STREAMPLAY STUDIO LIMITED - Annual Report 2012

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2012

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ANNUAL REPORT ABN 31 004 766 376

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COnTEnTS
Corporate Directory	2
Chairman’s Report	3
Review of Operations	6
Abu Dabbab – Egypt	8
Nuweibi – Egypt	11
Wadi Allaqi – Egypt	12
Adobha – Eritrea	12
Financial Statements	17
Directors’ Report	18
Auditor’s Independence Declaration	28
Corporate Governance Statement	29
Consolidated Statement of Comprehensive Income	37
Consolidated Statement of Financial Position	38
Consolidated Statement of Cash Flows	39
Consolidated Statement of Changes in Equity	40
Notes to the Financial Statements	41
Directors’ Declaration	80
Independent Auditor’s Report	81
ASX Additional Information	83

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ABN 31 004 766 376
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ANNUAL REPORT 2012

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Gippsland Limited Annual Report 2012

CORPORATE DIRECTORY

DIRECTORS Ian Jeffrey Gandel – Non Executive Chairman Jon Starink – Executive Director John Damian Kenny – Non‐Executive Director

COMPANY SECRETARY Rowan St John Caren

REGISTERED OFFICE 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] WEBSITE www.gippslandltd.com AUDITORS Deloitte Level 14, Woodside Plaza 240 St. George's Terrace Perth WA 6000 Australia SOLICITORS Steinepreis Paganin Trowers & Hamlins Level 4, The Read Buildings 3rd Floor, 1 El Gabalaya Street 16 Milligan Street Zamalek, Cairo Perth WA 6000 Arab Republic of Egypt Australia Gowlings (UK) LLP 15th Floor 125 Old Broad Street London EC2N 1AR United Kingdom SHARE REGISTRY Security Transfer Registrars Pty Ltd PO BOX 535 Suite 1, 770 Canning Hwy Applecross WA 6953 Applecross WA 6153 Australia Australia WEBSITE www.securitytransfer.com.au PHONE NUMBER +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) Ltd 2 The Esplanade Perth WA 6000 Australia

ASX CODE GIP

FRANKFURT STOCK EXCHANGE The Company's securities are quoted on the Frankfurt Stock Exchange (DEUTSCHE BÖRSE) Börsenplatz 4 60313 Frankfurt / Main Germany FSE CODE GIX

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Gippsland Limited Annual Report 2012

CHAIRMAN'S REPORT

2011/12 has been another tough year for the company and the broader exploration company market. We have been able to advance our project portfolio. Key progress was made this year on the Company’s Egyptian and Eritrean projects.

Egypt

At Abu Dabbab, Gippsland commissioned and commenced production of tin from the alluvial placer deposits. In so doing, it became the first company to produce tin in Egypt in modern times. Whilst production to date has been relatively modest, my fellow directors and I are confident that production rates will be increased once upgrades to the plant are in place. The grades of the ore treated to date have supported the grades that our geological team forecast, which gives us further confidence that the project will generate significant income for Gippsland in the coming year. The tin produced is sold in concentrate form to the Malaysian Smelting Corporation for refinement.

The resource base at the Company’s Abu Dabbab Tin‐Tantalum Project stands at 44.5 million tonnes of which 33.18 million tonnes is in the Ore Reserve category. Abu Dabbab, when combined with the Company's nearby Nuweibi tantalum deposit, has a combined resource base of 142.5 million tonnes.

The Abu Dabbab Tin‐Tantalum‐Feldspar Project debt financing continues to be the main focus of the Board and management. The political upheaval in the Middle East and the North African region, and the on‐going turmoil in global financial markets, has increased the level of difficulty in obtaining acceptable financing terms, however, we believe that the existing Off‐take Agreement with German tantalum major HC Starck GmbH, together with projected tin production from the Abu Dabbab Tin‐Tantalum‐Feldspar Project, and hopefully a more stable political situation in Egypt, will assist us to negotiate a finance package which will contribute toward the long‐ term success of the project. The Company and its advisors have focused the search for a financier on banks operating in the Middle Eastern region. These financial institutions are best placed to understand the risks and returns of developing projects in the region.

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 Osama Kamal, 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 Geologist Dr Hasan Bakhit, the acting Chairman of the Egyptian Company for Mineral Resources, also continue to provide a high level of support for the Company and its Egyptian projects.

Eritrea

In Eritrea, Gippsland has an extensive and key landholding at its Adobha Project. The Company was among the first Western companies to secure mineral rights in Eritrea and has been able to aggregate a significant acreage of highly prospective ground at Adobha.

Eritrea is a highly prospective exploration destination. This fact was reinforced recently when Chalice Gold Mines Limited (ASX Code: CHN) completed the sale of its Zara gold project to China SFECO Group and the Eritrean national minerals company (ENAMCO) for a combined US$114 million.

During the year the Company completed a gravity survey within the Adobha Project. The gravity survey was conducted over twelve electromagnetic anomalies previously identified from an airborne survey flown by Geotech Airborne Limited using a Versatile Time Domain Electro Magnetic system (‘VTEM’) during 2011.

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Gippsland Limited Annual Report 2012

CHAIRMAN'S REPORT

The gravity survey on a 100m x 50m grid was completed by Geo‐surveys International Inc. and designed to cover the highly‐ranked VTEM anomalies as a prelude to RC drilling. Preliminary results from the gravity survey were encouraging and in the light of these preliminary results, the survey grids were extended. Limited infill gravity data was collected on a 50m x 50m grid in some areas to assist in the selection of drill hole location. Geological mapping to assist with the interpretation of the anomalies for the purpose of prioritising proposed drill collar locations of each of the anomalies was also completed.

During the year the Company commenced a 5,000 metre reconnaissance reverse circulation (‘RC’) drilling programme designed to test a number of VTEM, gravity and geochemical anomalies. At the time of writing the laboratory assay results of this drilling are still being received and incorporated into the Company’s database to form the basis for the next round of exploration. The results received to date include some interesting intersections which will require follow‐up drilling. These include 26m of 0.16% copper from surface and in another hole 6m of 0.24% zinc with some associated lead (654ppm). In addition to the follow‐up drilling the company still has some untested high priority VTEM targets which could not be reached during the past wet season as well as geochemical rock‐chip gold anomalies located along strike to the north from the Zara gold project.

The Company would like to thank His Excellency Ahmed Haj Ali, The Minister of Energy and Mines, Mr 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

Gippsland shareholders approved the sale of its 40% interest in the project to its partner in the Heemskirk Tin Project, Stellar Resources Limited (ASX: SRZ) for 43.5 million Stellar shares. Gippsland will retain a net smelter return (‘NSR’) royalty over any future tin production from the Heemskirk project.

The Heemskirk Tin Project currently comprises the Queen Hill, Severn and Montana deposits, which are located immediately northwest of Zeehan on the west coast of Tasmania. Stellar has estimated that the three deposits comprise an Inferred Resource of 4.4 million tonnes grading 1.1% tin, making Heemskirk the highest grade, undeveloped tin resource in Australia.

Preliminary studies have indicated that at an appropriate tin price, an economic mining project could be developed.

The Heemskirk Tin Project had been disadvantaged for too long by the existing joint venture agreement. By agreeing to this deal, Gippsland shareholders have ensured that the project is given the best possible chance of becoming a mine. Gippsland retains an interest of almost 20% in SRZ and will benefit considerably from developments at Heemskirk.

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Gippsland Limited Annual Report 2012

CHAIRMAN'S REPORT

Corporate

I am very encouraged by the support from shareholders and investors during the two rights issues completed this year, particularly given the tough world‐wide economic conditions. Funds raised will assist the Company greatly in advancing its project portfolio.

I would like to particularly acknowledge the efforts of my fellow directors, Jon Starink and John Kenny, during the year.

During the upcoming year, we will be working diligently to ensure the success of the alluvial tin mining at Abu Dabbab, testing of targets in Eritrea and towards financing of Abu Dabbab.

Yours sincerely,

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Ian Gandel

Chairman

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IAN GANDEL NON-EXECUTIVE CHAIRMAN

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Gippsland Limited Annual Report 2012

REVIEW OF OPERATIONS

OVERVIEW

Gippsland's activities are primarily focussed on the Arabian‐Nubian 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 also has an office in Asmara, Eritrea.

Gippsland’s flagship asset is the world class Abu Dabbab Tantalum‐Tin‐Feldspar Project in Egypt, which also contains an alluvial tin deposit which is currently being mined.

During the year, Gippsland sold its 40% interest in the Tasmanian Heemskirk Tin Project to its joint venture partner for 43,528,743 shares in Stellar Resources Ltd and a royalty.

EGYPT

Gippsland has a controlling 50% interest in the Abu Dabbab and Nuweibi Tantalum‐Tin‐Feldspar 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 mining and production of tin concentrates from its Abu Dabbab Alluvial Tin Project during the year.

The Company also has an interest in eight gold prospects and one copper‐nickel prospect located in the Wadi Allaqi region situated to the south‐east of Aswan in Egypt. Exploration of the current Wadi Allaqi Exploration Licences will re‐commence following the granting of tenements under application.

ERITREA

In Eritrea, the Company's 100% owned subsidiary Adobha Resources (Eritrea) Pty Ltd has two Exploration Licences totalling 2,200 km[2] in area. Both 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. An application for an additional Exploration Licence area has been lodged and is pending.

TASMANIA

Gippsland and Stellar Resources Ltd (‘Stellar’) completed a sale and purchase transaction whereby Stellar acquired the 40% interest held in the Heemskirk Tin Project by Gippsland in return for 43,528,743 Stellar shares and a royalty.

The Stellar shares received by Gippsland have been escrowed for 12 months from the date of issue in accordance with ASX rules.

Gippsland will retain a net smelter return (‘NSR’) royalty over any future tin production from the Heemskirk project. The royalty will be triggered when the tin price is A$25,000, at a rate of 1%. The royalty will then rise linearly to a maximum rate of 2% at a tin price of $A30,000 and above.

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Gippsland Limited Annual Report 2012

REVIEW OF OPERATIONS

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Gippsland Limited Annual Report 2012

REVIEW OF OPERATIONS

EGYPT

ABU DABBAB

Introduction

The Abu Dabbab tantalum‐tin‐feldspar deposit is covered by two Exploitation Licences (№ 1658 & № 1659) granted in the name of Tantalum Egypt JSC, a company incorporated in Egypt and held 50% by the Egyptian government owned Egyptian Mineral Resources Authority (‘EMRA’) and 50% by Tantalum International Pty Ltd, a wholly owned subsidiary of Gippsland Limited. The two Exploitation Licences have a 30‐year tenure with an option of a further 30 years.

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Ten Year Tantalum Off‐take Agreement

Gippsland has an Off‐take 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 ‐ Ta2O5) for a period of ten years.

The Company has entered into discussions with other tantalum refiners in respect of the production capacity that is not committed to HC Starck.

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 Abu Dabbab Project is expected to be capable of providing initial production in excess of 900,000 pounds of Ta2O5 per year. Implementation of the Abu Dabbab Project would position Gippsland as a world ranking, top tier producer of conflict‐free, clean tantalum, thereby justifying Abu Dabbab as a world class deposit.

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Gippsland Limited Annual Report 2012

REVIEW OF OPERATIONS

Project Finance

Due to the political upheaval in the Middle East during 2011, the Company has re‐focused the search for a financier on major banks and sovereign funds located in the Middle East and North Africa region. Discussions in this regard are ongoing.

Free Zone Area

In accordance with General Authority For Investment (‘GAFI’) requirements, the Company completed the construction of a 3.5 metre‐high brick security wall, including a chain wire fence on one side of the compound, to enclose the Abu Dabbab Free Zone site leased from EMRA. In addition to the wall, a GAFI and Customs Office was also constructed in the Free Zone area.

Sea Water Intake and Project Environmental Social Impact Assessment

Following consultation with the Company’s Cairo‐based environmental consultants, Environics, it was decided that the preferred means of sea water intake will take the form of an intake located outside the fringing reef, connecting with a pipeline to shore mounted on a jetty structure. The Company’s engineers, Lycopodium Ltd, prepared revised drawings of such an arrangement which have been included in the updated Environmental Social Impact Assessment (‘ESIA’).

The ESIA also required updating to take account of the increased production rate, the elimination of the use of sea water as process water and the consequential changes to the tailings storage facility.

The updated ESIA has been submitted to the Shore Protection Agency and Ministry of Water and Irrigation for approval.

Increase in Ore Reserves

Following detailed evaluation of alternative production profiles for the Abu Dabbab Project, the Company proceeded with a change of scope for the Abu Dabbab Project from 2 million tonnes per annum (‘Mtpa’) of Run‐ of‐Mine ore (‘ROM’) to 3 Mtpa of ROM.

At this rate of production, the average annual output of products is estimated to be approximately:

925,000 pounds of tantalum oxide (Ta2O5) in slag;
2,200 tonnes of tin as tin metal; and
up to 2.4 Mtpa of feldspar.

Revised pit optimisation studies suggest a mine life of 13.5 years. The Company completed Whittle pit re‐ optimisations at both 2 and 3 Mtpa based on both Measured and Indicated Mineral Resources and Measured, Indicated and Inferred Mineral Resources.

The process flow sheet will comprise conventional gravity separation after crushing and grinding of the ROM to produce a primary gravity concentrate.

The revised open pit mine design and associated production schedule supports the following updated Ore Reserves statement, based on a 100 g/t Ta2O5 cut‐off.

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Gippsland Limited Annual Report 2012

REVIEW OF OPERATIONS

Table 1: Abu Dabbab Ore Reserves Statement, as at May 29[th] 2011.

Category	Mt	Ta2O5 (%)	Sn(%)
Proven ore	15.20	0.0260	0.1695
Probable ore	17.98	0.0245	0.0989
TOTAL ORE RESERVES	33.18	0.0252	0.1312
Inferred resource	8.21	0.021	0.040
TOTAL	41.37	0.0244	0.1130

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%.

Independent Calculation of Project Economics

Noah’s Rule, a financial advisory firm, has prepared an independent calculation of project economic indicators and sensitivities for the Abu Dabbab tantalum‐tin‐feldspar project.

The economic performance indicators produced are the conventional Net Present Value (‘NPV’) and Internal Rate of Return (‘IRR’) methodologies for project evaluation utilising a core set of costs provided by the Company’s engineering consultants and revenue assumptions related to product sales, market price and fuel costs set by Gippsland’s management in consultation with Noah’s Rule. The results are summarised in Table 2.

The key price assumptions upon which the Base Case performance indicators presented in Tables 2(a) (un‐geared) and 2(b) (geared) were based are summarised in Table 3.

