Prospectus Supplement Filed pursuant to Rule 424(b)(3) Registration No. 333-145082 PROSPECTUS SUPPLEMENT NO. 02 DATED NOVEMBER 17, 2008 (To Prospectus Dated September 30, 2008) LEGEND INTERNATIONAL HOLDINGS, INC. 42,840,000 Shares of Common Stock This prospectus supplement supplements information contained in, and should be read in conjunction with, that certain Prospectus, dated September 30, 2008, of Legend International Holdings, Inc. (the "Company") as supplemented by Supplement No. 01 thereto dated October 29, 2008. This prospectus supplement is not complete without, and may not be delivered or used except in connection with, the original Prospectus and Supplement No. 01 thereto. The Prospectus relates to the public sale, from time to time, of up to 42,840,000 shares of our common stock by the selling shareholders identified in the Prospectus. The information attached to this prospectus supplement modifies and supersedes, in part, the information in the Prospectus, as supplemented. Any information that is modified or superseded in the Prospectus shall not be deemed to constitute part of the Prospectus, except as modified or superseded by this prospectus supplement or Prospectus Supplement No. 01. This prospectus supplement includes the attached Form 10-Q dated November 14, 2008 as filed by us with the Securities and Exchange Commission. We may amend or supplement the Prospectus from time to time by filing amendments or supplements as required. You should read the entire Prospectus and any amendments or supplements carefully before you make an investment decision. The Securities and Exchange Commission and state securities regulators have not approved or disapproved these securities or determined if this Prospectus Supplement (or the original Prospectus dated September 30, 2008) is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus supplement is November 17, 2008. ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark one) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE - ----ACT OF 1934 For the Quarterly Period Ended September 30, 2008 or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE - ----ACT OF 1934 For the transition period from ________________ to ________________ Commission File Number: 000-32551 -------------- LEGEND INTERNATIONAL HOLDINGS, INC. (Exact name of registrant as specified in its charter) -------------- Delaware 233067904 (State or Other Jurisdiction (I.R.S. Employer of Incorporation) Identification No.) Level 8, 580 St Kilda Road Melbourne, Victoria, Australia 3004 (Address of Principal Executive (Zip Code) Offices) Registrant's telephone number, including area code: 001 (613) 8532 2866 -------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. |X| Yes |_| No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "accelerated filer," "large accelerated filer" and "smaller reporting company" in Rule 12-b2 of the Exchange Act. (Check one): Large accelerated filer |_| Accelerated filer |_| Non-accelerated filer |X| Smaller reporting company |_| Indicate by check mark whether the registrant is a shell company (as defined in Rule 12-b2 of the Exchange Act). |_| Yes |X| No There were 226,315 392 shares of common stock outstanding on November 5, 2008. ================================================================================ Table Of Contents PAGE NO -------------- PART I. FINANCIAL INFORMATION Item 1 Financial Statements 2 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 26 Item 3 Quantitative and Qualitative Disclosure about Market Risk 31 Item 4 Controls and Procedures 31 PART II OTHER INFORMATION Item 1 Legal Proceedings 32 Item 1A Risk Factors 32 Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 32 Item 3 Defaults Upon Senior Securities 32 Item 4 Submission of Matters to a Vote of Security Holders 32 Item 5 Other Information 32 Item 6 Exhibits 32 SIGNATURES 33 EXHIBIT INDEX 34 Exh. 31.1 Certification 35 Exh. 31.2 Certification 37 Exh. 32.1 Certification 39 Exh. 32.2 Certification 40 1 PART I - FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS Introduction to Interim Financial Statements. The interim financial statements included herein have been prepared by Legend International Holdings, Inc. ("Legend International" or the "Company") without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (The "Commission"). Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These interim financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2007. In the opinion of management, all adjustments, consisting of normal recurring adjustments and consolidating entries, necessary to present fairly the financial position of the Company and subsidiaries as of September 30, 2008, the results of its operations for the three and nine month periods ended September 30, 2008 and September 30, 2007, and the changes in its cash flows for the three and nine month periods ended September 30, 2008 and September 30, 2007, have been included. The results of operations for the interim periods are not necessarily indicative of the results for the full year. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Foreign Currency Translation The functional and reporting currency of the Company is the Australian dollar. UNLESS OTHERWISE INDICATED, ALL FINANCIAL INFORMATION PRESENTED IS IN AUSTRALIAN DOLLARS. 2 LEGEND INTERNATIONAL HOLDINGS, INC. (An Exploration Stage Company) Balance Sheet
September 30, December 31, 2008 2007 ASSETS A$ A$ ------------------ ------------------- (unaudited) Current Assets: Cash 124,036,322 17,088,190 Receivables 1,061,938 507,264 Prepayments 510,959 110,840 ------------------ ------------------- Total Current Assets 125,609,219 17,706,294 ------------------ ------------------- Non-Current Assets: Property and Equipment, net (Note 3) 1,857,363 158,177 Deposits 2,108,706 130,000 Non-Current Receivable 658,000 - ------------------ ------------------- Total Non-Current Assets 4,624,069 288,177 ------------------ ------------------- Total Assets 130,233,288 17,994,471 ================== =================== LIABILITIES Current Liabilities: Accounts payable and accrued expenses 1,091,501 671,384 Lease liability 114,388 273,740 ------------------ ------------------- Total Current Liabilities 1,205,889 945,124 ------------------ ------------------- Non Current Liabilities: Reclamation and Remediation Provision 32,710 90,000 Lease Liability 217,434 - ------------------ ------------------- Total Non Current Liabilities: 250,144 90,000 ------------------ ------------------- Total Liabilities 1,456,033 1,035,124 ------------------ ------------------- Commitments (Note 6) Stockholders' Equity Common Stock: US$.001 par value, 300,000,000 shares authorized 226,073,698 shares issued (177,068,825 in 2007) 274,739 223,039 Additional Paid-in-Capital 153,059,162 30,691,681 Accumulated Other Comprehensive Income 38,490 38,490 Retained Deficit during development period (839,463) (839,463) Retained Deficit during exploration period (23,755,673) (13,154,400) ------------------ ------------------- Total Stockholders' Equity 128,777,255 16,959,347 ------------------ ------------------- Total Liabilities and Stockholders' Equity 130,233,288 17,994,471 ================== ===================
The accompanying notes are an integral part of these financial statements. 3 LEGEND INTERNATIONAL HOLDINGS, INC. (An Exploration Stage Company) Statements of Operations (Unaudited)
For the three months For the nine months January 5, ended September 30 ended September 30 2001 (Inception) to September 30, 2008 2007 2008 2007 2008 A$ A$ A$ A$ A$ -- -- -- -- -- -------------- -------------- --------------- --------------- --------------- Revenues: Sales - - - - 6,353 less cost of sales - - - - (1,362) -------------- -------------- --------------- --------------- --------------- Gross profit - - - - 4,991 Other income Interest income 1,586,828 2,068 1,936,800 6,471 1,962,858 -------------- -------------- --------------- --------------- --------------- 1,586,828 2,068 1,936,800 6,471 1,967,849 -------------- -------------- --------------- --------------- --------------- Costs and expenses: Exploration expenditure 2,227,340 1,274,519 4,339,553 2,969,928 13,609,465 Legal, accounting and professional 142,573 47,997 450,380 107,296 797,362 Stock based compensation 1,581,290 84,632 3,540,100 255,579 4,686,997 Loss on equipment written off - - - - 3,570 Interest expense 2,521 14,009 21,226 47,015 133,357 Administration expenses 2,040,830 498,186 6,280,787 1,196,894 9,265,817 -------------- -------------- --------------- --------------- --------------- Total costs and expenses (5,994,554) (1,919,343) (14,632,046) (4,576,712) (28,496,568) -------------- -------------- --------------- --------------- --------------- (Loss) from operations (4,407,726) (1,917,275) (12,695,246) (4,570,241) (26,528,719) Foreign currency exchange gain/(loss) 3,978,148 (159,460) 2,093,973 (315,995) 1,933,578 -------------- -------------- --------------- --------------- --------------- (Loss) before income taxes (429,578) (2,076,735) (10,601,273) (4,886,236) (24,595,141) -------------- -------------- --------------- --------------- --------------- Provision for income taxes - - - - - -------------- -------------- --------------- --------------- --------------- Net (Loss) (429,578) (2,076,735) (10,601,273) (4,886,236) (24,595,141) -------------- -------------- --------------- --------------- --------------- Basic and diluted loss per common shares A$(0.00) A$(0.01) A$(0.06) A$(0.41) A$(0.03) ============== ============== =============== =============== =============== Weighted average number of common shares used in per share calculations 223,807,693 155,186,494 188,188,074 141,566,192 59,224,559 ============== ============== =============== =============== ===============
The accompanying notes are an integral part of these consolidated financial statements 4 LEGEND INTERNATIONAL HOLDINGS, INC. (An Exploration Stage Company) Statements of Stockholders' Equity (Deficit) for the period ended September 30, 2008
Common Stock Retained Retained (Deficit) During (Deficit) Accumulated Additional the Exploration During the Other Stockholders' Paid-In Period Development Comprehensive Equity Par Value Capital A$ Period Income (Deficit) Shares A$ A$ A$ A$ A$ ----------------------------------------------------------------------------------------------- Balance, January 5, 2001 - - - - - - - Shares issued to founder for organisation cost and services at US$0.05 per shares 4,297,500 5,550 118,896 - - - 124,446 Shares Issued for services rendered at US$0.05 per share 146,250 189 4,046 - - - 4,235 Shares Issued for Cash 616,500 796 17,056 - - - 17,852 Net Loss - - - - (131,421) - (131,421) ----------------------------------------------------------------------------------------------- Balance, December 31, 2001 5,060,250 6,535 139,998 - (131,421) - 15,112 Shares Issued for Cash 225,000 291 6,225 - - - 6,516 Shares Issued for Officer's Compensation 11,250,000 14,529 148,359 - - - 162,888 Net Loss - - - - (182,635) - (182,635) ----------------------------------------------------------------------------------------------- Balance, December 31, 2002 16,535,250 21,355 294,582 - (314,056) - 1,881 Shares Issued for services rendered at US$0.022 per share 5,026,500 6,491 139,065 - - - 145,556 Net Loss - - - - (156,965) - (156,965) ----------------------------------------------------------------------------------------------- Balance, December 31, 2003 21,561,750 27,846 433,647 - (471,021) - (9,528) Shares Issued for services rendered at US$0.022 per share 2,004,750 2,589 55,464 - - - 58,053 Options Issued for services - - 160,672 - - - 160,672 Loan forgiveness-former major shareholder - - 12,144 - - - 12,144 Net Loss - - - - (234,611) - (234,611) ----------------------------------------------------------------------------------------------- Balance, December 31, 2004 23,566,500 30,435 661,927 - (705,632) - (13,270) Shares issued on cashless exercise of options 17,085,938 22,066 (22,066) - - - - Net Loss - - - - (75,508) - (75,508) ----------------------------------------------------------------------------------------------- Balance, December 31, 2005 40,652,438 52,501 639,861 - (781,140) - (88,778) Share issued on cashless exercise of options 72,281,329 93,336 (93,336) - - - - Shares and options issued under settlement agreement 112,500 144 35,272 - - - 35,416 Shares issued for cash 12,756,734 16,524 3,854,843 - - - 3,871,367 Cost of share issues - - (128,376) - - - (128,376) Amortisation of Options under stock option plan - - 115,307 - - - 115,307 Net unrealized gain on foreign exchange translation - - - - - 38,490 38,490 Net Loss - - - (4,516,271) (58,323) - (4,574,594) ----------------------------------------------------------------------------------------------- Balance, December 31, 2006 125,803,001 162,505 4,423,571 (4,516,271) (839,463) 38,490 (731,168)
