Gladstone Pacific Nickel Ltd. - ACN 104 261 887 - Final Results for the year
ended 30 June 2009
Chairman and CEO Report
The Global Financial Crisis ("GFC") has changed world capital markets, impacted on business confidence in the nickel sector and general commodity markets, and in turn has affected the timing of the Gladstone Nickel Project ("GNP").
The nickel price started to collapse in the second quarter of 2008; by
A significant problem for nickel still remains in that there is substantial stock sitting on the
These new generation HPAL plants are built on dedicated ore bodies, do not have the ore supply flexibility (to process high grade ore) and do not have the high level of existing infrastructure support as does the GNP. We anticipate some consolidation in the industry and believe that increasing demand for sustainable long life projects will open the window for the next HPAL plant to be built at Gladstone within the coming two to three years.
HPAL is the only new commercial and environmentally sustainable technology available to process the dominant nickel laterite resources in the Pacific. Despite the operating successes of Minara's Murrin Murrin, and Sumitomo's
In May 2009 we received the final Environmental Approvals for the GNP under the following acts: - Queensland - State Development and Public Works Organisation Act; and - Federal - Environment Protection and Biodiversity Conservation Act. The approval was a very long and complex process and it is a critical foundation in the project development. The community acceptance and support for the GNP has set a new benchmark in Queensland and will ensure a smooth transition through to development. The table below provides the 3.5 year historical timeline for the key milestones involved in the approval process: ------------------------------------------------------------------------- Awarded Significant Project Status (Qld) November 2005 ------------------------------------------------------------------------- Terms of Reference May 2006 ------------------------------------------------------------------------- Major Projects facilitation (Fed) June 2006 ------------------------------------------------------------------------- EIS Report May 2007 ------------------------------------------------------------------------- Public Review June 2007 ------------------------------------------------------------------------- EIS Supplemental February 2008 ------------------------------------------------------------------------- Qld Gov Assessment Report January 2009 ------------------------------------------------------------------------- Fed Gov Approval (EPBC) May 2009 -------------------------------------------------------------------------
The State and Federal Government were complimentary of the innovative approach included in our Environmental Impact Study ("EIS") for the sulphur dioxide reduction scheme and the community infrastructure assistance program. Our project will have one of the lowest carbon dioxide ("CO(2)") foot-prints in the industry so we will be well positioned with the introduction of the Federal Government CPRS in full. Other outcomes from the EIS process have included co-operation with existing industries in Gladstone and it has also resulted in the high potential of improving residue and water management when the GNP proceeds. Environmentally sustainable solutions will remain a critical goal for the Company.
An Extraordinary General Meeting was held on
In early 2009 the Company completed a detailed review and due diligence for the potential acquisition of the BHPB Yabulu nickel plant in Queensland. There are a number of synergies between the GPN and the Yabulu refinery that could have added significant shareholder value and provided an immediate development pathway for the GNP, however, they were unable to be realized when the vendor of the Yabulu refinery chose not to deal with GPNL and negotiated a sale to a private company associated with
Over 8,500 m of diamond drilling has now been completed at Ouinné in
The Ouinné JV combined with the 100% owned Marlborough project continues to provide the strategic resource base of over 20 years required for the GNP.
We would like to acknowledge the strong and continued support from the GPNL Board and the enthusiasm and commitment from our management and staff during the past year. In addition, we would also like to pay special thanks to our Joint Venture partners in
The Company has reduced ongoing costs significantly in an effort to recognise the impact of the GFC. Key staff only have been retained and they are working reduced hours. All non essential work, including minimum travel and sponsorships, has been stopped.
Several projects are under consideration aimed at providing an early revenue stream while still preserving the critical GNP assets. The Board is actively pursuing ways to create value during this period of uncertainty and would like to thank our shareholders for their support.
Lastly, the Board extends a special thanks to Mr
Financial Performance ---------------------
The Company's net loss before income tax was A$98,513,230 (2008:A$7,657,682) which includes an impairment loss of A$96,015,663 (2008:A$2,114,981). The Company increased general expenditure (excluding foreign exchange and impairment losses) in the year from A$6,122,109 to A$7,328,826. This was due to a significant expenditure program during the period of A$904,000 on evaluation projects for proposed investments and expenditure on evaluation activities principally in
The Company continues to have a strong cash balance with A$13,566,123 on hand at the end of the period.
