Quarterly Report

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

FUND COSTS CONVERSION

The statements of operations and other financial and operating data contained elsewhere here in and the 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, 2008 A$1.00 = US$.8211 9 months ended September 30, 2009 A$1.00 = US$.8729

RESULTS OF OPERATION

Three Months Ended September 30, 2009 vs. Three Months Ended September 30, 2008.

The Company as part of its business strategy is increasing its diamond exploration activity in the proximity of the Merlin diamond mine in the Northern Territory and is continually sourcing new ground in this region which is one of the most diamond prospective areas in Australia. As part of this strategy, the Company acquired a 14.9% interest in North Australian Diamonds Ltd ("NADL"), an Australian diamond exploration corporation, at a cost of A$2,368,000 in February 2009. NADL owns the Merlin diamond mine and surrounding tenements. On May 12, 2009, the Company made an on market takeover offer for all of the shares in NADL, an Australian corporation. The takeover offer concluded on August 6, 2009. As close of offer, the Company held 55% of the issued and outstanding shares of NADL. As a result, the Company has since that time consolidated the results of NADL.

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, 2009 to the three months ended September 30, 2008 does not always present a true comparison.

Other income decreased from A$1,586,828 for the three months ended September 30, 2008 to A$1,109,797 for the three months ended September 30, 2009 which primarily represents interest on funds in the bank of A$706,551 and A$22,440 from affiliate companies and other represents a refund from the government for research and development and diesel fuel. Included within the information for the three months ended September 30, 2009 are the following material amounts for NADL: A$359,587 being a refund from the government for research and development and diesel fuel; for which there is no comparative amount in the three months ended September 30, 2008.

Costs and expenses increased from A$5,994,554 in the three months ended September 30, 2008 to A$11,931,792 in the three months ended September 30, 2009. The increase in expenses is a net result of:

a) a increase in legal, accounting and professional expense from A$142,573 for the three months ended September 30, 2008 to A$254,164 for the three months ended September 30, 2009 as a result of a increase in legal fees for general legal work including stock transfer matters, regulatory filings, stock transfer agent fees, and audit fees for professional services in relation to the Form 10-Q. Included within legal, accounting and professional expense for the three months ended September 30, 2009 are the following material amounts for NADL; A$66,854 being a fee paid to tax consultants for the preparation of the research and development claim (success fee of 20%), legal fees of A$8,312, professional fees paid to attorney's, independent experts and other consultants for takeover defense costs of A$27,771; for which there is no comparative amount in the three months ended September 30, 2008.

b) an increase in exploration expenditure written off from A$2,227,340 in the three months ended September 30, 2008 to A$7,563,247 in the three months ended September 30, 2009. The exploration costs include geological/geophysical/mineral analysis contractors, salaries for contract field staff, travel costs, accommodation and tenement holding costs. Drilling on our phosphate project in Queensland and a detailed sampling program in Northern Territory recommenced in March 2009 after the end of the wet season in Northern Australia. On our Queensland phosphate project, work continued on investigations into a mining operation. As a result of the increase in the Company's exploration activities, additional staff costs were incurred via service arrangements with AXIS, as AXIS provided additional staff to undertake the Company's activities. Included within exploration expenditure written off for the three months ended September 30, 2009 is A$110,406 in exploration costs relating to the diamond exploration at Merlin and surrounding areas; for which there is no comparative amount in the three months ended September 30, 2008.

c) an increase in aircraft maintenance costs from A$nil in the three months ended September 30, 2008 to A$299,651 in the three months ended September 30, 2009. The Company purchased a lear jet in August 2008 to utilize in its field operations. There was no comparable cost in 2008.

d) an decrease in stock based compensation from A$1,581,290 in the three months ended September 30, 2008 to A$949,858 in the three months ended September 30, 2009. The Company has issued options under the 2006 Incentive Option Plan throughout 2006, 2007, 2008 and 2009. The decrease is a result of options being fully vested in prior periods.

e) an increase in interest expense from A$2,521 for the three months ended September 30, 2008 to A$17,896 for the three months ended September 30, 2009 due to the increase in interest bearing debt of the Company. For the three months ended September 30, 2009, interest was incurred on motor vehicle finance lease.

f) an increase in amortization of mineral rights from A$nil for the three months ended September 30, 2008 to A$233,084 for the three months ended September 30, 2009. On the acquisition date of the business combination of NADL, the Company recognised Mineral Rights of A$18,873,000. The underlying mineral property licences have a set term and the Mineral Rights are being amortized over the term of the licences. The acquisition occurred in the current quarter and therefore there was no comparable amount for the three months ended September 30, 2009.

