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1 Gulf Minerals Corporation Ltd ACN Half Year Report Ended 31 December 2014

2 CORPORATE DIRECTORY DIRECTORS Mr Graham Anderson (Non Exec. Chairman) Mr Bruce Morrin (CEO & Exec. Director) Mr Michael Walters (Non Exec. Director) Dr Peter Williams (Non Exec. Director) Mr Paul O Shaughnessy (Non Exec. Director) COMPANY SECRETARY Leonard Math Helen Halliday REGISTERED AND PRINCIPAL OFFICE 78 Mill Point Road, South Perth WA 6151 Telephone: (08) Facsimile: (08) Website: SHARE REGISTRY Automic Registry Services Pty Ltd Level 1, 7 Ventnor Ave West Perth WA 6005 Telephone: (08) Facsimile: (08) AUDITORS Somes Cooke Level 2, 35 Outram Street West Perth WA 6005 AUSTRALIAN SECURITIES EXCHANGE Gulf Minerals Corporation Limited shares (GMC) are listed on the Australian Securities Exchange. COMPANY VISION Produce a high quality, cost-effective alloy thereby increasing shareholder wealth. Gulf Minerals Corporation Limited 1

3 CHIEF EXECUTIVE OFFICER S REPORT Highlights Rights Issue success Smelter design completed Corporate Governance strengthened Dual listing Overseas interest Development approvals to be fast-tracked by BKPM s new one-stop shop Locking in smelter funding Modular Smelter Design Gulf on path to development Gulf Minerals Corporation is on track become an ASEAN-focused high quality manganese ore and alloy producer. Gulf is an Australian registered company (ACN ) listed on the Australian Securities Exchange (ASX: GMC) with its head office in Perth, Western Australia. The company has embarked on its path to develop a staged 8-furnace smelter facility near the West Timor capital Kupang. The facility will capitalise on the anticipated growing demand for manganese and will produce a premium quality 78% ferromanganese alloy, thanks to the high-grade, low-impurity Indonesian ore. The value-adding project will benefit from Indonesia s beneficial cost structures and Government incentives, including a 5-year tax holiday. The 8 furnaces will be built in pairs over four years, beginning in 2015, for an estimated total cost of 52M. The project will be funded by a proposed dual listing on an overseas stock exchange, modest debt and operational cashflow. Gulf will export 50%-plus manganese ore during construction to provide early cashflow, increasing to 180,000 tonnes in Gulf is investing potential manganese exploration targets in Turkey to augment the company s strategy of becoming a fully integrated global manganese ore and alloy producer. Gulf will pour its first alloy in 2016 Gulf Minerals Corporation Limited 2

4 Corporate Gulf has strengthened its board, governance and capital management as it develops its ASEAN-focused manganese ore and alloying enterprise. Rights Issue Post the reporting period, Gulf s Entitlement Rights Issue closed fully subscribed, raising 1,341,009. Following a strong take-up by existing shareholders, the directors placed the shortfall to sophisticated shareholders, as an Excluded Offer under Section 708D, substantially to clients of Sydney-based Paradigm Securities. Appointments Gulf s CEO Bruce Morrin, a mining engineer with 45 years of industry experience, was appointed to the board in July as Executive Technical Director. In August, Paul O Shaughnessy was appointed as Non-Executive Metallurgical Director, bringing 40 years of international manganese industry experience to the board. Post the reporting period, experienced accountant Leonard Math was appointed to the combined roles of Chief Financial Officer and Company Secretary. Capital Management Shareholders resolved at a General Meeting on September 1 to consolidate the capital on a 1 for 50 basis, to bolster the company s application to dual list on an overseas stock exchange. Dual Listing The company is progressing plans to apply to dual list on an overseas stock exchange. Dual listing will broaden the shareholder base and introduce new support as the company develops its manganese ore and alloying enterprise. Corporate Governance Gulf s strengthened Board has reviewed and implemented a complete new set of procedures including: Gulf s Constitution Code of Conduct Board and committee charters Company policies These can be viewed in full on the company s website Overseas Interest Management attended London Mines and Money in December, generating strong interest in Gulf s manganese project through a presentation and the company s booth. Post the reporting period, Gulf attracted further interest at the Smelter Summit in Jakarta in February. The company expects increasing interest at future international forums, including the Mining Investment Forum in Singapore and Mines & Money Hong Kong in March. Manganese Ore and Alloying Enterprise Smelter Funding Post the reporting period, Gulf entered into a Terms Sheet covering a Committed Equity Funding Agreement to provide a total of US20 million, by way of a 10% annual interest, 4 year Senior Credit Facility loan and Preferred Shares with Sigur Holdings Inc. The proposed funding will cover development of the first stage of the smelter enterprise, together with the future IPO of Gulf s subsidiary company holding the smelter project onto the US Nasdaq Stock Market. Gulf and Sigur have signed a non-binding Terms Sheet, which is subject to due diligence and final Definitive Agreements. Smelter Site Post the reporting period, Gulf was granted a 30-hectare block of land 10km from Kupang to build its ferromanganese smelter facility. The land is covered by a 50-year lease and is in the West Timor industrial area Bolok, just 5km from the Port of Tenau. The land was granted following a successful series of presentations and meetings between Gulf management and Indonesian authorities. Gulf Minerals Corporation Limited 3

