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STREAMPLAY STUDIO LIMITED Annual Report 2011
65841_rns_2011-10-26_675ba969-dcdc-4237-aa01-38b1d94c9968.pdf
Annual Report
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2011 Annual Report ABN 31 004 766 376
CONTENTS
| Corporate Directory | 2 |
|---|---|
| Chairman's Report | 3 |
| Review of Operations | 6 |
| Abu Dabbab – Egypt | 8 |
| Nuweibi – Egypt | 11 |
| Wadi Allaqi – Egypt | 11 |
| Adobha – Eritrea | 11 |
| Heemskirk Tin Project – Australia | 15 |
| Financial Statements | 18 |
| Directors' Report | 19 |
| Auditor's Independence Declaration | 29 |
| Corporate Governance Statement | 30 |
| Statement of Comprehensive Income | 37 |
| Statement of Financial Position | 38 |
| Statement of Cash Flows | 39 |
| Statement of Changes in Equity | 40 |
| Notes to the Financial Statements | 41 |
| Directors' Declaration | 78 |
| Independent Auditor's Report | 79 |
| ASX Additional Information | 81 |
ANNUAL REPORT 2011
CORPORATE DIRECTORY
| DIRECTORS | Ian Jeffrey Gandel – Non Executive ChairmanJon Starink – Executive DirectorJohn Stuart Ferguson Dunlop – Executive DirectorJohn Damian Kenny – NonͲExecutive Director | |||
|---|---|---|---|---|
| COMPANY SECRETARY | Rowan St John Caren | |||
| REGISTERED OFFICE | Suite 4, 207 Stirling HighwayClaremont WA 6010Australia | |||
| POSTAL ADDRESS | PO Box 352Nedlands WA 6909Australia | |||
| TELEPHONE | +61 8 9340 6000 | |||
| FACSIMILE | +61 8 9340 6060 | |||
| [email protected] | ||||
| WEBSITE | www.gippslandltd.com | |||
| AUDITORS | DeloitteLevel 14, Woodside Plaza240 St. George's TerracePerth WA 6000Australia | |||
| SOLICITORS | Gilbert + Tobin1202 Hay StreetWest PerthWA6005Australia | Trowers & Hamlins3rd Floor, 1 El Gabalaya StreetZamalek, CairoArab Republic of Egypt | ||
| Cobbetts58 Mosley StreetManchesterM23HZUnited Kingdom | ||||
| SHARE REGISTRY | Security Transfer Registrars Pty LtdSuite 1, 770 Canning HwyApplecross WA 6153Australia | PO BOX 535Applecross WA 6953Australia | ||
| WEBSITEPHONE NUMBER | www.securitytransfer.com.au+61 8 9315 2333 | |||
| 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 EsplanadePerthWA6000Australia | |||
| ASX CODE | GIP | |||
| FRANKFURT STOCK EXCHANGE(DEUTSCHE BÖRSE) | The Company's securities are quoted on the Frankfurt Stock ExchangeBörsenplatz 460313 Frankfurt / MainGermany | |||
| FSE CODE | GIX |
CHAIRMAN'S REPORT
An encouraging increase in the price of tantalum and tin over the past year was partially eroded due to the global economy's impact on commodity prices over the last few months.Although the recent volatility has resulted in a decrease in the tin price of about 30% from its highs during April 2011, at US$23,000/tonne, it is still significantly stronger than it was in mid 2009.The tantalum spot price has remained relatively strong at around US$130/lb which is also significantly stronger than the US$38/lb on offer in late 2009.With prices of the key minerals to which Gippsland is exposed at these levels, the Company is extremely well placed to benefit in the short to medium term.
Egypt
Based on an evaluation of alternative production profiles, the Company has proceeded with a change of scope for the 44.5 million tonne Abu Dabbab TinͲTantalumͲFeldspar Project in Egypt from 2 million tonnes per annum of RunͲofͲMine ore to 3 million tonnes per annum of RunͲofͲMine ore.Abu Dabbab, together with the Company's nearby Nuweibi tantalum deposit, has a combined resource base of 142.5 million tonnes.During the year, there was a 10% increase in the Abu Dabbab Ore Reserve to 33.18 million tonnes and encouraging improvement in the Abu Dabbab project economics.
Also during the year, Gippsland's corporate advisors, Noah's Rule, calculated an ungeared NPV of Gippsland's share in the project of $264m and an IRR of 28.4%.
Work on our Abu Dabbab TinͲTantalumͲFeldspar Project has continued including securing the relevant regulatory approvals in relation to its sea water supply, completion of a bathymetric survey of the seabed, and construction of a security wall and customs office at the Abu Dabbab Free Zone site in compliance with the General Authority For Investment requirements.
The project debt financing is a milestone that is taking considerably more time to finalise than anticipated.The political upheaval in Egypt and the ongoing turmoil in global financial markets has increased the level of difficulty in obtaining acceptable financing terms, however, we believe that the existing OffͲtake Agreement with the German tantalum major HC Starck GmbH together with projected tin production from the Abu Dabbab TinͲ TantalumͲFeldspar Project and hopefully a more stable political situation in Egypt, will assist us to negotiate a finance package which will contribute toward the longͲterm success of the project.
The ten year OffͲtake Agreement between the Company's 50% owned subsidiary, Tantalum Egypt JSC and HC Starck for the supply of six million pounds of tantalum pentoxide from the Abu Dabbab project remains onͲfoot, however, some of its terms and pricing escalation mechanism require clarification between the parties. Negotiations in relation to these items are ongoing.
The Company commenced trial mining operations at Abu Dabbab in relation to the alluvial tin deposits during the first half of 2011. This trial mining has lead to the approval of plans to commence mining operations for the processing of high grade alluvial material.These mining operations, which are expected to commence in March 2012, are forecast to generate a net cash inflow to Gippsland of approximately US$3.5 million over the 17 month project life.
Once again, the Company acknowledges the high level of support it enjoys from its Egyptian partners. In particular, I wish to acknowledge and thank His Excellency Eng Abdallah Ghorab, Minister of the Egyptian Ministry of Petroleum and Mineral Resources, for his substantial support and assistance during the past year.Geologist Mr Fikri Yousef, the Chairman of the Egyptian Mineral Resources Authority and Dr M Nashaat, the Chairman of
CHAIRMAN'S REPORT
the Egyptian Company for Mineral Resources, also continue to provide a high level of support for the Company and its Egyptian projects.
Eritrea
During the year, the Company conducted extensive geological mapping activities over its Eritrean tenement area to assist with the field work which was subsequently undertaken during the first half of 2011.The Company's 100% owned subsidiary, Adobha Resources (Eritrea) Pty Ltd, has established an office in Asmara, Eritrea, and appointed a country manager and an office manager, and has engaged some temporary employees to undertake field work in Eritrea.
Geological sampling work in Eritrea was the prelude to extensive geophysical work which included a Versatile TimeͲDomain Electromagnetic survey being flown over a significant area of the Company's existing 2,100km2 Adobha Exploration Licence and its newly granted 100km2 Gerasi South Exploration Licence. I am extremely encouraged with the results of the survey and the potential for a base and/or precious metal discovery.
A work programme is currently underway to conduct field examination of electroͲmagnetic anomalies to assess ground conditions for further exploration or drilling.
The Company would like to thank His Excellency Ahmed Haj Ali, The Minister of Energy and Mines, Dr Alem Kibreab, Director General, Department of Mines and Mr Mebrahtu Okbazghi, Director of Mineral Resources Management, of the Ministry of Energy and Mines for their high level of support for the Company in The State of Eritrea.
Tasmania
The Heemskirk Tin Project is located north of Zeehan on Tasmania's west coast. This project comprises the Queen Hill, Severn, and Montana deposits and is Australia's largest known undeveloped hard rock tin deposit.During the past year, Gippsland's joint venture partner Stellar Resources Ltd completed initial metallurgical test work on drill core samples from the upper part of the Queen Hill mineralisation at the Heemskirk Tin Project. They also completed a JORC Compliant Mineral Resource and a scoping study which indicated encouraging economics for the project.
Corporate
I am very encouraged by the support from shareholders and investors during its recent fully underwritten renounceable rights issue, particularly given the tough worldͲwide economic conditions.These funds will enable your company to advance exploration in Eritrea, fund further exploration at Nuweibi and progress the alluvial tin operations at Abu Dabbab.
Termination of the proposed spin off of the Company's Eritrean exploration assets together with its 40% interest in the Heemskirk Tin Project in Tasmania was disappointing, however, the Directors will continue to assess opportunities for these assets that will maximise value for all shareholders.
CHAIRMAN'S REPORT
Following the departure of the Company's former CEO in late November 2010, the Company established an executive team responsible for the day to day operations.The Directors are mindful that the Company requires a Chief Executive Officer, however, we also believe that in order to be able to attract the best possible candidates to the CEO role, the Company must first achieve certain project milestones in relation to the Abu Dabbab TinͲTantalumͲFeldspar Project.I would like to particularly acknowledge the efforts of my fellow directors, Jon Starink and John Dunlop, who have taken on increased levels of executive responsibility in the absence of a CEO.
During the upcoming year, we will be working diligently to ensure the success of the alluvial tin mining at Abu Dabbab, further work at Nuweibi, testing of targets in Eritrea and towards financing of Abu Dabbab. Whilst discussing potential financing of Abu Dabbab with a recognised international bank, it was suggested that the demonstration of the Company's ability to successfully conduct production operations with the alluvial tin on a relatively small scale and generating positive cash inflows, will demonstrate the efficacy of operating in Egypt and facilitate the ramp up of the Company's flagship Abu Dabbab TinͲTantalumͲFeldspar Project.
Yours sincerely,
Ian Gandel Chairman
IAN GANDEL NON-EXECUTIVE CHAIRMAN
OVERVIEW
Gippsland's activities are primarily focussed on the ArabianͲNubian Shield, which is host to a number of world scale projects, particularly in regard to tantalum, gold, copper and Volcanic Massive Sulphide (VMS) projects.
Having regional headquarters in Cairo, Gippsland is able to efficiently utilise its team of executives and technical staff in advancing the Company's interests in Egypt and Eritrea. Gippsland has also established an office in Asmara, Eritrea.
Gippsland's flagship asset is the world class Abu Dabbab TinͲTantalumͲFeldspar Project in Egypt, which also contains a financially viable alluvial tin deposit.
Exploration activities in Eritrea continue to deliver encouraging results.
Gippsland has a 40% interest in the Tasmanian Heemskirk Tin Project, the largest known hard rock tin deposit in Australia.
EGYPT
Gippsland has a controlling 50% interest in the Abu Dabbab and Nuweibi TinͲTantalumͲFeldspar deposits located near the western shore of the Red Sea coast in Egypt. These two deposits have a combined JORC compliant resource of 142.5 million tonnes.
The Company commenced trial mining of the alluvial tin deposits at Abu Dabbab during the year.The results of the trial mining have led to the decision to commence mining and processing of the Wadi Quaria alluvial tin deposit which is scheduled to commence in March 2012.
The Company also has an interest in eight gold prospects and one copperͲnickel prospect located in the Wadi Allaqi region situated to the southͲeast of Aswan in Egypt.Exploration of the current Wadi Allaqi Exploration Licences will reͲcommence following the granting of tenements under application.
ERITREA
In Eritrea, the Company's 100% owned subsidiary Adobha Resources (Eritrea) Pty Ltd was recently granted a 100 km2 Exploration Licence on conversion of its Gerasi South Prospecting Licence in the Adobha region.Together with its existing 2,100 km2 Adobha Exploration Licence, these two Licences total 2,200 km2 in area and are located north of the Eritrean capital Asmara in a geological setting similar to that of the 0.84 Moz Zara Gold Project located some 17 km to the south of the Company's southernmost licence boundary.The geological setting is also similar to that found at the Bisha gold base metal deposit containing 1.6 Moz Au and 0.45 Mt Cu, located some 174 km to the south.Applications to convert two other Prospecting Licence areas into Exploration Licences have been lodged and are pending.
TASMANIA
In Australia, the Company has a 40% freeͲcarried interest in the Heemskirk Tin Project located at Zeehan in Tasmania with joint venture partner Stellar Resources Limited.Heemskirk contains a total mineral resource of 4.4 million tonnes at 1.1% tin.
Gippsland Limited Annual Report 2011
EGYPT
ABU DABBAB
Introduction
The Abu Dabbab tinͲtantalumͲfeldspar deposit is covered by two Exploitation Licences (ζ 1658 & ζ 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 and 50% by Tantalum International Pty Ltd, a wholly owned subsidiary of Gippsland Limited.The two Exploitation Licences have a 30Ͳyear tenure with an option of a further 30 years.
Ten Year Tantalum OffͲtake Agreement
Gippsland has an OffͲtake Agreement with the German tantalum refiner HC Starck GmbH, whereby HC Starck has contracted to purchase 600,000 pounds per year of Abu Dabbab tantalum (in the form of tantalum pentoxide Ͳ Ta2O5) for a period of ten years.
The Company is presently in negotiation with HC Starck regarding clarification of certain terms and the price escalation mechanism of the OffͲtake Agreement.
Whilst these HC Starck discussions are in progress, the Company has also entered into discussions with other tantalum refiners.
Tantalum Market
The long predicted shortage in the global tantalum supply is now having a dramatic effect on the international tantalum market, with the spot market price increasing from approximately US$38 per pound in December 2009 to the present price of approximately US$130 per pound.
The shortage is expected to continue through to at least 2013 by which time the Abu Dabbab Project could be in a position to contribute substantially to demand with its initial production of in excess of 900,000 pounds of Ta2O5 per year, coupled with significant opportunities for production expansion should market conditions warrant. Implementation of the Abu Dabbab Project would position Gippsland as a world ranking, top tier producer of conflictͲfree, clean tantalum, thereby justifying Abu Dabbab as a world class deposit.
Project Finance
During October 2010, Gippsland appointed the risk and financial advisor, Noah's Rule, to assist in fund raising and financial structuring in relation to the development of the 44.5 million tonne Abu Dabbab Project.
Free Zone Area
In accordance with General Authority For Investment (GAFI) requirements, the Company arranged for the construction of a 3.5 metreͲhigh brick security wall, including a chain wire fence on one side of the compound, to enclose the Abu Dabbab Free Zone site leased from the Egyptian Mineral Resource Authority.In addition to the wall, a GAFI and Customs Office was also constructed in the Free Zone area.
Alluvial Tin Trial Mining
A programme of trial mining was commenced to assess the viability of fullͲscale mining of two placer tin deposits at Abu Dabbab. The placers are known as Wadi Mubarak and Wadi Quaria and are located adjacent to the Abu Dabbab TinͲTantalumͲfeldspar Deposit.
The objectives of the trial mining programme included the confirmation of the recoverable grade of tin and related minerals, reͲevaluation of recoverable resources based on a lower cutͲoff grade, validation of the simple conceptual process flowsheet and the development of commercially sized equipment design and specification criteria.
Based on the results of the trial mining programme, the Company intends to commence commercial operations at the Wadi Quaria deposit during March 2012 with a view to exploiting the resource over a 17 month operating time frame.An order has been placed for two modular IEͲTEC HPCͲ30 units which will be utilised to process high grade alluvial material at the alluvial tin deposit.Allowing for two months sea freight, the units are expected to be on site in February 2012.
The project is forecast to be cash flow positive one month after operations commence, that is April 2012 and is forecast to generate US$3.5 million for the entire 17 month project life. Breakeven is anticipated approximately 10 weeks after the commencement of operations.The capital and preͲproduction mining costs are estimated to total US$0.6 million.
The placers were first explored during the early 1970s by a joint EgyptianͲSoviet expedition. Sampling data produced by the programme was reͲevaluated and a resource estimation completed by Gippsland in 2008 identified an Inferred Resource of 438,000 m3 of alluvium containing 759 t of recoverable tin metal. A short programme of reͲsampling of the pits excavated during the early 1970s as part of the Soviet exploration programme was completed during 2009 and confirmed the presence of cassiterite and wolframite at commercially exploitable levels.
Change of Base Case Throughput Rate
Following detailed evaluation of alternative production profiles for the Abu Dabbab Project, the Company has proceeded with a change of scope for the Abu Dabbab Project from 2 million tonnes per annum ("Mtpa") of RunͲ ofͲMine ore ("ROM") to 3 Mtpa of ROM.
At this expanded rate of production, the average annual output of products is estimated to be approximately:
- x 925,000 pounds of tantalum oxide (Ta2O5) in slag;
- x 2,200 tonnes of tin as tin metal; and
- x up to 2.4 Mtpa of feldspar.
Revised pit optimisation studies suggest a mine life of 13.5 years.The Company has completed Whittle pit reͲ optimisations at both 2 and 3 Mtpa based on both Measured and Indicated Mineral Resources and Measured, Indicated and Inferred Mineral Resources. In each case a number of scenarios over a range of metal price assumptions were performed.The results indicate that the 3 Mtpa ROM option is superior to the 2 Mtpa ROM case on technical, economic and commercial (marketing) grounds.
Following review of process alternatives and corresponding forecast product specifications, the Company has decided not to proceed with the SynCon route for the production of high grade tantalum oxide for the Abu Dabbab Project.The process flow sheet will comprise conventional gravity separation after crushing and grinding of the ROM to produce a primary gravity concentrate.
Increase of Ore Reserves
The original pit optimisation and open pit mine design for the bankable feasibility study for the Abu Dabbab project was based on prices of US$42.00 per pound for Ta2O5 and US$7,000 per tonne for tin. In light of the recent significant lift in the prices for both commodities, the Company decided to reͲoptimise the open pit design with the aim of better utilising the total Abu Dabbab resource.
With this in mind, the pit reͲoptimisations were run at both 2 Mtpa and 3 Mtpa production rates with the following metal prices:Ta2O5 US$75.00 per lb and tin US$25,000 per tonne.The results of the reͲoptimisations pointed to improved overall project economics stemming both from the increased production rate and metal prices.Accordingly, an updated 3 Mtpa open pit mine design was prepared.
The revised open pit mine design and associated production schedule supports the following updated Ore Reserves statement, based on a 100 g/t Ta2O5 cutͲoff.
| Category | Mt | Ta2O5(%) | Sn(%) |
|---|---|---|---|
| Provenore | 15.20 | 0.0260 | 0.1695 |
| Probableore | 17.98 | 0.0245 | 0.0989 |
| TOTALORERESERVES | 33.18 | 0.0252 | 0.1312 |
| Inferredresource | 8.21 | 0.021 | 0.040 |
| TOTAL | 41.37 | 0.0244 | 0.1130 |
Abu Dabbab Ore Reserves Statement, as at May 29th 2011.
Note: Totals may not match due to rounding
The immediate increase in the Ore Reserve is in the Probable category. The remaining 8.21 Mt of Inferred Resource is expected to be upgraded to an ore reserve category as the pit deepens and additional grade control
drilling can be completed. Thus the increase in the Ore Reserves is 10%, and the corresponding increase in scheduled resources is 37%.
NUWEIBI
The Exploitation Licenceζ1785 covering the Nuweibi tantalum deposit was issued to Tantalum Egypt JSC by Ministerial Decreeζ5 of 2008 on 13 July 2008.The Nuweibi deposit is located 17 km to the southͲsouthwest of the Abu Dabbab deposit and 30 km inland from the Red Sea.This Exploitation Licence also has a 30Ͳyear tenure with an option of a further 30 years.
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 SovietͲEgyptian team that explored Abu Dabbab.The previous work has included 23 diamond drill holes totalling 2,746 m, four surface trenches and four bulk samples which were used for metallurgical testwork.
The mineral resources at Nuweibi have been estimated by Gippsland using the ore block modelling (inverse distance squared) method at a 100 g/t Ta2O5 cutͲoff and currently stand at a combined Indicated and Inferred Resources of 98 million tonnes at 140 g/t of Ta2O5.
There is the potential for a significant increase in Nuweibi mineral resources as the deposit is open at depth as well as to the east and the west.There is also a small placer resource containing tin and tantalum.
A proposed work program including diamond drilling has been approved and is expected to commence during the December 2011 quarter, subject to the receipt of required permits.
WADI ALLAQI
The Wadi Allaqi Project consists of nine small Exploration Licences located approximately 160 km southeast of Aswan in the southͲwestern part of the Eastern Desert of Egypt.These Exploration Licences have a total area of 144 km2 .Application has been made for an Exploration Licences having a total area of 980 km2 and the renewal of the small Seiga licence. Exploration of the current Exploration Licences will reͲcommence following the granting of the tenements under application.
Exploration within the Wadi Allaqi tenements has delineated an Inferred Resource of 85,000 oz of gold contained in 1.1 million tonnes at a grade of 2.3 g/t Au.
ERITREA
ADOBHA
In October 2009 the Company announced that it had been granted three Prospecting Licences in the highly prospective Adobha region of Eritrea. The Company completed a drainage geochemical survey targeting interpreted Thematic Mapper ('TM') satellite images which identified a number of areas of anomalous gold and base metals which were followedͲup with rockͲchip sampling and geological mapping. The followͲup work identified two large areas of outcropping copper mineralisation, some of which contained associated lead and zinc.
Further to the successful results of the initial surveys the Company converted the three Prospecting Licences to a large Exploration Licence and applied for a further three Prospecting Licences.During July 2010, the Company announced that its 100% owned subsidiary Adobha Resources (Eritrea) Pty Ltd (formerly Nubian Resources Pty
Ltd) had been granted a 2,100 km2 Exploration Licence plus three new 100 km2 Prospecting Licences giving the Company a very large strategic tenement holding of 2,400 km2 in the highly prospective Adobha region.
During the December 2010 quarter, geological mapping was undertaken at 1:25,000 scale over the whole of the tenement area with 1:5,000 scale mapping over areas of interest such as outcropping mineralisation, geochemical anomalies and areas of hydrothermal alteration. High resolution ALOS satellite imagery over the whole of the project area was purchased and a geological interpretation of this imagery at a scale of 1:25,000 was completed, together with a broad scale interpretation at 1:250,000.
