3rd Quarter Results
Centamin Egypt Limited
15 May 2007
CENTAMIN EGYPT LIMITED
THIRD QUARTER REPORT
31 March 2007
REPORT TO SHAREHOLDERS
QUARTERLY HIGHLIGHTS
• Sukari JORC compliant resource upgraded to 9.01 million ounces of gold
• JORC compliant reserve figure of 3.7 million ounces of gold
• Completion of 'economically robust' Definitive Feasibility Study (DFS)
• Formal Board approval for Sukari Development
• Completion of C$151m Equity Raising and TSX listing
• Appointment of Barclays as Mandated Project Finance Lead Arranger
• Acquisition of 28MW power station
• Completion, submission and approval of Environmental Impact Assessment (EIA)
• Addition of a further RC rig takes drilling fleet on site to 10 rigs
• Record quarter of drilling, 33,133 metres drilled
• Project total drilling now exceeds 200,000m and 1,000 holes
• Drilling continues to encounter significant mineralisation
• Significant drill intersections for the quarter
o RCD 421 - 120m @ 1.98g/t Au
o RCD454 - 40m @ 8.65g/t Au
o RCD574 - 30m @ 16.9g/t Au
o RCD708 - 50m @ 1.90g/t Au
o RCD735 - 28.6m @ 10.54g/t Au
o RCD817 - 3m @ 47.29g/t Au
o RCD741 - 138m @ 1.35g/t Au
DEFINITIVE FEASIBILITY STUDY 'DFS'
On February 19, 2007, the Company announced that the DFS into the Sukari Gold
Project ('the Project') had been completed.
A summary of the findings of the DFS were:
•the DFS concluded that a 4mpta plant producing on average 200,000 ounces
per annum, over 15 years of mining, is economically robust; and
•total Capital Construction costs are estimated at US$216m with average
cash operating costs of US$290/oz (inclusive of 3% royalty) over the 15 year
mining period.
On the same day, the Board of Directors formally approved the development of the
Project.
DEVELOPMENT SCHEDULE - UPDATE
Project Go-Ahead Decision Feb 2007 (Completed)
Project Finance Q3 2007 (Equity component complete)
Commence Site Works Q3 2007
Commence Tailings Storage Facility Q3 2007
Kori Kollo Plant Arrives Egypt Q3 2007
Commence Mining Pre-strip Q3 2007
Commissioning and Production Q3 2008
An overview of the development schedule key items is set out below under the
same headings:
Project Finance
During the quarter, the Company completed a roadshow through London and North
America with Westwind Partners Inc. At the completion of this roadshow, the
Company placed approximately 175m new shares to raise C$151m. The placing was
heavily oversubscribed. Subsequent to this, the Company completed a full TSX
listing and shares began trading on April 5. These equity funds will be applied
to the Sukari development and represent the full equity component of the capital
required to take the project into production.
On April 17, 2007, the Company announced that Barclays Capital, the investment
banking division of Barclays Bank PLC, was appointed as Mandated Lead Arranger
to arrange a financing facility of up to US$100 million for the Project.
Together with the proceeds from the recently completed TSX listing and offering,
this facility will complete the financing arrangements required for the
development of the Project. The funding is subject to completion of due
diligence and detailed documentation.
The due diligence process has commenced (April 2007) with the review of Project
data, and visits to site by key banking personnel are scheduled for early May
2007. The Company is in receipt of the project financing schedule from Barclays
Capital and expects to complete the financing of the Project in the third
quarter of this year.
Kori Kollo Process Plant
During the quarter a supervisory dismantling team from Australia, under the
management of Centamin's Construction Manager, mobilised to site along with
Kaiser Setec, a local Bolivian engineering company, who have been awarded the
dismantling contract. Dismantling work commenced in February, following receipt
of dismantling equipment and establishment of site facilities.
Progress at the end of the quarter is as follows:
•Crushing 65% complete
•Reclaim 25% complete
•Grinding 21% complete
•CIL 12% complete
•Thickener 37% complete
•Plant Services 93% complete
•Gravity Circuit 90% complete
•Cyanide Area Yet to commence
First shipment of dismantled equipment will commence in June and will largely
consist of those requiring refurbishment outside of Egypt prior to importation
to Alexandria and then site.
Project Engineering and Design
A contract for the engineering and design work for the process plant was awarded
in mid March to MetPlant Engineering Services Pty Ltd, an Australian based
company. A technical team visited Bolivia (April) and will travel onto Egypt in
early May to review the Kori Kollo processing plant dismantling progress and the
Sukari plant site location respectively. Data and information gathered from
these visits will be used to finalise design and engineering work. Completion of
this work is scheduled for the second quarter of 2007 to enable plant site
clearing and civil earthworks to commence in early July 2007.
An Egyptian engineering company, TCB Egypt, has been engaged to detail design
and engineer the construction camp, kitchen-mess, desalination plant and
sewerage treatment plant. These facilities will go out for tender bids in early
May. Construction camp grading drawings are in progress and civils earthwork
will commence once equipment, surveyors and a field engineer are established at
site. The layout for the mine maintenance workshop has been finalised and issued
for design.
This key development schedule item remains on track for completion as planned.
Tailings Storage Facility
Knight Piesold Pty Ltd has been appointed to carry out the design and
construction supervision of the Tailings Storage Facility with HDPE liner. A
site visit for their engineer has been scheduled in May 2007 to conduct a
geotechnical survey and identify borrow sources for all materials.
Mining
Mr Tadek Wojtowicz commenced in the role of Mining Manager in mid March.
Discussions with fleet suppliers were held during the quarter, and at the
conclusion of the tender process, Caterpillar, through their Egyptian authorised
dealer Mantrac, was selected as the supplier of haulage trucks, articulated dump
trucks, excavators, graders and dozers. Atlas Copco has been selected to supply
grade control and blast hole drilling equipment. Final discussion over
maintenance and repair contracts is being held, and will be completed during the
June quarter.
Initial deposits on the long lead-time haulage trucks and excavators have been
made, with arrival into the Port of Alexandria scheduled for late June 2007.
Recruitment of key expatriate personnel is well advanced with appointments
scheduled to be made in May 2007.
Power Station
During the quarter, the acquisition of a 28MW Heavy Fuel Oil second hand power
plant currently decommissioned and resident in Turkey was finalised following
inspection and assessment of its good condition. The purchase of this critical
path item has removed a significant amount of project risk from the completion
schedule and will also represent a material saving on the budgeted capex amount
in the DFS for this item.
A contract for the dismantlement, packing and transportation within Turkey has
been awarded to a Magdenli, a Turkish engineering group, with a small Centamin
team currently in Turkey overseeing these activities. It is expected to take 16
weeks to dismantle. Maintenance support in Egypt for the equipment will be
provided by the local Caterpillar dealer, Mantrac.
Owners Team
The Company's organisational structure continues to grow with many key
appointments being made in the quarter. In a booming resource market, the
Company is very pleased with the quality of the personnel that have been
attracted to the project and the positions below have now been filled. The
Company will continue with its large 'owners team' approach.
- Project Manager
- Deputy Project Manager (HSE/Infrastructure)
- Construction Manager
- Construction Supervisor
- GIS & Data Base Manager
- Senior Surveyor
- Mining Manager
- Senior Mine Engineer
- Mill Superintendent
- Logistics Manager
- Power Plant Superintendent
- Engineering Manager
- Project Controller
- Manager Procurement Services
- Purchasing Officer
EXPLORATION AND DEVELOPMENT DRILLING
The Sukari Resource Model was upgraded during the quarter.