The impairment loss of A$96,015,663 for the year includes a write down of A$86,367,475 on Deferred Evaluation and Exploration Assets. The Company has taken a conservative approach to the evaluation of its Deferred Evaluation and Exploration Assets and hence has taken a significant write down to this asset. The impairment loss includes an amount of
Note 1: i. Ravensthorpe (BHPB) 45kt/a (Commissioned but now on care and maintenance) ii. Goro (Vale) 65kt/a (Commissioning but not yet producing) iii. Ambatovy (Sherritt) 60kt/a (construction recommenced, commissioning in late 2010) iv. Ramu (MCC) 35kt/a (commissioning to start in early 2010) Income Statement for the year ended 30 June 2009 Notes Consolidated Parent June 09 June 08 June 09 June 08 ($A) ($A) ($A) ($A) Interest Income 5(b) 1,369,181 2,303,943 1,119,326 2,125,229 Foreign Exchange Gain 5(a) 3,466,424 - 3,466,424 - ---------------------------------------------------- REVENUES FROM CONTINUING OPERATIONS 4,835,605 2,303,943 4,585,750 2,125,229 ---------------------------------------------------- Impairment Loss 10/11/12/14 96,015,663 2,114,981 82,604,027 1,423,082 Evaluation Costs 1,696,911 613,865 872,161 535,935 China Representative 187,788 228,588 178,592 228,588 Foreign Exchange Loss 5(a) 4,346 1,724,535 - 1,713,049 Directors' Fees/ Remuneration 19 665,389 789,409 665,389 789,049 Directors' Option Expense 20(a) 52,583 24,101 52,583 24,101 Brokers' Option Expense 20(a) 42,350 14,083 42,350 14,083 Professional Fees 1,668,934 1,207,513 1,362,468 888,019 Travel and Accommodation 398,830 459,662 231,556 397,059 Wages and On-costs 5(d) 974,640 1,190,582 816,482 928,806 Office Rental 5(c) 434,846 365,524 340,552 306,976 Public Relations and Ongoing Listing Fees 398,467 368,574 398,467 368,574 IT and Communication 201,530 182,551 149,619 142,432 Marketing 18,231 60,595 7,965 31,820 Depreciation 5(a) 167,172 134,620 146,179 112,952 Other 5(e) 421,155 482,442 281,731 380,458 ---------------------------------------------------- EXPENSES 103,348,835 9,961,625 88,150,121 8,284,983 ---------------------------------------------------- ---------------------------------------------------- PROFIT/(LOSS) BEFORE INCOME TAX EXPENSE (98,513,230) (7,657,682) (83,564,371) (6,159,754) ---------------------------------------------------- ---------------------------------------------------- INCOME TAX (EXPENSE)/ BENEFIT 6 2,429,251 (1,274,440) (6,249,260) (1,228,001) ---------------------------------------------------- ---------------------------------------------------- PROFIT/(LOSS) AFTER INCOME TAX EXPENSE (96,083,979) (8,932,122) (89,813,631) (7,387,755) ATTRIBUTABLE TO: Minority Interest - 36,889 - - Parent Interest (96,083,979) (8,969,011) - (7,387,755) ---------------------------------------------------- (96,083,979) (8,932,122) (89,813,631) (7,387,755) ---------------------------------------------------- EARNINGS PER SHARE Basic and Diluted Earnings (Loss) per Share (Cents per Share) 24 (150.00) (22.07) Balance Sheet as at 30 June 2009 Notes Consolidated Parent June 09 June 08 June 09 June 08 ($A) ($A) ($A) ($A) ---------------------------------------------------- CURRENT ASSETS Cash Assets 7 13,566,123 23,735,508 13,503,342 23,381,961 Trade and Other Receivables 8 194,815 286,213 115,566 192,818 Other Current Assets 9 898 9,231 - 3,900 ---------------------------------------------------- TOTAL CURRENT ASSETS 13,761,836 24,030,952 13,618,908 23,578,679 ---------------------------------------------------- NON CURRENT ASSETS Property Plant and Equipment 10 852,596 874,778 433,462 377,326 Investment in Subsidiaries 14 - - 7,807,908 32,525,085 Investment in Joint Venture 15 1,712 - 1,712 - Deferred Evaluation and Exploration Costs 11 18,222,910 111,984,745 - 1,387,021 Trade and Other Receivables 12 2,092,547 8,767,140 6,905,990 12,538,865 Deferred Tax Asset 6(d)(i) - - 5,068,136 10,617,537 ---------------------------------------------------- TOTAL NON CURRENT ASSETS 21,169,765 121,626,663 20,217,208 57,445,834 ---------------------------------------------------- TOTAL ASSETS 34,931,601 145,657,615 33,836,116 81,024,513 ---------------------------------------------------- ---------------------------------------------------- CURRENT LIABILITIES Trade and Other Payables 13 811,489 2,186,788 566,936 815,764 Provisions 16 136,265 130,614 108,427 92,131 ---------------------------------------------------- TOTAL CURRENT LIABILITIES 947,754 2,317,402 675,363 907,895 ---------------------------------------------------- NON CURRENT LIABILITIES Trade and Other Payables 17 725,690 812,109 71,314 100,820 Deferred Tax Liabilities 6(d)(ii) - 2,429,251 - - Provisions 16 132,096 196,426 17,236 19,877 ---------------------------------------------------- TOTAL NON CURRENT LIABILITIES 857,786 3,437,786 88,550 120,697 ---------------------------------------------------- TOTAL LIABILITIES 1,805,540 5,755,188 763,913 1,028,592 ---------------------------------------------------- ---------------------------------------------------- ---------------------------------------------------- NET ASSETS 33,126,061 139,902,427 33,072,203 79,995,921 ---------------------------------------------------- ---------------------------------------------------- EQUITY Contributed Equity 23 127,456,754 84,259,743 127,456,754 84,259,743 Reserves 23 13,522,927 36,012,711 2,198,100 2,505,198 Retained Earnings/ (Accumulated Losses) (107,874,620) (11,790,641) (96,582,651) (6,769,020) ---------------------------------------------------- Parent Interest 33,105,061 108,481,813 33,072,203 79,995,921 ---------------------------------------------------- Minority Interest 21,000 31,420,614 - - ---------------------------------------------------- TOTAL EQUITY 33,126,061 139,902,427 33,072,203 79,995,921 ---------------------------------------------------- ---------------------------------------------------- Cash Flow Statement for the year ended 30 June 2009 Notes Consolidated Parent June 09 June 08 June 09 June 08 ($A) ($A) ($A) ($A) ---------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Payments to Suppliers and Employees (8,328,342) (6,351,983) (5,447,031) (8,055,763) Payments for Exploration and Evaluation (3,146,455) (12,199,687) - - Interest Received 900,993 2,202,129 900,993 2,017,139 ---------------------------------------------------- NET CASH FLOWS FROM (USED) IN OPERATING ACTIVITIES 25 (10,573,804) (16,349,541) (4,546,038) (6,038,624) ---------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property plant and equipment (217,301) (416,589) (220,155) (386,234) Escrow money paid for the establishment of a joint venture - (5,318,688) - (5,318,688) Deposit for land purchase - (1,684,490) - - Advances to Joint Venture - - - - Increase (decrease) in other non current receivables - (1,086,733) 5,314,665 (179,988) Advanced to Subsidiaries and Joint Ventures (1,730,598) - (12,779,409) (12,855,573) ---------------------------------------------------- NET CASH FLOWS (USED) FROM INVESTING ACTIVITIES (1,947,899) (8,506,500) (7,684,899) (18,740,483) ---------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from Issue of Ordinary Shares and Warrants - 12,249,479 - 12,249,479 Proceeds from Issue of Converting Shares - 42,000 - - ---------------------------------------------------- NET CASH FLOWS FROM (USED) FINANCING ACTIVITIES - 12,291,479 - 12,249,479 ---------------------------------------------------- Net Increase/(Decrease) in Cash Held (12,521,703) (12,564,562) (12,230,937) (12,529,629) Net Foreign Exchange Differences 2,352,318 (1,263,660) 2,352,318 (1,252,174) Opening Cash Brought Forward 23,735,508 37,563,730 23,381,961 37,163,764 ---------------------------------------------------- CLOSING CASH CARRIED FORWARD 13,566,123 23,735,508 13,503,342 23,381,961 ---------------------------------------------------- ---------------------------------------------------- Statement of Changes in Equity - for the year ended 30 June 2009 ------------------------------------------------------------------------- Issued Special Accumulated Consolidated Notes capital Warrants Losses ------------------------------------------------------------------------- AS AT 1 JULY 2007 58,757,554 12,185,454 (2,821,630) --------------------------------------- Reserve Arising from deemed