g) an increase in administrative costs from A$2,040,830 in the three months ended September 30, 2008 to A$2,623,892 in the three months ended September 30, 2009 as a result of a decrease in direct costs, indirect costs and service fees, charged to the Company by AXIS from A$1,603,912 to A$1,222,279; the cost of travel and accommodation in the marketing of the Company of A$397,999 and investor relations and other consultants of A$393,821; the cost of property rentals and associated costs of A$248,382; and the cost of insurance of A$213,971 including the Federal Government of Australia insurance policy on cash at bank in Australia in excess of A$1,000,000, which was introduced by Federal Governments around the world to counter the global economic downturn. Included within administrative costs for the three months ended September 30, 2009 are the following material amounts for NADL; A$42,188 for rent; A$96,797 for salaries and associated benefits, and A$11,385 for insurance; for which there is no comparative amount in the three months ended September 30, 2008.

As a result of the foregoing, the loss from operations increased from A$4,407,726 for the three months ended September 30, 2008 to A$10,821,995 for the three months ended September 30, 2009. A decrease in foreign currency exchange gain from a gain of A$3,978,148 for the three months ended September 30, 2008 to a foreign currency exchange loss of A$1,285,275 in the three months ended September 30, 2009 was recorded as a result of the movement in the Australian dollar versus the US dollar. On May 12, 2009, the Company made an on-market takeover offer for all of the shares in North Australian Diamonds Limited ("NADL"). The Company held 34.61% of the issued and outstanding shares at May 31, 2009, which increased to 39.38% at June 30, 2009. During the month of June 2009 the Company accounted for its 34.61% interest in NADL as an unconsolidated entity and for the month of July 2009, at the rate of 39.38%. The on market takeover of NADL finished on August 6, 2009 and since that time, the Company has consolidated the results of NADL. In accordance with US GAAP, the Company calculated the difference between the fair value of assets acquired at August 6, 2009 and the carrying value of its investment in an unconsolidated entity (NADL) at August 6, 2009 and recorded an adjustment to fair value on stepped acquisition of A$2,200,620, for which there was no comparable amount in 2008.

The loss before income taxes and losses of unconsolidated entity was A$429,578 for the three months ended September 30, 2008 compared to a net loss of A$9,906,650 for the three months ended September 30, 2009.

On May 12, 2009, the Company made an on-market takeover offer for all of the shares in North Australian Diamonds Limited ("NADL"). The Company held 34.61% of the issued and outstanding shares at May 31, 2009 and as a result, since that time has accounted for its interest in NADL as an unconsolidated entity. During the three months ended September 30, 2009, the Company's share of the losses of the unconsolidated entity amounted to A$40,869 (2008: $nil)

The net loss was A$9,947,519 for the three months ended September 30, 2009 compared to a net loss of A$429,578 for the three months ended September 30, 2008.

The share of the loss attributable to the non-controlling interests of NADL amounted to A$362,784, for which there was no comparable amount in 2008.

The net loss attributable to Legend stockholders amounted to A$9,584,735 for the three months ended September 30, 2009 compared to A$429,578 for the three months ended September 30, 2008.

Nine Months Ended September 30, 2009 vs. Nine Months Ended September 30, 2008.

The Company as part of its business strategy is increasing its diamond exploration activity in the proximity of the Merlin diamond mine in the Northern Territory and is continually sourcing new ground in this region which is one of the most diamond prospective areas in Australia. As part of this strategy, the Company acquired a 14.9% interest in North Australian Diamonds Ltd ("NADL"), an Australian diamond exploration corporation, at a cost of A$2,368,000 in February 2009. NADL owns the Merlin diamond mine and surrounding tenements. On May 12, 2009, the Company made an on market takeover offer for all of the shares in NADL, an Australian corporation. The takeover offer concluded on August 6, 2009. As close of offer, the Company held 55% of the issued and outstanding shares of NADL. As a result, the Company has since that time consolidated the results of NADL.

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, 2009 to the nine months ended September 30, 2008 does not always present a true comparison.

Other income increased from A$1,936,800 for the nine months ended September 30, 2008 to A$3,108,215 for the nine months ended September 30, 2009 which primarily represents interest on funds in the bank of A$2,671,392 and A$53,747 from affiliate companies and other represents a refund from the government for research and development and diesel fuel. Included within the information for the nine months ended September 30, 2009 are the following material amounts for NADL; A$359,587 being a refund from the government for research and development and diesel fuel; for which there is no comparative amount in the nine months ended September 30, 2008.

