STREAMPLAY STUDIO LIMITED — Annual Report 2013

Sep 26, 2013

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Gippsland Limited and its Controlled Entities ABN 31 004 766 376

Annual Financial Report

30 June 2013

Contents

Contents	Contents
DIRECTORS' REPORT .......................................................................................................................................................... 1
AUDITOR’S INDEPENDENCE DECLARATION....................................................................................................................... 10
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME ................................................ 11
CONSOLIDATED STATEMENT OF FINANCIAL POSITION...................................................................................................... 12
CONSOLIDATED STATEMENT OF CASH FLOWS.................................................................................................................. 13
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ...................................................................................................... 14
NOTES TO THE FINANCIAL STATEMENTS........................................................................................................................... 15
1	CORPORATE INFORMATION ...................................................................................................................................... 15
2	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES .................................................................................................. 15
3	REVENUES, OTHER INCOME AND EXPENSES............................................................................................................... 27
4	INCOME TAX ............................................................................................................................................................. 27
5	EARNINGS PER SHARE ............................................................................................................................................... 28
6	CASH AND CASH EQUIVALENTS ................................................................................................................................. 29
7	TRADE AND OTHER RECEIVABLES (CURRENT)............................................................................................................. 30
8	INVENTORIES ............................................................................................................................................................ 31
9	OTHER ASSETS........................................................................................................................................................... 31
10	OTHER FINANCIAL ASSETS (NON‐CURRENT)............................................................................................................... 31
11	PROPERTY, PLANT AND EQUIPMENT ......................................................................................................................... 32
12	EXPLORATION AND EVALUATION EXPENDITURE........................................................................................................ 33
13	MINE PROPERTIES..................................................................................................................................................... 33
14	TRADE AND OTHER PAYABLES (CURRENT) ................................................................................................................. 34
15	PROVISIONS (CURRENT) ............................................................................................................................................ 34
16	NON‐CONTROLLING INTEREST................................................................................................................................... 34
17	CONTRIBUTED EQUITY .............................................................................................................................................. 34
18	RESERVES AND ACCUMULATED LOSSES ..................................................................................................................... 35
19	INTERESTS IN CONTROLLED ENTITIES......................................................................................................................... 36
20	INTERESTS IN JOINT VENTURE OPERATIONS AND BUSINESS UNDERTAKINGS ............................................................. 37
21	EXPENDITURE COMMITMENTS.................................................................................................................................. 37
22	SHARE BASED PAYMENT PLANS................................................................................................................................. 38
23	CONTINGENT LIABILITIES AND CONTINGENT ASSETS.................................................................................................. 40
24	SUBSEQUENT EVENTS................................................................................................................................................ 40
25	REMUNERATION OF AUDITORS ................................................................................................................................. 41
26	RELATED PARTY DISCLOSURE..................................................................................................................................... 41
27	KEY MANAGEMENT PERSONNEL................................................................................................................................ 43
28	SEGMENT INFORMATION.......................................................................................................................................... 45
29	FINANCIAL INSTRUMENTS ......................................................................................................................................... 47
30	PARENT ENTITY INFORMATION ................................................................................................................................. 53
31	CHANGE TO ACCOUNTING TREATMENT OF INVENTORIES .......................................................................................... 54
DIRECTORS’ DECLARATION............................................................................................................................................... 55
INDEPENDENT AUDITOR'S REPORT................................................................................................................................... 56
ASX	ADDITIONAL INFORMATION ..................................................................................................................................... 58

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 2013 ("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 Chairman of the Company's Remuneration Committee and a member of the 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. He is also a member of the Audit Committee and Remuneration Committee (appointed 9 August 2012).

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

GIPPSLAND LIMITED AND CONTROLLED ENTITIES

1

ABN 31 004 766 376

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 companies: 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.

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
	Shares	over Ordinary Shares
IJ Gandel	586,788,200	‐
JD Kenny	5,165,819	‐
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 2013	$0.06	600,000

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GIPPSLAND LIMITED AND CONTROLLED ENTITIES

ABN 31 004 766 376

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, 11 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	11	11	2	2	1	1
JD Kenny	11	9	2	2	1	1
J Starink	11	11	2	2	1	1
JSF Dunlop	1	‐	‐	‐	‐	‐

PRINCIPAL ACTIVITIES

The principal activities of the entities within the Group during the year were exploration and development of commercially and economically viable mineral resources. There were no significant changes in the nature of the Group's principal activity during the year.

CONSOLIDATED RESULTS

The consolidated operating loss of the Group after providing for income tax amounted to $7,999,617 (2012: profit of $799,359).

Review of Operations

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

• Consortium of Egyptian banks formed to support Tantalum Egypt JSC in raising senior debt and appointment of Independent Technical Advisor.

• Purchase and commissioning of a demountable modular gravity separation plant for the Alluvial Mining Project at Abu Dabbab.

• Commencement of mining activities at Wadi Mubarak placer deposit at the Abu Dabbab Alluvial Tin Project.

• 12 shipments of cassiterite were made during the year from the Abu Dabbab Alluvial Tin 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 drilling programme consisting of 53 holes totalling 2,845m to test six of the high to medium ranked VTEM anomalies, drainage geochemical sampling, rock‐chip and soil sampling, and geological mapping.

• successful placements of shares during the year to raise a total of $3,032,162 before costs.

• sale of the Company’s shareholding in Stellar Resources Ltd of 43,528,743 shares for approximately $1.9 million, after deducting the costs of brokerage.

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GIPPSLAND LIMITED AND CONTROLLED ENTITIES

ABN 31 004 766 376

DIRECTORS’ REPORT

Financial Position

The net assets of the Group have decreased by $5,069,558 to $7,141,385 at 30 June 2013. The decrease has largely resulted from the following factors:

• full impairment of the capitalised exploration expenditure in relation to the Group’s exploration licences in Eritrea totalling $3,645,635;

• proceeds from the issue of shares raising a total during the year of $3,032,162 before costs;

• a reduction in the market value of the Company’s shareholding in Stellar Resources Ltd which was sold around May 2013 for approximately $1.9 million; 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 deficit of $411,843 (2012: surplus of $385,708).

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) Completed the issue and allotment of 230,684,158 shares at a placement price of $0.006 to raise $1,384,105 (before costs) on 10 September 2012;

• b) Completed the issue and allotment of 164,805,766 shares at a placement price of $0.01 to raise $1,648,057 (before costs) on 15 April 2013;

• c) Mr JSF Dunlop resigned as a Director of the company on 12 July 2012; and

• d) The Company sold its shareholding in Stellar Resources Ltd of 43,528,743 shares for approximately $1.9 million, after deducting the costs of brokerage.

SIGNIFICANT EVENTS AFTER THE BALANCE DATE

Gandel Metals Pty Ltd, a company associated with Mr Ian Gandel, has entered into an agreement to provide a loan facility to Gippsland for up to $1,000,000 for working capital.

The terms of the agreement are as follows:

• (a) the interest rate for the loan is equal to the ANZ facility interest rate, as varied (currently 5.33%);

• (b) the loan is unsecured; and

• (c) the loan is repayable the earlier of:

• 1 July 2014;

• 5 business days after completion of a capital raising by Gippsland for an amount equal to or greater than $1,500,000; or

• such earlier date that Gippsland has surplus cash reserves to repay the loan in full without affecting Gippsland’s continuing operations in the reasonable opinion of the Directors.

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.

GIPPSLAND LIMITED AND CONTROLLED ENTITIES

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ABN 31 004 766 376

DIRECTORS’ REPORT

FUTURE DEVELOPMENTS

The consolidated entity’s activities will continue to focus on the Abu Dabbab Alluvial Tin Project and progressing financing of the Abu Dabbab tantalum/tin/feldspar project.

Information as to other 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 $13,051 (2012: $14,103). 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”).

