Gladstone Pacific Nickel Ltd. - Final Results for the year ended 30 June 2011

TORONTO, Oct. 25, 2011 - Gladstone Pacific Nickel Limited ("GPNL" or "the Company") is pleased to report its final results for the year ended 30 June 2011 Extracts of the financial report are set out below and a full copy will be available on the Company's website prior to the Company's Annual General Meeting.


Chairman's Review

During this year, while Gladstone Pacific Nickel Ltd ("GPNL") has not been able to progress the Gladstone Nickel Project ("GNP") as quickly as it would have wished. 2010/2011 saw a number of significant shareholder transactions and corporate developments.

- August 2010:

In August 2010, QNI Resources Pty Ltd ("QNI") (a wholly owned subsidiary of Mr Clive Palmer) made an unconditional cash offer of £0.14 per share for all the ordinary shares in GPNL it did not already own. QNI received 3,899,105 acceptances in respect to their takeover bid which closed on 25 October 2010. Following this purchase, Mr. Palmer and his related entities held 39,394,338 ordinary shares in the Company representing 55.53% of the ordinary shares in issue. QNI subsequently transferred its shareholding to Waratah Coal Pty Ltd ("Waratah") a wholly owned subsidiary of Mr Clive Palmer


- November 2010.

The Company was unable to appoint a replacement Nominated Advisor for the purposes of the AIM Rules for Companies. Pursuant to AIM Rule 1, the Company's AIM securities were cancelled from AIM on 24 November 2010


- June 2011.

In June 2011, Waratah made an unconditional cash offer of $A0.05 per share for all the ordinary shares in GPNL it did not already own. Waratah received 589,888 acceptances in respect to their takeover bid which closed on 1 August 2011 . Following this purchase, Mr. Palmer and his related entities held 39,984,226 ordinary shares in the Company representing 56.37% of the ordinary shares in issue. Waratah subsequently transferred its shareholding to Fairway Coal Pty Ltd ("Fairway) a wholly owned subsidiary of Mr Clive Palmer.


- August 2011.

On 12 August, the Company lodged a Prospectus with ASIC for a non-renounceable rights issue to existing Shareholders on the basis of 11 new shares for every 1 share held at an issue price of $0.08 per new share. The amount raised by the Issue, after deducting associated costs, was to be used by the Company to undertake a variety of activities, including funding ongoing operating and legal costs, a revised drilling program and tenement acquisition program and an updated feasibility study and to fund the Company's obligations under the then proposed variation of contracts to purchase land for the Project from the Queensland State Government. On 22 August, 2011 an application was made to the Takeovers Panel in Australia by a shareholder Robash Pty Ltd ("Robash") alleging that unacceptable circumstances had arisen in relation to the proposed issue. On 9 September, 2011 ,the company's major shareholder, Fairway ,advised GPNL they would not support the current capital raising .The prospectus was withdrawn on 9 September 2011. The Takeovers Panel declined to make a declaration of unacceptable circumstances in response to the application by Robash. The Board is reviewing the group's funding requirements with a view to a capital raising later in the year to be used to undertake a variety of activities as outlined in the prospectus.


- September 2011.

GPNL is party to legally binding agreements with the Queensland Government to acquire land at Gladstone for its refinery and residue storage facility for A$33 million subject to various approval and development conditions. In September 2011 the company concluded negotiations with the relevant agencies to revise the content and timing of the development conditions applicable to the land. The detailed changes to the land agreements are set out in the Directors Report. GPNL is able to proceed with the purchase of the land at any time, subject to the availability of funds. GPNL considers that the modification of the conditions as described above is advantageous for its timetable for the development of the Project


OTHER DEVELOPMENTS DURING THE YEAR

During the year, GPNL has continued to talk with our partners Société Minière Georges Montagnat ("SMGM") in New Caledonia. The agreement with SMGM is conditional upon GPNL securing funding for the GNP. The dates associated with funding are 30th December 2011, with GPNL having an option to extend this date to 30 December 2012, upon payment of US$1,000,000. Discussions between GPNL and SMGM have commenced in relation to the JV agreement, however an outcome has not yet been reached.

