Directors' report 

The directors of Rusina Mining NL submit the financial report of the consolidated entity and the Auditor's review report thereon for the half-year ended 31 December 2008. In order to comply with the provisions of the Corporations Act 2001, the directors report as follows:

Directors

The names of the directors who have held office during or since the end of the half-year and until the date of this report are noted below. Directors were in office for this entire period unless otherwise stated.

Mr Gordon Getley

Chairman/Non Executive Director

Mr Robert Gregory

Managing Director/Chief Executive Officer

Mr Philip Fillis

Director

Mr Antony Butler

Non Executive Director

Review of operations

Despite the significant deterioration in global economic conditions during the period the Company continued to make progress across its key areas of operation in the Philippines. Of most significance was the finalisation of the pre-feasibility study for the nickel heap leach project at Acoje. In addition the Company completed the acquisition of the Barlo copper/gold project and commenced the direct shipping of chromite.

Nickel Heap Leach

In November the Company released the results of the Acoje nickel heap leach pre-feasibility study (PFS) utilising partner European Nickel PLC's heap leach technology. 

The PFS results demonstrate an economically viable nickel laterite project using heap leach technology producing 24,500 tonnes a year of contained nickel and 930 tonnes of contained cobalt. The study for the Acoje project is based on a JORC Indicated Resource of 30.76 million tonnes at 1.12% nickel and 0.05% cobalt (at a 0.8% nickel cut-off for saprolite and a 0.9% nickel cut off for limonite) giving the project an initial mine life of ten years. Mining will be at a rate of three million tonnes per annum, with a low strip ratio of 0.46, and cash costs are estimated at US$3.10 per pound of nickel (at US$6/lb Ni), net of by-products including a refining charge of 25% of the nickel price and a cobalt price of US$10/lb. Further potential resources have been identified, the JORC Inferred Resources at Acoje and the Zambales Chromite deposit, which are expected to extend the mine life beyond 20 years and are expected to be confirmed to JORC Indicated Resource levels during the definitive feasibility study.

The highlights of the PFS include:

- JORC combined limonite plus saprolite Indicated Resource of 34.41 Mt at 1.09% nickel from an Inferred plus Indicated Resource of 50.14 Mt at 1.06% nickel using a 0.8% cut off grade

- Estimated annual production of 24,500 tonnes of nickel and 930 tonnes of cobalt

- Estimated cash cost of US$3.10/lb of nickel, net of by-products including refining costs at US$6.00/lb nickel price and US$10/lb cobalt price

- Total development estimated at US$498 million

- Estimated capital cost per annual pound of nickel of US$7.84

- Post-tax Net Present Value of US$375 million (at a 10% discount rate) and US$6/lb nickel price and $10/lb cobalt

- Internal Rate of Return of 28.3%

- 3 year payback period

- Forecast annual sales of US$260 million, based on a long term nickel price of US$6.00/lb and including by-product credits

- Significant potential to increase NPV and IRR with extended mine life by confirming the JORC Inferred Acoje and Zambales Chromite deposits to JORC Indicated status

European Nickel ('EN') and the Company have now moved into the definitive feasibility study ('DFS') phase with the construction of the trial leach facility to demonstrate the large scale permeability and recovery of the Acoje ore. First leaching is on schedule for April 2009. In addition European Nickel have constructed a research laboratory at Acoje where larger 4m column test work as well as advanced metallurgical work on enhancing the final mixed hydroxide products can be undertaken as part of the DFS. The permitting of the full scale plant has also commenced and Chinese engineering group, China Tianchan Engineering Corporation, have conducted a site visit. European Nickel are funding the DFS by spending US$10m to earn a 40% interest in the project.

Direct Shipping Operations

Shipping of nickel laterite ore was halted during the period due to low nickel prices and a significant reduction in demand from Chinese buyers. A trial high-grade shipment to a Japanese customer was made during the period and it is anticipated further cargoes may follow. Interest still exists for high iron shipments although margins are minimal. Small tonnages of chromite ore shipped via containers commenced during the period. The Acoje mine was once South-East Asia's largest chromite mine and the Company is looking for partners to reopen large-scale underground chromite mining.

Exploration

The Company has several exploration tenements under application. The main activities on these tenements has been gaining the requisite approvals from stakeholders and local government agencies prior to physical exploration activities can be undertaken. 

