Interim Results
AIM: KEFI 29 September 2009
KEFI Minerals Plc
("KEFI Minerals" or the "Company")
INTERIM RESULTS FOR THE HALF-YEAR ENDED 30 JUNE 2009
KEFI Minerals, the AIM-quoted gold and copper exploration company with projects
in Turkey and in the Kingdom of Saudi Arabia, is pleased to announce its
unaudited interim results for the half-year ended 30 June 2009.
Highlights of the Half-Year Period
* KEFI Minerals has expanded its activities and is now operator of
exploration joint ventures in Turkey and in the Kingdom of Saudi Arabia.
* Second phase drilling of the Yanikli prospect at Artvin is planned in H2
with Joint Venture Partner Centerra Gold.
* Strong exploration team and proprietary database enables the Company to
rapidly identify and assess targets.
* Placings in March 2009 and June 2009 raised a total of £1.035 million via
the issuance of 94.4 million shares.
* Loss for the half-year period totalling £767,000 reflects the Company's
conservative accounting policy of writing off all expenditure until a
commitment to develop a project is made by the Board.
KEFI Minerals' Managing Director, Jeff Rayner, commented:
"We have maintained the Company's momentum through a challenging period in the
financial markets. The steady progress of our exploration projects in Turkey
during the first half of 2009 has been pleasing, especially at the Artvin and
Bakir Tepe Prospects. A key initiative for 2009 has been the formation of GEMCO
the Companies Joint Venture in Saudi Arabia. We were pleased to be appointed
operator of the JV where initial prospecting activities have already begun.
"KEFI Minerals is now established in two countries within a great metallogenic
region. We will continue to explore in a cost-effective manner with the
intention of making significant discoveries."
Enquiries
KEFI Minerals WH Ireland Fox-Davies Bishopsgate
Capital Communications
Jeffrey Rayner Katy Mitchell Oliver Stansfield Nick Rome
Michael Kinirons
+90 533 928 19 13 +44 161 832 +44 207 936 5230 +44 20 7562 3350
2174
www.kefi-minerals.com
References in this announcement to exploration results and potential have been
approved for release by Mr Jeffrey Rayner (BSc.Hons).Mr Rayneris a geologist
and has more than 20 years' relevant experience in the field of activity
concerned. He is a Member of the Australasian Institute of Mining and
Metallurgy (AusIMM) and has consented to the inclusion of the material in the
form and context in which it appears.
Managing Director's Report
The Company's strategy is to concentrate on exploring the prolific mineral
endowment of Turkey and surrounding countries, targeting +1 million gold-ounce
equivalent deposits. KEFI Minerals recently expanded its activities with the
formation a new minerals exploration joint venture in the Kingdom of Saudi
Arabia.
Exploration - Turkey
KEFI Minerals currently has the following exploration projects in Turkey:
* At Derinin Tepe in the Western Anatolia Region, low-sulphidation epithermal
quartz veins have been identified with gold and silver mineralisation.
* At Artvin, in northeastern Turkey, extensive hydrothermal alteration with
gold and base metal mineralisation has been recognised in the project area.
Centerra Gold Incorporated entered into a joint venture agreement in
October 2008 to earn up to 70% of the Artvin Project by spending US$6
million over a five-year period. First pass drilling was completed in
December 2008 with best results of 2m at 21 g/t Au, 14m at 1 g/t Au and
broad (20-40m) intercepts of anomalous zinc. Further drilling is planned to
take place in late 2009.
* Bakir Tepe, in southwestern Turkey, is prospective for VMS polymetallic
deposits. High grade gold and copper crop out on the peripheries of a
shallowly buried geophysical chargeability anomaly. Drilling is planned in
H2 2009.
* At Yatik, in the Western Anatolia Region, low-sulphidation epithermal
quartz veins with gold and silver mineralisation have been identified.
Diamond and RC drilling to shallow depths of 60-80m by previous explorers
have intercepted consistent widths of +10m of vein quartz and up to 4m at
7.3 g/t Au. The vein is exposed close to the paleosurface, ie high up in
the epithermal system and needs to be drill tested at +150m depths to test
maximum gold concentrations. The Yatik vein lies 40km along strike and to
the north of the 1Moz Ovacik Mine and 20km north of the recently discovered
Kaplan gold prospect.
* At Gumushane in eastern Turkey, areas of extensive hydrothermal alteration
have been recognised in the project area, as well as coincident areas of
interest identified through interpretation of Aster data.
* Hasancelebi, in central Turkey, is prospective for high-sulphidation
epithermal gold mineralisation and Iron-Oxide Copper-Gold ("IOCG")
mineralisation.
* Muratdag, in the Western Anatolia Region, is prospective for Carlin-style
epithermal gold mineralisation.