The Environmental Impact Statement (EIS) in relation to the Project approved by the Queensland State Government and the Commonwealth Government for construction and operation of Stages 1 and 2 of the Project remains current. The EIS continues to be a critical foundation in the development of the GNP.

The group has maintained its Marlborough resources and reserves during the period. . The group holds valid Mining Leases and Exploration Permits, along with associated Environmental Authorities and regional Registered Native Title agreements .The final necessary Indigenous Land User Agreement was registered 9 December 2009. Traditional owner relationships remain on a sound footing.

On 29 July 2011 Robash, filed an application in the Supreme Court of New South Wales seeking leave of the Court to bring proceedings in the name of GPNL against Clive Palmer and other companies controlled by him. GPNL has obtained legal advice about the claim by Robash. On the basis of that advice, the independent director of GPNL, Mr Martino, remains of the view that the claim by Robash is not supported. GPNL has instructed its solicitors to defend Robash's application. As at the date of this report, it is not possible to predict whether Robash will be granted leave to bring proceedings in GPNL's name.


FINANCIAL PERFORMANCE

The Company's net loss before income tax was A$2,438,154(2010: A$2,396,873) which includes an impairment loss reversal of A$1,105,003 (2009: A$ 1,825,204).

Based on movements in exchange rates affecting loan balances with the Ouinne Joint Venture , exchange losses of A$1,213,897(2010: A$345,608) were recorded.

Interest income for the period was of A$591,616 (2010: A$697,379).

Tenement Expenditure of A$912,966 (2010: A$1,305,504) reflects ongoing native title and tenement maintenance costs for the GNP. During 2010 additional salaries were incurred in relation to review of the Marlborough Heap leach program.

Professional Fees were A$470,237(2010: A$330,213) reflecting costs associated with undertaking various corporate transactions.

Wages and on costs were A$769,852 (2010: A$484,040). The increase during 2011 represents payments of contractual obligations for senior management.

The carrying value of the Deferred Evaluation and Exploration Expenditure asset at 30 June 2011 remains at $A20,048,114 (2010: A$20,048,114 )and reflects the historical cost of the asset after adjustment for impairment. 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 is consistent with the valuation methodology applied in 2010, having regard to the applicable accounting standards. The company, in assessing the Deferred Evaluation and Exploration Expenditure assetfor impairment, has taken into consideration the Independent Expert Report which was included in the GPNL Target Statement in response to Waratah's Takeover offer.

The Company continues to have a strong cash balance with A$7,176,758 (2009: $9,362,976) on hand at the end of the period.

The critical next step to move the project forward is to raise funds to continue the development of the GNP. The Board is reviewing the group's funding requirements and assessing options available for a capital raising. The funds raised will be used to undertake the variety of activities as outlined in the recent prospectus.

The Board would like to acknowledge the strong and continued support from all the stakeholders associated with the Gladstone Nickel Project .


Statementof Comprehensive Income
for the year ended 30 June 2011

  	  	Consolidated
  	Notes 	June 11
($A) 	June 10
($A)
Interest Income 	5(b) 	591,616 	697,379
Other Income 	5(b) 	7,700 	7,875
REVENUES FROM CONTINUING OPERATIONS 	  	599,316 	705,254
Impairment Reversal 	11/12 	(1,105,003) 	(1,825,204)
Tenement Expenses 	  	912,996 	1,305,504
Evaluation Costs 	  	20,978 	413,108
Foreign Exchange Loss 	5(a) 	1,213,897 	345,608
Directors' Fees / Remuneration 	18 	103,942 	571,030
Directors' Option Expense 	19(a) 	- 	81,065
Brokers' Option Expense 	19(a) 	28,611 	42,250
Professional Fees 	  	470,237 	330,213
Travel and  Accommodation 	  	31,370 	106,624
Wages and On-costs 	5(d) 	769,852 	484,040
Office Rental 	5 (c) 	103,549 	559,703
Public Relations and Listing Fees 	  	96,162 	135,313
IT and Communication 	  	68,835 	110,083
Depreciation 	5 (a) 	166,075 	173,729
Other 	5(e) 	155,969 	269,061
EXPENSES 	  	3,037,470 	3,102,127
  	  	  	 