5 Power State-owned electricity company PLN advised post the reporting period that it can supply power, on a user-pays basis, for the first stage of development while Gulf constructs its own coal-fired power station. Approvals Indonesia implemented its One Stop Service Centre in January through BKPM, the Investment Coordinating Board, to streamline foreign investment. Gulf expects to benefit from a much shorter approvals process for its facility thanks to the new one-stop shop. Smelter Design Gulf finalised the conceptual smelter design in the September quarter. The full engineering design plans and final costings are being completed. Smelter Specifics Staged build of 8 furnaces over 4 years Modular components allow staged expansion Construction to begin in 2015 First two 20,000tpa smelters online in early 2016 Full production capacity of 150,000tpa of high quality 78% ferromanganese alloy Kupang offers a good port and associated infrastructure Mining and Environmental Consultants Gulf appointed global integrated mining services group Golder Associates and their Indonesian group Marston Consultants in the December quarter. The group will provide environmental consulting and coal procurement services to progress the ore and alloying facility. Development and Expansion Plans Smelter Construction Construction will begin in 2015 on the first two smelters of the 8-furnace facility at Kupang. The company aims to pour its first premium quality 78% ferromanganese alloy in Manganese Gulf will further investigate the potential manganese prospects it has already identified in the promising Tethyan Metallogenic Belt in Turkey. Gulf will produce a premium quality ferromanganese alloy, thanks to the high-grade, low-impurity Indonesian ore. Gulf Minerals Corporation Limited 4