Adobha Resources (Eritrea) Pty Ltd established an office in Asmara, Eritrea, and appointed a fullͲtime country manager and a fullͲtime office manager. Geologists and other field staff have been recruited on a temporary basis to assist with undertaking field work.
In June 2011, the Company commenced a systematic drainage geochemical sampling programme of the previously identified Thematic Mapper satellite image anomalies and target areas identified from a geological interpretation.
In addition to the above geochemical sampling, a 5,161 line kilometre airborne geophysical survey over the Adobha and Gerasi South licence areas was commenced during July 2011 and completed during September 2011. The airborne geophysical survey covered 19 target areas selected on the basis of TM anomalies, geological interpreted targets, and geochemical anomalies identified during geochemical surveys by Gippsland completed during late October to early November 2009, May 2010 and July 2011. The survey was flown by Geotech Airborne Limited using a Versatile Time Domain Electro Magnetic system (VTEM) at a line spacing of 200 m with a nominal height of 80Ͳ120 m determined by the topography.Aeromagnetic data was also acquired as part of the survey.
Interpretation of the preliminary data by the Company's consultant geophysicist has identified 16 electromagnetic (EM) anomalies which have been ranked on the basis of their EM response (intensity and decay rate), geological setting, proximity to TM anomalies and presence of coincident geochemical anomalies.
A work programme commenced in early October 2011 to conduct a field examination of all of the EM anomalies in order to determine appropriate further exploration with a view to drill testing at the earliest opportunity.
During September 2011, the Company received approval from the Ministry of Energy and Mines in the State of Eritrea regarding the conversion of the 100 km2 Prospecting Licence held by Adobha Resources (Eritrea) Pty Ltd for the Gerasi South area to an Exploration Licence.The Prospecting Licences held by Adobha Resources (Eritrea) Pty Ltd for the Hafta West and Romay areas have expired as they had a one year term, however, applications to convert these areas to Exploration Licences have been lodged with the Ministry of Energy and Mines and the applications are pending.
Gippsland Limited Annual Report 2011
AUSTRALIA
HEEMSKIRK
The Heemskirk Tin Project (previously referred to as the Zeehan Tin Project) is located within a major tin province in the northwest of Tasmania approximately 15 km from the large Renison tin deposit.Stellar Resources Limited ('Stellar') holds a 60% interest in the Heemskirk Tin Project with the remaining 40% being held by Gippsland.
Under the terms of a Joint Venture Agreement, Stellar has the right to increase its equity from 60% to 70% by completing a Banked Feasibility Study, at which time Gippsland's interest will reduce to 30%.Gippsland enjoys a freeͲcarried interest in the project until the point at which Stellar completes the Banked Feasibility Study.
Stellar as manager of the project continued drill testing of the known deposits to determine the resource potential of the deposits at depth.During 2011 the focus was on the Severn deposit, the largest of the known deposits. This deposit is open at depth and provides the greatest scope for a significantly increased resource base.
Geological Plan of the Heemskirk Project
Stellar released an updated Mineral Resource estimate for the Heemskirk Project which now includes a total of 4.4 million tonnes grading 1.1% Sn at a cutͲoff grade of 0.6% Sn.Details of the mineral resource categories are included in the Mineral Resource and Ore Reserve Inventory which forms part of this report.
Metallurgical testwork completed during the year provided encouraging results and demonstrated that a traditional highͲsulphide tin processing circuit would work for the Queen Hill mineralisation.
LongͲSection Showing Mineralised Drill Hole Pierce Points and tin intersections
MINERAL RESOURCE AND ORE RESERVE INVENTORYͲSEPTEMBER 2011 TOTAL MINERAL RESOURCESͲEGYPT
| Category | Measured | Indicated | Inferred | Total | CutͲoff |
|---|---|---|---|---|---|
| AbuDabbab(Gippsland50%) | |||||
| Milliontonnes | 15.2 | 17.3 | 12 | 44.5 | 100g/tTa2O5 |
| Ta2O5(g/t) | 290 | 250 | 200 | 250 | |
| Sn(%) | 0.143 | 0.078 | 0.03 | 0.09 | |
| Placertindeposit | |||||
| (m3Volume) | 438,000 | 438,000 | |||
| ContainedSn(t) | 760 | 760 | |||
| Nuweibi(Gippsland50%) | |||||
| Milliontonnes | Ͳ | 48 | 50 | 98 | 100g/tTa2O5 |
| Ta2O5(g/t) | Ͳ | 147 | 138 | 143 | |
| Seiga(Gippsland50%) | |||||
| Milliontonnes | 1.1 | 1.1 | 0.7g/tAu | ||
| Gold(g/t) | 2.3 | 2.3 | |||
| TOTALMINERAL | RESOURCESͲAUSTRALIA | ||||
| HeemskirkͲTasmania(Gippsland | 40%interest) | ||||
| QueenHill | |||||
| Milliontonnes | 1.6 | 1.6 | 0.6%Sn | ||
| Sn(%) | 1.2 | 1.2 | |||
| Severn | |||||
| Milliontonnes | 2.4 | 2.4 | 0.6%Sn | ||
| Sn(%) | 0.9 | 0.9 | |||
| Montana | |||||
| Milliontonnes | 0.4 | 0.4 | 0.6%Sn | ||
| Sn(%) | 1.6 | 1.6 |
TOTAL ORE RESERVESͲEGYPT (INCLUSIVE OF MINERAL RESOURCES)
| Category | Proved | Probable | Total |
|---|---|---|---|
| AbuDabbab(Gippsland50%) | |||
| Milliontonnes | 15.20 | 17.98 | 33.18 |
| Ta2O5(g/t) | 260 | 245 | 252 |
| Sn(%) | 0.1695 | 0.0989 | 0.1312 |
Note: Numbers in table may not add correctly due to rounding
**Note:**In accordance with Listing Rule 5.6 of the Australian Stock Exchange Limited, the geological information in this report that relates to Exploration Results, Mineral Resources and Ore Reserves is based on data compiled by Dr John Chisholm, a Fellow of The Australasian Institute of Mining and Metallurgy.Dr Chisholm has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'.Dr Chisholm consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Your Directors present their report with respect to the results of Gippsland Limited ("Gippsland" or "the Company") and its controlled entities ("the Group") for the year ended 30 June 2011 ("the Balance Date") and the state of affairs of the Company and the Group at Balance Date.
DIRECTORS
The names of the Directors in office at any time during or since the end of the year are as below. Directors were in office for this entire period unless otherwise stated.
Mr Ian Jeffrey Gandel Mr Jon Starink Mr John Stuart Ferguson Dunlop Mr John Damian Kenny Mr Robert John Telford (resigned 25 November 2010)
Names, qualifications, experience and special responsibilities
Ian Jeffrey GandelͲChairman (NonͲexecutive) LLB, BEc, FCPA, FAICD
Mr Gandel was appointed Director and nonͲexecutive chairman on 24 June 2009.He is also a member of the Company's Remuneration Committee and Audit Committee.
Mr Gandel is a Melbourne businessman with extensive experience in retail management and retail property.He has had an involvement in the construction and leasing of Gandel shopping centres and has been a director of Gandel Retail Trust.He has previously been involved in the Priceline retail chain and the CEO chain of serviced offices. Mr Gandel has been an investor in the mining industry since 1994, and is currently a substantial shareholder of a number of publicly listed Australian companies and is involved in exploration in his own right in Victoria, New South Wales and Western Australia.
During the past three years Mr Gandel has served as a Director of the following listed companies: Alliance Resources Limited* – Appointed 15 October 2003 Alkane Resources Ltd* – Appointed 25 July 2006 Octagonal Resources Ltd*ͲAppointed 10 November 2010
Jon Starink – Director (Executive) BSC (Hons), BChemE(Hons), MApplSc, FAusIMM, FIEAust, FIChemE, MRACI, MTMS, CPEng, CChem, CSci
Mr Starink was appointed Director on 8 May 2007.
Based in London, Mr 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.
Mr Starink has over 30 years experience in the mining industry in the role of both Executive and NonͲExecutive Director.His extensive practical and operational experience includes engineering design and project management; mining exploration management; science and engineering research & development and process innovation & development.Mr Starink served in senior technical and engineering roles with the Sons of Gwalia Ltd Greenbushes tantalumͲtin project for 10 years where he was directly responsible for process development, project design and construction management for the tin smelter and tantalum extraction projects.
During the past three years Mr Starink has served as a Director of the following listed company: MacArthur Minerals Limited* – Appointed 28 June 2011 Manaccom Corporation Limited – Appointed 30 August 2006; Resigned 22 November 2008.
John Stuart Ferguson Dunlop – Director (Executive) BE, M Eng Sc, P Cert Arb, CP, FAusIMM, FIMMM, MSME, MCIMM, MMICA
Mr Dunlop was appointed Director on 1 July 2005.He is also Chairman of the Company's Remuneration Committee and a member of the Audit Committee.
Mr Dunlop is a certified Mine Manager having approximately 40 years of international surface and underground mining experience in a variety of base metals, industrial and precious metals production.
He is a former Director of the Australasian Institute of Mining and Metallurgy (AusIMM) and remains Chairman of its affiliate, the Mineral Industry Consultants Association (MICA).
Mr Dunlop is a highly experienced mining professional having been involved in the design, construction and onͲgoing operation of a number of major resource projects throughout the world.
He has operated his own mining consulting firm 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 that company's takeover by Normandy Mining Ltd.
During the past three years Mr Dunlop has served as a Director of the following listed companies: Alliance Resources Limited* – Appointed 30 November 1994 Alkane Resources Ltd* – Appointed 4 July 2006 Copper Strike Ltd* – Appointed 9 November 2009 Drummond Gold Ltd – Appointed 1 August 2007; Resigned 15 July 2010
John Damian Kenny – Director (NonͲexecutive) B Com (Hons), LLB
Mr Kenny was appointed Director on 2 September 1999.He is also a member of the Company's Remuneration Committee and is Chairman of the Company's Audit Committee.
Mr Kenny is a corporate and resources lawyer with 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.
During the past three years Mr Kenny has served as a Director of the following listed company: The ARK Fund Limited*ͲAppointed 18 June 2003
Robert John TelfordͲDirector (Executive) (resigned 25 November 2010) AWAIT (Chem), MRACI
Mr Telford was appointed Director on 20 January 1992 and resigned on 25 November 2010.
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.He was not a director of any other listed company at the time of his resignation as a Director, nor had he been a director of any other listed company within the three years prior to his resignation as a Director.
* denotes current directorship
Interest in Shares and Options of the Company and related bodies corporate
As at the date of this report, the interest of the directors in the shares and options of Gippsland Limited were:
| Number of OrdinaryShares | Number of Optionsover Ordinary Shares | Exercise Price ofOptions | Expiry date ofOptions | |
|---|---|---|---|---|
| IJ Gandel | 244,552,183 | Ͳ | Ͳ | Ͳ |
| JSF Dunlop | 1,000,000 | 2,000,000 | 15c | 31 May 2012 |
| JD Kenny | 2,892,858 | 1,000,000 | 15c | 31 May 2012 |
| J Starink | 1,800,000 | 2,000,000 | 15c | 31 May 2012 |
OPTIONS
At the date of this report, the unissued ordinary shares of Gippsland Limited under option are as follows:
| Grant Date | Date of Expiry | Exercise Price | Number under Option |
|---|---|---|---|
| 16 May 2006 | 26 May 2012 | $0.135 | 25,000,000 |
| 05 February 2008 | 15 December 2011 | UK£0.0665 | 4,000,000 |
| 28 November 2008 | 31 May 2012 | $0.150 | 17,000,000 |
| 17 August 2009 | 14 December 2011 | $0.080 | 10,000,000 |
COMPANY SECRETARY
The following person held the position of company secretary at the end of the financial year:
Rowan St John Caren BCom, CA
Mr Caren was appointed Company Secretary on 15 August 2006.Mr Caren was employed by the chartered accountancy firm Price Waterhouse Coopers in Australia and overseas for six years and has been directly involved in the minerals exploration industry for a further 15 years.He also provides company secretarial and corporate advisory services to several exploration companies and is a member of the Institute of Chartered Accountants in Australia.
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 | Audit Committee | Remuneration Committee | ||||
|---|---|---|---|---|---|---|
| Held | Attended | Held | Attended | Held | Attended | |
| IJ Gandel | 10 | 10 | 2 | 2 | 1 | 1 |
| JSF Dunlop | 10 | 8 | Ͳ | Ͳ | 1 | 1 |
| JD Kenny | 10 | 10 | 2 | 1 | 1 | 1 |
| J Starink | 10 | 10 | Ͳ | Ͳ | Ͳ | Ͳ |
| RJ Telford (resigned) | 5 | 5 | 1 | 1 | Ͳ | Ͳ |
PRINCIPAL ACTIVITIES
The principal activities of the entities within the Group during the year were exploration and development of commercially and economically viable mineral resources.There were no significant changes in the nature of the Group's principal activity during the year.
CONSOLIDATED RESULTS
The consolidated operating loss of the Group after providing for income tax amounted to $2,630,645 (2010: $2,894,769).
Review of Operations
During the year the Company continued to focus on the development of the Abu Dabbab tin/tantalum project in Egypt.The following activities were undertaken in relation to the Abu Dabbab tin/tantalum project:
- x appointment of corporate advisor to assist in fund raising and financial structuring.
- x construction of free zone security wall.
- x obtaining approval for the fresh water pipeline.
- x commencement of trial mining activities in relation to the alluvial tin deposit.
- x change of scope from 2 million tonnes per annum ("Mtpa") of RunͲofͲMine ore ("ROM") to 3 Mtpa of ROM.
- x increase of ore reserves.
- x independent calculation of project economics.
In addition, the Company's operations included:
- x exploration activities in Eritrea in relation to an Exploration Licence and three Prospecting Licences granted during the year to a 100% owned subsidiary of the Company. Exploration activities included a systematic drainage geochemical programme and commencement of a geophysical survey of the Adobha project area.
- x successful placement of shares to raise $3,200,000 before costs.
- x continuation of drilling, metallurgical testwork and completion of a JORC compliant mineral resource at the Company's 40% owned Heemskirk Tin Project by the Company's joint venture partner.
Financial Position
The net assets of the Group have decreased by $523,627 to $4,376,993 at 30 June 2011.The decrease has largely resulted from the following factors:
- x proceeds from the issue of shares raising $3,200,000 before costs;
- x a consolidated operating loss of the Group of $2,630,645; and
- x foreign currency translation differences of $899,448.
As atReporting Date the group had a working capital deficiency of $224,060.A fully underwritten renounceable rights issue was completed in August 2011 to raise $5,063,591 before costs to address this working capital deficiency.
DIVIDENDS
No dividends were declared or paid during the financial year.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
The following significant changes in the state of affairs of the Company occurred during the financial year:
- a) The Company's 100% owned subsidiary Adobha Resources (Eritrea) Pty Ltd (formerly Nubian Resources Pty Ltd) was granted a 2,100km2 Exploration Licence plus three new 100km2 Prospecting Licences (total 2,400 km2 ), in the highly prospective Adobha region of The State of Eritrea;
- b) Completed the issue and allotment of 80,000,000 shares at a placement price of $0.04 to raise $3,200,000 (before costs) on 1 October 2010;
- c) RJ Telford resigned as a Director of the Company on 25 November 2010 and his contract as Chief Executive Officer was terminated on 26 November 2010.
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
On 4 July 2011, the Company entered into a loan agreement with Abbotsleigh Pty Ltd, an entity associated with Mr Ian Gandel.The loan facility was for $640,000 to assist the Company to meet its minimum expenditure commitments in Eritrea and for working capital. $400,000 of the loan facility was drawn down and subsequently repaid to Abbotsleigh Pty Ltd following the completion of the rights issue in August 2011.Interest of 4% was paid by Gippsland to Abbotsleigh Pty Ltd on the funds drawn down and the loan was unsecured.
During July 2011, a scoping study was completed in relation to the Company's 40% owned Heemskirk Tin Project by the Company's joint venture partner.
On 26 July 2011, strong drilling results were reported by the Company's joint venture partner in relation to the Company's 40% owned Heemskirk Tin Project.
During July and August 2011, the Company commenced and successfully completed a fully underwritten renounceable rights issue to raise $5,063,591 before costs.The rights issue was underwritten by Patersons Securities Ltd and subͲunderwritten by Gandel Metals Pty Ltd, an entity associated with Mr Ian Gandel.
During August 2011, the Company announced approval of the Abu Dabbab Alluvial Project, subject to approval of the Board of Directors of Tantalum Egypt JSC and finalising financing arrangements.
During September 2011, the Company received approval from the Ministry of Energy and Mines in the State of Eritrea regarding the conversion of the 100 km Prospecting Licence held by Adobha Resources (Eritrea) Pty Ltd for the Gerasi South area to an Exploration Licence.The Prospecting Licences held by Adobha Resources (Eritrea) Pty Ltd for the Hafta West and Romay areas have expired as they had a one year term, however, applications to convert these areas to Exploration Licences ave been lodged with the Ministry of Energy and Mines and the applications are pending. 2 h
No other matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
Information as to likely developments in the operations of the Company and the 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 Group.
ENVIRONMENTAL REGULATION AND PERFORMANCE
The Group's operations are not currently subject to any significant environmental regulations under either Australian, Eritrean 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 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 Group.
An environmental and social impact assessment was updated during the previous financial year for the Abu Dabbab project in Egypt.
The 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.
INDEMNITY AND INSURANCE OF 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 $14,053 (2010: $21,090). The Company has entered into "Deeds of Indemnity, Access and Insurance" with directors and officers in which the Company agrees to indemnify the directors and officers in respect of certain liabilities incurred by the director or officer while acting in their capacity for the Company and to insure the director or officer against certain risks they are exposed to as a director or officer of the Company.
PROCEEDINGS ON BEHALF OF COMPANY
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave 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.No proceedings have been brought or intervened in or on behalf of the Company with leave of the court under section 237 of the Corporations Act 2001.
NONͲAUDIT SERVICES
No nonͲaudit services were provided by the Company's current auditor, Deloitte Touche Tomatsu ("Deloitte").
AUDITORS INDEPENDENCE DECLARATION
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 for the year ended 30 June 2011 has been received and can be found on page 28 of the directors' report.
REMUNERATION REPORT (Audited)
This report details the nature and amount of remuneration for each director of Gippsland Limited, and for the executives receiving the highest remuneration.
Remuneration Policy
The remuneration policy of Gippsland Limited has been designed to align director and executive objectives with shareholder and business objectives by providing a fixed remuneration component and offering specific longͲterm 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 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 Group is as follows:
- x The remuneration policy, setting the terms and conditions for the executive directors and other senior executives, is developed and approved by the board after seeking professional advice from independent external consultants as required.
- x All executives receive a base salary (which is based on factors such as length of service and experience).
- x The board reviews executive packages annually by reference to the Group's performance, executive performance and comparable information from industry sectors.
The board policy is to remunerate nonͲexecutive directors at market rates for time, commitment and responsibilities.The board determines payments to the nonͲexecutive 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 nonͲexecutive directors is currently fixed at $150,000 with any change in this amount subject to approval by shareholders at the Annual General Meeting.Fees for nonͲexecutive directors are not linked to the performance of the 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.No relationship exists between the remuneration policy and the Company's performance.
Details of key management personnel (including the highest paid executives of the Company and the Group)
(i) Directors
| IJ Gandel | ͲChairman (NonͲExecutive) |
|---|---|
| J Starink | ͲExecutive Director |
| JSF Dunlop | ͲExecutive Director |
| J Kenny | ͲNonͲExecutive Director |
| RJ Telford | ͲExecutive Director (resigned 25 November 2010) and Chief Executive Officer (terminated 26 November2010) |
(ii) Executives
| ͲChief Geologist |
|---|
| ͲRegional ManagerͲMiddle East and North Africa |
| ͲCompany Secretary |
| ͲChief Financial Officer – appointed 1 September 2010 |
| ͲChief Financial Officer – resigned 8 January 2010 |
NonͲExecutive Director Remuneration
IJ GandelͲChairman (NonͲExecutive)
- x Remuneration: $80,000 per annum.
- x Details of remuneration entitlement on termination: Payment of fees up to the date of termination.
J KennyͲNonͲExecutive Director
- x Remuneration: $40,000 per annum.
- x Details of remuneration entitlement on termination: Payment of fees up to the date of termination.
Employment Contracts
J StarinkͲExecutive Director
- x Term of agreement: 8 May 2007 until terminated in accordance with the agreement.
- x Remuneration: $150,000 per annum.
- x Period of notice for termination/resignation: Three months written notice by either party.
- x Details of remuneration entitlement on termination: Payment of consulting fees up to the date of termination or payment of three months salary in lieu of notice.
JSF DunlopͲExecutive Director
- x Remuneration: $115,000 per annum.
- x Period of notice for termination/resignation: None.
- x Details of remuneration entitlement on termination: Payment of fees up to the date of termination.
JM ChisholmͲChief Geologist
- x Remuneration: $175 per hour.Total remuneration is capped at $175,000 per year.
- x Period of notice for termination/resignation: Three months written notice by either party.
- x Details of remuneration entitlement on termination: Payment of consulting fees up to the date of termination or payment of three months salary in lieu of notice.
A AyyashͲRegional ManagerͲMiddle East and North Africa
- x Term of agreement: 1 October 2010 until terminated in accordance with the agreement.
- x Remuneration: $188,600 salary and allowances per annum.On 30 November 2010, 500,000 shares were issued to Mr Ayyash as part of his renewal of his employment contract.The shares were issued for nil consideration and have a deemed value of $22,500.
- x Period of notice for termination/resignation: Two months written notice by the Company or three months written notice by the Executive.
- x Details of remuneration entitlement on termination: Payment of salary and employee entitlements up to the date of termination and one month's salary for each year worked by the Executive.
