Gladstone Pacific Nickel Limited (ACN 104 261 887) - Preliminary results for the year ended 30 June 2007



    CHAIRMAN'S STATEMENT and CHIEF EXECUTIVE OFFICER'S REVIEW
    ---------------------------------------------------------

    TORONTO, Oct. 9 /CNW/ - The past year was a significant one for the
Gladstone Pacific Nickel Ltd ("GPNL") Project. A number of critical milestones
have been completed and agreements concluded to secure substantial additional
offshore ore supplies. As such the project is now poised for the next
implementation phase. The achievement of these goals is the result of a
dedicated team of personnel and consultants led by the new CEO, John Downie,
who has achieved an enormous amount since he started early this year.
    During the year the nickel market price continued to rise to
unprecedented highs (+US$24/lb). Major socio-economic development taking place
in the significant economies of China and India, as well as the increasing
investment in infrastructure in countries such as Russia, Eastern Europe,
South Africa, Brazil and Indonesia will help to provide a platform for the
growth in demand for metals. Supply shortages in the nickel business and
forecasts of continued increases in price and demand for the metal in both
traditional and new uses are driving the industry pipeline for major capital
expansion.
    Our strategy is unique, creating value from our own Marlborough ore
deposits as well as ore from second tier deposits in the various Islands in
the Pacific. These ore bodies would otherwise be too small to justify a
standalone processing plant in their own right, for the benefit of the owners,
communities, governments and international nickel markets. With our refinery
located in the Queensland Government's designated regional industrial zone at
the Gladstone deep water port, the Project will be able to import ores,
process them into high-grade metal product and dispose of process residues in
an environmentally-safe storage facility. This approach offers those Pacific
Island nations a long-term, low impact environmental solution and significant
incremental social benefits. Additionally, pre-approved Australian
environmental permits will provide GPNL shareholders with a shortened delivery
time to nickel metal revenue and a repeatable model for growth.
    Significant progress was also made this past year in the areas of
handling and processing of ore. This is in preparation for the implementation
phase of the GPN project. Our thanks go to Gavin Becker, Project Manager, and
his energetic team in achieving the goals set in the timeframes allowed.

    Your company has continued to act responsibly in relation to
environmental, community and societal obligations.

    
    -  The Environmental Impact Statements (EIS) has completed the public
       display and review stages in relation to Stages 1 and 2 of the
       processing and refinery development and Supplementary EIS work is
       underway to reinforce and clarify aspects of our plans and ensure
       GPNL's responsible interaction with the Gladstone community;
    -  Relationships have been built, respected and managed with the
       traditional land owners of the site of the Marlborough resource. An
       Indigenous Land Use Agreement has been signed and registered by the
       National Native Title Tribunal;
    -  Gladstone Nouvelle Calédonie (GNC) has developed and communicated to
       the community our social commitments, focussing on opportunities
       relating to legacy and long term relationships
    -  A Village Awareness Management Program was undertaken and successfully
       completed in regard to our Solomon Island activities.
    

    The plant's location at Gladstone provides unique opportunities for
synergies with other adjacent major industrial facilities, including
co-disposal of acidic residues with alkaline red mud produced in the vicinity
and as such is a springboard for growth. Further expansion of Rio's Gladstone
Alumina refinery is well underway and other industry developments such as the
massive Santos coal seam gas conversion plant are proposed for the area. The
size and scale of Stage 1 of the GPNL Project is consistent with the technical
and economic scale currently in favour within the industry.
    The estimated capital cost of the Project, whilst having increased,
benchmarks well against similar projects in the industry. The capital cost is
readily supported by a better understanding of the value of the business given
high quality ore supplies and an improved long term view of the nickel price.
The Project offers sufficient cash flow to support an optimized financing
structure and excellent returns at manageable risk to shareholders and equity
partners. There is great upside potential as the market for lower grade
laterites develops and adequate quantities of suitable materials are
identified to support two- or four-fold expansion of the Gladstone refinery
complex.
    The recruitment of senior staff has been challenging at a time of
unprecedented resource industry developments. We are pleased to announce that
key members have been recruited, providing an experienced and enthusiastic
management team well prepared for the next implementation phase of the
project.
    2007 has been a year of intense activity and rapid change and the outlook
for 2008 is a continuation of this trend. GPNL has achieved all its immediate
milestones and has developed a business plan which positions the Company to
meet its objectives.