AUDITOR’S 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 2013 has been received and can be found on page 10 of the directors’ report.

GIPPSLAND LIMITED AND CONTROLLED ENTITIES

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ABN 31 004 766 376

DIRECTORS’ REPORT

REMUNERATION REPORT (Audited)

This report details the nature and amount of remuneration for each director of Gippsland Limited.

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 2012 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 2013:

	30 June 2013 $	30 June 2012 $	30 June 2011 $	30 June 2010 $	30 June 2009 $
Revenue	8,228	90,820	82,938	64,440	17,303
Netprofit/(loss)before tax	(7,999,617)	799,359	(2,630,645)	(2,894,769)	(2,751,352)
Netprofit/(loss)after tax	(7,999,617)	799,359	(2,630,645)	(2,894,769)	(2,751,352)
	30 June 2013	30 June 2012	30 June 2011	30 June 2010	30 June 2009
Shareprice at start ofyear	$0.009	$0.032	$0.030	$0.044	$0.099
Shareprice at end ofyear	$0.007	$0.009	$0.032	$0.030	$0.044
Basic/diluted earnings/(loss) per share	(0.67)cps	0.10 cps	(0.43)cps	(0.58)cps	(0.86)cps

GIPPSLAND LIMITED AND CONTROLLED ENTITIES

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ABN 31 004 766 376

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

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 for 2.5 days work per week plus additional fees based on hours worked above the base hours as determined by the Remuneration Committee.

• 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.

GIPPSLAND LIMITED AND CONTROLLED ENTITIES

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ABN 31 004 766 376

DIRECTORS’ REPORT

Remuneration of key management personnel

Table 1: Remuneration for the year ended 30 June 2013

Key Management	Short‐term	Share‐based	Post‐	Total	Remuneration
Personnel	Benefits	Payment	employment		consisting of
	Cash, salary and	Shares	Benefits		options for the
	commissions		Superannuation		year
	$	$	$	$	%
Non‐Executive Directors
Mr IJ Gandel	80,000	‐	‐	80,000	0.00%
Mr JD Kenny	40,000	‐	‐	40,000	0.00%
Sub‐total	120,000	‐	‐	120,000
Executive Directors
Mr J Starink	300,000	‐	‐	300,000	0.00%
Mr JSF Dunlop (resigned 12
July 2012)	‐	50,000	‐	50,000	0.00%
Sub‐total	300,000	50,000	‐	350,000
Other key management
personnel
Mr A Ayyash	188,600	‐	‐	188,600	0.00%
Dr JM Chisholm	197,400	‐	‐	197,400	0.00%
Sub‐total	386,000	‐	‐	386,000
Total	806,000	50,000	‐	856,000
Table 2: Remuneration for the year ended 30 June		2012
Key Management	Short‐term	Share‐based	Post‐	Total	Remuneration
Personnel	Benefits	Payment	employment		consisting of
	Cash, salary and	Shares	Benefits		options for the
	commissions		Superannuation		year
	$	$	$	$	%
Non‐Executive Directors
Mr IJ Gandel	80,000	‐	‐	80,000	0.00%
Mr JD Kenny	40,000	‐	‐	40,000	0.00%
Sub‐total	120,000	‐	‐	120,000
Executive Directors
Mr J Starink	200,000	‐	‐	200,000	0.00%
Mr JSF Dunlop (resigned 12
July 2012)	113,417	‐	1,583	115,000	0.00%
Sub‐total	313,417	‐	1,583	315,000
Other key management
personnel
Mr A Ayyash	198,508	‐	‐	198,508	0.00%
Dr JM Chisholm	244,693	‐	‐	244,693	0.00%
Sub‐total	443,201	‐	‐	443,201
Total	876,618	‐	1,583	878,201

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

There were no options granted to Directors or other Key Management Personnel during 2012 or 2013.

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GIPPSLAND LIMITED AND CONTROLLED ENTITIES

ABN 31 004 766 376

DIRECTORS’ REPORT

Table 3: Shares issued on exercise of compensation options (consolidated)

30 June 2013
	Shares issued	Paid per share	Unpaid per share
	No.	$	$
Directors
Nil	‐	‐	‐
30 June 2012
	Shares issued	Paid per share	Unpaid per share
	No.	$	$
Directors
Nil	‐	‐	‐

Table 4: 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.

senior management.
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:

• 5,000,000 shares with a value of 1 cent per share were issued to John Dunlop in relation to director fees payable.

• 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.

[END OF REMUNERATION REPORT]

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

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J STARINK Director

Dated this 27[th] day of September 2013.

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GIPPSLAND LIMITED AND CONTROLLED ENTITIES

ABN 31 004 766 376

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Deloitte Touche Tohmatsu ABN 74 490 121 060

Woodside Plaza Level 14 240 St Georges Terrace Perth WA 6000 GPO Box A46 Perth WA 6837 Australia

Tel: +61 8 9365 7000 Fax: +61 8 9365 7001 www.deloitte.com.au

The Board of Directors Gippsland Limited 207 Stirling Highway CLAREMONT WA 6010

27 September 2013

Dear Board Members

Gippsland Limited

In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of Gippsland Limited

As lead audit partner for the audit of the financial statements of Gippsland Limited for the financial year ended 30 June 2013, I declare that to the best of my knowledge and belief, there have been no contraventions of:

• (i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

• (ii) any applicable code of professional conduct in relation to the audit.

Yours sincerely

DELOITTE TOUCHE TOHMATSU

Chris Nicoloff

Partner Chartered Accountants

Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Touche Tohmatsu Limited

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CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 JUNE 2013

Note	2013 2012 $ $
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 3(e) Project evaluation expense Depreciation and amortisation expense Impairment of exploration and evaluation expenditure 12 Finance costs Total expenses (Loss)/profit before income tax Income tax expense 4 (Loss)/profit after income tax Other comprehensive income Items that may be reclassified subsequently to profit or loss: Exchange rate differences on translating foreign operations Total other comprehensive income Total comprehensive (loss)/income for the period (Loss)/profit is attributable to: Members of the parent Non‐controlling interest Total comprehensive (loss)/income 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	8,228 81,037 ‐ 9,783
	8,228 90,820
	(1,348,318) 3,264,656 (1,454,254) (1,013,251) (1,041,773) (1,407,394) (7,136) (21,610) (50,000) (4,260) (364,283) ‐ (86,836) (65,505) (3,645,635) (44,097) (9,610) ‐
	(8,007,845) 708,539 (7,999,617) 799,359 ‐ ‐
	(7,999,617) 799,359 (69,416) 87,665
	(69,416) 87,665
	(8,069,033) 887,024
	(7,818,715) 976,628 (180,902) (177,269)
	(7,999,617) 799,359
	(7,959,875) 1,117,100 (109,158) (230,076)
	(8,069,033) 887,024
	(0.67) 0.10 (0.67) 0.10

The accompanying notes form an integral part of this Consolidated Statement of Profit or Loss and Other Comprehensive Income.