RS CarenͲCompany Secretary
- x Term of agreement: 15 August 2006 until terminated in accordance with the agreement.
- x Remuneration: $5,000 per month.
- x Period of notice for termination/resignation: One month written notice by either party.
- x Details of remuneration entitlement on termination: Payment of consulting fees up to the date of termination.
GA HawkinsͲChief Financial Officer (appointed 1 September 2010)
- x Term of agreement: 1 September 2010 until terminated in accordance with the agreement.
- x Remuneration: $160,000 per annum.
- x Period of notice for termination/resignation: Two months written notice by the Company or three months written notice by the Executive.
- x Details of remuneration entitlement on termination: Payment of salary and employee entitlements up to the date of termination.
RJ TelfordͲExecutive Director (resigned 25 November 2010) and Chief Executive Officer (terminated 26 November 2010)
- x Term of agreement: 1 January 2004 until terminated in accordance with the agreement (26 November 2010).
- x Remuneration: $250,000 per annum.
- x Period of notice for termination/resignation: Three months written notice by either party.
- x Details of remuneration entitlement on termination: Payment of consulting fees up to the date of termination.
Remuneration of key management personnel and the highest paid executives of the Company and the Group
Table 1: Remuneration for the year ended 30 June 2011
| Key ManagementPersonnel | ShortͲtermBenefitsCash, salary and | ShareͲbasedPaymentShares | PostͲemploymentBenefits | Total | Remunerationconsisting ofoptions for the |
|---|---|---|---|---|---|
| commissions | Superannuation | year | |||
| $ | $ | $ | $ | % | |
| NonͲExecutive Directors | |||||
| Mr IJ Gandel | 88,188 | Ͳ | Ͳ | 88,188 | 0.00% |
| Mr JD Kenny | 36,808 | Ͳ | Ͳ | 36,808 | 0.00% |
| SubͲtotal | 124,996 | Ͳ | Ͳ | 124,996 | |
| Executive Directors | |||||
| Mr J Starink | 135,000 | Ͳ | Ͳ | 135,000 | 0.00% |
| Mr JSF Dunlop | 74,800 | Ͳ | Ͳ | 74,800 | 0.00% |
| Mr RJ Telford (terminated 26 | 166,667 | Ͳ | Ͳ | 166,667 | |
| November 2010) | 0.00% | ||||
| SubͲtotal | 376,467 | Ͳ | Ͳ | 376,467 | |
| Other key management | |||||
| personnel | |||||
| Mr A Ayyash | 191,870 | 22,500 | Ͳ | 214,370 | 10.50% |
| Mr RS Caren | 79,775 | Ͳ | Ͳ | 79,775 | 0.00% |
| Dr JM Chisholm | 94,238 | Ͳ | Ͳ | 94,238 | 0.00% |
| Mr GA Hawkins | 122,324 | Ͳ | 11,009 | 133,333 | 0.00% |
| SubͲtotal | 488,207 | 22,500 | 11,009 | 521,716 | |
| Total | 989,670 | 22,500 | 11,009 | 1,023,179 |
Table 2: Remuneration for the year ended 30 June 2010
| Key ManagementPersonnel | ShortͲtermBenefitsCash, salary andcommissions | ShareͲbasedPaymentShares | PostͲemploymentBenefitsSuperannuation | Total | Remunerationconsisting ofoptions for theyear |
|---|---|---|---|---|---|
| $ | $ | $ | $ | % | |
| NonͲExecutive Directors | |||||
| Mr IJ Gandel | 50,000 | Ͳ | Ͳ | 50,000 | 0.00% |
| Mr JSF Dunlop | 25,700 | Ͳ | Ͳ | 25,700 | 0.00% |
| Mr JD Kenny | 25,000 | Ͳ | Ͳ | 25,000 | 0.00% |
| SubͲtotal | 100,700 | Ͳ | Ͳ | 100,700 | |
| Executive Directors | |||||
| Mr RJ Telford | 250,000 | Ͳ | Ͳ | 250,000 | 0.00% |
| Mr J Starink | 120,000 | Ͳ | Ͳ | 120,000 | 0.00% |
| SubͲtotal | 370,000 | Ͳ | Ͳ | 370,000 | |
| Other key management | |||||
| personnel | |||||
| Mr A Ayyash | 167,062 | Ͳ | Ͳ | 167,062 | 0.00% |
| Mr RS Caren | 62,975 | Ͳ | Ͳ | 62,975 | 0.00% |
| Dr JM Chisholm | 145,600 | Ͳ | Ͳ | 145,600 | 0.00% |
| Mr NA Marston (resigned 8 | 127,750 | Ͳ | 11,498 | 139,248 | 0.00% |
| January 2010) | |||||
| SubͲtotal | 503,387 | Ͳ | 11,498 | 514,885 | |
| Total | 974,087 | Ͳ | 11,498 | 985,585 |
Table 3: Compensation Options: Granted and vested during the year (consolidated)
The following are grants of shareͲbased payment compensation to directors and senior management:
| 30 June 2011 | Terms & Conditions for Each Grant | Vesting date | ||||
|---|---|---|---|---|---|---|
| Fair Value per | Exercise | |||||
| Option at | Price per | |||||
| Grant Date ($) | option ($) | |||||
| Granted No. | Grant Date | (note 19) | (note 19) | Expiry Date | ||
| Nil | Ͳ | Ͳ | Ͳ | Ͳ | Ͳ | Ͳ |
| 30 June 2010 | Terms & Conditions for Each Grant | Vesting date | ||||
| Fair Value per | Exercise | |||||
| Option at | Price per | |||||
| Grant Date ($) | option ($) | |||||
| Granted No. | Grant Date | (note 19) | (note 19) | Expiry Date | ||
| Nil | Ͳ | Ͳ | Ͳ | Ͳ | Ͳ | Ͳ |
Table 4: Shares issued on exercise of compensation options (consolidated)
30 June 2011
| Shares issued | Paid per share | Unpaid per share | |
|---|---|---|---|
| No. | $ | $ | |
| Directors | |||
| Nil | Ͳ | Ͳ | Ͳ |
| 30 June 2010 | |||
| Shares issued | Paid per share | Unpaid per share | |
| No. | $ | $ | |
| Directors | |||
| Nil | Ͳ | Ͳ | Ͳ |
Table 5: ShareͲbased payment arrangements in existence
During the financial year, the following shareͲbased payment arrangements were in existence in relation to directors and senior management.
| Options series | Grant date | Expiry date | Number of options | Grant date fairvalue | Vesting date |
|---|---|---|---|---|---|
| (1) Issued 28November 2008 | 28 November2008 | 31 May 2012 | 17,000,000 | $0.0010 | Vests at date ofgrant |
There are no further service or performance criteria that need to be met in relation to options granted under series (1) before the beneficial interest vests in the recipient.
During the financial year:
- x 500,000 shares were issued to Mr Ayman Ayyash in accordance with his employment contract.The shares were issued for nil consideration and have a deemed value of $22,500 (2010: Nil).There were no other grants of shareͲ based payment compensation to directors or senior management.
- x No directors or senior management exercised options that were granted to them as part of their compensation.
- x No options held by directors or senior management lapsed.
[END OF REMUNERATION REPORT]
Signed in accordance with a resolution of the Board of Directors.
JSF DUNLOP Director
Dated this 30th day of September 2011.
AUDITOR'S INDEPENDENCE DECLARATION
ASX CORPORATE GOVERNANCE PRINCIPLES AND RECOMMENDATIONS
The Company is committed to implementing the highest standards of corporate governance.In determining what those high standards should involve, the Company has turned to the ASX Corporate Governance Principles and Recommendations issued in August 2007 (and amended in 2010).As consistency with the ASX guidelines has been a gradual process, where the Company did not have certain policies or committees recommended by the Council in place for the entire reporting period, the Company has identified when such policies or committees were introduced. The Company has endeavoured to early adoption of the revised principles and recommendations.
To illustrate where the Company has addressed each of the Council's revised recommendations, the following summary crossͲreferences each revised recommendation with sections of the Corporate Governance Statement.
Introduction
Gippsland Limited has adopted systems of control and accountability as the basis for the administration of corporate governance.Some of these policies and procedures are summarised below.
The following additional information about the Company's corporate governance practices is set out on the Company's website at www.gippslandltd.com:
- x Corporate Governance Statement including disclosures and explanations;
- x Summary of Code of Ethics and Conduct for Directors and Key Executives;
- x Summary of Securities Trading Policy;
- x Audit Committee Charter;
- x Remuneration Committee Charter;
- x Summary of Continuous Disclosure Policy;
- x Summary of Shareholder Communications Strategy;
- x Policy on Risk Oversight and Management of Material Business Risks; and
- x Summary of Company Code of Ethics and Conduct.
Explanations for Departures from Best Practice Recommendations
During the financial year the Company has complied with the majority of the Eight Essential Corporate Governance Principles and the corresponding Best Practice Recommendations as published by the Council and as detailed below:
1. LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT
Council Principle 1: Companies should establish and disclose the respective roles and responsibilities of board and management.
Council Recommendation 1.1:
Establish the functions reserved to the board and those delegated to senior executives and disclose those functions.
The Company complies with this recommendation.
The board has set out the responsibilities of the Board in Section 1.1 of its Corporate Governance Statement which can be accessed on the Company website.Any functions not reserved for the Board and not expressly reserved for members by the Corporations Act 2001 and ASX Listing Rules are reserved for senior executives.
Council Recommendation 1.2:
Disclose the process for evaluating the performance of senior executives.
The Company complies with this recommendation.
Arrangements put in place by the Board to monitor the performance of the Group's executives include:
Gippsland Limited Annual Report 2011
- x a review by the Board of the Group's financial and operating performance;
- x comparison of executive remuneration levels to industry benchmarks; and
- x annual performance appraisal meetings between the executive and the Chairman incorporating analysis of performance with each individual to ensure that the level of reward is aligned with respective responsibilities and individual contributions made to the success of the Company.
Council Recommendation 1.3:
Companies should provide the information indicated in the Guide to reporting on Principle 1
The Company complies with this recommendation.
A review of senior executive performance in accordance with the above policy was completed in October 2011.
2. STRUCTURE THE BOARD TO ADD VALUE
Council Principle 2: Companies should have a board of an effective composition, size and commitment to adequately discharge its responsibilities and duties.
Council Recommendation 2.1:
A majority of the Board should be independent directors.
The Company does not comply with this Recommendation.
Currently the Board of Gippsland Limited has one independent director, Mr JD Kenny, and three nonͲindependent directors, Mr JSF Dunlop, Mr IJ Gandel and Mr J Starink. Mr Dunlop was an independent NonͲExecutive director until he was appointed to the Executive Team in late 2010 following the resignation of the CEO.The other member of the Executive Team is Mr Starink.
While the Board strongly endorses the position that boards need to exercise independence of judgment, it also recognises (as does ASX Corporate Governance Council Principle 2) that the need for independence is to be balanced with the need for skills, commitment and a workable board size.The Board believes it has recruited members with the skills, experience and character to discharge its duties and that any greater emphasis on independence would be at the expense of the Board's effectiveness.
Mr Kenny is a NonͲExecutive Director of the Company.He is considered independent within the ASX Corporate Governance Council's guidelines.
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 NonͲExecutive Directors.
Council Recommendation 2.2:
The chair should be an independent director.
The Company does not comply with this Recommendation.
The Company's Chairman, Mr IJ Gandel, is not considered by the Board to be independent as he holds a substantial interest in the Company's securities.However the Board believes that the Chairman is able and does bring quality and independent judgment to all relevant issues falling within the scope of the role of a Chairman.
The Board considers that the Company is not currently of a size, nor are its affairs of such complexity to necessitate the appointment of an independent Chairman.
Council Recommendation 2.3:
The roles of chair and chief executive officer should not be exercised by the same individual.
The Company does comply with this Recommendation.
Mr IJ Gandel is the NonͲExecutive Chairman and the role of Chief Executive Officer is undertaken jointly by Mr Starink and Mr Dunlop. The roles of chairman and chief executive officer are not exercised by the same individual.
Council Recommendation 2.4:
The Board should establish a nomination committee.
The Company does not comply with this Recommendation.
The board does not have 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 attributes required in new Directors. Where appropriate independent consultants are engaged to identify possible new candidates for the Board.
The membership of the Board, its activities and composition is subject to periodic review.The criteria for determining the identification and appointment of a suitable candidate for the Board shall include quality of the individual, background of experience and achievement, compatibility with other Board members, credibility within the Company's scope of activities, intellectual ability to contribute to Board's duties and physical ability to undertake Board's duties and responsibilities.
Directors are initially appointed by the full Board subject to election by shareholders at the next Annual General Meeting. Under the Company's Constitution the tenure of Directors is subject to reappointment by shareholders not later than the third anniversary following his last appointment.A Managing Director may be appointed for any period and on any terms the Directors think fit and, subject to the terms of any agreement entered into, the Board may revoke any appointment.
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 2.5:
Disclose the process for evaluating the performance of the board, its committees and individual directors.
The Company complies with this recommendation.
The Board has adopted an annual evaluation process to measure its own performance. Also, the Board undertakes an annual review in relation to the composition and skills mix of the Directors of the Company.The last review was completed in October 2011.
Council Recommendation 2.6:
Companies should provide the information indicated in the Guide to reporting on Principle 2.
The Company complies with this recommendation and provides the following disclosures.
The skills, experience and expertise relevant to the position held by each director are disclosed in the Directors Report.The Board has determined that individual Directors have the right in connection with their duties and responsibilities as Directors, to seek independent professional advice at the Company's expense.The engagement of an outside adviser is subject to prior approval of the Chairman and this will not be withheld unreasonably.If appropriate, any advice so received will be made available to all Board members.
Period of Office Held by each director in office at the date of the Directors Report
John Kenny – appointed 2 September 1999, date of last reͲelection 26 November 2009, tenure 12 years John Dunlop – appointed 1 July 2005, date of last reͲelection 28 November 2008, tenure 6 years Jon Starink – appointed 8 May 2007, date of last reͲelection 26 November 2010, tenure 4 years Ian Gandel – appointed 24 June 2009, date of last reͲelection 20 May 2009, tenure 2 years
Gippsland Limited Annual Report 2011
A performance evaluation of board members was completed in October 2011.
3. PROMOTE ETHICAL AND RESPONSIBLE DECISIONͲMAKING
Council Principle 3: Companies should actively promote ethical and responsible decisionͲmaking.
Council Recommendation 3.1:
Establish a code of conduct and disclose the code or a summary of the code as to:
- x the practices necessary to maintain confidence in the Company's integrity;
- x the practices necessary to take into account their legal obligations and the reasonable expectations of their stakeholders;
- x the responsibility and accountability of individuals for reporting and investigating reports of unethical practices.
The Company complies with this recommendation.
The Company has adopted a Code of Ethics and Conduct for Directors and Key Executives and a Company Code of Ethics and Conduct, both of which can be accessed on the website.
Council Recommendation 3.2:
Companies should establish a policy concerning diversity, and disclose the policy or a summary of that policy. The policy should include requirements for the board to establish measurable objectives for achieving gender diversity and for the board to assess annually both the objectives and progress in achieving them
The Company does not yet comply with this recommendation.
A diversity policy is currently being developed for adoption and, once adopted, a copy of the Company's Diversity policy will be available on the website.
Council Recommendation 3.3:
Companies should disclose in each annual report the measurable objectives for achieving gender diversity.
The Company does not yet comply with this recommendation as objectives have not yet been agreed, pending adoption of a diversity policy.
Council Recommendation 3.4:
Companies should disclose in each annual report the proportion of women employees in the whole organisation, women in senior executive positions and women on the board.
The Company complies with this recommendation.The Group currently employees one woman.She is not a senior executive and is not on the Board.
Council Recommendation 3.5:
Provide the information indicated in the Guide to reporting on Principle 3.
The Company complies with this recommendation.
4. SAFEGUARD INTEGRITY IN FINANCIAL REPORTING
Council Principle 4: Companies should have a structure to independently verify and safeguard the integrity of their financial reporting.
Council Recommendation 4.1:
The Board should establish an audit committee.
The Company complies with this recommendation.
In August 2009 an audit committee was formed and an audit committee charter was adopted.
Council Recommendation 4.2:
The audit committee should be structured so that it:
- x consists only of nonͲexecutive directors;
- x consists of a majority of independent directors;
- x is chaired by an independent chair, who is not chair of the board;
- x has at least three members.
The members of the audit committee are Mr Ian Gandel, Mr John Dunlop and Mr John Kenny.The Chairman of the audit committee is Mr Kenny, who is not the Chairman of the Board. Currently the audit committee has one independent director, Mr Kenny, and two nonͲindependent directors, Mr Dunlop and Mr Gandel. The Company does not comply with Recommendation 4.2.
While the Board strongly endorses the position that the audit committee should exercise independence of judgment, it also recognises that there are only four directors on the Board and it was decided that audit committee members should be those most familiar with statutory financials.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 NonͲExecutive Directors simply to fill the audit committee.
Council Recommendation 4.3
The audit committee should have a formal charter.
The Company complies with this recommendation.
Council Recommendation 4.4:
Provide the information indicated in the Guide to reporting on Principle 4.
The Company complies with this recommendation and provides the following disclosure.
The Company appointed Deloitte Touche Tohmatsu to take over from PKF in 2010, following the transfer of all PKF Perth audit partners to Deloitte.This appointment was approved by shareholders.External auditors are selected on the basis of professional skills, reputation, service levels and fees. The current policy of the external auditor is to rotate the audit engagement partner every 5 years.This is disclosed on the Company website.
5. MAKE TIMELY AND BALANCED DISCLOSURE
Council Principle 5: Companies should promote timely and balanced disclosure of all material matters concerning the Company.
Council Recommendation 5.1:
Establish written policies and procedures designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior executive level for that compliance and disclose those policies or a summary of those policies.
The Company complies with this recommendation.
The Company has adopted a Continuous Disclosure Policy which is available on its website.
Council Recommendation 5.2:
Provide the information indicated in the Guide to reporting on Principle 5.
The Company complies with this recommendation.
6. RESPECT THE RIGHTS OF SHAREHOLDERS
Council Principle 6: Companies should respect the rights of shareholders and facilitate the effective exercise of those rights.
Council Recommendation 6.1:
Design a communications policy for promoting effective communication with shareholders and encouraging their participation at general meetings and disclose that policy or a summary of that policy.
The Company complies with this recommendation.
The Company has adopted a Shareholder Communication Strategy which is available on its website.
Council Recommendation 6.2:
Provide the information indicated in the Guide to reporting on Principle 6.
The Company complies with this recommendation.
7. RECOGNISE AND MANAGE RISK
Council Principle 7: Companies should establish a sound system of risk oversight and management and internal control.
Council Recommendation 7.1:
Companies should establish policies for the oversight and management of material business risks and disclose a summary of those policies.
The Company complies with this recommendation.
The Company has a Policy on Risk Oversight and Management of Material Business Risks which is available on the website.
Council Recommendation 7.2
The board should require management to design and implement the risk management and internal control system to manage the Company's material business risks and report to it on whether those risks are being managed effectively.The board should disclose that management has reported to it as to the effectiveness of the Company's management of its material business risks.
The Chief Executive Officer (currently the Executive Team) and the Chief Financial Officer review the risk management and internal control systems and report annually to the Board in respect of the company's key business risks and how they are being managed. The last report was completed in August 2011.
Council Recommendation 7.3
The board should disclose whether it has received assurance from the Chief Executive Officer (or equivalent) and the Chief Financial Officer (or equivalent) that the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks.
The Company complies with this recommendation.
The Board receives assurance from the Chief Executive Officer (or equivalent) and the Chief Financial Officer in the form of a declaration, prior to approving the financial statements.
Council Recommendation 7.4:
Provide the information indicated in the Guide to reporting on Principle 7.
The Company complies with this recommendation and provides the following disclosure;
The board has received assurance from the Chief Executive Officer (or equivalent) and the Chief Financial Officer that the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks.
8. REMUNERATE FAIRLY AND RESPONSIBLY
Council Principle 8: Companies should ensure that the level and composition of remuneration is sufficient and reasonable and that its relationship to performance is clear.
Council Recommendation 8.1
The Board should establish a remuneration committee.
The Company complies with this recommendation.
The Board established a remuneration committee which is governed by a formal charter. The Remuneration committee charter is available on the website.
Council Recommendation 8.2
The remuneration committee should be structured so that it;
- x Consists of a majority of independent directors;
- x Is chaired by an independent chair
- x Has at least three members
The members of the remuneration committee are Mr Ian Gandel, Mr John Dunlop, and Mr John Kenny.The Chairman of the remuneration committee is Mr Dunlop who is not independent. Currently the remuneration committee has one independent director, Mr Kenny, and two nonͲindependent directors, Mr Dunlop and Mr Gandel. The Company does not comply with Recommendation 8.2.
While the Board strongly endorses the position that the remuneration committee should exercise independence of judgment, it also recognises that there are only four directors on the Board.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 NonͲ Executive Directors simply to fill the remuneration committee.
Council Recommendation 8.3
Companies should clearly distinguish the structure of nonͲexecutive directors' remuneration from that of executive directors and senior executives.
The Company complies with this recommendation.
Information on director and executive remuneration is contained within the Directors' Report.
Council Recommendation 8.4:
Provide the information indicated in the Guide to reporting on Principle 8.
The Company complies with this recommendation and provides the following disclosures;
- A single meeting of the remuneration committee was held during the year which was attended by Mr Gandel and Mr Dunlop.
- The Company currently has no schemes for retirement benefits, other than superannuation for directors.
- The Company does not have any unvested entitlements under any equityͲbased remuneration schemes.