Table 2(a): Base Case Un‐Geared Economic Performance Indicators

(Capital costs 100% Equity Funded)

Performance Indicator	Units	Project	Gippsland Share
NPV @ 10% discount rate	US$ million	593.0	263.6
NPV @ 15% discount rate	US$ million	402.8	164.9
NPV @ 20% discount rate	US$ million	271.5	94.6
IRR	%	39.2	28.4

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Gippsland Limited Annual Report 2012

REVIEW OF OPERATIONS

Table 2(b): Base Case Geared Economic Performance Indicators

(Capital costs 50:50 Debt*:Equity Funded)

Performance Indicator	Units	Project	Gippsland Share
NPV @ 10% discount rate	US$ million	583.8	268.8
NPV @ 15% discount rate	US$ million	392.6	188.4
NPV @ 20% discount rate	US$ million	260.7	132.3
IRR	%	37.8	42.5

*Interest on debt is assumed at 7% per annum

Table 3: Base Case Price Assumptions

Product		Unit	Product Price Assumptions
Tin		US$ per tonne	25,450
Ta2O5
	Off‐Take Price	US$ per pound	per Off‐take Agreement
	Residual Sales	US$ per pound	110
Feldspar		US$ per tonne FOB	35
Diesel Price		US$ per litre	0.935

Abu Dabbab Alluvial Project

During the September 2011 quarter, Gippsland completed a comprehensive engineering study and economic evaluation of the opportunity to develop the Abu Dabbab alluvial tin deposits (the ‘Abu Dabbab Alluvial Project’). Based on the results of the trial mining program, the Directors approved project go‐ahead and implementation of the Abu Dabbab Alluvial Project.

Prior to the first shipment, Tantalum Egypt JSC entered into a contract with Malaysia Smelting Corporation Bhd for the sale of tin concentrates from the Abu Dabbab Alluvial Project. Ramp‐up of the Abu Dabbab Alluvial Project to full production was slower than expected. The first product despatch from the mine site was completed on Thursday 28 June 2012. A further two shipments have been despatched up to the date of this report.

The tin concentrates being produced are generally between 55% and 65% tin, have low impurities and are readily saleable.

In the light of recent operating experience, Gippsland management is currently evaluating low capital cost opportunities for process improvement and capacity enhancement to dramatically increase tin concentrate production.

NUWEIBI

The Exploitation Licence № 1785 covering the Nuweibi tantalum deposit was issued to Tantalum Egypt JSC by Ministerial Decree № 5 of 2008 on 13 July 2008. The Nuweibi deposit is located 17 km to the south‐southwest of

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Gippsland Limited Annual Report 2012

REVIEW OF OPERATIONS

the Abu Dabbab deposit and 30 km inland from the Red Sea. This Exploitation Licence also has a 30‐year 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 Soviet‐Egyptian 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 cut‐off 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.

Work undertaken during the year included satellite image acquisition, map compilation and processing of a small parcel of cassiterite bearing alluvials.

The drilling at Nuweibi that was planned for the December 2011 quarter has been deferred due to the lack of a suitable drilling rig.

WADI ALLAQI

The Wadi Allaqi Project consists of nine small Exploration Licences located approximately 160 km southeast of Aswan in the south‐western part of the Eastern Desert of Egypt. These Exploration Licences have a total area of 144 km[2] . Application has been made for an Exploration Licences having a total area of 980 km[2] and the renewal of the small Seiga licence. Exploration of the current Exploration Licences will re‐commence 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

Gippsland’s 100% owned subsidiary Adobha Resources (Eritrea) Pty Ltd holds the Adobha Exploration Licence covering 2,100 km[2] and the Gerasi South Exploration Licence covering 100 km[2] in the highly prospective Adobha region of The State of Eritrea.

The two granted Exploration Licences cover an area that is regarded as very prospective for volcanogenic massive sulphide mineralisation and structurally controlled gold mineralisation. Local examples of these types of deposits are the Bisha base metal deposit (1.618 million ounce gold and 0.45 million tonne copper in the Ore Reserves) located some 174 km to the south and the Probable Ore Reserve of 0.760 million ounces of gold at the Zara gold project (Koka deposit) located only 16 km to the south of the Company's most southern Licence. The Precambrian Nubian‐Arabian Shield hosts at least five gold deposits containing in excess of 1 million ounces of gold including the 14.5 million ounce Sukari gold deposit in Egypt.

Gippsland received the final levelled data for the 5,161 line‐kilometre airborne geophysical survey over the Adobha and Gerasi South licence areas in Northern Eritrea. The airborne geophysical survey covered 19 target areas selected on the basis of Thematic Mapper (‘TM’) anomalies, geological targets, and geochemical anomalies identified during geochemical surveys by Gippsland.

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Gippsland Limited Annual Report 2012

REVIEW OF OPERATIONS

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 80‐120 m determined by the topography.

Interpretation of the data by the Company’s consultant geophysicist identified 16 electro‐magnetic (‘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.

Field inspection of the EM anomalies was completed in early October 2011 in order to determine appropriate further exploration. Follow‐up exploration in the areas of the VTEM anomalies was conducted with programmes of geological mapping, in‐fill drainage sampling, and soil and rock‐chip sampling.

The Company completed a gravity survey within the Adobha Project over all of the accessible high and medium priority electromagnetic anomalies identified from an airborne survey. The Company also undertook geological mapping, additional geochemical sampling and site access preparatory work ahead of its reverse circulation drilling programme.

The drilling programme was initially delayed due to the Eritrean authorities changing the visa requirements for foreign drillers and technical workers entering the country, and further delayed when a drilling rig being mobilised to site was washed off a causeway by a flash flood. A replacement drilling rig was contracted and, in July 2012, mobilised to the Adobha Project site to commence drilling the VTEM, gravity and geochemical targets.

During the period 13 July to 10 September the company completed the first pass (2,845m) of a proposed 5,000m drilling programme on the Adobha Project in Northern Eritrea. The programme tested all of the high to medium ranked VTEM anomalies that were accessible due to logistical difficulties caused by the wet season. Low‐grade copper mineralisation over significant intervals was intersected in three holes. Significant zinc, up to 4,268ppm with some associated lead was intersected in drill hole RCAD11 at anomaly V11 which is of interest with respect to VMS exploration.

The drilling results received to date indicate that the area is mineralised and that additional geological mapping and geochemical sampling will be required prior to the second phase of drilling.

Table 4: Adobha Project ‐ Best drilling results received to date

Anomaly	Hole	From(m)	To(m)	Interval(m)	Grade	N‐UTM	E‐UTM
V11	RCAD11	40	46	6	2,377ppm Zn,
					654ppm Pb	1885351	406469
V13	RCAD03	46	62	16	720ppm Cu	1924918	406363
V14	RCAD05	40	68	28	410ppm Cu	1918720	410861
	Incl.	42	46	4	1,435ppm Cu
V14	RCAD06	0	26	26	1,638ppmCu	1918797	410832
	Incl.	22	24	2	7,597ppm Cu

Geological mapping and drainage geochemical sampling is continuing in other parts of the project area principally within the Gerasi South Exploration Licence where the focus is on gold exploration as this area contains the northern strike extension of the Zara gold zone. Another area of high priority is anomaly V12 where a high priority VTEM anomaly is located within a sequence of felsic volcanic rocks containing layers to sulphide‐bearing tuff layers. The V12 anomaly was inaccessible due to the wet season.

The Company has submitted an application for an Exploration Licence to cover the area to the west of the granted Adobha and Gerasi South Exploration Licences.

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Gippsland Limited Annual Report 2012

REVIEW OF OPERATIONS

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REVIEW OF OPERATIONS

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Gippsland Limited Annual Report 2012

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MINERAL RESOURCE AND ORE RESERVE INVENTORY ‐ SEPTEMBER 2012 TOTAL MINERAL RESOURCES ‐ EGYPT

TOTAL MINERAL RESOUR	CES ‐ EGYPT
Category	Measured	Indicated	Inferred	Total	Cut‐off
Abu Dabbab (Gippsland 50%)
Million tonnes	15.2	17.3	12	44.5	100g/t Ta2O5
Ta2O5(g/t)	290	250	200	250
Sn (%)	0.143	0.078	0.03	0.09
Placer tin deposit
Volume (m3)			438,000	438,000
Contained Sn (t)			760	760
Nuweibi (Gippsland 50%)
Million tonnes	‐	48	50	98	100g/t Ta2O5
Ta2O5(g/t)	‐	147	138	143
Seiga (Gippsland 50%)
Million tonnes			1.1	1.1	0.7g/t Au
Gold(g/t)			2.3	2.3

TOTAL ORE RESERVES ‐	EGYPT(INCLUSIVE OF MINERAL	EGYPT(INCLUSIVE OF MINERAL	RESOURCES)
Category	Proved	Probable	Total
Abu Dabbab (Gippsland 50%)
Million tonnes	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.

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Gippsland Limited Annual Report 2012

FINANCIAL STATEMENTS

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ABN 31 004 766 376

FINANCIAL STATEMENTS

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Gippsland Limited Annual Report 2012

DIRECTORS’ REPORT

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 2012 ("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 Damian Kenny Mr John Stuart Ferguson Dunlop (resigned 12 July 2012)

Names, qualifications, experience and special responsibilities

Ian Jeffrey Gandel ‐ Chairman (Non‐executive) LLB, BEc, FCPA, FAICD

Mr Gandel was appointed Director and non‐executive 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* ‐ Appointed 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 Non‐Executive Director. His extensive practical and operational experience includes engineering design and project management; mining exploration management; science and engineering research & development and process innovation & development.

Mr Starink served in senior technical and engineering roles with the Sons of Gwalia Ltd Greenbushes tantalum‐tin 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

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Gippsland Limited Annual Report 2012

DIRECTORS’ REPORT

John Damian Kenny – Director (Non‐executive) 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 ‐ Appointed 18 June 2003 Indus Coal Limited ‐ Appointed 13 September 2011 Sun Resources Limited* ‐ Appointed 1 March 2012

John Stuart Ferguson Dunlop – Director (Executive) (resigned 12 July 2012) BE, M Eng Sc, P Cert Arb, CP, FAusIMM, FIMMM, MSME, MCIMM, MMICA

Mr Dunlop was appointed Director on 1 July 2005 and resigned on 12 July 2012.

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.

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

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 Ordinary	Number of Options	Exercise Price of	Expiry date of
	Shares	over Ordinary Shares	Options	Options
IJ Gandel	469,430,560	‐	‐	‐
JD Kenny	4,132,655	‐	‐	‐
J Starink	3,085,715	‐	‐	‐

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
25	November 2011	31 December 2012	$0.04	600,000
25	November 2011	31 December 2013	$0.06	600,000

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Gippsland Limited Annual Report 2012

DIRECTORS’ REPORT

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 PricewaterhouseCoopers 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	2	2
JD Kenny	10	9	2	2	2	1
J Starink	10	8	‐	‐	‐	‐
JSF Dunlop	10	8	2	1	2	2

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 profit of the Group after providing for income tax amounted to $799,359 (2011: loss of $2,630,645).

Review of Operations

During the year the Company continued to focus on the development of the Abu Dabbab tin/tantalum/feldspar project and commencement of production at the Alluvial Tin Project in Egypt. The following activities were undertaken in relation to the Abu Dabbab tin/tantalum project and the Abu Dabbab Alluvial Tin Project:

Completion of work on the Free Zone.
Preparation of revised drawings for the seawater intake and jetty structure.
Completion of the Environmental Social Impact Assessment by the Company’s environmental consultants, Environics, and submission to the Shore Protection Agency and Ministry of Water and Irrigation for approval.
Completion of alluvial tin trial mining activities.
Completion of a comprehensive engineering study and economic evaluation of the Abu Dabbab Alluvial Tin Project and approval to proceed with mining operations in relation to this project.
Purchase and implementation of the plant and equipment to process the high grade alluvial material from Wadi Quaria.
Commencement of mining operations at the Alluvial Tin Project.
Entering into a concentrate sales contract with Malaysia Smelting Corporation Bhd.
First shipment despatched from Alluvial Tin Project.
Completion of independent calculation of project economics in relation to the Abu Dabbab Tin‐Tantalum‐Feldspar Project.

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Gippsland Limited Annual Report 2012

DIRECTORS’ REPORT

Satellite image acquisition, map compilation and processing a small parcel of cassiterite bearing alluvials in relation to the Nuweibi Project.

In addition, the Company’s operations included:

exploration activities in Eritrea in relation to two Exploration Licences granted to a 100% owned subsidiary of the Company. Exploration activities included completion of a Versatile Time Domain Electro Magnetic system (‘VTEM’) survey, completion of follow‐up gravity surveys and preparation for a 5,000 metre reconnaissance reverse circulation drilling programme in relation to the Adobha and Gerasi South project areas.
successful placements of shares during the year to raise a total of $7,501,617 before costs.
divestment of the Company’s 40% interest in the Heemskirk Tin Project to the Company’s joint venture partner for 43,528,743 shares in Stellar Resources Ltd and a royalty.

Financial Position

The net assets of the Group have increased by $7,833,950 to $12,210,943 at 30 June 2012. The increase has largely resulted from the following factors:

proceeds from the issue of shares raising a total during the year of $7,501,617 before costs;
sale of the Company’s interest in the Heemskirk Tin Project for a royalty and shares in Stellar Resources Ltd with a market value at 30 June 2012 of $3,264,656; and
capital and development expenditure and inventories in relation to the Abu Dabbab Alluvial Tin Project.

As at Reporting Date the group had a working capital surplus of $1,037,935.

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 was granted a 100km[2] Exploration Licence in addition to its existing 2,100km[2] (total 2,200 km[2] ), in the highly prospective Adobha region of The State of Eritrea;
b) Completed the issue and allotment of 187,540,415 shares at a placement price of $0.027 to raise $5,063,591 (before costs) on 18 August 2011;
c) Completed the issue and allotment of 162,535,026 shares at a placement price of $0.015 to raise $2,438,026 (before costs) on 20 March 2012;
d) The Company’s 50% owned subsidiary, Tantalum Egypt JSC, commenced production at the Abu Dabbab Alluvial Project in Egypt; and
e) The Company executed a sale and purchase agreement with Stellar Resources Ltd whereby Stellar Resources Ltd acquired the Company’s 40% interest in the Heemskirk Tin Project for 43,528,743 shares in Stellar Resources Ltd and a royalty.

SIGNIFICANT EVENTS AFTER THE BALANCE DATE

On 12 July 2012, Mr John Dunlop resigned as a Director of the Company.

During July to September 2012, the Company commenced and completed a non‐renounceable rights issue to raise $ 1,384,105 before costs.

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.

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Gippsland Limited Annual Report 2012

DIRECTORS’ REPORT

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 $14,103 (2011: $14,053). 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.

NON‐AUDIT SERVICES

No non‐audit 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 2012 has been received and can be found on page 18 of the directors’ report.

