STREAMPLAY STUDIO LIMITED — Interim / Quarterly Report 2006

Mar 15, 2006

GIPPSLAND LIMITED ABN 31 004 766 376

FINANCIAL REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2005

DIRECTORS' REPORT

The Directors present the financial report of the economic entity being Gippsland Limited ("the Company") and its controlled entities for the half year ended 31 December 2005.

DIRECTORS

The following persons were Directors of the Company who held office during or since the end of the half year:

Robert John (Jack) Telford John Morrison Chisholm John Damian Kenny John Dunlop (appointed 1 July 2005)

REVIEW OF OPERATIONS

The consolidated operating loss after tax for the half year was $1,234,588 (2004 - $1,046,061).

The Company continued its business of mineral exploration with the main focus being on the development of the Abu Dabbab tantalite, tin and feldspar project in Egypt in which Gippsland has a 50% economic interest by way of an incorporated joint venture with the Eqyptian Government. The Bankable Feasibility Study ("BFS") was completed in November 2004 by Lycopodium Pty Ltd and has been subsequently updated for financing purposes. The results of the BFS determined that the 40Mt Abu Dabbab Project will produce in excess of 650,000 pounds of tantalum pentoxide ("Ta2O5") per year which will firmly establish the operation as the world's second largest tantalum producer. The Project will also produce 1,530 tonnes of tin metal per year.

The BFS determined that the Project will generate gross sales revenue in excess of US$500 million during the first 13 years of its estimated 20-year mine life. These sales will be from tantalum and tin only and exclude all potential feldspar sales revenues.

On 11 October 2005 the Company completed a share placement to UK based investors by issuing 15,000,000 ordinary shares at an issue price of 4 UK pence (approx 9.3 cents) per share which raised a total of $1.4 million (£600.000) before issue costs.

The funds raised will be applied to the continued development of the Abu Dabbab Project in Eqypt, and to fund additional exploration at the Wadi Allagi project.

On March 7 2006 the Directors announced that the International Finance Corporation ("IFC"), a member of the World Bank Group, has been mandated as Lead Debt Arranger for Gippsland's Abu Dabbab Tantalum-Tin Project (the "Project") in Egypt.

AUDITOR'S INDEPENDENCE DECLARATION

A copy of the auditors' independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 12.

Signed in accordance with a resolution of the Board and dated 16th March 2006.

respect

R J TELFORD DIRECTOR

CONSOLIDATED INCOME STATEMENT FOR THE HALF YEAR ENDED 31 DECEMBER 2005

Economic Entity

	31 December 2005s.	31 December 2004
Revenues from ordinary activities	10,669	9,390
Employee expenses	(59, 160)	(31, 468)
Depreciation	(10, 643)	(3,288)
Project feasibility and exploration expenses	(531, 891)	(637,068)
Management and consulting expenses	(71, 424)	(109, 360)
Corporate office expenses	(29,069)	(50,047)
AIM administration expenses	(91, 160)	(87, 103)
Unrealised foreign exchange gains / (losses)	16,757	(49, 127)
Provision for diminution in exploration	(194, 143)
Option Expenses	(77, 827)
Other expenses from ordinary activities	(196, 697)	(87,990)
Loss from ordinary activities before income tax expense	(1, 234, 588)	(1,046,061)
Income tax expense relating to ordinary activities
Net loss attributable to members of the parent entity	(1.234.588)	(1.046.061)
Basic loss per share (cents per share)	(0.7)	(0.7)
Diluted loss per share (cents per share)	(0.7)	(0.7)

The accompanying notes form part of these financial statements

CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2005

	31 December2005$	Economic Entity30 June2005$	31 December2004$
CURRENT ASSETSCash and cash equivalentsTrade and other receivablesOther assets	826.91642,6503,650	589,52233,07815,270	1,285,42929,0002,759
TOTAL CURRENT ASSETS	873,216	637,870	1,317,188
NON CURRENT ASSETSTenement guaranteesProperty, plant and equipment	43.004	41.942	55,16412,383
TOTAL NON CURRENT ASSETS	43.004	41,942	67,547
TOTAL ASSETS	916.220	679,812	1,384,735
CURRENT LIABILITIESTrade and other payablesShort term provisions	172.9489,000	99,2259.000	100,94310,350
TOTAL CURRENT LIABILITIES	181.948	108,225	111,293
TOTAL LIABILITIES	181.948	108,225	111,293
NET ASSETS	734.272	571,587	1.273,442
EQUITYContributed equityShare Option reserveAccumulated losses	17,187,68277,827(16,531.237)	15,868,236(15,296,649)	15,620,944(14, 347, 502)
TOTAL EQUITY	734.272	571.587	1.273.442

CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE HALF YEAR ENDED 31 DECEMBER 2005

Opening Balance - EquityNew Equity Issues (net of costs)Share Option reserve	571.5871.319.44677.827	1,273,442247.293	902.4721,417,031
Losses attributable to members of theparent entityClosing Balance - Equity	(1, 234, 588)734.272	(949.148)571.587	(1,046,061)1.273.442

The accompanying notes form part of these financial statements.

CONSOLIDATED CASH FLOW STATEMENT FOR THE HALF YEAR ENDED 31 DECEMBER 2005

	Economic Entity20052004
	$	$
CASH FLOW FROM OPERATING ACTIVITIES
Receipts from operationsPayments to suppliers and employeesInterest received	(884, 767)10,669	58.825(1, 160, 664)9,390
Net cash used in operating activities	(874,098)	(1,092,449)
CASH FLOW FROM INVESTING ACTIVITIES
Payments for property, plant and equipmentPayments for exploration/tenement quarantees	(11, 705)(179, 492)	(2, 195)(55, 164)
Net cash used in investing activities	(191,197)	(57,359)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from share issuesPayments for share issues	1.388.890(69, 444)	1,491,612(57, 707)
Net cash provided by financing activities	1,319,446	1,433,905
Net increase in cash held	254,151	284,097
Effects of exchange rate changes on cash	(16, 757)	(49, 127)
Add opening cash brought forward	589,522	1,050,459
Closing cash carried forward	826,916	1.285,429

The accompanying notes form part of these financial statements.

NOTES TO THE FINANCIAL REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2005

NOTE 1: STATEMENT OF ACCOUNTING POLICIES

BASIS OF PREPARATION OF THE HALF-YEAR FINANCIAL REPORT

$\ddagger$ . BASIS OF PREPARATION

The half-year consolidated financial statements are a general purpose financial report prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standard AASB 134: Interim Financial Reporting, Urgent Issues Group Interpretations and other authoritative pronouncements of the Australian Accounting Standards Board.

It is recommended that this financial report be read in conjunction with the annual financial report for the year ended 30 June 2005 and any public announcements made by Gippsland Limited and its controlled entities during the halfyear in accordance with continuous disclosure requirements arising under the Corporations Act 2001.

As this is the first interim financial report prepared under Australian equivalents to IFRS, the accounting policies applied are inconsistent with those applied in the 30 June 2005 annual report as this report was presented under Accordingly, a summary of the significant accounting policies under Australian previous Australian GAAP. equivalents to IFRS has been included below. A reconciliation of equity and profit and loss between previous GAAP and Australian equivalents to IFRS has been prepared in Note 2.

The half-year report does not include full disclosures of the type normally included in an annual financial report.

(a) Principles of Consolidation

A controlled entity is any entity controlled by Gippsland Limited ("Gippsland") whereby Gippsland has the power to control the financial and operating policies of an entity so as to obtain benefits from its activities

All inter-company balances and transactions between entities in the economic entity, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistencies with those policies applied by the parent entity.

Where controlled entities have entered or left the economic entity during the year, their operating results have been included/excluded from the date control was obtained or until the date control ceased.

(b) Income Tax

Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the income statement except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.

Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised.

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the economic entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

NOTES TO THE FINANCIAL REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2005

BASIS OF PREPARATION (Continued) $\mathbf{1}$ .

(c) Plant and Equipment

Each class of plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and impairment losses.

Plant and equipment

Plant and equipment are measured on the cost basis less depreciation and impairment losses.

The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the assets employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts.

Depreciation

The depreciable amount of all fixed assets are depreciated on a straight line basis over their useful lives to the economic entity commencing from the time the asset is held ready for use.

The depreciation rate used for each class of depreciable assets range between 10% and 33%

(d) Exploration and Evaluation Expenditure

Exploration and evaluation 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 vet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves.

Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area is made.

When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves.

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.

Costs of site restoration are provided over the life of the facility from when exploration commences and are included in the costs of that stage. Site restoration costs include the dismantling and removal of mining plant, equipment and building structures, waste removal, and rehabilitation of the site in accordance with clauses of the mining permits. Such costs have been determined using estimates of future costs, current legal requirements and technology on an undiscounted basis.

Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of site restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations and future legislation. Accordingly the costs have been determined on the basis that the restoration will be completed within one year of abandoning the site.

(e) Financial Instruments

Recognition

Financial instruments are initially measured at cost on trade date, which includes transaction costs, when the related contractual rights or obligations exist. Subsequent to initial recognition these instruments are measured as set out below.

NOTES TO THE FINANCIAL REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2005

BASIS OF PREPARATION (Continued) $\mathbf{1}$ .

Financial assets at fair value through profit and loss

A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by management. Derivatives are also categorised as held for trading unless they are designated as hedges. Realised and unrealised gains and losses arising from changes in the fair value of these assets are included in the income statement in the period in which they arise.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are stated at amortised cost using the effective interest rate method.

Financial liabilities

Non-derivative financial liabilities are recognised at amortised cost, comprising original debt less principal payments and amortisation.

Fair value

Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm's length transactions, reference to similar instruments and option pricing models.

Impairment

At each reporting date, the group assess whether there is objective evidence that a financial instrument has been impaired. In the case of available-for sale financial instruments, a prolonged decline in the value of the instrument is considered to determine whether an impairment has arisen. Impairment losses are recognised in the income statement

(f) Foreign Currency Transactions and Balances

Functional and presentation currency

The functional currency of each of the group's entities is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity's functional and presentation currency.

Transaction and balances

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Nonmonetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.

Exchange differences arising on the translation of monetary items are recognised in the income statement, except where deferred in equity as a qualifying cash flow or net investment hedge.

Exchange difference arising on the translation of non-monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity, otherwise the exchange difference is recognised in the income statement.

Group companies

The financial results and position of foreign operations whose functional currency is different from the group's presentation currency are translated as follows:

• Assets and liabilities are translated at year-end exchange rates prevailing at that reporting date.
• Income and expenses are translated at average exchange rates for the period.
• Retained profits are translated at the exchange rates prevailing at the date of the transaction.

NOTES TO THE FINANCIAL REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2005

BASIS OF PREPARATION (Continued) $\mathbf{1}$ .

Group companies (continued)

Exchange differences arising on translation of foreign operations are transferred directly to the group's foreign currency translation reserve in the balance sheet. These differences are recognised in the income statement in the period in which the operation is disposed.

(g) Employee Benefits

Provision is made for the company's liability for employee benefits arising from services rendered by employees to balance date. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled, plus related on-costs. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits.

(h) Cash and Cash Equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within short-borrowings in current liabilities on the balance sheet.

(i) Revenue

Revenue from the sale of goods is recognised upon the delivery of goods to customers.

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

Dividend revenue is recognised when the right to receive a dividend has been established. Dividends received from associates and joint venture entities are accounted for in accordance with the equity method of accounting.

Revenue from the rendering of a service is recognised upon the delivery of the service to the customers.

All revenue is stated net of the amount of goods and services tax (GST).

(i) Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the balance sheet are shown inclusive of GST.

Cash flows are presented in the cash flow statement on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.

(k) Comparative Figures

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

NOTES TO THE FINANCIAL REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2005

FIRST TIME ADOPTION OF AUSTRALIAN EQUIVALENTS TO INTERNATIONAL FINANCIAL $\overline{2}$ REPORTING STANDARDS

(a) Reconciliation of equity at 1 July 2004, 31 December 2004 and 30 June 2005

On adoption of the new AIFRS standards, there were no differences between equity presented under AIFRS with that presented under AGAAP.

(b) Reconciliation of net loss for the half year ended 31 December 2004, and the year ended 30 June 2005

On adoption of the new AIFRS standards, there were no differences between net loss presented under AIFRS with that presented under AGAAP.

NOTE 3: SEGMENT INFORMATION

The Company operates within the mineral exploration industry in Australia and Egypt.