In addition, the Company has an extensive exploration database containing
information about approximately 100 further prospective sites in Turkey. This
database provides a competitive advantage for the identification of prospective
areas in Turkey.
Exploration - Saudi Arabia
The KEFI Minerals team has been evaluating potential joint ventures and
prospects in The Kingdom of Saudi Arabia since 2008. The Company's geologists
have compiled a large database of mineral occurrences and historic workings,
geological maps, aeromagnetic surveys and remote sensing data for this region.
In May 2009, KEFI Minerals expanded its activities with the formation a
minerals exploration joint venture (the "GEMCO" joint venture) in the Kingdom
of Saudi Arabia with Abdul Rahman Saad Al-Rashid & Sons Company Ltd. ("ARTAR"),
a leading Saudi construction and investment group. The establishment of this
strategic alliance is an important step towards any future success in Saudi
Arabia.
In general, Saudi Arabia is a well-endowed mineral province, notwithstanding
that the majority of investors only know it for its oil reserves. There are
over 5,000 known mineral occurrences and more than 1,100 documented historical
gold mine workings. Despite this substantial history of gold mining and
numerous historical workings, before 1994, only 51 of these had ever been
drilled. To date, all known gold mineralisation occurs within the Proteorozoic
rocks of the Arabian Shield. The Arabian-Nubian Shield contains the original
King Solomon's gold mine, now called Mahd adh Dhahab (+6Moz), the giant Sukari
(+13Moz) deposit and the recent Ad Duwayhi (+2Moz) discovery, among others.
KEFI Minerals has embarked on an exploration strategy targeting an
under-explored region with substantial historical mining heritage. Such
opportunities do not present themselves very often. For example in Tanzania,
following several decades of political isolation, gold explorers in a little
more a decade from the mid 1990's, have reputedly discovered in excess of 40Moz
from a variety of gold deposits within the Lake Victoria greenstone belt in
that country. Companies who benefited most were first movers and initially
targeted regions with historical workings.
KEFI Minerals has defined four specific geological profiles to both increase
the chances of an economic discovery as well as minimising exploration
expenditure. The Company focuses on volcanic massive sulphide, epithermal,
mesothermal/orogenic and intrusive-related styles of gold mineralisation. Many
of the 20 tenements that have been applied for contain historical workings but
negligible levels of modern exploration. There is an excellent chance of rapid
success once the selected licences are issued and field activities can proceed.
Finance
The Company has been supported by its major shareholder EMED Mining and by
capital markets generally. During the six months equity raisings totalled
approximately £1 million. In March 2009 the Company raised £585,000 by way of a
placing 58,434,004 new ordinary at 1.00p per share. A further £450,000 was
raised in June 2009 by placing 36,000,000 new ordinary shares at 1.25p per
share.
The loss for the half-year period totalled £767,000 and reflects the Company's
conservative accounting policy. All expenditure is written off until the Board
decides to commence development of a project, from which point costs associated
with the project would be capitalised.
At 30 June 2009, KEFI Minerals had £266,420 in cash, prior to receipt of net
proceeds of capital raised in June 2009 of £450,000.
Technical, commercial and administrative systems and personnel are provided to
KEFI Minerals by EMED Mining on a cost-recovery basis, enabling KEFI Minerals
to minimise overheads and focus its efforts on discovering economic mineral
deposits.
Outlook
Turkey and the Kingdom of Saudi Arabia are both increasingly recognised as
under-explored countries that are very prospective for discoveries of large
gold and copper deposits.
KEFI Minerals will continue exploring its current projects in a very
cost-effective manner while evaluating further opportunities in the region.
The strength in the gold market (with the current gold price in the vicinity of
US$1,000 per ounce), combined with the opportunities identified by the Company,
provides KEFI Minerals with an exciting opportunity to create exceptional value
for shareholders - subject to the Company continuing its tight focus and
risk-management.
KEFI MINERALS PLC
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIOD FROM 1 JANUARY 2009 TO 30 JUNE 2009
Notes Six months Six months
ended 30 ended 30
June 2009 June 2008
GBP'000 GBP'000
Exploration costs (201) (298)
Other income - 17
Administration expenses (350) (280)
Share-based benefits (133) (44)
Operating loss (684) (605)
Foreign Exchange loss (80) 51
Finance costs (3) (3)
Loss before tax 4 (767) (557)
Taxation - -
Loss after tax (767) (557)
Earnings per Share Information
Basic and fully diluted loss per share 7 (0.42) (0.48)
(pence)
The Group has not any income or expense that is not included in the condensed
consolidated statement of operations.