PROFIT / (LOSS) BEFORE INCOME TAX EXPENSE 	  	(2,438,154) 	(2,396,873)
  	  	  	 
INCOME TAX (EXPENSE) / BENEFIT 	6 	66,470 	333,460
  	  	  	 
PROFIT / (LOSS) AFTER INCOME TAX EXPENSE 	  	(2,371,684) 	(2,063,413)
OTHER COMPREHENSIVE INCOME  	  	  	 
Foreign Currency  Translation 	  	20,340 	(17,048)
TOTAL  COMPREHENSIVE INCOME  	  	(2,351,344) 	(2,080,461)
EARNINGS PER SHARE 	  	  	 
Basic and Diluted Earnings (Loss) per Share (Cents per Share) 	24 	(3.65) 	(2.90)

Statement of Financial Position
as at 30 June 2011
Consolidated
Notes June 11
($A) June 10
($A)
CURRENT ASSETS
Cash Assets 7 7,176,758 9,362,976
Trade and Other Receivables 8 7,245 4,283
Other Current Assets 9 88,244 70,524
TOTAL CURRENT ASSETS 7,272,247 9,437,783
NON CURRENT ASSETS
Property Plant and Equipment 10 660,351 843,076
Investment in Joint Venture 14 1,712 1,712
Deferred Evaluation and Exploration Costs 11 20,048,114 20,048,114
Trade and Other Receivables 12 1,872,035 1,873,599
Deferred Tax Asset 6 (c) - -
TOTAL NON CURRENT ASSETS 22,582,212 22,766,501
TOTAL ASSETS 29,854,459 32,204,284

CURRENT LIABILITIES
Trade and Other Payables 13 370,379 238,535
Provisions 15 46,101 107,642
TOTAL CURRENT LIABILITIES 416,480 346,177
NON CURRENT LIABILITIES
Trade and Other Payables 16 565,437 621,457
Deferred Tax Liabilities 6 (c) - -
Provisions 15 116,756 114,860
TOTAL NON CURRENT LIABILITIES 682,193 736,317
TOTAL LIABILITIES 1,098,673 1,082,494

NET ASSETS 28,755,786 31,121,790

EQUITY
Contributed Equity 23 127,456,754 127,456,754
Reserves 23 (e) 13,608,749 13,582,069
Retained Earnings / (Accumulated Losses) (112,309,717) (109,938,033)
Parent Interest 28,755,786 31,100,790
Non-Controlling Interest - 21,000
TOTAL EQUITY 28,755,786 31,121,790


Cash Flow Statement
for the year ended 30 June 2011

Consolidated
Notes June 11
($A) June 10
($A)
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to Suppliers and Employees (2,747,264) (4,779,838)
Research and Development Rebate 66,470 333,460
Interest Received 560,668 494,107
NET CASH FLOWS FROM (USED) IN OPERATING ACTIVITIES 25 (2,120,126) (3,952,271)

CASH FLOWS FROM INVESTING ACTIVITIES
Sale (purchase) of property plant and equipment 16,650 (268,150)
Advances to Joint Venture (82,742) (176,560)
Increase (decrease) in other non-current receivables - 193,834
NET CASH FLOWS (USED) FROM INVESTING ACTIVITIES (66,092) (250,876)

Net Increase / (Decrease) in Cash Held (2,186,218) (4,203,147)
Net Foreign Exchange Differences - -
Opening Cash Brought Forward 9,362,976 13,566,123
CLOSING CASH CARRIED FORWARD 7 7,176,758 9,362,976


Statement of Changes in Equity
for the year ended 30 June 2011

Consolidated Notes Issued
Capital Accumulated
Losses Other
Reserves Non
Controlling
Interest Total
Equity
AS AT 1 JULY 2009 127,456,754 (107,874,620) 13,522,927 21,000 33,126,061