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2011
| CONSOLIDATED | PARENT | ||||
|---|---|---|---|---|---|
| Note | 2011 | 2010 | 2011 | 2010 | |
| $ | $ | $ | $ | ||
| Continuing Operations | |||||
| Finance revenue | 3(a) | 82,348 | 61,446 | 82,348 | 61,445 |
| Other Income | 3(b) | 590 | 2,994 | 590 | 2,994 |
| Total Income | 82,938 | 64,440 | 82,938 | 64,439 | |
| Administration expense | 3(c) | (1,113,588) | (988,964) | (806,937) | (576,985) |
| Employee benefits expense | 3(d) | (1,221,526) | (1,111,176) | (892,875) | (822,071) |
| Foreign exchange gain/(losses) | 1,125 | 10,392 | (1,733) | 4,313 | |
| Share based payment expense | (22,500) | (181,000) | (22,500) | (181,000) | |
| Exploration expense | (39,318) | (16,501) | (27,806) | (1,411) | |
| Project evaluation expense | (33,165) | (362,468) | Ͳ | Ͳ | |
| Impairment of loans to other entities | (239,596) | Ͳ | (239,596) | ||
| Depreciation and amortisation expense | (39,222) | (38,299) | (15,675) | (13,622) | |
| Impairment of intercompany loans | Ͳ | Ͳ | (1,584,566) | (1,171,869) | |
| Impairment of exploration and evaluation | (5,793) | (250,398) | Ͳ | Ͳ | |
| expenditure | |||||
| Finance costs | Ͳ | (20,795) | Ͳ | (20,795) | |
| Total expenses | (2,713,583) | (2,959,209) | (3,591,688) | (2,783,440) | |
| Loss before income tax | (2,630,645) | (2,894,769) | (3,508,750) | (2,719,001) | |
| Income tax expense | 4 | Ͳ | Ͳ | Ͳ | Ͳ |
| Loss after income tax | (2,630,645) | (2,894,769) | (3,508,750) | (2,719,001) | |
| Other comprehensive income | |||||
| Exchange rate differences on translating | (899,448) | (275,212) | Ͳ | Ͳ | |
| foreign operations | |||||
| Total other comprehensive income | (899,448) | (275,212) | Ͳ | Ͳ | |
| Total comprehensive income/(loss) for theperiod | (3,530,093) | (3,169,981) | (3,508,750) | (2,719,001) | |
| Profit/(loss) is attributable to:Members of the parentNonͲcontrolling interest | (3,530,093)Ͳ | (3,169,981)Ͳ | (3,508,750)Ͳ | (2,719,001)Ͳ | |
| (3,530,093) | (3,169,981) | (3,508,750) | (2,719,001) | ||
| Total comprehensive income/(loss) isattributable to: | |||||
| Members of the parent | (3,530,093) | (3,169,981) | (3,508,750) | (2,719,001) | |
| NonͲcontrolling interest | Ͳ | Ͳ | Ͳ | Ͳ | |
| (3,530,093) | (3,169,981) | (3,508,750) | (2,719,001) | ||
| Basic earnings/(loss) per share (cents pershare) | 5 | (0.43) | (0.58) | ||
| Diluted earnings/(loss) per share (cents pershare) | 5 | (0.43) | (0.58) |
The accompanying notes form an integral part of this Statement of Comprehensive Income.
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2011
| CONSOLIDATED | PARENT | |||||
|---|---|---|---|---|---|---|
| Note | 2011 | 2010 | 2011 | 2010 | ||
| $ | $ | $ | $ | |||
| ASSETS | ||||||
| Current Assets | ||||||
| Cash and cash equivalents | 6 | 806,397 | 1,223,122 | 639,915 | 1,147,375 | |
| Trade and other receivables | 7 | 98,480 | 33,556 | 85,038 | 31,810 | |
| Other assets | 80,524 | 42,958 | 70,057 | 35,635 | ||
| Total Current Assets | 985,401 | 1,299,636 | 795,010 | 1,214,820 | ||
| NonͲCurrent Assets | ||||||
| Other financial assets | 8 | Ͳ | Ͳ | 27,888 | 27,788 | |
| Property, plant and equipment | 9 | 284,429 | 133,846 | 46,876 | 47,922 | |
| Exploration and evaluation | 10 | 4,316,624 | 4,384,999 | Ͳ | Ͳ | |
| Total NonͲCurrent assets | 4,601,053 | 4,518,845 | 74,764 | 75,710 | ||
| TOTAL ASSETS | 5,586,454 | 5,818,481 | 869,774 | 1,290,530 | ||
| LIABILITIESCurrent Liabilities | ||||||
| Trade and other payables | 11 | 1,010,327 | 900,625 | 123,939 | 45,164 | |
| Provisions | 12 | 10,177 | 17,236 | 5,678 | 2,925 | |
| Loans and Borrowings | 13 | 188,957 | Ͳ | Ͳ | Ͳ | |
| Total Current Liabilities | 1,209,461 | 917,861 | 129,617 | 48,089 | ||
| TOTAL LIABILITIES | 1,209,461 | 917,861 | 129,617 | 48,089 | ||
| NET ASSETS | 4,376,993 | 4,900,620 | 740,157 | 1,242,441 | ||
| EQUITY | ||||||
| Equity attributable to equity holders of theparent | ||||||
| Contributed Equity | 14(a) | 38,588,181 | 35,581,715 | 38,588,181 | 35,581,715 | |
| Reserves | 15 | (276,951) | 622,497 | 530,402 | 530,402 | |
| Accumulated losses | 15 | (33,934,237) | (31,303,592) | (38,378,426) | (34,869,676) | |
| TOTAL EQUITY | 4,376,993 | 4,900,620 | 740,157 | 1,242,441 |
The accompanying notes form an integral part of this Statement of Financial Position.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2011
| CONSOLIDATED | PARENT | ||||
|---|---|---|---|---|---|
| Note | 2011 | 2010 | 2011 | 2010 | |
| $ | $ | ||||
| Cash flows from operating activities | |||||
| Payments to suppliers and employees | (2,376,324) | (2,272,893) | (1,738,629) | (1,586,498) | |
| Interest received | 82,902 | 61,583 | 82,902 | 60,468 | |
| Finance costs | Ͳ | (20,795) | Ͳ | (20,795) | |
| Other receipts | 590 | 1,880 | 590 | 2,994 | |
| Net cash flows (used in) operating activities | 6 | (2,292,832) | (2,230,225) | (1,655,137) | (1,543,831) |
| Cash flows from investing activities | |||||
| Payments for exploration and evaluation | (816,812) | (457,715) | Ͳ | Ͳ | |
| Payments for property, plant and equipment | (214,310) | (13,807) | (10,294) | (12,321) | |
| Payments for other assets | Ͳ | Ͳ | (100) | (100) | |
| Loans to controlled entities within the Group | Ͳ | Ͳ | (1,584,566) | (1,171,869) | |
| Loans to other entities | (50,639) | (239,596) | Ͳ | ||
| Net cash flows (used in) investing activities | (1,081,761) | (471,522) | (1,834,556) | (1,184,290) | |
| Cash flows from financing activities | |||||
| Proceeds from issue of fully paid shares | 14(b) | 3,200,000 | 4,372,958 | 3,200,000 | 4,372,958 |
| Payment of transaction costs | 14(b) | (216,034) | (269,813) | (216,034) | (269,813) |
| Proceeds from borrowings | Ͳ | 150,000 | Ͳ | 150,000 | |
| Repayment of borrowing | Ͳ | (450,000) | Ͳ | (450,000) | |
| Net cash flows from financing activities | 2,983,966 | 3,803,145 | 2,983,966 | 3,803,145 | |
| Net increase/(decrease) in cash held | (390,627) | 1,101,398 | (505,727) | 1,075,024 | |
| Net foreign exchange differences | (26,098) | 7,597 | (1,733) | 4,313 | |
| Cash and cash equivalents at beginning of | |||||
| period | 1,223,122 | 114,127 | 1,147,375 | 68,038 | |
| Cash and cash equivalents at end of period | 6 | 806,397 | 1,223,122 | 639,915 | 1,147,375 |
The accompanying notes form an integral part of this Statemen of t Cash Flows.
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2011
| Issued | Accumulated | Option | Foreign | Total | |
|---|---|---|---|---|---|
| capital | losses | reserve | currency | equity | |
| translation | |||||
| reserve | |||||
| $ | $ | $ | $ | $ | |
| CONSOLIDATED | |||||
| At 1 July 2009 | 30,678,570 | (28,408,823) | 349,402 | 367,307 | 2,986,456 |
| Currency translation differences | Ͳ | Ͳ | Ͳ | (275,212) | (275,212) |
| Loss for the year | Ͳ | (2,894,769) | Ͳ | Ͳ | (2,894,769) |
| Total comprehensive income for the year | Ͳ | (2,894,769) | Ͳ | (275,212) | (3,169,981) |
| Transactions with owners in their capacity | |||||
| as owners | |||||
| Issue of share capital | 5,172,958 | Ͳ | Ͳ | Ͳ | 5,172,958 |
| Transaction costs | (269,813) | Ͳ | Ͳ | Ͳ | (269,813) |
| Cost of shareͲbased payments | Ͳ | Ͳ | 181,000 | Ͳ | 181,000 |
| At 30 June 2010 | 35,581,715 | (31,303,592) | 530,402 | 92,095 | 4,900,620 |
| Currency translation differences | Ͳ | Ͳ | (899,448) | (899,448) | |
| Loss for the year | Ͳ | (2,630,645) | Ͳ | Ͳ | (2,630,645) |
| Total comprehensive income for the year | Ͳ | (2,630,645) | Ͳ | (899,448) | (3,530,093) |
| Transactions with owners in their capacity | |||||
| as owners | |||||
| Issue of share capital | 3,200,000 | Ͳ | Ͳ | Ͳ | 3,200,000 |
| Transaction costs | (216,034) | Ͳ | Ͳ | Ͳ | (216,034) |
| Cost of shareͲbased payments | 22,500 | Ͳ | Ͳ | Ͳ | 22,500 |
| At 30 June 2011 | 38,588,181 | (33,934,237) | 530,402 | (807,353) | 4,376,993 |
| PARENT | |||||
| At 1 July 2009 | 30,678,570 | (32,150,675) | 349,402 | Ͳ | (1,122,703) |
| Loss for the year | Ͳ | (2,719,001) | Ͳ | Ͳ | (2,719,001) |
| Total comprehensive income for the year | Ͳ | (2,719,001) | Ͳ | Ͳ | (2,719,001) |
| Transactions with owners in their capacity | |||||
| as owners | |||||
| Issue of share capital | 5,172,958 | Ͳ | Ͳ | Ͳ | 5,172,958 |
| Transaction costs | (269,813) | Ͳ | Ͳ | Ͳ | (269,813) |
| Cost of shareͲbased payments | Ͳ | Ͳ | 181,000 | Ͳ | 181,000 |
| At 30 June 2010 | 35,581,715 | (34,869,676) | 530,402 | Ͳ | 1,242,441 |
| Loss for the year | Ͳ | (3,508,750) | Ͳ | Ͳ | (3,508,750) |
| Total comprehensive income for the year | Ͳ | (3,508,750) | Ͳ | Ͳ | (3,508,750) |
| Transactions with owners in their capacity | |||||
| as owners | |||||
| Issue of share capital | 3,200,000 | Ͳ | Ͳ | Ͳ | 3,200,000 |
| Transaction costs | (216,034) | Ͳ | Ͳ | Ͳ | (216,034) |
| Cost of shareͲbased payments | 22,500 | Ͳ | Ͳ | Ͳ | 22,500 |
| At 30 June 2011 | 38,588,181 | (38,378,426) | 530,402 | Ͳ | 740,157 |
The accompanying notes form an integral part of this Statement of Changes in Equity.
FOR THE YEAR ENDED 30 JUNE 2011
1 CORPORATE INFORMATION
The financial report of Gippsland Limited for the year ended 30 June 2011 was authorised for issue in accordance with a resolution of the directors on 30 September 2011.
Gippsland Limited which is the ultimate parent company, is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange.
The nature of the operations and principal activities of the Group is exploration and mine development.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Preparation
The financial report is a general purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001 and applicable Australian Accounting Standards.
The financial report has also been prepared on a historical cost basis, except where stated.
The financial report is presented in Australian dollars and all values are in whole dollars.
(b) Going Concern
The consolidated entity and the company have incurred net losses after tax of $2,630,645 (2010: $2,894,769) and $3,508,750 (2010: $2,719,001) respectively and experienced net cash outflows from operating and investing activities of $3,374,593 (2010: $2,701,747) and $3,489,693 (2010: $2,728,121) respectively for the year ended 30 June 2011.As at 30 June 2011, the consolidated entity had a working capital deficiency of $224,060 and had cash assets of $806,397.
The ability of the consolidated entity and the company to continue as going concerns is principally dependent upon raising additional capital and / or debt finance to fund exploration and project development, funding the Abu Dabbab project, Eritrean project, other commitments, other principal activities and working capital.
These conditions indicate a material uncertainty that may cast significant doubt about the consolidated entity's and the company's ability to continue as going concerns.
During July and August 2011, the Company commenced and successfully completed a fully underwritten renounceable rights issue to raise $5,063,591 before costs. The rights issue was underwritten by Patersons Securities Ltd and subͲ underwritten by Gandel Metals Pty Ltd, an entity associated with Mr Ian Gandel.
The directors have prepared a cash flow forecast for the period ending 30 September 2012 which indicates that the current cash resources may not meet expected cash outgoings, without additional capital and / or debt funding.The consolidated entity will require at least $2.3 million (net of costs) to be raised by no later than May 2012 to fund its current operations through to 30 September 2012.The consolidated entity is currently evaluating capital raising and/or debt funding opportunities.
Based on the cash flow forecasts and achieving future funding, the directors are satisfied that the going concern basis of preparation is appropriate. The financial report has therefore been prepared on a going concern basis, which assumes continuity of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business.
Should the consolidated entity and the company be unable to raise the funding referred to above, there is a material uncertainty whether the consolidated entity and the company will be able to continue as going concerns and, therefore, whether they will be required to realise their assets and extinguish their liabilities in the normal course of business and at the amounts stated in the financial report.
FOR THE YEAR ENDED 30 JUNE 2011
The financial report does not include any adjustments relating to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that may be necessary should the consolidated entity and the company be unable to continue as going concerns.
(c) Statement of Compliance
Compliance with Australian Accounting Standards ensures the financial report, the financial statements and notes comply with International Financial Reporting Standards ("IFRS").
(d) New standards and Interpretations Adopted
The consolidated entity has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board that are relevant to their operations and are effective for the current financial reporting period beginning 1 July 2010.
Significant new and revised standards and interpretations effective for the current financial reporting period that are relevant to the consolidated entity are:
- x AASB 2009Ͳ5: Further Amendments to Australian Accounting Standards arising from the Annual Improvements Process;
- x AASB 2009Ͳ8: Amendments to Australian Accounting Standards Group CashͲsettled ShareͲbased Payment Transactions AASB 2;
- x AASB 2009Ͳ10: Amendments to Australian Accounting StandardsͲClassification of Rights Issues;
- x AASB 2010Ͳ3: Amendments to Australian Accounting Standards arising from the Annual Improvements Project;
- x Interpretation 19: Extinguishing Financial Liabilities with Equity Instruments.
The adoption of these standards has not had an impact on the consolidated entity.
Accounting Standards and Interpretations issued but not yet effective
The following Australian Accounting Standards and Interpretations have recently been issued or amended but are not yet effective and have not been adopted by the consolidated entity for the year ended 30 June 2011.
| Standard / Interpretation | Effective for annualreporting periodsbeginning/ending on orafter | Expected to beapplied beconsolidated entity |
|---|---|---|
| AASB 124 Related Party Disclosures (2009) andAASB 2009Ͳ12 Amendments to AustralianAccounting Standards | 1 January 2011 | 30 June 2012 |
| AASB 9: Financial Instruments, AASB 2009Ͳ11Amendments to Australian Accounting Standardsarising from AASB 9 and AASB 2010Ͳ9Amendments to Australian Accounting Standardsarising from AASB 9 (December 2010) | 1 January 2013 | 30 June 2014 |
| AASB 2010Ͳ4 Further Amendments to AustralianAccounting Standards arising from AnnualImprovements Project | 1 January 2011 | 30 June 2012 |
| AASB 2010Ͳ5 Amendments to AustralianAccounting Standards | 1 January 2011 | 30 June 2012 |
| AASB 2010Ͳ6 Amendments to AustralianAccounting Standards – Disclosures on Transfers ofFinancial Assets | 1 July 2011 | 30 June 2012 |
FOR THE YEAR ENDED 30 JUNE 2011
| Standard / Interpretation | Effective for annualreporting periodsbeginning/ending on orafter | Expected to beapplied beconsolidated entity |
|---|---|---|
| AASB 2010Ͳ8 Amendments to AustralianAccounting Standards – Deferred Tax: Recovery ofUnderlying Assets' | 1 January 2012 | 30 June 2013 |
| AASB 2011Ͳ4 Amendments to AustralianAccounting Standards to Remove Individual KeyManagement Personnel Disclosure Requirements | 1 July 2013 | 30 June 2014 |
| AASB 2011Ͳ9 Amendments to AustralianAccounting Standards – Presentation of OtherComprehensive Income | 1 July 2012 | 30 June 2013 |
| AASB 10 Consolidated Financial Statements | 1 January 2013 | 30 June 2014 |
| AASB 11 Joint Arrangements | 1 January 2013 | 30 June 2014 |
| AASB 12 Disclosure of Interests in Other Entities | 1 January 2013 | 30 June 2014 |
| AASB 127 Separate Financial Statements (2011),AASB 128 Investments in Associates and JointVentures (2011) and AASB 2011Ͳ7 Amendments toAustralian Accounting Standards arising from theConsolidation and Joint Venture ArrangementStandards | 1 January 2013 | 30 June 2014 |
| AASB 13 Fair Value Measurement | 1 January 2013 | 30 June 2014 |
| AASB 119 Employee Benefits | 1 January 2013 | 30 June 2014 |
The impact of these recently issued or amended Standards and Interpretation have not been determined as yet by the consolidated entity.
(e) Basis of consolidation
The consolidated financial statements comprise the financial statements of Gippsland Limited and entities (including special purpose entities) controlled by Gippsland Limited (its subsidiaries).Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies.
Adjustments are made to bring into line any dissimilar accounting policies that may exist.All interͲcompany balances and transactions, including unrealised profits arising from intraͲgroup transactions, have been eliminated in full. Unrealised losses are eliminated unless costs cannot be recovered.Subsidiaries are consolidated from the date on which control is transferred to the group and cease to be consolidated from the date on which control is transferred out of the Group.
Where there is loss of control of a subsidiary, the consolidated financial statements include the results for the part of the reporting period during which Gippsland Limited has control.
(f) Interests in joint ventures
The Group's interest in its joint venture operations is accounted for by recognising the Group's assets and liabilities from the joint venture, as well as expenses incurred by the Group and the Group's share of income earned from the joint venture, in the consolidated financial statements.
FOR THE YEAR ENDED 30 JUNE 2011
(g) Foreign currency translation
Both the functional and presentation currency of Gippsland Limited and its Australian subsidiaries is Australian dollars ($AU).
Transactions in foreign currencies are initially recorded in the functional currency at the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the statement of financial position date.
All differences in the consolidated financial report are taken to the statement of comprehensive income with the exception of differences on foreign currency borrowings that provide a hedge against a net investment in a foreign entity.These are taken directly to equity until the disposal of the net investment, at which time they are recognised in the statement of comprehensive income.
Tax charges and credits attributable to exchange differences on those borrowings are also recognised in equity.
NonͲmonetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the date of the initial transaction.
NonͲmonetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.
The functional currency of the overseas subsidiaries Tantalum Egypt JSC, Nubian Resources JSC and Nubian Resources PLC is Egyptian pounds (EGP).
As at the reporting date the assets and liabilities of these overseas subsidiaries are translated into the presentation currency of Gippsland Limited at the rate of exchange ruling at the statement of financial position date and the statements of comprehensive income are translated at the weighted average exchange rates for the year.
The exchange differences arising on the retranslation are taken directly to a separate component of equity.
On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised in the statement of comprehensive income.
(h) Cash and cash equivalents
Cash and shortͲterm deposits in the statement of financial position comprise cash at bank and in hand and shortͲterm deposits with an original maturity of three months or less.
For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.
(i) Trade and other receivables
Trade receivables, which generally have 30 day terms, are recognised and carried at original invoice amount which represents fair value at that date less an allowance for any doubtful debts. An allowance of doubtful debts is made when there is objective evidence that the Group will not be able to collect the debts. Bad debts are written off when identified.
(j) Other financial assets
Other financial assets in the parent company represent investments in subsidiaries held at cost less any impairment.
FOR THE YEAR ENDED 30 JUNE 2011
(k) Property, plant and equipment
Plant and equipment is stated at cost less accumulated depreciation and any impairment losses recognised.
Depreciation is calculated on a straightͲline basis over the estimated useful life of the asset as follows:
Leasehold ImprovementsͲover 2 to 5 years Plant and equipmentͲover 3 to 10 years
Impairment
The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.
For an asset that does not generate largely independent cash flows, the recoverable amount is determined for the cashͲ generating unit to which the asset belongs.
If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets or cashͲ generating units are written down to their recoverable amount.
The recoverable amount of plant and equipment is the greater of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a preͲtax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
Impairment losses are recognised in the statement of comprehensive income.An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued used of the asset.
Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the statement of comprehensive income in the period the item is derecognised.
(l) Exploration and evaluation expenditure
Exploration and evaluation expenditure incurred is recognised as exploration and evaluation assets, measured on the cost basis.The 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.
(m) Recoverable amount of assets
At each reporting date, the Group assesses whether there is any indication that an asset may be impaired.Where an indicator of impairment exists, the Group makes a formal estimate of recoverable amount.Where the carrying amount of an asset exceeds its recoverable amount the asset is considered impaired and is written down to its recoverable amount.