6 GULF MINERALS CORPORATION LIMITED DIRECTORS REPORT Your Directors present their report for Gulf Minerals Corporation Limited ( the Company or Gulf ) and controlled entities ( the consolidated entity ) for the half-year ended 31 December 2014 In order to comply with the provisions of the Corporations Act 2001, the directors report as follows: DIRECTORS The names of the Directors of the Company in office during the financial year and up to the date of this report are as follows: Mr Graham Anderson (Non Exec. Chairman) Mr Bruce Morrin (CEO & Exec. Director) appointed 21 July 2014 Mr Michael Walters (Non Exec. Director) Dr Peter Williams (Non Exec. Director) Mr Paul O Shaughnessy (Non Exec. Director) appointed 12 August 2014 Mr Victor Wu (Non Exec. Director) resigned 11 July 2014 Directors were in office from the beginning of the half- year until the date of this report unless otherwise stated. CORPORATE INFORMATION Corporate Structure Gulf is a limited liability company that is incorporated and domiciled in Australia. Gulf has prepared a consolidated financial report incorporating the entities that it controlled during the financial year as follows: Gulf Minerals Corporation Limited - parent entity Gulf Copper Pty Ltd - 100% owned controlled entity Gulf Manganese Pty Ltd - 100% owned controlled entity Gulf Coal Pty Ltd - 100% owned controlled entity Ebagoola Gold Mines Pty Ltd - 100% owned controlled entity International Manganese Group Ltd - 100% owned controlled entity by Gulf Manganese Pty Ltd Nature of Operations and Principal Activities The principal continuing activities during the period within the consolidated entity were exploration for and evaluation of mineral resources. OPERATING AND FINANCIAL REVIEW Corporate Long-term board member Mr Victor Wu resigned on 11 July 2014 due to his ongoing work commitments. Gulf s current CEO, Mr Bruce Morrin, was appointed to the board as executive director on 21 July Gulf s board was further strengthened with the appointment in August of Mr Paul O Shaughnessy as Non Executive Metallurgical Director. The metallurgical engineer brings 40 years specialty experience in manganese smelting operations, which is expected to greatly benefit the company as it moves into the engineering, construction and operating phases of its smelter enterprise. Gulf has proposed tactical capital management strategies to prepare for its application to list on the Singapore Stock Exchange s Catalist Board. Shareholder approval has been passed at a meeting on 1 September 2014, to consolidate the company s large number of ordinary shares and options on a 1 for 50 basis. The company believes this is in the best interests of all shareholders as Gulf works to create shareholder wealth through its planned manganese business. The consolidation was completed on 10 September In September 2014 the Company announced the sale agreement to divest its 51% of Northern Territory mining tenement EL10335 to joint venture partner Redbank Copper Limited for 125,000 cash. Capital Raising In September 2014, the company announced a renounceable entitlement rights issue of 2 shares for every 1 share at an issue price of 3 cents to raise up to 1,341,000 and subsequent to half year, the rights issue was 100% taken up. A total of 19,646,430 shares were taken up through the rights issue. The Company s major shareholder has taken up their full entitlement of 13,400,000 shares. Gulf Minerals Corporation Limited 5

7 GULF MINERALS CORPORATION LIMITED DIRECTORS REPORT At the end of December 2014, the Company placed 5,569,433 shares under the shortfall shares. Total funds raised at the end of December 2014 was 756,476. Subsequent to half end, the Company managed to place the remaining shortfall shares of 19,484,429 at 0.03 each, raising a further 584,533. The shareholders have also approved the issue of 1,666,667 shares at a price of 0.03 each to Mr Peter Williams to settle an outstanding loan of 50,000 in November On 31 December 2014, the Company issued 40 Convertible Notes with a face value of 10,000 each, raising 400,000. The funds raised during the period will be used for general working capital purposes and the repayment of liabilities and debts. Operating Results Consolidated loss after income tax for the financial period was 849,537 (2013: 1,008,632). SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS In the opinion of the directors, there were no other significant changes in the state of affairs of the consolidated entity that occurred during the financial year under review not otherwise disclosed in this report or in the financial report. EVENTS SUBSEQUENT TO REPORTING DATE Subsequent to year end, the Company managed to place the remaining shortfall shares from the entitlement rights issue of 19,484,429 at 0.03 each, raising a further 584,533. In February 2015, the shareholders have approved the issue of 5,053,533 shares at a price of 0.03 to settle the respective outstanding directors fees totalling 151,606 with Messrs Graham Anderson, Bruce Morrin, Michael Walters and Peter Williams. The shareholders have also approved the issue of 7,500,000 Convertible Notes with a face value of 0.03 each to the Company s largest shareholder, Leprechaun Holdings Pty Ltd to clear the current outstanding debts of 225,000. In the General Meeting held on 16 February 2015, it was also resolved to issue the following options to Directors and employee of the Company: Graham Anderson 2,000,000 Bruce Morrin 2,000,000 Peter Williams 1,000,000 Michael Walters 1,000,000 Paul O Shaughnessy 1,000,000 Helen Halliday 500,000 *Options are exercisable at 0.25 each expiring 31 December On 11 March 2015, Gulf announced that it has entered into a Terms Sheet covering a Committed Equity Funding Agreement to provide a total of US20 million by way of a 10% annual interest, 4 year Senior Credit Facility loan and Preferred Shares. The Terms Sheet has been entered into with Sigur Holdings Inc., a subsidiary of the New York-based, South African private group, Sigur Capital. In summary, the key points in the Terms Sheet include: Sigur Holdings shall immediately subscribe for AUD500,000 of Gulf Minerals Redeemable Convertible 10% Notes A Sigur Holdings representative will join Gulf's board of directors Gulf will list its subsidiary company holding the Indonesian manganese smelter project onto the Nasdaq Stock Market in the USA US10,000,000-10% annual interest 4 year Senior Credit Facility loan to the listed subsidiary and secured by the project and to be drawn over 24 months US10,000,000 - Preferred Shares in the listed subsidiary and issued at 2.50/share convertible strike price equal to 85% of the market price or redeemed at 5.00/share after 24 months Sigur Holdings shall have first right of refusal on any subsequent funding required by the listed subsidiary; and The Terms Sheet is non-binding and subject to final Definitive Agreements following due diligence by both parties. Gulf Minerals Corporation Limited 6