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Gippsland Limited Annual Report 2012

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 long‐term incentives. The board of Gippsland Limited believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best executives and directors to run and manage the 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:

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. In the years presented, no external consultants have been used.
All executives receive a base salary (which is based on factors such as length of service and experience).
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 non‐executive directors at market rates for time, commitment and responsibilities. The board determines payments to the non‐executive directors and reviews their remuneration annually, based on market practice, duties and accountability. Independent external advice is sought when required. The maximum aggregate amount of fees that can be paid to non‐executive directors is currently fixed at $250,000 with any change in this amount subject to approval by shareholders at the Annual General Meeting. Fees for non‐executive 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.

At the Company’s most recent Annual General Meeting, the remuneration report for the year ended 30 June 2011 was passed with a greater than 75% vote in favour.

The tables below set out summary information about the consolidated entity’s earnings and movements in shareholder wealth for the five years to 30 June 2012:

	30 June 2012 $	30 June 2011 $	30 June 2010 $	30 June 2009 $	30 June 2008 $
Revenue	90,820	82,938	64,440	17,303	80,880
Netprofit/(loss)before tax	799,359	(2,630,645)	(2,894,769)	(2,751,352)	(2,520,874)
Netprofit/(loss)after tax	799,359	(2,630,645)	(2,894,769)	(2,751,352)	(2,520,874)

	30 June 2012	30 June 2011	30 June 2010	30 June 2009	30 June 2008
Shareprice at start ofyear	$0.032	$0.030	$0.044	$0.099	$0.120
Shareprice at end ofyear	$0.009	$0.032	$0.030	$0.044	$0.099
Basic/diluted earnings/(loss) per share	0.10 cps	(0.43)cps	(0.58)cps	(0.86)cps	(0.91)cps

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Gippsland Limited Annual Report 2012

DIRECTORS’ REPORT

Details of key management personnel

(i) Directors

IJ Gandel ‐ Chairman (Non‐Executive)
J Starink ‐ Executive Director J Kenny ‐ Non‐Executive Director JSF Dunlop ‐ Executive Director (resigned 12 July 2012)

(ii) Executives

JM Chisholm ‐ Chief Geologist A Ayyash ‐ Regional Manager ‐ Middle East and North Africa RS Caren ‐ Company Secretary GA Hawkins ‐ Chief Financial Officer

Non‐Executive Director Remuneration

IJ Gandel ‐ Chairman (Non‐Executive)

Remuneration: $80,000 per annum.
Details of remuneration entitlement on termination: Payment of fees up to the date of termination.

J Kenny ‐ Non‐Executive Director

Remuneration: $40,000 per annum.
Details of remuneration entitlement on termination: Payment of fees up to the date of termination.

Employment Contracts

J Starink ‐ Executive Director

Term of agreement: 8 May 2007 until terminated in accordance with the agreement.
Remuneration: $150,000 per annum.
Period of notice for termination/resignation: Three months written notice by either party.
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.

JM Chisholm ‐ Chief Geologist

Remuneration: $175 per hour.
Period of notice for termination/resignation: Three months written notice by either party.
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 Ayyash ‐ Regional Manager ‐ Middle East and North Africa

Term of agreement: 1 October 2010 until terminated in accordance with the agreement.
Remuneration: $188,600 salary and allowances per annum.
Period of notice for termination/resignation: Two months written notice by the Company or three months written notice by the Executive.
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.

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Gippsland Limited Annual Report 2012

DIRECTORS’ REPORT

RS Caren ‐ Company Secretary

Term of agreement: 15 August 2006 until terminated in accordance with the agreement.
Remuneration: $6,500 per month.
Period of notice for termination/resignation: One month written notice by either party.
Details of remuneration entitlement on termination: Payment of consulting fees up to the date of termination.

GA Hawkins ‐ Chief Financial Officer

Term of agreement: 1 September 2010 until terminated in accordance with the agreement.
Remuneration: $170,000 per annum.
Period of notice for termination/resignation: Two months written notice by the Company or three months written notice by the Executive.
Details of remuneration entitlement on termination: Payment of salary and employee entitlements up to the date of termination.

JSF Dunlop ‐ Executive Director (resigned 12 July 2012)

Remuneration: $115,000 per annum.
Period of notice for termination/resignation: None.
Details of remuneration entitlement on termination: Payment of fees up to the date of termination.

Remuneration of key management personnel

Table 1: Remuneration for the year ended 30 June 2012

Key Management Personnel Non‐Executive Directors Mr IJ Gandel Mr JD Kenny Sub‐total Executive Directors Mr J Starink Mr JSF Dunlop (resigned 12 July 2012) Sub‐total Other key management personnel Mr A Ayyash Mr RS Caren Dr JM Chisholm Mr GA Hawkins Sub‐total Total	Short‐term Benefits Cash, salary and commissions $ Share‐based Payment Shares $ Post‐ employment Benefits Superannuation $ Total $ Remuneration consisting of options for the year % 80,000 ‐ ‐ 80,000 0.00% 40,000 ‐ ‐ 40,000 0.00%
	120,000 ‐ ‐ 120,000 200,000 ‐ ‐ 200,000 0.00% 113,417 ‐ 1,583 115,000 0.00%
	313,417 ‐ 1,583 315,000 198,508 ‐ ‐ 198,508 0.00% 76,507 ‐ ‐ 76,507 0.00% 244,693 ‐ ‐ 244,693 0.00% 153,670 3,550 13,830 171,050 2.08%
	673,378 3,550 13,830 690,758
	1,106,795 3,550 15,413 1,125,758

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Gippsland Limited Annual Report 2012

DIRECTORS’ REPORT

Table 2: Remuneration for the year ended 30 June 2011

Key Management Personnel Non‐Executive Directors Mr IJ Gandel Mr JD Kenny Sub‐total Executive Directors Mr J Starink Mr JSF Dunlop Mr RJ Telford (terminated 26 November 2010) Sub‐total Other key management personnel Mr A Ayyash Mr RS Caren Dr JM Chisholm Mr GA Hawkins Sub‐total Total*	Short‐term Benefits Cash, salary and commissions $ Share‐based Payment Shares $ Post‐ employment Benefits Superannuation $ 88,188 ‐ ‐ 36,808 ‐ ‐	Total $ Remuneration consisting of options for the year % 88,188 0.00% 36,808 0.00%
	124,996 ‐ ‐ 135,000 ‐ ‐ 74,800 ‐ ‐ 166,667 ‐ ‐	124,996 135,000 0.00% 74,800 0.00% 166,667 0.00%
	376,467 ‐ ‐ 191,870 22,500 ‐ 79,775 ‐ ‐ 94,238 ‐ ‐ 122,324 ‐ 11,009	376,467 214,370 10.50% 79,775 0.00% 94,238 0.00% 133,333 0.00%
	488,207 22,500 11,009	521,716
	989,670 22,500 11,009	1,023,179

In addition to these fees paid by Gippsland, during the year ended 30 June 2011, Dr Chisholm was also paid $37,500 from Adobha Resources Ltd, which was intended to be the listing vehicle for the Eritrean exploration assets through a proposed Initial Public Offering. The proposed Initial Public Offering was cancelled and during the year ended 30 June 2012, these fees of $37,500 were brought to account in Gippsland’s subsidiary, Adobha Resources (Eritrea) Pty Ltd, in order for the fees to contribute towards the Company’s exploration expenditure commitments in Eritrea.

Table 3: Compensation Options: Granted and vested during the year (consolidated)

The following are grants of share‐based payment compensation to directors and senior management:

30	June 2012			Terms &	Conditions for Each	Grant	Vesting date
				Fair Value per	Exercise
				Option at	Price per
				Grant Date ($)	option ($)
		Granted No.	Grant Date	(note 22)	(note 22)	Expiry Date
Mr	GA Hawkins	500,000	25 Nov 2011	$0.0032	$0.04	31 Dec 2012	25 Nov 2011
Mr	GA Hawkins	500,000	25 Nov 2011	$0.0039	$0.06	31 Dec 2013	25 Nov 2011

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Gippsland Limited Annual Report 2012

DIRECTORS’ REPORT

Table 4: Shares issued on exercise of compensation options (consolidated)

30 June 2012
	Shares issued	Paid per share	Unpaid per share
	No.	$	$
Directors
Nil	‐	‐	‐
30 June 2011
	Shares issued	Paid per share	Unpaid per share
	No.	$	$
Directors
Nil	‐	‐	‐

Table 5: Share‐based payment arrangements in existence

During the financial year, the following share‐based payment arrangements were in existence in relation to directors and senior management.

During the financial ye senior management.	ar, the following share	‐based payment	arrangements were in ex	istence in relation to d	irectors and
Options series	Grant date	Expiry date	Number of options	Grant date fair	Vesting date
				value
(1) Issued 25	25 Nov 2011	31 Dec 2012	500,000	$0.0032	25 Nov 2011
November 2011
(2) Issued 25	25 Nov 2011	31 Dec 2013	500,000	$0.0039	25 Nov 2011
November 2011

There are no further service or performance criteria that need to be met in relation to options granted under series (1) or (2) before the beneficial interest vests in the recipient.

During the financial year:

1,000,000 options were issued to Mr Geoffrey Hawkins. All options vested on grant date. The options were issued for nil consideration and have a fair value at grant date of $3,550 (2011: Nil). There were no other grants of share‐ based payment compensation to directors or senior management.
No directors or senior management exercised options that were granted to them as part of their compensation.
17,000,000 options held by directors and senior management lapsed. Of these 17,000,000 options, 10,000,000 options were held by current directors and senior management and 7,000,000 options were held by former directors and senior management. The 17,000,000 lapsed options had a value at their grant date of $17,000.

[END OF REMUNERATION REPORT]

Signed in accordance with a resolution of the Board of Directors.

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J STARINK Director

Dated this 28[th] day of September 2012.

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Gippsland Limited Annual Report 2012

AUDITOR'S INDEPENDENCE DECLARATION

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Gippsland Limited Annual Report 2012

CORPORATE GOVERNANCE STATEMENT

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 cross‐references 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:

Corporate Governance Statement including disclosures and explanations;
Summary of Code of Ethics and Conduct for Directors and Key Executives;
Summary of Securities Trading Policy;
Audit Committee Charter;
Remuneration Committee Charter;
Summary of Continuous Disclosure Policy;
Summary of Shareholder Communications Strategy;
Policy on Risk Oversight and Management of Material Business Risks; and
Summary of Company Code of Ethics and Conduct.

Explanations for Departures from Best Practice Recommendations

During the financial year the Company has complied with the majority of the 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.

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Gippsland Limited Annual Report 2012

CORPORATE GOVERNANCE STATEMENT

The Company complies with this recommendation.

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

a review by the Board of the Group's financial and operating performance;
comparison of executive remuneration levels to industry benchmarks; and
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 2012.

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 J Kenny, and two non‐independent directors, Mr I Gandel and Mr J Starink. The former director, Mr J Dunlop was not considered to be an independent director as he was performing an executive role prior to his resignation from the Board in July 2012. Mr Starink is not independent by virtue of the fact that he is an executive. Mr Gandel is not independent as he holds a substantial interest in the Company's securities.

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 Non‐Executive 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 Non‐Executive 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 I Gandel, is not considered by the Board to be independent as he holds a substantial interest in the Company's securities.

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Gippsland Limited Annual Report 2012

CORPORATE GOVERNANCE STATEMENT

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 Non‐Executive Chairman and the role of Chief Executive Officer is undertaken by Mr Starink. 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 September 2012.

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

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Gippsland Limited Annual Report 2012

CORPORATE GOVERNANCE STATEMENT

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 re‐election 26 November 2009, tenure 13 years Jon Starink – appointed 8 May 2007, date of last re‐election 26 November 2010, tenure 5 years Ian Gandel – appointed 24 June 2009, date of last re‐election 20 May 2009, tenure 3 years

A performance evaluation of board members was completed in October 2012.

3. PROMOTE ETHICAL AND RESPONSIBLE DECISION‐MAKING

Council Principle 3: Companies should actively promote ethical and responsible decision‐making.

Council Recommendation 3.1:

Establish a code of conduct and disclose the code or a summary of the code as to:

the practices necessary to maintain confidence in the Company's integrity;
the practices necessary to take into account their legal obligations and the reasonable expectations of their stakeholders;
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

A diversity policy was adopted on 27 September 2012. A copy of the Company's Diversity policy is available on the website. The policy does not contain measurable objectives because the Company is not of a sufficient size to justify these objectives.

Council Recommendation 3.3:

Companies should disclose in each annual report the measurable objectives for achieving gender diversity.

The Company does not comply with this recommendation as it has not implemented a policy containing measurable objectives.

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.

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Gippsland Limited Annual Report 2012

CORPORATE GOVERNANCE STATEMENT

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:

consists only of non‐executive directors;
consists of a majority of independent directors;
is chaired by an independent chair, who is not chair of the board;
has at least three members.

The members of the audit committee are Mr Gandel, Mr Starink and Mr Kenny. The Chairman of the audit committee is Mr Kenny, who is not the Chairman of the Board. Mr Starink joined the audit committee upon the resignation from the Board of Mr Dunlop in July 2012.

Currently the audit committee has one independent director, Mr Kenny, and two non‐independent directors, Mr Starink 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 three 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 Non‐Executive 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.

Two meetings of the audit committee were held during the year. Mr Kenny and Mr Gandel attended both meetings. Mr Dunlop attended one meeting. Mr Starink was not a member of the audit committee at the time the meetings were held.
Deloitte Touche Tohmatsu is the incumbent auditor. 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.

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Gippsland Limited Annual Report 2012

CORPORATE GOVERNANCE STATEMENT

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

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Gippsland Limited Annual Report 2012

CORPORATE GOVERNANCE STATEMENT

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 September 2012.

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;

Consists of a majority of independent directors;
Is chaired by an independent chair
Has at least three members

The members of the remuneration committee are Mr Gandel, Mr Starink and Mr Kenny. The Chairman of the remuneration committee is Mr Gandel who is not independent. Mr Starink joined the remuneration committee upon the resignation from the Board of Mr Dunlop in July 2012.

Currently the remuneration committee has one independent director, Mr Kenny, and two non‐independent directors, Mr Starink and Mr Gandel. The Company does not comply with Recommendation 8.2.

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Gippsland Limited Annual Report 2012

CORPORATE GOVERNANCE STATEMENT

While the Board strongly endorses the position that the remuneration committee should exercise independence of judgment, it also recognises that there are only three 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 Non‐ Executive Directors simply to fill the remuneration committee.

Council Recommendation 8.3

Companies should clearly distinguish the structure of non‐executive 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. Mr Kenny did not attend the meeting. Mr Starink was not a member of the remuneration committee at the time the meeting was held.
The Company currently has no schemes for retirement benefits, other than superannuation for directors.
The Company does not have any unvested entitlements under any equity‐based remuneration schemes.