KEFI MINERALS PLC
CONDENSED CONSOLIDATED BALANCE SHEET
30 JUNE 2009
Notes As at As at 30 As at 30
30 June December June
2009 2008 2008
GBP'000 GBP'000 GBP'000
ASSETS
Non current assets
Property, plant and equipment 15 27 36 43
Intangible assets 16 - - -
27 36 43
Current assets
Trade and other receivables 10 479 109 75
Bank and cash balances 11 266 293 524
745 402 599
Total assets 772 438 642
EQUITY AND LIABILITIES
Capital and reserves
Share capital 12 2,248 1,296 1,296
Share premium 1,385 1,347 1,347
Share options reserve 389 256 211
Other reserves (217) (292) (147)
Accumulated Loss (3,591) (2,824) (2,244)
214 (217) 463
Non-current liabilities
Advances received 17 400 266 -
Current liabilities
Trade and other payables 13 158 389 179
Total liabilities 558 655 179
Total equity and liabilities 772 438 642
KEFI MINERALS PLC
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD FROM 1 JANUARY 2009 TO 30 JUNE 2009
Share Exchange
Share Share Accumulated options difference
capital Premium losses reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance 1 January 1,088 991 (1,687) 167 (86) 473
2008
Issue of share 208 416 - - - 624
capital
Share issue costs - (60) - - - (60)
Loss for the period - - (557) - - (557)
Exchange difference - - - - (61) (61)
on translation of
subsidiaries
Recognition of - - - 44 - 44
share-based payments
Balance at 30 June 1,296 1,347 (2,244) 211 (147) 463
2008
Issue of share - - - - - -
capital
Share issue costs - - - - - -
Loss for the period - - (580) - - (580)
Exchange difference - - - - (145) (145)
on translation of
subsidiaries
Recognition of - - - 45 - 45
share-based payments
Balance at 31 1,296 1,347 (2,824) 256 (292) (217)
December 2008
Issue of share 952 93 - - - 1,045
capital
Share issue costs - (55) - - - (55)
Loss for the period - - (767) - - (767)
Exchange difference - - - - 75 75
on translation of
subsidiaries
Recognition of - - - 133 - 133
share-based payments
Balance at 30 June 2,248 1,385 (3,591) 389 (217) 214
2009
KEFI MINERALS PLC
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
FOR THE PERIOD FROM 1 JANUARY 2009 TO 30 JUNE 2009
Six Six
months to months to
30 June 30 June
2009 2008
GBP'000 GBP'000
Cash flows from operating activities
(Loss) for the period (767) (557)
Share-based benefits 133 44
Depreciation 7 7
Exchange difference on translation of subsidiaries 77 (64)
Operating loss before working capital changes (550) (570)
Changes in working capital:
Trade and other receivables (370) (32)
Trade and other payables (231) 60
Net cash from operations (1,151) (542)
Cash flows from investing activities:
Advances from Centerra Gold (KB) Inc. 134 -
Net cash used in investing activities 134 -
Cash flows from financing activities:
Proceeds from issue of share capital 1,045 624
Share issue and listing costs (55) (60)
Net cash from financing activities 990 564
Net increase in cash (27) 22
Cash at beginning of period 293 502
Cash at end of period 266 524
KEFI MINERALS PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM 1 JANUARY 2009 TO 30 JUNE 2009
1. General information
Country of incorporation
The Company was incorporated in United Kingdom as a public limited company on
24 October 2006. Its registered office is at 27/28 Eastcastle Street, London
W1W 8DH.
Principal activities
The principal activities of the Group for the period are:
* To explore for mineral deposits of precious and base metals and other
minerals that appear capable of commercial exploitation, including
topographical, geological, geochemical and geophysical studies and
exploratory drilling.
* To evaluate mineral deposits determining the technical feasibility and
commercial viability of development, including the determination of the
volume and grade of the deposit, examination of extraction methods,
infrastructure requirements and market and finance studies.
* To develop, operate mineral deposits and market the metals produced.
2. Summary of significant accounting policies
The principal accounting policies applied in the preparation of these condensed
interim consolidated financial statements are set out below. These policies
have been applied consistently throughout the period presented in these
financial statements unless otherwise stated.
Basis of preparation
The interim consolidated financial statements have been prepared in accordance
with International Accounting Standards (IFRS) including International
Accounting Standard 34 "Interim Financial Reporting" and using the historical
cost convention.
These interim consolidated financial statements (`the statements") are
unaudited and include the financial statements of the Company and its
subsidiary undertakings. They have been prepared using accounting bases and
policies consistent with those used in the preparation of the financial
statements of the Company and the Group for the year ended 31 December 2008.