5 LEGEND INTERNATIONAL HOLDINGS, INC. (An Exploration Stage Company) Statements of Stockholders' Equity (Deficit) for the period ended September 30, 2008 (continued) Common Stock
Retained Retained (Deficit) (Deficit) Accumulated Additional During the During the Other Stockholders' Paid-In Exploration Development Comprehensive Equity Par Value Capital Period Period income (Deficit) Shares A$ A$ A$ A$ A$ A$ ----------------------------------------------------------------------------------------------- Shares issued for cash 47,686,624 56,438 25,684,666 - - - 25,741,104 Cost of share issues - - (1,675,111) - - - (1,675,111) Shares issued for consulting fees 2,604,200 2,984 1,001,122 - - - 1,004,106 Shares issued on cashless exercise of options 75,000 85 (85) - - - - Shares issued under registration rights agreement 200,000 230 364,575 - - - 364,805 Shares issued for part- settlement of the acquisition of rights to exploration licences under agreement 500,000 545 517,455 - - - 518,000 Amortization of options under stock option plan - - 375,740 - - - 375,740 Net Loss - - - (8,638,129) - - (8,638,129) ----------------------------------------------------------------------------------------------- Balance, December 31, 2007 176,868,825 222,787 30,691,933 (13,154,400) (839,463) 38,490 16,959,347 Shares issued for cash 42,000,000 44,011 109,984,282 - - - 110,028,293 Cost of share issues - - (5,920,448) - - - (5,920,448) Shares issued on cashless exercise of options 1,283,304 1,368 (1,368) - - - - Shares issued on exercise of options 5,432,960 5,995 13,717,158 - - - 13,723,153 Shares issued for consulting fees 30,800 33 147,555 - - - 147,588 Shares issued under registration rights agreement 457,809 545 899,950 - - - 900,495 Amortization of options under stock option plan - - 3,540,100 - - - 3,540,100 Net Loss - - - (10,601,273) - - (10,601,273) ----------------------------------------------------------------------------------------------- Balance, September 30, 2008 226,073,698 274,739 153,059,162 (23,755,673) (839,463) 38,490 128,777,255 -----------------------------------------------------------------------------------------------
The accompanying notes are integral part of the financial statements. 6 LEGEND INTERNATIONAL HOLDINGS, INC. (An Exploration Stage Company) Statement of Cash Flows
For the nine months January 5, 2001 ended September 30 (Inception) to September 30, 2008 2007 2008 A$ A$ A$ -- -- -- ------------- -------------- ------------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net Loss (10,601,273) (2,809,501) (24,595,136) ------------- -------------- ------------------ Adjustments to reconcile net loss to net cash provided (used) by operating activities: Foreign exchange (2,093,973) 315,995 (1,934,921) Shares and Options issued for Stock Based Compensation - Employees 3,540,100 255,579 4,686,998 - Consultants 147,588 53,269 531,421 - Exploration Agreement - - 518,000 - Registration Payment Arrangements 900,494 - 1,265,299 Exploration expenditure 326,526 142,215 326,526 Provision for rehabilitation (57,290) 90,000 32,710 Depreciation 97,004 12,404 117,974 Accrued interest added to principal - - 37,282 Net Change in: Receivables (1,145,497) (33,833) (1,703,402) Prepayments and deposits (940,825) (295,762) 1,181,665 Accounts Payable and Accrued Expenses 131,655 (6,400) 938,068 ------------- -------------- ------------------ Net Cash (Used) In Operating Activities (9,695,491) (4,352,769) (20,960,846) ------------- -------------- ------------------ CASH FLOWS FROM INVESTING ACTIVITIES: Write off of Property and Equipment - - 3,570 Acquisition of Subsidiary (326,526) - (326,526) Purchase of Property, Equipment and Motor Vehicle (1,516,822) (125,899) (1,671,387) Deposits (1,438,000) - (1,438,000) ------------- -------------- ------------------ Net Cash (Used) In Investing Activities (3,281,348) (125,899) (3,432,343) ------------- -------------- ------------------ CASH FLOWS FROM FINANCING ACTIVITIES: Advances Payable - Affiliates - (1,271,501) (26,156) Repayment of Convertible Debenture - - (130,310) Repayment of Shareholder Advance - - (641) Proceeds from Convertible Debenture Payable - - 130,310 Shareholder Advance - - 6,621 Proceeds from Issuance of Stock 123,751,446 8,816,811 153,388,284 Cost of share issues (5,920,448) (787,704) (7,082,573) Net Borrowing/Repayments from Affiliates - - 50,003 ------------- -------------- ------------------ Net Cash Provided by Financing Activities 117,830,998 6,757,606 146,335,538 ------------- -------------- ------------------ Effect of exchange rate changes on cash 2,093,973 (311,303) 2,093,973 ------------- -------------- ------------------ Net Increase in Cash 106,948,132 1,967,635 124,036,322 Cash at Beginning of Period 17,088,190 839,797 - ------------- -------------- ------------------ Cash at End of Period 124,036,322 2,807,432 124,036,322 ------------- -------------- ------------------ Supplemental Disclosures: Cash paid for interest - 47,015 62,196 Cash paid for income taxes - - - Stock and options issued for services 147,588 673,543 1,595,523 Accrued interest and stockholder advances charged to paid in capital - - 12,744 Stock issued for exploration agreement - - 518,000 Stock issued for registration payment arrangement 900,494 - 1,265,299 Equipment obtained through a capital lease 279,368 - 303,949 Capital lease obligation for exploration costs 362,462 362,462 Interest in relation to capital lease for exploration costs - 42,313 42,313 Fair value of warrants issued in connection with issuance of capital stock 1,330,852 - 1,330,852
The accompanying notes are integral part of the financial statements. 7 LEGEND INTERNATIONAL HOLDINGS, INC. (An Exploration Stage Company) Notes to Financial Statements 1. ORGANISATION AND BUSINESS Legend International Holdings, Inc, ("the Company"), was incorporated under the laws of the State of Delaware on January 5, 2001. Following a change of management in November 2004, the Company developed a new plan of operations for fiscal 2006, which is to engage in mineral exploration and development activities. The Company's current business plan calls for the identification of mineral properties where it can obtain secure title to exploration, development and mining interests. The Company's preference is to identify large minerals deposits with low operating costs. At the beginning of 2006, the Company expanded its areas of interest to include diamond exploration activities and in July 2006, the Company completed the acquisition of certain diamond mining tenements in Northern Australia. Since that time, the Company has identified that those mining tenements in Northern Australia also have potential for uranium and base metals. In November 2007 and February 2008, the Company acquired mining tenements prospective for phosphate in the State of Queensland, Australia. Since that time, the Company has focussed its primary activities on phosphate in the State of Queensland, Australia The Company's financial statements are prepared using generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company has incurred net losses since its inception. Exploration Stage Enterprise The Company is an exploration stage enterprise. The Company is devoting all of its present efforts in securing and establishing its exploration business through field sampling and drilling programs in the State of Queensland and the Northern Territory of Australia. 2. RECENT ACCOUNTING PRONOUNCEMENTS In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements which provides enhanced guidance for using fair value to measure assets and liabilities. SFAS No. 157 provides a common definition of fair value and establishes a framework to make the measurement of fair value in generally accepted accounting principles more consistent and comparable. SFAS No. 157 also requires expanded disclosures to provide information about the extent to which fair value is used to measure assets and liabilities, the methods and assumptions used to measure fair value, and the effect of fair value measures on earnings. SFAS No. 157 is effective for financial statements issued in fiscal years beginning after November 15, 2007 and for interim periods within those fiscal years. In February 2008, the FASB staff issued Staff Position No. 157-2 "Effective date of FASB Statement No. 157" ("FSP FAS 157-2"). FSP FAS 157-2 delayed the effective date of FAS 157 for nonfinancial assets and nonfinancial liabilities, except for items that are recognised or disclosed at fair value in the financial statements on a recurring basis (at least annually). The provisions of FSP FAS 157-2 are effective for the Company's fiscal year beginning January 1, 2009. The adoption of this interpretation has not and is not expected to have a material impact on the Company's future reported financial position or results of operations. In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities-Including an Amendment of FASB Statement No. 115", which permits companies to choose to measure many financial instruments and certain other items at fair value. The provisions of SFAS 159 were adopted January 1, 2008. The Company did not elect the Fair Value Option for any of its financial assets or liabilities and therefore, the adoption of SFAS 159 had no impact on the Company's consolidated financial position, results or operations or cash flows. In December 2007, the FASB issued SFAS No. 141(R), "Business Combinations" ("SFAS 141(R)"), which replaces SFAS 141. SFAS 141(R) requires assets and liabilities acquired in a business combination, contingent consideration, and certain acquired contingencies to be measured at their fair values as of the date of acquisition. SFAS 141(R) also requires that acquisition-related costs and restructuring costs be recognized separately from the business combination. SFAS 141(R) is effective for fiscal years beginning 8 after December 15, 2008 and will be effective for business combinations entered into after January 1, 2009. The Company is currently evaluating the potential impact of adopting this statement on the Company's financial position, results of operations or cash flows. In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in Consolidated Financial Statements - an Amendment of ARB No. 51" ("SFAS 160"). SFAS 160 clarifies the accounting for noncontrolling interests and establishes accounting and reporting standards for the noncontrolling interest in a subsidiary, including classification as a component of equity. SFAS 160 is effective for fiscal years beginning after December 15, 2008. The Company is currently evaluating the potential impact of adopting this statement on the Company's consolidated financial position, results of operations and cash flows. In December 2007, the FASB issued FASB Statement No. 141(R), "Business Combinations" ("FAS 141(R)") which amends FAS 141, and provides revised guidance for recognizing and measuring identifiable assets and goodwill acquired, liabilities assumed, and any noncontrolling interest in the acquiree. It also provides disclosure requirements to enable users of the financial statements to evaluate the nature and financial effects of the business combination. FAS 141(R) is effective for the Company's fiscal year beginning January 1, 2009 and is to be applied prospectively. The Company is currently evaluating the potential impact of adopting this statement on the Company's consolidated financial position, results of operations or cash flows. In March 2008, the FASB issued SFAS No. 161 "Disclosure about Derivative Instruments and Hedging Activities - an amendment of FASB statements No. 133" ("SFAS 161") which provides revised guidance for enhanced disclosures about how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for under FAS 133, and how derivative instruments and the related hedged items affect and entity's financial position, financial performance and cash flows. SFAS 161 is effective for the Company's fiscal year beginning January 1, 2009. The Company does not currently have any derivative instruments and is not involved in any hedging activities. In May 2008, the FASB issued SFAS No. 162 "The Hierarchy of Generally Acceptable Accounting Principles" ("SFAS 162"). SFAS 162 identifies the source of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of non-governmental entities that are presented in conformity with generally accepted accounting principles in the United States. This statement is effective 60 days following the SEC's approval of the Public Company Accounting Oversight Board amendments to AU Section 411, "The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles". Although the Company will continue to evaluate the application of SFAS 162, the Company does not currently believe the adoption of SFAS 162 will have a material impact on its financial statements. 3. PROPERTY AND EQUIPMENT Property and equipment is stated at cost. Depreciation is computed over a period covering the estimated useful life of the applicable property and equipment.