Profit (Loss ) for the period - (2,063,413) - - (2,063,413)

Other Comprehensive Income - - (17,048) - (17,048)

Share Based Payment - Employees and Directors' Options 23 (e) - - 76,190 - 76,190

AS AT 30 JUNE 2010 127,456,754 (109,938,033) 13,582,069 21,000 31,121,790

Profit (Loss) for the period - (2,371,684) - - (2,371,684)

Other Comprehensive Income 23 (e) - - (20,340) - (20,340)

Cancellation of Converting Shares - - - (21,000) (21,000)

Share Based Payment - Employees and Directors' Options 23 (e) - - 47,020 - 47,020

AS AT 30 JUNE 2011 127,456,754 (112,309,717) 13,608,749 - 28,755,786


Notes to the Financial Statements( extracts)
for the year ended 30 June 2011


1. CORPORATE INFORMATION

The financial report of Gladstone Pacific Nickel Limited for the year ended 30 June 2011 was authorisedfor issue in accordance with a resolution of the directors on 24 October 2011.

Gladstone Pacific Nickel Limited (the Parent) is a public unlisted company incorporated in Australia. The ultimate parent company ofGladstone Pacific Nickel Limited isFairway Coal Pty Ltd,which owns 56.4% of ordinary shares.

The nature of the operations and principal activities of the Group are described in the Directors' Report. The registered office of the Group is Level 2, 380 Queen Street, Brisbane, Queensland.


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. 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 also complies with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board.


24. EARNINGS PER SHARE

Consolidated
June 11
($A) June 10
($A)

Net Loss (2,371,684) (2,063,413)
Earnings used in Calculation of Basic / DilutedEarnings per Share (2,371,684) (2,063,413)

Weighted Average Number of Ordinary Shares on Issue Used in the Calculation of Basic / DilutedEarnings per Share 70,935,699 70,935,699

Basic / DilutedEarnings per Share (0.03) (0.03)

Options on issue are not considered dilutive.

25. CASH FLOW STATEMENT RECONCILIATION

Consolidated
June 11
($A) June 10
($A)

Operating Profit/(Loss) After Tax (2,371,684) (2,063,413)

Adjusted for :
Interest (35,686) (173,147)
Share based Payments 47,019 76,190
Provision for Employee Entitlements (48,470) 59,727
(Gain)/ Loss on Foreign Exchange 1,213,897 345,608
Impairment Loss Reversal (1,105,003) (1,825,204)
Depreciation- Charged to Operations 166,075 173,729
Loss on Disposal of Fixed Assets - 89,185
Movement in Shares Based Payments and other reserves. 390 81,706

Changes in Assets and Liabilities:
(Increase)/Decrease in Receivables 53,718 133,523
(Increase)/Decrease in Prepayments and other Assets 8,016 206,331
(Increase)/Decrease in Deferred Tax Asset/ Liability (66,470) (333,460)
Increase/(Decrease) in Payables 131,852 (601,577)
Increase/(Decrease) in Non-Current Payables (54,135) (104,233)
Increase/(Decrease) in Non-Current Provisions (59,645) (17,236)
Net Cash Flow Used from Operating Activities (2,120,126) (3,952,271)

Reconciliation of Cash:
Cash Balance Comprises
Cash at Bank and on Short Term Deposit 7,176,758 9,362,976
Closing Cash Balance 7,176,758 9,362,976


26. EVENTS AFTER BALANCE DATE

Non-renounceable rights Issue

On 12 August 2011, the Company lodged a prospectus with ASIC for a non-renounceable rights issue (the issue) to existing Shareholders on the basis of 11 new shares for every 1 share held at an issue price of $0.08 per new share. If all entitlements to participate in the Issue were taken up by Shareholders, the Issue would result in the issue of approximately 780 million New Shares and would raise approximately $62.4 million. The minimum amount to be raised was $25 million. The amount raised by the Issue, after deducting associated costs, was to be used by the Company to undertake a variety of activities, including funding ongoing operating and legal costs, a revised drilling program and tenement acquisition program and an updated feasibility study and to fund the Company's obligations under the then proposed variation of contracts to purchase land for the Project from the Queensland State Government.