These statements do not include all of the disclosures required for annual
financial statements, and accordingly, should be read in conjunction with the
financial statements and other information set out in the Company's 31 December
2008 Annual Report.
Use and revision of accounting estimates
The preparation of the financial report requires the making of estimations and
assumptions that affect the recognised amounts of assets, liabilities, revenues
and expenses and the disclosure of contingent liabilities. The estimates and
associated assumptions are based on historical experience and various other
factors that are believed to be reasonable under the circumstances, the results
of which form the basis of making the judgments about carrying values of assets
and liabilities that are not readily apparent from other sources. Actual
results may differ from these estimates.
KEFI MINERALS PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM 1 JANUARY 2009 TO 30 JUNE 2009
2. Summary of significant accounting policies-(continued)
Use and revision of accounting estimates-(continued)
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.
Adoption of new and revised International Financial Reporting Standards (IFRSs)
During the current period the Group adopted all the new and revised IFRSs and
International Accounting Standards (IAS), which are relevant to its operations
and are effective for accounting periods commencing on 1 January 2009.
The adoption of these Standards did not have a material effect on the
consolidated financial statements.
At the date of authorisation of these financial statements some Standards were
in issue but not yet effective. The Board of Directors expects that the
adoption of these Standards in future periods will not have a material effect
on the consolidated financial statements of the Group.
Accounting policies
The following accounting policies have been used consistently in dealing with
items which are considered material in relation to the financial of the Group.
Consolidation
The consolidated financial statements incorporate the assets and liabilities of
all entities controlled by the Company as at 30 June 2009 and the results of
all the controlled entities for the period then ended. The Company and its
controlled entities together are referred to in this financial report as the
Group.
Control is achieved where the Company has power to govern the financial and
operating policies of an entity so as to obtain benefits from its activities.
The financial statements of all the Group companies are prepared using uniform
accounting policies.
Transactions eliminated on consolidation
Intercompany transactions, balances and unrealised gains on transactions
between consolidated entities are eliminated on consolidation. Unrealised
losses are also eliminated unless the transaction provides evidence of
impairment of the asset transferred.
Business combinations
The acquisition of subsidiaries is accounted for using the purchase method. The
cost of the acquisition is measured at the aggregate of the fair values, at the
date of exchange, of assets given, liabilities incurred or assumed, and equity
instruments issued by the Group in exchange for control of the acquiree, plus
any costs directly attributable to the business combination. The acquiree's
identifiable assets, liabilities and contingent liabilities that meet the
conditions for recognition under IFRS 3 are recognised at their fair values at
the acquisition date, except for non-current assets (or disposal groups) that
are classified as held for sale in accordance with IFRS 5 Non-Current Assets
held for sale and discontinued operations, which are recognised and measured at
fair value less costs to sell.
KEFI MINERALS PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM 1 JANUARY 2009 TO 30 JUNE 2009
2. Summary of significant accounting policies-(continued)
Business combinations (continued)
Goodwill arising on acquisition is recognised as an asset and initially
measured at cost, being the excess of the cost of the business combination over
the Group's interest in the net fair value of the identifiable assets,
liabilities and contingent liabilities recognised. If, after reassessment, the
Group's interest in the net fair value of the acquiree's identifiable assets,
liabilities and contingent liabilities exceeds the cost of the business
combination, the excess is recognised immediately in profit or loss.
The interest of minority shareholders in the acquiree is initially measured at
the minority's proportion of the net fair value of the assets, liabilities and
contingent liabilities recognised.
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair
value of the Group's share of the net identifiable assets of the acquired
undertaking at the date of acquisition. Goodwill on acquisition of subsidiaries
is included in "intangible assets". Goodwill on acquisitions of associates is
included in "investments in associates".
Goodwill is tested annually for impairment and carried at cost less accumulated
impairment losses. Gains and losses on the disposal of an undertaking include
the carrying amount of goodwill relating to the undertaking sold. Goodwill is
allocated to cash generating units for the purpose of impairment testing.
Any excess of the interest in the net fair value of acquiree's identifiable
assets, liabilities and contingent liabilities over cost is recognised
immediately in the profit and loss.
Revenue recognition
Revenue consists of the amounts receivable from exploration tenements,
technical data, precious and base metals sold. The Group had no sales/revenue
during the period under review.
Exploration costs
The Group adopted the provisions of IFRS6 "Exploration for and Evaluation of
Mineral Resources". The Group's stage of operations as at the period end and as
at the date of approval of these financial statements have not yet met the
criteria for capitalisation of exploration costs.
Foreign currency translation
(1) Measurement currency
The financial statements are prepared in British Pounds (measurement currency)
which is the currency that best reflects the economic substance of the
underlying events and circumstances relevant to the Company.