+---------------------------------------------------------------------------------+
| Total Resource (February 2007 - Global All Data) |
+-------+-------------+-------------+-----------------------+---------------------+
| | Measured | Indicated | Total | Inferred |
| | | | | |
| | | | (Measured and | |
| | | | Indicated) | |
| | | | | |
| +------+------+------+------+-------+-------+-------+-------+------+------+
|Cut-off| Mt | g/t | Mt | g/t | Mt | g/t | Moz | Mt | g/t | Moz |
| | | | | | | | | | | |
+-------+------+------+------+------+-------+-------+-------+-------+------+------+
| 0.5 | 47.39| 1.40| 73.98| 1.39| 121.37| 1.39| 5.42| 52.80| 1.70| 2.84|
+-------+------+------+------+------+-------+-------+-------+-------+------+------+
| 0.7 | 34.44| 1.70| 53.45| 1.69| 87.89| 1.69| 4.78| 38.60| 2.10| 2.57|
+-------+------+------+------+------+-------+-------+-------+-------+------+------+
| 1.0 | 22.40| 2.16| 34.36| 2.16| 56.76| 2.16| 3.94| 25.90| 2.70| 2.25|
+-------+------+------+------+------+-------+-------+-------+-------+------+------+
The resource estimate was calculated by Hellman and Schofield Pty Ltd ('H&S')
and is an estimate of recoverable tonnes and grade using Multiple Indicated
Kriging with block support correction. Measured resources exist in areas where
drilling is available at a nominal 25 x 25 metre spacing, Indicated resources
occur in areas drilled at approximately 25 x 50 metre spacing and Inferred
resources exist in areas of broad spaced drilling. The resource model extends
from 9700mN to 12200mN and to a maximum depth of 500RL (a maximum depth of 800
metres below surface). The estimate has been adjusted to present land surfaces
and previous underground mining.
It was based on 168,000 metres of drilling from 817 diamond and RC drill holes
which comprises of 88,421 two metre down hole composites and surface rock chip
samples.
Drilling in the Ra, Gazelle and Pharaoh Zones (10700N - 11900N) continued to
intersect high grade mineralisation. This further emphasizes that the initial
mineralised zones encountered in Amun and the southern part of Ra continue
through to northern Ra and Gazelle and then on to the northern Pharaoh zone. The
following new intersections show the extensiveness of the mineralisation
encountered in this quarter alone.
As announced on May 7, 2007, the Sukari global resource now stands at 194.42Mt @
1.44g/t Au for 9.01 Moz Au, at a 0.5g/t Au cut off grade, as set out in the
table below:
+---------------------------------------------------------------------------------------+
| Total Resource (May 2007 - Global All Data) |
+-------+---------------+---------------+-----------------------+-----------------------+
| | Measured | Indicated | Total | Inferred |
| | | | | |
| | | | (Measured and | |
| | | | Indicated) | |
| | | | | |
| +-------+-------+-------+-------+-------+-------+-------+-------+-------+-------+
|Cut-off| Mt | g/t | Mt | g/t | Mt | g/t | Moz | Mt | g/t | Moz |
| | | | | | | | | | | |
+-------+-------+-------+-------+-------+-------+-------+-------+-------+-------+-------+
| 0.5 | 52.15 | 1.39 | 83.62 | 1.39 | 135.76| 1.39| 6.07| 58.7 | 1.6 | 2.94|
+-------+-------+-------+-------+-------+-------+-------+-------+-------+-------+-------+
| 0.7 | 37.37 | 1.70 | 59.67 | 1.71 | 97.04| 1.71| 5.33| 42.4 | 1.9 | 2.63|
+-------+-------+-------+-------+-------+-------+-------+-------+-------+-------+-------+
| 1.0 | 24.11 | 2.18 | 38.14 | 2.20 | 62.24| 2.19| 4.39| 27.8 | 2.5 | 2.24|
+-------+-------+-------+-------+-------+-------+-------+-------+-------+-------+-------+
Note to Table: Figures in table may not add correctly due to rounding
The resources are estimates of recoverable tonnes and grades using Multiple
Indicator Kriging with block support correction. Measured resources lie in areas
where drilling is available at a nominal 25 x 25 metre spacing, Indicated
resources occur in areas drilled at approximately 25 x 50 metre spacing and
Inferred resources exist in areas of broader spaced drilling. The resource model
extends from 9700mN to 12200mN and to a maximum depth of 350mRL (a maximum depth
of 950 metres below surface) and is based on all assay data available at 30
April 2007.
The majority of the resource has been added in the Ra and Gazelle zones from
11075N - 11225N with drilling confirming continuity of the major high grade Hapi
Zone along strike to the north.
Ra -Gazelle Zones
o RCD421 - 120m @ 1.98g/t from 595m (incl. 1m @ 102g/t from 611m)
o RCD422 - 32m @ 1.57g/t from 501m (incl. 1m @ 28.6g/t Au)
o RCD427 - 2m @ 94g/t Au from 791m
o RCD454 - 40m @ 8.65g/t Au from 523m, incl. 1m @ 189g/t from 528m
o RCD530 - 34m @ 1.10g/t from 554m; 17m @ 2.04g/t from 646m and 83m @
1.02g/t from 717m
o RCD708 - 50m @ 1.90g/t Au from 351m and 23m @ 4.30g/t from 556m
o RCD720 - 25m @ 1.36g/t Au from 231m and 8m @ 2.30g/t Au from 320m
o RCD726 - 7m @ 5.15g/t Au from 470m and 40m @ 1.45g/t Au from 531m
o RCD735 - 21m @ 1.04g/t Au from 90m; 20m @ 2.05g/t from 317m; 14m @
2.15g/t Au from 351m;
30m @ 1.33g/t Au from 595m and 28.6m @ 10.54g/t Au from 658.4m
o D817 - 9m @ 6.33g/t Au from 345m; 3m @ 47.29g/t Au from 485m and 24m @
1.39g/t from 547m
o D856 - 21m @ 2.25g/t Au from 36m and 28m @ 4.62g/t from 63m (incl. 2m @
39.05g/t from 73m)
o D896 - 31m @ 1.69g/t Au from 250m and 11m @ 11.71g/t Au from 646m
Pharaoh Zone (>11200N)
o RCD574 - 30m @ 16.9g/t Au from 488m (incl. 1m @ 410g/t from 501m)
o RCD741 - 138m @ 1.35g/t Au from 601m
o RCD766 - 28m @ 1.48g/t Au from 39m
o RCD771 - 14m @ 2.50g/t Au from 5m and 11m @ 1.17g/t Au from 105m
o RCD776 - 42m @ 1.32g/t Au from 63m
o RCD779 - 29m @ 1.02g/t Au from 72m
o RCD783 - 20m @ 1.69g/t Au from 1m
o RCD784 - 73m @ 1.58g/t Au from 3m
o RCD787 - 62m @ 1.27g/t Au from 0m
o D827 - 29m @ 1.50g/t from 50m
o D842 - 21m @ 1.73g/t Au from 31m
The main areas of significant resource increase were:
•11000N - 11150N - reflects the strong assays and significant widths of
mineralisation intersected by holes that have tested and defined the strike
extension of the Main and Hapi zones from the Amun zone. This zone was first
intersected by hole RCD553 and has subsequently been followed up with holes,
660, 703, 710, 699, 726, 427, 421, 729, 733, 720, 735, 817 and 708.
•11600N - 12000N Assays from infill drill holes in this area confirmed the
near surface mineralisation, as well as continuing to identify deeper
structures, with a high proportion of the resource now classified as
measured and indicated resources.
Ra - Gazelle Zone (10700 - 11200N)
Drilling focused on moving northwards through the Ra and Gazelle zones into the
Pharaoh zone, testing the strike continuity of the Main and Hapi mineralisation
zones at depth, other stacked quartz vein - shear zones and associated stockwork
mineralisation. The Main and Hapi zones continue to be successfully intersected,
proving continuity of the mineralisation from the far south in the Amun Zone, to
the northern extent of the deep drilling currently underway.
RCD454 on 10950N intersected 40m @ 8.65g/t Au from 523m, correlating well to
intersections in 703 and D307, near the steep porphyry HW contact.
Pharaoh Zone (>11200N)
Holes 696, 698, 751, 745 and 746 were drilled from section 11225N to 11425N to
test the strike extension of the Hapi and Main zone mineralisation intersected
to the south, including the very encouraging broad mineralisation intersected in
holes 896 and 530 on 11200N (Table 3). The holes have intersected these
projected zones and other stacked zones, indicated by strongly
sericite-clay-silica altered porphyry, intense quartz veining, sulphide
mineralisation, some visible gold and areas of intense shearing. Assay results
are awaited.
Surface mineralisation continued to be intersected in the Pharaoh zone north of
11500N proving continuity to the far north of the hill. A strong surface zone is
particularly evident from 11900 - 12000N corresponding to the NE striking quartz
reef previously mapped and rock chip sampled with strong assays.