Recoverable amount is the greater of fair value less costs to sell and value in use.It is determined for an individual asset, unless the asset's value in use cannot be estimated to be close to its fair value less costs to sell and it does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case, the recoverable amount is determined for the cashͲgenerating unit to which the asset belongs.
FOR THE YEAR ENDED 30 JUNE 2011
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
(n) Trade and other payables
Trade and other payables are carried at amortised cost and due to their short term nature they are not discounted. They represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. The amounts are unsecured and are usually paid within 30 days of recognition.
(o) Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
Where the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the statement of comprehensive income net of any reimbursement.
If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a preͲtax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.
Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
(p) Loans and borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received.
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. Amortised cost is calculated by taking into account any issue costs and any discount or premium on settlement.
(q) Contributed equity
Ordinary share capital is recognised at the fair value of the consideration received.Any transaction costs arising on the issue of shares are recognised directly in equity as a reduction of the share proceeds received.
(r) ShareͲbased payment transactions
The Group provides remuneration to employees (including directors) of the Group in the form of shareͲbased payment transactions, whereby employees render services in exchange for shares or rights over shares ('equityͲsettled transactions').
The cost of these equityͲsettled transactions with employees is measured by reference to the fair value at the date at which they are granted. In valuing equityͲsettled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of Gippsland Limited ('market conditions').
The cost of equityͲsettled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award ('vesting date').
FOR THE YEAR ENDED 30 JUNE 2011
The cumulative expense recognised for equityͲsettled transactions at each reporting date until vesting date reflectsͲ
- (i) the extent to which the vesting period has expired, and
- (ii) the number of awards that, in the opinion of the directors of the Group, will ultimately vest.
This opinion is formed based on the best available information at balance date. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition.Where the terms of an equityͲsettled award are modified, as a minimum an expense is recognised as if the terms had not been modified.In addition, an expense is recognised for any increase in the value of the transaction as a result of the modification, as measured at the date of modification.
Where an equityͲsettled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph.
The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per share (see note 5).
(s) Leases
Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. All other leases are classified as finance leases. Operating lease payments are recognised as an expense in the statement of comprehensive income on a straightͲline basis over the lease term. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.
In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straightͲline basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
(t) Revenue
Interest revenue is recognised when it is probable that the economic benefits will flow to the Group and the amount of revenue can be measured reliably.Interest revenue is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount on initial recognition.
(u) Income tax
In principle, deferred income tax is provided on all temporary differences at the statement of financial position date between the tax bases of assets and liabilities and their carrying amounts for the financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences:
- x except where the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
- x in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, except where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
FOR THE YEAR ENDED 30 JUNE 2011
Deferred income tax assets are recognised for all deductible temporary differences, carryͲforward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carryͲforward of unused tax credits and unused tax losses can be utilised:
- x except where the deferred income tax asset relating to the deductible temporary differences arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
- x in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred income tax assets is reviewed at each statement of financial position date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the statement of financial position date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in the statement of comprehensive income.
(v) Other taxes
Revenues, expenses and assets are recognised net of the amount of GST except:
- x where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
- x receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.
Cash flows are included in the Cash Flow statement on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.
(w) Employee entitlements
Provision is made for the Company's liability for employee benefits arising from services rendered by employees at balance date. Employee benefits expected to be settled within one year, together with entitlements arising from wages and salaries, annual leave and sick leave, which will be settled within one year, have been measured at the amounts expected to be paid when the liability is settled, plus related onͲcosts. 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. Contributions are made by the entity to employee superannuation funds and are charged as expenses when incurred.
FOR THE YEAR ENDED 30 JUNE 2011
(x) Derecognition of financial instruments
The derecognition of a financial instrument takes place when the Group no longer controls the contractual rights that comprise the financial instrument, which is normally the case when the instrument is sold, or all the cash flows attributable to the instrument are passed through to an independent third party.
(y) Segment information
Operating segments have been identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segments and to assess their performance.The chief operating decision maker has been identified as the board of directors of the Company.
(z) Critical accounting judgements and key sources of estimation uncertainty
In the application of Australian Accounting Standards management is required to make judgments, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstance, the results of which form the basis of making the judgments.Actual results may differ from these estimates.The estimates and underlying assumptions are reviewed on an ongoing basis.Revisions to accounting estimates are recognised in the year in which the estimate is revised if the revision affects only that year, or in the year of the revision and future years if the revision affects both current and future years.Judgments made by management that have significant effects on the financial statements and estimates with a significant risk of material adjustments in the next year are disclosed, these relate to impairment of interͲcompany loans and exploration and evaluation expenditure.
The criteria used by management in determining the impairment is as follows:
- x InterͲcompany loans are impaired by the lending company to the extent that there is uncertainty about the future recoverability of such loans from the borrowing company.Reversal of all or part of prior period impairment losses may be approved by management once a borrowing company has a capacity to repay all or part of such interͲ company loans, and
- x The ultimate recoupment of exploration and evaluation expenditure is dependent upon successful development and commercial exploitation or alternatively the sale of the respective areas of interest at an amount at least equal to book value.Therefore exploration and evaluation expenditure is impaired until such time as the aforementioned can be determined, normally by way of a Feasibility Study or some other event. Reversal of prior period impairment losses may be approved by management once the capacity to exploit or sell has been positively determined.
Accounting policies are selected and applied in a manner which ensures that the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported.
(aa) Financial risk management policy
Details of the Group's financial risk management policy are set out in Note 26.
(bb) Compound financial instruments
The Group evaluates the terms of any financial instrument to determine whether it contains both a liability and an equity component.The separate components of a financial instrument that create a financial liability and grant an option to the holder of the instrument to convert it into an equity instrument are recognised separately on the statement of financial position.
(cc) Comparative figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.
FOR THE YEAR ENDED 30 JUNE 2011
3 REVENUES, OTHER INCOME AND EXPENSES
| CONSOLIDATED | PARENT | ||||
|---|---|---|---|---|---|
| 2011 | 2010 | 2011 | 2010 | ||
| $ | $ | $ | $ | ||
| Revenue and expenses from continuing operations | |||||
| (a) | Revenue | ||||
| Finance revenue | 82,348 | 61,446 | 82,348 | 61,445 | |
| 82,348 | 61,446 | 82,348 | 61,445 | ||
| (b) | Other income | ||||
| Sundry income | 590 | 2,994 | 590 | 2,994 | |
| 590 | 2,994 | 590 | 2,994 | ||
| (c) | Administration expenses | ||||
| Included in administrative expenses: | |||||
| Minimum lease paymentsͲoperating lease | 154,372 | 145,507 | 130,176 | 126,944 | |
| Consultancy expenses | 231,088 | 63,293 | 231,088 | 63,292 | |
| (d) | Employee benefits expenses | ||||
| Payroll cost | 1,204,737 | 1,096,651 | 876,086 | 807,546 | |
| Superannuation | 16,789 | 14,525 | 16,789 | 14,525 | |
| Employee benefits expense in Statement of | |||||
| Comprehensive Income | 1,221,526 | 1,111,176 | 892,875 | 822,071 | |
| ShareͲbased payments expense | 22,500 | Ͳ | 22,500 | Ͳ | |
| Total employee benefit expenses | 1,244,026 | 1,111,176 | 915,375 | 822,071 | |
| 4 | INCOME TAX | ||||
| Statement of Comprehensive Income | CONSOLIDATED | PARENT | |||
| 2011 | 2010 | 2011 | 2010 | ||
| $ | $ | $ | $ | ||
| (a) | The components of income tax expense for the yearsended 30 June 2011 and 2010 are: | ||||
| Statement of Comprehensive Income | |||||
| Current income tax | |||||
| Current income tax charge/(benefit) | Ͳ | Ͳ | Ͳ | Ͳ | |
| Deferred income tax | |||||
| Relating to origination and reversal of temporary differences | Ͳ | Ͳ | Ͳ | Ͳ | |
| Benefit from previously unrecognised tax loss used to | |||||
| reduce deferred tax expense | Ͳ | Ͳ | Ͳ | Ͳ | |
| Income tax expense/(benefit) reported in statement of | |||||
| comprehensive income | Ͳ | Ͳ | Ͳ | Ͳ | |
| Statement of changes in equity | |||||
| Income tax liability reported in equity | Ͳ | Ͳ | Ͳ | Ͳ |
FOR THE YEAR ENDED 30 JUNE 2011
A reconciliation of income tax expense (benefit) applicable to accounting profit before income tax at the statutory income tax rate to income tax expense at the Group's effective income tax rate for the years ended 30 June 2011 and 2010 is as follows:
| Statement of Comprehensive Income | CONSOLIDATED | PARENT | ||
|---|---|---|---|---|
| 2011 | 2010 | 2011 | 2010 | |
| $ | $ | $ | $ | |
| Accounting profit (loss) before tax | (2,630,645) | (2,894,769) | (3,508,750) | (2,719,001) |
| At the statutory income tax rate of 30% (2010: 30%) | (789,194) | (868,431) | (1,052,625) | (815,700) |
| NonͲdeductible expenses | 79,398 | 227,039 | 747,107 | 89,934 |
| Temporary differences and tax losses not recognised | 709,796 | 641,392 | 305,518 | 725,766 |
| Income tax expenserecognised on profit or loss | ͲͲ | Ͳ | Ͳ | |
| ͲͲ | Ͳ | Ͳ | ||
| Effective income tax rate | 0% | 0% | 0% | 0% |
| CONSOLIDATED | PARENT | |||
| 2011 | 2010 | 2011 | 2010 | |
| $ | $ | $ | $ | |
| Deferred tax liabilitiesOther assets | (90) | (146) | (90) | (146) |
| Foreign exchange gain | Ͳ | Ͳ | Ͳ | Ͳ |
| (90) | (146) | (90) | (146) | |
| Deferred tax assets | ||||
| Business related costs | 57,446 | 35,577 | 57,446 | 35,577 |
| Accrued superannuation | Ͳ | Ͳ | Ͳ | Ͳ |
| Accrued audit fees | 8,482 | 8,115 | 5,308 | 5,054 |
| Accrued expenses | 11,384 | 2,206 | 11,384 | 1,500 |
| Employee entitlements | 1,703 | 878 | 1,703 | 878 |
| Foreign exchange gain | Ͳ | Ͳ | Ͳ | 17 |
| Foreign exchange loss | 466,470 | 90,890 | Ͳ | Ͳ |
| Tax losses (domestic) | 4,839,207 | 4,444,627 | 4,116,152 | 3,568,376 |
| Trade and other receivables | Ͳ | Ͳ | 4,725,416 | 4,923,677 |
| 5,384,692 | 4,582,293 | 8,917,409 | 8,535,079 | |
| Unrecognised deferred tax assets | (5,384,602) | (4,582,147) | (8, 917,319) | (8,534,933) |
| 90 | 146 | 90 | 146 | |
| Net deferred tax asset | Ͳ | Ͳ | Ͳ | Ͳ |
| Tax losses and temporary differences not recognised | 5,384,602 | 4,582,147 | 8,917,319 | 8,534,933 |
The deductible temporary differences and tax losses do not expire under current legislation. Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profit will be available against which the Company and Group can utilise benefits.
FOR THE YEAR ENDED 30 JUNE 2011
5 EARNINGS PER SHARE
| CONSOLIDATED | ||
|---|---|---|
| 2011 | 2010 | |
| cents | cents | |
| Basic earnings per share | (0.43) | (0.58) |
| Diluted earnings per share | (0.43) | (0.58) |
| The following reflects the income and share data used in the basic and diluted earnings per share computations:(a)Reconciliation of earnings used in calculating earnings per shareProfit/(loss) attributable to ordinary equity holders of the Company used in | ||
| calculating basic and diluted earnings per share | (2,630,645) | (2,894,769) |
| (b)Weighted average number of shares used in the denominator | ||
| Shares | Shares | |
| Weighted average number of ordinary shares used as the denominator in | ||
| calculating basic earnings per share | 604,762,113 | 497,548,253 |
| Adjusted weighted average number of ordinary shares used in calculating diluted | ||
| earnings per share | 604,762,113 | 497,548,253 |
There were 56,000,000 potential ordinary shares as at 30 June 2011 (56,000,000 for 30 June 2010).
The consolidated entity's options over ordinary shares could potentially dilute basic earnings per share in the future, however they have been excluded from the calculations of diluted earnings per share because they are antiͲdilutive for the years presented.
FOR THE YEAR ENDED 30 JUNE 2011
6 CASH AND CASH EQUIVALENTS
| CONSOLIDATED | PARENT | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2011 | 20102011 | 2010 | ||||||||
| $ | $ | $ | $ | |||||||
| Cash at bank and in hand | 271,797 | 104,951 | 105,315 | 29,204 | ||||||
| Short term deposits | 534,600 | 1,118,171 | 534,600 | 1,118,171 | ||||||
| 806,397 | 1,223,122 | 639,915 | 1,147,375 |
Cash at bank and in hand earns interest at floating rates based on daily bank rates.
ShortͲterm deposits are made for varying periods of between one day and one month depending on the immediate cash requirements of the Group, and earn interest at the respective shortͲterm deposit rates.
The fair value of cash and cash equivalents is $806,397 (2010: $1,223,122).
Reconciliation to statement of cash flows
For the purposes of the Statement of Cash Flows, cash and cash equivalents comprise the following at 30 June:
| 271,797104,951105,315Cash at bank and in hand | 29,204 |
|---|---|
| ShortͲterm deposits534,6001,118,171534,600 | 1,118,171 |
| 806,3971,223,122639,915 | 1,147,375 |
| Reconciliation from the net profit/(loss) after tax to the net cash | |
| flows from operations | |
| Net Profit/(Loss) after income tax(2,630,645)(2,894,769)(3,508,750) | (2,719,001) |
| Adjustments for: | |
| Depreciation and amortisation39,22238,30015,675 | 13,622 |
| Impairment losses247,22735,2241,826,000 | 1,171,869 |
| Foreign exchange loss (gain)167,901(42,635)1,733 | (4,313) |
| Share options expensed22,500181,00022,500 | 181,000 |
| Exploration expenses9,616229,959Ͳ | Ͳ |
| Changes in assets and liabilities | |
| (increase)/decrease in trade and other receivables(55,821)(1,849)(44,126) | (103) |
| (increase)/decrease in other assets(8,987)15,794(1,838) | 18,594 |
| (decrease)/increase in provisions(7,059)(3,161)2,753 | (1,754) |
| (decrease)/increase in trade and other payables(76,786)211,91230,916 | (203,745) |
| Net cash from operating activities(2,292,832)(2,230,225)(1,655,137) | (1,543,831) |
NonͲcash transactions
During the 2011 financial year, the Group did not enter into any nonͲcash investing or financing activities.
During the 2010 financial year, the Group entered into the following nonͲcash investing and financing activities which are not reflected in the statement of cash flows:
- x The issue of 10,000,000 options on 17 August 2009 for nil consideration to International Finance Corporation pursuant to the renegotiation of the International Finance Corporation Subscription Agreement to allow increased flexibility for capital raisings.The options had an exercise price of $0.087 and an expiry date of 14 December 2011. On 9 November 2009, the exercise price of the options was amended to $0.08; and
- x Conversion of the $800,000 convertible loan funding facility from Abbotsleigh Pty Limited, at the conversion rate of one share for every $0.01 of the outstanding amount of the loan, into 80,000,000 shares on 28 August 2009.
FOR THE YEAR ENDED 30 JUNE 2011
7 TRADE AND OTHER RECEIVABLES (CURRENT)
| CONSOLIDATED | PARENT | |||||
|---|---|---|---|---|---|---|
| 20112010 | 2011 | 2010 | ||||
| $ | $ | $ | $ | |||
| Trade receivables | (i) | Ͳ | Ͳ | Ͳ | Ͳ | |
| Other receivables | (ii) | 98,480 | 33,556 | 85,038 | 31,810 | |
| Loan receivable from Adobha Resources Ltd | (iii) | 239,596 | Ͳ | 239,596 | Ͳ | |
| Allowance for impairment of receivables | (iii) | (239,596) | Ͳ | (239,596) | Ͳ | |
| 98,480 | 33,556 | 85,038 | 31,810 |
(i) Trade receivables are nonͲinterest bearing and are generally on 30Ͳday terms.
(ii) Other receivables relate to GST receivable from the Australian Taxation Office and a refund due from a supplier.
(iii) Gippsland loaned funds to Adobha Resources Ltd in relation to the proposed Initial Public Offering ("IPO") of Adobha Resources Ltd.The loan funds were used by Adobha Resources Ltd for establishment costs, IPO costs, working capital and onͲloaning funds to Adobha Resources (Eritrea) Pty Ltd for exploration costs.The proposed IPO was terminated in June 2011.The loan has been fully impaired.
8 OTHER FINANCIAL ASSETS (NONͲCURRENT)
| CONSOLIDATED | PARENT | |||
|---|---|---|---|---|
| 2011 | 2010 | 2011 | 2010 | |
| $ | $ | $ | $ | |
| Loans receivable from controlled entities (a) | Ͳ | Ͳ | 15,751,387 | 16,412,258 |
| Allowance for impairment of receivables | Ͳ | Ͳ | (15,751,387) | (16,412,258) |
| Investments in controlled entitiesͲat cost | Ͳ | Ͳ | 27,888 | 27,788 |
| Ͳ | Ͳ | 27,888 | 27,788 |
The impairment of loans to subsidiaries was $1,584,566 (2010: $1,171,869). During the year, $2,245,437 of the loan from Gippsland to its 100% owned subsidiary Adobha Resources (Eritrea) Pty Ltd was forgiven.This loan amount had been fully impaired.
The impairment recognised represents the difference between the carrying amount of these loans receivable and the recoverable amount of the loans at the end of the financial year.
Ageing of impaired loans receivable:
| CONSOLIDATED | PARENT | |||
|---|---|---|---|---|
| 20112010 | 2011 | 2010 | ||
| $ | $ | $ | $ | |
| 0 – 60 days | Ͳ | Ͳ | 137,936 | 246,836 |
| 60 – 90 days | Ͳ | Ͳ | 163,009 | 86,189 |
| 90 – 120 days | Ͳ | Ͳ | 301,327 | 72,620 |
| 120+ days | Ͳ | Ͳ | 15,149,115 | 16,006,613 |
| Total | Ͳ | Ͳ | 15,751,387 | 16,412,258 |
All amounts are receivable in Australian dollars
(a) Loans receivable from controlled entities
The loans to controlled entities are advanced interest free, are unsecured and will be repaid when the respective subsidiary is generating sufficient funds and has the financial capacity to meet the loan commitment.
FOR THE YEAR ENDED 30 JUNE 2011
(b) Fair Values
The fair values and carrying values of nonͲcurrent receivables of the Group are as follows:
| CONSOLIDATED | PARENT | ||||
|---|---|---|---|---|---|
| 2011 | 2010 | 2011 | 2010 | ||
| $ | $ | $ | $ | ||
| Loan receivables | Ͳ | Ͳ | Ͳ | Ͳ |
(c) Interest Rate Risk
Details regarding interest rate risk exposure are disclosed in note 26(b).
(d) Credit risk
Details regarding credit risk exposure are disclosed in note 26(d).
FOR THE YEAR ENDED 30 JUNE 2011
9 PROPERTY, PLANT AND EQUIPMENT
| CONSOLIDATED | PARENT | ||||||
|---|---|---|---|---|---|---|---|
| Leasehold | Plant and | Leasehold | Plant and | ||||
| Improvements | equipment | Total | Improvements | equipment | Total | ||
| $ | $ | $ | $ | $ | $ | ||
| Year ended 30 June 2011 | |||||||
| Balance at 30 June 2010 | 5,602 | 128,244 | 133,846 | 5,602 | 42,320 | 47,922 | |
| Additions | 543 | 205,905 | 206,448 | Ͳ | 14,629 | 14,629 | |
| Disposals | Ͳ | Ͳ | Ͳ | Ͳ | Ͳ | Ͳ | |
| Foreign Exchange | |||||||
| Adjustment | Ͳ | (18,303) | (18,303) | Ͳ | Ͳ | Ͳ | |
| Depreciation charge for | |||||||
| the year | (3,650) | (33,912) | (37,562) | (3,650) | (12,025) | (15,675) | |
| Balance at 30 June 2011 | 2,495 | 281,934 | 284,429 | 1,952 | 44,924 | 46,876 | |
| At 1 July 2010 | |||||||
| Cost | 18,251 | 330,908 | 349,159 | 18,251 | 122,537 | 140,788 | |
| Accumulated | |||||||
| depreciation and | |||||||
| impairment | (12,649) | (202,664) | (215,313) | (12,649) | (80,217) | (92,866) | |
| Net carrying amount | 5,602 | 128,244 | 133,846 | 5,602 | 42,320 | 47,922 | |
| At 30 June 2011 | |||||||
| Cost | 18,794 | 479,039 | 497,833 | 18,251 | 126,333 | 144,584 | |
| Accumulated | |||||||
| depreciation and | |||||||
| impairment | (16,299) | (197,105) | (213,404) | (16,299) | (81,409) | (97,708) | |
| Net carrying amount | 2,495 | 281,934 | 284,429 | 1,952 | 44,924 | 46,876 | |
| Year ended 30 June 2010 | |||||||
| Balance at 30 June 2009 | 9,252 | 159,088 | 168,340 | 9,252 | 39,971 | 49,223 | |
| Additions | Ͳ | 13,807 | 13,807 | Ͳ | 12,321 | 12,321 | |
| Disposals | Ͳ | Ͳ | Ͳ | Ͳ | Ͳ | Ͳ | |
| Foreign Exchange | |||||||
| Adjustment | Ͳ | (10,001) | (10,001) | Ͳ | Ͳ | Ͳ | |
| Depreciation charge for | |||||||
| the year | (3,650) | (34,650) | (38,300) | (3,650) | (9,972) | (13,622) | |
| Balance at 30 June 2010 | 5,602 | 128,244 | 133,846 | 5,602 | 42,320 | 47,922 | |
| At 1 July 2009 | |||||||
| Cost | 18,251 | 317,436 | 335,687 | 18,251 | 110,216 | 128,467 | |
| Accumulated | |||||||
| depreciation and | |||||||
| impairment | (8,999) | (158,348) | (167,347) | (8,999) | (70,245) | (79,244) | |
| Net carrying amount | 9,252 | 159,088 | 168,340 | 9,252 | 39,971 | 49,223 | |
| At 30 June 2010 | |||||||
| Cost | 18,251 | 330,908 | 349,159 | 18,251 | 122,537 | 140,788 | |
| Accumulated | |||||||
| depreciation and | |||||||
| impairment | (12,649) | (202,664) | (215,313) | (12,649) | (80,217) | (92,866) | |
| Net carrying amount | 5,602 | 128,244 | 133,846 | 5,602 | 42,320 | 47,922 | |
Gippsland Limited Annual Report 2011
FOR THE YEAR ENDED 30 JUNE 2011
10 EXPLORATION AND EVALUATION EXPENDITURE
| CONSOLIDATED | PARENT | |||
|---|---|---|---|---|
| 2011 | 2010 | 2011 | 2010 | |
| $ | $ | $ | $ | |
| Exploration & evaluation expenditure (at cost) | 7,565,055 | 8,607,962 | Ͳ | Ͳ |
| Accumulated amortisation and impairment | (3,248,431) | (4,222,963) | Ͳ | Ͳ |
| 4,316,624 | 4,384,999 | Ͳ | Ͳ | |
| Movement: | ||||
| Exploration & evaluation expenditure | ||||
| Balance at beginning of year | 4,384,999 | 4,422,641 | Ͳ | Ͳ |
| Current year expenditure | 972,786 | 489,926 | Ͳ | Ͳ |
| Foreign exchange adjustment | (1,035,368) | (277,170) | Ͳ | Ͳ |
| Impairment | (5,793) | (250,398) | Ͳ | Ͳ |
| Balance at end of year | 4,316,624 | 4,384,999 | Ͳ | Ͳ |
The ultimate recoupment of exploration and evaluation expenditure is dependent upon successful development and commercial exploitation or alternatively the sale of the respective areas of interest at an amount at least equal to book value.