partial disposal of interest in subsidiary 23(g) - - Ordinary Shares Issued During the Year 23(d) 25,423,256 (23,554,042) - Special Warrants Issued During the Year 23(e) - 11,368,588 - Share Based Payment - Employees and Directors' Options 23(g) - - - Share Based Payment - Director 23(g) - - - Share Based Payment - Director 23(g) - - - Share Issue Costs (Tax Effected) 78,933 - - Translation Reserve - - - Minority Interest acquired in MNPL - - - Profit/(Loss) for the Year - - (8,969,011) --------------------------------------- AS AT 1 JULY 2008 84,259,743 - (11,790,641) --------------------------------------- --------------------------------------- Ordinary Shares Issued During the Year 23(d) 43,197,011 - - Minority Interest prior to Purchase - - - Share Based Payment - Employees and Directors' Options 23(g) - - - Share Based Payment - Director 23(g) - - - Translation Reserve 23(g) - - - Purchase of Egidia Pty Ltd 23(d) - - - Profit/Loss for the Year - - (96,083,979) --------------------------------------- --------------------------------------- AS AT 30 JUNE 2009 127,456,754 - (107,874,620) --------------------------------------- --------------------------------------- ------------------------------------------------------------------------- Other Minority Consolidated Notes Reserves Interest Total ------------------------------------------------------------------------- AS AT 1 JULY 2007 1,904,003 - 70,025,381 --------------------------------------- Reserve Arising from deemed partial disposal of interest in subsidiary 23(g) (9,696,433) - (9,696,433) Ordinary Shares Issued During the Year 23(d) - - 1,869,214 Special Warrants Issued During the Year 23(e) - - 11,368,588 Share Based Payment - Employees and Directors' Options 23(g) 202,493 - 202,493 Share Based Payment - Director 23(g) 43,290,591 - 43,290,591 Share Based Payment - Director 23(g) 398,702 - 398,702 Share Issue Costs (Tax Effected) - - 78,933 Translation Reserve (86,645) - (86,645) Minority Interest acquired in MNPL - 31,383,725 31,383,725 Profit/( Loss) for the Year - 36,889 (8,932,122) --------------------------------------- AS AT 1 JULY 2008 36,012,711 31,420,614 139,902,427 --------------------------------------- --------------------------------------- Ordinary Shares Issued During the Year 23(d) - - 43,197,011 Minority Interest prior to Purchase (58,049) (1,054) (59,103) Share Based Payment - Employees and Directors' Options 23(g) 91,603 - 91,603 Share Based Payment - Director 23(g) (10,698,879) - (10,698,879) Translation Reserve 23(g) (26,008) - (26,008) Purchase of Egidia Pty Ltd 23(d) (11,798,451) (31,398,560) (43,197,011) Profit/Loss for the Year - - (96,083,979) --------------------------------------- --------------------------------------- AS AT 30 JUNE 2009 13,522,927 21,000 33,126,061 --------------------------------------- --------------------------------------- ------------------------------------------------------------------------- Issued Special Accumulated Parent Notes capital Warrants Losses ------------------------------------------------------------------------- AS AT 1 JULY 2007 58,757,554 12,185,454 618,734 --------------------------------------- Ordinary Shares Issued During the Year 23(d) 25,423,256 (23,554,042) - Special Warrants Issued During the Year 23(e) - 11,368,588 - Share Based Payment - Employees and Directors' Options 23(g) - - - Share Based Payment - Director 23(g) - - - Tax Effect of Share Issue Cost 78,933 - - Profit/(Loss) for the Year - - (7,387,754) --------------------------------------- AS AT 1 JULY 2008 84,259,743 - (6,769,020) --------------------------------------- --------------------------------------- Ordinary Shares Issued During the Year 23(d) 43,197,011 - Special Warrants Issued During the Year 23(e) - - - Share Based Payment - Employees and Directors' Options 23(g) - - - Share Based Payment - Director 23(g) - - - Tax Effect of Share Issue Cost - - - Profit/(Loss) for the Year - - (89,813,631) --------------------------------------- --------------------------------------- AS AT 30 JUNE 2009 127,456,754 - (96,582,651) --------------------------------------- --------------------------------------- ------------------------------------------------------------ Other Parent Notes Reserves Total ------------------------------------------------------------ AS AT 1 JULY 2007 1,904,003 73,465,745 -------------------------- Ordinary Shares Issued During the Year 23(d) - 1,869,214 Special Warrants Issued During the Year 23(e) - 11,368,588 Share Based Payment - Employees and Directors' Options 23(g) 202,493 202,493 Share Based Payment - Director 23(g) 398,702 398,702 Tax Effect of Share Issue Cost - 78,933 Profit/(Loss) for the Year - (7,387,754) -------------------------- AS AT 1 JULY 2008 2,505,198 79,995,921 -------------------------- -------------------------- Ordinary Shares Issued During the Year 23(d) - 43,197,011 Special Warrants Issued During the Year 23(e) - - Share Based Payment - Employees and Directors' Options 23(g) 91,603 91,603 Share Based Payment - Director 23(g) (398,701) (398,701) Tax Effect of Share Issue Cost - - Profit/(Loss) for the Year - (89,813,631) -------------------------- -------------------------- AS AT 30 JUNE 2009 2,198,100 33,072,203 -------------------------- -------------------------- Notes to the Financial Statements (Extracts) for the year ended 30 June 2009 NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Basis of Preparation The financial statements are general purpose financial statements, which have been prepared in accordance with the requirements of the Corporation Act 2001 and Australian Accounting Standards. The financial statements have been prepared in accordance with the historical cost convention, which have been measured at fair value. The financial statements are presented in Australian dollars. The accounts have been prepared using the going concern assumption. This assumes that the Group will be able to settle all debts as and when they fall due in the ordinary course of business. Management and the directors monitor the forecast cash flows to ensure that sufficient funds exists to cover overheads, retain title to mineral properties and to progress the project. (b) Statement of Compliance The financial report complies with Australian Accounting Standards as issued by the Australian Accounting Standards Board and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board. NOTE 10. PROPERTY PLANT AND EQUIPMENT Consolidated Parent Year Ended Plant and Land and Plant and 30 June 2009 Equipment Improvements Total Equipment Total ($A) ($A) ($A) ($A) ($A) ------------------------------------------------------- As at 1 July 2008 Net carrying amount 511,227 363,551 874,778 377,326 377,326 Additions 226,535 - 226,535 217,363 217,363 Disposals (6,379) - (6,379) - - Depreciation charge for the year - Operations (167,172) - (167,172) (146,179) (146,179) Depreciation charge for the year - Evaluation (24,916) (9,000) (33,916) (15,048) (15,048) Impairment (41,250) (41,250) ------------------------------------------------------- As at 30 June 2009 Net carrying amount 539,295 313,301 852,596 433,462 433,462 ------------------------------------------------------- ------------------------------------------------------- As at 30 June 2009 Cost 957,570 376,250 1,333,820 782,244 782,244 Accumulated Depreciation (418,275) (21,699) (439,974) (348,782) (348,782) Impairment (41,250) (41,250) ------------------------------------------------------- As at 30 June 2009 Net Carrying Amount 539,295 313,301 852,596 433,462 433,462 ------------------------------------------------------- ------------------------------------------------------- As at 30 June 2008 Cost 737,189 376,250 1,113,439 564,881 564,881 Accumulated Depreciation (225,962) (12,699) (238,661) (187,555) (187,555) ------------------------------------------------------- As at 30 June 2008 Net Carrying Amount 511,227 363,551 874,778 377,326 377,326 ------------------------------------------------------- ------------------------------------------------------- Year Ended Plant and Land and Plant and 30 June 2008 Equipment Improvements Total Equipment Total ($A) ($A) ($A) ($A) ($A) ------------------------------------------------------- As at 1 July 2007 Net carrying