Costs and expenses increased from A$14,632,046 in the nine months ended September 30, 2008 to A$27,387,922 in the nine months ended September 30, 2009. The increase in expenses is a net result of:

a) an increase in legal, accounting and professional expense from A$450,380 for the nine months ended September 30, 2008 to A$602,744 for the nine months ended September 30, 2009 as a result of the increase in legal fees for general legal work including stock transfer matters, regulatory filings, stock transfer agent fees, and audit fees for professional services in relation to the statutory filings. Included within legal, accounting and professional expense for the nine months ended September 30, 2009 are the following material amounts for NADL; A$66,854 being a fee paid to tax consultants for the preparation of the research and development claim (success fee of 20%), legal fees of A$8,312, professional fees paid to attorney's, independent experts and other consultants for takeover defense costs of A$27,771; for which there is no comparative amount in the nine months ended September 30, 2008.

b) an increase in exploration expenditure written off from A$4,339,553 in the nine months ended September 30, 2008 to A$16,188,341 in the nine months ended September 30, 2009. The exploration costs include geological/geophysical/mineral analysis contractors, salaries for contract field staff, travel costs, accommodation and tenement holding costs. Drilling on our phosphate project in Queensland and a detailed sampling program in Northern Territory recommenced in March 2009 after the end of the wet season in Northern Australia. On our Queensland phosphate project, work continued on investigations into a mining operation. As a result of the increase in the Company's exploration activities, additional staff costs were incurred via service arrangements with AXIS, as AXIS provided additional staff to undertake the Company's activities. Included within exploration expenditure written off for the nine months ended September 30, 2009 is A$110,406 in exploration costs relating to the diamond exploration at Merlin and surrounding areas; for which there is no comparative amount in the nine months ended September 30, 2008.

c) an increase in aircraft maintenance costs from A$nil in the nine months ended September 30, 2008 to A$544,639 in the nine months ended September 30, 2009. The Company purchased a lear jet in August 2008 to utilize in its field operations. There was no comparable cost in 2008.

d) a decrease in stock based compensation expense from A$3,540,100 in the nine months ended September 30, 2008 to A$3,370,221 in the nine months ended September 30, 2009. The Company has issued options under the 2006 Incentive Option Plan throughout 2006, 2007, 2008 and 2009. The decrease is a result of options being fully vested in prior periods.

e) an increase in interest expense from A$21,226 for the nine months ended September 30, 2008 to A$52,577 for the nine months ended September 30, 2009 due to the decrease in interest bearing debt of the Company. For the nine months ended September 30, 2009, interest was incurred on motor vehicle finance lease.

f) an increase in amortization of mineral rights from A$nil for the nine months ended September 30, 2008 to A$233,084 for the nine months ended September 30, 2009. On the acquisition date of the business combination of NADL, the Company recognised Mineral Rights of A$18,873,000. The underlying mineral property licences have a set term and the Mineral Rights are being amortized over the term of the licences. The acquisition occurred in the current quarter and therefore there was no comparable amount for the nine months ended September 30, 2009.

g) an increase in administrative costs from A$6,280,787 in the nine months ended September 30, 2008 to A$6,396,316 in the nine months ended September 30, 2009 as a net result of (i) an increase in direct costs, indirect costs and service fees, charged to the Company by AXIS from $3,704,816 to A$3,978,804, as a result in the level of activity of the Company; (ii) an increase in the cost of travel and accommodation in the marketing of the Company of A$767,969 (2008: A$605,847) as the number of international trips has reduced given current economic circumstances, (iii) investor relations, tenement and other consultants of A$463,434 (2008: A$853,378) which have also been reduced following the effect of current economic circumstances;
(iv) the cost of property rentals and associated costs of A$395,234 (2008:
A$155,495) as the Company has been required to increase its office requirements as it develops its projects; and (v) the cost of insurance of A$455,551 (2008: A$nil) including the Federal Government of Australia insurance policy on cash at bank in Australia in excess of A$1,000,000, which was introduced by Federal Governments around the world to counter the global economic downturn. The increases are as a result of the increase in activity by the Company as a consequence of providing support to the field exploration program. In the nine months ended September 30, 2008, the cost of the shares issued under a registration rights agreement amounted to A$660,494 for which there was no comparable amount in the nine months ended September 30, 2009. Included within administrative costs for the nine months ended September 30, 2009 are the following material amounts for NADL; A$42,188 for rent; A$96,797 for salaries and associated benefits, and A$11,385 for insurance; for which there is no comparative amount in the nine months ended September 30, 2008.