Corporate Activity

Early in the period the Company finalised the acquisition of the Barlo project, a copper/gold prospect located some 30 km north of the Acoje tenement. A work programme is currently being finalised for this project. The Company continues to be mindful of its cash resources and has implemented a new pared-back budget, while pushing forward with its partner funded activities to further the development of its flag-ship Acoje project.

Robert Gregory

Managing Director

13  March 2009

Mark Hanlon 

Rusina Mining NL 

Tel: +61 8 9226 1111 

rusinaadmin@rusina.com.au 

Roland Cornish

Beaumont Cornish

Tel: +44 (0) 207 628 3396

Directors' declaration

In the opinion of the directors of Rusina Mining NL:

1. The financial statements and notes thereto, as set out on pages 7 to 15, are in accordance with the Corporations Act 2001 including:

• complying with Accounting Standard AASB 134: Interim Financial Reporting and the Corporations Regulations; and

b.  giving a true and fair view of the consolidated entity's financial position as at 31 December  2008 and of its performance for the half-year then ended.

2. There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

This declaration is signed in accordance with a resolution of the Board of Directors made pursuant to s.303(5) of the Corporations Act 2001.

On behalf of the directors

Robert Gregory

Managing Director

13 March 2009

Condensed consolidated income statement for the 
half-year ended 31 December 2008

Note

Half-year ended 31 Dec 2008

$

Half-year ended 31 Dec 2007*

$

Revenue

68,687

-

Total Revenue

68,687

-

Share of loss of associates

(27,307)

-

Share of loss from joint venture

(258,759)

-

Administration expenses

(2,541,780)

(2,359,826)

Finance income

1,170,963

542,836

Finance costs

-

(2,676)

Change in fair value of derivative liability

243,276

2,222,026

Loss on sale of assets

(1,232)

-

Depreciation

(87,785)

(63,459)

Profit/(Loss) before income tax expense

2

(1,433,937)

338,901

Income tax expense

-

-

Profit/(Loss) for the period

(1,433,937)

338,901

Attributable to 

Equity holders of the parent

(1,464,737)

346,713

Minority interest

30,800

(7,812)

Profit/(Loss) for the period

(1,433,937)

338,901

Profit/(Loss) per share

Basic (cents per share)

(0.59)

0.17

Diluted (cents per share)

(0.59)

0.14

Notes to the condensed consolidated financial statements are included on pages 11 to 15.

* Restated - refer to note 6.

Condensed consolidated balance sheet
as at 31 December 2008

Note

31 Dec 2008

$

30 June 2008

$

Current assets

Cash and cash equivalents

5,374,508

6,192,933

Trade and other receivables

2,564,795

1,538,649

Other current assets

-

131,400

Total current assets

7,939,303

7,862,982

Non-current assets

Other financial assets

-

48,107

Property, plant and equipment

414,088

378,907

Intangible assets

3

13,919,749

9,603,341

Total non-current assets

14,333,837

10,030,355

Total assets

22,273,140

17,893,337

Current liabilities

Trade and other payables

3,584,644

2,398,240

Employee benefits

102,393

72,375

Derivative liability

118

243,394

Provisions

20,212

-

Total current liabilities

3,707,367

2,714,009

Total liabilities

3,707,367

2,714,009

Net assets

18,565,773

15,179,328

Equity

Issued capital

4

57,369,493

56,877,493

Reserves

6,843,863

3,166,580

Accumulated losses

(45,842,988)

(44,904,360)

Equity attributable to equity holders of the parent

18,370,368

15,139,713

Minority interest

195,405

39,615

Total equity

18,565,773

15,179,328

Notes to the condensed consolidated financial statements are included on pages 11 to 15.