amount 220,233 372,576 592,809 104,044 104,044 Additions 458,407 - 458,407 386,234 386,234 Disposals (26,722) - (26,722) - - Depreciation charge for the year - Operations (134,620) - (134,620) (112,952) (112,952) Depreciation charge for the year - Evaluation (6,071) (9,025) (15,096) - - ------------------------------------------------------- As at 30 June 2008 Net carrying amount 511,227 363,551 874,778 377,326 377,326 ------------------------------------------------------- ------------------------------------------------------- Consolidated Parent June 09 June 08 June 09 June 08 ($A) ($A) ($A) ($A) ----------------------------------------------------- NOTE 11. DEFERRED EVALUATION AND EXPLORATION Opening balance 111,984,745 35,562,039 1,387,021 1,423,082 Foreign Currency Translation 127,053 - - - Additions 3,177,466 12,214,783 - - Share Based Payments (refer Note19(a)) - 66,322,904 - 1,387,021 Reversal of Share Based Payment (i) (10,698,879) - (398,702) - Impairment (ii) (86,367,475) (2,114,981) (988,319) (1,423,082) ----------------------------------------------------- 18,222,910 111,984,745 - 1,387,021 ----------------------------------------------------- ----------------------------------------------------- Exploration and Evaluation expenditure incurred by the Group is accumulated for each area of interest. This expenditure is carried at cost and is comprised of direct costs and an appropriate directly attributable portion of related salary and contractor costs and overhead costs. When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area on a production output basis. The amount will be recovered through successful development or sale. i. Share Based Payments associated with progressing the evaluation of the Marlborough Nickel Project: ------------------------------------------------------------------ On 7 December 2007, MNPL entered into Share Subscription Agreements with Dasines Pty Ltd. An amendment to the milestones in the Dasines Share subscription agreement was approved on 14 August 2008. Under the subscription agreements, shares issued to Dasines would convert to ordinary shares in MNPL on the achievement of certain milestones. The milestones were: 1. Execution of a binding agreement for the turnkey construction of the Gladstone Nickel Project; and 2. Execution of a binding agreement for the financing of or assistance with the financing of the Gladstone Nickel Project or 3. The Company entering a Scheme of Arrangement with Resource Developments International Limited ("RDI"). The Scheme of Arrangement with RDI was not completed by 31 March 2009, and Milestone 3 was not achieved. The Memorandum of Understanding ("MOU") with MCC lapsed on 30 June 2009. As a result, it is not probable that Milestone 1 and 2 will be achieved. Based on this, the portion of the Dasines Share based payment previously capitalised to Deferred Evaluation and Exploration has been reversed. ii. Impairment: Exploration and Evaluation expenditure incurred by the Group is accumulated for each area of interest. This expenditure is carried at cost and is comprised of direct costs and an appropriate directly attributable portion of related salary and contractor costs and overhead costs. When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area on a production output basis. The amount will be recovered through successful development or sale. The Group determines whether Deferred Evaluation and Exploration Costs are impaired at least on a bi-annual basis. In assessing whether impairment is required to the carrying value of an asset, its carrying value is compared with its recoverable amount. The recoverable amount is the higher of the asset's fair value less costs to sell and value in use. Given the nature of the groups activities, the fair value less costs to sell' approach has been used in assessing the impairment charges. The triggers for the impairment test were the significant fall in the price of nickel, the closing of major nickel operations and write down of associated carrying values, proposed RDI listing not proceeding and the MOU with MCC lapsing as at 30 June 2009. Total impairment