GIPPSLAND LIMITED AND CONTROLLED ENTITIES

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ABN 31 004 766 376

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2013

Note	2013 2012 $ $
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 Total Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Equity attributable to equity holders of the parent Contributed equity 17(a) Reserves 18(a) Accumulated losses 18(b) Non‐controlling interest 16 TOTAL EQUITY	586,883 1,169,582 313,424 25,902 94,976 53,851 55,990 203,374
	1,051,273 1,452,709
	‐ 3,264,656 1,938,858 1,192,111 4,040,894 6,458,211 1,573,476 910,257
	7,553,228 11,825,235
	8,604,501 13,277,944
	1,355,268 993,262 107,848 73,739
	1,463,116 1,067,001
	1,463,116 1,067,001
	7,141,385 12,210,943
	48,530,322 45,530,847 (1,257,921) (1,116,761) (37,964,388) (30,145,673) (2,166,628) (2,057,470)
	7,141,385 12,210,943

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

12

GIPPSLAND LIMITED AND CONTROLLED ENTITIES

ABN 31 004 766 376

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 30 JUNE 2013

Note	2013 2012
Cash flows from operating activities Payments to suppliers and employees Payments for project evaluation Interest received Finance costs Other receipts Net cash flows (used in) operating activities 6 Cash flows from investing activities Receipts from sale of alluvial tin Payments for exploration and evaluation Payments for mine properties Payments for plant and equipment Proceeds from sale of financial assets 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 (decrease)/increase in cash and cash equivalents held Net foreign exchange differences Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period 6	(2,062,546) (2,908,766) (364,283) ‐ 8,465 81,151 (9,610) (592) ‐ 7,561
	(2,427,974) (2,820,646)
	1,052,798 ‐ (1,401,717) (2,631,215) (1,790,348) ‐ (944,860) (868,429) 1,916,337 ‐
	(1,167,790) (3,499,644)
	3,032,162 7,501,617 (76,465) (558,951) ‐ (66,746) 1,200,000 400,000 (1,200,000) (560,000)
	2,955,697 6,715,920
	(640,067) 395,630 57,368 (32,444) 1,169,582 806,396
	586,883 1,169,582

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

13

GIPPSLAND LIMITED AND CONTROLLED ENTITIES

ABN 31 004 766 376

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2013

At 1 July 2011 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 2012 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 2013	Issued capital Accumulated losses Option reserve Foreign currency translation reserve Non‐ controlling interest Total equity $ $ $ $ $ $
	38,588,181 (31,122,301) 530,402 (1,791,895) (1,827,394) 4,376,993
	‐ ‐ 140,472 (52,807) 87,665 ‐ 976,628 ‐ ‐ (177,269) 799,359
	‐ 976,628 ‐ 140,472 (230,076) 887,024
	7,501,617 ‐ ‐ ‐ ‐ 7,501,617 (558,951) ‐ ‐ ‐ ‐ (558,951) ‐ 4,260 ‐ ‐ 4,260
	45,530,847 (30,145,673) 534,662 (1,651,423) (2,057,470) 12,210,943
	‐ ‐ ‐ (141,160) 71,744 (69,416) ‐ (7,818,715) ‐ ‐ (180,902) (7,999,617)
	‐ (7,818,715) ‐ (141,160) (109,158) (8,069,033)
	3,032,162 ‐ ‐ ‐ ‐ 3,032,162 (82,687) ‐ ‐ ‐ ‐ (82,687) 50,000 ‐ ‐ ‐ ‐ 50,000
	48,530,322 (37,964,388) 534,662 (1,792,583) (2,166,628) 7,141,385

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

GIPPSLAND LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

14

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

1 CORPORATE INFORMATION

The financial report of Gippsland Limited for the year ended 30 June 2013 was authorised for issue in accordance with a resolution of the directors on 27 September 2013.

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 loss after income tax of $7,999,617 (2012: profit of $799,359) and experienced net cash outflows from operations of $2,427,974 (2012: $2,820,646) and net cash outflows from investing activities of $1,167,790 (2012: $3,499,644) for the year ended 30 June 2013. As at 30 June 2013, the consolidated entity had a working capital deficiency of $411,843 and had cash and cash equivalents of $586,883.

The ability of the company and the consolidated entity to continue as going concerns is principally dependent upon raising additional capital and / or debt finance, and continuation of production of its Alluvial Tin project to fund exploration and project development, the Abu Dabbab project, other commitments, other principal activities and provide additional working capital.

These conditions indicate a material uncertainty that may cast significant doubt about the company and the consolidated entity’s ability to continue as going concerns.

Subsequent to year end, Gippsland entered into agreements with Gandel Metals Proprietary Limited (a director related entity of Ian Gandel) to provide $1,000,000 in short‐term funding. Details of the terms of this loan have been disclosed in Note 24 to the financial report. To the date of this report, the Company has received $250,000 of this funding.

The directors have prepared a cash flow forecast for the period ending 30 September 2014 which indicates that the current cash resources will not meet expected cash outgoings without additional capital and / or debt funding and continuation of production of its Alluvial Tin project. The directors anticipate that these requirements will be met through a combination of some or all of the following:

• Obtaining the remaining short‐term funding of $750,000 based on the agreement noted above;

• Obtaining a reduction and deferral on exploration commitments on its Eritrean project from the Eritrean Ministry of Energy and Mines;

• Continuation of production of its Alluvial Tin Project; and / or

• Further capital raisings and / or debt funding of at least $1,500,000 by February 2014.

The Company will use part of the cash proceeds obtained from the completion of the capital raising to repay the short‐ term funding provided to the Company by Gandel Metals Proprietary Limited.

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

GIPPSLAND LIMITED AND CONTROLLED ENTITIES

15

ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

continuity of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business.

Should the company and the consolidated entity be unable to achieve the initiatives referred to above, there is a material uncertainty whether the company and the consolidated entity will be able to continue as going concerns and, therefore, whether they will realise their assets and discharge their liabilities in the normal course of business and at the 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 company and the consolidated entity 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 2012.

The following new and revised Standards and Interpretations have been adopted in the current period and have affected the amounts reported in these financial statements:

• AASB 2011‐9 Amendments to Australian Accounting Standards – Presentation of Items of Other Comprehensive Income

From 1 July 2012, the consolidated entity applied amendments to AASB 101 Presentation of Items of Other Comprehensive Income outlined in AASB 2011‐9 Amendments to Australian Accounting Standards – Presentation of Items of Other Comprehensive Income. The change in the accounting policy only relates to disclosures and has had no impact on the earnings of the consolidated entity. The changes have been applied retrospectively and require the consolidated entity to separately present those items of other comprehensive income that maybe reclassified to profit or loss in the future from those that will never be reclassified to profit or loss. These changes have been included in the Consolidated Statement of Profit or Loss and Other Comprehensive Income.

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 2013.

	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 arisingfrom AASB 9(December 2010)	1 January 2015	30 June 2016
	AASB 10 Consolidated Financial Statements and AASB 2011‐7 Amendments to Australian Accounting Standards arising from the consolidation and Joint Arrangements standards	1 January 2013	30 June 2014
	AASB 11 Joint Arrangements and AASB 2011‐7 Amendments to Australian AccountingStandards	1 January 2013	30 June 2014

GIPPSLAND LIMITED AND CONTROLLED ENTITIES

16

ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

Standard / Interpretation	Effective for annual reporting periods beginning/ending on or after	Expected to be applied be consolidated entity
arising from the consolidation and Joint Arrangements standards
AASB 12 Disclosure of Interests in Other Entities and AASB 2011‐7 Amendments to Australian Accounting Standards arising from the consolidation and Joint Arrangements standards	1 January 2013	30 June 2014
AASB 127 Separate Financial Statements (2011) and AASB 2011‐7 Amendments to Australian Accounting Standards arising from the consolidation and Joint Arrangements standards	1 January 2013	30 June 2014
AASB 128 Investments in Associates and Joint Ventures (2011) and AASB 2011‐7 Amendments to Australian Accounting Standards arising from the consolidation and Joint Arrangements standards	1 January 2013	30 June 2014
AASB 13 Fair Value Measurement and AASB 2011‐ 8 Amendments to Australian Accounting Standards arisingfrom AASB 13	1 January 2013	30 June 2014
AASB 119 Employee Benefits (2011) and AASB 2011‐10 Amendments to Australian Accounting Standards arisingfrom 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 2012‐2 Amendments to Australian Accounting Standards – Disclosures – Offsetting Financial Assets and Financial Liabilities	1 January 2013	30 June 2014
AASB 2012‐3 Amendments to Australian Accounting Standards – Offsetting Financial Assets and Financial Liabilities	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
AASB 2012‐6 Amendments to Australian Accounting Standards Mandatory Effective Date of AASB 9 and Transition Disclosures	1 January 2013	30 June 2014
AASB 2012‐10 Amendments to Australian Accounting Standards – Transition Guidance and Other Amendments	1 January 2013	30 June 2014
Interpretation 20 Stripping Costs in the Production Phase of a Surface Mine and AASB 2011‐12 Amendments to Australian Accounting Standards arisingfrom Interpretation 20	1 January 2013	30 June 2014
AASB 2013‐5 Amendments to Australian AccountingStandards – Investment Entities	1 January 2014	30 June 2015

The impact of these recently issued or amended Standards and Interpretation are not expected to have a material impact on the consolidated entity.