(2) Transactions and balances
Foreign currency transactions are translated into the measurement currency
using the exchange rates prevailing at the date of the transactions. Foreign
exchange gains and losses resulting from the settlement of such transactions
and from the translation at year-end exchange rates of monetary rates of
monetary assets and liabilities denominated in foreign currencies are
recognised in the income statement.
KEFI MINERALS PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM 1 JANUARY 2009 TO 30 JUNE 2009
2. Summary of significant accounting policies-(continued)
Tax
Income tax expense represents the sum of the tax currently payable and deferred
tax.
Current tax liabilities and assets for the current and prior periods are
measured at the amount expected to be paid to or recovered from the taxation
authorities, using the tax rates and laws that have been enacted, or
subsequently enacted, by the balance sheet date.
Deferred tax is provided in full, using the liability method, on temporary
differences arising between the tax bases of assets and liabilities and their
carrying amounts in the financial statements. Currently enacted tax rates are
used in the determination of deferred tax.Deferred tax assets are recognised to
the extent that it is probable that future taxable profit will be available against
which the temporary differences can be utilised.
Share capital
Ordinary shares are classified as equity.
Cash and cash equivalents
For the purposes of the cash flow statement, cash and cash equivalents comprise
of cash in hand and balances with banks.
Comparatives
Where necessary, comparative figures have been adjusted to conform to changes
in presentation in the current period.
3. Financial risk management
Financial risk factors
The Company's activities expose it to currency risk arising from the financial
instruments it holds. The risk management policies employed by the Company to
manage the risk are discussed below:
Interest rate risk
Interest rate risk is the risk that the value of financial instruments will
fluctuate due to changes in market interest rates. The Group is exposed to
interest rate risk in relation to its bank deposits. The Group's management
monitors the interest rate fluctuations on a continuous basis and acts
accordingly.
Liquidity risk
Liquidity risk is the risk that arises when the maturity of assets and
liabilities does not match. An unmatched position potentially enhances
profitability, but can also increase the risk of losses. The Group has
procedures with the object of minimising such losses such as maintaining
sufficient cash and other highly liquid current assets and by having available
an adequate amount of committed credit facilities.
KEFI MINERALS PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM 1 JANUARY 2009 TO 30 JUNE 2009
3. Financial risk management (continued)
Currency risk
Currency risk is the risk that the value of financial instruments will
fluctuate due to changes in foreign exchange rates. Currency risk arises when
future commercial transactions and recognised assets and liabilities are
denominated in a currency that is not the Company's measurement currency. The
Company is exposed to foreign exchange risk arising from various currency
exposures primarily with respect to the Euro, Bulgarian Lev and New Turkish
Lira.
The Group's management monitors the exchange rate fluctuations on a continuous
basis and acts accordingly.
Fair values
The fair values of the Groups financial assets and liabilities approximate
their carrying amounts at the balance sheet date.
4. Operating profit/(loss)
The following items have been included in arriving at operating (loss):
Six Six
months to months to
30 June 30 June
2009 2008
GBP'000 GBP'000
Recognition of share-based benefits 133 44
Professional services 29 25
5. Tax
Due to tax losses sustained in the period, no tax liability arises on the
Group. Under current legislation, tax losses may be carried forward and be set
off against taxable income of the following years.
The Company is resident in Cyprus for tax purposes.
Cyprus
The corporation tax rate is 10%. Under certain conditions interest may be
subject to defence contribution at the rate of 10%. In such cases 50% of the
same interest will be exempt from corporation tax, thus having an effective tax
rate burden of approximately 15%. In certain cases, dividends received from
abroad may be subject to defence contribution at the rate of 15%.
KEFI MINERALS PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM 1 JANUARY 2009 TO 30 JUNE 2009
5. Tax - (continued)
Bulgaria
Mediterranean Minerals (Bulgaria) EOOD, the 100% subsidiary of the Company, is
resident in Bulgaria for tax purposes.
The corporation tax rate is 10%. Due to tax losses sustained in the period, no
tax liability arises on the Mediterranean Minerals (Bulgaria) EOOD. Under
current legislation, tax losses may be carried forward and be set off against
taxable income of the following five years.
Turkey
Dogu Akdeniz Mineralleri Ltd, the 100% subsidiary of Mediterranean Minerals
(Bulgaria) EOOD, and ultimately 100% subsidiary of the Company, is resident in
Turkey for tax purposes.
The corporation tax rate is 20%. Due to tax losses sustained in the period, no
tax liability arises on the Dogu Akdeniz Mineralleri Ltd. Under current
legislation, tax losses may be carried forward and be set off against taxable
income of the following five years.
6. Deferred tax
No provision for deferred taxation has been made as there are no differences
between the amounts attributed to assets and liabilities for tax purposes and
their corresponding carrying amounts in the balance sheet.