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Gippsland Limited Annual Report 2012

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 JUNE 2012

*Note*	*2012* *2011* $ $
Finance revenue 3(a) Other Income 3(b) Total Income Other gains and losses 3(c) Administration expense 3(d) Employee benefits expense 3(e) Foreign exchange gain/(losses) Share based payment expense Exploration expense Project evaluation expense Impairment of loans to other entities Depreciation and amortisation expense Impairment of exploration and evaluation expenditure Profit/(loss) before income tax Income tax expense 4 Profit/(loss) after income tax Other comprehensive income Exchange rate differences on translating foreign operations Total other comprehensive income Total comprehensive income/(loss) for the period Profit/(loss) is attributable to: Members of the parent Non‐controlling interest Total comprehensive income/(loss) is attributable to: Members of the parent Non‐controlling interest Basic earnings/(loss) per share (cents per share) 5 Diluted earnings/(loss) per share (cents per share) 5	81,037 82,348 9,783 590
	90,820 82,938
	3,264,656 ‐ (1,013,251) (1,113,588) (1,407,394) (1,221,526) (21,610) 1,125 (4,260) (22,500) ‐ (39,318) ‐ (33,165) ‐ (239,596) (65,505) (39,222) (44,097) (5,793)
	799,359 (2,630,645) ‐ ‐
	799,359 (2,630,645) 87,665 (899,448)
	87,665 (899,448)

	887,024 (3,530,093)
	799,359 (2,630,645) ‐ ‐
	799,359 (2,630,645)
	887,024 (3,530,093) ‐ ‐
	887,024 (3,530,093)
	0.10 (0.43) 0.10 (0.43)

The accompanying notes form an integral part of this Consolidated Statement of Comprehensive Income.

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Gippsland Limited Annual Report 2012

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2012

AS AT 30 JUNE 2012
*Note*	*2012* *2011* $ $
ASSETS Current Assets Cash and cash equivalents 6 Trade and other receivables 7 Inventories 8 Other assets 9 Total Current Assets Non‐Current Assets Other financial assets 10 Property, plant and equipment 11 Exploration and evaluation 12 Mine properties 13 Total Non‐Current assets TOTAL ASSETS LIABILITIES Current Liabilities Trade and other payables 14 Provisions 15 Loans and Borrowings 16 Total Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Equity attributable to equity holders of the parent Contributed Equity 17(a) Reserves 18 Accumulated losses 18 TOTAL EQUITY	1,169,582 806,397 25,902 98,480 706,078 ‐ 203,374 80,524
	2,104,936 985,401
	3,264,656 ‐ 1,192,111 284,429 6,458,211 4,316,624 258,030 ‐
	11,173,008 4,601,053
	13,277,944 5,586,454
	993,262 1,010,327 73,739 10,177 ‐ 188,957
	1,067,001 1,209,461
	1,067,001 1,209,461
	12,210,943 4,376,993
	45,530,847 38,588,181 (185,026) (276,951) (33,134,878) (33,934,237)
	12,210,943 4,376,993

The accompanying notes form an integral part of this Consolidated Statement of Financial Position.

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Gippsland Limited Annual Report 2012

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 30 JUNE 2012

*Note*	*2012* *2011*
Cash flows from operating activities Payments to suppliers and employees Interest received Finance costs Other receipts Net cash flows (used in) operating activities 6 Cash flows from investing activities Payments for exploration and evaluation Payments for property, plant and equipment Net cash flows (used in) investing activities Cash flows from financing activities Proceeds from issue of fully paid shares 17(b) Payment of transaction costs 17(b) Loans to other entities Proceeds from borrowings Repayment of borrowing Net cash flows from financing activities Net increase/(decrease) in cash held Net foreign exchange differences Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period 6	(2,908,766) (2,376,324) 81,151 82,902 (592) ‐ 7,561 590
	(2,820,646) (2,292,832)
	(2,631,215) (816,812) (868,429) (214,310)
	(3,499,644) (1,031,122)
	7,501,617 3,200,000 (558,951) (216,034) (66,746) (50,639) 400,000 ‐ (560,000) ‐
	6,715,920 2,933,327
	395,630 (390,627) (32,444) (26,098) 806,396 1,223,122
	1,169,582 806,397

The accompanying notes form an integral part of this Consolidated Statement of Cash Flows.

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Gippsland Limited Annual Report 2012

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2012

At 1 July 2010 Currency translation differences Loss for the year Total comprehensive income for the year Transactions with owners in their capacity as owners Issue of share capital Transaction costs Cost of share‐based payments At 30 June 2011 Currency translation differences Profit for the year Total comprehensive income for the year Transactions with owners in their capacity as owners Issue of share capital Transaction costs Cost of share‐based payments At 30 June 2012	Issued capital Accumulated losses Option reserve Foreign currency translation reserve Total equity $ $ $ $ $
	35,581,715 (31,303,592) 530,402 92,095 4,900,620
	‐ ‐ (899,448) (899,448) ‐ (2,630,645) ‐ ‐ (2,630,645)
	‐ (2,630,645) ‐ (899,448) (3,530,093)
	3,200,000 ‐ ‐ ‐ 3,200,000 (216,034) ‐ ‐ ‐ (216,034) 22,500 ‐ ‐ ‐ 22,500
	38,588,181 (33,934,237) 530,402 (807,353) 4,376,993
	‐ ‐ 87,665 87,665 ‐ 799,359 ‐ ‐ 799,359
	‐ 799,359 ‐ 87,665 (887,024)
	7,501,617 ‐ ‐ ‐ 7,501,617 (558,951) ‐ ‐ ‐ (558,951) ‐ 4,260 ‐ 4,260
	45,530,847 (33,134,878) 534,662 (719,688) 12,210,943

The accompanying notes form an integral part of this Consolidated Statement of Changes in Equity.

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Gippsland Limited Annual Report 2012

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2012

1 CORPORATE INFORMATION

The financial report of Gippsland Limited for the year ended 30 June 2012 was authorised for issue in accordance with a resolution of the directors on 28 September 2012.

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.

For the purpose of preparing the financial statements, the consolidated entity is a for‐profit entity.

(b) Going Concern

The consolidated entity has incurred a net profit after income tax of $799,359 (2011: Loss of $2,630,645) and experienced net cash outflows from operations of $2,820,646 (2011: $2,292,832) and net cash outflows from investing activities of $3,499,644 (2011: $1,031,122) for the year ended 30 June 2012.

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, the Abu Dabbab project, other commitments, other principal activities and provide additional working capital, the sale of non‐core assets and the ramp‐up in production of its Alluvial Tin project.

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 September 2012, the Company completed a non‐renounceable rights issue to raise $1,384,105 before costs.

The directors have prepared a cash flow forecast for the period ending 30 September 2013 which indicates that the current cash resources will not meet expected cash outgoings without additional capital and / or debt funding. The directors anticipate that this funding will be obtained through a combination of some or all of the following:

Short‐term funding of $800,000 to be obtained from Ian Gandel or his related party by way of loan funds to be provided by December 2012;
Realisation of non‐core assets by March/April 2013 at amounts equivalent to the carrying value of those assets at 30 June 2012;
Successful ramp‐up of the Alluvial Tin Project, increasing revenue and cash receipts from March 2013 due to a planned upgrade of its plant facility in December 2012; and/or
Further capital raisings and / or debt funding.

The directors are satisfied that they will achieve the matters set out above and therefore the going concern basis of preparation is appropriate. The financial report has therefore been prepared on the 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 achieve the matters 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,

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Gippsland Limited Annual Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

whether they will realise their assets and discharge their liabilities in the normal course of business and at amounts stated in the financial report.

The financial report does not include adjustments relating to the recoverability and classification of recorded asset amounts, or to the amounts and classification of liabilities that might be necessary should the consolidated entity and the company not 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 2011.

Significant new and revised standards and interpretations effective for the current financial reporting period that are relevant to the consolidated entity are:

AASB 124 Related Party Disclosures (2009), AASB 2009‐12 Amendments to Australian Accounting Standards;
AASB 1054 Australian Additional Disclosures and AASB 2011‐1 Amendments to Australian Accounting Standards arising from Trans‐Tasman Convergence Project;
AASB 2010‐4 Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project;
AASB 2010‐5 Amendments to Australian Accounting Standards; and
AASB 2010‐6 Amendments to Australian Accounting Standards – Disclosures on Transfers of Financial Assets.

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 annual reporting periods beginning/ending on or after	Expected to be applied be consolidated entity
AASB 9 Financial Instruments, AASB 2009‐11 Amendments to Australian Accounting Standards arising from AASB 9 and AASB 2010‐7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010)	1 January 2015	30 June 2016
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)	1 January 2013	30 June 2014
AASB 128 Investments in Associates and Joint Ventures(2011)	1 January 2013	30 June 2014

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Gippsland Limited Annual Report 2012

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2012

Standard / Interpretation	Effective for annual reporting periods beginning/ending on or after	Expected to be applied be consolidated entity
AASB 13 Fair Value Measurement and AASB 2011‐ 8 Amendments to Australian Accounting Standards arising from AASB 13	1 January 2013	30 June 2014
AASB 119 Employee Benefits (2011) and AASB 2011‐10 Amendments to Australian Accounting Standards arising from AASB 119 (2011)	1 January 2013	30 June 2014
AASB 2011‐4 Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirements	1 July 2013	30 June 2014
AASB 2011‐7 Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangements standards	1 January 2013	30 June 2014
AASB 2011‐9 Amendments to Australian Accounting Standards – Presentation of Items of Other Comprehensive Income	1 July 2012	30 June 2013
Interpretation 20 Stripping Costs in the Production Phase of a Surface Mine and AASB 2011‐12 Amendments to Australian Accounting Standards arising from Interpretation 20	1 January 2013	30 June 2014
AASB 2012‐2 Amendments to Australian Accounting Standards ‐ Disclosures – Offsetting Financial Assets and Financial Liabilities (Amendments to AASB 7)	1 January 2013	30 June 2014
AASB 2012‐3 Amendments to Australian Accounting Standards ‐ Offsetting Financial Assets and Financial Liabilities (Amendments to AASB 132)	1 January 2014	30 June 2015
AASB 2012‐5 Amendments to Australian Accounting Standards arising from Annual Improvements 2009‐2011 Cycle	1 January 2013	30 June 2014

At the date of authorisation of the financial report, the following Standards and Interpretations issued by the IASB/IFRIC where an equivalent Australian Standard or Interpretation has not been made by the AASB, were in issue but not yet effective:

Standard / Interpretation	Effective for annual reporting periods beginning/ending on or after	Expected to be applied be consolidated entity
Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance (Amendments to IFRS 10, IFRS 11 and IFRS 12)	1 January 2013	30 June 2014

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

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 inter‐company balances and transactions, including unrealised profits arising from intra‐group 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.

(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. Non‐monetary 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.

Non‐monetary 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).

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Gippsland Limited Annual Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

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 short‐term deposits in the statement of financial position comprise cash at bank and in hand and short‐term 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) Inventories

Inventories are stated at the lower of cost and net realisable value. Costs of inventories are determined on a first‐in‐ first‐out basis. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. Categories of inventory include:

a. spare parts and stores;
b. work in progress – stockpiles of ore containing cassiterite awaiting processing where future economic benefits are expected to flow to the Group;
c. finished goods – final cassiterite product on site awaiting shipment; and
d. finished goods in transit – final cassiterite product in transit to the smelter.

(k) Other financial assets

Other financial assets in the parent company represent investments in subsidiaries held at cost less any impairment.

(l) Property, plant and equipment

Leasehold improvements, buildings and plant and equipment are stated at cost less accumulated depreciation and any impairment losses recognised.

Depreciation is calculated on a straight‐line basis over the estimated useful life of the asset as follows:

Leasehold Improvements ‐ over 2 to 5 years Buildings – over 20 years Plant and equipment ‐ over 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 cash‐ generating unit to which the asset belongs.

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Gippsland Limited Annual Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets or cash‐ 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 pre‐tax 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.

(m) 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.

The Group assesses the stage of each mine under construction to determine when a mine moves into the production stage. The criteria used to assess the start date are determined based on the unique nature of each mine construction project, such as the complexity of a plant and its location. The Group considers various relevant criteria to assess when the mine and the processing plant is substantially complete and ready for its intended use. At this time, any costs capitalised to ‘exploration and evaluation’ are reclassified to ‘mine properties’. Some of the criteria will include, but are not limited, to the following:

Availability of the plant;
Completion of a reasonable period of testing of the mine plant and equipment;
Ability to produce metal in saleable form (within specifications); and
Ability to sustain ongoing production of metal at commercial rates of production.

(n) Mine properties

When a mine construction project moves into the production stage, any costs capitalised to ‘exploration and evaluation’ are reclassified to ‘mine properties’. Also at this time, the capitalisation of certain mine construction costs ceases and costs are either regarded as inventory or expensed, except for costs that qualify for capitalisation relating to mine asset additions or improvements, mine development or mineable reserve development. It is also at this point that depreciation / amortisation commences.

Mine properties are recorded at cost, less accumulated depreciation and amortisation and any impairment losses.

Amortisation is over the units of production of the economically recoverable reserves (that is, tonnes of ore).

(o) 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

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Gippsland Limited Annual Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

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 cash‐generating unit to which the asset belongs.

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.

(p) 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.

(q) 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 pre‐tax 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.

(r) 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.

(s) 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.

(t) Share‐based payment transactions

The Group provides remuneration to employees (including directors) of the Group in the form of share‐based payment transactions, whereby employees render services in exchange for shares or rights over shares ('equity‐settled transactions').

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Gippsland Limited Annual Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

The cost of these equity‐settled transactions with employees is measured by reference to the fair value at the date at which they are granted. In valuing equity‐settled 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 equity‐settled 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').

The cumulative expense recognised for equity‐settled transactions at each reporting date until vesting date reflects ‐

(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 equity‐settled 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 equity‐settled 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).

(u) 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 straight‐line 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 straight‐line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

(v) 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.

(w) 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:

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Gippsland Limited Annual Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

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
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.

Deferred income tax assets are recognised for all deductible temporary differences, carry‐forward 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 carry‐forward of unused tax credits and unused tax losses can be utilised:

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
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.

(x) Financial instruments

Financial assets and financial liabilities are recognised when a group entity becomes a party to the contractual provisions of the instrument.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

Financial assets

Financial assets are classified into the following specified categories: financial assets ‘at fair value through profit or loss’ (FVTPL), ‘held‐to‐maturity’ investments, ‘available‐for‐sale’ (AFS) financial assets and ‘loans and receivables’. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.

Financial assets at FVTPL

Financial assets are classified as at FVTPL when the financial asset is either held for trading or it is designated as at FVTPL.