charges of $86,367,475 have been recognised in respect of the Deferred Evaluation and Exploration asset. The Impairment charge includes the full impairment of the Deferred Evaluation and Exploration asset associated with the Ouinne SAS Joint Venture. As part of the Joint venture agreement, GPNL was to provide financing for the GNP. As the current Dasines agreement for funding of the GNP is not proceeding, the Group has assessed that an impairment trigger exists in relation to the assessment of the recoverable amount of the Deferred Evaluation and Exploration asset associated with the JV. The recoverable amount of the Deferred Exploration and Evaluation asset was based on the groups estimate of fair value less costs to sell, consistent with recent transactions of nickel projects having regard to the recoverable amounts work undertaken in relation to engineering, environmental and metallurgical activities. Consolidated Parent June 09 June 08 June 09 June 08 ($A) ($A) ($A) ($A) ----------------------------------------------------- NOTE 12. TRADE AND OTHER RECEIVABLES (NON-CURRENT) ----------------------------------------------------- Amounts Receivable from Subsidiaries (a) (Refer Note 19) - - 12,724,579 7,040,189 Impairment of Receivables from Subsidiaries (b) - - (6,012,603) - Security Deposits - Bank Guarantees 352,807 1,215,787 194,014 179,988 Amounts in Escrow - 5,318,688 - 5,318,688 Amounts receivable from Joint Venture parties (c) 7,688,918 - 7,688,918 - Impairment of Receivables from JV parties (e) (7,688,918) - (7,688,918) - Amounts receivable from Joint Venture Parties (d) 1,918,020 482,991 - - Impairment of Receivables from JV parties (e) (1,918,020) - - - Others 55,250 65,184 - - Deposits - Land (Note 18 (g)) 1,684,490 1,684,490 - - ----------------------------------------------------- 2,092,547 8,767,140 6,905,990 12,538,865 ----------------------------------------------------- ----------------------------------------------------- (a) This amount is unsecured, interest free and repayable on demand. (b) The loan balances arise from the transfer of cash and exploration and evaluation expenditure incurred by GPNL on behalf of the MNPL, GNPP and GNC in relation to their exploration assets. The subsidiaries major assets are deferred exploration expenditure leaving them unable to repay in full their loans to GPNL until production commences or the asset is sold. The Exploration and Evaluation assets have been impaired and are written down to their recoverable value. The Group has assessed that an impairment trigger exists in relation to GPNL'S loan receivables with its Subsidiaries and these amounts have been impaired to the amount recoverable by the parent as at 30 June 2009. (c) This amount forms part of the arrangements to earn an interest in the JV in New Caledonia. (refer also Note 18(e)). (d) This amount is interest bearing and represents advances made for the payment of exploration and evaluation activities in New Caledonia. The loans will be repaid by way of reduction in the Groups' purchase price of materials from the entity. (e) As part of the Joint venture agreement, with SMGM, GPNL was to provide financing for the GNP. As the current agreement for funding of the GNP is not proceeding, the group has assessed that all receivables from Ouinné SAS are subject to impairment. The recoverable amount of the receivable has been assessed as zero. An impairment expense has been included in the income statement. NOTE 14. INVESTMENTS IN SUBSIDIARIES Consolidated Parent June 09 June 08 June 09 June 08 ($A) ($A) ($A) ($A) ----------------------------------------------------- Investments in Subsidiaries Marlborough Nickel Pty Ltd (a) - - 32,452,079 32,452,079 Gladstone Nickel Pipeline Pty Ltd - - 1 1 Gladstone Nickel Project Pty Ltd - - 1 1 Gladstone New Caledonia SAS - - 71,145 71,145 Gladstone Solomon Islands Pty Ltd - - 1,859 1,859 Egidia Pty Ltd - - 43,197,011 - Impairment Provision - - (67,914,188) - ----------------------------------------------------- - - 7,807,908 32,525,085 ----------------------------------------------------- ----------------------------------------------------- Equity