As a result of the foregoing, the loss from operations increased from A$12,695,246 for the nine months ended September 30, 2008 to A$24,279,707 for the nine months ended September 30, 2009. A decrease in foreign currency exchange gain from a gain of A$2,093,973 for the nine months ended September 30, 2008 to a foreign currency exchange loss of A$4,248,053 in the nine months ended September 30, 2009 was recorded as a result of the movement in the Australian dollar versus the US dollar. On May 12, 2009, the Company made an on-market takeover offer for all of the shares in North Australian Diamonds Limited ("NADL"). The Company held 34.61% of the issued and outstanding shares at May 31, 2009, which increased to 39.38% at June 30, 2009. During the month of June 2009 the Company accounted for its 34.61%interest in NADL as an unconsolidated entity and for the month of July 2009, at the rate of 39.38%. The on market takeover of NADL finished on August 6, 2009 and since that time, the Company has consolidated the results of NADL. In accordance with US GAAP, the Company calculated the difference between the fair value of assets acquired at August 6, 2009 and the carrying value of its investment in an unconsolidated entity (NADL) at August 6, 2009 and recorded an adjustment to fair value on stepped acquisition of A$2,200,620, for which there was no comparable amount in 2008. A net gain of A$113,739 on revaluation and sale of certain trading securities was incurred in the nine months ended September 30, 2009, being the difference between the cost price, sale price and market value. There were no trading securities held in the comparable period.

The loss before income taxes and equity in losses of unconsolidated entity was A$10,601,273 for the nine months ended September 30, 2008 compared to a net loss of A$26,213,401 for the nine months ended September 30, 2009.

On May 12, 2009, the Company made an on-market takeover offer for all of the shares in North Australian Diamonds Limited ("NADL"). The Company held 34.61% of the issued and outstanding shares at May 31, 2009 and as a result, since that time has accounted for its interest in NADL as an unconsolidated entity. During the nine months ended September 30, 2009, the Company's share of the losses of the unconsolidated entity amounted to A$182,667 (2008: $nil).

The net loss was A$10,601,273 for the nine months ended September 30, 2008 compared to a net loss of A$26,396,068 for the nine months ended September 30, 2009.

The share of the net loss attributable to the non-controlling interests of NADL amounted to A$362,784 for the nine months ended September 30, 2009 compared to A$nil for the nine months ended September 30, 2008 as the acquisition of NADL occurred in July 2009 for the first time.

The net loss attributable to Legend stockholders amounted to A$26,033,284 for the nine months ended September 30, 2009 compared to A$10,601,273 for the nine months ended September 30, 2008.

Liquidity and Capital Resources

For the nine months ending September 30, 2009, net cash used in operating activities was A$21,494,726 (2008: A$9,695,491) primarily consisting of the net loss of A$26,396,068 (2008: A$10,601,273), decrease in accounts receivable of A$1,622,299 (2008: A$1,145,497); increase in prepayments and deposits of A$2,681,007 (2008: A$940,825); a increase in inventories of A$47,447 (2008: A$nil) offset by an decrease in accounts payable and accrued expenses of A$210,696 (2008: A$131,655); and adjusted for non-cash items relating to the fair valuing of NADL on date of acquisition of A$2,017,953 (2008: $nil) and other non-cash items of A$8,236,146.

Net cash used in investing activities was A$15,220,088 (2008:
A$3,281,348), being for the purchase of investments for A$5,914,269 in NADL and NCRC, trading securities A$377,658; property, equipment and motor vehicles for A$1,112,198; net of proceeds from the sale of trading securities of A$1,272,343 and property, plant and equipment of A$110,100; and net cash acquired from the acquisition of majority owned subsidiary of A$9,198,412.

Net cash used in financing activities was A$290,032 being primarily net repayments under financing leases of A$292,795 being for lease payments for the purchase of motor vehicles under finance leases (2008: A$nil); and net proceeds from shares issued upon exercise of options of A$2,763 (2008: A$nil).

At September 30, 2009, the Company held US$14,330,395 in US accounts which when converted to Australian dollars results in an unrealized foreign exchange loss of A$4,248,053.

As at September 30, 2009, the Company had A$78,024,637 in cash.

We plan to continue our exploration and pre-development program throughout 2009 and anticipate spending A$6.6 million on exploration and pre-development (including A$0.6 million for capital items for exploration and pre-development), A$5.75 million on investments and A$2.7 million on administrative costs.

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, 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/A for the fiscal year ended December 31, 2008,

o The possibility that the phosphates we find are not commercially economical to mine,

o The possibility that we do not find diamonds or other minerals or that the diamonds or 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/A on file with the Securities and Exchange Commission.