For Centamin Egypt Limited
Josef El-Raghy
Managing Director/CEO
May 14, 2007
Information in this report which relates to exploration, geology, sampling and
drilling is based on information compiled by geologist Mr R Osman who is a full
time employee of the Company, and is a member of the Australasian Institute of
Mining and Metallurgy with more than five years experience in the fields of
activity being reported on, and is a 'Competent Person' for this purpose and is
a Qualified Person as defined in National Instrument 43-101 of the Canadian
Securities Administrators. His written consent has been received by the Company
for this information to be included in this report in the form and context which
it appears.
The information in this report that relates to mineral resources is based on
work completed by Mr Nicolas Johnson, who is a Member of the Australian
Institute of Geoscientists. Mr Johnson is a full time employee of Hellman and
Schofield Pty Ltd and has sufficient experience which is relevant to the style
of mineralisation and type of deposit under consideration and to the activity
which he is undertaking to qualify as a Competent Person as defined in the 2004
edition of the 'Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves' and is a Qualified Person as defined in National
Instrument 43-101 of the Canadian Securities Administrators. Mr Johnson consents
to the inclusion in the report of the matters based on his information in the
form and context in which it appears.
MANAGEMENT DISCUSSION AND ANALYSIS
The following Management's Discussion and Analysis of the Financial Condition
and Results of Operations ('MD&A') for Centamin Egypt Limited (the 'Company' or
'Centamin') should be read in conjunction with the Interim Consolidated
Financial Statements for the nine months ended March 31, 2007 which are
unaudited. The effective date of this report is May 14, 2007.
The financial information presented in this MD&A has been prepared in accordance
with the measurement and recognition criteria of Australian Generally Accepted
Accounting Principles.
In addition to these Australian requirements, further information has been
included in the Interim Consolidated Financial Statements for the nine months
ended March 31, 2007 in order to comply with applicable Canadian securities law,
as the Company is listed on the Toronto Stock Exchange.
Additional information relating to the Company, including the Company's most
recent Annual Report for the year ended June 30, 2006 and other public
announcements is available at www.centamin.com.
All amounts in this MD&A are expressed in Australian dollars unless otherwise
identified.
FORWARD LOOKING STATEMENTS
Some of the statements contained in this MD&A, including those relating to
strategies and other statements, are predictive in nature, and depend upon or
refer to future events or conditions, or include words such as 'expects',
'intends', 'plans', 'anticipates', 'believes', 'estimates' or similar
expressions that are forward looking statements. Forward looking statements
include, without limitations, the information concerning possible or assumed
further results of operations as set forth herein. These statements are not
historical facts but instead represent only expectations, estimates and
projections regarding future events and are qualified in their entirety by the
inherent risks and uncertainties surrounding future expectations generally.
The forward looking statements contained in this MD&A are not guarantees of
future performance and involve certain risks and uncertainties that are
difficult to predict. The future results of the Company may differ materially
from those expressed in the forward looking statements contained in this MD&A
due to, among other factors, the risks and uncertainties inherent in the
business of the Company. The Company does not undertake any obligation to update
or release any revisions to these forward looking statements to reflect events
or circumstances after the date of this MD&A or to reflect the occurrence of
unanticipated events.
BACKGROUND
Centamin is a mineral exploration and development company that has been actively
exploring in Egypt since 1995. The principal asset of Centamin is its interest
in the Sukari Project, located in the Eastern Desert of Egypt. The Sukari
Project is at an advanced stage of development, with construction due to
commence in July 2007 and first gold production expected during the third
quarter of 2008.
A definitive feasibility study (the 'DFS') for the development to commercial
production of the Sukari Project was compiled in February 2007 by Roche Process
Engineering Pty Ltd. The DFS provides that the capital cost to develop the
project is estimated at US$216.5 million (including mining fleet and
contingencies but not including the leased mining fleet). According to the DFS,
the Sukari Project reserve will be mined by a single open pit over a 15-year
period. During that time 78 Mt ore grading 1.5 g/t is expected to be mined,
containing 3.7 Moz gold. Over this 15-year mining period the project is expected
to produce on average 200,000 oz of gold annually at an average cash operating
cost of US$290/oz.
The Sukari Project will be the first large-scale modern gold mine to be
developed in Egypt. Centamin's operating experience in Egypt gives it a
significant first-mover advantage in acquiring and developing other gold
projects in the prospective Arabian-Nubian Shield.
SELECTED FINANCIAL INFORMATION FROM THE UNAUDITED INTERIM CONSOLIDATED INCOME
STATEMENTS
Three Months Nine Months
Ended March 31, Ended March 31,
2007 2007
A$ A$
______________________________
Revenue 465,808 1,762,712
Other income - 530,258
Administration expenses (601,917) (1,259,558)
Foreign exchange loss (602,604) (753,291)
Marketing expenses (94,850) (167,642)
Travelling expenses (158,814) (438,757)
Share based payments (326,422) (556,594)
Other expenses (95,450) (459,507)
______________________________
Loss before income tax (1,414,249) (1,342,379)
Tax (expense)/income - -
______________________________
Net (loss) for the period (1,414,249) (1,342,279)
______________________________
(Loss) per share
- Basic (cents per share) (0.110) (0.104)
- Diluted (cents per share) (0.110) (0.104)
Results for the Nine Months Ended March 31, 2007
Revenue of $1,762,712 comprises interest revenue applicable on the Company's
available cash and working capital balances and term deposit amounts.
Other income of $530,258 is for a 'profit on sale of fixed asset' non-cash
accounting entry applicable on the sale of the exploration drilling rigs sold by
under a sale and purchase agreement in a prior financial year. The accounting
entry has been posted to recognise the accounting profit on sale as a result of
the final progressive purchase payment being received.
Administration expenses of $1,259,558 comprise expenditure incurred against
communications, consultants, directors' fees, stock exchange listing fees, share
registry fees, employee salaries and general office administration expenses.
Foreign exchange loss of $753,291 is attributable to adverse exchange rate
movements during the period as a result of the weakening United States dollar.
Marketing expenses of $167,642 comprise investor relations activities and
attendance at various trade shows and industry conferences.
Travelling expenses of $438,757 are significant and comprise travel and
accomodation for directors, company executives and consultants for industry and
corporate purposes.
Share based payments of $556,594 relates to the requirement to recognise the
cost of granting options to directors, company executives and employees under
AIFRS over the option vesting period.
Other expenses of $459,507 comprise non-cash expenses for depreciation and
employee entitlements.
The loss after tax of the consolidated entity for the nine months ended March
31, 2007 was $1,342,279.
Results for the Three Months Ended March 31, 2007
Revenue of $465,808 comprises interest revenue applicable on the Company's
available cash and working capital balances and term deposit amounts.
Administration expenses of $601,917 comprise expenditure incurred against
communications, consultants, directors' fees, stock exchange listing fees, share
registry fees, employee salaries and general office administration expenses.
Foreign exchange loss of $602,604 is attributable to adverse exchange rate
movements during the period as a result of the weakening United States dollar.
Marketing expenses of $94,850 comprise investor relations activities and
attendance at various trade shows and industry conferences.
Travelling expenses of $158,814 are significant and comprise travel and
accomodation for directors, company executives and consultants for industry and
corporate purposes.
Share based payments of $326,442 relates to the requirement to recognise the
cost of granting options to directors, company executives and employees under
AIFRS over the option vesting period.
Other expenses of $96,450 comprise non-cash expenses for depreciation and
employee entitlements.
The loss after tax of the consolidated entity for the nine months ended March
31, 2007 was $1,414,249.
SELECTED FINANCIAL INFORMATION FROM THE UNADUITED INTERIM CONSOLIDATED BALANCE
SHEETS
March 31, 2007 June 30, 2006
A$ A$
______________________________
Total current assets 30,248,391 54,789,830
Total non-current assets 82,548,632 42,458,738
Total assets 112,797,023 97,248,568
Total current liabilities 18,114,991 1,187,188
Total non-current liabilities - 205,448
Total liabilities 18,114,991 1,392,626
______________________________
Net assets 94,682,032 95,855,932
______________________________
Current assets have decreased to $30,248,391 at March 31, 2007 as a result of
expenditure incurred for completion of the definitive feasibility study on the
Sukari Gold Project, ongoing exploration resource drilling at Sukari,
acquisition of Kori Kollo second hand gold plant in Bolivia (South America) and
initial construction activities at Sukari.