On 22 August 2011 an application was made to the Takeovers Panel in Australia by a shareholder,Robash Pty Ltd,("Robash") alleging that unacceptable circumstances had arisen in relation to the proposed non- renounceable rights issue. Robash had also indicated that it would not support the proposed capital raising. GPNL undertook not to issue the prospectus before 19 September 2011 or thereafter without first giving the Panel and the parties 48 hours of its intention to do so.

On 9 September 2011 the company's major shareholder, Fairway Coal Pty Ltd and companies associated with Mr Clive Palmer advised GPNL they would not support the current capital raising. The prospectus was withdrawn on 9 September 2011. On 15 September 2011, the Takeovers Panel announced that it had declined to make a declaration of unacceptable circumstances in response to the application by Robash.

The Board is reviewing the group's funding requirements with a view to a capital raising later in the year to be used to undertake a variety of activities as outlined in the August 2011 prospectus.


Legal Proceedings by Robash Pty Ltd

On 29 July 2011 Robash, filed an application in the Supreme Court of New South Wales seeking leave of the Court to bring proceedings in the name of GPNL against Clive Palmer and other companies controlled by him. GPNL has obtained legal advice about the claim by Robash. On the basis of that advice, the independent director of GPNL, Mr Martino, remains of the view that the claim by Robash is not supported. GPNL has instructed its solicitors to defend Robash's application. As at the date of this report, it is not possible to predict whether Robash will be granted leave to bring proceedings in GPNL's name.


Land purchase agreements

GPNL is party to legally binding agreements with the Queensland Government to acquire land at Gladstone for its refinery and residue storage facility for A$33 million subject to various approval and development conditions. In September 2011 the company concluded negotiations with the relevant agencies to revise the content and timing of the development conditions applicable to the land. The changes are as follows:

(a) Conditions as to the Marlborough mine being commenced and ore transport and supply being contracted have been removed and replaced by a condition that GPNL demonstrate (by 30 June 2015 or such later date as the parties may agree) that it is committed to proceeding with the proposed development of the Project.

(b) GPNL will relinquish part of the area originally subject to agreement and will grant a licence to the adjoining landowner, Wiggins Island Coal Export Terminal Pty Ltd (WICET) to use parts of the land for lay down purposes, for extraction of landfill and to undertake defined works including the construction of bunds.

(c) The condition as to the Project being financed has been removed and replaced by a condition that GPNL raise sufficient funds (whether by way of equity capital, debt funding (or a blend of the two) to enable it to purchase the land.

(d) The provision for a sunset date for extension of the date for satisfaction of these conditions has been extended to 31 December 2016, however the contract provides that this date will not be extended beyond 31 December 2016 (except by agreement of the parties (acting reasonably) in exceptional circumstances, with a specific provision contemplating that this could occur if the time for completion of works by WICET has been extended.

GPNL is able to proceed with the purchase of the land at any time, subject to the availability of funds.


Gladstone Pacific Nickel Limited is an Australian mining development company presently undertaking an Integrated Definitive Feasibility Study for the Gladstone Nickel Project. The Company's vision is to build a major long-life nickel cobalt refinery at the deepwater Port of Gladstone, in Central Queensland, Australia, treating abundant high grade nickel laterite ores from New Caledonia and other south-west Pacific islands, underpinned by beneficiated ores from its own Marlborough deposits. The Project has the potential to be one of the largest of its type in the world producing some 126,000 tpa nickel (8 - 10% of global nickel demand) and 10,400 tpa of cobalt metal from its first two stages.


Disclaimer:

This news release includes certain statements that may be deemed "forward-looking statements". All statements in this news release, other than statements of historical facts, that address future exploration drilling, exploration activities and events or developments that the Company expects, are forward looking statements. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include metal prices, exploration success, continued availability of capital and financing, and general economic, market or business conditions.



For further information:

Blair Brewster
Gladstone Pacific Nickel Ltd
Tel:+61(0)7 3231 7100
Email: info@gladstonepacific.com.au