GIPPSLAND LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

17

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

(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. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non‐controlling interests even if this results in the non‐controlling interests having a deficit balance.

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 profit or loss and other 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 profit or loss and other 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).

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 profit or loss and other comprehensive income are translated at the weighted average exchange rates for the year.

18

GIPPSLAND LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

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 profit or loss and other 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 spare parts and stores.

(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. 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 profit or loss and other 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.

19

GIPPSLAND LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

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 profit or loss and other 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 or loss 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 pre‐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 pre‐production stage, any costs capitalised to ‘exploration and evaluation’ are reclassified to ‘mine properties’. During this pre‐production stage, certain mine construction and commissioning costs continue to be capitalised to mine properties and offset any incidental revenue earned until such time as the project is operating in line with management’s expectation.

When a mine construction project moves into the production stage, 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 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.

20

GIPPSLAND LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

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 profit or loss and other 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').

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 ‐

21

GIPPSLAND LIMITED AND CONTROLLED ENTITIES

ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

• (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 profit or loss and other 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:

• 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.

22

GIPPSLAND LIMITED AND CONTROLLED ENTITIES

ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

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 profit or loss and other 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

• 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

23

GIPPSLAND LIMITED AND CONTROLLED ENTITIES

ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

• 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 profit or loss and other 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 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.

24

GIPPSLAND LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

(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.

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:

25

GIPPSLAND LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

• 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 Profit or Loss and Other Comprehensive Income.

• The Group assesses the stage of each mine under construction to determine when a mine moves into the pre‐ 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 pre‐ 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, as described in Note 31.

26

GIPPSLAND LIMITED AND CONTROLLED ENTITIES

ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

3 REVENUES, OTHER INCOME AND EXPENSES	2013 2012 $ $
Revenue and expenses from continuing operations (a) Revenue Finance revenue (b) Other income Sundry income (c) Other gains and losses Loss on sale of financial assets 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 As per Statement of Profit or Loss and Other Comprehensive Income Share‐based payments expense Total employee benefit expenses 4 INCOME TAX Statement of Profit or Loss and Other Comprehensive Income	8,228 81,037
	8,228 81,037
	‐ 9,783
	‐ 9,783
	(1,348,318) ‐ ‐ 4,635,811 ‐ (1,371,155)
	(1,348,318) 3,264,656
	198,901 198,854 198,505 153,874 1,021,544 1,385,891 20,229 21,503
	1,041,773 1,407,394
	50,000 4,260
	1,091,773 1,411,654
	2013 2012 $ $
(a) The components of income tax expense for the years ended 30 June 2013 and 2012 are: Statement of Profit or Loss and Other 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 profit or loss and other comprehensive income Statement of changes in equity Income tax liability reported in equity	‐ ‐ ‐ ‐ ‐ ‐
	‐ ‐
	‐ ‐

27

GIPPSLAND LIMITED AND CONTROLLED ENTITIES

ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

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 2013 and 2012 is as follows:

Statement of Profit or Loss and Other Comprehensive Income

Statement of Profit or Loss and Other Comprehensive Income
	2013 2012 $ $
Accounting profit (loss) before tax At the statutory income tax rate of 30% (2012: 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:	(7,999,617) 799,359
	(2,399,885) 239,808 770,029 466,503 1,629,856 (706,311)
	‐ ‐
	‐ ‐
	0% 0%

	2013 2012 $ $
Deferred tax liabilities Other assets Deferred tax assets Business related costs Accrued superannuation Accrued audit fees Accrued expenses Employee entitlements Foreign exchange loss Tax losses (domestic) Unrecognised deferred tax assets Net deferred tax Tax losses and temporary differences not recognised	(122) (68)
	(122) (68)
	19,003 76,099 ‐ ‐ 3,597 9,817 112,255 54,118 32,355 11,828 224,447 4,951 5,740,810 4,345,798
	6,132,467 4,502,611 (6,132,345) (4,502,543)
	122 68
	‐ ‐
	6,132,345 4,502,543

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
	2013	2012
	cents	cents
Basic earnings per share	(0.67)	0.10
Diluted earnings per share	(0.67)	0.10

28

GIPPSLAND LIMITED AND CONTROLLED ENTITIES

ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

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

	2013	2012
	$	$
(Loss)/profit attributable to ordinary equity holders of the
Company used in calculating basic and diluted earnings per	(7,999,617)	799,359
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 1,195,966,832 833,820,398
	1,195,966,832 833,820,398

There were 600,000 potential ordinary shares as at 30 June 2013 (1,200,000 for 30 June 2012).

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

	2013 2012 $ $
Cash at bank and in hand Short term deposits	285,883 385,782 301,000 783,800
	586,883 1,169,582

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 $586,883 (2012: $1,169,582).

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	285,883 385,782 301,000 783,800
	586,883 1,169,582

29

GIPPSLAND LIMITED AND CONTROLLED ENTITIES

ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

	2013	2012
	$	$
Reconciliation from the net profit/(loss) after tax to the net cash flows used in
operations
Net (Loss)/Profit after income tax	(7,999,617)	799,359
Adjustments for:
Depreciation and amortisation	86,836	65,505
Impairment losses of exploration expenditure	3,645,635	44,387
Foreign exchange loss (gain)	(35,258)	(5,479)
Share based payment expense	50,000	4,260
Profit on sale of Heemskirk Joint Venture interest	‐	(4,635,811)
Loss on disposal of financial asset	1,348,318	‐
Loss on disposal of assets	1,119	‐
Net loss arising on available for sale financial asset	‐	1,371,155
Changes in assets and liabilities
(increase)/decrease in trade and other receivables	(43,502)	70,164
(increase)/decrease in other assets	144,813	(164,141)
(increase)/decrease in inventories	(41,125)	(706,078)
(decrease)/increase in provisions	34,110	63,562
(decrease)/increase in trade and other payables	380,697	272,471
Net cash used in operating activities	(2,427,974)	(2,820,646)

Non‐cash transactions

During the 2013 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 5,000,000 ordinary shares on 18 June 2013 at 1 cent per share in relation to director fees payable.

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.

7 TRADE AND OTHER RECEIVABLES (CURRENT)

	2013 2012 $ $
Trade receivables (i) Other receivables (ii) Loan receivable from Adobha Resources Ltd (iii) Allowance for impairment of receivables (iii)	241,450 ‐ 71,974 25,902 239,885 239,885 (239,885) (239,885)
	313,424 25,902

(i) Trade receivables are non‐interest bearing and are generally on 30‐day terms.

30

GIPPSLAND LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

• (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.

8 INVENTORIES

	2013 2012 $ $
Spare parts and stores – at costs	94,976 53,851
	94,976 53,851

The cost of inventories recognised as an expense during the year in respect of continuing operations was nil (2012: nil).