At September 30, 2008 At December 31, 2007 Depreciable Accumulated Net Book Accumulated Net Book Life Cost Depreciation Value Cost Depreciation Value (in years) A$ A$ A$ A$ A$ A$ Leasehold Improvements 1-2 16,732 (1,065) 15,666 16,732 (105) 16,627 Motor Vehicles 5 463,024 (47,169) 415,855 104,782 (13,114) 91,668 Equipment 1-10 301,582 (32,472) 269,110 57,633 (7,751) 49,882 Lear Jet 5 1,100,000 (37,268) 1,062,732 - - - Construction in Progress 94,000 - 94,000 - - - ========================================================================== 1,975,338 (117,975) 1,857,363 154,566 (20,970) 158,177 ==========================================================================
The depreciation expense for the nine months ended September 30, 2008 amounted to A$97,004 and for the nine months ended September 30, 2007 amounted to A$12,404. 9 DEPOSITS Deposits held by the Company as at September 30, 2008: 2008 A$ Application for shares 500,000 Term Deposit as security for a Banker's Undertaking 500,000 Other 3,206 Property Acquisition 938,000 Cash deposits provided to Government Departments for the purpose of guaranteeing the Company's performance in accordance with mining law 167,500 ------------------- 2,108,706 =================== 5. STOCKHOLDERS EQUITY Common Stock In January 2001, 4,297,500 common shares were issued to the Company's founder for organization cost valued at A$124,446 (US$95,500), and 146,250 common shares were issued to a related party in exchange for consulting fee valued at A$4,235 (US$3,250). In March 2002, 11,250,000 common shares were issued to the Company's founder in exchange for present and future services valued at A$162,888 (US$125,000). In April 2002, the Company closed its offering under its registration statement filed with the United States Securities and Exchange Commission to sell up to 4,500,000 shares of its common stock at US$0.022 per share, which became effective on April 11, 2001. The Company sold 841,500 shares (616,500 shares in 2001 and a further 225,000 shares in 2002) of its common stock under the offering. In 2003, a total of 5,026,500 common shares were issued to the Company's sole officer and director for services valued at A$145,556 (US$111,700) or A$0.029 (US$0.022) per share. In 2004, a total of 2,004,750 common shares were issued to the Company's former sole officer and director for services valued at A$58,053 (US$44,550) or A$0.029 (US$0.022) per share. In December 2004, the Company issued to Renika Pty Limited ("Renika"), a company associated with Mr J I Gutnick, 20,250,000 options to be converted into 20,250,000 shares of common stock, at an exercise price of US$0.022 and a latest exercise date of December 2009 for services to be rendered to the Company. The Company undertook a Black Scholes valuation of these options using a A$0.029 (US$0.022) exercise price, US$0.022 market price, 5 year life, risk free interest rate of 5.155% and a volatility of 16.7%. The 20,250,000 options were valued at A$160,672 (US$123,300) or A$0.008 (US$0.006) each. The stock options were issued for services rendered, to be rendered and for agreeing to provide financial assistance to the Company (not the actual provision of financial assistance). The issue of the stock options was not contingent upon any further services or events. The stock options are not forfeitable if the services or financial assistance are not provided. Accordingly, the value of the stock options were expensed during 2004. In September 2005, Renika exercised the 20,250,000 options using the cashless exercise feature and were issued 17,085,937 shares of common stock. Effective as of December 12, 2005, the Board of Directors of Company approved the distribution to all stockholders for no consideration of an aggregate of 36,135,500 non-transferable options, each of which is exercisable to purchase one share of common stock of the Company at an exercise price of US$0.25 cents per share with a latest exercise date of December 31, 2012. The options were issued on a pro-rata basis to all stockholders of record on December 31, 2005 on the basis of two (2) options for every one (1) share of common stock owned by a stockholder on the record date. The options may not be 10 exercised until the shares underlying the options are registered under federal and state securities laws. At December 31, 2005 the Company had outstanding 36,135,500 options and as at December 31, 2006, the Company had outstanding 1,388,280 options, each of which is exercisable to purchase one share of common stock at US$0.25 per share. The options cannot be exercised, other than using the cashless exercise feature, until the Company registers the shares of common stock to be issued upon exercise of the options in accordance with the Securities Act of 1933, asamended and any applicable state securities laws. The only exception is in the case of a cashless exercise. Effective July 21, 2006, Legend issued 71,730,079 shares of common stock to Renika Pty Ltd ("Renika"), a company associated with Mr. J I Gutnick, President of Legend, following the cashless exercise of 34,778,220 options. The shares of common stock issued are restricted shares. Between September 19, 2006 and November 17, 2006, Legend issued 11,703,728 shares of common stock at a placement price of US$0.22 per share raising A$3,384,709. The securities were issued pursuant to a private placement and are issued in reliance upon an exemption from the registration requirements of the Securities Act of 1933, as amended ("The Act") under Section 4(2) of the Act. Effective November 30, 2006, Legend issued a further 112,500 shares of common stock and 50,000 options with an exercise price of A$0.25 per option and a latest exercise date of December 12, 2012 for no consideration to settle outstanding matters with an external party. Effective December 31, 2006, Legend issued a further 1,053,000 shares of common stock at a placement price of US$0.33 raising A$445,705 (US$351,000). The securities were issued pursuant to a private placement and are issued in reliance upon an exemption from the registration requirements of the Securities Act of 1933, as amended ("the Act") under Section 4 (2) of the Act. In December 2006, 19,000 options issued with no exercise price were exercised and the Company issued 24,750 shares of common stock. In December 2006, 351,000 options were exercised using the cashless exercise feature and the Company issued 526,500 shares of common stock. Between January 1, 2007 and September 30, 2007, Legend issued a further 29,136,624 shares of common stock at a placement price of US$0.25 raising A$8,816,411 (US$7,226,906). The securities were issued pursuant to a private placement and are issued in reliance upon an exemption from the registration requirements of the Securities Act of 1933 as amended ("The Act") under Section 4(2) of the Act. Effective June 15, 2007, Legend issued a further 200,000 shares of common stock for consulting fees amounting to A$59,074 (US$50,000). Between July 1, 2007 and September 30, 2007, Legend issued a further 2,150,200 shares of common stock for consulting fees amounting to A$614,469 (US$537,550). On December 12, 2007, Legend issued a further 18,750,000 shares of common stock at a placement price of US$0.80 per share raising A$16,924,292 (US$15,000,000). The securities were issued pursuant to a private placement and are issued in reliance upon an exemption from the registration requirements of the Securities Act of 1933 as amended ("The Act") under Section 4(2) of the Act. Between October 1, 2007 and December 31, 2007, Legend issued a further 500,000 shares of common stock for part settlement of acquisition of exploration permits amounting to A$518,000 (US$475,000). Between October 1, 2007 and December 31, 2007, Legend issued a further 254,000 shares for consulting fees amounting to A$330,564 (US$289,420). 11 Between October 1, 2007 and December 31, 2007, Legend issued a further 200,000 shares of common stock as a result of delays in lodging a registration statement amounting to A$364,805 (US$318,000). Between January 1, 2008 and June 30, 2008, Legend issued a further 457,809 shares of common stock as a result of delays in lodging a registration statement amounting to A$900,494 (US$757,015). On June 3, 2008, Legend issued 42,000,000 shares of common stock at a placement price of US$2.50 per share raising A$110,028,293 (US$105,000,000) (the "BMO Offering"). The securities were issued pursuant to a private placement and are issued in reliance upon an exemption from the registration requirements of the Securities Act of 1933 as amended ("The Act") under Section 4(2) of the Act. The direct costs of the offering totalled approximately A$5,920,448. As additional consideration, the Company issued to the agents 840,000 warrants to purchase common stock with an exercise price of US$2.50 per warrant. The warrants are exercisable at any time up to June 3, 2010. Between April 1, 2008 and June 30, 2008, 1,332,000 options were exercised using the cashless exercise feature and the Company issued 1,274,584 shares of common stock. Between April 1, 2008 and June 30, 2008, 108,000 options were exercised for US$0.111, total amount received A$12,544 (US$11,988.00) and the Company issued 108,000 shares of common stock. Between April 1, 2008 and June 30, 2008, Legend issued a further 30,800 shares for consulting fees amounting to A$147,588 (US$138,600). Between July 1, 2008 and September 30, 2008, 9,000 options were exercised using the cashless exercise feature and the Company issued 8,720 shares of common stock. Between July 1, 2008 and September 30, 2008, 324,960 options were exercised for US$0.111, total amount received A$38,518 (US$36,071) and the Company issued 324,960 shares of common stock. Effective July 14, 2008, the Company entered into a Shares Option Agreement with the Indian Farmers Fertilizer Cooperative Limited ("IFFCO") to finance its operations. Under the Share Options Agreement, IFFCO received options to purchase 30 million shares of Common Stock of the Company on the following terms: a. 5,000,000 options, at an exercise price of US$2.50 per share and expiring 60 days from July 11, 2008; b. 8,000,000 options, at an exercise price of US$3.00 per share and expiring 12 months from July 11, 2008; c. 8,000,000 options, at an exercise price of US$3.50 per share and expiring 18 months from July 11, 2008; d. 9,000,000 options, at an exercise price of US$4.00 per share and expiring 24 months from July 11, 2008. During the third quarter of 2008, the 5,000,000 options issued to IFFCO, at an exercise price of US$2.50 per share and expiring 60 days from July 11, 2008 were exercised on August 11, 2008 and pursuant to the Share Options Agreement, IFFCO received a 1.2% discount on the exercise price. The total amount received was A$13,672,091 (US$12,350,000) and the Company issued 5,000,000 shares of common stock. The total remaining proceeds amount to US$88 million, and when exercised will be utilized to fund expenditure related to the Company's phosphate project. The Company accounts for these options as a financing activity and accordingly, records all proceeds upon exercise of such options within shareholders equity. 12 The Share Options Agreement also gives IFFCO a pre-emptive right to acquire its pro rata share of future issuances of Common Stock by the Company, with certain exceptions. Share Bonus Issue Effective November 17, 2006, Legend issued one (1) new bonus share of common stock for every two (2) shares of common stock outstanding on the record at that date. The issue of the new bonus shares of common stock were on a pro-rate basis to all shareholders. As a result, the Company issued 27,599,722 shares of its common stock. Effective December 31, 2006, Legend issued one (1) new bonus share of common stock for every two (2) shares of common stock outstanding on the record at that date. The issue of the new bonus shares of common stock were on a pro-rata basis to all shareholders. As a result, the Company issued 41,934,337 shares of its common stock. The Company has accounted for these two bonus issues as a stock split and accordingly, all share and per share data has been retroactively restated. Issue of Options under Equity Incentive Plan (i) Effective September 19, 2006, the Company issued 8,100,000 options over shares of common stock to Directors, Executives and Consultants under the 2006 Equity Incentive Plan that has been adopted by the Directors of the Company. The options will vest: 1/3 after 12 months, 1/3 after 24 months and the balance of 1/3 after 36 months. The exercise price of the options is US$1.00 for the President and Chief Executive Officer and one other participant; and for all other participants, US$0.444 for 50% of the options and US$1.00 for the balance of 50% of the options. The latest exercise date for the options is September 19, 2016. The Company has accounted for all options issued based upon their fair market value using the Binomial pricing model. An external consultant has calculated the fair value of the 8,100,000 options using the Binomial valuation method using the following inputs:
- ------------------------------------------------------------------------------------------------------------------- Grant date Sept 19, 2006 Sept 19, 2006 Sept 19, 2006 Sept 19, 2006 Sept 19, 2006 Sept 19, 2006 - ------------------------------------------------------------------------------------------------------------------- Grant date share price US$0.222 US$0.222 US$0.222 US$0.222 US$0.222 US$0.222 - ------------------------------------------------------------------------------------------------------------------- Vesting date Sept 19, 2007 Sept 19, 2007 Sept 19, 2008 Sept 19, 2008 Sept 19, 2009 Sept 19, 2009 - ------------------------------------------------------------------------------------------------------------------- Expected life in years 5.50 5.50 6.00 6.00 6.50 6.50 - ------------------------------------------------------------------------------------------------------------------- Risk-free rate 4.69% 4.69% 4.69% 4.69% 4.69% 4.69% - ------------------------------------------------------------------------------------------------------------------- Volatility 60% 60% 60% 60% 60% 60% - ------------------------------------------------------------------------------------------------------------------- Exercise price US$0.444 US$1.00 US$0.444 US$1.00 US$0.444 US$1.00 - ------------------------------------------------------------------------------------------------------------------- Call option value US$.09 US$.05 US$.10 US$.06 US$.10 US$.06 - -------------------------------------------------------------------------------------------------------------------
The Company adopted revised SFAS No.123, Share-Based payment, which addresses the accounting for share-based payment transactions in which a company receives employee services in exchange for (a) equity instruments of that company or (b) liabilities that are based on the fair value of the company's equity instruments or that may be settled by the issuance of such equity instruments.