A financial asset is classified as held for trading if:

it has been acquired principally for the purpose of selling it in the near term; or

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Gippsland Limited Annual Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

on initial recognition it is part of a portfolio of identified financial instruments that the Group manages together and has a recent actual pattern of short‐term profit‐taking; or
it is a derivative that is not designated and effective as a hedging instrument.
A financial asset other than a financial asset held for trading may be designated as at FVTPL upon initial recognition if:
such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or
the financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group's documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or
it forms part of a contract containing one or more embedded derivatives, and AASB 139 ‘Financial Instruments: Recognition and Measurement’ permits the entire combined contract (asset or liability) to be designated as at FVTPL.

Financial assets at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the financial asset and is included in the ‘other gains and losses’ line item in the consolidated statement of comprehensive income. Fair value is determined in the manner described in note 29.

Loans and receivables

Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as ‘loans and receivables’. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short‐term receivables when the recognition of interest would be immaterial.

Impairment of financial assets

Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.

For certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Group’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period of 60 days, as well as observable changes in national or local economic conditions that correlate with default on receivables.

For financial assets carried at amortised cost, the amount of the impairment loss recognised is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.

For financial assets carried at cost, the amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment loss will not be reversed in subsequent periods.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.

When an AFS financial asset is considered to be impaired, cumulative gains or losses previously recognised in other comprehensive income are reclassified to profit or loss in the period.

For financial assets measured at amortised cost, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at

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Gippsland Limited Annual Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

In respect of AFS equity securities, impairment losses previously recognised in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognised in other comprehensive income and accumulated under the heading of investments revaluation reserve.

(y) Other taxes

Revenues, expenses and assets are recognised net of the amount of GST except:

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
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.

(z) 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 on‐costs. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits. Contributions are made by the entity to employee superannuation funds and are charged as expenses when incurred.

(aa) 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.

(bb) 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.

(cc) 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.

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Gippsland Limited Annual Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

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 inter‐company loans and exploration and evaluation expenditure.

The criteria used by management in determining the impairment is as follows:

Inter‐company 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 inter‐ company loans, and
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.
The impairment of financial assets is accounted for by revaluing the financial asset to market value at the reporting date. The financial asset consists of shares in an ASX listed company and the market value is determined by using the closing price on the last business day of the reporting period. Any movement in the market value of the financial asset is brought to account in the Consolidated Statement of Comprehensive Income.

The Group assesses the stage of each mine under construction to determine when a mine moves into the production stage. The criteria used to assess the start date are determined based on the unique nature of each mine construction project, such as the complexity of a plant and its location. The Group considers various relevant criteria to assess when the mine and the processing plant is substantially complete, ready for its intended use and operating in the manner intended by management. When a mine construction project moves into the production stage, any costs capitalised to ‘exploration and evaluation’ are reclassified to ‘mine properties’.

Mine properties are amortised over the units of production of the economically recoverable reserves.

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.

(dd) Financial risk management policy

Details of the Group's financial risk management policy are set out in Note 29.

(ee) 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.

(ff) Comparative figures

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

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Gippsland Limited Annual Report 2012

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2012

3 REVENUES, OTHER INCOME AND EXPENSES

3 REVENUES, OTHER INCOME AND EXPENSES
	*2012* *2011* $ $
Revenue and expenses from continuing operations (a) Revenue Finance revenue (b) Other income Sundry income (c) Other gains and losses Profit on sale of Heemskirk Joint Venture interest Net gain/(loss) arising on financial assets (d) Administration expenses Included in administrative expenses: Minimum lease payments ‐ operating lease Consultancy expenses (e) Employee benefits expenses Payroll cost Superannuation Employee benefits expense in Statement of Comprehensive Income Share‐based payments expense Total employee benefit expenses 4 INCOME TAX	81,037 82,348
	81,037 82,348
	9,783 590
	9,783 590
	4,635,811 ‐ (1,371,155) ‐
	3,264,656 ‐
	198,854 154,372 153,874 231,088 1,385,891 1,204,737 21,503 16,789
	1,407,394 1,221,526
	4,260 22,500
	1,411,654 1,244,026

Statement of Comprehensive Income

Statement of Comprehensive Income
	*2012* *2011* $ $
(a) The components of income tax expense for the years ended 30 June 2012 and 2011 are: Statement of Comprehensive Income Current income tax Current income tax charge/(benefit) Deferred income tax Relating to origination and reversal of temporary differences Benefit from previously unrecognised tax loss used to reduce deferred tax expense Income tax expense/(benefit) reported in statement of comprehensive income Statement of changes in equity Income tax liability reported in equity	‐ ‐ ‐ ‐ ‐ ‐
	‐ ‐

	‐ ‐

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Gippsland Limited Annual Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

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 2012 and 2011 is as follows:

Statement of Comprehensive Income

Statement of Comprehensive Income
	*2012* *2011* $ $
Accounting profit (loss) before tax At the statutory income tax rate of 30% (2011: 30%) Non‐deductible expenses Temporary differences and tax losses not recognised Income tax expense recognised on profit or loss Effective income tax rate Unrecognised deferred tax assets and liabilities Deferred tax assets and liabilities have not been recognised in respect of the following items:	799,359 (2,630,645)
	239,808 (789,194) 466,503 79,398 (706,311) 709,796
	‐ ‐
	‐ ‐
	0% 0% *2012* *2011* $ $
Deferred tax liabilities Other assets Foreign exchange gain Deferred tax assets Business related costs Accrued superannuation Accrued audit fees Accrued expenses Employee entitlements Foreign exchange loss Tax losses (domestic) Trade and other receivables Unrecognised deferred tax assets Net deferred tax Tax losses and temporary differences not recognised	(68) (90) ‐ ‐
	(68) (90)
	76,099 57,446 ‐ ‐ 9,817 8,482 54,118 11,384 11,828 1,703 4,951 466,470 4,345,798 4,839,207 ‐ ‐
	4,502,611 5,384,692 (4,502,543) (5,384,602)
	68 90
	‐ ‐
	4,502,543 5,384,602

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.

5 EARNINGS PER SHARE

5 EARNINGS PER SHARE
	*2012*	*2011*
	*cents*	*cents*
Basic earnings per share	0.10	(0.43)
Diluted earnings per share	0.10	(0.43)

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Gippsland Limited Annual Report 2012

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2012

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 share

Profit/(loss) attributable to ordinary equity holders of the
Company used in calculating basic and diluted earnings per	799,359	(2,630,645)
share

(b) Weighted average number of shares used in the denominator

Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share Adjusted weighted average number of ordinary shares used in calculating diluted earnings per share	*Shares* Shares 833,820,398 604,762,113
	833,820,398 604,762,113

There were 1,200,000 potential ordinary shares as at 30 June 2012 (56,000,000 for 30 June 2011).

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 anti‐dilutive and out of the money for the years presented.

6 CASH AND CASH EQUIVALENTS

6 CASH AND CASH EQUIVALENTS
	*2012* *2011* $ $
Cash at bank and in hand Short term deposits	385,782 271,797 783,800 534,600
	1,169,582 806,397

Cash at bank and in hand earns interest at floating rates based on daily bank rates.

Short‐term 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 short‐term deposit rates.

The fair value of cash and cash equivalents is $1,169,582 (2011: $806,397).

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:

Cash at bank and in hand Short‐term deposits	385,782 271,797 783,800 534,600
	1,169,582 806,397

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Gippsland Limited Annual Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

Reconciliation from the net profit/(loss) after tax to the net cash flows from operations

Net Profit/(Loss) after income tax Adjustments for: Depreciation and amortisation Impairment losses of exploration expenditure Foreign exchange loss (gain) Share options expensed Exploration expenses Profit on sale of Heemskirk Joint Venture interest Net loss arising on financial asset designated as FVTPL Changes in assets and liabilities (increase)/decrease in trade and other receivables (increase)/decrease in other assets (increase)/decrease in inventories (decrease)/increase in provisions (decrease)/increase in trade and other payables Net cash from operating activities	799,359 (2,630,645) 65,505 39,222 44,387 247,227 (5,479) 167,901 4,260 22,500 ‐ 9,616 (4,635,811) ‐ 1,371,155 ‐ 70,164 (55,821) (164,141) (8,987) (706,078) ‐ 63,562 (7,059) 272,471 (76,786)
	(2,820,646) (2,292,832)

Net Profit/(Loss) after income tax
Adjustments for:
Depreciation and amortisation
Impairment losses of exploration expenditure
Foreign exchange loss (gain)
Share options expensed
Exploration expenses
Profit on sale of Heemskirk Joint Venture interest
Net loss arising on financial asset designated as FVTPL
Changes in assets and liabilities
(increase)/decrease in trade and other receivables
(increase)/decrease in other assets
(increase)/decrease in inventories
(decrease)/increase in provisions
(decrease)/increase in trade and other payables
Net cash from operating activities

799,359
(2,630,645)
65,505
39,222
44,387
247,227
(5,479)
167,901
4,260
22,500
‐
9,616
(4,635,811)
‐
1,371,155
‐
70,164
(55,821)
(164,141)
(8,987)
(706,078)
‐
63,562
(7,059)
272,471
(76,786)

(2,820,646)
(2,292,832)

Non‐cash transactions

During the 2012 financial year, the Group entered into the following non‐cash investing and financing activities which are not reflected in the statement of cash flows:

The issue of 1,200,000 options on 25 November 2011 for nil consideration to employees of Gippsland. 600,000 of the options had an exercise price of $0.04 and an expiry date of 31 December 2012, and the other 600,000 options had an exercise price of $0.06 and an expiry date of 31 December 2013; and
Gippsland Ltd received 43,528,743 shares in Stellar Resources Ltd valued at $4,635,811 being the consideration from the sale of the Company’s interest in the Heemskirk Tin Joint Venture. The value of the shares in Stellar Resources Ltd has been determined by multiplying the number of shares received by $0.1065, being the 5 day volume weighted average price for Stellar Resources Ltd shares for the 5 business days between 19 January and 25 January 2012.

During the 2011 financial year, the Group did not enter into any non‐cash investing or financing activities.

7 TRADE AND OTHER RECEIVABLES (CURRENT)

	*2012* *2011* $ $
Trade receivables (i) Other receivables (ii) Loan receivable from Adobha Resources Ltd (iii) Allowance for impairment of receivables (iii)	‐ ‐ 25,902 98,480 239,885 239,596 (239,885) (239,596)
	25,902 98,480

(i) Trade receivables are non‐interest bearing and are generally on 30‐day 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 on‐loaning funds to Adobha Resources (Eritrea) Pty Ltd for exploration costs. The proposed IPO was terminated in June 2011. The loan has been fully impaired.

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Gippsland Limited Annual Report 2012

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2012

8 INVENTORIES

	*2012* *2011* $ $
Spare parts and stores – at costs Work in progress – at cost Finished goods in transit – at cost	53,851 ‐ 565,632 ‐ 86,595 ‐
	706,078 ‐

The cost of inventories recognised as an expense during the year in respect of continuing operations was nil (2011: nil).

9 OTHER ASSETS

	*2012* *2011* $ $
Prepayments Rental deposits Accrued revenue	199,803 78,911 3,262 1,189 309 424
	203,374 80,524

10 OTHER FINANCIAL ASSETS (NON‐CURRENT)

10 OTHER FINANCIAL ASSETS (NON‐CURRENT)
	*2012* *2011* $ $
Investments in listed entities classified as available for sale – at fair value	3,264,656 ‐
	3,264,656 ‐

This investment consists of 43,528,743 shares in Stellar Resources Ltd and is subject to escrow pursuant to ASX rules until 31 January 2013.

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Gippsland Limited Annual Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

11 PROPERTY, PLANT AND EQUIPMENT

	*Leasehold* *Improvements* *Buildings* *Plant and* *equipment* *Total* $ $ $
Year ended 30 June 2012 Balance at 30 June 2011 Additions Disposals Foreign Exchange Adjustment Depreciation charge for the year Balance at 30 June 2012 At 1 July 2011 Cost Accumulated depreciation and impairment Net carrying amount At 30 June 2012 Cost Accumulated depreciation and impairment Net carrying amount Year ended 30 June 2011 Balance at 30 June 2010 Additions Disposals Foreign Exchange Adjustment Depreciation charge for the year Balance at 30 June 2011 At 1 July 2010 Cost Accumulated depreciation and impairment Net carrying amount At 30 June 2011 Cost Accumulated depreciation and impairment Net carrying amount	2,495 281,934 284,429 1,381 161,412 790,910 953,703 ‐ ‐ (9,606) (9,606) ‐ (38) 29,128 29,090 (2,070) (6,015) (57,420) (65,505)
	1,806 155,359 1,034,946 1,192,111
	18,794 ‐ 479,039 497,833 (16,299) ‐ (197,105) (213,404)
	2,495 ‐ 281,934 284,429
	20,175 161,412 1,330,433 1,512,020 (18,369) (6,053) (295,487) (319,909)
	1,806 155,359 1,034,946 1,192,111
	5,602 ‐ 128,244 133,846 543 ‐ 205,905 206,448 ‐ ‐ ‐ ‐ ‐ ‐ (18,303) (18,303) (3,650) ‐ (33,912) (37,562)
	2,495 ‐ 281,934 284,429
	18,251 ‐ 330,908 349,159 (12,649) ‐ (202,664) (215,313)
	5,602 ‐ 128,244 133,846
	18,794 ‐ 479,039 497,833 (16,299) ‐ (197,105) (213,404)
	2,495 ‐ 281,934 284,429

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Gippsland Limited Annual Report 2012

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2012

12 EXPLORATION AND EVALUATION EXPENDITURE

12 EXPLORATION AND EVALUATION EXPENDITURE
	*2012* *2011* $ $
Exploration & evaluation expenditure (at cost) Accumulated amortisation and impairment Movement: Exploration & evaluation expenditure Balance at beginning of year Current year expenditure Foreign exchange adjustment Reclassification of expenditure as Property, Plant and Equipment Transfer to mine properties Impairment Balance at end of year	9,842,616 7,565,055 (3,384,405) (3,248,431)
	6,458,211 4,316,624
	4,316,624 4,384,999 2,690,645 972,786 (98,123) (1,035,368) (118,798) ‐ (288,039) ‐ (44,098) (5,793)
	6,458,211 4,316,624

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 2012 and 30 June 2011, evaluation expenditure on the Abu Dabbab project was capitalised at cost, until such time production commences and costs are transferred to ‘mine properties’. For the year ended 30 June 2012, exploration expenditure of $2,289 (2011: $5,793) on the Wadi Allaqi project was impaired.

For the year ended 30 June 2012, exploration expenditure in Eritrea in relation to expired Prospecting Licences (Hafta West and Romay) of $41,809 (2011: nil) was impaired. Exploration expenditure for the Adobha Exploration Licence and Gerasi South Exploration Licence was capitalised at cost.