Interests are listed in Note 19 The subsidiaries major assets are deferred exploration expenditure leaving them unable to repay their loans to GPNL until production commences or the asset is sold The Exploration and Evaluation assets have been impaired and are written down to their recoverable value. The Group has assessed that an impairment trigger exists in relation to the carrying amount of the parent's investment in Subsidiaries. As a result, the recoverable amount of the Investments in Subsidiaries has been assessed as the amount recoverable by the parent and impairment charge of $67,914,188 has been included in the income statement. NOTE 24. EARNINGS PER SHARE Consolidated June 09 June 08 ($A) ($A) -------------------------- Net Profit (Loss) (96,083,979) (8,969,011) Earnings used in Calculation of Basic and Diluted Earnings per Share (96,083,979) (8,969,011) Weighted Average Number of Ordinary Shares on Issue Used in the Calculation of Basic Earnings per Share 63,970,835 40,517,126 Basic Earnings per Share (1.50) (0.22) Options on issue are not considered dilutive. NOTE 25. CASH FLOW STATEMENT RECONCILIATION Consolidated Parent June 09 June 08 June 09 June 08 ($A) ($A) ($A) ($A) ----------------------------------------------------- a) Reconciliation of operating profit/(loss) after tax to the net cash flows from operations Operating Profit/(Loss) After Tax (96,083,979) (8,932,122) (89,813,631) (7,387,754) Adjusted for: Interest (218,333) (218,333) Provision for Employee Entitlements 10,618 32,269 24,921 6,617 Gain on Foreign Exchange (3,462,078) 1,263,660 (3,466,424) 1,252,174 Impairment Loss 96,015,663 2,114,981 82,604,027 1,423,082 Depreciation - Charged to Operations 167,172 134,620 146,179 112,952 Depreciation - Charged to Evaluation 15,096 33,916 - Movement in Shares Based Payments and other reserves. (6,491) 49,118 91,604 49,118 Changes in Assets and Liabilities: (Increase)/Decrease in Receivables 91,398 444,499 93,149 176,731 (Increase)/Decrease in Deferred Evaluation Costs (3,146,455) (12,289,066) (26,025) - (Increase)/Decrease in Prepayments and other Assets 8,333 24,132 - (Increase)/Decrease in Deferred Tax Asset/ Liability (2,429,253) 1,274,440 6,249,260 (1,977,264) Increase/(Decrease) in Payables (1,369,655) (542,175) (248,829) 185,021 Increase/(Decrease) in Non-Current Payables (86,414) 41,130 (13,212) 100,822 Increase/(Decrease) in Non-Current Provisions (64,330) 19,877 (2,640) 19,877 ----------------------------------------------------- Net Cash Flow Used from Operating Activities (10,573,804) (16,349,541) (4,546,038) (6,038,624) ----------------------------------------------------- ----------------------------------------------------- Reconciliation of Cash: Cash Balance Comprises Cash at Bank and on Short Term Deposit 13,566,123 23,735,508 13,503,342 23,381,961 ----------------------------------------------------- Closing Cash Balance 13,566,123 23,735,508 13,503,342 23,381,961 ----------------------------------------------------- ----------------------------------------------------- b) Non cash financing and investments activities Share Based Payments (note 21) - 66,322,904 - 1,387,022 Ordinary Shares Issued as per (note 19) 43,197,011 43,197,011 - Reversal of Share Based Payments (10,698,879) - (10,698,879) - Conversion of Special Warrants to Ordinary Shares (note 22 (e)) - 12,185,454 - 12,185,454 Conversion of Subsidiary Debt in parent to Equity (note 14) - - - 32,452,079 NOTE 26. EVENTS AFTER BALANCE DATE (a) Extension of Memorandum of Understanding with MCC. GPNL and MCC have not extended the expiry dates of the exclusivity period of the MOU from 30 June 2009. The MOU announced on 30 January 2008 provided MCC with an exclusive right to negotiate and finalise financing and construction agreements for the GNP.
For further information: or comment: James Henderson, Chairman - Gladstone Pacific Nickel, Tel: +61 (0) 2 9252 8466; Fiona Owen, Robert Beenstock - Grant Thornton UK LLP, Tel: +44 207 383 5100; John Prior - Arbuthnot Securities, Tel: +44 207 012 2000; Email: [email protected]
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