Options Option Price Per Weighted Average ------- Share Exercise Price US$ US$ --- --- Outstanding at January 1, 2006 - - - Granted 8,100,000 0.444-1.00 0.69 Forfeited - - - --------------------------------------------------------- Outstanding at December 31, 2006 8,100,000 0.444-1.00 0.69 Granted - - - Forfeited (1,800,000) - - --------------------------------------------------------- Outstanding at December 31, 2007 6,525,000 0.444-1.00 0.69 Granted - - - Forfeited (337,500) - - --------------------------------------------------------- Outstanding at September 30, 2008 6,187,500 0.444-1.00 0.69 --------------------------------------------------------- Options exercisable at September 30, 2008 4,124,988 0.444-1.00 0.69 ---------------------------------------------------------
13 The range of exercise price is US$0.444 to US$1.00 per option. The weighted average per option fair value of options granted during 2006 was US$0.07 and the weighted average remaining contractual life of those options at September 30, 2008 is 8 years. The remaining value of the outstanding options equates to A$65,103 (US$49,010) and is being amortised over the vesting periods. For the nine months ended September 30, 2008, the amortization amounted to A$89,748 (US$67,562), including adjustment for forfeited options. (ii) Effective May 16, 2007, the Company issued 862,500 options over shares of common stock to employees under the 2006 Equity Incentive Plan that has been adopted by the Directors of the Company. The options will vest: 1/3 after 12 months, 1/3 after 24 months and the balance of 1/3 after 36 months. The exercise price of the options is US$0.444 for 50% of the options and US$1.00 for the balance of 50% of the options. The latest exercise date for the options is May 16, 2017. The Company has accounted for all options issued based upon their fair market value using the Binomial pricing model. An external consultant has calculated the fair value of the 862,500 options using the Binomial valuation method using the following inputs:
- ---------------------------------------------------------------------------------------------------------------- Grant date May 16, 2007 May 16, 2007 May 16, 2007 May 16, 2007 May 16, 2007 May 16, 2007 - ---------------------------------------------------------------------------------------------------------------- Grant date share price US$0.25 US$0.25 US$0.25 US$0.25 US$0.25 US$0.25 - ---------------------------------------------------------------------------------------------------------------- Vesting date May 16, 2008 May 16, 2008 May 16, 2009 May 16, 2009 May 16, 2010 May 16, 2010 - ---------------------------------------------------------------------------------------------------------------- Expected life in years 5.50 5.50 6.00 6.00 6.50 6.50 - ---------------------------------------------------------------------------------------------------------------- Risk-free rate 4.92% 4.92% 4.92% 4.92% 4.92% 4.92% - ---------------------------------------------------------------------------------------------------------------- Volatility 60% 60% 60% 60% 60% 60% - ---------------------------------------------------------------------------------------------------------------- Exercise price US$0.444 US$1.00 US$0.444 US$1.00 US$0.444 US$1.00 - ---------------------------------------------------------------------------------------------------------------- Call option value US$0.1111 US$0.064 US$0.117 US$0.072 US$0.124 US$0.079 - ----------------------------------------------------------------------------------------------------------------
Options Option Price Weighted ------- Per Share Average US$ Exercise Price --- US$ --- ---------------- --------------- --------------- Outstanding at January 1, 2007 - - - Granted 862,500 0.444-1.00 0.69 Forfeited (187,500) - - ------------------------------------------------ Outstanding at December 31, 2007 675,000 0.444-1.00 0.69 Forfeited (300,000) - - ------------------------------------------------ Outstanding at September 30, 2008 375,000 0.444-1.00 0.69 ------------------------------------------------ Options exercisable at September 30, 2008 125,000 0.444-1.00 0.69 ------------------------------------------------
The range of exercise price is US$0.444 to US$1.00 per option. The weighted average per option fair value of options granted during 2007 was US$0.0945 and the weighted average remaining contractual life of those options at September 30, 2008 is 9 years. A retention rate of 56.52% was applied based on personnel retention history for persons in this class of participants by AXIS Consultants Pty Ltd. The remaining value of the outstanding options including employee retention factor equates to A$12,646 (US$10,521) and is being amortised over the vesting periods. For the nine months ended September 30, 2008, the amortization amounted to A$14,019 (US$11,664). (iii) Effective September 10, 2007, the Company issued 300,000 options over shares of common stock to employees under the 2006 Equity Incentive Plan that has been adopted by the Directors of the Company. The options will vest: 1/3 after 12 months, 1/3 after 24 months and the balance of 1/3 after 36 months. The exercise price of the options is US$0.444 for 50% of the options and US$1.00 for the balance of 50% of the options. The latest exercise date for the options is September 10, 2017. 14 The Company has accounted for all options issued based upon their fair market value using the Binomial pricing model. An external consultant has calculated the fair value of the 300,000 options using the Binomial valuation method using the following inputs:
- ---------------------------------------------------------------------------------------------------------- Grant date Sept 10, 2007 Sept 10, 2007 Sept 10, 2007 Sept 10, 2007 Sept 10, 2007 Sept 10, 2007 - ---------------------------------------------------------------------------------------------------------- Grant date share price US$1.25 US$1.25 US$1.25 US$1.25 US$1.25 US$1.25 - ---------------------------------------------------------------------------------------------------------- Vesting date Sept 10, 2008 Sept 10, 2008 Sept 10, 2009 Sept 10, 2009 Sept 10, 2010 Sept 10, 2010 - ---------------------------------------------------------------------------------------------------------- Expected life in years 5.50 5.50 6.00 6.00 6.50 6.50 - ---------------------------------------------------------------------------------------------------------- Risk-free rate 4.637% 4.637% 4.637% 4.637% 4.637% 4.637% - ---------------------------------------------------------------------------------------------------------- Volatility 60% 60% 60% 60% 60% 60% - ---------------------------------------------------------------------------------------------------------- Exercise price US$0.444 US$1.00 US$0.444 US$1.00 US$0.444 US$1.00 - ---------------------------------------------------------------------------------------------------------- Call option value US$0.098 US$0.079 US$0.100 US$0.081 US$0.101 US$0.083 - ----------------------------------------------------------------------------------------------------------
Options Option Price Weighted ------- Per Share Average US$ Exercise Price --- US$ --- Outstanding at January 1, 2007 - - - ----------------------------------------------- Granted 300,000 0.444-1.00 0.69 ----------------------------------------------- Forfeited - - - ----------------------------------------------- Outstanding at December 31, 2007 300,000 0.444-1.00 0.69 ----------------------------------------------- Outstanding at September 30, 2008 300,000 0.444-1.00 0.69 ----------------------------------------------- Options exercisable at September 30, 2008 100,000 0.444-1.00 0.69 -----------------------------------------------
The range of exercise price is US$0.444 to US$1.00 per option. The weighted average per option fair value of options granted during 2007 was US$0.9033 and the weighted average remaining contractual life of those options at September 30, 2008 is 9 years. A forfeiture rate of 50% was applied for the third year based on personnel retention history for persons in this class of participants by AXIS Consultants Pty Ltd. The remaining value of the outstanding options including employee retention factor equates to A$87,740 (US$72,570) and is being amortised over the vesting periods. For the nine months ended September 30, 2008, the amortization amounted to A$129,423 (US$107,055). (iv) Effective December 19, 2007, the Company issued 300,000 options over shares of common stock to employees under the 2006 Equity Incentive Plan that has been adopted by the Directors of the Company. The options will vest: 1/3 after 12 months, 1/3 after 24 months and the balance of 1/3 after 36 months. The exercise price of the options is US$0.444 for 50% of the options and US$1.00 for the balance of 50% of the options. The latest exercise date for the options is December 19, 2017. The Company has accounted for all options issued based upon their fair market value using the Binomial pricing model. An external consultant has calculated the fair value of the 300,000 options using the Binomial valuation method using the following inputs:
- ---------------------------------------------------------------------------------------------------- Grant date Dec 19, 2007 Dec 19, 2007 Dec 19, 2007 Dec 19, 2007 Dec 19, 2007 Dec 19, 2007 - ---------------------------------------------------------------------------------------------------- Grant date share price US$0.95 US$0.95 US$0.95 US$0.95 US$0.95 US$0.95 - ---------------------------------------------------------------------------------------------------- Vesting date Dec 19, 2008 Dec 19, 2008 Dec 19, 2009 Dec 19, 2009 Dec 19, 2010 Dec 19, 2010 - ---------------------------------------------------------------------------------------------------- Expected life in years 5.50 5.50 6.00 6.00 6.50 6.50 - ---------------------------------------------------------------------------------------------------- Risk-free rate 4.92% 4.92% 4.92% 4.92% 4.92% 4.92% - ---------------------------------------------------------------------------------------------------- Volatility 60% 60% 60% 60% 60% 60% - ---------------------------------------------------------------------------------------------------- Exercise price US$0.444 US$1.00 US$0.444 US$1.00 US$0.444 US$1.00 - ---------------------------------------------------------------------------------------------------- Call option value US$0.70 US$0.54 US$0.71 US$0.56 US$0.72 US$0.58 - ----------------------------------------------------------------------------------------------------
15 Options Option Price Weighted ------- Per Share Average US$ Exercise Price --- US$ --- Outstanding at January 1, 2007 - - - Granted 300,000 0.444-1.00 0.69 Forfeited - - - ----------------------------------------------- Outstanding at December 31, 2007 300,000 0.444-1.00 0.69 ----------------------------------------------- Outstanding at September 30, 2008 300,000 0.444-1.00 0.69 ----------------------------------------------- The range of exercise price is US$0.444 to US$1.00 per option. The weighted average per option fair value of options granted during 2007 was US$0.6350 and the weighted average remaining contractual life of those options at September 30, 2008 is 9 1/4 years. No options are currently exercisable. A retention rate of 50% in the third year was applied for based on personnel retention history for persons in this class of participants by AXIS Consultants Pty Ltd. The remaining value of the outstanding options including employee retention factor equates to A$88,677 (US$76,227) and is being amortised over the vesting periods. For the nine months ended September 30, 2008, the amortization amounted to A$91,137 (US$78,338). (v) Effective December 28, 2007, the Company issued 4,787,500 options over shares of common stock to employees under the 2006 Equity Incentive Plan that has been adopted by the Directors of the Company. The options will vest: 1/3 after 12 months, 1/3 after 24 months and the balance of 1/3 after 36 months. The exercise price of the options is US$1.00. The latest exercise date for the options is December 28, 2017. The Company has accounted for all options issued based upon their fair market value using the Binomial pricing model. An external consultant has calculated the fair value of the 4,787,500 options using the Binomial valuation method using the following inputs: ------------------------------------------------------------------ Grant date Dec 28, 2007 Dec 28, 2007 Dec 28, 2007 ------------------------------------------------------------------ Grant date share price US$1.09 US$1.09 US$1.09 ------------------------------------------------------------------ Vesting date Dec 28, 2008 Dec 28, 2009 Dec 28, 2010 ------------------------------------------------------------------ Expected life in years 5.50 6.00 6.50 ------------------------------------------------------------------ Risk-free rate 4.488% 4.488% 4.488% ------------------------------------------------------------------ Volatility 60% 60% 60% ------------------------------------------------------------------ Exercise price US$1.00 US$1.00 US$1.00 ------------------------------------------------------------------ Call option value US$0.65 US$0.67 US$0.69 ------------------------------------------------------------------ Options Option Price Weighted ------- Per Share Average US$ Exercise Price --- US$ --- Outstanding at January 1, 2007 - - - Granted 4,787,500 1.00 1.00 Forfeited - - - ----------------------------------------------- Outstanding at December 31, 2007 4,787,500 1.00 1.00 ----------------------------------------------- Outstanding at September 30, 2008 4,787,500 1.00 1.00 ----------------------------------------------- The exercise price is US$1.00 per option. The weighted average per option fair value of options granted during 2007 was US$0.67 and the weighted average remaining contractual life of those options at September 30, 2008 is 9 1/4 years. No options are currently exercisable. A retention rate of 78% was applied for the third year based on personnel retention history for persons in this class of participants by AXIS Consultants Pty Ltd. The remaining value of the outstanding options including employee retention factor equates to A$1,776,568 (US$1,554,675) and is being amortised over the vesting periods. For the nine months ended September 30, 2008, the amortization amounted to A$1,592,124 (US$1,393,267). 