	Australia		Egypt		Consolidated
	Dec2005	Dec2004	Dec2005	Dec2004	Dec2005	Dec2004
Total Segment Revenue	10.669	9.390			10.669	9,390
Segment Result	(508.554)	(408.993)	(726.034)	(637.068)	(1.234.588)	(1.046.061)

NOTE 4: CONTRIBUTED EQUITY

	31 December2005	31 December2005
	$	Number
Issued capital:
177,818,926 (June 2005: 162,818,926) fully paid
ordinary shares	17,187,682	177,818,926
Movement
Opening Balance	15,868,237	162,818,926
Issue of 15,000,000 shares at an issue price of 4
UK pence (9.3 cps) pursuant to a share	1,388,889	15,000,000
placement - funds applied to the Abu Dabbab
development and Wadi Allagi exploration
Less: Issue costs of capital raising	(69, 444)
Closing balance	17,187,682	177,818,926

As at 31 December 2005 the Company had the following options on issue:

43.771.393 listed options exercisable at 9 cents each by 31 December 2007: $(i)$

10,000,000 unlisted options exercisable at 4 UK pence each by 31 December 2007; and $(ii)$

$(iii)$ 2,250,000 unlisted options exercisable at 15 cents each by 31 December 2007.

NOTES TO THE FINANCIAL REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2005

NOTE 5: EVENTS SUBSEQUENT TO REPORTING DATE

Since 31 December 2005, no event has arisen that would be likely to materially affect the operations of the Company, the results of the Company or the state of affairs of the Company not otherwise disclosed in the Company's financial statements.

NOTE 6: CONTINGENT LIABILITIES

There have been no changes in contingent liabilities since the last annual reporting date.

DIRECTOR'S DECLARATION

The directors of Gippsland Limited declare that:

• 1. The financial statements and notes, as set out on pages 3 to 11:
  • comply with Accounting Standard AASB 134: Interim Financial Reporting and the Corporations Regulations a) $2001$ ; and
  • give a true and fair view of the consolidated entity's financial position as at 31 December 2005 and its b) performance for the half-year ended on that date.
• 1. In the directors' opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors dated this 16th day of March 2006.

inperd

R.J. Telford Chairman

Grant Thornton ●

AUDITOR'S INDEPENDENCE DECLARATION

In accordance with the requirements of section 307C of the Corporations Act 2001, as auditor for the review of Gippsland Limited for the half-year ended 31 December 2005, I declare that, to the best of my knowledge and belief, there have been:

• no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the $(a)$ review; and
• no contraventions of any applicable code of professional conduct in relation to the audit. $(b)$

Fan Niell

SEAN MCGURK Partner Grant Thornton Western Australian Partnership

Perth 16th March 2006

Grant Thornton ®

INDEPENDENT REVIEW REPORT TO THE MEMBERS OF GIPPSLAND LIMITED

Scope

The half-year financial report and directors' responsibility

The half-year financial report comprises the balance sheet, income statement, statement of changes in equity, cash flow statement, notes to the financial statements and the directors' declaration for the consolidated entity, for the half year ended 31 December 2005. The consolidated entity comprises both the Gippsland Limited (the company) and the entities it controlled during that half-year.

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

Review approach

We conducted an independent review of the half-year financial report in order to state whether, on the basis of the procedures described, anything has come to our attention that would indicate that the half-year financial report is not presented fairly in accordance with Accounting Standard AASB 134: Interim Financial Reporting and other mandatory professional reporting requirements in Australia and statutory requirements so as to present a view which is consistent with our understanding of the consolidated entity's financial position and performance as represented by the results of its operations and its cash flows, and in order for the company to lodge the half-year financial report with the Australian Securities & Investments Commission/Australian Stock Exchange Limited.

Our review has been conducted in accordance with Australian Auditing Standards applicable to review engagements. A review is limited primarily to inquiries of company personnel and analytical procedures applied to the financial data. These procedures do not provide all the evidence that would be required in an audit, thus the level of assurance provided is less than given in an audit. We have not performed an audit and, accordingly, we do not express an audit opinion.

Independence

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

In accordance with ASIC Class Order 05/83, we declare to the best of our knowledge and belief that the auditor's independence declaration has not changed as at the date of providing our review opinion.

Statement

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the halfyear financial report of Gippsland Limited is not in accordance with:

• the Corporations Act 2001, including: a)
  • giving a true and fair view of the consolidated entity's financial position as at 31 December 2005 and of its $\mathbf{I}$ performance for the period ended on that date; and
  • $\ddot{1}$ complying with Accounting Standard AASB 134: Interim Financial Reporting and the Corporations Regulations $2001$ ; and
• other mandatory financial reporting requirements in Australia. b)

GRANT THORNTON WESTERN AUSTRALIAN PARTNERSHIP

San Niell

Sean McGurk Partner

Dated this 16th day of March 2006 Perth, WA