Non-current assets have increased to $82,548,632 at March 31, 2007 as a result
of the expenditure described in Current assets due to the Company's accounting
policy to capitalise expenditure of this nature under the category of
Exploration, Evaluation & Development.
Current liabilities have increased to $18,114,991 at March 31, 2007 due to the
acquisition of the Kori Kollo second hand gold plant in Bolivia (South America)
and a second hand power plant in Turkey. The acquisition price for the Kori
Kollo second hand gold plant was US$11M of which US$5.5M remains to be paid, as
at March 31, 2007 as the third and final payment of this transaction. The
acquisition price of the second hand power plant was US$9.75M of which US$7.828M
remains to be paid, as at March 31, 2007 as the third and final payment of this
transaction.
Non-current liabilities as at March 31, 2007 have decreased to nil.
SELECTED FINANCIAL INFORMATION FROM THE UNADUITED INTERIM CONSOLIDATED
STATEMENTS OF CHANGES IN EQUITY
Three months Nine months
ended ended
March 31, 2007 March 31, 2007
A$ A$
______________________________
Total equity at beginning of period 96,595,012 95,855,932
Movement in issued equity 58,884 (390,114)
Movement in reserves 326,422 565,643
Loss for the period (1,412,249) (1,349,429)
______________________________
Total equity at end of period 94,682,032 94,682,032
______________________________
Issued equity has decreased due to the effect of timing differences in relation
to equity raising costs being incurred early and in advance of the equity to be
issued as a result of the Company's listing on the TSX in April 2007.
Reserves have increased due to the effect of expensing of share based option
payments.
Loss for the quarter and nine month period is analysed under the section
unaudited interim consolidated income statement.
SELECTED FINANCIAL INFORMATION FROM THE UNAUDITED INTERIM CONSOLIDATED CASH FLOW
STATEMENTS
Three months Nine months
ended ended
March 31, 2007 March 31, 2007
A$ A$
______________________________
Net cash flow from operating activities (647,657) (806,775)
Net cash flow from investing activities (8,606,763) (23,191,590)
Net cash flow from financing activities (720,986) (390,114)
______________________________
Net decrease in cash and cash equivalents (9,975,406) (24,388,479)
Cash and cash equivalents at the beginning of 40,014,485 54,493,427
the financial period
Effects of exchange rate changes (73,209) (139,078)
______________________________
Cash and cash equivalents at the end of the 29,965,870 29,965,870
financial period
______________________________
Nine Months Ended March 31, 2007
The net cash flow from operating activities in the nine months ended March 31,
2007 of ($806,775) is attributable to payments for corporate salary and wage,
corporate administration and compliance related costs.
The net cash flow from investing activities in the nine months ended March 31,
2007 of ($23,191,590) is attributable to exploration expenditure of $8,133,503,
feasibility study expenditure of $2,390,755, early Sukari development
expenditure of $955,852 and payments for plant and equipment totalling
$11,711,479. This final amount is largely payments for the Kori Kollo second
hand gold processing plant in Bolivia (South America) and initial payment for
the second hand power plant in Turkey.
The net cash flow from financing activities in the nine months ended March 31,
2007 of ($390,114) is attributable to equity raised through the conversion of
employee share options of $389,756 offset by costs of equity raising of
$779,870.
The overall net decrease in cash in the nine months ended March 31, 2007 of
$24,388,479, excluding the effect of exchange rate movements, results in a
closing cash balance of $29,965,870.
Three Months Ended March 31, 2007
The net cash flow from operating activities in the three months ended March 31,
2007 of ($647,657) is attributable to payments for corporate salary and wage,
corporate administration and compliance related costs.
The net cash flow from investing activities in the three months ended March 31,
2007 of ($8,606,763) is attributable to exploration expenditure of $2,761,687,
feasibility study expenditure of $777,809, early Sukari development expenditure
of $460,274 and payments for plant and equipment totalling $4,606,993. This
final amount is largely payments for the dismantling of the Kori Kollo second
hand gold processing plant in Bolivia (South America) and initial payment for
the second hand power plant in Turkey.
The net cash flow from financing activities in the three months ended March 31,
2007 of ($720,986) is attributable to equity raised through the conversion of
employee share options of $58,884 offset by costs of equity raising of $779,870.
The overall net decrease in cash in the three months ended March 31, 2007 of
$9,975,406, excluding the effect of exchange rate movements, results in a
closing cash balance of $29,965,870.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal source of liquidity as at March 31, 2007 is cash of
$29,965,870 (June 30, 2006 - $54,493,427). Of this amount $26,307,466 has been
invested in short term commercial banks bills and term deposits.
The Company's principal sources of cash for the nine months ended March 31, 2007
were proceeds from cash investments and interest revenue received from cash
investments.
The following is a summary of the Company's outstanding commitments as at March
31, 2007:
Payments due Total Less than 1 1 to 5 years
year
A$ A$ A$
Kori Kollo 6,733,100 6,733,100 -
Turkish Power Plant 9,583,037 9,583,37 -
Creditors 1,352,573 1,352,573 -
Total commitments 17,668,711 17,668,711 -
The Company's financial commitments are limited to controllable discretionary
spending on work programs at the Sukari Project, the Kori Kollo plant
dismantling site in Bolivia, the Turkish power plant dismantling site in Turkey,
administration expenditure at the Egyptian and Australia office locations and
for general working capital purposes.
The Company's financial obligations in relation to the Kori Kollo and Turkish
plants are limited to the following:
• A US$5.5 million payment, being the final balance owing on the
acquisition cost of the Kori Kollo gold processing plant acquired in the
early part of fiscal year 2007 presently located in Bolivia.
• A US$9.75 million series of progressive payments relating to the
acquisition of a second hand power generation plant acquired in February
2007 and presently located in Turkey. The first payment of US$1.9 million
was made upon signing of the sale and purchase contract in February 2007,
the second and third payments of US$1.9 million each are due on April 30,
2007 and August 13, 2007, and the final payment is due upon the earlier of
power plant location or the expiry date of a letter of credit established as
security for the payments. This expiry date is October 9, 2007.
On April 17, 2007 the Company announced that it had appointed Barclays Capital,
the investment banking division of Barclays Bank PLC, as Mandated Lead Arranger
to arrange a financing facility of up to US$100M for the Sukari Gold Project.
Other than described above the company has no other off balance sheet
arrangements.
OUTSTANDING SHARE INFORMATION
As at May 14, 2007 the Company had 755,534 232 fully paid ordinary shares issued
and outstanding. The following table sets out the fully paid ordinary shares
issuable under the Employee Share Option Plan and Warrants issued under the
recent TSX listing:
As at May 14, 2007 Number
Shares on Issue 755,534,232
Options issued but not exercised 12,360,000
Warrants issued by not exercised 8,794,691
776,688,923
SEGMENT DISCLOSURE
The Company is engaged in the business of exploration for precious and base
metals only, which is characterised as one business segment only.
SIGNIFICANT ACCOUNTING ESTIMATES
Management is required to make various estimates and judgements in determining
the reported amounts of assets and liabilities, revenues and expenses for each
period presented and in the disclosure of commitments and contingencies. The
significant areas where management uses estimates and judgements in preparing
the consolidated financial statements are the determination of carrying values
and impaired values of exploration assets.
INTERNAL CONTROLS
The Company has made no change to its internal controls over financial reporting
since June 30, 2006 that have materially affected, or are reasonably likely to
materially affect, the Company's internal control over financial reporting.
FINANCIAL INSTRUMENTS
At March 31, 2007 the Company has exposure to interest rate risk which is
limited to the floating market rate for cash.
The Company does not have foreign currency risk for non-monetary assets and
liabilities of the Egyptian operations as these are deemed to have a functional
currency of Australian dollars. The Company has no significant monetary foreign
currency assets and liabilities apart from (Australian) cash term deposits which
are held for the purposes of funding a portion of the mine construction for the
Sukari Project.
The Company currently does not engage in any hedging or derivative transactions
to manage interest rate or foreign currency risks.
RELATED PARTY TRANSACTIONS
The related party transactions for the nine months ended March 31, 2007 are
summarised below:
- Salaries, superannuation contributions, consulting and Directors fees
paid to Directors during the nine months ended March 31, 2007 amounted
to $758,486 (March quarter: $253,432).