9 OTHER ASSETS

	2013 2012 $ $
Prepayments Rental deposits Accrued revenue	52,779 199,803 3,139 3,262 72 309
	55,990 203,374

10 OTHER FINANCIAL ASSETS (NON‐CURRENT)

10 OTHER FINANCIAL ASSETS (NON‐CURRENT)
	2013 2012 $ $
Investments in listed entities classified as available for sale – at fair value	‐ 3,264,656
	‐ 3,264,656

This investment consisted of 43,528,743 shares in Stellar Resources Ltd and was subject to escrow pursuant to ASX rules until 31 January 2013. The shares were sold during April and May 2013 for $1,916,337 after brokerage costs. The shares had a deemed cost base of $4,635,810 resulting in a total loss on disposal of $2,719,473. $1,371,155 of this loss was brought to account in 2012 as an impairment of the shares to disclose them at their fair value at 30 June 2012 and the balance of the loss of $1,348,318 has been brought to account during 2013.

31

GIPPSLAND LIMITED AND CONTROLLED ENTITIES

ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

11 PROPERTY, PLANT AND EQUIPMENT

	Leasehold Improvements Buildings Plant and equipment Total $ $ $
Year ended 30 June 2013 Balance at 30 June 2012 Additions Disposals Foreign Exchange Adjustment Depreciation charge for the year Balance at 30 June 2013 At 1 July 2012 Cost Accumulated depreciation and impairment Net carrying amount At 30 June 2013 Cost Accumulated depreciation and impairment Net carrying amount 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	1,806 155,359 1,034,946 1,192,111 ‐ 8,637 923,984 932,621 ‐ (1,520) (1,520) ‐ (86) (97,432) (97,518) (192) (9,669) (76,975) (86,836)
	1,614 154,241 1,783,003 1,938,858
	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
	20,175 170,049 2,245,672 2,435,896 (18,561) (15,808) (462,669) (497,038)
	1,614 154,241 1,783,003 1,938,858
	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

32

GIPPSLAND LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

12 EXPLORATION AND EVALUATION EXPENDITURE

	2013 2012 $ $
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	10,944,830 9,842,616 (6,903,936) (3,384,405)
	4,040,894 6,458,211
	6,458,211 4,316,624 1,360,342 2,690,645 (132,024) (98,123) ‐ (118,798) ‐ (288,039) (3,645,635) (44,098)
	4,040,894 6,458,211

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 2013 and 30 June 2012, 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 2013, exploration expenditure of nil (2012: $2,289) on the Wadi Allaqi project was impaired.

For the year ended 30 June 2013, exploration expenditure in Eritrea in relation to the Group’s:

• current Exploration Licences (Adobha and Gerasi South) of $3,645,635 (2012: nil) was impaired; and

• expired Prospecting Licences (Hafta West and Romay) of nil (2012: $41,809) was impaired.

13 MINE PROPERTIES

	2013 2012 $ $
Mine properties (at cost) Accumulated amortisation and impairment Movement: Mine properties Balance at beginning of year Transfer from exploration and evaluation expenditure Reclassification of inventories (Note 31) Additions Net pre‐production revenue Foreign exchange adjustments Amortisation adjustment Balance at end of year	1,573,476 910,257 ‐ ‐
	1,573,476 910,257
	910,257 ‐ ‐ 288,039 ‐ 652,227 1,912,019 ‐ (1,236,406) ‐ (12,394) ‐ ‐ (30,009)
	1,573,476 910,257

33

GIPPSLAND LIMITED AND CONTROLLED ENTITIES

ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

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.

14 TRADE AND OTHER PAYABLES (CURRENT)

14 TRADE AND OTHER PAYABLES (CURRENT)
	2013 2012 $ $
Trade payables and accruals (i)	1,355,268 993,262
	1,355,268 993,262

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

15 PROVISIONS (CURRENT)

	2013 2012 $ $
Provision for annual leave Provision for long service leave 16 NON‐CONTROLLING INTEREST	83,721 51,946 24,127 21,793
	107,848 73,739
	2013 2012 $ $
Balance at beginning of year Share of profit/(loss) for the year Share of movement in foreign currency translation reserve Balance at end of year 17 CONTRIBUTED EQUITY	(2,057,470) (1,827,394) (180,902) (177,269) 71,744 (52,807)
	(2,166,628) (2,057,470)
	2013 2012 $ $
(a) Ordinary Shares Issued and fully paid	48,530,322 45,530,847

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

34

GIPPSLAND LIMITED AND CONTROLLED ENTITIES

ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

(b) Movement in ordinary share capital At 30 June 2011 Share issue (i) Share issue (ii) Share issue costs Subtotal (shares issued during year) At 30 June 2012 Share issue (iii) Share issue (iv) Share issue (v) Share issue costs Subtotal (shares issued during year) At 30 June 2013		Number of shares $
		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
		230,684,158 1,384,105 164,805,766 1,648,057 5,000,000 50,000 (82,687)
		400,489,924 2,999,475
		1,375,700,081 48,530,322

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

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

(iii) 230,684,158 shares issued on 10 September 2012 for cash at 0.6 cents each.

(iv) 164,805,766 shares issued on 15 April 2013 for cash at 1 cent each.

(v) 5,000,000 shares issued on 18 June 2013 in relation to fees payable at 1 cent 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 2013 $0.06 Total	Number under Option 600,000
	600,000

18 RESERVES AND ACCUMULATED LOSSES

18 RESERVES AND ACCUMULATED LOSSES
(a) Reserves Option issue reserve Foreign currency translation reserve	2013 2012 $ $
	534,662 534,662 (1,792,583) (1,651,423)
	(1,257,921) (1,116,761)

	Option issue reserve Foreign currency translation reserve Total $ $ $
Movements in reserves At 30 June 2011 Share based payment Currency translation differences As at 30 June 2012 Share based payment Currency translation differences As at 30 June 2013	530,402 (1,791,895) (1,261,493) 4,260 ‐ 4,260 ‐ 140,472 140,472
	534,662 (1,651,423) (1,116,761) ‐ ‐ ‐ ‐ (141,160) (141,160)
	534,662 (1,792,583) (1,257,921)

35

GIPPSLAND LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

(b) Accumulated losses Movements in accumulated losses were as follows: Balance 1 July Net profit/(loss) for the year Balance 30 June	2013 2012 $ $
	(30,145,673) (31,122,301) (7,818,715) 976,628
	(37,964,388) (30,145,673)

• (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
2013 2012 % % 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	2013 2012 $ $ 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.

Tantalum Egypt JSC is included in the consolidated financial statements on the basis that Gippsland Limited controls the activities of Tantalum Egypt JSC by way of Gippsland’s casting vote on the Board of Directors.

36

GIPPSLAND LIMITED AND CONTROLLED ENTITIES

ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

20 INTERESTS IN JOINT VENTURE OPERATIONS AND BUSINESS UNDERTAKINGS

At 30 June 2013, the Group was a participant in the following joint ventures:

Name of joint venture 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	2013 2012 % Interest % Interest
	50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50

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	2013 2012 $ $
	125,600 159,500 40,800 149,900
	166,400 309,400

37

GIPPSLAND LIMITED AND CONTROLLED ENTITIES

ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

(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 2013, the Group has received written confirmation from the Eritrean Ministry of Energy and Mines that the expenditure commitments for Year 3 (year ended 23 July 2013) of the Adobha Exploration Licence and Year 2 (year ended 25 August 2013) of the Gerasi South Exploration Licence have been fulfilled and the Company is in good standing in relation to both of the exploration licences. The Company is required to spend US$400,000 on exploration of the Gerasi South Exploration Licence by 25 August 2014, being Year 3 of the Licence. The Year 4 expenditure commitment for the year ended 23 July 2014 for the Adobha Exploration Licence calculated in accordance with the Exploration Licence Agreement is approximately US$5,160,000, however, it is subject to relinquishment provisions and also the discretion of the Eritrean Ministry of Energy and Mines. The Company has applied to the Eritrean Ministry of Energy and Mines for a deferment in relation to future year’s expenditure commitments until additional funds are raised for exploration and the Company has proposed an exploration expenditure amount for Year 4 of US$1,000,000 instead of the US$5,160,000 as per the Exploration Licence agreement. The Company has received verbal approval from the Eritrean Ministry of Energy and Mines in relation to this deferment of expenditure. 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 2013 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 2014.