7. Loss per share
The calculation of the basic and diluted earnings per share attributable to the
ordinary holders of the parent based on the following data:
Six Month Six months
to 3o June to 30 June
2009 2008
(Unaudited) (Unaudited)
GBP'000 GBP'000
Net loss attributable to equity (767) (557)
shareholders
Number of ordinary share for the purposes of 180,836 115,771
basic earnings per share
Basic and fully diluted loss per share (0.42) (0.48)
(pence)
The diluted loss per share has been kept the same as the basic loss per share
as the conversion of the share option decreases the basic loss per share, thus
being anti-dilutive.
KEFI MINERALS PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM 1 JANUARY 2009 TO 30 JUNE 2009
8. Business and geographical segments
Business segments
The Group has only one distinct business segment, being that of mineral
exploration.
Geographical segments
The Group's exploration activities are located in Turkey and Bulgaria and its
administration and management is based in Cyprus.
Six months ended 30 June 2009
Cyprus Turkey Bulgaria Consolidation Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Operating loss (444) (240) - - (684)
Foreign Exchange loss 30 (92) (18) - (80)
Financial costs (2) (1) - - (3)
Net loss for the period (511) (333) (18) - (767)
Total assets 2,278 248 6 (1,760) 772
Total liabilities 130 2,025 161 (1,758) 558
Depreciation of fixed - 7 - - 7
assets
Six months ended 30 June 2008
Cyprus Turkey Bulgaria Consolidation Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Operating loss (285) (320) - - (605)
Foreign Exchange loss - 39 12 - 51
Financial costs (3) - - - (3)
Net loss for the period (288) (281) 12 - (557)
Total assets 1,947 146 6 (1,457) 642
Total liabilities 172 1,295 160 (1,448) 179
Depreciation of fixed - 7 - - 7
assets
9. Controlled entities
The Group has the following subsidiaries which have been consolidated in these
financial statements.
Company name Date of Country of % of
acquisition incorporation shareholding
Mediterranean Minerals 8/11/06 Bulgaria 100%-Direct
(Bulgaria) EOOD
Dogu Akdeniz Mineralleri Ltd 8/11/06 Turkey 100%-Indirect
Kackar Madencilik Sanayi ve 15/01/09 Turkey 100%
Ticaret Limited Sirkedi
KEFI MINERALS PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM 1 JANUARY 2009 TO 30 JUNE 2009
10. Trade and other receivables 30 June 31 Dec 30 June
2009 2008 2008
GBP'000 GBP'000 GBP'000
Other amounts receivable 460 99 69
Deposits and other prepayments 19 10 6
479 109 75
11. Cash and cash equivalents
Cash included in the cash flow statement comprise the following balance sheet
amounts:
30 June 31 Dec 30 June
2009 2008 2008
GBP'000 GBP'000 GBP'000
Bank balances and cash 266 293 524
12. Share capital Number Share Share Total
of capital premium
shares GBP'000
'000 GBP'000 GBP'000
Authorised
Ordinary shares of GBP0.01 each 400,000 4,000 - 4,000
Issued and fully paid
At 1 January 2008 108,834 1,088 991 2,079
Issued 8 May 2008 at GBP0.03 20,812 208 416 624
Share issue costs - - (60) (60)
At 31 December 2008/1 January 2009 129,646 1,296 1,347 2,643
Issued 10 March 2009 at GBP0.01 58,434 585 - 585
Issued 12 June 2009 at GBP0.013 36,000 360 90 450
Issued 18 June 2009 at GBP0.014 702 7 3 10
Share issue costs - - (55) (55)
At 30 June 2009 224,782 2,248 1,385 3,633
On 10 March 2009 the Company issued 58,434,004 new ordinary shares of 1p each
at 1p per.
On 12 June 2009 the Company issued 36,000,000 new ordinary shares of 1p each at
1.3p per share.
On 18 June 2009 the Company issued 702,839 new ordinary shares of 1p each at
1.4p per share.
On 8 May 2008 the Company issued 20,812,242 new ordinary shares of 1p each at
3p per share together with 10,406,121 warrants to subscribe for new ordinary
shares of 1p each at 5 pence per share on the basis of one warrant for every
two new ordinary shares.