- Mr S El-Raghy and Mr J El-Raghy are Directors and shareholders of
El-Raghy Kriewaldt Pty Ltd ('ELK'), which provides office premises to
the Company in Australia. All dealings with ELK are in the ordinary
course of business and on normal terms and conditions. Rent paid to ELK
during the nine months ended March 31, 2007 amounted to $41,065 (March
quarter: $13,923).
- Mr S El-Raghy provides office premises to the Company in Alexandria,
Egypt. All dealings are in the ordinary course of business and on normal
terms and conditions. Rent paid during the nine months ended March 31,
2007 amounted to $14,916 (March quarter: $5,169).
- Mr C Cowden, a non-executive director, is also a director and shareholder
of Cowden Limited, which provides insurance broking services to the
Company. All dealings with Cowden Limited are in the ordinary course of
business and on normal terms and conditions. Insurance premiums paid to
Cowden Limited during the nine months ended March 31, 2007 amounted to
$102,546 (March quarter: $14,363).
SUBSEQUENT EVENTS
Allotment of Shares
On April 5, 2007 the Company announced an allotment of shares following the
successful closing of the first tranche (the 'First Tranche') of a total
offering of 163,622,198 ordinary shares priced at C$0.86 for total proceeds
C$140,715,090 (the 'Offering'). The First Tranche represented 75,028,620
Ordinary Shares for gross proceeds of C$64,524,613.
On April 11, 2007 the Company announced an allotment of shares following the
successful closing of the second tranche (the 'Second Tranche') of a total
offering of 163,622,198 ordinary shares priced at C$0.86 for total proceeds
C$140,715,090 (the 'Offering'). The Second Tranche consisted of 88,593,578
Ordinary Shares priced at C$0.86 for gross proceeds of C$76,190,477. The Second
Tranche closed following the approval by shareholders of the Company, at a
meeting of shareholders held on April 10, 2007, of the issuance of 100 million
shares under the Offering.
On April 20, 2007 the Company announced an allotment of shares to Westwind
Partners Inc who acted as sole agent (the 'Agent') for the Offering. Westwind
Partners (UK) Limited, an affiliate of the Agent, acted as financial adviser to
the Company. In addition, the Agent has been granted an over-allotment option to
purchase up to an aggregate of 12,271,665 additional ordinary shares at C$0.86
per share, exercisable as to 5,627,147 ordinary shares for 30 days from the
closing of the First Tranche and exercisable as to 6,644,518 ordinary shares for
15 days from the closing of the Second Tranche. Westwind Partners Inc has fully
exercised the over-allotment option for an additional 12,271,665 ordinary shares
at C$0.86 per share. The over-allotment raised additional gross proceeds of
approximately C$10.5 million or A$11.2 million.
Project Financing
On April 17, 2007 the Company announced that it had appointed Barclays Capital,
the investment banking division of Barclays Bank PLC, as Mandated Lead Arranger
to arrange a financing facility of up to US$100M for the Sukari Gold Project.
Project Environmental Approval
On May 2, 2007 the Company announced that it has received Environmental Approval
from the Egyptian Environmental Affairs Agency (EEAY) for the Sukari Gold
Project.
The accompanying Interim Consolidated Financial Statements for the quarter ended
March 31, 2007 have been prepared in accordance with Australian Equivalents to
International Financial Reporting Standards and has not been audited by the
Company's Auditors.
UNAUDITED INTERIM CONSOLIDATED INCOME STATEMENTS
Three Months Nine Months
Ended March 31, Ended March 31,
2007 2007
A$ A$
__________________________________
Revenue - Note 4 465,808 1,762,712
Other income - Note 4 - 530,258
Administration expenses (601,917) (1,259,558)
Foreign exchange loss (602,604) (753,291)
Marketing expenses (94,850) (167,642)
Travelling expenses (158,814) (438,757)
Share based payments (326,422) (556,594)
Other expenses (95,450) (459,507)
__________________________________
Loss before income tax (1,414,249) (1,342,379)
Tax (expense)/income - -
__________________________________
Net loss for the period (1,414,249) (1,342,279)
__________________________________
Loss per share
- Basic (cents per share) (0.110) (0.104)
- Diluted (cents per share) (0.110) (0.104)
The above Unaudited Interim Consolidated Income Statements should be read in
conjunction with the accompanying notes.
UNAUDITED INTERIM CONSOLIDATED BALANCE SHEETS
March 31, 2007 June 30, 2006
A$ A$
__________________________________
CURRENT ASSETS
Cash and cash equivalents 29,965,870 54,493,427
Trade and other receivables 217,487 183,004
Prepayments 65,034 113,399
Total current assets 30,248,391 54,789,830
NON-CURRENT ASSETS
Investments 4,728 -
Plant and equipment 29,004,977 1,070,101
Exploration, evaluation and development 53,538,927 41,388,637
expenditure - Note 5
Total non-current assets 82,548,632 42,458,738
Total assets 112,797,023 97,248,568
CURRENT LIABILITIES
Trade and other accounts payable 17,676,503 861,259
Provisions 438,488 325,929
Total current liabilities 18,114,991 1,187,188
NON-CURRENT LIABILITIES
Trade and other accounts payable - 205,448
Total non-current liabilities - 205,448
Total liabilities 18,114,991 1,392,626
__________________________________
NET ASSETS 94,682,032 95,855,932
__________________________________
EQUITY
Contributed equity - Note 7 114,953,620 115,344,046
Reserves 3,905,244 3,339,601
Accumulated losses (24,176,832) (22,827,715)
__________________________________
TOTAL EQUITY 94,682,032 95,855,932
__________________________________
The above Unaudited Interim Consolidated Balance Sheets should be read in
conjunction with the accompanying notes.
UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Contributed Options Accumulated
Equity Reserves Reserve Losses Total
$ $ $ $ $
___________________________________________________________
At July 1, 2005 68,602,890 2,809,287 63,504 (23,847,593) 47,628,088
Profit for the - - - 1,010,830 1,010,830
period
Share options 339,183 - - - 339,183
exercised
Cost of share based - - 475,858 - 475,858
payments
Contributions of 46,401,973 - - - 46,401,973
equity
Transfer to retained - - (9,048) 9,048 -
earnings
___________________________________________________________
At June 30, 2006 115,344,046 2,809,287 530,314 (22,827,715) 95,855,932
Loss for the period - - - (1,342,279) (1,342,279)
Share options 389,688 - - - 389,688
exercised
Cost of share based - - 565,643 - 565,643
payments
Contributions of (780,114) - - - (780,114)
equity (1)
Transfer to retained - - - (6,838) (6,838)
earnings
___________________________________________________________
At March 31, 2007 114,953,620 2,809,287 1,095,957 (24,176,832) 94,682,032
___________________________________________________________
(1) Contributions of equity is in deficit due to early accrual of equity raising
fees associated with the Company's TSX listing completed in April 2007.
The above Unaudited Interim Consolidated Statement of Changes in Equity should
be read in conjunction with the accompanying notes.
UNAUDITED INTERIM CONSOLIDATED CASH FLOW STATEMENT
Three Months Nine Months
Ended March 31, Ended March 31,
2007 2007
A$ A$
_________________________________
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees (1,113,465) (2,569,486)
Interest received 465,808 1,762,712
_________________________________
Net cash generated by/(used in) operating
activities (647,657) (806,775)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for property, plant and equipment (4,606,993) (11,711,479)
Sale of plant and equipment - -
Payments for exploration and evaluation (3,999,770) (11,480,111)
_________________________________
Net cash generated by/(used in) investing
activities (8,606,763) (23,191,590)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the conversion of options 58,884 389,756
Proceeds from issues of shares - -
Share issue costs (779,870) (779,870)
_________________________________
Net cash generated by/(used in) financing
activities (720,986) (390,114)
Net increase/(decrease) in cash and cash
equivalents (9,975,406) (24,388,479)
Cash and cash equivalents at the beginning 40,014,485 54,493,427
of the period
Effects of exchange rate changes on the
balance of cash held in foreign currencies (73,209) (139,077)
_________________________________
Cash and cash equivalents at the end of the
period 29,965,870 29,965,870
_________________________________
The above Interim Consolidated Cash Flow Statements should be read in
conjunction with the accompanying notes.