Condensed consolidated statement of changes in equity
for the half year ended 31 December 2008

Fully paid ordinary shares

Foreign currency translation reserve

Option premium reserve

Accumulated losses

Attributable to equity holders of the parent

Minority interest

Total 

$

$

$

$

$

$

$

Balance at 1 July 2007

47,203,488

56,863

2,417,089

(43,505,544)

6,171,896

30,702

6,202,598

Exchange differences arising on translation of foreign operations

-

(170,788)

-

-

(170,788)

-

(170,788)

Income and expense recognised directly in equity

-

(170,788)

-

-

(170,788)

-

(170,788)

Loss attributable to equity holders of the parent

-

-

-

346,713

346,713

-

346,713

Loss attributable to minority interest

-

-

-

-

-

(7,812)

(7,812)

Total recognised income and expense

-

-

-

346,713

346,713

(7,812)

338,901

Shares issued

3,437,288

-

-

-

3,437,288

-

3,437,288

Share-based payments

-

-

353,411

-

353,411

-

353,411

Balance at 31 December 2007*

50,640,776

(113,925)

2,770,500

(43,158,831)

10,138,520

22,890

10,161,410

Balance at 1 July 2008

56,877,493

(884,564)

4,051,144

(44,904,360)

15,139,713

39,615

15,179,328

Exchange differences arising on translation of foreign operations

-

3,896,692

-

-

3,896,692

-

3,896,692

Income and expense recognised directly in equity

-

3,896,692

-

-

3,896,692

-

3,896,692

Profit attributable to equity holders of the parent

-

-

-

(1,464,737)

(1,464,737)

-

(1,464,737)

Profit attributable to minority interest

-

-

-

-

-

30,800

30,800

Total recognised income and expense

-

-

-

(1,464,737)

(1,464,737)

30,800

(1,433,937)

Shares issued

492,000

-

-

-

492,000

-

492,000

Share-based payments

-

-

306,700

-

306,700

-

306,700

Initial recognition of minority interest

-

-

-

-

-

124,990

124,990

Transfer between option premium reserve and accumulated losses following the lapse of options

-

-

(526,109)

526,109

-

-

-

Balance at 31 December 2008

57,369,493

3,012,128

3,831,735

(45,842,988)

18,370,368

195,405

18,565,773

Condensed consolidated cash flow statement 
for the half-year ended 31 December 2008

Notes to the condensed consolidated financial statements 
for the half-year ended 31 December 2008

1.

Statement of significant accounting policies

Statement of compliance

The half-year consolidated financial statements are a general purpose financial report prepared in accordance with the requirements of the Corporations Act 2001, applicable accounting standards including AASB 134: Interim Financial Reporting, Accounting Interpretations and other authoritative pronouncements of the Australian Accounting Standards Board ('AASB'). Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 'Interim Financial Reporting'.

This condensed half-year financial report does not include full disclosures of the type normally included in an annual financial report. Therefore, it cannot be expected to provide as full an understanding of the financial performance, financial position and cash flows of the consolidated entity as in the full financial report.

It is recommended that this financial report be read in conjunction with the annual financial report for the year ended 30 June 2008 and any public announcements made by Rusina Mining NL and its subsidiaries during the half-year in accordance with continuous disclosure requirements arising under the Corporations Act 2001 and the ASX Listing Rules. 

The half-year consolidated financial statements were approved by the Board of Directors on 13 March 2009.

Basis of preparation

The half-year report has been prepared on a historical cost basis, except for derivative financial instruments and available-for-sale financial assets which are measured at fair value. Cost is based on the fair value of the consideration given in exchange for assets. The company is domiciled in Australia and all amounts are presented in Australian dollars, unless otherwise noted.

For the purpose of preparing the half-year report, the half-year has been treated as a discrete reporting period.

Significant accounting judgement and key estimates

The preparation of interim financial reports requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expense. Actual results may differ from these estimates.

In preparing this half-year report, the significant judgements made by management in applying the consolidated entity's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial report for the year ended 30 June 2008.

Adoption of new and revised accounting standards

In the half-year ended 31 December 2008, the consolidated entity has reviewed all of the new and revised Standards and Interpretations issued by the AASB that are relevant to its operations and effective for annual reporting periods beginning on or after 1 July 2008.

It has been determined by the consolidated entity that there is no impact, material or otherwise, of the new and revised Standards and Interpretations on its business and, therefore, no change is necessary to the consolidated entity's policies.

2.

Profit/(loss) before income tax expense

31 December 2008

$

31 December 2007

$

The following revenue and expense items are relevant in explaining the financial performance for the half-year:

Share-based payments

(306,700)

(353,411)

Share of profit paid to joint venture partners

523,824

-

Realised and unrealised foreign currency gains

1,096,876

459,665

3.