KEFI MINERALS PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM 1 JANUARY 2009 TO 30 JUNE 2009
13. Trade and other payables 30 June 31 Dec 30 June
2009 2008 2008
GBP'000 GBP'000 GBP'000
Trade and other payables 77 203 81
Accruals 26 44 -
Amounts due to EMED Mining Public Ltd 55 142 98
158 389 179
14. Share option plan
Details of share options outstanding as at 30 June 2009:
Grant date Expiry date Exercise Number of
price shares
GBP '000
12 December 12 December 0.0300 16,000
2006 2012
12 March 2007 11 March 2013 0.0350 250
18 April 2007 17 April 2013 0.0350 1,200
04 June 2007 03 June 2013 0.0350 500
08 October 07 October 2010 0.0400 300
2007
24 June 2008 23 June 2014 0.0325 250
12 June 2009 11 June 2014 0.0240 9,000
27,500
Number of
shares
'000
Outstanding options at 1 January 2009 18,500
-granted 9,000
-cancelled -
-exercised -
Outstanding options at 30 June 2009 27,500
The Company has a share option scheme for employees and other parties of the
Group. All options, except those noted bellow, expire six years after grant
date and are exercisable at the exercise price in whole or in part no more than
one third form at grant date, two thirds after one year from the grant date and
the balance after two years from the grant date. The option agreement contain
provisions adjusting the exercise price in certain circumstances including the
allotment of fully paid ordinary shares by way of a capitalisation of the
Company's reserves, a sub division or consolidation of the ordinary shares, a
reduction of share capital and offers or invitations (whether by way of rights
issue or otherwise) to the holders of ordinary shares.
On 12 June 2009, 9 million options were issued which expire five years after
the grant date, and are exercisable at any time within that period.
The estimated fair values of the options were calculated using the Black
Scholes option pricing model. The inputs into the model and the results are as
follows:
KEFI MINERALS PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM 1 JANUARY 2009 TO 30 JUNE 2009
14. Share option plan - (continued)
12 Jun. 24 Jun. 8 Oct. 4 Jun. 18 Apr.12 Mar. 12 Dec.
2009 2008 2007 2007 2007 2007 2006
Closing share price 2.00p 3.25p 3.00p 3.62p 3.88p 3.30p 3.88p
at issue date
Weighted average 2.40p 3.25p 4.00p 3.50p 3.50p 3.50p 3.00p
exercise price
Average expected 238.50% 147.60% 85.58% 68.06% 68.06% 68.06% 50%
volatility
Expected life 5yrs 6yrs 3yrs 6 yrs 6 yrs 6 yrs 6 yrs
Risk free rate 5.00% 5.00% 4.75% 6.08% 5.95% 5.73% 5.97%
Expected dividend Nil Nil Nil Nil Nil Nil Nil
yield
Discount factor 55% 30% 30% 30% 30% 30% 30%
Estimated fair value 0.89p 2.13p 1.06p 1.71p 1.85p 1.50p 1.427p
Expected volatility was estimated based on the likely range of volatility of
the share price.
15. Property Plant and Equipment Furniture, Total
Motor fixtures
vehicles and office
equipment
The Group GBP'000 GBP'000 GBP'000
Cost
1 January 2008 40 17 57
Exchange difference on translation 5 2 7
of subsidiaries
At 31 December 2008 45 19 64
Exchange difference on translation of 2 (6) (4)
subsidiaries
At 30June 2009 47 13 60
Accumulated Depreciation 8 2 10
At 1 January 2008
Charge for the period 18 5 23
Exchange difference on translation of (4) (1) (5)
subsidiaries
At 31 December 2008 22 6 28
Charge for the period 6 1 7
Exchange difference on translation of (1) (1) (2)
subsidiaries
At 30June2009 27 6 33
Net Book Value at 30 June 2009 20 7 27
Net Book Value at 31 December 23 13 36
2008
KEFI MINERALS PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM 1 JANUARY 2009 TO 30 JUNE 2009
16. Intangible assets 30 June 31 Dec 30 June
2009 2008 2008
Goodwill GBP'000 GBP'000 GBP'000
Cost
Balance at 1 January 364 364 364
Balance at 30 June/31 December 364 364 364
Provision for impairment
Balance at 1 January 364 364 364
Provision for the period/year - - -
Balance at 30 June/31 December 364 364 364
Net Book Value
Balance at 30 June/31 December - - -
17. Advances Received
On 22 October 2008, the company entered into a Joint Venture Agreement ("Joint
Venture Agreement") in respect of its 100%-owned Artvin Project ("the Project")
with Centerra Gold (KB) Inc ("Centerra"), a wholly-owned subsidiary of Centerra
Gold Inc., a Canadian-based gold mining and exploration company which is listed
on the Toronto Stock Exchange.
The Artvin Project is located in the Artvin Province of north eastern Turkey
and comprises 15 tenements, which cover approximately 254km2 within the eastern
portion of the Pontide Belt. The Pontide Belt is a major metallogenic province
in the eastern Black Sea coastal region and is prospective for volcanic-hosted
massive sulphide (VHMS) deposits, porphyry copper-gold deposits and epithermal
gold-silver mineralisation.