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations, Going Concern and Accounting Policies
Statement of Compliance
Centamin Egypt Limited (the 'Company') and its subsidiaries (collectively 'the
Group') are engaged in the exploration for precious and base metals located in
the western desert region of Egypt. The Company was incorporated under the
Corporations Law of South Australia on March 24, 1970.
These consolidated financial statements have been prepared in accordance with
Australian general accepted accounting principles, as applicable to a going
concern. Accordingly, they do not give effect to adjustments that would be
necessary should the Company be unable to continue as a going concern and
therefore be required to realise its assets and liquidate its liabilities and
commitments in other than the normal course of business and at amounts different
from those in the accompanying consolidated financial statements. The Company
has a need for financing for working capital, and the exploration and
development of its mineral properties. The Company's continuance as a going
concern is dependent upon its ability to obtain adequate financing and to reach
profitable levels of operations. It is not possible to predict whether financing
efforts will be successful or if the Company will attain profitable levels of
operations.
Basis of Preparation
The accompanying unaudited interim consolidated financial statements have been
prepared in accordance with generally accepted accounting principles in
Australia. The financial statements are prepared using the same accounting
policies and methods of application as those disclosed in note 1 to the
consolidated financial statements for the year ended 30 June 2006, but they do
not include all the disclosures required by Australian Accounting Standards for
annual financial statements. In the opinion of management, all adjustments
considered necessary for fair presentation have been included in these financial
statements. Operating results for the three months ended 31 March 2007 are not
necessarily indicative of the results that may be expected for the full year
ending 30 June 2007. For further information see the Company's consolidated
financial statements, including notes thereto, for the year ended 30 June 2006.
The significant accounting policies which have been adopted in the preparation
of these unaudited interim consolidated financial statements are:
(A) ACCOUNTS PAYABLE
Trade payables and other accounts payable are recognised when the consolidated
entity becomes obliged to make future payments resulting from the purchase of
goods and services.
(B) DEBT AND EQUITY INSTRUMENTS ISSUED BY THE COMPANY
Debt and equity instruments are classified as either liabilities or as equity in
accordance with the substance of the contractual arrangement.
(C) EXPLORATION, EVALUATION AND DEVELOPMENT EXPENDITURE
Exploration and evaluation expenditures in relation to each separate areas of
interest are recognised as an exploration and evaluation asset in the year in
which they are incurred where the following conditions are satisfied:
i) the rights to tenure of the area of interest are current; and
ii) at least one of the following conditions is also met:
a) the exploration and evaluation expenditures are expected to be
recouped through successful development and exploration of the
area of interest, or alternatively, by its sale: or
b) exploration and evaluation activities in the area of interest have
not at the reporting date reached a stage which permits a reasonable
assessment of the existence or otherwise of economically recoverable
reserves, and active and significant operations in, or in relation to,
the area of interest are continuing.
Exploration and evaluation assets are initially measured at cost and include
acquisition of rights to explore, studies, exploration drilling, trenching and
sampling and associated activities. General and administrative costs are only
included in the measurement of exploration and evaluation costs where they are
related directly to operational activities in a particular area of interest.
Exploration and evaluation assets are assessed for impairment when facts and
circumstances (as defined in AASB 6 'Exploration for and Evaluation of Mineral
Resources') suggest that the carrying amount of exploration and evaluation
assets may exceed its recoverable amount. The recoverable amount of the
exploration and evaluation assets (or the cash-generating unit(s) to which it
has been allocated, being no larger than the relevant area of interest) is
estimated to determine the extent of the impairment loss (if any). Where an
impairment loss subsequently reverses, the carrying amount of the asset is
increased to the revised estimate of its recoverable amount, but only to the
extent that the increased carrying amount does not exceed the carrying amount
that would have been determined had no impairment loss been recognised for the
asset in previous years.
Where a decision is made to proceed with development in respect of a particular
area of interest, the relevant exploration and evaluation asset is tested for
impairment, reclassified to development properties, and then amortised over the
life of the reserves associated with the area of interest once mining operations
have commenced.
(D) FOREIGN CURRENCY
All foreign currency transactions during the period have been brought to account
using the exchange rate in effect at the date of the transaction. Foreign
currency monetary items at balance date are translated at the exchange rate
existing at that date.
Non-monetary assets and liabilities carried at fair value that are denominated
in foreign currencies are translated at the rates prevailing at the date when
the fair value was determined. All exchange differences are brought to account
in the interim consolidated income statement in the financial period in which
they arise.
(E) GOODS AND SERVICES TAX
Revenues, expenses and assets are recognised net of the amount of goods and
services tax (GST), except:
i. Where the amount of GST incurred is not recoverable from the taxation
authority, it is recognised as part of the cost of acquisition of an asset
or as part of an item of expense; or
ii. For receivables and payables which are recognised inclusive of GST.
The net amount of GST recoverable from, or payable to, the taxation authority is
included as part of receivables or payables.
(F) IMPAIRMENT OF ASSETS (OTHER THAN EXPLORATION AND EVALUATION)
At each reporting date, the consolidated entity reviews the carrying amounts of
its tangible and intangible assets to determine whether there is any indication
that those assets have suffered an impairment loss. If any such indication
exists, the recoverable amount of the asset is estimated in order to determine
the extent of the impairment loss (if any). Where the asset does not generate
cash flows that are independent from other assets, the consolidated entity
estimates the recoverable amount of the cash-generating unit to which the asset
belongs.
Recoverable amount is the higher of fair value less costs to sell and value in
use. In assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects current
market assessment of the time value of money and the risks specific to the asset
for which the estimates of future flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to
be less than its carrying amount, the carrying amount of the asset
(cash-generating unit) is reduced to its recoverable amount. Each cash generated
unit is determined on an area of interest basis.
Where an impairment loss subsequently reverses, the carrying amount of the asset
(cash-generating unit) is increased to the revised estimate of its recoverable
amount, but only to the extent that the increased carrying amount does not
exceed the carrying amount that would have been determined had no impairment
loss been recognised for the asset (cash generating unit) in prior years.
(G) LOANS AND RECEIVABLES
Trade receivables, loans, and other receivables are recorded at amounts due less
any allowance for doubtful debts.
(H) PLANT AND EQUIPMENT
Plant and equipment, and equipment under finance lease are stated at cost less
accumulated depreciation and impairment. Plant and equipment will include
capitalised development expenditure. Cost includes expenditure that is directly
attributable to the acquisition of the item as well as the estimated cost of
abandonment. In the event that settlement of all or part of the purchase
consideration is deferred, cost is determined by discounting the amounts payable
in the future to their present value as at the date of acquisition.
Depreciation is provided on plant and equipment. Depreciation of capitalised
development expenditure will be provided on a unit of production basis over
recoverable reserves, whilst on other fixed assets are calculated on a straight
line basis so as to write off the cost or other re-valued amount of each asset
over its expected useful life to its estimated residual value.
The estimated useful lives, residual values and depreciation method are reviewed
at the end of each annual reporting period.
The following estimated useful lives are used in the calculation of depreciation:
Plant & Equipment & Office Furniture - 4-10 years
Motor Vehicles - 2 -8 years
(I) PRINCIPLES OF CONSOLIDATION
The consolidated financial statements are prepared by combining the financial
statements of all the entities that comprise the consolidated entity, being the
company (the parent entity) and its subsidiaries as defined in Accounting
Standard AASB 127 'Consolidated and Separate Financial Statements'. Consistent
accounting policies are employed in the preparation and presentation of the
consolidated financial statements.
The consolidated financial statements include the information and results of
each subsidiary from the date on which the company obtains control and until
such time as the company ceases to control such entity.
In preparing the consolidated financial statements, all significant intercompany
balances and transactions, and unrealised profits arising within the
consolidated entity are eliminated in full.
(J) REVENUE RECOGNITION
Interest revenue is recognised on a time proportionate basis that takes into
account the effective yield on the financial asset.
(K) SHARE-BASED PAYMENTS
Employee share options that vested before January 1, 2005 have not been
expensed. The shares are recognised when the options are exercised and the
proceeds are allocated to share capital.
Equity-settled share-based payments granted after November 7, 2002 that were
vested on or after January 1, 2005, are measured at fair value at the date of
grant. Fair value is measured under the Black-Scholes option valuation model.
The fair value determined at the grant date of the equity-settled share-based
payments is expensed on a straight-line basis over the vesting period, based on
the consolidated entity's estimate of shares that will eventually vest.