Intangible assets

31 December 2008

$

30 June 2008

$

Costs carried forward in respect of areas of interest:

Exploration and evaluation - at cost

Balance at beginning of half-year

9,603,341

3,455,733

Expenditure and currency translation movement

4,316,408

6,176,614

Amortised as cost of sales

-

(29,006)

Carrying amount at end of period

13,919,749

9,603,341

4.

Issued capital

31 December 2008

30 June 2008

No.

$

No.

$

Fully paid ordinary shares

Balance at beginning of half-year

242,202,715

56,877,493

186,122,471

47,203,488

Exercise of 3,000,000 options exercisable at 16.40 cents

  3,000,000

492,000

-

-

Exercise of 38,623,418 listed options exercisable at 20.00 cents

  -

  -

38,623,418

7,650,522

Exercise of 837,000 options exercisable at 21.25 cents

  -

  -

837,000

177,863

5,882,352 fully paid ordinary shares issued at 21 UK pence

  -

  -

5,882,352

474,811

3,658,537 fully paid ordinary shares issued at 41.00 US cents

  -

  -

3,658,537

289,466

6,458,937 fully paid ordinary shares issued at 35.84 cents

  -

  -

6,458,937

2,315,439

620,000 fully paid ordinary shares issued at 20.00 cents

  -

  -

620,000

124,000

Share issue costs

  -

  -

-

(1,358,096)

245,202,715

57,369,493

242,202,715

56,877,493

5.

Segment information

The following is an analysis of the revenue and results for the period, analysed by geographical segment, Rusina Mining Limited's primary basis of segmentation. The consolidated entity has two geographic segments, being Philippines and Australia and one business segment being mineral exploration activities.

Segment revenue

Services

Financial Income

Total

2008

$

2007*    

$

2008

$

2007*

$

2008

$

2007

$

Phillipines

68,687

-

2,729

-

71,416

-

Australia

-

-

1,168,234

83,171

1,168,234

542,836

Consolidated

1,239,650

542,836

Segment result

2008

$

2007*

$

Phillipines

(1,734,987)

(619,601)

Australia

270,250

966,314

Profit/(loss) for the period

  (1,464,737)

346,713

6.

Correction of prior period error

At 31 December 2007, the Company recognised the issue of free attaching options to shares issued in foreign currencies within equity. In accordance with accounting standards, the options should have been accounted for as derivatives as the options result in a fixed amount of shares to be issued in exchange for a variable amount of cash. 

The Company has reflected this requirement by restating the income statement for the comparative period. This adjustment resulted in the following effects:

7.

Share based payments

The terms and conditions of the grants made during the six months ended 31 December 2008 are as follows:

Series

Grant date

Number of instruments

Vesting conditions

Expiry date

1

27 November 2008

4,200,000

Vests in 3 equal tranches of 1,400,000 options each, when the share price is 33.33%, 66.66% and 100% greater than the exercise price of 20 cents

28 August 2011

2

27 November 2008

1,700,000

Vests in 2 equal tranches of 850,000 options each, when the share price is 50% and 100% greater than the exercise price of 25 cents.

26 November 2011

3

8 December 2008

4,900,000

Vests subject to various conditions related to the employees employment.

7 December 2011

Fair value of share options and assumptions for the six months ended 31 December 2008:

Series 1

Tranche 1

Tranche 2

Tranche 3

Fair value at grant date

0.10 cents

0.62 cents

1.17 cents

Share price on grant date

4.20 cents

4.20 cents

3.90 cents

Exercise price

20 cents

20 cents

20 cents

Expected volatility 

98%

98%

98%

Risk-free interest rate 

3.75%

3.75%

3.75%

Series 2

Tranche 1

Tranche 2

Fair value at grant date

0.14 cents

0.61 cents

Share price on grant date

4.20 cents

4.20 cents

Exercise price

25 cents

25 cents

Expected volatility 

98%

98%

Risk-free interest rate 

3.75%

3.75%

7.

Share based payments (contd)

Series 3

Tranche 1

Fair value at grant date

1.69 cents

Share price on grant date

3.90 cents

Exercise price

10 cents

Expected volatility 

98%

Risk-free interest rate 

3.64%

8.

Contingent liabilities

There has been no change in contingent liabilities since the last annual reporting date.

9.

Subsequent events 

There have been no material events subsequent to the reporting date.