13 MINE PROPERTIES

	*2012* *2011* $ $
Mine properties (at cost) Accumulated amortisation and impairment Movement: Mine properties Balance at beginning of year Transfer from exploration and evaluation expenditure Additions Amortisation Balance at end of year	288,039 ‐ (30,009) ‐
	258,030 ‐
	‐ ‐ 288,039 ‐ ‐ ‐ (30,009) ‐
	258,030 ‐

This project cost will be amortised over the life of the Abu Dabbab operation from production commencement. Expenditure in relation to pre‐production activities on the Abu Dabbab Alluvial Tin Project was capitalised at cost and will be amortised based on tin production.

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Gippsland Limited Annual Report 2012

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2012

14 TRADE AND OTHER PAYABLES (CURRENT)

14 TRADE AND OTHER PAYABLES (CURRENT)
	*2012* *2011* $ $
Trade payables and accruals (i)	993,262 1,010,327
	993,262 1,010,327

(i) Trade payables and accruals are non‐interest bearing and are normally settled on repayment terms between 7 and 30 days.

15 PROVISIONS (CURRENT)

	*2012* *2011* $ $
Provision for annual leave Provision for long service leave	51,946 10,177 21,793 ‐
	73,739 10,177

16 LOANS AND BORROWINGS (CURRENT)

16 LOANS AND BORROWINGS (CURRENT)
	*2012* *2011* $ $
Loans – unsecured (i)	‐ 188,957
	‐ 188,957

(i) During 2011, 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.

17 CONTRIBUTED EQUITY

	*2012* *2011* $ $
(a) Ordinary Shares Issued and fully paid	45,530,847 38,588,181

Fully paid ordinary shares carry one vote per share and carry the right to dividends. Issued capital has no par value.

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Gippsland Limited Annual Report 2012

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2012

(b) Movement in ordinary share capital At 30 June 2010 Share issue (i) Share issue (ii) Share issue costs Subtotal (shares issued during year) At 30 June 2011 Share issue (iii) Share issue (iv) Share issue costs Subtotal (shares issued during year) At 30 June 2012		*Number of* *shares* $
		544,634,716 35,581,715 80,000,000 3,200,000 500,000 22,500 (216,034)
		80,500,000 3,006,466
		625,134,716 38,588,181
		187,540,415 5,063,591 162,535,026 2,438,026 (558,951)
		350,075,441 6,942,666
		975,210,157 45,530,847

(i) 80,000,000 shares issued on 1 October 2010 for cash at 4 cents each.

(ii) 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.

(iii) 187,540,415 shares issued on 18 August 2011 for cash at 2.7 cents each.

(iv) 162,535,026 shares issued on 20 March 2012 for cash at 1.5 cents each.

The unissued ordinary shares of Gippsland Limited under option are as follows:

Grant Date Date of Expiry Exercise Price 25 November 2011 31 December 2012 $0.04 25 November 2011 31 December 2013 $0.06 Total	Number under Option 600,000 600,000
	1,200,000

18 RESERVES AND ACCUMULATED LOSSES

18 RESERVES AND ACCUMULATED LOSSES
(a) Reserves Option issue reserve Foreign currency translation reserve	*2012* *2011* $ $
	534,662 530,402 (719,688) (807,353)
	(185,026) (276,951)

	*Option issue reserve* *Foreign currency* *translation* *reserve* *Total* $ $ $
Movements in reserves At 30 June 2010 Share based payment Currency translation differences As at 30 June 2011 Share based payment Currency translation differences As at 30 June 2012	530,402 92,095 622,497 ‐ ‐ ‐ ‐ (899,448) (899,448)
	530,402 (807,353) (276,951) 4,260 ‐ 4,260 ‐ 87,665 87,665
	534,662 (719,688) (185,026)

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Gippsland Limited Annual Report 2012

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2012

(b) Accumulated losses Movements in accumulated losses were as follows: Balance 1 July Net profit/(loss) for the year Balance 30 June	*2012* *2011* $ $
	(33,934,237) (31,303,592) 799,359 (2,630,645)
	(33,134,878) (33,934,237)

(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.

19 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 of incorporation Percentage of equity interest held by the Group	Investment
2012 2011 % % Tantalum International Pty Ltd Australia 100 100 Here2win.com Pty Ltd Australia 100 100 Adobha Resources (Eritrea) Pty Ltd Australia 100 100 Oryx Resources Pty Ltd Australia 100 100 Gippsland (Jordan) Pty Ltd Australia 100 100 Nubian Resources PLC United Kingdom 100 100 Tantalum Egypt JSC Egypt 50 50 Nubian Resources JSC Egypt 100 100	2012 2011 $ $ 100 100 100 100 100 100 100 100 100 100 27,388 27,388 ‐ ‐ ‐ ‐
	27,888 27,888

Country of
incorporation
Percentage of equity interest
held by the Group

Investment

2012
2011
%
%
Tantalum International Pty Ltd
Australia
100
100
Here2win.com Pty Ltd
Australia
100
100
Adobha Resources (Eritrea) Pty Ltd
Australia
100
100
Oryx Resources Pty Ltd
Australia
100
100
Gippsland (Jordan) Pty Ltd
Australia
100
100
Nubian Resources PLC
United Kingdom
100
100
Tantalum Egypt JSC
Egypt
50
50
Nubian Resources JSC
Egypt
100
100

2012
2011
$
$
100
100
100
100
100
100
100
100
100
100
27,388
27,388
‐
‐
‐
‐

27,888
27,888

Gippsland Limited is the ultimate Australian parent entity and ultimate parent of the Group.

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Gippsland Limited Annual Report 2012

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2012

20 INTERESTS IN JOINT VENTURE OPERATIONS AND BUSINESS UNDERTAKINGS

At 30 June 2012, the Group was a participant in the following joint ventures:

Name of joint venture Heemskirk Tin Deposit – Tasmania, Australia* Seiga – Wadi Allaqi, Egypt Um Shashoba – Wadi Allaqi, Egypt Haimur – Wadi Allaqi, Egypt Nile Valley Block E – Wadi Allaqi, Egypt Nile Valley Block A – Wadi Allaqi, Egypt Um Garayat – Wadi Allaqi, Egypt Koleit – Wadi Allaqi, Egypt Um Tiur – Wadi Allaqi, Egypt Abu Swayel – Wadi Allaqi, Egypt	*2012* 2011 % Interest % Interest
	‐ 40 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50

During the year, Gippsland Ltd sold its interest in the Heemskirk Tin Joint Venture for 43,528,743 shares in Stellar Resources Ltd valued at $4,635,811. The value of the shares in Stellar Resources Ltd has been determined by multiplying the number of shares received by $0.1065, being the 5 day volume weighted average price for Stellar Resources Ltd shares for the 5 business days between 19 January and 25 January 2012.

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.

21 EXPENDITURE COMMITMENTS

(a) Lease expenditure commitments

The Group has entered into commercial leases for office accommodation in Perth, Australia; Asmara, Eritrea; and Cairo, Egypt.

Perth Office Lease

The property lease is a non‐cancellable lease with a two and a half year term, with rent payable monthly in advance. Contingent rental provisions within the lease agreement require the minimum lease payments shall be increased by the lower of CPI or 5% per annum. An option exists to renew the lease at the end of the 2.5 year term for an additional 2.5 years.

Cairo Office Lease

The property lease is a non‐cancellable lease with a five year term, with rent payable monthly in advance.

Asmara Office Lease

The property lease is a non‐cancellable lease with a twelve month term, with rent payable monthly in advance.

Future minimum rentals payable as at 30 June are as follows:

Within one year After one year but not more than five years	*2012* *2011* $ $
	159,500 160,000 149,900 285,000
	309,400 445,000

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Gippsland Limited Annual Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

(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 2012, the Group was required to expend a further $367,000 on the Adobha Exploration Licence in Eritrea by no later than 23 July 2012, being the second anniversary of the grant of the tenement, and a further $64,300 on the Gerasi South Exploration Licence in Eritrea by no later than 25 August 2012, being the first anniversary of the grant of the tenement. The Company did not meet these expenditure commitments for the Exploration Licences due to a delay in the drilling programme resulting from the Eritrean authorities changing the visa requirements for foreign drillers and technical workers entering the country and a further delay when a drilling rig mobilsing to site was washed off a causeway by a flash flood. Although the Company had not expended these funds by the due dates, it had entered into a drilling contract which committed sufficient funds to satisfy the minimum expenditure requirements. The Company has received verbal advice from the Eritrean Ministry of Energy and Mines that there will be no liability to the Eritrean government for not expending the funds by the due dates due to these delays. The minimum expenditure commitments for year 3 of the Adobha Exploration Licence is US$3,440,000 and the minimum expenditure commitments for year 2 of the Gerasi South Exploration Licence is US$200,000. The Group has pending applications regarding other exploration licence areas. The granting of the new exploration licences is not guaranteed, however, if granted, there will be additional minimum expenditure commitments. The Company does not currently have the funds to meet these requirements and will need to raise additional capital to do so.

During 2011, the Group committed to spend US$300,000 on exploration at its Nuweibi Tantalum‐Tin Project by 31 December 2011. Drilling at Nuweibi planned for the December 2011 quarter was deferred due to the lack of a suitable drilling rig. Approximately US$294,400 as at 30 June 2012 is required to be spent in relation to exploration once a suitable drilling rig becomes available in order to meet this expenditure commitment.

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 2013.

(e) Capital Commitments

Gippsland’s subsidiary, Tantalum Egypt JSC, entered into a contract during 2011 with a mining contractor in relation to its Alluvial Tin Project. The total contract value is estimated at US$1,740,000 over the life of the project. As at 30 June 2012, under this contract, Tantalum Egypt JSC had paid approximately US$392,000.

Gippsland’s subsidiary, Adobha Resources (Eritrea) Pty Ltd, entered into a drilling contract during the year in relation to its exploration in Eritrea. The total contract value is estimated at US$480,000. Drilling commenced during July 2012.

22 SHARE BASED PAYMENT PLANS

(a) Recognised share‐based payment expenses

The expense recognised for share based payments during the year is shown in the table below:

Expense arising from equity‐settled share‐based payment transactions	*2012* *2011* $ $
	4,260 22,500
	4,260 22,500

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Gippsland Limited Annual Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

(b) Types of share‐based payment plans

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.

On 25 November 2011, 1,200,000 options were issued to employees of the Company for nil consideration. The expiry date, exercise price and fair value of the options are shown in the table below.

The following share‐based payment arrangements were in existence during the current and prior reporting periods:

Options series	Number	Grant date	Expiry date	Exercise price	Fair value at
					grant date
				$	$
(1) Issued 25 November 2012 (*)	600,000	25/11/11	31/12/12	0.04	0.0032
(2) Issued 25 November 2012 (*)	600,000	25/11/11	31/12/13	0.06	0.0039
(3) Issued 16 May 2006	25,000,000	16/5/06	26/5/12	0.135	Nil
(4) Issued 5 February 2008	4,000,000	5/2/08	15/12/11	UK£0.0665	0.0484
(5) Issued 28 November 2008	17,000,000	28/11/08	31/5/12	0.150	0.0010
(6) Issued 17 August 2009	10,000,000	17/8/09	14/12/11	0.080	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 share‐based arrangement, options issued during the financial year ended 30 June 2012, vest at the date of their issue.

(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.

	2012 2012 2011 2011 No WAEP No WAEP
Outstanding at the beginning of the year Granted during the year Exercised during the year Expired during the year Outstanding at the end of the year Exercisable at the end of the year	56,000,000 0.13 56,000,000 0.13 1,200,000 0.05 ‐ ‐ ‐ ‐ ‐ ‐ (56,000,000) 0.13 ‐ ‐
	1,200,000 0.05 56,000,000 0.13
	1,200,000 0.05 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 2012 is 1.00 year (2011: 0.80 years).

(e) Range of exercise price

The range of exercise prices for options outstanding at the end of the year was $0.04 ‐ $0.06. (2011: $0.08 ‐ $0.15).

(f) Weighted average fair value

The weighted average fair value of options granted during the year was $0.05 (2011: nil).

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Gippsland Limited Annual Report 2012

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2012

(g) Option pricing model

Equity‐settled transactions

The fair value of the equity‐settled 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:

	2012	2012
Strikeprice	$0.04	$0.06
Stockprice	$0.022	$0.022
Valuation date	25/11/11	25/11/11
Expirydate	31/12/12	31/12/13
Volatility	76.03%	76.03%
Risk free rate	3.77%	3.77%
Valueper option	$0.0032	$0.0039
Number of options	600,000	600,000
Value of options	$1,920	$2,340

23 CONTINGENT LIABILITIES AND CONTINGENT ASSETS

(a) Contingent Liabilities

During the reporting period, the Company received an invoice for $108,000 plus GST from John S Dunlop and Associates Pty Ltd, a company controlled by Mr JSF Dunlop, for consulting work done prior to his resignation as an Executive Director of the Company. Gippsland disputes this amount is payable and is in discussions with Mr Dunlop.

The Group did not have any other contingent liabilities as at Balance Date.

(b) Contingent Assets

During the year, the Company executed a sale and purchase agreement with Stellar Resources Ltd whereby Stellar Resources Ltd acquired the Company’s 40% interest in the Heemskirk Tin Project for 43,528,743 shares in Stellar Resources Ltd and a royalty. Under the Minerals Royalty Deed dated 30 January 2012, the royalty receivable by the Company will be calculated as follows:

Net Realised Price (Tin Price) per tonne Royalty Percentage

Less than $25,000 Nil $25,000 ‐ $30,000 1% plus 0.0002% for every $1 the Net Realised Price is over $25,000 $30,000 or more 2%

The Group did not have any other contingent assets as at Balance Date.

24 SUBSEQUENT EVENTS

On 12 July 2012, Mr John Dunlop resigned as a Director of the Company.

During July to September 2012, the Company commenced and completed a non‐renounceable rights issue to raise $1,384,105 before costs.

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Gippsland Limited Annual Report 2012

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2012

25 REMUNERATION OF AUDITORS

The auditor of Gippsland Limited is Deloitte Touche Tomatsu (“Deloitte”).