16 (vi) Effective February 7, 2008, the Company issued 5,000,000 options over shares of common stock to employees under the 2006 Equity Incentive Plan that has been adopted by the Directors of the Company. The options will vest: 1/3 after 12 months, 1/3 after 24 months and the balance of 1/3 after 36 months. The exercise price of the options is US$2.00. The latest exercise date for the options is February 7, 2018. The Company has accounted for all options issued based upon their fair market value using the Binomial pricing model. An external consultant has calculated the fair value of the 5,000,000 options using the Binomial valuation method using the following inputs: ---------------------------------------------------------- Grant date Feb 7, 2008 Feb 7, 2008 Feb 7, 2008 ---------------------------------------------------------- Grant date share price US$0.99 US$0.99 US$0.99 ---------------------------------------------------------- Vesting date Feb 7, 2009 Feb 7, 2010 Feb 7, 2011 ---------------------------------------------------------- Expected life in years 5.50 6.00 6.50 ---------------------------------------------------------- Risk-free rate 4.387% 4.387% 4.387% ---------------------------------------------------------- Volatility 60% 60% 60% ---------------------------------------------------------- Exercise price US$2.00 US$2.00 US$2.00 ---------------------------------------------------------- Call option value US$0.40 US$0.43 US$0.46 ---------------------------------------------------------- Options Option Price Weighted ------- Per Share Average US$ Exercise Price --- US$ --- Outstanding at January 1, 2008 - - - Granted 5,000,000 2.00 2.00 Forfeited - - - ----------------------------------------------- Outstanding at September 30, 2008 5,000,000 2.00 2.00 ----------------------------------------------- The exercise price is US$2.00 per option. The weighted average per option fair value of options granted during 2008 was US$0.43 and the weighted average remaining contractual life of those options at September 30, 2008 is 9 1/2 years. No options are currently exercisable. The options were issued to the Company's CEO and therefore the Company applied a 100% retention rate. The remaining value of the outstanding options including employee retention factor equates to A$1,476,815 (US$1,323,670) and is being amortised over the vesting periods. For the nine months ended September 30, 2008, the amortization amounted to A$921,935 (US$826,330). (vii) Effective February 19, 2008, the Company issued 400,000 options over shares of common stock to employees under the 2006 Equity Incentive Plan that has been adopted by the Directors of the Company. The options will vest: 1/3 after 12 months, 1/3 after 24 months and the balance of 1/3 after 36 months. The exercise price of the options is US$1.00. The latest exercise date for the options is February 19, 2018. The Company has accounted for all options issued based upon their fair market value using the Binomial pricing model. An external consultant has calculated the fair value of the 400,000 options using the Binomial valuation method using the following inputs: ------------------------------------------------------------------ Grant date Feb 19, 2008 Feb 19, 2008 Feb 19, 2008 ------------------------------------------------------------------ Grant date share price US$1.04 US$1.04 US$1.04 ------------------------------------------------------------------ Vesting date Feb 19, 2009 Feb 19, 2010 Feb 19, 2011 ------------------------------------------------------------------ Expected life in years 5.50 6.00 6.50 ------------------------------------------------------------------ Risk-free rate 4.422% 4.422% 4.422% ------------------------------------------------------------------ Volatility 60% 60% 60% ------------------------------------------------------------------ Exercise price US$1.00 US$1.00 US$1.00 ------------------------------------------------------------------ Call option value US$0.61 US$0.63 US$0.65 ------------------------------------------------------------------ 17 Options Option Price Weighted ------- Per Share Average US$ Exercise Price --- US$ --- Outstanding at January 1, 2008 - - - Granted 400,000 1.00 1.00 Forfeited - - - ----------------------------------------------- Outstanding at September 30, 2008 400,000 1.00 1.00 ----------------------------------------------- The exercise price is US$1.00 per option. The weighted average per option fair value of options granted during 2008 was US$0.63 and the weighted average remaining contractual life of those options at September 30, 2008 is 9 1/2 years. No options are currently exercisable. The options were issued to one individual and in that case, the Company applied a 100% retention rate. The remaining value of the outstanding options equates to A$174,129 (US$158,353) and is being amortised over the vesting periods. For the nine months ended September 30, 2008, the amortization amounted to A$102,977 (US$93,647). (viii) Effective May 29, 2008, the Company issued 362,500 options over shares of common stock to employees under the 2006 Equity Incentive Plan that has been adopted by the Directors of the Company. The options will vest: 1/3 after 12 months, 1/3 after 24 months and the balance of 1/3 after 36 months. The exercise price of the options is US$1.00. The latest exercise date for the options is May 29, 2018. The Company has accounted for all options issued based upon their fair market value using the Binomial pricing model. An external consultant has calculated the fair value of the 362,500 options using the Binomial valuation method using the following inputs: ------------------------------------------------------------- Grant date May 29, 2008 May 29, 2008 May 29, 2008 ------------------------------------------------------------- Grant date share price US$3.31 US$3.31 US$3.31 ------------------------------------------------------------- Vesting date May 29, 2009 May 29, 2010 May 29, 2011 ------------------------------------------------------------- Expected life in years 5.50 6.00 6.50 ------------------------------------------------------------- Risk-free rate 4.077% 4.077% 4.077% ------------------------------------------------------------- Volatility 60% 60% 60% ------------------------------------------------------------- Exercise price US$1.00 US$1.00 US$1.00 ------------------------------------------------------------- Call option value US$2.67 US$2.70 US$2.72 ------------------------------------------------------------- Options Option Price Weighted ------- Per Share Average US$ Exercise Price --- US$ --- Outstanding at January 1, 2008 - - - Granted 362,500 1.00 1.00 Forfeited - - - ----------------------------------------------- Outstanding at September 30, 2008 362,500 1.00 1.00 ----------------------------------------------- The exercise price is US$1.00 per option. The weighted average per option fair value of options granted during 2008 was US$2.70 and the weighted average remaining contractual life of those options at September 30, 2008 is 9 3/4 years. No options are currently exercisable. The options were issued to two individuals and in that case, the Company applied a 100% retention rate. The remaining value of the outstanding options equates to A$807,689 (US$775,301) and is being amortised over the vesting periods. For the nine months ended September 30, 2008, the amortization amounted to A$210,689 (US$202,241). (ix) Effective July 7, 2008, the Company issued 200,000 options over shares of common stock to employees under the 2006 Equity Incentive Plan that has been adopted by the Directors of the Company. The options will vest: 1/3 after 12 months, 1/3 after 24 months and the balance of 1/3 after 36 months. The exercise price of the options is US$2.00. The latest exercise date for the options is July 7, 2018. 18 The Company has accounted for all options issued based upon their fair market value using the Binomial pricing model. An external consultant has calculated the fair value of the 200,000 options using the Binomial valuation method using the following inputs: ------------------------------------------------------------------ Grant date July 7, 2008 July 7, 2008 July 7, 2008 ------------------------------------------------------------------ Grant date share price US$3.83 US$3.83 US$3.83 ------------------------------------------------------------------ Vesting date July 7, 2009 July 7, 2010 July 7, 2011 ------------------------------------------------------------------ Expected life in years 5.50 6.00 6.50 ------------------------------------------------------------------ Risk-free rate 3.901% 3.901% 3.901% ------------------------------------------------------------------ Volatility 60% 60% 60% ------------------------------------------------------------------ Exercise price US$2.00 US$2.00 US$2.00 ------------------------------------------------------------------ Call option value US$2.72 US$2.77 US$2.82 ------------------------------------------------------------------ Options Option Price Weighted ------- Per Share Average US$ Exercise Price --- US$ --- Outstanding at January 1, 2008 - - - Granted 200,000 2.00 2.00 Forfeited - - - ----------------------------------------------- Outstanding at September 30, 2008 200,000 2.00 2.00 ----------------------------------------------- The exercise price is US$2.00 per option. The weighted average per option fair value of options granted during 2008 was US$2.77 and the weighted average remaining contractual life of those options at September 30, 2008 is 10 years. No options are currently exercisable. A retention rate of 66% is based on personnel retention history for persons in this class of participants by AXIS Consultants Pty Ltd. The remaining value of the outstanding options equates to A$325,704 (US$313,946) and is being amortised over the vesting periods. For the nine months ended September 30, 2008, the amortization amounted to A$53,630 (US$51,694). (x) Effective July 11, 2008, the Company issued 1,000,000 options over shares of common stock to employees under the 2006 Equity Incentive Plan that has been adopted by the Directors of the Company. The options will vest: 1/3 after 12 months, 1/3 after 24 months and the balance of 1/3 after 36 months. The exercise price of the options is US$3.48. The latest exercise date for the options is July 11, 2018. The Company has accounted for all options issued based upon their fair market value using the Binomial pricing model. An external consultant has calculated the fair value of the 1,000,000 options using the Binomial valuation method using the following inputs: ------------------------------------------------------------------ Grant date July 11, 2008 July 11, 2008 July 11, 2008 ------------------------------------------------------------------ Grant date share price US$3.26 US$3.26 US$3.26 ------------------------------------------------------------------ Vesting date July 11, 2009 July 11, 2010 July 11, 2011 ------------------------------------------------------------------ Expected life in years 5.50 6.00 6.50 ------------------------------------------------------------------ Risk-free rate 3.960% 3.960% 3.960% ------------------------------------------------------------------ Volatility 60% 60% 60% ------------------------------------------------------------------ Exercise price US$3.48 US$3.48 US$3.48 ------------------------------------------------------------------ Call option value US$1.81 US$1.88 US$1.95 ------------------------------------------------------------------ Options Option Price Weighted ------- Per Share Average US$ Exercise Price --- US$ --- Outstanding at January 1, 2008 - - - Granted 1,000,000 3.48 3.48 Forfeited - - - ----------------------------------------------- Outstanding at September 30, 2008 1,000,000 3.48 3.48 ----------------------------------------------- 19 The exercise price is US$3.48 per option. The weighted average per option fair value of options granted during 2008 was US$1.88 and the weighted average remaining contractual life of those options at September 30, 2008 is 10 years. No options are currently exercisable. The options were issued to one individual and in that case, the Company applied a 100% retention rate. The remaining value of the outstanding options equates to A$1,697,408 (US$1,628,493) and is being amortised over the vesting periods. For the nine months ended September 30, 2008, the amortization amounted to A$262,150 (US$251,507). (xi) Effective July 21, 2008, the Company issued 150,000 options over shares of common stock to employees under the 2006 Equity Incentive Plan that has been adopted by the Directors of the Company. The options will vest: 1/3 after 12 months, 1/3 after 24 months and the balance of 1/3 after 36 months. The exercise price of the options is US$2.00. The latest exercise date for the options is July 21, 2018. The Company has accounted for all options issued based upon their fair market value using the Binomial pricing model. An external consultant has calculated the fair value of the 150,000 options using the Binomial valuation method using the following inputs: ---------------------------------------------------------------- Grant date July 21, 2008 July 21, 2008 July 21, 2008 ---------------------------------------------------------------- Grant date share price US$3.08 US$3.08 US$3.08 ---------------------------------------------------------------- Vesting date July 21, 2009 July 21, 2010 July 21, 2011 ---------------------------------------------------------------- Expected life in years 5.50 6.00 6.50 ---------------------------------------------------------------- Risk-free rate 4.044% 4.044% 4.044% ---------------------------------------------------------------- Volatility 60% 60% 60% ---------------------------------------------------------------- Exercise price US$2.00 US$2.00 US$2.00 ---------------------------------------------------------------- Call option value US$2.06 US$2.11 US$2.15 ---------------------------------------------------------------- Options Option Price Weighted ------- Per Share Average US$ Exercise Price --- US$ --- Outstanding at January 1, 2008 - - - Granted 150,000 2.00 2.00 Forfeited - - - ----------------------------------------------- Outstanding at September 30, 2008 150,000 2.00 2.00 ----------------------------------------------- The exercise price is US$2.00 per option. The weighted average per option fair value of options granted during 2008 was US$2.11 and the weighted average remaining contractual life of those options at September 30, 2008 is 10 years. No options are currently exercisable. A retention rate of 66% is based on personnel retention history for persons in this class of participants by AXIS Consultants Pty Ltd. The remaining value of the outstanding options equates to A$189,497 (US$183,964) and is being amortised over the vesting periods. For the nine months ended September 30, 2008, the amortization amounted to A$25,336 (US$24,596). (xii) Effective August 8, 2008, the Company issued 112,500 options over shares of common stock to employees under the 2006 Equity Incentive Plan that has been adopted by the Directors of the Company. The options will vest: 1/3 after 12 months, 1/3 after 24 months and the balance of 1/3 after 36 months. The exercise price of the options is US$1.00. The latest exercise date for the options is August 8, 2018. The Company has accounted for all options issued based upon their fair market value using the Binomial pricing model. 20 An external consultant has calculated the fair value of the 112,500 options using the Binomial valuation method using the following inputs: ------------------------------------------------------------------ Grant date Aug 8, 2008 Aug 8, 2008 Aug 8, 2008 ------------------------------------------------------------------ Grant date share price US$2.08 US$2.08 US$2.08 ------------------------------------------------------------------ Vesting date Aug 8, 2009 Aug 8, 2010 Aug 8, 2011 ------------------------------------------------------------------ Expected life in years 5.50 6.00 6.50 ------------------------------------------------------------------ Risk-free rate 3.915% 3.915% 3.915% ------------------------------------------------------------------ Volatility 60% 60% 60% ------------------------------------------------------------------ Exercise price US$1.00 US$1.00 US$1.00 ------------------------------------------------------------------ Call option value US$1.51 US$1.54 US$1.56 ------------------------------------------------------------------