8 GULF MINERALS CORPORATION LIMITED DIRECTORS REPORT The proposed funding will cover the first stage of the development of the Indonesian Smelter enterprise with the future IPO covering the balance. AUDITOR INDEPENDENCE We have received the independence declaration from the auditor of Gulf Minerals Corporation Limited, Somes Cooke, a copy of which is attached to the Directors Report on page 8 of the financial report. This report is made in accordance with a resolution of the Directors. GRAHAM ANDERSON CHAIRMAN 16 March 2015 Gulf Minerals Corporation Limited 7

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10 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE HALF-YEAR ENDED 31 DECEMBER 2014 Notes 31 December 2014 Consolidated 31 December 2013 Interest revenue 42 - Directors fees and benefits expense (85,935) (108,218) Occupancy expenses (36,676) (34,458) Share based payments (730) (226,157) Administration expenses (567,828) (657,899) Exploration and evaluation expenditure (20,532) (11,900) Impairment of exploration expenditure - (1,200,180 Impairment of share acquisition costs - (100,000) Finance costs (137,878) - Loss before income tax expense (849,537) (2,338,812) Income tax expense - - Net Loss for the year (849,537) (2,338,812) Other comprehensive income - - Total comprehensive loss for the year (849,537) (2,338,812) Earnings/(Loss) per Share: Basic and diluted loss per share (cents per share) (3.30) (14.00)* *restated to reflect 1 for 50 security consolidation The accompanying condensed notes form part of these financial statements. Gulf Minerals Corporation Limited 9

11 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2014 Notes 31 December 2014 Consolidated 30 June 2014 ASSETS Current Assets Cash and cash equivalents 128,319 3,802 Trade and other receivables 121, ,218 Total Current Assets 249, ,020 Non-Current Assets Financial asset 2 750, ,000 Property, plant and equipment 43,620 48,865 Exploration and evaluation expenditure 3 64, ,000 Total Non-Current Assets 858, ,865 Total Assets 1,108,269 1,081,885 LIABILITIES Current Liabilities Trade and other payables* 4 641, ,505 Borrowings Leprechaun Holdings Pty Ltd** 5 225, ,012 Other borrowings 5 448,013 - Total Current Liabilities 1,314, ,517 Non-Current Liabilities Borrowings 5 68, ,583 Total Non-Current Liabilities 68, ,583 Total Liabilities 1,382,440 1,309,100 Net Assets (274,171) (227,215) EQUITY Issued capital 6(a) 19,012,207 18,210,356 Reserves 6(c) 1,056,523 1,055,793 Accumulated losses (20,342,901) (19,493,364) Total Equity (274,171) (227,215) *In February 2015, the shareholders approved the issue of 5,053,533 shares at a price of 0.03 to settle the respective outstanding directors fees totalling 151,606 with Messrs Graham Anderson, Bruce Morrin, Michael Walters and Peter Williams. **In February 2015, the shareholders approved the issue of 7,500,000 Convertible Notes with a face value of 0.03 each to the Company s largest shareholder, Leprechaun Holdings Pty Ltd to clear the current outstanding debts of 225,000. The accompanying condensed notes form part of these financial statements. Gulf Minerals Corporation Limited 10