(e) Capital Commitments

There are no capital commitments of the Group at 30 June 2013.

(f) Other Commitments

Payment of $30,000 of the 2013 remuneration of Executive Director of Gippsland Ltd, Mr Jon Starink, has been deferred pending certain conditions. This amount has been included in Mr Starink’s total remuneration shown in the Remuneration Report for the year ended 30 June 2013.

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	2013 2012 $ $
	50,000 4,260
	50,000 4,260

38

GIPPSLAND LIMITED AND CONTROLLED ENTITIES

ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

(b) Types of share‐based payment plans

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 2011 (*)	600,000	25/11/11	31/12/12	0.04	0.0032
(2) Issued 25 November 2011 (*)	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	5,000,000	18/6/13	0.01

(*) 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.

	2013 2013 2012 2012 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	1,200,000 0.05 56,000,000 0.13 ‐ ‐ 1,200,000 0.05 ‐ ‐ ‐ ‐ (600,000) 0.04 (56,000,000) 0.13
	600,000 0.06 1,200,000 0.05
	600,000 0.06 1,200,000 0.05

(d) Weighted average of remaining contractual life

The weighted average remaining contractual life for the share options outstanding as at 30 June 2013 is 0.50 year (2012: 1.00 years).

(e) Range of exercise price

The exercise price for options outstanding at the end of the year was $0.06. (2012: range of $0.04 ‐ $0.06).

(f) Weighted average fair value

The weighted average fair value of options granted during the year was nil (2012: $0.05).

39

GIPPSLAND LIMITED AND CONTROLLED ENTITIES

ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

(g) Option pricing model

Equity‐settled transactions

There were no equity‐settled share options granted during the year.

23 CONTINGENT LIABILITIES AND CONTINGENT ASSETS

(a) Contingent Liabilities

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

(b) Contingent Assets

During 2012, 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. The 43,528,743 shares in Stellar Resources Ltd were sold during 2013. 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

Gandel Metals Pty Ltd, a company associated with Mr Ian Gandel, has entered into an agreement to provide a loan facility to Gippsland for up to $1,000,000 for working capital.

The terms of the agreement are as follows:

• (a) the interest rate for the loan is equal to the ANZ facility interest rate, as varied (currently 5.33%);

• (b) the loan is unsecured; and

• (c) the loan is repayable the earlier of:

• 1 July 2014;

• 5 business days after completion of a capital raising by Gippsland for an amount equal to or greater than $1,500,000; or

• such earlier date that Gippsland has surplus cash reserves to repay the loan in full without affecting Gippsland’s continuing operations in the reasonable opinion of the Directors.

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.

40

GIPPSLAND LIMITED AND CONTROLLED ENTITIES

ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

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	2013 2012 $ $
	63,892 40,138 39,632 34,537
	103,524 74,675

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:

relevant financial year:
	2013	2012
	$	$
Gandel Metals Pty Ltd – a company controlled by Mr IJ Gandel
received director’s fees.	80,000*	80,000*
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
Abbotsleigh Pty Limited – a company associated with Mr IJ Gandel
provided loan funds to Gippsland. The interest rates for the loans
were 7.14% (2013) and 4% (2012), the loans were unsecured and
both loans have been repaid.	1,200,000	400,000
Abbotsleigh Pty Limited – a company associated with Mr IJ Gandel
was repaid loan funds by Gippsland. The interest rates for the
loans were 7.14% (2013) and 4% (2012) and the loans were
unsecured.	1,200,000	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. The interest rates for the
loans were 7.14% (2013) and 4% (2012), the loans were unsecured
and both loans have been repaid.	9,215	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

GIPPSLAND LIMITED AND CONTROLLED ENTITIES

41

ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

	2013	2012
	$	$
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
Mandu Pty Ltd – a company controlled by Dr JM Chisholm
received geological consulting fees.	197,400*	244,693*
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*	40,000*
Mr J Starink – received director fees and consulting fees.	300,000*	200,000*
John S Dunlop and Associates Pty Ltd – a company controlled by
Mr JSF Dunlop received directors and mining consulting fees.	50,000*	95,833*
Mr JSF Dunlop – received director fees and superannuation.	‐*	19,167*
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
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
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.

42

GIPPSLAND LIMITED AND CONTROLLED ENTITIES

ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

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 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	2013 2012 $ $
	806,000 876,618 ‐ 1,583 50,000 ‐
	856,000 878,201

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 2013 Directors Mr IJ Gandel Mr JSF Dunlop Mr JD Kenny Mr J Starink Executives Mr A Ayyash Dr JM Chisholm	Balance at 1.7.2012 Granted as remune‐ ration Options exerci‐ sed Options expired Balance at 30.6.2013 Vested at 30.6.2013 Vested but not exerci‐ sable Vested and exerci‐ sable Vested during the year
	‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐
	‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

43

GIPPSLAND LIMITED AND CONTROLLED ENTITIES

ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

30 June 2012 Directors Mr IJ Gandel Mr JSF Dunlop Mr JD Kenny Mr J Starink Executives Mr A Ayyash Dr JM Chisholm	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 ‐ ‐ ‐ ‐ ‐ 3,000,000 ‐ ‐ 3,000,000 ‐ ‐ ‐ ‐ ‐
	9,000,000 ‐ ‐ 9,000,000 ‐ ‐ ‐ ‐ ‐

(d) Shareholdings of key management personnel (consolidated)

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

30 June 2013	Balance 1.7.2012 Granted as remuneration On exercise of Options Net Change Other Balance 30.6.2013 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 Dr JM Chisholm 30 June 2012	328,601,392 ‐ ‐ 258,186,808 586,788,200 2,892,858 ‐ ‐ 2,272,961 5,165,819 2,160,000 ‐ ‐ 925,715 3,085,715 1,200,000 5,000,000 ‐ 514,286 6,714,286 974,784 ‐ ‐ ‐ 974,784 2,790,370 ‐ ‐ 697,593 3,487,963
	338,619,404 5,000,000 ‐ 262,597,363 606,216,767
	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 Dr JM Chisholm	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

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

GIPPSLAND LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

44

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

(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 2013 and 2012.

	Continuing Operations	Total Operations
	Tin/Tantalum Gold Copper Corporate $ $ $ $	$
GIPPSLA Year ended 30 June 2013 Revenue Other revenues from external customers Inter‐segment transactions Total segment revenue Inter‐segment elimination Total consolidated revenue Result Segment net operating loss after tax Profit/(loss) before income tax and minority interest Income tax expense Net profit (loss) for the year Assets and liabilities Segment assets Total assets Segment liabilities Total liabilities Cash flow information Net cash flow from/(used in) operating activities Net cash flow from/(used in) investing activities	‐ ‐ ‐ 8,228 ‐ ‐ ‐ ‐	8,228 ‐
	‐ ‐ ‐ 8,228	8,228 ‐
	(1,264,792) (37,533) (3,791,089) (2,906,203)
		8,228
		(7,999,617)
	7,802,728 32,855 246,164 522,754	(7,999,617) ‐
		(7,999,617)
		8,604,501
	(752,326) (163,273) (40,836) (506,681)	8,604,501
		(1,463,116)
	(1,035,525) (28,026) (98,713) (1,265,710) 864,330 27,175 86,502 (2,145,797)	(1,463,116)
		45 (2,427,974) (1,167,790)
	ND LIMITED AND CONTROLLED ENTITIES