Options Option Price Per Weighted Average ------- Share Exercise Price US$ US$ --- --- Outstanding at January 1, 2008 - - - Granted 112,500 1.00 1.00 Forfeited - - - --------------------------------------------------------- Outstanding at September 30, 2008 112,500 1.00 1.00 ---------------------------------------------------------
The exercise price is US$1.00 per option. The weighted average per option fair value of options granted during 2008 was US$1.54 and the weighted average remaining contractual life of those options at September 30, 2008 is 10 years. No options are currently exercisable. A retention rate of 50% is based on personnel retention history for persons in this class of participants by AXIS Consultants Pty Ltd. The remaining value of the outstanding options equates to A$86,628 (US$78,814) and is being amortised over the vesting periods. For the nine months ended September 30, 2008, the amortization amounted to A$8,379 (US$7,623). (xiii) Effective August 11, 2008, the Company issued 700,000 options over shares of common stock to employees under the 2006 Equity Incentive Plan that has been adopted by the Directors of the Company. The options will vest: 1/3 after 12 months, 1/3 after 24 months and the balance of 1/3 after 36 months. The exercise price of the options is US$2.00. The latest exercise date for the options is August 8, 2018. The Company has accounted for all options issued based upon their fair market value using the Binomial pricing model. An external consultant has calculated the fair value of the 700,000 options using the Binomial valuation method using the following inputs: ------------------------------------------------------------------ Grant date Aug 11, 2008 Aug 11, 2008 Aug 11, 2008 ------------------------------------------------------------------ Grant date share price US$1.93 US$1.93 US$1.93 ------------------------------------------------------------------ Vesting date Aug 11, 2009 Aug 11, 2010 Aug 11, 2011 ------------------------------------------------------------------ Expected life in years 5.50 6.00 6.50 ------------------------------------------------------------------ Risk-free rate 3.982% 3.982% 3.982% ------------------------------------------------------------------ Volatility 60% 60% 60% ------------------------------------------------------------------ Exercise price US$2.00 US$2.00 US$2.00 ------------------------------------------------------------------ Call option value US$1.08 US$1.12 US$1.16 ------------------------------------------------------------------
Options Option Price Per Weighted Average Share Exercise Price US$ US$ --- --- Outstanding at January 1, 2008 - - - Granted 700,000 2.00 2.00 Forfeited - - - --------------------------------------------------------- Outstanding at September 30, 2008 700,000 2.00 2.00 ---------------------------------------------------------
The exercise price is US$2.00 per option. The weighted average per option fair value of options granted during 2008 was US$1.12 and the weighted average remaining contractual life of those options at September 30, 2008 is 10 years. No options are currently exercisable. The retention rate of 50% is based on personnel retention history for persons in this class of participants by AXIS Consultants Pty Ltd. 21 The remaining value of the outstanding options equates to A$404,466 (US$359,611) and is being amortised over the vesting periods. For the nine months ended September 30, 2008, the amortization amounted to A$36,430 (US$32,390). As at September 30, 2008, 7,444,005 options over shares were available for future grants under the Stock Option Plan. 6. AFFILIATE TRANSACTIONS In December 2004, the Company issued to Renika, a company associated with Mr J I Gutnick, 20,250,000 options to be converted into 20,250,000 shares of common stock, at an exercise price of 5 cents and a latest exercise date of December 2009 for services to be rendered to the Company. The Company undertook a Black and Scholes valuation of these options using a 2.22 cent exercise price, 2.22 cent market price, 5 year life, risk free interest rate of 5.155% and a volatility of 16.7%. The Company valued the 20,250,000 options at A$160,672 (US$123,300) or A$0.0178 (US$0.0137) each. In September 2005, Renika exercised the 20,250,000 options using the cashless exercise feature and were issued 17,085,937 shares of common stock. In December 2004, the Company entered into an agreement with AXIS Consultants Pty Ltd to provide geological, management and administration services to the Company. AXIS is affiliated through common management. The Company is one of five affiliated companies of which three are Australian public companies listed on Australian Stock Exchange. Each of the companies has some common Directors, officers and shareholders. In addition, each of the companies is substantially dependent upon AXIS for its senior management and certain mining and exploration staff. A number of arrangements and transactions have been entered into from time to time between such companies. It has been the intention of the affiliated companies and respective Boards of Directors that each of such arrangements or transactions should accommodate the respective interest of the relevant affiliated companies in a manner which is fair to all parties and equitable to the shareholders of each. Currently, there are no material arrangements or planned transactions between the Company and any of the other affiliated companies other than AXIS. AXIS is a company owned by its public companies (including Legend) and any profits generated by AXIS are returned to its shareholders in the form of dividends. AXIS is paid by each company for the costs incurred by it in carrying out the administration function for each such company. Pursuant to the Service Agreement, AXIS performs such functions as payroll, maintaining employee records required by law and by usual accounting procedures, providing insurance, legal, human resources, company secretarial, land management, certain exploration and mining support, financial, accounting advice and services. AXIS procures items of equipment necessary in the conduct of the business of the Company. AXIS also provides for the Company various services, including but not limited to the making available of office supplies, office facilities and any other services as may be required from time to time by the Company as and when requested by the Company. The Company is required to reimburse AXIS for any direct costs incurred by AXIS for the Company. In addition, the Company is required to pay a proportion of AXIS's overhead cost based on AXIS's management estimate of our utilisation of the facilities and activities of AXIS plus a service fee of not more than 15% of the direct and overhead costs. Amounts invoiced by AXIS are required to be paid by us. The Company is also not permitted to obtain from sources other than AXIS, and we are not permitted to perform or provide ourselves, the services contemplated by the Service Agreement, unless we first requests AXIS to provide the service and AXIS fails to provide the service within one month. The Service Agreement may be terminated by AXIS or us upon 60 days prior notice. If the Service Agreement is terminated by AXIS, the Company would be required to independently provide, or to seek an alternative source of providing, the services currently provided by AXIS. There can be no assurance that the Company could independently provide or find a third party to provide these services on a cost-effective basis or that any transition from receiving services under the Service Agreement will not have a material adverse effect on us. The Company's inability to provide such services or to find a third party to provide such services may have a material adverse effect on our operations. 22 In accordance with the Service Agreement AXIS provides the Company with the services of the Company's Chief Executive Officer, Chief Financial Officer, geologists and clerical employees, as well as office facilities, equipment, administrative and clerical services. We pay AXIS for the actual costs of such facilities plus a maximum service fee of 15%. During the nine months ended September 30, 2007, AXIS charged the Company A$709,243 for management and administration services, and A$622,096 for exploration services and charged interest of A$14,683 on the outstanding balance and the Company repaid A$1,826,060. AXIS charged interest at a rate of 10.10% for the nine months ended September 30, 2007. The amount owed to AXIS at September 30, 2007 was A$15,984. During the nine months ended September 30, 2008, AXIS charged the Company A$3,704,816 for management and administration services, and A$1,263,862 for exploration services. The Company purchased a Lear jet from AXIS to utilize in its operations at a price of A$1,210,000 (A$1,100,000 which was based on an external valuation plus 10% GST). The Company placed on deposit with AXIS funds amounting to A$1,596,000 to acquire three properties in Mt Isa, which is the base for the Company's phosphate project, to be used to accommodate employees and consultants when working in Mt Isa and relocating to the field operations. The Company paid A$8,404,831 which includes the cost of the Lear jet, the three properties and an advance for 2008 charges and ongoing operations. The Company charged AXIS interest of A$38,330 at a rate between 10.80% and 11.75% for the nine months ending September 30, 2008. The amount owed by AXIS at September 30, 2008 was A$2,213,574 Effective as of March 3, 2006, Legend entered into a Contract for the Sale of Mining Tenements ("Contract") with Astro Diamond Mines N.L. ("Astro") an Australian company pursuant to which the Company acquired certain diamond mining tenements in Northern Australia from Astro. The consideration payable by Legend to Astro was A$1.5 million and Legend was also required to pay to Astro any costs incurred on the tenements after February 1, 2006. Astro provided commercial warranties which are usual for a transaction of this nature in favour of Legend. Under Australian law, Astro was required to provide an independent experts report to shareholders for this transaction. In order to prepare the independent experts report, a mineral valuation was prepared on behalf of Astro which indicated that the preferred value for the tenements that are the subject of the transaction was A$1.5 million. This formed the basis of the consideration agreed by the parties. The President and Chief Executive Officer of the Company, Mr. J. I. Gutnick, was Chairman and Managing Director of Astro and Dr DS Tyrwhitt, an independent Director of the Company is also a Director of Astro. The tenements are located in the Northern Territory of Australia and are prospective for all minerals. Astro incurred costs on the mining tenements from February 1, 2006 which at settlement Legend was required to pay. However, Astro had not quantified the amount at the date of settlement and it was only finally quantified in November 2006. The consideration and all related acquisition costs, costs incurred by Astro since February 1, 2006 and exploration expenditure incurred by the Company is shown in the Statement of Operations as Exploration Expenditure. 7. COMMITMENTS During December 2006, the Company entered into an operating lease agreement for a motor vehicle which expires in 2008. The lease agreement has a monthly repayment amount of A$1,123. The future minimum lease repayments under a non-cancellable lease at September 30, 2008, were A$2,219. During July 2007, the Company entered into a sublease agreement for the rental of office premises which expires in 2008. The total rental payment for 2008 is A$50,022 and the amount of the remaining commitment outstanding as at September 30, 2008 is A$18,373. During April 2008, the Company entered into a finance lease agreement for a motor vehicle which expires in 2012. The lease agreement has a monthly repayment amount of A$1,050. The future minimum loan repayments under a non-cancellable lease at September 30, 2008 were A$51,734 23 During July 2008, the Company entered into an agreement for an aircraft maintenance and safety upgrade program for the Lear Jet 35 for an estimated cost of A$250,000. The total cost will be finalised by November 30, 2008, and the amount incurred to date is A$201,350. During August 2008, the Company entered into a lease agreement for the rental of office premises which expires in 2010. The total rental payment for 2008 is A$15,970. During September 2008, the Company entered into a capital finance lease agreement for a motor vehicle which expires in 2011. The lease agreement has a monthly repayment amount of A$5,134. The future minimum loan repayments under a non-cancellable lease at September 30, 2008 were A$179,698. In connection with the BMO Offering, the Company agreed not to issue any additional shares of Common Stock (other than pursuant to existing rights) for a period of 120 days following the closing without the consent of BMO, which shall not be unreasonably withheld. The Company also agreed to appoint two additional directors and a chief operating officer with the approval of BMO and to use its reasonable best efforts to list its shares of Common Stock on the American Stock Exchange within six months following the closing date. Exploration The Company has to perform minimum exploration work and expend minimum amounts of money on its tenements. The overall expenditure requirement tends to be limited in the normal course of the Company's tenement portfolio management through expenditure exemption approvals, and expenditure reductions through relinquishment of parts or the whole of tenements deemed non prospective. Should the company wish to preserve interests in its current tenements the amount which may be required to be expended is as follows: 2008 A$ Not later than one year 1,667,957 Later than one year but not later than five years 3,299,356 Later than five years but not later than twenty one years - -------------- 4,967,313 ============== 8. ACQUISITIONS/INVESTMENTS On February 27, 2008, the Company entered into a Share Sale Agreement whereby the Company agreed to purchase all of the issued and outstanding shares of Teutonic Minerals Pty Ltd. As a result, Teutonic became a subsidiary of the Company from that date. Teutonic holds an application for a mineral licence over phosphate in the Georgina Basin in the State of Queensland, Australia. The consideration payable to the vendors was A$300,000, and the Company granted a 1% gross revenue royalty from production from the mineral licence and incurred legal costs of A$26,526. The mineral licence application held by Teutonic was withdrawn on March 17, 2008 and replaced by a mineral application lodged by the Company. Teutonic had no other assets or liabilities. As at September 30, 2008 the net assets and liabilities acquired by the Company have no value. The consideration and legal costs of A$326,526 paid by the Company are included as exploration expenditure. 