12 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF-YEAR ENDED 31 DECEMBER 2014 Consolidated Issued Accumulated Options Total Capital Losses Reserve Balance at 30 June ,704,586 (13,870,483) - 834,103 Loss for the year - (2,388,812) - (2,388,812) Other comprehensive income Total comprehensive loss for the year - (2,388,812) - (2,388,812) Transactions with owners, recorded directly in equity: Securities issued during the year 3,352,620-1,013,787 4,366,407 Capital raising costs (70,000) - - (70,000) Total equity transactions 3,282,020-1,013,787 4,296,407 Balance at 31 December ,987,206 (16,209,295) 1,013,787 2,791,698 Balance at 30 June ,210,356 (19,493,364) 1,055,793 (227,215) Loss for the year (849,537) Other comprehensive income Total comprehensive loss for the year - (849,537) - (849,538) Transactions with owners, recorded directly in equity: Share based payments Securities issued during the year 806, ,476 Capital raising costs (4,625) - - (4,625) Total equity transactions 801, ,581 Balance at 31 December ,012,207 (20,342,901) 1,056,523 (274,171) The accompanying condensed notes form part of these financial statements. Gulf Minerals Corporation Limited 11

13 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE HALF-YEAR ENDED 31 DECEMBER December 2014 Consolidated 31 December 2013 Cash flows from operating activities Payments to suppliers and employees (615,028) (388,061) Interest received 42 - Interest paid (8,770) - Net cash used in operating activities (623,756) (388,061) Cash flows from investing activities Proceeds from sale of exploration asset 125,000 - Payments for exploration and development expenditure (77,995) (157,619) Net cash from/(used) in investing activities 47,005 (157,619) Cash flows from financing activities Proceeds from issue of securities 762, ,000 Cost of capital raisings (4,625) (53,500) Proceeds from borrowings Convertible Note 280,000 40,060 Repayment of borrowings (336,583) - Net cash provided by financing activities 701, ,560 Net increase/(decrease) in cash and cash equivalents held 124,517 (4,120) Cash and cash equivalents at beginning of the financial year 3,802 4,152 Cash and cash equivalents at end of the period 128, The accompanying condensed notes form part of these financial statements. Gulf Minerals Corporation Limited 12

14 NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Statement of Compliance The half-year financial report is a general purpose financial report prepared in accordance with the Corporations Act 2001 and AASB 134 Interim Financial Reporting. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS34 Interim Financial Reporting. The half-year report does not include notes of the type normally included in an annual financial report and shall be read in conjunction with the most recent annual financial report. Basis of preparation The condensed consolidated financial statements have been prepared on the basis of historical cost, except for the revaluation of certain non-current assets and financial instruments. Cost is based on the fair values of the consideration given in exchange for assets. All amounts presented in Australian dollars, unless otherwise noted. The accounting policies and methods of computation adopted in the preparation of the half-year financial report are consistent with those adopted and disclosed in the Company s 2014 annual financial report for the financial year ended 30 June 2014, except for the impact of the Standards and Interpretations described below. These accounting policies are consistent with Australian Accounting Standards and with International Financial Reporting Standards. Adoption of new or revised accounting standards and interpretations The Group has adopted all of the new and revised standards and interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to their operations and effective for the current half-year. The Group has not early adopted any accounting standards or interpretations. The adoption of all new and revised standards and interpretations has not resulted in any changes to the Group s accounting policies and has no effect on the amounts reported for the current or prior half-years. Going concern The interim financial report has been prepared on the going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and the settlement of liabilities in the normal course of business. The consolidated entity had net current liabilities of 1,064,754 at 31 December 2014 (30 June 2014: 834,497), incurred a net loss after tax for the six months ended 31 December 2014 of 849,537 (six months to 31 December 2013: loss 2,338,812) and experienced net cash outflows from operating and exploration activities of 623,755 (six months to 31 December 2013: 388,061). Whilst the directors have instituted measures to preserve cash and secure additional finance, they recognise that the Group s ability to continue as a going concern is dependent on its ability to raise additional capital to fund its business plans. Furthermore, the ability of the Group to continue as a going concern is subject to the ability of the Group to successfully develop and commercialise products. The Group is a listed company, and has been successful in raising capital on the ASX in the past. The Company expects to be able to raise additional capital from the Capital market, and on that basis, the directors believe that the going concern basis of the presentation is appropriate. Nonetheless, the group s working capital position and other year-end financial indicators show a significant uncertainty whether the Group will be able to continue as a going concern. Should the company be unable to continue as a going concern, it may be required to realise its assets and extinguish its liabilities other than in the normal course of business and at amounts different from those stated in the financial report. The financial report does not include any adjustments relating to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that may be necessary should the Group be unable to continue as a going concern. Gulf Minerals Corporation Limited 13