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 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	*2012* *2011* $ $
	40,138 37,827 34,537 34,696
	74,675 72,523

26 RELATED PARTY DISCLOSURE

The following table provides the total amount of transactions which have been entered into with related parties for the relevant financial year:

	*2012*	*2011*
	$	$
Gandel Metals Pty Ltd – a company controlled by Mr IJ Gandel
received director’s fees.	80,000*	88,188*
Gandel Metals Pty Limited ‐ a company associated with Mr IJ
Gandel rented a Niton Analyser to Tantalum Egypt JSC for use in
relation to the Abu Dabbab Project. The rental charged by Gandel
Metals Pty Ltd was less than the rental that would have been
charged by an arms‐length party.	17,357	5,000
Abbotsleigh Pty Limited – a company associated with Mr IJ Gandel
provided loan funds to Gippsland.	400,000	‐
Abbotsleigh Pty Limited – a company associated with Mr IJ Gandel
was repaid loan funds by Gippsland.	400,000	‐
Abbotsleigh Pty Limited – a company associated with Mr IJ Gandel
received interest on its loan funds to Gippsland up to the date of
repayment of the loan by Gippsland Ltd.	592	‐
Gandel Metals Pty Limited ‐ a company associated with Mr IJ
Gandel received a fee of 4% for sub‐underwriting the rights issue
by Gippsland during August 2011. The fee was paid by Patersons
Securities Ltd as underwriter of the rights issue.	202,544	‐
Abbotsleigh Pty Limited – a company associated with Mr IJ Gandel
participated in the rights issue by Gippsland Ltd during August
2011 and purchased the shortfall of the rights issue in accordance
with the sub‐underwriting agreement between Gandel Metals Pty
Ltd and Patersons Securities Ltd.	2,989,659	‐
Gandel Metals Pty Limited ‐ a company associated with Mr IJ
Gandel received a fee of 4% for sub‐underwriting the rights issue
by Gippsland during March 2012. The fee was paid by Patersons
Securities Ltd as underwriter of the rights issue.	68,175	‐
Abbotsleigh Pty Limited – a company associated with Mr IJ Gandel
participated in the rights issue by Gippsland Ltd during March
2012 and purchased the shortfall of the rights issue in accordance
with the sub‐underwriting agreement between Gandel Metals Pty
Ltd and Patersons Securities Ltd.	1,260,738	‐
		Gippsland LimitedAnnual Report 2012

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2012

	*2012*	*2011*
	$	$
Mandu Pty Ltd – a company controlled by Dr JM Chisholm
received geological consulting fees.	244,693*	94,238*
Mandu Pty Ltd ‐ a company controlled by Dr JM Chisholm received
$37,500 for consulting fees during the year ended 30 June 2011
from Adobha Resources Ltd, which was intended to be the listing
vehicle for the Eritrean exploration assets through a proposed
Initial Public Offering. The proposed Initial Public Offering was
cancelled and during the year ended 30 June 2012, these fees of
$37,500 were brought to account in Gippsland’s subsidiary,
Adobha Resources (Eritrea) Pty Ltd, in order for the fees to
contribute towards the Company’s exploration expenditure
commitments in Eritrea.	37,500	‐
Ventureworks JDK Pty Ltd – a company controlled by Mr JD Kenny
received director’s fees.	40,000*	36,808*
Mr J Starink – received directors fees and consulting fees.	200,000*	135,000*
John S Dunlop and Associates Pty Ltd – a company controlled by
Mr JSF Dunlop received directors and mining consulting fees.	95,833*	74,800*
Mr JSF Dunlop – received directors fees and superannuation.	19,167*	‐
John S Dunlop and Associates Pty Ltd – a company controlled by
Mr JSF Dunlop issued an invoice to Gippsland for consulting work
done prior to his resignation. Gippsland disputes this amount is	Refer Note
payable and is in discussions with Mr Dunlop.	23(a)	‐
Gippsland loaned funds to Adobha Resources Ltd in relation to the
proposed Initial Public Offering (“IPO”) of Adobha Resources Ltd.
Adobha Resources Ltd was established as a wholly owned
subsidiary of Gippsland, however, the ownership of Adobha
Resources Ltd was transferred to Mr GA Hawkins based on
professional advice regarding the structuring of the proposed IPO.
The loan funds were used by Adobha Resources Ltd for
establishment costs, IPO costs, working capital and on‐loaning
funds to Adobha Resources (Eritrea) Pty Ltd for exploration costs.
The proposed IPO was terminated in June 2011.	66,747	239,596
Adobha Resources Ltd loaned funds to Gippsland’s 100% owned
subsidiary, Adobha Resources (Eritrea) Pty Ltd, in relation to
funding exploration activities in Eritrea. The loans were a
component of a transaction regarding the proposed IPO of
Adobha Resources Ltd. Adobha Resources Ltd was established as
a wholly owned subsidiary of Gippsland, however, the ownership
of Adobha Resources Ltd was transferred to Mr GA Hawkins based
on professional advice regarding the structuring of the proposed
IPO. The proposed IPO was terminated in June 2011.	37,500	188,957
Adobha Resources (Eritrea) Pty Ltd repaid loan funds to Adobha
Resources Ltd.	160,000	‐
Loan funds owed by Adobha Resources (Eritrea) Pty Ltd to Adobha
Resources Ltd were offset against loans owed by Adobha
Resources Ltd to Gippsland Ltd.	66,457	‐

Note: These amounts are included within the Remuneration Report in the Directors’ Report.

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Gippsland Limited Annual Report 2012

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2012

27 KEY MANAGEMENT PERSONNEL

(a) Details of key management personnel

IJ Gandel ‐ Chairman (Non‐Executive) J Starink ‐ Executive Director J Kenny ‐ Non‐Executive Director JM Chisholm ‐ Chief Geologist A Ayyash ‐ Regional Manager ‐ Middle East and North Africa RS Caren ‐ Company Secretary GA Hawkins ‐ Chief Financial Officer JSF Dunlop ‐ Executive Director (resigned 12 July 2012)

(b) Compensation of key management personnel

The aggregate compensation made to key management personnel of the Group is set out below:

Short‐term employee benefits Post‐employment benefits Share‐based payment	*2012* *2011* $ $
	1,106,795 989,670 15,413 11,009 3,550 22,500
	1,125,758 1,023,179

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 2012
Directors
Mr IJ Gandel
Mr JSF Dunlop
Mr JD Kenny
Mr J Starink
Executives
Mr A Ayyash
Mr RS Caren
Dr JM Chisholm
Mr GA Hawkins

Balance at
1.7.2011
Granted as
remune‐
ration
Options
exerci‐
sed
Options
expired
Balance at
30.6.2012
Vested at
30.6.2012
Vested
but not
exerci‐
sable
Vested and
exerci‐
sable
Vested
during the
year

‐
‐
‐
‐
‐
‐
‐
‐
‐
2,000,000
‐
‐
2,000,000
‐
‐
‐
‐
‐
1,000,000
‐
‐
1,000,000
‐
‐
‐
‐
‐
2,000,000
‐
‐
2,000,000
‐
‐
‐
‐
‐
‐
‐
‐
‐
1,000,000
‐
‐
1,000,000
‐
‐
‐
‐
‐
1,000,000
‐
‐
1,000,000
‐
‐
‐
‐
‐
3,000,000
‐
‐
3,000,000
‐
‐
‐
‐
‐
‐
1,000,000
‐
‐
1,000,000
1,000,000
‐
1,000,000
1,000,000

10,000,000
1,000,000
‐
10,000,000
1,000,000
1,000,000
‐
1,000,000
1,000,000

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Gippsland Limited Annual Report 2012

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2012

30 June 2011
Directors
Mr IJ Gandel
Mr JSF Dunlop
Mr JD Kenny
Mr J Starink
Executives
Mr A Ayyash
Mr RS Caren
Dr JM Chisholm
Mr GA Hawkins

Balance at
1.7.2010
Granted as
remune‐
ration
Options
exerci‐
sed
Options
expired
Balance at
30.6.2011
Vested at
30.6.2011
Vested
but not
exerci‐
sable
Vested and
exerci‐
sable
Vested
during the
year

‐
‐
‐
‐
‐
‐
‐
‐
‐
2,000,000
‐
‐
‐
2,000,000
2,000,000
‐
2,000,000
‐
1,000,000
‐
‐
‐
1,000,000
1,000,000
‐
1,000,000
‐
2,000,000
‐
‐
‐
2,000,000
2,000,000
‐
2,000,000
‐
1,000,000
‐
‐
‐
1,000,000
1,000,000
‐
1,000,000
‐
1,000,000
‐
‐
‐
1,000,000
1,000,000
‐
1,000,000
‐
3,000,000
‐
‐
‐
3,000,000
3,000,000
‐
3,000,000
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐

10,000,000
‐
‐
‐
10,000,000
10,000,000
‐
10,000,000
‐

(d) Shareholdings of key management personnel (consolidated)

Shares held in Gippsland Limited (number) by key management personnel are:

30 June 2012	Balance 1.7.2011 Granted as remuneration On exercise of Options Net Change Other Balance 30.6.2012 Ord Ord Ord Ord Ord*
Directors Mr IJ Gandel Mr JD Kenny Mr J Starink Mr JSF Dunlop (resigned 12 July 2012) Executives Mr A Ayyash Mr RS Caren Dr JM Chisholm Mr GA Hawkins	133,824,073 ‐ ‐ 194,777,319 328,601,392 2,892,858 ‐ ‐ ‐ 2,892,858 300,000 ‐ ‐ 1,860,000 2,160,000 ‐ ‐ ‐ 1,200,000 1,200,000 974,784 ‐ ‐ ‐ 974,784 ‐ ‐ ‐ ‐ ‐ 2,420,000 ‐ ‐ 370,370 2,790,370 ‐ ‐ ‐ ‐ ‐
	140,411,715 ‐ ‐ 198,207,689 338,619,404

30 June 2011	Balance 1.7.2010 Granted as remuneration On exercise of Options Net Change Other Balance 30.6.2011 Ord Ord Ord Ord Ord*
Directors Mr IJ Gandel Mr JSF Dunlop Mr JD Kenny Mr J Starink Executives Mr A Ayyash Mr RS Caren Dr JM Chisholm Mr GA Hawkins	133,824,073 ‐ ‐ ‐ 133,824,073 ‐ ‐ ‐ ‐ ‐ 2,892,858 ‐ ‐ ‐ 2,892,858 300,000 ‐ ‐ ‐ 300,000 974,784 500,000 ‐ (500,000) 974,784 ‐ ‐ ‐ ‐ ‐ 2,420,000 ‐ ‐ ‐ 2,420,000 ‐ ‐ ‐ ‐ ‐
	140,411,715 500,000 ‐ (500,000) 140,411,715

Net change refers to shares purchased or sold during the financial year.

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Gippsland Limited Annual Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

(e) Other transactions with key management personnel

Please refer to note 26 regarding loans from key management personnel to the Company.

28 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:

Tantalum
Gold
Copper
Corporate

The tantalum segment relates to the development of the Group’s Abu Dabbab tantalum‐tin 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 2012 and 2011.

	*Continuing Operations*		*Total* *Operations*
	*Tin/Tantalum* *Gold* *Copper* $ $ $	*Corporate* $	$
Year ended 30 June 2012 Revenue Other revenues from external customers Inter‐segment transactions Total segment revenue Inter‐segment elimination Total consolidated revenue Result Segment result Profit/(loss) before income tax and minority interest Income tax expense Net profit for the year Assets and liabilities Segment assets Total assets Segment liabilities Total liabilities Other segment information Capital expenditure Depreciation Impairment losses	‐ ‐ 2,222 ‐ 2,593 ‐	4,724,409 ‐	4,726,631 2,593
	‐ 2,593 2,222	4,724,409	4,729,224 (2,593)
	(652,014) (41,596) (175,074)	1,668,043
			4,726,631
			799,359
	6,143,999 44,322 2,851,032	4,238,591	799,359 ‐
			799,359
			13,277,944
	(556,932) (168,740) (85,683)	(255,646)	13,277,944
			(1,067,001)
	(776,150) ‐ (173,808) (14,245) (13,686) (21,647) ‐ (2,289) (41,808)	(3,745) (15,927) ‐	(1,067,001)
			(953,703) (65,505) (44,097)

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Gippsland Limited Annual Report 2012

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2012

	*Continuing Operations*	*Continuing Operations*		*Total* *Operations*
	*Tin/Tantalum* *Gold* $ $	*Copper* $	*Corporate* $	$
Year ended 30 June 2011 Revenue Other revenues from external customers Inter‐segment transactions Total segment revenue Inter‐segment elimination Total consolidated revenue Result Segment result Loss before income tax and minority interest Income tax expense Net loss for the year Assets and liabilities Segment assets Total assets Segment liabilities Total liabilities Other segment information Capital expenditure Depreciation Impairment losses	‐ ‐ ‐ 16,776	‐ ‐	82,938 ‐	82,938 16,776
	‐ 16,776	‐	82,938	99,714 (16,776)
	(600,027) (57,715)	(48,502)	(1,924,401)
				82,938
				(2,630,645)
	3,980,413 58,270	590,512	957,259	(2,630,645) ‐
				(2,630,645)
				5,586,454
	(691,095) (164,196)	(224,553)	(129,617)	5,586,454
				(1,209,461)
	(104,596) ‐ (5,042) (15,396) ‐ (5,793)	(87,223) (3,109) ‐	(14,629) (15,675) ‐	(1,209,461)
				(206,448) (39,222) (5,793)

(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 2012 and 2011:

years ended 30 June 2012 and 2011:
	*Australia* *Egypt* *Eritrea* $ $ $	*Total* $
Year ended 30 June 2012 Revenue Other revenues from external customers Inter‐segment sales Segment revenue Other segment information Segment assets Total assets Capital expenditure	4,724,409 ‐ 2,222 ‐ 2,593 ‐	4,726,631 2,593
	4,724,409 2,593 2,222	4,729,224
	4,238,591 6,188,321 2,851,032 (3,745) (776,150) (173,808)	13,277,944
		13,277,944
		(953,703)

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Gippsland Limited Annual Report 2012

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2012

	*Australia* *Egypt* *Eritrea* $ $ $	*Total* $
Year ended 30 June 2011 Revenue Other revenues from external customers Inter‐segment sales Segment revenue Other segment information Segment assets Total assets Capital expenditure	82,938 ‐ ‐ ‐ 16,776 ‐	82,938 16,776
	82,938 16,776 ‐	99,714
	957,259 4,038,683 590,512 (14,629) (104,596) (87,223)	5,586,454
		5,586,454
		(206,448)

29 FINANCIAL INSTRUMENTS

(a) Financial risk management policy

The Group's management of financial risk is aimed at ensuring net cash flows are sufficient to:

meet all financial commitments as and when they fall due, and
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, short‐term deposits and an investment in an ASX listed company. 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.

The Group currently has minimal exposure to commodity price risk but it is expected that as the Group's Alluvial Tin Project has commenced production, and as its other 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, security 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.

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Gippsland Limited Annual Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

(b) Interest rate risk

The following table sets out the carrying amount of the financial instruments exposed to interest rate risk:

FINANCIAL ASSETS Interest Bearing Cash at bank Weighted average interest rate Non‐Interest Bearing Cash at bank Trade receivables FINANCIAL LIABILITIES Non‐Interest Bearing Trade and other payables Other loans	*2012* *2011* $ $ 882,031 626,756
	2.54% 3.47% 287,551 179,641 25,902 98,480
	313,453 904,877
	993,262 1,010,327 ‐ 188,957
	993,262 1,199,284

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.

