Gladstone Pacific Nickel Ltd. - ACN 104 261 887 - Final Results for the year
ended 30 June 2009

LONDON, Oct. 6 /CNW/ - Gladstone Pacific Nickel Limited ("GPNL" or "the Company") is pleased to report its 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 June 2008 it was down to US$25,000/t (from an unsustainable high of US$54,000/t in May 2007), and then it fell dramatically to US$9,400/t in the early part of 2009. However the nickel price has exhibited a certain amount of "stability" since that slump, reflecting the fact that plunging demand has been offset by a constant stream of production cut announcements.

A significant problem for nickel still remains in that there is substantial stock sitting on the London Metal Exchange ("LME"), increasing by over 30,000 tonnes in the first half of 2009 to 109,242 tonnes (at June 2009) which is just over a month's demand, despite the industry operating at a low rate of utilisation (around 75%). There is the potential for excess supply in the nickel market with four High Pressure Acid Leach Plants (please refer to Note 1) ("HPAL") now at an advanced stage of readiness and also a number of other new ferro-plants such as Posco Gwangyang (Korea) and Xstrata Koniambo (New Caledonia) at various stages of development.

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 Coral Bay projects, we need to see the four HPAL plants (mentioned above) up and running so the technology can mature and be optimised to achieve the low operating costs forecast at design.

    
    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 14 August 2008 to provide an opportunity for shareholders to approve the Scheme Implementation Agreement with Resource Development International Limited ("RDI") and the subsequent agreements between GPNL and companies related to Professor Clive Palmer. Unfortunately the GFC and its impact on capital markets resulted in the RDI merger proposal not proceeding.

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 Professor Clive Palmer.

Over 8,500 m of diamond drilling has now been completed at Ouinné in New Caledonia and the estimated ore resource is now over 40M dmt. The additional mineralised areas (adjacent to the Ouinné Joint Venture) have increased the potential target resource to 70M dmt at 1.35% nickel. GPNL has developed a strong and lasting business relationship with our partners Société Minière Georges Montagnat ("SMGM") and other participants in the nickel industry in New Caledonia which will provide a solid platform for growth in nickel resources.

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.

China Metallurgical Group Corp ("MCC") extended the Memorandum of Understanding ("MOU") for engineering and funding of the GNP out until June 2009. The extended timeframe for the Ramu Project construction, uncertainty from the GFC and requirement to commit construction funds to more diverse industries has now resulted in the MOU lapsing. We have maintained a very close relationship with MCC and we will resume discussions when the nickel price is sustained at higher levels and their Ramu Project construction in Papua New Guinea is complete.

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 New Caledonia as their continued support is essential for our Project. We also thank the Traditional Owners at Marlborough for working with us over the year to resolve indigenous land use issues.

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 John Downie who has lead the Company, as Managing Director, for over two years and delivered significant shareholder value. The Board accepted the resignation of Mr Downie whose last day was 11 September 2009. The Board is currently seeking a replacement for Mr Downie and will advise shareholders on the outcome in due course.

    
    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 New Caledonia during the year of A$1,696,911 (2008:A$613,865 ). Expenditure for the year was reduced with exchange gains of A$3,466,424 (2008: exchange loss of A$1,724,535) and interest income of A$1,369,181 (2008: A$2,303,943).

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 $55,624,025 being the previously capitalised non cash share based payment. The carrying value of the asset at 30 June 2009 after impairment write-down is $18,222,910 and reflects the fair market value of the tenements based on the contained nickel laterite resources. This value does not incorporate the value of the extensive feasibility studies, environmental impact studies and development approvals which have been undertaken to facilitate project financing and development. This approach has been adopted as a result of the deflated outlook for commodities extending from the GFC and the lapsing of the MOU with MCC.

    
    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.
    

SOURCE Gladstone Pacific Nickel Ltd.

For further information: 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: info@gladstonepacific.com.au

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