Under the terms of the Joint Venture Agreement, the licences relating to the
Project area are to be transferred to the new KEFI Minerals group subsidiary
Kackar Madencilik Sanayi ve Ticaret Limited Sirketi ("Kackar"), incorporated in
Turkey on 15 January 2009 and Centerra has the exclusive right to acquire up to
a 70% shareholding in this subsidiary. In order to acquire the initial 50%
shareholding in Kackar Centerra must spend US$3.0 million over three years with
a minimum expenditure of US$0.5 million in the first year. Centerra may then
elect to acquire an additional 20% shareholding through the expenditure of a
further US$3.0 million over the next two years. The joint venture is in respect
of a one-kilometre area of interest which extends from the outer boundary of
the Project area.
KEFI Minerals is the manager of the Project and Centerra has the right to
become manager at any time. Once Centerra has earned its 50% or 70%
shareholding in Kackar, KEFI Minerals and Centerra will fund their respective
percentage interests of future expenditure subject to dilution for
non-participation in such expenditure. If either party's interest is diluted to
less than 10%, that party's interest will automatically be converted to a 3%
net smelter return royalty, in which case the other party has the right to
purchase half of the royalty (1.5%) for US$1.5 million.
KEFI MINERALS PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM 1 JANUARY 2009 TO 30 JUNE 2009
17. Advances Received - (continued)
The Joint Venture Agreement contains certain warranties given by KEFI Minerals
and its group companies in respect of the Project and while KEFI Minerals is
the Manager of the Project and majority shareholder in the Kackar any advances
made by Centerra which are not expended on the Project are repayable in certain
circumstances. The Joint Venture Agreement also contains a number of matters
concerning the business of Kackar for which Centerra's consent must be
obtained.
The cumulative expenditure from Centerra Gold (KB) Inc until 30 June 2009
amounted to £400,422.
18. Contingent liabilities
Dogu Akdeniz Mineralleri Ltd acquired a proprietary geological database that
covers extensive parts of Turkey. Dogu has undertaken to make a payment of
approximately €60,155 (AUD105,000) for each tenement it is subsequently awarded
in Turkey and is identified from the database. The maximum number of such
payments required under the agreement is four, resulting in a contingent
liability of up to €240,620. These payments are to be settled by issuing shares
in KEFI Minerals plc. The first tranch of shares was issued under this
agreement in June 2007 for €43,750, the equivalent of AUD105,000.
Under the joint venture agreement with Centerra Gold (KB) Inc (see note 17)
there are certain warranties given by KEFI Minerals and its group companies
whereby KEFI Minerals, while manager and majority shareholder in the project,
must in certain circumstances repay any advances made by Centerra not expended
on the Project.
19. Capital commitments
The Group has no capital or other commitments as at 30 June 2009.
20. Relationship deed
A Relationship Deed between EMED and the Company dated 7 November 2006, by
which EMED agrees not to operate in Bulgaria and Turkey, and the Company agrees
not to operate in Albania, Armenia, Azerbaijan, Cyprus, Greece, Hungary, Iran,
Oman, Romania, Saudi Arabia, Serbia or Slovakia the "EMED Area". The
Relationship Deed provides that EMED has the right to appoint one non-executive
director of the Company. It also provides EMED with a right of first refusal in
respect of funding any proposed mining or exploration project of the Company.
The Relationship Deed provides that the Company shall refer any opportunity to
conduct mining or exploration activity in the EMED Area to EMED, and EMED shall
refer any such opportunity in Bulgaria or Turkey to the Company.
21. Post balance sheet events
There were no material post balance sheet events which have a bearing on the
understanding of the financial statements.
KEFI MINERALS PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM 1 JANUARY 2009 TO 30 JUNE 2009
REVIEW REPORT TO KEFI MINERALS PLC
We have reviewed the accompanying balance sheet of KEFI Minerals Plc at June
30, 2009, and the income statement, statement of changes in equity and cash
flow statement for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to issue a
report on these financial statements based on our review.
We conducted our review in accordance with the International Standard on Review
Engagements 2400. This Standard requires that we plan and perform the review to
obtain moderate assurance as to whether the financial statements are free of
material misstatement. A review is limited primarily to inquiries of company
personnel and analytical procedures applied to financial data and thus provides
less assurance than an audit. We have not performed an audit and, accordingly,
we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to
believe that the accompanying financial statements do not give a true and fair
view in accordance with International Accounting Standards.
Nicosia, Cyprus, 28 September 2009 MOORE STEPHENS STYLIANOU & CO
CERTIFIED PUBLIC ACCOUNTANTS - CY
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