15 NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2014 Critical accounting estimates and judgments The directors evaluate estimates and judgements incorporated into the interim financial statements based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Group. Key Estimates - Impairment The Group assesses impairment at the end of each reporting period by evaluating conditions specific to the Group that may be indicative of impairment triggers. Recoverable amounts of relevant assets are reassessed using value-in-use calculations which incorporate various key assumptions. Key Judgements - Exploration and Evaluation Expenditure The Group capitalises expenditure relating to exploration and evaluation where is it considered likely to be recoverable or where the activities have not reached a stage which permits a reasonable assessment of the existence of reserves. While there are certain areas of interest from which no reserves have been extracted, the directors are of the continued belief that such expenditure should not be written off since feasibility studies in such areas have not yet concluded. Such capitalised expenditure is carried at the end of the reporting period at a value of 64,963. Segment Reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors of the Company. 2. FINANCIAL ASSET 31 December 2014 Consolidated 30 June 2014 Available for sale unlisted investments, at fair value - shares in Asia Mineral Corporation Limited 750, , , ,000 The Company is a registered holder of 15,000,000 shares in Asia Mineral Corporation Limited (AMC) having acquired and initially recognised the investment at 22 cents. At the end of the period, the Board had reviewed the fair value of the AMC shares and have valued them at 5 cents per share after making appropriate enquiries of AMC. The Board is of a view that this is a long term investment in AMC. Reconciliation of the fair values at the beginning and end of the current period are set out below: Opening fair value 750,000 Additions - Disposals - Revaluation increments - Closing value 750,000 Gulf Minerals Corporation Limited 14

16 NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER EXPLORATION AND EVALUATION EXPENDITURE Consolidated 31 December 2014 Expenditure brought forward 125,000 Expenditure incurred 64,963 Expenditure sold to JV partner (125,000) Expenditure carried forward 64,963 The recoupment of exploration and evaluation expenditure carried forward is dependent upon successful development and commercialisation or sale of the areas of interest being explored and evaluated. 4. TRADE AND OTHER PAYABLES CURRENT 31 December 2014 Consolidated 30 June 2014 Trade payables Accruals 5,000 13,000 Other payables 104, ,279 Share application funds received 6,000 - Provision for annual leave , ,505 *In February 2015, the shareholders approved the issue of 5,053,533 shares at a price of 0.03 to settle the respective outstanding directors fees totalling 151,606 with Messrs Graham Anderson, Bruce Morrin, Michael Walters and Peter Williams. 5. BORROWINGS CURRENT Borrowing Leprechaun Holdings Pty Ltd 225,000* - Convertible Notes 400,000 - Other financial liabilities 48, ,012 NON CURRENT Other financial liabilities - Other Convertible Notes - Other liabilities 15,000 53, , , ,595 *In February 2015, the shareholders approved the issue of 7,500,000 Convertible Notes with a face value of 0.03 each to the Company s largest shareholder, Leprechaun Holdings Pty Ltd to clear the current outstanding debts of 225,000. Other financial liabilities (current and non-current) include convertible notes of 415,000 (2013: 208,000). During the period, no convertible notes were repaid via the issue of ordinary shares to the convertible note holders. The following table shows the movement of convertible notes during the period: Opening balance 15,000 Additions 400,000 Disposals - Revaluation increments - Closing value 415,000 The remaining 53,000 of other non-current financial liabilities constitutes loans from other entities. The Company intends to repay both loans with cash raised in the next 12 months. Gulf Minerals Corporation Limited 15