9. SUBSEQUENT EVENTS On October 13, 2008, the Company issued to eligible participants 2,787,500 options under the 2006 Incentive Stock Option Plan. The options have a strike price of US$1.00 and a latest exercise date of October 13, 2018. The options vest 1/3rd in 12 months from the date of issue, 1/3rd in 24 months from the date of issue and 1/3rd in 36 months from the date of issue. The Company is currently having an external consultant value the options. 24 On October 17, 2008, the Company issued to eligible participants 1,050,000 options under the 2006 Incentive Stock Option Plan. The options have a strike price of US$1.00 and a latest exercise price of October 13, 2018. The options vest 1/3rd in 12 months from the date of issue, 1/3rd in 24 months from the date of issue and 1/3rd in 36 months from the date of issue. The Company is currently having an external consultant value the options. On October 27, 2008 the Company entered into a Heads of Agreement with Mt Isa Metals Ltd ("MET") for the formation of a Joint Venture ("JV") over each party's respective interest in tenements overlying the D-Tree phosphate deposit. Under the JV Legend will manage and hold an 80% interest in the JV and MET will hold a 20% contributing interest in the JV. Significantly, the JV will also have access to plant and infrastructure at Legend's 100% owned proposed Lady Annie phosphate development, which lies 9 miles to the east of D-Tree., Legend will contribute tenements EPM 14753, EPMA's 17333, 17437, 17443 and 17446, and, MET will contribute tenement EPM 15763 (D- Tree West). The Company is considering the appropriate accounting treatment for the JV and may be required to account for the JV in accordance with FASB 141R "Business Combinations". On November 10, 2008, the Company entered into a contract with AXIS to purchase a property in Mt Isa which is the base for the Company's phosphate project, to be used to accommodate employees and consultants when working in Mt Isa and relocating to the field operations. The consideration for the property is A$900,000 which was based on the cost of the property to AXIS in April 2008. AXIS had acquired the property at the request of the Company whilst the Company sought FIRB approval in Australia to the acquisition of the property. 25 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. FUND COSTS CONVERSION The consolidated statements of operations and other financial and operating data contained elsewhere here in and the consolidated balance sheets and financial results have been reflected in Australian dollars unless otherwise stated. The following table shows the average rate of exchange of the Australian dollar as compared to the US dollar during the periods indicated: 9 months ended September 30, 2007 A$1.00 = US$.8884 9 months ended September 30, 2008 A$1.00 = US$.8211 RESULTS OF OPERATION Three Months Ended September 30, 2008 vs. Three Months Ended September 30, 2007. The Company's financial statements are prepared in Australian dollars (A$). A number of the costs, expenses and assets of the Company are incurred/held in US$ and the conversion of these costs to A$ means that the comparison of the three months ended September 30, 2008 to the three months ended September 30, 2007 does not always present a true comparison. Other income increased from A$2,068 for the three months ended September 30, 2007 to A$1,586,828 for the three months ended September 30, 2008 which primarily represents interest on funds in the bank of $1,576,264 as a result of the increase of funds in the bank following the private placement in June 2008 and the exercise of options in July 2008. Costs and expenses increased from A$1,919,343 in the three months ended September 30, 2007 to A$5,994,554 in the three months ended September 30, 2008. The increase in expenses is a net result of: a) an increase in exploration expenditure written off from A$1,274,519 for the three months ended September 30, 2007 to A$2,227,340 in the three months ended September 30, 2008. The exploration costs include geological/geophysical/mineral analysis contractors, salaries for contract field staff, travel costs, accommodation, tenement holding costs and drilling recommenced in April 2008 following the end of the wet season in Northern Australia together with work on the preliminary scoping and prefeasibility work on the Queensland tenements. As a result of the increase in the Company's exploration activities, additional staff costs were incurred via the service arrangements with AXIS as AXIS provided additional staff to undertake the Company's activities. b) an increase in legal, accounting and professional expense from A$47,997 for the three months ended September 30, 2007 to A$142,573 for the three months ended September 30, 2008 as a result of the increase in legal fees for general legal work including preparation of the Form S-1 registration statements following the private placement, stock transfer matters, regulatory filings; , stock transfer agent fees, and audit and accounting fees for professional services in relation to the Form 10-Q and the registration statement. All fees have increased in the three months to September 30, 2008 as a result of increased activity by the Company as a consequence of the exploration program and capital raising activities. c) an increase in administrative costs from A$498,186 in the three months ended September 30, 2007 to A$2,040,830 in the three months ended September 30, 2008 as a result of an increase in direct costs, including salaries and related costs, indirect costs and service fees, charged to the Company by AXIS which increased from $498,519 to $1,244,451, as a result in the level of activity of the Company; the cost of travel and accommodation in the marketing of the Company of A$193,594, and investor relations, tenement and other consultants costs of A$315,483. The increases are as a result of the increase in activity by the Company as a consequence of the acquisition of mining tenements, preparation of regulatory filings and capital raising activities. 26 d) an decrease in interest expense from A$14,009 for the three months ended September 30, 2007 to A$2,521 for the three months ended September 30, 2008. For the three months ended September 30, 2008, interest was incurred on motor vehicle finance lease. e) an increase in stock based compensation from A$84,632 in the three months ended September 30, 2007 to A$1,581,290 in the three months ended September 30, 2008 as a result of the increase in amortization of the issue cost of options under the 2006 Incentive Option Plan. See footnote 4 for further details on the options issued. As a result of the foregoing, the loss from operations increased from A$1,917,275 for the three months ended September 30, 2007 to A$4,407,726 for the three months ended September 30, 2008. The Company recorded a foreign exchange gain of A$3,978,148 in the three months ended September 30, 2008 compared to a foreign currency exchange loss for the three months ended September 30, 2007 of $159,460. The Company raised US$117,350,000 (A$123,700,384) from a private placement and exercise of options in June and July 2008. The Company's operating project is based in the Sate of Queensland Australia and the Company made the decision to move a majority of its funds to its Australian bank account and convert the funds to Australian dollars, to avoid any speculative risk on exchange rates. The Company retains some funds in its US bank account and the A$/US$ exchange rate has moved from a rate of approximately A$1 equals US$0.96 in mid August 2008 to A$1 equals US$0.82 at September 30, 2008. In converting the funds in its US bank account to A$ at September 30, 2008,a foreign exchange gain was recorded as a result of the movement in the Australian dollar versus the US dollar. The net loss was A$2,076,735 for the three months ended September 30, 2007 compared to a net loss of A$429,578 for the three months ended September 30, 2008. Nine Months Ended September 30, 2008 vs. Nine Months Ended September 30, 2007. The Company's financial statements are prepared in Australian dollars (A$). A number of the costs, expenses and assets of the Company are incurred/held in US$ and the conversion of these costs to A$ means that the comparison of the nine months ended September 30, 2008 to the nine months ended September 30, 2007 does not always present a true comparison. Other income increased from A$6,471 for the nine months ended September 30, 2007 to A$1,936,800 for the nine months ended September 30, 2008, of which $1,898,470 represents interest on funds in the bank following the private placement in June 2008 and the exercise of options in July 2008and A$38,330 represents interest from affiliate companies. Costs and expenses increased from A$4,576,712 in the nine months ended September 30, 2007 to A$14,632,046 in the nine months ended September 30, 2008. The increase in expenses is a net result of: a) an increase in exploration expenditure written off from A$2,969,928 for the nine months ended September 30, 2007 to A$4,339,553 in the nine months ended September 30, 2008. The exploration costs include geological/geophysical/mineral analysis contractors, salaries for contract field staff, travel costs, accommodation and tenement acquisition costs of A$326,527 (refer Note 8 to the Financial Statements), tenement holding costs and drilling recommenced in April 2008 following the end of the wet season in Northern Australia together with work on the preliminary scoping and prefeasibility work on the Queensland tenements. As a result of the increase in the Company's exploration activities, additional staff costs were incurred via the service arrangements with AXIS as AXIS provided additional staff to undertake the Company's activities. b) an increase in legal, accounting and professional expense from A$107,296 for the nine months ended September 30, 2007 to A$450,380 for the nine months ended September 30, 2008 as a result of the increase in legal fees for general legal work including preparation of the Form S-1 and Form SB-2 registration statements following the private placements in late 2007 and in 2008 stock transfer matters, regulatory filings, private placement matters; stock transfer agent fees, and audit and accounting fees for professional services in relation to the Form 10-Q, 10-K and the registration statements. All fees have increased in the nine months ended September 30, 2008 as a result of increased activity by the Company as a consequence of the exploration program and capital raising activities. 27 c) an increase in administrative costs from A$1,196,894 in the nine months ended September 30, 2007 to A$6,280,787 in the nine months ended September 30, 2008 as a result of an increase in direct costs, including salaries and related costs, indirect costs and service fees, charged to the Company by AXIS which increased from $399,883 to $3,704,816, as a result in the level of activity of the Company; the cost of the shares issued under a registration rights agreement of A$660,494; the cost of travel and accommodation in the marketing of the Company of A$605,847, investor relations, tenement and other consultants of A$853,378 and New York office costs of A$221,545. The increases are as a result of the increase in activity by the Company as a consequence of the acquisition of mining tenements, preparation of regulatory filings and capital raising activities. d) a decrease in interest expense from A$47,015 for the nine months ended September 30, 2007 to A$21,226 for the nine months ended September 30, 2008 due to the increase in vehicle finance lease costs which were offset by a decrease in interest as some historical interest bearing debt had been repaid. For the nine months ended September 30, 2008, interest was incurred on motor vehicle finance leases and camp lease. e) an increase in stock based compensation from A$255,579 in the nine months ended September 30, 2007 to A$3,540,100 in the nine months ended September 30, 2008 as a result of the increase in amortization of the issue cost of options under the 2006 Incentive Option Plan. See footnote 5 to the Financial Statements for further details on the options issued. As a result of the foregoing, the loss from operations increased from A$4,570,241 for the nine months ended September 30, 2007 to A$12,695,246 for the nine months ended September 30, 2008. The Company recorded a foreign exchange gain of A$2,093,973 in the nine months ended September 30, 2008 compared to a foreign currency exchange loss for the nine months ended September 30, 2007 of $315,995. The Company raised US$117,350,000 from a private placement and exercise of options in June and July 2008. The Company's operating project is based in the State of Queensland, Australia and as a result during the quarter, the Company made the decision to move a majority of its funds to its Australian bank account and convert the funds to Australian dollars, to avoid any speculative risk on exchange rates. The Company retains some funds in its US bank account and the A$/US$ exchange rate has moved from a rate of approximately A$1 equals US$0.96 in mid August 2008 to A$1 equals US$0.82 at September 30, 2008. In converting the funds in its US bank account to A$ at September 30, 2008,a foreign exchange gain was recorded as a result of the movement in the Australian dollar versus the US dollar. The net loss was A$4,886,236 for the nine months ended September 30, 2007 compared to a net loss of A$10,601,273 for the nine months ended September 30, 2008. Liquidity and Capital Resources For the nine months ending September 30, 2008, net cash used in operating activities was A$9,695,491 (2007: A$4,352,769) primarily consisting of the net loss of A$10,601,273 (2007: A$2,809,501), an increase in accounts receivable of A$1,145,497 (2007:A$33,833), prepayments and deposits of A$940,825 (2007:A$295,762) accounts payable and accrued expenses of A$131,655 (2007:(A$6,400)); net cash used in investing activities was A$3,281,348 (2007:A$125,899) being for the purchase of a Lear jet, motor vehicles, geotechnical software and equipment for A$1,516,822; deposit for application for shares and property acquisition of A$1,438,000 and the purchase of investments for A$326,526; and net cash provided by financing activities was A$117,830,998 (2007: A$6,757,606) being net proceeds from share issue. 