    This coming year the Company and the Board will actively oversee the
following activities:

    
    -  Finalisation of the Integrated Definitive Feasibility Study IDFS
       towards the end of 2007;
    -  Continuing the pursuit of further limonitic high grade nickel ore
       resources to further enhance the already substantial resource base;
    -  Conversion of existing resources to JORC reserves and further
       exploration drilling on existing tenements;
    -  Assessment of the identified processing and refining options to
       achieve best shareholder outcome;
    -  Appointment of suitable international advisors to assist the Company
       in developing an equity and financing package.
    -  Timetable and budget, including confirmation of project scope,
       development engineering and commitments for long lead time items
    -  Commencement of the equity raising in 2008.
    

    Our challenge will be to manage the rising capital cost resulting from
the high escalation, increasing contractor profit margins and increased
pricing of risk being experienced on all major projects. Value engineering
will continue as we progress through the detailed engineering phase of the
project. The Stage 1 plant has been designed to be flexible and able to suit a
range of potential partner expectations.
    It is satisfying being able to witness over the year this significant
undertaking as the GPN Project emerges as planned, with the various goals
achieved, obstacles overcome and timetables met. We take this opportunity to
offer sincerest thanks to the personnel and consultants of GPNL for their
untiring efforts this past year; to thank the Board for its dedication and
focus, and to thank you our shareholders for your continued support. We look
forward to an equally successful 2008 as we now move to transforming GPNL into
a producer and exporter of Nickel metal from the Gladstone site.

    
    Robert Pearce                     John Downie
    Chairman                          Chief Executive Officer
    9 October 2007



    Income Statement for the year ended 30 June 2007

                       Notes     Consolidated                  Parent
                              Jun-07       Jun-06       Jun-07       Jun-06
                               ($A)         ($A)         ($A)         ($A)
                      -------------------------------------------------------

    Interest Income           896,699    1,211,738      878,254    1,187,498
    Foreign Exchange
     Gain                           -        4,736            -        4,736
    Other                       2,768            -        2,768            -
                           --------------------------------------------------
    REVENUES FROM
     CONTINUING
     OPERATIONS               899,467    1,216,474      881,022    1,192,234
                           --------------------------------------------------

    OTHER INCOME
                           --------------------------------------------------
    Profit on Sale of
     Investments                    -    4,558,806            -    4,558,806
                           --------------------------------------------------

    Evaluation Costs          433,063      253,022      311,758      253,022
    Foreign Exchange Loss     300,809            -      284,165            -
    Directors' Fees/
     Remuneration             649,038      344,012      649,038      344,012
    Directors' Option
     Expense                  353,200      127,400      353,200      127,400
    Professional Fees         149,845      174,555      141,457      173,855
    Travel and
     Accommodation            229,477      170,624      224,728      170,624
    Wages and Oncosts         442,888      235,928      438,823      235,928
    Office Rental             136,151       84,038      128,039       84,038
    Public relations and
     Ongoing listing fees     227,056      218,622      227,056      218,622
    Depreciation               54,656       35,035       51,217       30,535
    Other                     400,391      248,208      391,010      238,976
                           --------------------------------------------------
    EXPENSES                3,376,574    1,891,444    3,200,491    1,877,012
                           --------------------------------------------------

                           --------------------------------------------------
    PROFIT/(LOSS) BEFORE
     INCOME TAX EXPENSE    (2,477,107)   3,883,836   (2,319,469)   3,874,028
                           --------------------------------------------------
                           --------------------------------------------------

                           --------------------------------------------------
    INCOME TAX (EXPENSE)/
     BENEFIT                   (5,673)  (1,248,676)     483,869   (1,201,644)
                           --------------------------------------------------

