Investments Pty Ltd | 645,000 | 1.47% |
| David Christopher Kemp | 601,683 | 1.38% |
| John Langley Webb | 571,140 | 1.31% |
| Jacqou Investments Pty Ltd | 509,412 | 1.16% |
| Cumbak Pty Ltd | 500,000 | 1.14% |
| Peter John Baker | 488,000 | 1.12% |
| David Christopher Kemp | 452,634 | 1.04% |
| Robert Anthony Healy & Helen Healy | 430,361 | 0.98% |
D. Unlisted Option Holders
| Service Service | ||||
|---|---|---|---|---|
| ------------------------ | -- | -- | -- | -- |
International Finance Corporation 25,000,000 63% Credit Suisse First Boston Client Nominees Ltd 10,000,000 25% JSF Dunlop 2,250,000 6% PR Sims 2,250,000 6%
E. Substantial Shareholders
Situate Pty Ltd and Taveroam Pty Ltd 25,700,000 9.90% International Finance Corporation 25,000,000 9.63% Eco International Pty Ltd and RJ & RK Telford 13,568,124 5.23%
Name Number of Options % 39,500,000 100%
30,317,980 69.33%
| Number ofOrdinarySharesin whichinterests held | % |
|---|---|
OFFICE ADDRESS 207 Stirling Highway, Claremont WA 6010, Australia POSTAL ADDRESS PO Box 325, Nedlands WA 6909, Australia TELEPHONE +61 8 9340 6000 | FACSIMILE +61 8 9340 6060 | EMAIL [email protected]