For the year ended 30 June 2011 and 30 June 2010, evaluation expenditure on the Abu Dabbab project was capitalised at cost.This project cost will be amortised over the life of the Abu Dabbab operation once production has commenced.
For the year ended 30 June 2011, exploration expenditure of $5,793 (2010: $35,225) on the Wadi Allaqi project was impaired.
11 TRADE AND OTHER PAYABLES (CURRENT)
| CONSOLIDATED | PARENT | ||||
|---|---|---|---|---|---|
| 2011 | 2010 | 2011 | 2010 | ||
| $ | $ | $ | $ | ||
| Trade payables and accruals (i) | 1,010,327 | 900,625 | 123,939 | 45,164 | |
| 1,010,327 | 900,625 | 123,939 | 45,164 |
(i) Trade payables and accruals are nonͲinterest bearing and are normally settled on repayment terms between 7 and 30 days.
12 PROVISIONS (CURRENT)
| CONSOLIDATED | PARENT | ||||
|---|---|---|---|---|---|
| 2011 | 2010 | 2011 | 2010 | ||
| $ | $ | $ | $ | ||
| Provision for annual leave | 10,177 | 17,236 | 5,678 | 2,925 | |
| 10,177 | 17,236 | 5,678 | 2,925 |
FOR THE YEAR ENDED 30 JUNE 2011
13 LOANS AND BORROWINGS (CURRENT)
| CONSOLIDATED | PARENT | |||
|---|---|---|---|---|
| 2011 | 2010 | 2011 | 2010 | |
| $ | $ | $ | $ | |
| Loans – unsecured (i) | 188,957 | Ͳ | Ͳ | Ͳ |
| Ͳ | Ͳ | Ͳ | Ͳ | |
| 188,957 | Ͳ | Ͳ | Ͳ |
(i) During the year, the Company's 100% owned subsidiary Adobha Resources (Eritrea) Pty Ltd received loan funds from Adobha Resources Ltd. These loans were part of the proposed Initial Public Offering ("IPO") of Adobha Resources Ltd whereby Adobha Resources Ltd would loan funds to Adobha Resources (Eritrea) Pty Ltd to fund exploration expenditure in Eritrea.In June 2011, the proposed IPO of Adobha Resources Ltd was terminated.The loan was repaid during August 2011 following the rights issue by the Company.The loan was interest free and unsecured.
14 CONTRIBUTED EQUITY
| CONSOLIDATED | PARENT | |||
|---|---|---|---|---|
| 2011 | 2010 | 2011 | 2010 | |
| $ | $ | $ | $ | |
| (a) Ordinary Shares | ||||
| Issued and fully paid | 38,588,181 | 35,581,715 | 38,588,181 | 35,581,715 |
Fully paid ordinary shares carry one vote per share and carry the right to dividends
| Number of | |||
|---|---|---|---|
| shares | $ | ||
| (b) Movement in ordinary share capital | |||
| At 30 June 2009 | 327,979,779 | 30,678,570 | |
| Share issue | (i) | 15,625,000 | 500,000 |
| Share issue | (ii) | 80,000,000 | 800,000 |
| Share issue | (iii) | 121,029,937 | 3,872,958 |
| Share issue costs | (269,813) | ||
| Subtotal (shares issued during year) | 216,654,937 | 4,903,145 | |
| At 30 June 2010 | 544,634,716 | 35,581,715 | |
| Share issue | (iv) | 80,000,000 | 3,200,000 |
| Share issue | (v) | 500,000 | 22,500 |
| Share issue costs | (216,034) | ||
| Subtotal (shares issued during year) | 80,500,000 | 3,006,466 | |
| At 30 June 2011 | 625,134,716 | 38,588,181 | |
(i) 15,625,000 shares issued on 19 August 2009 for cash at 3.2 cents each.
(ii) 80,000,000 shares issued on 27 August 2009 in relation to the conversion of an $800,000 convertible loan into shares at 1.0 cent per share.
(iii) 121,029,937 shares issued on 14 October 2009 for cash at 3.2 cents each.
(iv) 80,000,000 shares issued on 1 October 2010 for cash at 4 cents each.
(v) 500,000 shares issued on 30 November 2010 as remuneration to Mr Ayman Ayyash for nil consideration. The deemed value was determined as 4.5 cents per share.
The unissued ordinary shares of Gippsland Limited under option are as follows:
| Grant Date | Date of Expiry | Exercise Price | Number under Option |
|---|---|---|---|
| 16 May 2006 | 26 May 2012 | $0.135 | 25,000,000 |
| 05 February 2008 | 15 December 2011 | UK£0.0665 | 4,000,000 |
| 28 November 2008 | 31 May 2012 | $0.150 | 17,000,000 |
| 17 August 2009 | 14 December 2011 | $0.080 | 10,000,000 |
| Total | 56,000,000 |
Gippsland Limited Annual Report 2011
FOR THE YEAR ENDED 30 JUNE 2011
15 RESERVES AND ACCUMULATED LOSSES
| CONSOLIDATED | PARENT | |||
|---|---|---|---|---|
| 2011 | 2010 | 2011 | 2010 | |
| $ | $ | $ | $ | |
| (a)Reserves | ||||
| Option issue reserve | 530,402 | 530,402 | 530,402 | 530,402 |
| Foreign currency translation reserve | (807,353) | 92,095 | Ͳ | Ͳ |
| (276,951) | 622,497 | 530,402 | 530,402 |
| Foreign currencytranslation | |||
|---|---|---|---|
| Option issue reserve | reserve | Total | |
| $ | $ | $ | |
| Movements in reserves | |||
| At 30 June 2009 | 349,402 | 367,307 | 716,709 |
| Share based payment | 181,000 | Ͳ | 181,000 |
| Currency translation differences | Ͳ | (275,212) | (275,212) |
| At 30 June 2010 | 530,402 | 92,095 | 622,497 |
| Share based payment | Ͳ | Ͳ | Ͳ |
| Currency translation differences | Ͳ | (899,448) | (899,448) |
| As at 30 June 2011 | 530,402 | (807,353) | (276,951) |
| CONSOLIDATED | PARENT | |||
|---|---|---|---|---|
| 2011 | 2010 | 2011 | 2010 | |
| $ | $ | $ | $ | |
| (b)Accumulated losses | ||||
| Movements in accumulated losses were as | ||||
| follows: | ||||
| Balance 1 July | (31,303,592) | (28,408,823) | (34,869,676) | (32,150,675) |
| Net profit/(loss) for the year | (2,630,645) | (2,894,769) | (3,508,750) | (2,719,001) |
| Balance 30 June | (33,934,237) | (31,303,592) | (38,378,426) | (34,869,676) |
(c) Nature and purpose of reserves
Option issue reserve
The option issue reserve is used to record items recognised as expenses on grant of share options.
Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries.It is also used to record the net investment hedged in these subsidiaries.
FOR THE YEAR ENDED 30 JUNE 2011
16 INTERESTS IN CONTROLLED ENTITIES
The consolidated financial statements include the financial statements of Gippsland Limited and the controlled entities listed in the following table:
| Country ofPercentage of equity interestincorporationheld by the Group | Investment | ||||
|---|---|---|---|---|---|
| 2011 | 2010 | 2011 | 2010 | ||
| % | % | $ | $ | ||
| Tantalum International Pty Ltd | Australia | 100 | 100 | 100 | 100 |
| Here2win.com Pty Ltd | Australia | 100 | 100 | 100 | 100 |
| Adobha Resources (Eritrea) Pty Ltd * | Australia | 100 | 100 | 100 | 100 |
| Oryx Resources Pty Ltd | Australia | 100 | 100 | 100 | 100 |
| Gippsland (Jordan) Pty Ltd ** | Australia | 100 | Ͳ | 100 | Ͳ |
| Nubian Resources PLC | United Kingdom | 100 | 100 | 27,388 | 27,388 |
| Tantalum Egypt JSC | Egypt | 50 | 50 | Ͳ | Ͳ |
| Nubian Resources JSC | Egypt | 100 | 100 | Ͳ | Ͳ |
| 27,888 | 27,788 |
* Formerly Nubian Resources Pty Ltd
**Gippsland (Jordan) Pty Ltd was incorporated on 6 April 2011 and is currently dormant.
Gippsland Limited is the ultimate Australian parent entity and ultimate parent of the Group.
17 INTERESTS IN JOINT VENTURE OPERATIONS AND BUSINESS UNDERTAKINGS
At 30 June 2011, the Group was a participant in the following joint ventures:
| Name of joint venture | CONSOLIDATED | PARENT | |||
|---|---|---|---|---|---|
| 2011 | 2010 | 2011 | 2010 | ||
| % Interest | % Interest | % Interest | % Interest | ||
| Heemskirk Tin Deposit – Tasmania, Australia | 40 | 40 | 40 | 40 | |
| Seiga – Wadi Allaqi, Egypt | 50 | 50 | Ͳ | Ͳ | |
| Um Shashoba – Wadi Allaqi, Egypt | 50 | 50 | Ͳ | Ͳ | |
| Haimur – Wadi Allaqi, Egypt | 50 | 50 | Ͳ | Ͳ | |
| Nile Valley Block E – Wadi Allaqi, Egypt | 50 | 50 | Ͳ | Ͳ | |
| Nile Valley Block A – Wadi Allaqi, Egypt | 50 | 50 | Ͳ | Ͳ | |
| Um Garayat – Wadi Allaqi, Egypt | 50 | 50 | Ͳ | Ͳ | |
| Koleit – Wadi Allaqi, Egypt | 50 | 50 | Ͳ | Ͳ | |
| Um Tiur – Wadi Allaqi, Egypt | 50 | 50 | Ͳ | Ͳ | |
| Abu Swayel – Wadi Allaqi, Egypt | 50 | 50 | Ͳ | Ͳ |
The joint ventures are not separate legal entities.They are contractual arrangements between the participants and are of the type where initially one party contributes tenements with the other party earning a specified percentage by funding exploration activities. The Joint Ventures do not hold any assets and accordingly the Company's share of exploration expenditure is accounted for in accordance with the policy set out in Note 2.
18 EXPENDITURE COMMITMENTS
(a) Lease expenditure commitments
The Group has entered into commercial leases for office accommodation in Perth, Australia and Cairo, Egypt.
Perth Office Lease
The property lease is a nonͲcancellable 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.Two options exist to renew the lease at the end of the five year term for an additional 2.5 years per
FOR THE YEAR ENDED 30 JUNE 2011
option.The Company has advised the landlord that it is exercising the first of these options to extend the lease for 2.5 years.The lease will be subject to a market rent review on renewal of the lease.
Cairo Office Lease
The property lease is a nonͲcancellable lease with a five year term, with rent payable monthly in advance.
Asmara Office Lease
The property lease is a nonͲcancellable lease with a six month term, with rent payable monthly in advance.
Future minimum rentals payable as at 30 June are as follows:
| CONSOLIDATED | PARENT | |||
|---|---|---|---|---|
| 2011 | 2010 | 2011 | 2010 | |
| $ | $ | $ | $ | |
| Within one year | 160,000 | 141,850 | 132,400 | 127,850 |
| After one year but not more than five years | 285,000 | 58,350 | 205,700 | 58,350 |
| 445,000 | 200,200 | 338,100 | 186,200 |
(b) Exploration expenditure commitments
Under Eritrean mining law, expenditure commitments entered into by a tenement holder with respect to a tenement are mandatory.Failure to expend funds in accordance with a commitment may result in a liability to the Eritrean government to the extent of the unexpended portion of the expenditure commitment, or forfeiture of the tenement/s. As at 30 June 2011, the Group was required to expend approximately a further US$760,000 on the tenements in Eritrea by no later than 23 July 2011, being the first anniversary of the Eritrean tenements' grant.On 30 June 2011, Gippsland's 100% owned subsidiary, Adobha Eritrea Pty Ltd entered into a contract with Geotech Airborne Ltd in relation to a Versatile TimeͲDomain Electromagnetic (VTEM) survey on its tenements in Eritrea.Under the agreement, Adobha Eritrea Pty Ltd is committed to expenditure of approximately US$713,000.This committed expenditure together with other operational expenditure in July has enabled the Company to meet its Year 1 minimum expenditure commitments. The minimum expenditure commitments for years 2 and 3 in relation to its 2,100 km2 Adobha Exploration Licence are US$1,720,000 and US$3,440,000 respectively.The Group has recently submitted applications to convert its three Adobha Eritrea Prospecting Licences (Gerasi South, Hafta West and Romay) into exploration licences.The Ministry of Energy and Mines in the State of Eritrea has approved the conversion of the Gerasi South prospecting licence to an exploration licence.The minimum expenditure commitments for years 1, 2 and 3 in relation to the 100 km2 Gerasi South Exploration Licence are US$100,000, US$200,000 and US$400,000 respectively.The applications for Hafta West and Romay are pending.The granting of the new exploration licences for Hafta West and Romay are not guaranteed, however, on the assumption that new exploration licences are granted, the additional minimum expenditure commitments for Years 1, 2 and 3 of the new exploration licences would be similar to the minimum expenditure commitments for the Gerasi South exploration licence, that is, US$100,000, US$200,000 and US$400,000 respectively per licence.
The Group has committed to spend $300,000 on exploration at its Nuweibi TantalumͲTin Project in Egypt by 31 December 2011.
The Group has no other minimum exploration expenditure commitments in respect to any mining tenements or projects.
(c) Joint venture expenditure commitments
The Group has no minimum expenditure commitments in respect to any of its mining joint ventures.
(d) Bank guarantee
A subsidiary of the Group has been required to provide a bank guarantee of US$30,000 to the General Authority for Investment and Free Zone in Egypt.The letter of guarantee is valid until 10 August 2012.
FOR THE YEAR ENDED 30 JUNE 2011
(e) Capital Commitments
The Group is required to fund the construction of a wall around the "Free Trade Zone" area and a customs office at its Abu Dabbab Project.The estimated cost for this construction is EGP2,383,450 (approximately $378,000).As at 30 June 2011, the Group had incurred EGP2,248,450 (approximately $356,600) of the construction costs.Accordingly, it is anticipated that a further EGP135,000 (approximately $21,400) will be required to be spent by the Group in respect of this construction, subject to any further expenditure that may be incurred.The above amount includes an invoice for EGP558,700 (approximately A$88,609) from the contractor used to construct the free zone wall at the Abu Dabbab project in Egypt, which the Group believes is in excess of the contract for the free zone wall.The Group is currently reviewing this situation and is in discussions with the contractor in order to resolve the matter.
19 SHARE BASED PAYMENT PLANS
(a) Recognised shareͲbased payment expenses
The expense recognised for share based payments during the year is shown in the table below:
| CONSOLIDATED | PARENT | |||
|---|---|---|---|---|
| 2011 | 2010 | 2011 | 2010 | |
| $ | $ | $ | $ | |
| Expense arising from equityͲsettled shareͲ | ||||
| based payment transactions | 22,500 | 181,000 | 22,500 | 181,000 |
| 22,500 | 181,000 | 22,500 | 181,000 |
(b) Types of shareͲbased payment plans
On 28 November 2008, directors, senior executives and consultants to the Company were granted 17,000,000 options each with an exercise price of $0.15 on or before 31 May 2012.
On 17 August 2009, 10,000,000 options were issued for nil consideration to International Finance Corporation pursuant to the renegotiation of the International Finance Corporation Subscription Agreement to allow increased flexibility for capital raisings.The options had an exercise price of $0.087 and an expiry date of 14 December 2011. On 9 November 2009, the exercise price of the options was amended to $0.08.
On 30 November 2010, 500,000 fully paid ordinary shares were issued to Mr Ayman Ayyash for nil consideration in accordance with his employment contract. The shares had a deemed value of 4.5 cents per share being a total deemed value of $22,500.
The following shareͲbased payment arrangements were in existence during the current and prior reporting periods:
| Options series | Number | Grant date | Expiry date | Exercise price | Fair value atgrant date |
|---|---|---|---|---|---|
| $ | $ | ||||
| (1) Issued 28 November 2008 (*) | 17,000,000 | 28/11/08 | 31/05/12 | 0.15 | 0.001 |
| (2) Issued 17 August 2009 (*) | 10,000,000 | 17/08/09 | 14/12/11 | 0.08 | 0.0181 |
| Shares | Number | Issue date | Fair value at | ||
| issue date | |||||
| $ | |||||
| Ordinary fully paid | 500,000 | 30/11/10 | 0.045 |
(*)In accordance with the terms of the shareͲbased arrangement, options issued during the financial years ended 30 June 2009 and 30 June 2010, vest at the date of their issue.
FOR THE YEAR ENDED 30 JUNE 2011
(c) Summary of options granted
The following table illustrates the number and weighted average exercise price (WAEP) of, and movements in, share options issued during the year.
| 2011 | 2011 | 2010 | 2010 | |
|---|---|---|---|---|
| No | WAEP | No | WAEP | |
| Outstanding at the beginning of the year | 56,000,000 | 0.13 | 46,000,000 | 0.14 |
| Granted during the year | Ͳ | Ͳ | 10,000,000 | 0.08 |
| Exercised during the year | Ͳ | Ͳ | Ͳ | Ͳ |
| Expired during the year | Ͳ | Ͳ | Ͳ | Ͳ |
| Outstanding at the end of the year | 56,000,000 | 0.13 | 56,000,000 | 0.13 |
| Exercisable at the end of the year | 56,000,000 | 0.13 | 56,000,000 | 0.13 |
(d) Weighted average of remaining contractual life
The weighted average remaining contractual life for the share options outstanding as at 30 June 2011 is 0.80 years (2010: 1.80 years).
(e) Range of exercise price
The range of exercise prices for options outstanding at the end of the year was $0.08Ͳ$0.15. (2010: $0.08Ͳ$0.15).
(f) Weighted average fair value
The weighted average fair value of options granted during the year was nil (2010: $0.0181).
(g) Option pricing model
EquityͲsettled transactions
The fair value of the equityͲsettled share options granted is estimated as at the date of grant using a binomial model taking into account the terms and conditions upon which the options were granted.
Using the Binomial Tree option valuation, the fair value of the options issued during the year was calculated.The model takes into account share price volatilities. The following inputs were used:
| 2011 | 2010 | |
|---|---|---|
| Strike price | Ͳ | A$ 0.087 |
| Stock price | Ͳ | A$ 0.055 |
| Valuation date | Ͳ | 17/08/2009 |
| Expiry date | Ͳ | 14/12/2011 |
| Volatility | Ͳ | 75% |
| Risk free rate | Ͳ | 3.76% |
| Value per option | Ͳ | A$ 0.0181 |
| Number of options | Ͳ | 10,000,000 |
| Value of options | Ͳ | A$ 181,000 |
FOR THE YEAR ENDED 30 JUNE 2011
20 CONTINGENT LIABILITIES AND CONTINGENT ASSETS
(a) Contingent Liabilities
The Group did not have any contingent liabilities as at Balance Date.
(b) Contingent Assets
The Group did not have any contingent assets as at Balance Date.
21 SUBSEQUENT EVENTS
On 4 July 2011, the Company entered into a loan agreement with Abbotsleigh Pty Ltd, an entity associated with Mr Ian Gandel.The loan facility was for $640,000 to assist the Company to meet its minimum expenditure commitments in Eritrea and for working capital. During July and August 2011, $400,000 of the loan facility was drawn down and subsequently repaid to Abbotsleigh Pty Ltd following the completion of the rights issue.Interest of 4% was paid by Gippsland to Abbotsleigh Pty Ltd on the funds drawn down and the loan was unsecured.
During July 2011, a scoping study was completed in relation to the Company's 40% owned Heemskirk Tin Project by the Company's joint venture partner.