17 NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER ISSUED CAPITAL 31 December 2014 Consolidated 30 June 2014 (a) Issued and paid up capital Ordinary shares fully paid 19,012,207 18,210,356 Number (b) Movement in ordinary shares on issue At 31 December ,232,676 19,012,207 Balance at 1 July ,233,858 14,704, July 2013 Issue of 2,600,000 ordinary shares at 0.6 cents each 2,600,000 15, October 2013 Issue of 385,000,000 ordinary shares at 0.6 cents each 385,000,000 2,310, October 2013 Issue of 40,000,000 ordinary shares at 0.6 cents each 40,000, , October 2013 Issue of 32,500,000 ordinary shares at 0.6 cents each 32,500, , October 2013 Issue of 98,669,998 ordinary shares at 0.6 cents each 98,669, , June 2014 Issue of 27,500,000 ordinary shares at 0.6 cents each 27,500, , June 2014 Issue of 10,000,000 ordinary shares at 0.5 cents each 10,000,000 50, June 2014 Issue of 25,000,000 ordinary shares at cents each 25,000,000 61,900 Less capital raising costs (123,750) Balance at 30 June ,117,503,856 18,210,356 Consolidation at one for fifty (1,095,153,710) - 3 December 2014 Issue of 19,646,430 ordinary shares at 3 cents each 19,646, , December 2014 Issue of 1,666,667 ordinary shares at 3 cents each 1,666,667 50, December 2014 Issue of 5,569,433 ordinary shares at 3 cents each 5,569, ,083 Less capital raising costs - (4,625) 49,232,676 19,012,207 Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held. Ordinary shareholders rank behind creditors in the distribution of proceeds from the winding-up of the Company. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote. (c) Movement in Share Options Number At 31 December ,846,008 1,056,523 At 1 July ,250,002 - (A) Issue of unlisted options exercisable at 0.75 cents each expiring on or before 31 July ,000, ,414 (B) Issue of unlisted options exercisable at 0.75 cents each expiring on or before 30 June ,950,000 76,428 (C) Issue of unlisted options exercisable at 1.5 cents each on or before expiring 31 October ,100,000 1,951 Lapsing of unlisted options exercisable at 5 cents each expiring on or before 31 January 2014 (1,000,000) - Lapsing of unlisted options exercisable at 5 cents each expiring on or before 31 December 2013 (35,000,000) - At 30 June ,300,002 1,055,793 Gulf Minerals Corporation Limited 16

18 NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2014 (A) Consolidation of unlisted options exercisable at 0.75 cents each expiring on or before 31 July 2017 (post consolidation 37.5 cents each) (B) Consolidation of unlisted options exercisable at 0.75 cents each expiring on or before 30 June 2016 (post consolidation 37.5 cents each) (C) Consolidation of unlisted options exercisable at 1.5 cents each on or before expiring 31 October 2014 (post consolidation 75 cents each) (D) Consolidation of unlisted options exercisable at 2 cents each on or before expiring 30 April 2015 (post consolidation 1 each) Lapsing of unlisted options exercisable at 75 cents each expiring on or before 31 October 2014 Issue of unlisted options exercisable at 37.5 cents each expiring on or before 31 July 2017 Number (681,200,000) - (62,671,000) - (41,544,663) - (94,038,331) - (2,555,337) - 100, ,846,008 1,056,523 (d) Fair value of options granted The fair value of options granted during the half year was calculated at the date of grant using the Black-Scholes option-pricing model. The following table gives the assumption made in determining the fair value of options on grant date: Fair value per option 0.07 cents Grant date 20 November 2014 Number of options 100,000 Expiry date 31 July 2017 Exercise price 37.5 cents Price of shares on grant 4.2 cents date Estimated volatility 100% Risk-free interest rate 2.50% Dividend yield 0% 7. FINANCIAL REPORTING BY SEGMENTS For management purposes, the Group is organised into one main operating segment, which involves the exploration for minerals and evaluation of mineral investment opportunities for its investors, presently solely in Australia. All of the Group s activities are interrelated, and discrete financial information is reported to the Board (chief operating decision maker) as a single segment. Accordingly, all significant operating decisions are based upon analysis of the Group as one segment. The financial results from this segment are equivalent to the financial statements of the Group as a whole. The accounting policies applied for internal reporting purposes are consistent with those applied in the preparation of these financial statements. Gulf Minerals Corporation Limited 17