28 As at September 30, 2008 the Company had A$124,036,222 in cash, A$818,431 in receivables, A$1,412,466 in prepayments and short-term obligations of A$1,205,889 comprising accounts payable and accrued expenses and motor vehicle lease costs We plan to continue our exploration, pre-feasibility and development activities throughout 2008 and 2009, and anticipate spending A$10,000,000 on exploration and feasibility studies and A$4,000,000 for capital purchases relating to the projects. In addition, we expect that we will need to spend $6,000,000 on legal, professional, accounting and administration expenses. In June 2008, the Company completed a private placement offering (the "BMO Offering") of 42,000,000 share of common stock to institutional investors at a purchase price of US$2.50 per share. BMO Nesbitt Burns Inc., Wellington West Capital Markets Inc. and BBY Limited acted as agents for the offering and received a commission of 5% of the offering proceeds and two year warrants to purchase 840,000 shares of common stock at an exercise price of US$2.50 per share. In connection with the BMO Offering, the Company agreed not to issue any additional shares of Common Stock (other than pursuant to existing rights) for a period of 120 days following the closing without the consent of BMO, which shall not be unreasonably withheld. The Company also agreed to appoint a chief operating officer with the approval of BMO and to use its reasonable best efforts to list its shares of Common Stock on the American Stock Exchange ("AMEX") within six months following the closing date. As a result of the current market conditions, the Company has put on hold a decision to list on AMEX. In connection with the BMO Offering, Joseph Gutnick, Renika Pty Ltd. and Chabad House of Caulfield Pty Ltd. (the "Gutnick Group") generally have agreed not to acquire, transfer or dispose of any shares of Common Stock or other securities of the Company or enter into any agreements or make any announcements with respect thereto for a period of one year following the Closing, except that the Gutnick Group is not prohibited from (i) selling shares to an industry participant such as a mining company or fertilizer manufacturer or user in an off-market transaction; (ii) selling up to 2,000,000 shares commencing 180 days after the closing date; provided that BMO shall have the right to act as the broker for any sales that are made on market; and (iii) selling shares in response to a takeover offer for all of the outstanding shares of the Company. Effective July 14, 2008, the Company entered into a Shares Option Agreement with the Indian Farmers Fertilizer Cooperative Limited ("IFFCO") to finance the Company's operations. Under the Share Options Agreement, IFFCO received options to purchase 30 million shares of Common Stock of the Company on the following terms: e. 5,000,000 options, at an exercise price of US$2.50 per share and expiring 60 days from July 11, 2008; f. 8,000,000 options, at an exercise price of US$3.00 per share and expiring 12 months from July 11, 2008; g. 8,000,000 options, at an exercise price of US$3.50 per share and expiring 18 months from July 11, 2008; h. 9,000,000 options, at an exercise price of US$4.00 per share and expiring 24 months from July 11, 2008. During the third quarter of 2008, the 5,000,000 options issued to IFFCO, at an exercise price of US$2.50 per share and expiring 60 days from July 11, 2008 were exercised on August 11, 2008 and pursuant to the Share Options Agreement, received a 1.2% discount on the exercise price. The total amount received was A$13,672,091 (US$12,350,000) and the Company issued 5,000,000 shares of common stock. The total remaining proceeds amount to US$88 million, and when exercised will be utilized to fund expenditure related to the Company's phosphate project. The Company accounts for these options as a financing activity and accordingly, records all proceeds upon exercise of such options within shareholders equity. 29 The Share Options Agreement also gives IFFCO a pre-emptive right to acquire its pro rata share of future issuances of Common Stock by the Company, with certain exceptions. Pursuant to the Shares Option Agreement, the parties agreed to enter into a long-term rock off-take agreement, which shall be separately negotiated but which shall be based on certain principles which were previously described in the Company's Quarterly Report of Form 10-Q for the fiscal quarter ended June 30, 2008. Effective as of August 7, 2008, the Company filed a Registration Statement on Form S-1/A with the Securities and Exchange Commission to register the 42,000,000 shares of common stock and 840,000 shares issuable upon exercise of options that were issued in the BMO private placement offering in June 2008. The Registration Statement was declared effective on September 30, 2008. The Company is considered to be an exploration stage company, with no significant revenue, and is dependent upon the raising of capital through placement of its common stock, preferred stock or debentures to fund its operations. In the event the Company is unsuccessful in raising such additional capital or to produce operating revenues in the future, it may not be able to continue active operations. Cautionary Safe Harbor Statement under the United States Private Securities Litigation Reform Act of 1995. Certain information contained in this Form 10-Q's forward looking information within the meaning of the Private Securities Litigation Act of 1995 (the "Act") which became law in December 1995. In order to obtain the benefits of the "safe harbor" provisions of the act for any such forwarding looking statements, the Company wishes to caution investors and prospective investors about significant factors which among others have affected the Company's actual results and are in the future likely to affect the Company's actual results and cause them to differ materially from those expressed in any such forward looking statements. This Form 10-Q report contains forward looking statements relating to future financial results. Actual results may differ as a result of factors over which the Company has no control including, without limitation: o The risk factors set forth in Item 1A of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2007, o The possibility that the phosphates we find are not commercially economical to mine, o The possibility that we do not find other minerals or that the other minerals we find are not commercially economical to mine, o The risks and hazards inherent in the mining business (including environmental hazards, industrial accidents, weather or geologically related conditions), o Changes in the market price of phosphate, base metals and diamonds, o The uncertainties inherent in our production, exploratory and developmental activities, including risks relating to permitting and regulatory delays, o The uncertainties inherent in the estimation of ore reserves, o The effects of environmental and other governmental regulations, and o Uncertainty as to whether financing will be available to enable further exploration and mining operations. Investors are cautioned not to put undue reliance on forward-looking statements. We disclaim any intent or obligation to update publicly these forward-looking statements, whether as a result of new information, future events or otherwise. Additional information which could affect the Company's financial results is included in the Company's Form 10-K on file with the Securities and Exchange Commission. 30 Item 3. Quantitative and Qualitative Disclosures About Market Risk. At September 30, 2008, the Company had no outstanding loan facilities. At September 30, 2008, assuming no change in the cash at bank, a 10% change in the A$ versus US$ exchange rate would have a A$1,246,363 effect on the Company's cash position. Item 4. Controls and Procedures. (a) Evaluation of disclosure controls and procedures. Our principal executive officer and our principal financial officer evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 as amended) as of the end of the period covered by this report. Based on that evaluation, such principal executive officer and principal financial officer concluded that, the Company's disclosure control and procedures were effective as of the end of the period covered by this report. (b) Change in Internal Control over Financial Reporting. No change in our internal control over financial reporting occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect our internal control over financial reporting. (c) We believe that a controls system, no matter how well designed and operated, can not provide absolute assurance that the objectives of the controls system, no matter how well designed and operated, can not provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. 31 PART II - OTHER INFORMATION Item 1. Legal Proceedings. There are no pending legal proceedings to which the Company is a party, or to which any of its property is the subject, which the Company considers material. Item 1A Risk Factors An investment in the Company involves a high degree of risk. In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2007 which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing the Company. Other unknown or unpredictable factors could also have material adverse effects on future results. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. Not Applicable Item 3. Defaults Upon Senior Securities. Not Applicable Item 4. Submission of Matters to a Vote of Security Holders. Not Applicable Item 5. Other Information. Not Applicable Item 6. Exhibits. Exhibit No. Description - ----------- ----------- 31.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Joseph Isaac Gutnick (6) 31.2 Certification of Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Peter James Lee (6) 32.1 Certification of Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Joseph Isaac Gutnick (6) 32.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Peter James Lee (6) 32 FORM 10-Q SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorised. LEGEND INTERNATIONAL HOLDINGS, INC. (Registrant) By: /s/ Peter J Lee ------------------------------------ Peter J Lee Chief Financial Officer and Secretary Dated: November 13, 2008 33 EXHIBIT INDEX Exhibit No. Description - ----------- ----------- 31.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Joseph Isaac Gutnick (6) 31.2 Certification of Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Peter James Lee (6) 32.1 Certification of Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Joseph Isaac Gutnick (6) 32.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Peter James Lee (6) 34 Exhibit 31.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Joseph Isaac Gutnick, Chief Executive Officer, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Legend International Holdings, Inc. (the "registrant"); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13(a)-15(e) and 15(d)-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a) designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted principles; c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): 35 a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: November 13, 2008 /s/ Joseph I. Gutnick --------------------------------------------- Name: Joseph I. Gutnick Title: Chairman of the Board, President and Chief Executive Officer (Principal Executive Officer) 36 Exhibit 31.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Peter James Lee, Chief Financial Officer, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Legend International Holdings, Inc. (the "registrant"); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13(a)-15(e) and 15(d)-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a) designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted principles; c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): 37 a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: November 13, 2008 /s/ Peter Lee --------------------------------------------- Name: Peter Lee Title: Secretary and Chief Financial Officer (Principal Financial Officer) 38 Exhibit 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the quarterly report on Form 10-Q of Legend International Holdings, Inc. (the "Company") for the quarter ended September 30, 2008 as filed with the Securities and Exchange Commission on the date hereof (the "report"), the undersigned, Joseph Isaac Gutnick, Chief Executive Officer of the Company, certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that: (1) The report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the report fairly presents, in all material respects, the financial condition and result of operations of the Company. Date: November 13, 2008 /s/ Joseph Isaac Gutnick ------------------------------------ Joseph Isaac Gutnick Chairman of the Board, President and Chief Executive Officer (Principal Executive Officer) 39 Exhibit 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the quarterly report on Form 10-Q of Legend International Holdings, Inc. (the "Company") for the quarter ended September 30, 2008 as filed with the Securities and Exchange Commission on the date hereof (the "report"), the undersigned, Peter James Lee, Chief Financial Officer of the Company, certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that: (1) The report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the report fairly presents, in all material respects, the financial condition and result of operations of the Company. Date: November 13, 2008 /s/ Peter James Lee ---------------------------------- Peter James Lee Secretary and Chief Financial Officer 40