(L) SUPERANNUATION FUND
The Company contributes to, but does not participate in, compulsory
superannuation funds on behalf of the Employees and Directors in respect of
salaries and directors' fees paid. Contributions are charged against income as
they are made.
(M) TAXATION
Current tax
Current tax is calculated by reference to the amount of income taxes payable or
recoverable in respect of the taxable profit or tax loss for the period. It is
calculated using tax rates and tax laws that have been enacted or substantively
enacted by reporting date. Current tax for current and prior periods is
recognised as a liability (or asset) to the extent that it is unpaid (or
refundable).
Deferred tax
Deferred tax is accounted for using the comprehensive balance sheet liability
method in respect of temporary differences arising from differences between the
carrying amount of assets and liabilities in the financial statements and the
corresponding tax base of those items.
In principle, deferred tax liabilities are recognised for all taxable temporary
differences. Deferred tax assets are recognised to the extent that it is
probable that sufficient taxable amounts will be available against which
deductible temporary differences or unused tax losses and tax offsets can be
utilised. However, deferred tax assets and liabilities are not recognised if the
temporary differences giving rise to them arise from the initial recognition of
assets and liabilities (other than as a result of a business combination) which
affects neither taxable income nor accounting profit.
Furthermore, a deferred tax liability is not recognised in relation to taxable
temporary differences arising from goodwill.
Deferred tax assets and liabilities are offset when they relate to income taxes
levied by the same taxation authority and the company/consolidated entity
intends to settle its current tax assets and liabilities on a net basis.
Current and deferred tax for the period
Current and deferred tax is recognised as an expense or income in the income
statement, except when it relates to items credited or debited directly to
equity, in which case the deferred tax is also recognised directly in equity, or
where it arises from the initial accounting for a business combination, in which
case it is taken into account in the determination of goodwill or excess.
Tax Consolidation
The Company and all its wholly-owned Australian resident entities are part of a
tax-consolidated group under Australian taxation law. Centamin Egypt Limited is
the head entity in the tax-consolidated group. Tax expense/income, deferred tax
liabilities and deferred tax assets arising from temporary differences of the
members of the tax-consolidated group are recognised in the separate financial
statements of the members of the tax-consolidated group using the 'separate
taxpayer within group' approach. Current tax liabilities and assets and deferred
tax assets arising from unused tax losses and tax credits of the members of the
tax-consolidated group are recognised by the company (as the head entity in the
tax-consolidated group).
Due to the existence of a tax funding arrangement between the entities in the
tax-consolidated group, amounts are recognised as payable to or receivable by
the company and each member of the group in relation to the tax contribution
amounts paid or payable between the parent entity and the other members of the
tax-consolidated group in accordance with the arrangement. Where the tax
contribution amount recognised by each member of the tax-consolidated group for
a particular period is different to the aggregate of the current tax liability
or asset and any deferred tax asset arising from unused tax losses and tax
credits in respect of that period, the difference is recognised as a
contribution to (or distribution to) equity participants.
NOTE 2: SEGMENT REPORTING
Primary reporting - Business Segments
The economic entity is engaged in the business of exploration for precious and
base metals only, which is characterised as one business segment only.
Secondary reporting - Geographical Segments
The principal activity of the economic entity during the year was the
exploration for precious and base metals in Egypt and funding is sourced from
Australia.
NOTE 3: EVENTS SUBSEQUENT TO BALANCE DATE
Allotment of Shares
On April 5, 2007 the Company announced an allotment of shares following the
successful closing of the first tranche (the 'First Tranche') of a total
offering of 163,622,198 ordinary shares priced at C$0.86 for total proceeds
C$140,715,090 (the 'Offering'). The First Tranche represented 75,028,620
Ordinary Shares for gross proceeds of C$64,524,613.
On April 11, 2007 the Company announced an allotment of shares following the
successful closing of the second tranche (the 'Second Tranche') of a total
offering of 163,622,198 ordinary shares priced at C$0.86 for total proceeds
C$140,715,090 (the 'Offering'). The Second Tranche consisted of 88,593,578
Ordinary Shares priced at C$0.86 for gross proceeds of C$76,190,477. The Second
Tranche closed following the approval by shareholders of the Company, at a
meeting of shareholders held on April 10, 2007, of the issuance of 100 million
shares under the Offering.
On April 20, 2007 the Company announced an allotment of shares to Westwind
Partners Inc who acted as sole agent (the 'Agent') for the Offering. Westwind
Partners (UK) Limited, an affiliate of the Agent, acted as financial adviser to
the Company. In addition, the Agent has been granted an over-allotment option to
purchase up to an aggregate of 12,271,665 additional ordinary shares at C$0.86
per share, exercisable as to 5,627,147 ordinary shares for 30 days from the
closing of the First Tranche and exercisable as to 6,644,518 ordinary shares for
15 days from the closing of the Second Tranche. Westwind Partners Inc has fully
exercised the over-allotment option for an additional 12,271,665 ordinary shares
at C$0.86 per share. The over-allotment raised additional gross proceeds of
approximately C$10.5 million or A$11.2 million.
Project Financing
On April 17, 2007 the Company announced that it had appointed Barclays Capital,
the investment banking division of Barclays Bank PLC, as Mandated Lead Arranger
to arrange a financing facility of up to US$100M for the Sukari Gold Project.
Project Environmental Approval
On May 2, 2007 the Company announced that it has received Environmental Approval
from the Egyptian Environmental Affairs Agency (EEAY) for the Sukari Gold
Project.
NOTE 4: REVENUE
Nine months
ended
March 31, 2007
$
(a) Revenue
Interest revenue 1,762,712
(b) Other income
Profit on sale of asset 530,258
______________
2,292,969
______________
NOTE 5: EXPLORATION, EVALUATION AND DEVELOPMENT EXPENDITURE
Nine months
ended
March 31, 2007
A$
______________
Exploration and evaluation expenditure
- At Cost (a)
Balance at the beginning of the period 41,388,636
Expenditure for the period 12,150,292
______________
Balance at the end of the period 53,538,928
______________
(a) Included within the cost amount of assets is $5,311,744 being the excess of
consideration over the net tangible assets acquired on the acquisition of
Pharaoh Gold Mines NL in January 1999. This amount has been treated as part of
the cost of exploration and evaluation. Management believe that the recovery of
these amounts will satisfactorily be made through the exploitation of the
project in due course.
NOTE 6: CONTINGENT LIABILITIES
The Directors are not aware of any contingent liabilities as at the date of
these unaudited interim consolidated financial statements.
NOTE 7: CONTRIBUTED EQUITY
Consolidated
Nine months ended Year ended
March 31, 2007 June 30, 2006
$ $
(a) Issued and paid up capital
Balance at beginning of period 115,344,046 68,602,890
Exercise of options issued
under the Employee Share
Option Plan
- 150,000 @ 23.10 cents - -
- 640,000 @ 23.10 cents - 147,840
- 250,000 @ 29.00 cents - 72,500
- 50,000 @ 35.00 cents - 17,500
- 45,000 @ 28.04 cents - 12,618
- 250,000 @ 35.49 cents - 88,725
- 345,000 @ 28.04 cents 96,738 -
- 500,000 @ 23.10 cents 115,500 -
- 500,000 @ 35.49 cents 177,450 -
Placement of 75,000,000 shares @27.5p - 46,401,973
FX Difference on Placement in April 2006 68 -
Contributions of Equity (780,182) -
_____________________________
Balance at end of period 114,953,620 115,344,046
_____________________________
Nine months ended
March 31, 2007
No. $
(b) Movements in ordinary share capital
Balance at beginning of 578,295,369 115,344,046
financial year
Exercise of options issued
under the Employee Share
Option Plan
- @ 0.2804 cents 345,000 96,738
- @ 0.2310 cents 500,000 115,500
- @ 0.3549 cents 500,000 177,450
Contributions of equity and FX (780,114)
difference on Placement in
April 2006
_____________________________
Balance at March 31, 2007 579,640,369 114,953,620
_____________________________
(c) Options Nine months ended Year ended
Unlisted Employee Unlisted Employee
Options March 31, Options June 30,
2007 2006
No. No.