19 NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER EVENTS SUBSEQUENT TO REPORTING DATE Subsequent to year end, the Company managed to place the remaining shortfall shares from the entitlement rights issue of 19,484,429 at 0.03 each, raising a further 584,533. In February 2015, the shareholders have approved the issue of 5,053,533 shares at a price of 0.03 to settle the respective outstanding directors fees totalling 151,606 with Messrs Graham Anderson, Bruce Morrin, Michael Walters and Peter Williams. The shareholders have also approved the issue of 7,500,000 Convertible Notes with a face value of 0.03 each to the Company s largest shareholder, Leprechaun Holdings Pty Ltd to clear the current outstanding debts of 225,000. These were subsequently issued on the 27 February In February 2015, it was also resolved to issue the following options to Directors and employee of the Company: Graham Anderson 2,000,000 Bruce Morrin 2,000,000 Peter Williams 1,000,000 Michael Walters 1,000,000 Paul O Shaughnessy 1,000,000 Helen Halliday 500,000 *Options are exercisable at 0.25 each expiring 31 December These options were issued on 27 February On 11 March 2015, Gulf announced that it has entered into a Terms Sheet covering a Committed Equity Funding Agreement to provide a total of US20 million by way of a 10% annual interest, 4 year Senior Credit Facility loan and Preferred Shares. The Terms Sheet has been entered into with Sigur Holdings Inc., a subsidiary of the New York-based, South African private group, Sigur Capital. In summary, the key points in the Terms Sheet include: Sigur Holdings shall immediately subscribe for AUD500,000 of Gulf Minerals Redeemable Convertible 10% Notes A Sigur Holdings representative will join Gulf's board of directors Gulf will list its subsidiary company holding the Indonesian manganese smelter project onto the Nasdaq Stock Market in the USA US10,000,000-10% annual interest 4 year Senior Credit Facility loan to the listed subsidiary and secured by the project and to be drawn over 24 months US10,000,000 - Preferred Shares in the listed subsidiary and issued at 2.50/share convertible strike price equal to 85% of the market price or redeemed at 5.00/share after 24 months Sigur Holdings shall have first right of refusal on any subsequent funding required by the listed subsidiary; and The Terms Sheet is non-binding and subject to final Definitive Agreements following due diligence by both parties. The proposed funding will cover the first stage of the development of the Indonesian Smelter enterprise with the future IPO covering the balance. There are no other matters or circumstances that have arisen since 31 December 2014 that have or may significantly affect the operations, results, or state of affairs of the consolidated entity in future financial years other than disclosed above. 9. COMMITMENTS There are no operating lease or exploration commitments as at the date of this report. 10. CONTINGENT LIABILITIES In December 2014, a previously disclosed contingent liability crystallised, as part of a settlement agreed with Bell Medical Pty Ltd. As part of the settlement, Gulf agreed to pay 92,000 to Bell Medical Pty Ltd, which brought all ongoing matters to a close. Aside from the above, there has been no change in contingent liabilities since the last annual reporting period. 11. DIVIDENDS No dividends have been paid or proposed during the half year. Gulf Minerals Corporation Limited 18

20 DIRECTORS' DECLARATION The Directors of the company declare that: 1) The financial statements and notes, as set out on pages 9-18 a. Comply with Accounting Standard AASB 134: Interim Financial Reporting, Corporations Act 2001 and the Corporations Regulations 2001; and b. Give a true and fair view of the consolidated entity s financial position as at 31 December 2014 and of its performance for the half year ended on that date. 2) In the Directors opinion there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable. The declaration is made in accordance with resolution of the board. GRAHAM ANDERSON CHAIRMAN Perth 16 March 2015 Gulf Minerals Corporation Limited 19

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