On 26 July 2011, strong drilling results were reported by the Company's joint venture partner in relation to the Company's 40% owned Heemskirk Tin Project.
During July and August 2011, the Company commenced and successfully completed a fully underwritten renounceable rights issue to raise $5,063,591 before costs. The rights issue was underwritten by Patersons Securities Ltd and subͲ underwritten by Gandel Metals Pty Ltd , an entity associated with Mr Ian Gandel.
During August 2011, the Company announced approval of the Abu Dabbab Alluvial Project, subject to approval of the Board of Directors of Tantalum Egypt JSC and finalising financing arrangements.
During September 2011, the Company received approval from the Ministry of Energy and Mines in the State of Eritrea regarding the conversion of the 100 km2 Prospecting Licence held by Adobha Resources (Eritrea) Pty Ltd for the Gerasi South area to an Exploration Licence.The Prospecting Licences held by Adobha Resources (Eritrea) Pty Ltd for the Hafta West and Romay areas have expired as they had a one year term, however, applications to convert these areas to Exploration Licences have been lodged with the Ministry of Energy and Mines and the applications are pending.
No other matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years.
FOR THE YEAR ENDED 30 JUNE 2011
22 REMUNERATION OF AUDITORS
The auditor of Gippsland Limited is Deloitte Touche Tomatsu ("Deloitte").Deloitte were appointed as auditor during August 2010 and accordingly, no amount was paid to Deloitte during the financial year ended 30 June 2010, however, $16,847 was accrued at 30 June 2010 for audit fees payable to Deloitte for the audit of the financial statements.
| CONSOLIDATED | PARENT | |||
|---|---|---|---|---|
| 2011 | 2010 | 2011 | 2010 | |
| $ | $ | $ | $ | |
| Amounts received or due and receivable by Deloitte for: | ||||
| •an audit or review of the financial report of the | ||||
| entity and any other entity in the Group | 37,827 | 16,847 | 37,827 | 16,847 |
| •other services in relation to the entity and any | ||||
| other entity in the Group | ||||
| (a)tax compliance | Ͳ | Ͳ | Ͳ | Ͳ |
| (b) corporate advisory fees | Ͳ | Ͳ | Ͳ | Ͳ |
| 37,827 | 16,847 | 37,827 | 16,847 | |
| Amounts received by auditors other than Deloitte for: | ||||
| •an audit or review of the financial report of the | ||||
| entity and any entity in the Group | 34,696 | 52,442 | 1,960 | 25,942 |
| •other services in relation to the entity and any | ||||
| entity in the Group | ||||
| (b)tax compliance | Ͳ | 24,983 | Ͳ | 22,299 |
| (b) corporate advisory fees | Ͳ | Ͳ | Ͳ | Ͳ |
| 34,696 | 77,425 | 1,960 | 48,241 | |
| 72,523 | 94,272 | 39,787 | 65,088 |
23 RELATED PARTY DISCLOSURE
Ultimate Parent
Gippsland Limited is the ultimate holding company of the Group.
| CONSOLIDATED | PARENT | |||
|---|---|---|---|---|
| 2011 | 2010 | 2011 | 2010 | |
| $ | $ | $ | $ | |
| Aggregate amounts receivable at balance date | ||||
| from: | ||||
| Controlled entities(i) | Ͳ | Ͳ | 15,751,387 | 16,412,258 |
| Allowance for impairment | Ͳ | Ͳ | (15,751,387) | (16,412,258) |
| Ͳ | Ͳ | Ͳ | Ͳ |
(i) 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.
The impairment of loans to controlled entities during the year was $1,584,566 (2010: $1,171,869). During the year, $2,245,437 of the loan from Gippsland to its 100% owned subsidiary Adobha Resources (Eritrea) Pty Ltd was forgiven. This loan amount had been fully impaired.All amounts are receivable in Australian Dollars.
The following table provides the total amount of transactions which have been entered into with related parties forthe relevant financial year:
FOR THE YEAR ENDED 30 JUNE 2011
| CONSOLIDATED | PARENT | |||
|---|---|---|---|---|
| 2011 | 2010 | 2011 | 2010 | |
| $ | $ | $ | $ | |
| Gandel Metals Pty Ltd – a company controlled byMr IJ Gandel received director's fees. | 88,188* | 50,000 | 88,188 | 50,000 |
| Gandel Metals Pty LimitedͲa company associatedwith Mr IJ Gandel rented a Niton Analyser toTantalum Egypt JSC for use in relation to the AbuDabbab Project.The rental charged by GandelMetals Pty Ltd was less than the rental that wouldhave been charged by an armsͲlength party. | 5,000 | Ͳ | Ͳ | Ͳ |
| Abbotsleigh Pty Limited – a company associatedwith Mr IJ Gandel converted its Convertible Loan toGippsland into shares in Gippsland. | Ͳ | 800,000 | Ͳ | 800,000 |
| Abbotsleigh Pty Limited – a company associatedwith Mr IJ Gandel received interest on itsConvertible Loan to Gippsland up to the date of theconversion of the loan into shares in Gippsland. | Ͳ | 20,795 | Ͳ | 20,795 |
| Mr IJ Gandel – director loan provided to Gippsland | Ͳ | 150,000 | Ͳ | 150,000 |
| Mr IJ GandelͲrepayment of director loan byGippsland | Ͳ | 150,000 | Ͳ | 150,000 |
| Gandel Metals Pty Limited, a company associatedwith Mr IJ Gandel received a fee of 4% forunderwriting the rights issue by Gippsland duringOctober 2009. | Ͳ | 154,918 | Ͳ | 154,918 |
| Abbotsleigh Pty Limited – a company associatedwith Mr IJ Gandel participated in the rights issue byGippsland during October 2009 and purchased theshortfall of the rights issue under the underwritingagreement with Gandel Metals Pty Ltd. | Ͳ | 1,722,370 | Ͳ | 1,722,370 |
| Mandu Pty Ltd – a company controlled by Dr JMChisholm received geological consulting fees. | 94,238* | 145,600 | 94,238 | 145,600 |
| John S Dunlop and Associates Pty Ltd – a companycontrolled by Mr JSF Dunlop received directors andmining consulting fees. | 74,800* | 25,700 | 74,800 | 25,700 |
| Ventureworks JDK Pty Ltd – a company controlledby Mr JD Kenny received director's fees. | 36,808* | 25,000 | 36,808 | 25,000 |
| Mr J Starink – received directors fees andconsulting fees. | 135,000* | 120,000 | 135,000 | 120,000 |
| Mr J Starink – repayment of director loan byGippsland | Ͳ | 50,000 | Ͳ | 50,000 |
| Eco International Pty Ltd – a company controlled byMr RJ Telford received management fees. | 166,667* | 250,000 | 166,667 | 250,000 |
| Mr RJ TelfordͲrepayment of director loan byGippsland | Ͳ | 250,000 | Ͳ | 250,000 |
FOR THE YEAR ENDED 30 JUNE 2011
| CONSOLIDATED | PARENT | ||||
|---|---|---|---|---|---|
| 2011 | 2010 | 2011 | 2010 | ||
| $ | $ | $ | $ | ||
| terminated in June 2011. | Gippsland loaned funds to Adobha Resources Ltd inrelation to the proposed Initial Public Offering("IPO") of Adobha Resources Ltd.AdobhaResources Ltd was established as a wholly ownedsubsidiary of Gippsland, however, the ownership ofAdobha Resources Ltd was transferred to Mr GAHawkins based on professional advice regarding thestructuring of the proposed IPO.The loan fundswere used by Adobha Resources Ltd forestablishment costs, IPO costs, working capital andonͲloaning funds to Adobha Resources (Eritrea) PtyLtd for exploration costs.The proposed IPO was | 239,596 | Ͳ | 239,596 | Ͳ |
| was terminated in June 2011. | Adobha Resources Ltd loaned funds to Gippsland's100% owned subsidiary, Adobha Resources(Eritrea) Pty Ltd, in relation to funding explorationactivities in Eritrea.The loans were a component ofa transaction regarding the proposed IPO ofAdobha Resources Ltd.Adobha Resources Ltd wasestablished as a wholly owned subsidiary ofGippsland, however, the ownership of AdobhaResources Ltd was transferred to Mr GA Hawkinsbased on professional advice regarding thestructuring of the proposed IPO. The proposed IPO | 188,957 | Ͳ | Ͳ | Ͳ |
| unsecured and at call. | The parent entity, Gippsland, has made loans to itscontrolled entities.These loans are interest free, | Ͳ | Ͳ | 1,469,193 | 1,171,869 |
| * Note: These amounts are included within the Remuneration Report in the Directors' Report. | |||||
| 24 | KEY MANAGEMENT PERSONNEL(a) Details of key management personnel | ||||
| IJ GandelJ StarinkJSF DunlopJ KennyJM ChisholmA AyyashRS CarenGA HawkinsRJ Telford | ͲChairman (NonͲExecutive)ͲExecutive DirectorͲExecutive DirectorͲNonͲExecutive DirectorͲChief GeologistͲRegional ManagerͲMiddle East and North AfricaͲCompany SecretaryͲChief Financial OfficerͲExecutive Director (resigned 25 November 2010) and Chief Executive Officer (terminated 26 November2010) |
FOR THE YEAR ENDED 30 JUNE 2011
(b) Compensation of key management personnel
The aggregate compensation made to key management personnel of the Group is set out below:
| CONSOLIDATED | PARENT | |||
|---|---|---|---|---|
| 2011 | 2010 | 2011 | 2010 | |
| $ | $ | $ | $ | |
| ShortͲterm employee benefits | 989,670 | 974,087 | 989,670 | 974,087 |
| PostͲemployment benefits | 11,009 | 11,498 | 11,009 | 11,498 |
| ShareͲbased payment | 22,500 | Ͳ | 22,500 | Ͳ |
| 1,023,179 | 985,585 | 1,023,179 | 985,585 |
Key management personnel remuneration has been included in the Remuneration Report section of the Directors' Report.
The remuneration of directors and key executives is determined by the remuneration committee having regard to the performance of individuals and market trends.
(c) Option holdings of key management personnel (consolidated)
Options held in Gippsland Limited (number) by Key Management personnel are:
| 30 June 2011 | Balance at1.7.2010 | Granted asremuneͲration | OptionsexerciͲsed | Optionsexpired | Balance at30.6.2011 | Vested at30.6.2011 | Vestedbut notexerciͲsable | Vested andexerciͲsable | Vestedduring theyear |
|---|---|---|---|---|---|---|---|---|---|
| Directors | |||||||||
| Mr IJ Gandel | Ͳ | Ͳ | Ͳ | Ͳ | Ͳ | Ͳ | Ͳ | Ͳ | Ͳ |
| Mr JSF Dunlop | 2,000,000 | Ͳ | Ͳ | Ͳ | 2,000,000 | 2,000,000 | Ͳ | 2,000,000 | Ͳ |
| Mr JD Kenny | 1,000,000 | Ͳ | Ͳ | Ͳ | 1,000,000 | 1,000,000 | Ͳ | 1,000,000 | Ͳ |
| Mr J Starink | 2,000,000 | Ͳ | Ͳ | Ͳ | 2,000,000 | 2,000,000 | Ͳ | 2,000,000 | Ͳ |
| Mr RJ Telford | 5,000,000 | Ͳ | Ͳ | Ͳ | 5,000,000 | 5,000,000 | Ͳ | 5,000,000 | Ͳ |
| Executives | |||||||||
| Mr A Ayyash | 1,000,000 | Ͳ | Ͳ | Ͳ | 1,000,000 | 1,000,000 | Ͳ | 1,000,000 | Ͳ |
| Mr RS Caren | 1,000,000 | Ͳ | Ͳ | Ͳ | 1,000,000 | 1,000,000 | Ͳ | 1,000,000 | Ͳ |
| Dr JM Chisholm | 3,000,000 | Ͳ | Ͳ | Ͳ | 3,000,000 | 3,000,000 | Ͳ | 3,000,000 | Ͳ |
| Mr GA Hawkins | Ͳ | Ͳ | Ͳ | Ͳ | Ͳ | Ͳ | Ͳ | Ͳ | Ͳ |
| 15,000,000 | Ͳ | Ͳ | Ͳ | 15,000,000 | 15,000,000 | Ͳ | 15,000,000 | Ͳ | |
| 30 June 2010 | Balance at | Granted as | Options | Options | Balance at | Vested at | Vested | Vested and | Vested |
| 1.7.2009 | remuneͲration | exerciͲsed | expired | 30.6.2010 | 30.6.2010 | but notexerciͲsable | exerciͲsable | during theyear | |
| Directors | |||||||||
| Mr IJ Gandel | Ͳ | Ͳ | Ͳ | Ͳ | Ͳ | Ͳ | Ͳ | Ͳ | Ͳ |
| Mr JSF Dunlop | 2,000,000 | Ͳ | Ͳ | Ͳ | 2,000,000 | 2,000,000 | Ͳ | 2,000,000 | 2,000,000 |
| Mr JD Kenny | 1,000,000 | Ͳ | Ͳ | Ͳ | 1,000,000 | 1,000,000 | Ͳ | 1,000,000 | 1,000,000 |
| Mr J Starink | 2,000,000 | Ͳ | Ͳ | Ͳ | 2,000,000 | 2,000,000 | Ͳ | 2,000,000 | 2,000,000 |
| Mr RJ Telford | 5,000,000 | Ͳ | Ͳ | Ͳ | 5,000,000 | 5,000,000 | Ͳ | 5,000,000 | 5,000,000 |
| Executives | |||||||||
| Mr A Ayyash | 1,000,000 | Ͳ | Ͳ | Ͳ | 1,000,000 | 1,000,000 | Ͳ | 1,000,000 | 1,000,000 |
| Mr RS Caren | 1,000,000 | Ͳ | Ͳ | Ͳ | 1,000,000 | 1,000,000 | Ͳ | 1,000,000 | 1,000,000 |
| Dr JM Chisholm | 3,000,000 | Ͳ | Ͳ | Ͳ | 3,000,000 | 3,000,000 | Ͳ | 3,000,000 | 3,000,000 |
| 15,000,000 | Ͳ | Ͳ | Ͳ | 15,000,000 | 15,000,000 | Ͳ | 15,000,000 | 15,000,000 |
FOR THE YEAR ENDED 30 JUNE 2011
(d) Shareholdings of key management personnel (consolidated)
| 30 June 2011 | Balance 1.7.2010 | Granted asremuneration | On exercise ofOptions | Net ChangeOther* | Balance30.6.2011 |
|---|---|---|---|---|---|
| Ord | Ord | Ord | Ord | Ord | |
| Directors | |||||
| Mr IJ Gandel | 133,824,073 | Ͳ | Ͳ | Ͳ | 133,824,073 |
| Mr JSF Dunlop | Ͳ | Ͳ | Ͳ | Ͳ | Ͳ |
| Mr JD Kenny | 2,892,858 | Ͳ | Ͳ | Ͳ | 2,892,858 |
| Mr J Starink | 300,000 | Ͳ | Ͳ | Ͳ | 300,000 |
| Mr RJ Telford | 18,497,446 | Ͳ | Ͳ | (3,704,830) | 14,792,616 |
| Executives | |||||
| Mr A Ayyash | 974,784 | 500,000 | Ͳ | (500,000) | 974,784 |
| Mr RS Caren | Ͳ | Ͳ | Ͳ | Ͳ | Ͳ |
| Dr JM Chisholm | 2,420,000 | Ͳ | Ͳ | Ͳ | 2,420,000 |
| Mr GA Hawkins | Ͳ | Ͳ | Ͳ | Ͳ | Ͳ |
| 158,909,161 | 500,000 | Ͳ | (4,204,830) | 155,204,331 | |
| 30 June 2010 | Balance 1.7.2009 | Granted as | On exercise of | Net Change | Balance |
| remuneration | Options | Other* | 30.6.2010 | ||
| Ord | Ord | Ord | Ord | Ord | |
| Directors | |||||
| Mr IJ Gandel | Ͳ | Ͳ | Ͳ | 133,824,073 | 133,824,073 |
| Mr JSF Dunlop | Ͳ | Ͳ | Ͳ | Ͳ | Ͳ |
| Mr JD Kenny | 2,250,000 | Ͳ | Ͳ | 642,858 | 2,892,858 |
| Mr J Starink | 300,000 | Ͳ | Ͳ | Ͳ | 300,000 |
| Mr RJ Telford | 19,597,446 | Ͳ | Ͳ | (1,100,000) | 18,497,446 |
| Executives | |||||
| Mr A Ayyash | 974,784 | Ͳ | Ͳ | Ͳ | 974,784 |
| Mr RS Caren | Ͳ | Ͳ | Ͳ | Ͳ | Ͳ |
| Dr JM Chisholm | 2,420,000 | Ͳ | Ͳ | Ͳ | 2,420,000 |
| 25,542,230 | Ͳ | Ͳ | 133,366,931 | 158,909,161 |
Shares held in Gippsland Limited (number) by key management personnel are:
* Net change refers to shares purchased or sold during the financial year.
(e) Other transactions with key management personnel
Please refer to Note 23 regarding loans from key management personnel to the Company.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
25 SEGMENT INFORMATION
(a) Reportable segments
The Group operates predominantly in the mining and exploration industry.
Information reported to the Group's chief operating decision maker for the purpose of resource allocation and assessment of segment performance is focussed on the type of resources being explored for and evaluated or developed.The Group's reportable segments under AASB 8 are therefore as follows:
- x Tantalum
- x Gold
- x Copper
- x Corporate
The tantalum segment relates to the development of the Group's Abu Dabbab tantalumͲtin project in Egypt. The gold segment relates to the exploration activities at Wadi Allaqi in Egypt.
The copper segment relates to the exploration activities at the Adobha project in Eritrea.
The corporate segment relates to operations of the corporate head office in Perth, Western Australia.
The following tables present revenue and profit information and certain asset and liability information regarding reportable segments for the years ended 30 June 2011 and 2010.
| Total | |||||
|---|---|---|---|---|---|
| Continuing Operations | Operations | ||||
| Tantalum | Gold | Copper | Corporate | ||
| $ | $ | $ | $ | $ | |
| Year ended 30 June 2011 | |||||
| Revenue | |||||
| Other revenues from external customers | Ͳ | Ͳ | Ͳ | 82,938 | 82,938 |
| InterͲsegment transactions | Ͳ | 16,776 | Ͳ | Ͳ | 16,776 |
| Total segment revenue | Ͳ | 16,776 | Ͳ | 82,938 | 99,714 |
| InterͲsegment elimination | (16,776) | ||||
| Total consolidated revenue | 82,938 | ||||
| Result | |||||
| Segment result | (600,027) | (57,715) | (48,502) | (1,924,401) | (2,630,645) |
| Loss before income tax and minority interest | (2,630,645) | ||||
| Income tax expense | Ͳ | ||||
| Net loss for the year | (2,630,645) | ||||
| Assets and liabilities | |||||
| Segment assets | 3,980,413 | 58,270 | 590,512 | 957,259 | 5,586,454 |
| Total assets | 5,586,454 | ||||
| Segment liabilities | (691,095) | (164,196) | (224,553) | (129,617) | (1,209,461) |
| Total liabilities | (1,209,461) | ||||
| Other segment information | |||||
| Capital expenditure | (104,596) | Ͳ | (87,223) | (14,629) | (206,448) |
| Depreciation | (5,042) | (15,396) | (3,109) | (15,675) | (39,222) |
| Impairment losses | Ͳ | (5,793) | Ͳ | Ͳ | (5,793) |
FOR THE YEAR ENDED 30 JUNE 2011
| Continuing Operations | TotalOperations | ||||
|---|---|---|---|---|---|
| Tantalum | Gold | Copper | Corporate | ||
| $ | $ | $ | $ | $ | |
| Year ended 30 June 2010 | |||||
| Revenue | |||||
| Other revenues from external customers | 1 | Ͳ | 64,439 | 64,440 | |
| InterͲsegment transactions | Ͳ | 19,540 | Ͳ | Ͳ | 19,540 |
| Total segment revenue | Ͳ | 19,541 | Ͳ | 64,439 | 83,980 |
| InterͲsegment elimination | (19,540) | ||||
| Total consolidated revenue | 64,440 | ||||
| Result | |||||
| Segment result | (1,200,463) | (120,725) | (25,817) | (1,547,764) | (2,894,769) |
| Loss before income tax and minority interest | (2,894,769) | ||||
| Income tax expense | Ͳ | ||||
| Net loss for the year | (2,894,769) | ||||
| Assets and liabilities | |||||
| Segment assets | 4,246,860 | 87,599 | 221,280 | 1,262,742 | 5,818,481 |
| Total assets | 5,818,481 | ||||
| Segment liabilities | (644,755) | (212,460) | (12,557) | (48,089) | (917,861) |
| Total liabilities | (917,861) | ||||
| Other segment information | |||||
| Capital expenditure | (1,486) | Ͳ | Ͳ | (12,321) | (13,807) |
| Depreciation | (589) | (24,088) | Ͳ | (13,622) | (38,299) |
| Impairment losses | Ͳ | (35,225) | Ͳ | Ͳ | (35,225) |
FOR THE YEAR ENDED 30 JUNE 2011
(b) Geographical information
The Group's geographical areas are determined based on the location of the Group's assets and operations.