GIPPSLAND LIMITED AND CONTROLLED ENTITIES

ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

Net cash flow from/(used in) financing activities Net increase/decrease) in cash held Other segment information Capital expenditure Depreciation Impairment losses	Continuing Operations	Total Operations
	Tin/Tantalum Gold Copper Corporate $ $ $ $ ‐ ‐ ‐ 2,955,697	$ 2,955,697
	(171,195) (851) (12,211) (455,810)	(640,067)
	(928,881) ‐ (1,748) (1,992) (27,454) (8,344) (38,129) (12,909) ‐ ‐ (3,645,635) ‐	(932,621) (86,836) (3,645,635)
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 net operating loss after tax Profit/(loss) before income tax and minority interest Income tax expense Net profit (loss) for the year Assets and liabilities Segment assets Total assets Segment liabilities Total liabilities Cash flow information Net cash flow from/(used in) operating activities Net cash flow from/(used in) investing activities Net cash flow from/(used in) financing activities Net increase/decrease) in cash held Other segment information Capital expenditure Depreciation Impairment losses	‐ ‐ 2,222 88,598 ‐ 2,593 ‐ ‐	90,820 2,593
	‐ 2,593 2,222 88,598	93,413 (2,593)
	(652,014) (41,596) (175,074) 1,668,043
		90,820
		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)
	(1,482,086 (71,273) (85,983) (1,181,304 1,594,840 73,149 118,284 (5,285,917) ‐ ‐ ‐ 6,715,920	(1,067,001)
		(2,820,646) (3,499,644) 6,715,920
	112,754 1,876 32,301 248,699	395,630
	(776,150) ‐ (173,808) (3,745) (14,245) (13,686) (21,647) (15,927) ‐ (2,289) (41,808) ‐	(953,703) (65,505) (44,097)

(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 2013 and 2012:

GIPPSLAND LIMITED AND CONTROLLED ENTITIES

46

ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

	Australia Egypt Eritrea $ $ $	Total $
Year ended 30 June 2013 Revenue Other revenues from external customers Less revenue attributable to discontinued operation Revenue from continuing operations Inter‐segment sales Segment revenue Other segment information Segment assets Total assets Capital expenditure	8,228 ‐ ‐ ‐ ‐ ‐	8,228 ‐
	8,228 ‐ ‐ ‐ ‐ ‐	8,228 ‐
	8,228 ‐ ‐	8,228
	522,754 7,835,583 246,164 (1,992) (928,881) (1,748)	8,604,501
		8,604,501
		(932,621)
Year ended 30 June 2012 Revenue Other revenues from external customers Less revenue attributable to discontinued operation Revenue from continuing operations Inter‐segment sales Segment revenue Other segment information Segment assets Total assets Capital expenditure	88,598 ‐ 2,222 ‐ ‐ ‐	90,820 ‐
	88,598 2,222 ‐ 2,593 ‐	90,820 2,593
	88,598 2,593 2,222	93,413
	4,238,591 6,188,321 2,851,032 (3,745) (776,150) (173,808)	13,277,944
		13,277,944
		(953,703)

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

GIPPSLAND LIMITED AND CONTROLLED ENTITIES

47

ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

undertaken to manage credit risk. Liquidity risk is monitored through the development of future rolling cash flow forecasts.

(b) Interest rate risk

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

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	2013 2012 $ $ 416,502 882,031
	1.60% 2.54% 170,381 287,551 313,424 25,902
	900,307 1,195,484
	1,355,268 993,262 ‐ ‐
	1,355,268 993,262

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)
		2013	2012
		$	$
+1% (100	basis points)	4,163	8,820
‐1% (100	basis points)	(4,163)	(8,820)

(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

48

GIPPSLAND LIMITED AND CONTROLLED ENTITIES

ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

	Carrying Amount Fair Value 2013 2012 2013 2012 $ $ $ $
Financial Assets Cash Trade and other receivables ‐ current Available for sale financial asset Financial Liabilities Trade and other payables Unsecured loans Convertible loan	586,883 1,169,582 586,883 1,169,582 313,424 25,902 313,424 25,902 ‐ 3,264,656 ‐ 3,264,656
	1,355,268 993,262 1,355,268 993,262 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

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 2013	Level 1 Level 2 Level 3 Total $ $ $ $
Available for sale Quoted equities Total 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

49

GIPPSLAND LIMITED AND CONTROLLED ENTITIES

ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

(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.

As referred to in the Going Concern note (Note 1(b)), the Group’s liquidity position will depend on several factors, including, but not limited to the following:

• Obtaining additional short‐term funding of $1,000,000 from Gandel Metals Proprietary Limited (a director related entity of Ian Gandel);

• Obtaining a reduction and deferral on exploration commitment on its Eritrean project from the Eritrean Ministry of Energy and Mines;

• Continuation of the Alluvial Tin Project; and / or

• Further capital raisings and / or debt funding of at least $1,500,000 by February 2014.

The Company continually reviews its liquidity position including cash flow forecast to determine the forecast liquidity position and maintain appropriate liquidity levels.

In addition to commitment disclosure in Note 21(b), the table below reflects the contractual maturity of financial instruments as at 30 June. Cash flows for financial instruments are presented on an undiscounted basis.

		Aging	analysis between		Currency
2013	Total	**<30 days **	**30‐60 days **	**>60 days **	AUD	Other
Cash and Cash
Equivalents	(586,883)	(586,883)	‐	‐	(418,134)	(168,749)
Trade Receivables	(313,424)	(313,424)	‐	‐	(54,455)	(258,969)
Available for Sale
Financial Asset	‐	‐	‐	‐	‐	‐
Trade Payables	880,990	520,302	48,200	312,488	434,542	446,448
Other Payables	474,278	‐	‐	474,278	‐	474,278
Total	454,961	(380,005)	48,200	786,766	(38,047)	493,008
		Aging	analysis between		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
Total	(3,466,878)	(4,037,292)	13,622	556,792	(3,946,743)	479,865

50

GIPPSLAND LIMITED AND CONTROLLED ENTITIES

ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

(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 2013, the Group had the following exposure to foreign currency:

Financial Assets US$ Cash and cash equivalents EGP Cash and cash equivalents Trade Receivables Nakfa Cash and cash equivalents Financial Liabilities US$ Trade and other payables EGP Trade and other payables Nakfa Trade and other payables GBP Trade and other payables Net exposure	2013 2012
	99,443 186,453 19,517 31,690 258,969 4,416 49,789 62,571
	427,718 285,130
	237,932 128,309 651,160 553,787 19,644 73,677 11,990 9,222
	920,726 764,995
	(493,008) (479,865)

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 2013, 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%	Post Tax Loss (Higher)/Lower Equity Higher/(Lower) 2013 2012 2013 2012 $ $ $ $
	(40,568) (5,821) (1,160,772) (1,166,163) 49,583 7,114 1,418,721 1,425,310

GIPPSLAND LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

51

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

Foreign exchange rates used during the period were as follows:

	2013	2012
	AUD:EGP	AUD:EGP
Rate as at 30 June	6.37220	6.13180
Average Rate for year ended 30 June	6.57920	6.17090

(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. Short‐term funding for the Group of up to $1,000,000 has been obtained via a loan facility from Gandel Metals Proprietary Limited (a director related entity of Ian Gandel) to fund operations and commitments. As referred to in the Going Concern note (Note 1(b)), a further capital raising of at least $1,500,000 is estimated to be required by February 2014, however, the actual amount of any capital raising will be determined closer to the time and be subject to the operational requirements of the Group.

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.

(h) Equity price risk

The Group is no longer exposed to equity price risks arising from equity investments following the sale of its equity investments during 2013. 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 2013 would increase/decrease by nil (2012: $326,465) as a result of the changes in fair value in the equity investments; and

• other comprehensive income for the year ended 30 June 2013 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 shares in Stellar Resources Ltd during the reporting period.