                           --------------------------------------------------
    PROFIT/(LOSS) AFTER
     INCOME TAX EXPENSE     (2,482,780)  2,635,160   (1,835,600)   2,672,384
                           --------------------------------------------------
                           --------------------------------------------------


    EARNINGS PER SHARE
     (CENTS PER SHARE)
    Basic earnings
     (loss) per share
     (cents per share)  2        (8.13)       8.77
    Diluted earnings
     (loss) per share
     (cents per share)           (8.13)       8.77
                           --------------------------------------------------



    Balance Sheet for the year ended 30 June 2007

                                 Consolidated                  Parent
                              Jun-07       Jun-06       Jun-07       Jun-06
                               ($A)         ($A)         ($A)         ($A)
                        -----------------------------------------------------

    CURRENT ASSETS

    Cash assets            37,563,730   19,382,837   37,163,764   19,222,922
    Trade and other
     receivables              706,580      392,161      342,034      301,435
    Other current assets       33,363       18,878       31,415       18,878
                           --------------------------------------------------
    TOTAL CURRENT ASSETS   38,303,673   19,793,876   37,537,213   19,543,235
                           --------------------------------------------------

    NON CURRENT ASSETS

    Property plant and
     equipment                592,810      141,904      104,044      126,131
    Investment in
     subsidiaries                   -            -       73,016           10
    Deferred evaluation
     and exploration
     costs                 35,562,039   22,539,062    1,423,082            -
    Trade and other
     receivables              575,415      356,922   26,404,374   18,282,191
    Deferred tax asset              -            -    8,640,273    4,101,449
                           --------------------------------------------------
    TOTAL NON CURRENT
     ASSETS                36,730,264   23,037,888   36,644,789   22,509,781
                           --------------------------------------------------

    TOTAL ASSETS           75,033,937   42,831,764   74,182,002   42,053,016
                           --------------------------------------------------
                           --------------------------------------------------

    CURRENT LIABILITIES
    Trade and other
     payables               2,728,963    1,586,271      630,743    1,391,799
    Provisions                 98,345       63,628       85,514       46,476
                           --------------------------------------------------
    TOTAL CURRENT
     LIABILITIES            2,827,308    1,649,899      716,257    1,438,275
                           --------------------------------------------------

    NON CURRENT LIABILITIES
    Trade and other
     payables                 770,979      832,416            -            -
    Deferred tax
     liabilities            1,233,720    2,380,755            -            -
    Provisions                176,549      147,137            -            -
                           --------------------------------------------------
    TOTAL NON CURRENT
     LIABILITIES            2,181,248    3,360,308            -            -
                           --------------------------------------------------

    TOTAL LIABILITIES       5,008,556    5,010,207      716,257    1,438,275
                           --------------------------------------------------

    NET ASSETS             70,025,381   37,821,557   73,465,745   40,614,741
                           --------------------------------------------------
                           --------------------------------------------------

    EQUITY
    Contributed equity     70,943,008   37,942,416   70,943,008   37,942,416
    Reserves                1,904,003      217,991    1,904,003      217,991
    Retained earnings/
     (Accumulated losses)  (2,821,630)    (338,850)     618,734    2,454,334
                           --------------------------------------------------
    TOTAL EQUITY           70,025,381   37,821,557   73,465,745   40,614,741
                           --------------------------------------------------
                           --------------------------------------------------



    Cash Flow Statement for the year ended 30 June 2007

                       Notes     Consolidated                  Parent
                              Jun-07       Jun-06       Jun-07       Jun-06
                               ($A)         ($A)         ($A)         ($A)
                      -------------------------------------------------------