The following tables present revenue, expenditure and certain asset information regarding geographical locations for the years ended 30 June 2011 and 2010:
| Australia | Egypt | Eritrea | Total | |
|---|---|---|---|---|
| $ | $ | $ | $ | |
| Year ended 30 June 2011 | ||||
| Revenue | ||||
| Other revenues from external customers | 82,938 | Ͳ | Ͳ | 82,938 |
| Less revenue attributable to discontinued operation | Ͳ | Ͳ | Ͳ | Ͳ |
| Revenue from continuing operations | 82,938 | Ͳ | Ͳ | 82,938 |
| InterͲsegment sales | Ͳ | 16,776 | Ͳ | 16,776 |
| Segment revenue | 82,938 | 16,776 | Ͳ | 99,714 |
| Other segment information | ||||
| Segment assets | 957,259 | 4,038,683 | 590,512 | 5,586,454 |
| Total assets | 5,586,454 | |||
| Capital expenditure | (14,629) | (104,596) | (87,223) | (206,448) |
| Year ended 30 June 2010 | ||||
| Revenue | ||||
| Other revenues from external customers | 64,439 | 1 | Ͳ | 64,440 |
| Less revenue attributable to discontinued operation | Ͳ | Ͳ | Ͳ | Ͳ |
| Revenue from continuing operations | 64,439 | 1 | Ͳ | 64,440 |
| InterͲsegment sales | Ͳ | 19,540 | Ͳ | 19,540 |
| Segment revenue | 64,439 | 19,541 | Ͳ | 83,980 |
| Other segment information | ||||
| Segment assets | 1,262,742 | 4,334,459 | 221,280 | 5,818,481 |
| Total assets | 5,818,481 | |||
| Capital expenditure | (12,321) | (1,486) | Ͳ | (13,807) |
26 FINANCIAL INSTRUMENTS
(a) Financial risk management policy
The Group's management of financial risk is aimed at ensuring net cash flows are sufficient to:
- x meet all financial commitments as and when they fall due, and
- x maintain the capacity to fund its forecast project development and exploration strategies.
The Group continually monitors and tests its forecast financial position against these criteria.
The Group's principal financial instruments comprise cash and shortͲterm deposits. The main purpose of these financial instruments is to raise finance for the Group operations. The Group has various other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations. It is, and has been throughout the period under review, the Group's policy that no trading in financial instruments shall be undertaken.
FOR THE YEAR ENDED 30 JUNE 2011
The Group currently has minimal exposure to commodity price risk but it is expected that as the Group's projects move into the production phase the exposure to these risks is expected to increase significantly.The main risks arising from the Group's financial instruments are interest rate risk, foreign currency risk, credit risk and liquidity risk.
The Group uses different methods to measure and manage different types of risks to which it is exposed. These include monitoring levels of exposure to interest rate and foreign exchange risk and assessments of market forecasts for interest rate, foreign exchange and commodity prices. Ageing analyses and monitoring of specific credit allowances are undertaken to manage credit risk. Liquidity risk is monitored through the development of future rolling cash flow forecasts.
(b) Interest rate risk
The following table sets out the carrying amount of the financial instruments exposed to interest rate risk:
| CONSOLIDATED | PARENT | |||
|---|---|---|---|---|
| 2011 | 2010 | 2011 | 2010 | |
| $ | $ | $ | $ | |
| FINANCIAL ASSETS | ||||
| Interest Bearing | ||||
| Cash at bank | 626,756 | 1,136,692 | 626,756 | 1,136,692 |
| Weighted average interest rate | 3.47% | 4.55% | 4.37% | 4.85% |
| NonͲInterest Bearing | ||||
| Cash at bank | 179,641 | 86,430 | 13,159 | 10,683 |
| Trade receivables | 98,480 | 33,556 | 85,038 | 31,810 |
| 904,877 | 1,256,678 | 724,953 | 1,179,185 | |
| FINANCIAL LIABILITIES | ||||
| Interest Bearing | ||||
| Convertible loan | Ͳ | Ͳ | Ͳ | Ͳ |
| Weighted average interest rate | 0.00% | 0.00% | 0.00% | 0.00% |
| NonͲInterest Bearing | ||||
| Trade and other payables | 1,010,327 | 900,625 | 123,939 | 45,164 |
| Other loans | 188,957 | Ͳ | Ͳ | Ͳ |
| 1,199,284 | 900,625 | 123,939 | 45,164 |
The following table summarises the sensitivity of financial assets held at balance date to interest rate risk, following a movement of 100 basis points in interest rates at the reporting date would have increased (decreased) equity and profit or loss by the amounts shown below.
| CONSOLIDATEDPostͲtax gain/(loss)/equityincrease/(decrease) | PARENTPostͲtax gain/(loss)/equityincrease/(decrease) | ||||
|---|---|---|---|---|---|
| 2011 | 2010 | 2011 | 2010 | ||
| $ | $ | $ | $ | ||
| +1% (100 basis points) | 6,263 | 11,362 | 6,263 | 11,362 | |
| Ͳ1% (100 basis points) | (6,263) | (11,362) | (6,263) | (11,362) |
FOR THE YEAR ENDED 30 JUNE 2011
(c) Fair values
Set out below is a comparison by category of carrying amounts and fair values of all of the Group's financial instruments recognised in the financial statements
| 2011 | 2010 | 2011 | 2010 |
|---|---|---|---|
| $ | $ | $ | $ |
| 1,223,122 | |||
| 98,480 | 33,556 | 98,480 | 33,556 |
| 900,625 | |||
| Ͳ | |||
| Ͳ | Ͳ | Ͳ | Ͳ |
| 639,915 | 1,147,375 | 639,915 | 1,147,375 |
| 85,038 | 31,810 | 85,038 | 31,810 |
| Ͳ | Ͳ | Ͳ | Ͳ |
| 123,939 | 45,164 | 123,939 | 45,164 |
| Ͳ | Ͳ | Ͳ | Ͳ |
| Ͳ | Ͳ | Ͳ | Ͳ |
| 806,3971,010,327188,957 | Carrying Amount1,223,122900,625Ͳ | Fair Value806,3971,010,327188,957 |
Cash, cash equivalents and security deposits:The carrying amount approximates fair value because of their short term to maturity
Trade receivables and trade creditors:The carrying amount approximates fair value.
Shares in controlled entities are excluded from the above as these are accounted for at cost in accordance with AASB 127.
(d) Credit Risk
Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents, and trade and other receivables. The Group's exposure to credit risk arises from potential default of the counter party, with a maximum exposure equal to the carrying amount of these instruments.
The Group does not hold any credit derivatives to offset its credit exposure. In addition, receivable balances are monitored on an ongoing basis with the result that the Group's exposure to bad debts is not significant.
There are no significant concentrations of credit risk within the Group.
FOR THE YEAR ENDED 30 JUNE 2011
(e) Liquidity Risk
The Group's liquidity position is managed to ensure sufficient funds are available to meet our financial commitments in a timely and costͲeffective manner.
The Company continually reviews its liquidity position including cash flow forecast to determine the forecast liquidity position and maintain appropriate liquidity levels.
The table below reflects the contractual maturity of financial instruments as at 30 June. Cash flows for financial instruments are presented on an undiscounted basis.
| Aging analysis between | Currency of payables | |||||
|---|---|---|---|---|---|---|
| 2011 | Total | <30 days | 30Ͳ60 days | >60 days | AUD | Other |
| CONSOLIDATED | ||||||
| Cash and Cash | ||||||
| Equivalents | (806,397) | (806,397) | Ͳ | Ͳ | (639,915) | (166,482) |
| Trade Receivables | (98,480) | (98,480) | Ͳ | Ͳ | (85,038) | (13,442) |
| Trade Payables | 531,010 | 392,594 | 32,787 | 105,629 | 182,869 | 348,141 |
| Other Payables | 479,317 | Ͳ | Ͳ | 479,317 | Ͳ | 479,317 |
| Other Loans | 188,957 | Ͳ | 188,957 | Ͳ | 188,957 | Ͳ |
| Convertible Loan | Ͳ | Ͳ | Ͳ | Ͳ | Ͳ | Ͳ |
| Total | 294,407 | (512,283) | 221,744 | 584,946 | (353,127) | 647,534 |
| PARENT | ||||||
| Cash and Cash | ||||||
| Equivalents | (639,915) | (639,915) | Ͳ | Ͳ | (639,915) | Ͳ |
| Trade Receivables | (85,038) | (85,038) | Ͳ | Ͳ | (85,038) | Ͳ |
| Trade Payables | 123,939 | 123,395 | Ͳ | 544 | 123,939 | Ͳ |
| Other Loans | Ͳ | Ͳ | Ͳ | Ͳ | Ͳ | Ͳ |
| Convertible Loan | Ͳ | Ͳ | Ͳ | Ͳ | Ͳ | Ͳ |
| Total | (601,014) | (601,558) | Ͳ | 544 | (601,014) | Ͳ |
| 2010 | ||||||
| CONSOLIDATED | ||||||
| Cash and Cash | ||||||
| Equivalents | (1,223,122) | (1,223,122) | Ͳ | Ͳ | (1,147,375) | (75,747) |
| Trade Receivables | (33,556) | (33,556) | Ͳ | Ͳ | (31,810) | (1,746) |
| Trade Payables | 304,329 | 181,989 | 9,018 | 113,322 | 101,929 | 202,400 |
| Other Payables | 596,296 | Ͳ | Ͳ | 596,296 | Ͳ | 596,296 |
| Other Loans | Ͳ | Ͳ | Ͳ | Ͳ | Ͳ | Ͳ |
| Convertible Loan | Ͳ | Ͳ | Ͳ | Ͳ | Ͳ | Ͳ |
| Total | (356,053) | (1,074,689) | 9,018 | 709,618 | (1,077,256) | 721,203 |
| PARENT | ||||||
| Cash and Cash | ||||||
| Equivalents | (1,147,375) | (1,147,375) | Ͳ | Ͳ | (1,147,375) | Ͳ |
| Trade Receivables | (31,810) | (31,810) | Ͳ | Ͳ | (31,810) | Ͳ |
| Trade Payables | 45,164 | 44,620 | Ͳ | 544 | 45,164 | Ͳ |
| Other Loans | Ͳ | Ͳ | Ͳ | Ͳ | Ͳ | Ͳ |
| Convertible Loan | Ͳ | Ͳ | Ͳ | Ͳ | Ͳ | Ͳ |
| Total | (1,134,021) | (1,134,565) | Ͳ | 544 | (1,134,021) | Ͳ |
FOR THE YEAR ENDED 30 JUNE 2011
(f) Foreign Exchange Risk
As a result of operations in Egypt, the Group's statement of financial position can be affected significantly by movements in the EGP/AUD exchange rates.The Group also has transactional currency exposures.Such exposure arises from sales or purchases by an operating entity in currencies other than the functional currency.
At 30 June 2011, the Group had the following exposure to foreign currency that are not designated in cash flow hedges:
| CONSOLIDATED | PARENT | ||||
|---|---|---|---|---|---|
| 2011 | 2010 | 2011 | 2010 | ||
| Financial AssetsUS$ | |||||
| Cash and cash equivalentsEGP | 123,458 | 52,917 | Ͳ | Ͳ | |
| Cash and cash equivalentsGBP | 30,326 | 22,830 | Ͳ | Ͳ | |
| Cash and cash equivalents | 12,669 | Ͳ | Ͳ | Ͳ | |
| 166,453 | 75,747 | Ͳ | Ͳ | ||
| Financial LiabilitiesUS$ | |||||
| Trade and other payablesEGP | 23,446 | 38,347 | 944 | Ͳ | |
| Trade and other payablesEuro | 769,360 | 759,292 | Ͳ | Ͳ | |
| Trade and other payablesNakfa | Ͳ | 5,166 | Ͳ | Ͳ | |
| Trade and other payablesGBP | 25,016 | Ͳ | |||
| Trade and other payables | 10,580 | 10,202 | Ͳ | Ͳ | |
| 828,402 | 813,007 | 944 | Ͳ | ||
| Net exposure | (661,949) | (737,260) | (944) | Ͳ |
The following sensitivity is based on the foreign currency risk exposures in existence at the statement of financial position date.
At 30 June 2011, had the Australian Dollar moved, as illustrated in the table below, with all other variables held constant, post tax profit and equity would have been affected as follows:
Judgements of reasonably possible movements:
| Post Tax Loss (Higher)/Lower | Equity Higher/(Lower) | |||
|---|---|---|---|---|
| 2011 | 2010 | 2011 | 2010 | |
| $ | $ | $ | $ | |
| Consolidated | ||||
| AUD/EGP +10% | (316,070) | (102,031) | (1,126,003) | (1,118,933) |
| AUD/EGPͲ10% | 386,308 | 124,705 | 1,376,226 | 1,367,585 |
| Parent | ||||
| AUD/EGP +10% | Ͳ | Ͳ | Ͳ | Ͳ |
| AUD/EGPͲ10% | Ͳ | Ͳ | Ͳ | Ͳ |
FOR THE YEAR ENDED 30 JUNE 2011
Foreign exchange rates used during the period were as follows:
| 2011 | 2010 | |
|---|---|---|
| AUD:EGP | AUD:EGP | |
| Rate as at 30 June | 6.30520 | 4.84229 |
| Average Rate for year ended 30 June | 5.72250 | 4.91302 |
(g) Capital management policy
The Board's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business.
There were no changes in the Group's approach to capital management during the year.
Neither the Company nor any of its controlled entities are subject to externally imposed capital requirements.
Management monitors capital through the gearing ratio (net debt/total capital). The gearing ratios based on continuing operations at 30 June 2011 and 2010 were as follows:
| CONSOLIDATED | PARENT | ||||
|---|---|---|---|---|---|
| 2011 | 2010 | 2011 | 2010 | ||
| $ | $ | $ | $ | ||
| Total trade and other payables | 1,010,327 | 900,625 | 123,939 | 45,164 | |
| Loans & borrowings | 188,957 | Ͳ | Ͳ | Ͳ | |
| Less cash and cash equivalents | (806,397) | (1,223,122) | (639,915) | (1,147,375) | |
| Net debt position | 392,887 | (322,497) | (515,976) | (1,102,211) | |
| Total equity | 4,376,993 | 4,900,620 | 740,157 | 1,242,441 | |
| Total capital | 4,769,880 | 4,578,123 | 224,181 | 140,230 | |
| Gearing ratio | 8.2% | (7.0%) | (230.2%) | (786.0%) |
DIRECTORS' DECLARATION
The directors of Gippsland Limited declare that:
- (a) in the directors' opinion, the financial statements and notes on pages 37 to 77, and the remuneration disclosures that are contained in the Directors' report, set out on pages 24 to 28, are in accordance with the Corporations Act 2001, including:
- (i) giving a true and fair view of the Company's and the Consolidated Entity's financial position as at 30 June 2011 and of their performance, for the year ended on that date; and
- (ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and Corporations Regulations 2001.
- (b) in the directors' opinion, the financial report also complies with International Financial Reporting Standards issued by the International Accounting Standards Board as disclosed in note 2 to the financial statements; and
- (c) in the directors' opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
The directors have been given the declarations required by Section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of the directors pursuant to Section 295(5) of the Corporations Act 2001.
Dated 30th day of September 2011.
JSF Dunlop Director
INDEPENDENT AUDITOR'S REPORT
INDEPENDENT AUDITOR'S REPORT
ASX ADDITIONAL INFORMATION
AS AT 22 SEPTEMBER 2011
| A | TOTALEQUITYSECURITIES | Shares | Options ex26/5/2012at 13.5cents | Options ex15/12/2011at 6.65pence | Options ex31/05/2012at 15 cents | Options ex14/12/2011at 8 cents |
|---|---|---|---|---|---|---|
| Totals on Issue | 812,675,131 | 25,000,000 | 4,000,000 | 17,000,000 | 10,000,000 | |
| B | DISTRIBUTIONOFEQUITYSECURITIES | |||||
| 11,000Ͳ | 89 | |||||
| 1,0015,000Ͳ | 178 | |||||
| 5,00110,000Ͳ10,001 Ͳ100,000 | 225833 | |||||
| 100,001and over | 383 | 1 | 2 | 8 | 1 | |
| 1,708 | 1 | 2 | 8 | 1 | ||
| No of shareholders holdingan unmarketable parcel | 644 | |||||
| C | TOP20SHAREHOLDERS | Number | % | |||
| 1 | Abbotsleigh Pty Ltd | 244,552,183 | 30.09 | |||
| 2 | JP Morgan Nominees Aust Limited | 150,127,787 | 18.47 | |||
| 3 | National Nominees Limited | 59,281,437 | 7.29 | |||
| 4 | HSBC Custody Nominees Aust Limited | 43,528,027 | 5.36 | |||
| 5 | Situate Pty Ltd | 14,279,040 | 1.76 | |||
| 6 | Taveroam Pty Limited | 13,814,455 | 1.70 | |||
| 7 | Taveroam Pty Ltd | 10,260,243 | 1.26 | |||
| 8 | RJ & RK Telford | 8,519,461 | 1.05 | |||
| 9 | EJ & LY Congdon | 6,875,912 | 0.85 | |||
| 10 | Alsanto Nominees Pty Ltd | 6,390,000 | 0.79 | |||
| 11 | Figjar Holdings Pty Ltd | 5,965,000 | 0.73 | |||
| 12 | Situate Pty Limited | 5,203,404 | 0.64 | |||
| 13 | Sunvest Corporation Limited | 5,166,665 | 0.64 | |||
| 14 | Citicorp Nominees Pty Limited | 4,882,424 | 0.60 | |||
| 15 | Eco International Pty Ltd | 4,676,706 | 0.58 | |||
| 16 | Alibank London Nominees Ltd | 4,500,000 | 0.55 | |||
| 17 | JP Morgan Nominees Australia Ltd | 4,081,964 | 0.50 | |||
| 18 | Nessim Emile Alfred | 4,000,000 | 0.49 | |||
| 19 | Avoday Technology Pty Limited | 3,000,000 | 0.37 | |||
| 20 | King Town Holdings Pty Ltd | 3,000,000 | 0.37 | |||
| 602,104,708 | 74.09 |
ASX ADDITIONAL INFORMATION
AS AT 22 SEPTEMBER 2011
| D | UNLISTEDOPTIONHOLDERS | Number | Exercise Price | Expiry |
|---|---|---|---|---|
| International Finance Corporation | 25,000,000 | 13.5 cents | 26/05/2012 | |
| International Finance Corporation | 10,000,000 | 8 cents | 14/12/2011 | |
| FD Holdings Ltd | 2,000,000 | 6.65 pence | 15/12/2011 | |
| Seymour Pierce Limited | 2,000,000 | 6.65 pence | 15/12/2011 | |
| Eco International Pty Ltd | 5,000,000 | 15 cents | 31/05/2012 | |
| Mandu Superannuation Fund P/L< Mandu Superannuation Fund> | 3,000,000 | 15 cents | 31/05/2012 | |
| Lazarus Foundation Pty Ltd | 2,000,000 | 15 cents | 31/05/2012 | |
| VentureWorks JDK Pty Ltd | 1,000,000 | 15 cents | 31/05/2012 | |
| Rowan Caren | 1,000,000 | 15 cents | 31/05/2012 | |
| Spectrum Metallurgical Consultants Pty Ltd | 2,000,000 | 15 cents | 31/05/2012 | |
| Mr Ayman Ayyash | 1,000,000 | 15 cents | 31/05/2012 | |
| John S Dunlop Nominees Pty Ltd <john dunlop="" family="" s="" super<="" td="">2,000,00015 cents31/05/2012 | 2,000,000 | 15 cents | 31/05/2012 | |
| Fund> | ||||
| E | SUBSTANTIALSHAREHOLDERS | Number | % |
| Abbotsleigh Pty Ltd | 244,552,183 | 30.09 | |
|---|---|---|---|
| Situate Pty Ltd, Taveroam Pty Ltd and RW Beale | 43,300,000 | 5.33 | |
| AcornCapital Limited | 41,000,000 | 5.05 | |
F VOTING RIGHTS
Under the Company's constitution, all ordinary shares carry one vote per share without restriction. Options over ordinary shares do not carry any voting rights.
G EXPLORATION INTERESTS
As at 22 September 2011, the Company has an interest in the following tenements:
| Country | Project | Tenement | Status | Interest |
|---|---|---|---|---|
| Egypt | Abu Dabbab | Exploitation Licence 1658 | Granted | 50% |
| Egypt | Abu Dabbab | Exploitation Licence 1659 | Granted | 50% |
| Egypt | Nuweibi | Exploitation Licence 1785 | Granted | 50% |
| Egypt | Wadi AllaqiͲSeiga | Exploration Licence 1 | Granted | 50% |
| Egypt | Wadi AllaqiͲShashoba | Exploration Licence 1 | Granted | 50% |
| Egypt | Wadi Allaqi – Haimur | Exploration Licence 1 | Granted | 50% |
| Egypt | Wadi Allaqi – Garayat | Exploration Licence 1 | Granted | 50% |
| Egypt | Wadi Allaqi – Koleit | Exploration Licence 1 | Granted | 50% |
| Egypt | Wadi Allaqi – Nile Valley A | Exploration Licence 1 | Granted | 50% |
| Egypt | Wadi Allaqi – Nile Valley E | Exploration Licence 1 | Granted | 50% |
| Egypt | Wadi Allaqi – Abu Swayel | Exploration Licence 1 | Granted | 50% |
| Egypt | Wadi Allaqi – Um Tiur | Exploration Licence 1 | Granted | 50% |
| Eritrea | Adobha | Exploration Licence | Granted | 100% |
| Eritrea | Adobha (Gerasi South) | Exploration Licence | Granted | 100% |
| Eritrea | Adobha (Hafta West) | Exploration Licence | Pending | Ͳ |
| Eritrea | Adobha (Romay) | Exploration Licence | Pending | Ͳ |
| Australia | Heemskirk (Tasmania) | Retention Licence No.5/1997 | Granted | 40% |
Notes: 1. Tenements granted subject to an agreement with the Egyptian Government (EMRA) dated 21 June 2004.Applications to renew tenements have been lodged.
Gippsland Limited Annual Report 2011
OFFICE ADDRESS Suite 4, 207 Stirling Highway, Claremont WA 6010, Australia POSTAL ADDRESS PO Box 352, Nedlands WA 6909, Australia TELEPHONE +61 8 9340 6000 | FACSIMILE +61 8 9340 6060 | EMAIL [email protected]