52

GIPPSLAND LIMITED AND CONTROLLED ENTITIES

ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

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.

accounting policies relating to the Group.
	2013 2012 $ $
(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	498,977 939,242 51,665 3,327,238
	550,642 4,266,480
	506,681 255,647 ‐ ‐
	506,681 255,647
	48,530,322 45,530,847 (49,021,023) (42,054,676) 534,662 534,662
	43,961 4,010,833
	2013 2012 $ $
(b) Financial Performance Profit/(loss) for the year Other comprehensive income Total comprehensive income	(6,966,347) (3,791,623) ‐ ‐
	(6,966,347) (3,791,623)

(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 (2012: 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.

53

GIPPSLAND LIMITED AND CONTROLLED ENTITIES

ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

31 CHANGE TO ACCOUNTING TREATMENT OF INVENTORIES

At 30 June 2012, the Group accounted for the alluvial mining project on the basis that the project was in production. Subsequent to lodgement of the 30 June 2012 audited financial statements, the Directors of Gippsland reassessed the performance of the operations and concluded that the existing plant at 30 June 2012 was not performing in line with their expectations. Accordingly, the Directors have decided to account for the alluvial mining project on the basis that the project is in the development phase until such time as they consider the tin production from the alluvial mining project is commercial. This impact is a reclassification of $652,227 from Inventories to Mine Properties and, accordingly, has resulted in a change to the previously reported amounts in the statement of financial position at 30 June 2012 to reflect this reclassification.

While the alluvial mining project is in development phase, all revenues received from the sale of cassiterite will be treated as pre‐production revenue and offset against Mine Properties. Cash flows from the pre‐production revenue are included in the Condensed Consolidated Statement of Cash Flows under cash flows from investing activities.

GIPPSLAND LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

54

DIRECTORS' DECLARATION

The directors of Gippsland Limited declare that:

• (a) in the directors’ opinion, the financial statements and notes on pages 11 to 54, and the remuneration disclosures that are contained in the Directors' report, set out on pages 6 to 9, 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 2013 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 27[th] day of September 2013.

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J Starink Director

GIPPSLAND LIMITED AND CONTROLLED ENTITIES

55

ABN 31 004 766 376

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Deloitte Touche Tohmatsu ABN 74 490 121 060

Woodside Plaza Level 14 240 St Georges Terrace Perth WA 6000 GPO Box A46 Perth WA 6837 Australia

Independent Auditor’s Report to the Members of Gippsland Limited

Tel: +61 8 9365 7000 Fax: +61 8 9365 7001 www.deloitte.com.au

Report on the Financial Report

We have audited the accompanying financial report of Gippsland Limited, which comprises the statement of financial position as at 30 June 2013, the statement of profit or loss and other comprehensive income, the statement of cash flows and the statement of changes in equity for the year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration of the consolidated entity, comprising the company and the entities it controlled at the year’s end or from time to time during the financial year as set out on pages 11 to 55.

Directors’ Responsibility for the Financial Report

The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In Note 2, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements , that the consolidated financial statements comply with International Financial Reporting Standards.

Auditor’s Responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control, relevant to the entity’s preparation of the financial report that gives a true and fair view, in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Auditor’s Independence Declaration

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001 . We confirm that the independence declaration required by the Corporations Act 2001 , which has been given to the directors of Gippsland Limited, would be in the same terms if given to the directors as at the time of this auditor’s report.

Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Touche Tohmatsu Limited

56

==> picture [92 x 18] intentionally omitted <==

Opinion

In our opinion:

• (a) the financial report of Gippsland Limited is in accordance with the Corporations Act 2001 , including:

• (i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2013 and of its performance for the year ended on that date; and

• (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001 ; and

• (b) the consolidated financial statements also comply with International Financial Reporting Standards as disclosed in Note 2.

Material Uncertainty Regarding Continuation as a Going Concern

Without modifying our opinion, we draw attention to Note 2(b) in the financial report which indicates that the consolidated entity has incurred net losses of $7,999,617 (2012: profit of $799,359) and experienced net cash outflows from operations of $2,427,974 (2012: $2,820,646) and net cash outflows from investing activities of $1,167,790 (2012: $3,499,644) for the year ended 30 June 2013. These conditions, along with other matters set out in Note 2(b), indicate the existence of a material uncertainty that may cast significant doubt about the company’s and the consolidated entity’s ability to continue as going concerns and therefore, whether they will realise their assets and extinguish their liabilities in the ordinary course of business, and at amounts stated in the financial report.

Report on the Remuneration Report

We have audited the Remuneration Report included in pages 6 to 9 of the directors’ report for the year ended 30 June 2013. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001 . Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

Opinion

In our opinion the Remuneration Report of Gippsland Limited for the year ended 30 June 2013, complies with section 300A of the Corporations Act 2001 .

DELOITTE TOUCHE TOHMATSU

Chris Nicoloff Partner Chartered Accountants Perth, 27 September 2013

57

ASX ADDITIONAL INFORMATION

AS AT 25 SEPTEMBER 2013

A TOTAL EQUITY Shares Options ex 31/12/2013 SECURITIES at 6 cents Totals on Issue 1,375,700,081 600,000

B DISTRIBUTION OF EQUITY SECURITIES

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	49 38 31 496 415 2
	1,029 2 516

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 Citicorp Nominees Pty Limited 7 Taveroam Pty Limited 8 Nessim Emile Alfred 9 Situate Pty Limited 10 Sunland Systems Pty Ltd 11 Taveroam Pty Ltd 12 EJ & LY Congdon 13 King Town Holdings Pty Ltd 14 Bnp Paribas Nominees Pty Ltd 15 David Same 16 Eco International Pty Ltd 17 Threesixty Group Pty Ltd 18 Alsanto Nominees Pty Ltd 19 Statemoor Pty Ltd 20 Starlight Holdings Ltd

Number % 586,788,200 42.65 171,385,304 12.46 60,890,281 4.43 54,083,360 3.93 27,408,626 1.99 25,904,494 1.88 19,140,345 1.39 18,800,000 1.37 17,777,517 1.29 10,905,000 0.79 10,260,243 0.75 9,875,912 0.72 9,183,882 0.67 8,953,203 0.65 8,148,006 0.59 7,942,488 0.58 7,641,000 0.56 6,390,000 0.46 6,000,000 0.44 6,000,000 0.44

1,073,497,861 78.04

58

GIPPSLAND LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

ASX ADDITIONAL INFORMATION

AS AT 25 SEPTEMBER 2013

UNLISTED OPTION HOLDERS	Number	Exercise Price	Expiry
Geoffrey Alexander Hawkins	500,000	6 cents	31/12/13
Rhonda Jean Light	100,000	6 cents	31/12/13
SUBSTANTIAL SHAREHOLDERS	Number	%
Abbotsleigh Pty Ltd	586,788,200	42.65
Situate Pty Ltd, Taveroam Pty Ltd and RW Beale	75,000,000	5.45

D UNLISTED OPTION HOLDERS

E SUBSTANTIAL SHAREHOLDERS

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 2013, 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	Pending	50%
Egypt	Wadi Allaqi ‐ Shashoba	Exploration Licence1	Pending	50%
Egypt	Wadi Allaqi – Haimur	Exploration Licence1	Pending	50%
Egypt	Wadi Allaqi – Garayat	Exploration Licence1	Pending	50%
Egypt	Wadi Allaqi – Koleit	Exploration Licence1	Pending	50%
Egypt	Wadi Allaqi – Nile Valley A	Exploration Licence1	Pending	50%
Egypt	Wadi Allaqi – Nile Valley E	Exploration Licence1	Pending	50%
Egypt	Wadi Allaqi – Abu Swayel	Exploration Licence1	Pending	50%
Egypt	Wadi Allaqi – Um Tiur	Exploration Licence1	Pending	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.

59

GIPPSLAND LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376