		*Post‐tax gain/(loss)/equity*	*Post‐tax gain/(loss)/equity*
		*increase/(decrease)*
		2012	2011
		$	$
+1% (100	basis points)	8,820	6,263
‐1% (100	basis points)	(8,820)	(6,263)

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Gippsland Limited Annual Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

(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

	*Carrying Amount* *Fair Value* *2012* *2011* *2012* *2011* $ $ $ $
Financial Assets Cash Trade and other receivables ‐ current Available for sale financial asset Financial Liabilities Trade and other payables Unsecured loans Convertible loan	1,169,582 806,397 1,169,582 806,397 25,902 98,480 25,902 98,480 3,264,656 ‐ 3,264,656 ‐
	993,262 1,010,327 993,262 1,010,327 ‐ 188,957 ‐ 188,957 ‐ ‐ ‐ ‐

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.

Financial asset designated as available for sale: The carrying amount of this asset, which consists of shares in an ASX listed company, approximates fair value as the asset is valued at market value based on the closing price of the ASX listed shares on the last business day of the reporting period.

Fair value measurements recognised in the consolidated statement of financial position

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable.

Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

30 June 2012	*Level 1* *Level 2* *Level 3* *Total* $ $ $ $
Available for sale Quoted equities Total	3,264,656 ‐ ‐ 3,264,656
	3,264,656 ‐ ‐ 3,264,656

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Gippsland Limited Annual Report 2012

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2012

(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.

(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 cost‐effective 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	analysis between	Currency	Currency
2012	Total	<30 days	30‐60 days	>60 days	AUD	Other
Cash and Cash
Equivalents	(1,169,582)	(1,169,582)	‐	‐	(888,868)	(280,714)
Trade Receivables	(25,903)	(25,903)	‐	‐	(21,486)	(4,417)
Available for Sale
Financial Asset	(3,264,656)	(3,264,656)	‐	‐	(3,264,656)	‐
Trade Payables	500,391	422,849	13,622	63,920	228,267	272,124
Other Payables	492,872	‐	‐	492,872	‐	492,872
Other Loans	‐	‐	‐	‐	‐	‐
Convertible Loan	‐	‐	‐	‐	‐	‐
Total	(3,466,878)	(4,037,292)	13,622	556,792	(3,946,743)	479,865
2011		Aging	analysis between		Currency
	Total	<30 days	30‐60 days	>60 days	AUD	Other
Cash and Cash
Equivalents	(806,397)	(806,397)	‐	‐	(639,944)	(166,453)
Trade Receivables	(98,480)	(98,480)	‐	‐	(85,038)	(13,442)
Trade Payables	531,010	392,594	32,787	105,629	181,925	349,085
Other Payables	479,317	‐	‐	479,317	‐	479,317
Other Loans	188,957	‐	188,957	‐	188,957	‐
Convertible Loan	‐	‐	‐	‐	‐	‐
Total	294,407	(512,283)	221,744	584,946	(354,100)	648,507

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Gippsland Limited Annual Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

(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 2012, the Group had the following exposure to foreign currency:

Financial Assets *US$* Cash and cash equivalents *EGP* Cash and cash equivalents Trade Receivables *GBP* Cash and cash equivalents Financial Liabilities *US$* Trade and other payables *EGP* Trade and other payables *Euro* Trade and other payables *Nakfa* Trade and other payables *GBP* Trade and other payables Net exposure	*2012* *2011*
	186,453 123,458 31,690 30,326 4,416 13,442 62,571 12,669
	285,130 179,895
	128,309 23,446 553,787 769,360 ‐ ‐ 73,677 25,016 9,222 10,580
	764,995 828,402
	(479,865) (648,507)

The following sensitivity is based on the most significant foreign currency risk exposures in existence at the statement of financial position date, which is the Australian Dollar moving against the Egyptian Pound (EGP).

At 30 June 2012, 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:

AUD/EGP +10% AUD/EGP ‐10%	Gippsland LimitedAnnual Report 2012 *Post Tax Loss (Higher)/Lower* *Equity Higher/(Lower)* *2012* *2011* *2012* *2011* $ $ $ $ (5,821) (316,070) (1,166,163) (1,126,003) 7,114 386,308 1,425,310 1,376,226

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2012

Foreign exchange rates used during the period were as follows:

	2012	2011
	AUD:EGP	AUD:EGP
Rate as at 30 June	6.13180	6.30520
Average Rate for year ended 30 June	6.17090	5.72250

(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 2012 and 2011 were as follows:

Management monitors capital through the gearing ratio (net d operations at 30 June 2012 and 2011 were as follows:	ebt/total capital). The gearing ratios
	*2012* *2011* $ $
Total trade and other payables Loans & borrowings Less cash and cash equivalents Net debt position Total equity Total capital Gearing ratio	993,262 1,010,327 ‐ 188,957 (1,169,582) (806,397)
	(176,320) 392,887 12,252,752 4,376,993
	12,076,432 4,769,880
	‐1.5% 8.2%

(h) Equity price risk

The Group is exposed to equity price risks arising from equity investments. The equity investments were acquired from the sale of the Heemskirk Joint Venture interest.

The sensitivity analysis below has been determined based on the exposure to equity price risks at the end of the reporting period.

If equity prices had been 10% higher/lower:

profit for the year ended 30 June 2012 would increase/decrease by $326,465 (2011: nil) as a result of the changes in fair value in the equity investments; and
other comprehensive income for the year ended 30 June 2012 would have been unaffected as a result of the changes in fair value of the equity investments.

The Group’s sensitivity to equity prices has changed significantly from the prior year due to the sale of the Heemskirk Joint Venture interest for shares in Stellar Resources Ltd during the reporting period.

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Gippsland Limited Annual Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

30 PARENT ENTITY INFORMATION

The accounting policies of the parent entity, which have been applied in determining the financial information shown below, are the same as those applied in the consolidated financial statements. Refer to note 2 for a summary of the significant accounting policies relating to the Group.

	*2012* *2011* $ $
(a) Financial Position Assets Current assets Non‐current assets Total assets Liabilities Current liabilities Non‐current liabilities Total liabilities Equity Contributed equity Accumulated losses Option issue reserve Total equity	939,242 795,010 3,327,238 74,764
	4,266,480 869,774
	255,647 129,617 ‐ ‐
	255,647 129,617
	45,530,847 38,588,181 (42,054,676) (38,378,426) 534,662 530,402
	4,010,833 740,157
	*2012* *2011* $ $
(b) Financial Performance Profit/(loss) for the year Other comprehensive income Total comprehensive income	(3,791,623) (3,508,750) ‐ ‐
	(3,791,623) (3,508,750)

(c) Guarantees entered into by the parent entity in relation to the debts of its subsidiaries

At the Balance Date there are no guarantees entered into by the Parent Entity in relation to the debts of its subsidiaries (2011: nil).

(d) Contingent liabilities of the parent entity

The Parent Entity did not have any contingent liabilities as at Balance Date.

(e) Commitments for capital expenditure entered into by the parent entity

The Parent Entity did not have any commitments for capital expenditure as at Balance Date.

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Gippsland Limited Annual Report 2012

DIRECTORS' DECLARATION

The directors of Gippsland Limited declare that:

(a) in the directors’ opinion, the financial statements and notes on pages 37 to 79, and the remuneration disclosures that are contained in the Directors' report, set out on pages 23 to 27, 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 2012 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 28[th] day of September 2012.

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J Starink Director

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Gippsland Limited Annual Report 2012

INDEPENDENT AUDITOR'S REPORT

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Gippsland Limited Annual Report 2012

INDEPENDENT AUDITOR'S REPORT

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Gippsland Limited Annual Report 2012

ASX ADDITIONAL INFORMATION

AS AT 25 SEPTEMBER 2012

A TOTAL EQUITY SECURITIES Totals on Issue B DISTRIBUTION OF EQUITY SECURITIES 1 ‐ 1,000 1,001 ‐ 5,000 5,001 ‐ 10,000 10,001 ‐ 100,000 100,001 and over No of shareholders holding	Shares Options ex 31/12/2012 at 4 cents Options ex 31/12/2013 at 6 cents 1,205,894,315 600,000 600,000 37 37 32 518 421 2 2
	1,045 2 2 526

No of shareholders holding an unmarketable parcel

C
TOP 20 SHAREHOLDERS
1
Abbotsleigh Pty Ltd
2
JP Morgan Nominees Aust Limited
3
National Nominees Limited
4
HSBC Custody Nominees Aust Limited
5
Situate Pty Ltd
6
Taveroam Pty Limited
7
Situate Pty Limited
8
Nessim Emile Alfred
9
Taveroam Pty Ltd
10
Sunland Systems Pty Ltd
11
EJ & LY Congdon
12
Eco International Pty Ltd
13
King Town Holdings Pty Ltd
14
David Same
15
Alsanto Nominees Pty Ltd
16
Citicorp Nominees Pty Limited
17
Starlight Holdings Ltd
18
Figjar Holdings Pty Ltd
19
Fitel Nominees Ltd
20
Broko Investments Pty Ltd

Number
%
469,430,560
38.93
178,473,888
14.80
89,059,028
7.39
52,499,177
4.35
17,777,517
1.47
17,640,345
1.46
14,991,280
1.24
12,500,001
1.04
10,260,243
0.85
10,100,000
0.84
9,875,912
0.82
8,391,231
0.70
8,239,000
0.68
6,648,006
0.55
6,390,000
0.53
6,013,105
0.50
6,000,000
0.50
5,965,000
0.49
5,947,284
0.49
4,500,000
0.37

940,701,577
78.00

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Gippsland Limited Annual Report 2012

ASX ADDITIONAL INFORMATION

AS AT 25 SEPTEMBER 2012

D	UNLISTED OPTION HOLDERS	Number	Exercise Price	Expiry
	Geoffrey Alexander Hawkins	500,000	4 cents	31/12/12
	Geoffrey Alexander Hawkins	500,000	6 cents	31/12/13
	Rhonda Jean Light	100,000	4 cents	31/12/12
	Rhonda Jean Light	100,000	6 cents	31/12/13
E	SUBSTANTIAL SHAREHOLDERS	Number	%
	Abbotsleigh Pty Ltd	469,430,560	38.93
	Acorn Capital Limited	70,285,714	5.83
	Situate Pty Ltd, Taveroam Pty Ltd and RW Beale	61,000,000	5.06

D UNLISTED OPTION HOLDERS

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.

F EXPLORATION INTERESTS

As at 25 September 2012, 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 Allaqi ‐ Seiga	Exploration Licence1	Granted	50%
Egypt	Wadi Allaqi ‐ Shashoba	Exploration Licence1	Granted	50%
Egypt	Wadi Allaqi – Haimur	Exploration Licence1	Granted	50%
Egypt	Wadi Allaqi – Garayat	Exploration Licence1	Granted	50%
Egypt	Wadi Allaqi – Koleit	Exploration Licence1	Granted	50%
Egypt	Wadi Allaqi – Nile Valley A	Exploration Licence1	Granted	50%
Egypt	Wadi Allaqi – Nile Valley E	Exploration Licence1	Granted	50%
Egypt	Wadi Allaqi – Abu Swayel	Exploration Licence1	Granted	50%
Egypt	Wadi Allaqi – Um Tiur	Exploration Licence1	Granted	50%
Eritrea	Adobha	Exploration Licence	Granted	100%
Eritrea	Adobha (Gerasi South)	Exploration Licence	Granted	100%
Eritrea	Adobha (Gerasi)	Exploration Licence	Pending	‐

Notes: 1. Tenements granted subject to an agreement with the Egyptian Government (EMRA) dated 21 June 2004. Applications to renew tenements have been lodged.

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Gippsland Limited Annual Report 2012

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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]

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AI assistant

STREAMPLAY STUDIO LIMITED — Annual Report 2012

65841_rns_2012-10-15_7447b257-8f89-430b-a71a-00485e763e59.pdf

COnTEnTS

ANNUAL REPORT 2012

CORPORATE DIRECTORY

CHAIRMAN'S REPORT

Egypt

Eritrea

CHAIRMAN'S REPORT

Tasmania

CHAIRMAN'S REPORT

Corporate

REVIEW OF OPERATIONS

OVERVIEW

EGYPT

ERITREA

TASMANIA

REVIEW OF OPERATIONS

REVIEW OF OPERATIONS

EGYPT

ABU DABBAB

Introduction

Ten Year Tantalum Off‐take Agreement

Tantalum Market

REVIEW OF OPERATIONS

Project Finance

Free Zone Area

Sea Water Intake and Project Environmental Social Impact Assessment

Increase in Ore Reserves

REVIEW OF OPERATIONS

Independent Calculation of Project Economics

REVIEW OF OPERATIONS

Abu Dabbab Alluvial Project

NUWEIBI

REVIEW OF OPERATIONS

WADI ALLAQI

ERITREA

ADOBHA

REVIEW OF OPERATIONS

REVIEW OF OPERATIONS

REVIEW OF OPERATIONS

REVIEW OF OPERATIONS

MINERAL RESOURCE AND ORE RESERVE INVENTORY ‐ SEPTEMBER 2012 TOTAL MINERAL RESOURCES ‐ EGYPT

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS

DIRECTORS’ REPORT

DIRECTORS

Names, qualifications, experience and special responsibilities

Ian Jeffrey Gandel ‐ Chairman (Non‐executive) LLB, BEc, FCPA, FAICD

Jon Starink – Director (Executive)

BSC (Hons), BChemE(Hons), MApplSc, FAusIMM, FIEAust, FIChemE, MRACI, MTMS, CPEng, CChem, CSci

DIRECTORS’ REPORT

John Damian Kenny – Director (Non‐executive) B Com (Hons), LLB

John Stuart Ferguson Dunlop – Director (Executive) (resigned 12 July 2012) BE, M Eng Sc, P Cert Arb, CP, FAusIMM, FIMMM, MSME, MCIMM, MMICA

Interest in Shares and Options of the Company and related bodies corporate

OPTIONS

DIRECTORS’ REPORT

COMPANY SECRETARY

Rowan St John Caren BCom, CA

MEETINGS OF DIRECTORS

PRINCIPAL ACTIVITIES

CONSOLIDATED RESULTS

Review of Operations

DIRECTORS’ REPORT

Financial Position

DIVIDENDS

SIGNIFICANT CHANGES IN STATE OF AFFAIRS

SIGNIFICANT EVENTS AFTER THE BALANCE DATE

DIRECTORS’ REPORT

LIKELY DEVELOPMENTS AND EXPECTED RESULTS

ENVIRONMENTAL REGULATION AND PERFORMANCE

INDEMNITY AND INSURANCE OF OFFICERS

PROCEEDINGS ON BEHALF OF COMPANY

NON‐AUDIT SERVICES

AUDITORS INDEPENDENCE DECLARATION

DIRECTORS’ REPORT

REMUNERATION REPORT (Audited)

Remuneration Policy

DIRECTORS’ REPORT

STREAMPLAY STUDIO LIMITED Annual Report 2012