    CASH FLOWS FROM
     OPERATING
     ACTIVITIES
    Receipts from
     customers                      -            -            -            -
    Payments to
     suppliers and
     employees             (1,879,498)  (1,994,730)  (1,223,240)  (1,012,962)
    Payments for
     exploration and
     evaluation           (11,880,288) (12,335,168)  (2,184,145)           -
    Interest received         913,547    1,259,652      911,061    1,203,455
                           --------------------------------------------------
    NET CASH FLOWS
     FROM (USED) IN
     OPERATING
     ACTIVITIES        3  (12,846,239) (13,070,246)  (2,496,324)     190,493
                           --------------------------------------------------

    CASH FLOWS FROM
     INVESTING
     ACTIVITIES
    Purchase of land/
     equipment               (519,948)     (87,468)     (29,130)     (85,642)
    Purchase of
     investment in
     subsidiaries                   -     (370,329)     (73,004)    (370,330)
    Sale of investments             -    5,717,687            -    5,717,687
                           --------------------------------------------------

    NET CASH FLOWS
     (USED) FROM
     INVESTING
     ACTIVITIES              (519,948)   5,259,890     (102,134)   5,261,715
                           --------------------------------------------------

    CASH FLOWS FROM
     FINANCING
     ACTIVITIES
    Proceeds from
     issue of
     ordinary shares
     and warrants          31,847,889            -   31,847,889            -
    Advances to
     subsidiaries                   -            -  (11,024,424) (13,348,106)
                           --------------------------------------------------
    NET CASH FLOWS
     FROM (USED)
     FINANCING
     ACTIVITIES            31,847,889            -   20,823,465  (13,348,106)
                           --------------------------------------------------

    Net increase/
     (decrease) in
     cash held             18,481,702   (7,810,356)  18,225,007   (7,895,898)
    Net foreign
     exchange
     differences             (300,809)           -     (284,165)           -
    Opening cash
     brought forward       19,382,837   27,193,193   19,222,922   27,118,820
                           --------------------------------------------------

    CLOSING CASH
     CARRIED FORWARD       37,563,730   19,382,837   37,163,764   19,222,922
                           --------------------------------------------------
                           --------------------------------------------------



    Statement of Changes in Equity for the year ended 30 June 2007

    Consolidated          Issued    Special   Retained      Other
                         Capital   Warrants   Earnings   Reserves      Total
    -------------------------------------------------------------------------

    As at 01/07/05    37,942,416          - (2,974,010)   200,708 35,169,114

    Net Gains on
     Available for
     Sale Investments          -          -          -   (200,708)  (200,708)

    Share based
     payment -
     employees and
     directors'
     options                   -          -          -    217,991    217,991

    Profit/(Loss)
     for year                  -          -  2,635,160          -  2,635,160

                     --------------------------------------------------------
    As at 1/7/06      37,942,416          -   (338,850)   217,991 37,821,557

    Ordinary shares
     issued during
     the year         20,100,232          -          -          - 20,100,232

    Special warrants
     issued during
     the year                  - 11,747,658          -          - 11,747,658

    Share based
     payment -
     employees and
     directors'
     options                   -          -          -    803,558    803,558

    Share based
     payment -
     broker options            -          -          -    882,454    882,454

    Share Issue Costs
     (tax effected)      714,906    437,796          -          -  1,152,702

    Profit/Loss for
     the year                  -          - (2,482,780)         - (2,482,780)

                     --------------------------------------------------------
    As at 30/6/07     58,757,554 12,185,454 (2,821,630) 1,904,003 70,025,381
                     --------------------------------------------------------
                     --------------------------------------------------------



    Notes to the Financial Statements for the year ended 30 June 2007

    1.  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
    Corporations Act 2001, and Australian Accounting Standards. The financial
    statements have been prepared in accordance with the historical cost
    convention, except for available for sale assets 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 exist to cover overheads, retain title to mineral
    properties and to progress the Integrated Definitive Feasibility Study.
    Where the results of the Integrated Definitive Feasibility Study (IDF)
    indicate the opportunity to advance the project, the directors will
    review the need for a further capital raising.

    (b) Statement of Compliance

    Except for the amendments to AASB 101 Presentation of Financial
    Statements and AASB 2007-4 Amendments to Australian Accounting Standards
    arising from ED 151 and Other Amendments, which the Group has early
    adopted, Australian Accounting Standards and Interpretations that have
    recently been issued or amended but are not yet effective have not been
    adopted by the Group for the annual reporting period ending 30 June 2007.

    2.  EARNINGS PER SHARE

                                         Consolidated             Parent
                                      Jun-07       Jun-06    Jun-07    Jun-06
                                       ($A)         ($A)      ($A)      ($A)
                                ---------------------------

        Net profit (loss)          (2,482,780)   2,635,160
        Earnings used in
         calculation of basic
         and diluted earnings
         per share                 (2,482,780)   2,635,160

        Weighted Average number
         of ordinary shares on
         issue used in the
         calculation of basic
         earnings per share        30,501,062   30,042,293
        Weighted Average number
         of ordinary shares on
         issue used in the
         calculation of diluted
         earnings per share        30,787,177   30,161,844
                                ---------------------------

                                ---------------------------
        Basic and Diluted
         earnings per share             (0.08)        0.09
                                ---------------------------
                                ---------------------------

    Options on issue are not considered dilutive.


    3.  RECONCILIATION OF OPERATING PROFIT/(LOSS) AFTER TAX TO THE NET CASH
        FLOWS FROM OPERATIONS

                                 Consolidated                  Parent
                              Jun-07       Jun-06       Jun-07       Jun-06
                               ($A)         ($A)         ($A)         ($A)
    -------------------------------------------------------------------------

    Operating profit/(loss)
     after tax             (2,482,780)   2,635,160   (1,835,600)   2,672,384

    Adjusted for

    Provision for employee
     entitlements              34,717       55,691       39,038       46,476
    Net profit on Available
     for Sale Assets                -   (4,558,806)           -   (4,558,806)
    Loss on Foreign Exchange  300,809            -      284,165            -
    Depreciation - charged
     to operations             54,656       35,035       51,217       30,535
    Interest expense                -            -            -            -
    Movement in share
     option reserve         1,686,012      217,991    1,686,012      217,991

    Changes in Assets
     and Liabilities

    (Increase)/decrease
     in receivables          (314,419)    (164,265)     (40,599)    (165,783)
    (Increase)/decrease in
     deferred evaluation
     costs                (13,022,977) (12,559,145)  (1,423,082)           -
    (Increase)/decrease
     in other assets          (14,489)    (246,835)     (12,532)      (9,913)
    (Increase)/decrease
     inter-company
     receivable                     -            -            -    3,699,220
    (Increase)/decrease in
     deferred tax asset/
     liability                  5,673    1,248,676     (483,869)  (2,497,595)
    (Increase)/decrease
     in non-current
     receivables             (218,493)     (19,937)           -            -
    Increase/(decrease)
     in payables            1,142,681      223,978     (761,074)     755,984
    Increase/(decrease) in
     non-current payables     (61,428)     (79,926)           -            -
    Increase/(decrease) in
     non-current provisions    29,412      142,137            -            -

                           --------------------------------------------------
    Net cash flow used
     from operating
     activities           (12,846,239) (13,070,246)  (2,496,324)     190,493
                           --------------------------------------------------
                           --------------------------------------------------

    Reconciliation of cash

    Cash balance comprises
     Cash at bank and on
     short term deposit    37,563,730   19,382,838   19,222,922   19,222,922
                           --------------------------------------------------
    Closing Cash Balance   37,563,730   19,382,837   19,222,922   19,222,922
                           --------------------------------------------------
                           --------------------------------------------------


    4.  A copy of the Annual Report for the year ended 30 June 2007 will be
        sent to shareholders in due course.
    




For further information:

For further information: John Downie, Chief Executive Officer -
Gladstone Pacific Nickel Ltd: Tel: +61 7 3211 8899; Christopher Caldwell/Joe
Lunn - Insinger de Beaufort: Tel: +44 207 190 7000; Simon Rothschild/Keith
Irons - Bankside Consultants: Tel: +44 207 367 8888

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Gladstone Pacific Nickel Ltd.

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