Balance at beginning of period 7,840,000 3,325,000
Issued during the period 5,865,000 5,750,000
Exercised during the period (1,345,000) (1,235,000)
Lapsed/expired during the period - -
____________________________________
Balance at end of period 12,360,000 7,840,000
____________________________________
The details of these options are as follows:-
Balance at beginning of the financial year
+------------------+----------+--------------+---------------+--------------+
| Options - Series | Number | Grant Date |Expiry/Exercise|Exercise Price|
| | | | Date | $ |
+------------------+----------+--------------+---------------+--------------+
|Issued 12 November| 500,000| 12 November| 12 November| 0.2310|
|2003 | | 2003| 2006| |
+------------------+----------+--------------+---------------+--------------+
|Issued 15 December| 500,000| 15 December| 15 December| 0.3549|
|2003 | | 2003| 2006| |
+------------------+----------+--------------+---------------+--------------+
|Issued 04 February| 775,000| 04 February| 04 February| 0.2804|
|2005 | | 2005| 2008| |
+------------------+----------+--------------+---------------+--------------+
|Issued 17 February| 365,000| 17 February| 17 February| 0.2804|
|2005 | | 2005| 2008| |
+------------------+----------+--------------+---------------+--------------+
|Issued 31 October | 4,200,000| 31 October|31 October 2010| 0.3500|
|2005 | | 2005| | |
+------------------+----------+--------------+---------------+--------------+
|Issued 08 December| 1,500,000| 08 December| 08 December| 0.4355|
|2005 | | 2005| 2008| |
+------------------+----------+--------------+---------------+--------------+
|Total number of | 7,840,000| | | |
|options | | | | |
+------------------+----------+--------------+---------------+--------------+
Issued during the nine months to March 31, 2007
+------------------+----------+--------------+---------------+---------------+
|Options - Series | Number| Grant Date|Expiry/Exercise| Exercise Price|
| | | | Date| $|
+------------------+----------+--------------+---------------+---------------+
|Issued 30 August | 250,000|30 August 2006| 30 August 2009| 0.6566|
|2006 | | | | |
+------------------+----------+--------------+---------------+---------------+
|Issued 10 January | 2,000,000| 10 January|09 January 2009| 0.8000|
|2007 | | 2007| | |
+------------------+----------+--------------+---------------+---------------+
|Issued 31 January | 3,615,000| 31 January|31 January 2010| 0.7106|
|2007 | | 2007| | |
+------------------+----------+--------------+---------------+---------------+
|Total | 5,865,000| | | |
+------------------+----------+--------------+---------------+---------------+
Exercised during the nine months to March 31, 2007
+------------------+----------+--------------+---------------+--------------+
|Options - Series | Number| Grant Date|Expiry/Exercise|Exercise Price|
| | | | Date| $|
+------------------+----------+--------------+---------------+--------------+
|Issued 12 November| 500,000| 12 November| 12 November| 0.2310|
|2003 | | 2003| 2006| |
+------------------+----------+--------------+---------------+--------------+
|Issued 15 December| 500,000| 15 December| 15 December| 0.3549|
|2003 | | 2003| 2006| |
+------------------+----------+--------------+---------------+--------------+
|Issued 04 February| 180,000| 04 February| 04 February| 0.2804|
|2005 | | 2005| 2008| |
+------------------+----------+--------------+---------------+--------------+
|Issued 17 February| 165,000| 17 February| 17 February| 0.2804|
|2005 | | 2005| 2008| |
+------------------+----------+--------------+---------------+--------------+
|Total | 1,345,000| | | |
+------------------+----------+--------------+---------------+--------------+
Lapsed during the period
There were no options that lapsed or expired during the nine months to March 31,
2007.
Balance at March 31, 2007
+------------------+----------+--------------+---------------+--------------+
|Options - Series | Number| Grant Date|Expiry/Exercise|Exercise Price|
| | | | Date| $|
+------------------+----------+--------------+---------------+--------------+
|Issued 04 February| 595,000| 04 February| 04 February| 28.04|
|2005 | | 2005| 2008| |
+------------------+----------+--------------+---------------+--------------+
|Issued 17 February| 200,000| 17 February| 17 February| 28.04|
|2005 | | 2005| 2008| |
+------------------+----------+--------------+---------------+--------------+
|Issued 31 October | 4,200,000| 31 October|31 October 2010| 35.00|
|2005 | | 2005| | |
+------------------+----------+--------------+---------------+--------------+
|Issued 08 December| 1,500,000| 08 December| 08 December| 43.55|
|2005 | | 2005| 2008| |
+------------------+----------+--------------+---------------+--------------+
|Issued 30 August | 250,000|30 August 2006| 30 August 2009| 0.6566|
|2006 | | | | |
+------------------+----------+--------------+---------------+--------------+
|Issued 10 January | 2,000,000| 10 January|09 January 2009| 0.8000|
|2007 | | 2007| | |
+------------------+----------+--------------+---------------+--------------+
|Issued 31 January | 3,615,000| 31 January|31 January 2010| 0.7106|
|2007 | | 2007| | |
+------------------+----------+--------------+---------------+--------------+
|Total number of |12,360,000| | | |
|options | | | | |
+------------------+----------+--------------+---------------+--------------+
The fair values of the stock options granted were estimated using the
Black-Scholes options pricing model with the following assumptions and results:
Risk free interest rate: 5.50%
Dividend yield: 0.00%
Expected volatility: 60.0%
Expected term: 2 years
NOTE 8: RELATED PARTY TRANSACTIONS
The related party transactions for the nine months ended March 31, 2007 are
summarised below:
- Salaries, superannuation contributions, consulting and Directors fees paid
to Directors during the nine months ended March 31, 2007 amounted to $758,486
(March quarter: $253,432).
- Mr S El-Raghy and Mr J El-Raghy are Directors and shareholders of El-Raghy
Kriewaldt Pty Ltd ('ELK'), which provides office premises to the Company in
Australia. All dealings with ELK are in the ordinary course of business and
on normal terms and conditions. Rent paid to ELK during the nine months ended
March 31, 2007 amounted to $41,065 (March quarter: $13,923).
- Mr S El-Raghy provides office premises to the Company in Alexandria, Egypt.
All dealings are in the ordinary course of business and on normal terms and
conditions. Rent paid during the nine months ended March 31, 2007 amounted to
$14,916 (March quarter: $5,169).
- Mr C Cowden, a non-executive director, is also a Director and shareholder of
Cowden Limited, which provides insurance broking services to the Company. All
dealings with Cowden Limited are in the ordinary course of business and on
normal terms and conditions. Insurance premiums paid to Cowden Limited during
the nine months ended March 31, 2007 amounted to $102,546 (March quarter: $14,363).
NOTE 9: LOSS PER SHARE
Basic loss per share is calculated using the weighted average number of shares
outstanding. Diluted loss per share is calculated using the treasury stock
method. In order to determine diluted loss per share, the treasury stock method
assumes that any proceeds from the exercise of dilutive stock options and
warrants would be used to repurchase common shares at the average market price
during the period, with the incremental number of shares being included in the
denominator of the diluted loss per share calculation. The diluted loss per
share calculation excludes any potential conversion of options and warrants that
would increase earnings per share or decrease loss per share.
The effect of potential issuances of shares under stock options and warrants
would be anti-dilutive, and accordingly basic and diluted loss per share are the
same.
NOTE 10: Impact of reconciliation between Australian accounting standards and
Canadian GAAP
There are no material differences between the Income Statements, Balance Sheets,
Statement of Changes in Equity and Cash Flow Statements presented under
Australian accounting standards and Canadian GAAP.
NOTE 11: COMPARATIVE FIGURES
As the Company did not prepare interim financial information in the prior fiscal
year, comparative interim information has not been presented. Certain
comparative balance sheet figures have been reclassified to conform with the
current period's presentation.
Form 52-109F2 - Certification of Interim Filings
I, Mark Smith, Chief Financial Officer of Centamin Egypt Limited, certify that:
1. I have reviewed the interim filings (as this term is defined in
Multilateral Instrument 52-109 Certification of Disclosure in Issuers' Annual
and Interim Filings) of Centamin Egypt Limited (the issuer) for the interim
period ended March 31, 2007;
2. Based on my knowledge, the interim filings do not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated or that is necessary to make a statement not misleading in light of the
circumstances under which it was made, with respect to the period covered by the
interim filings;
3. Based on my knowledge, the interim financial statements together with the other
financial information included in the interim filings fairly present in all
material respects the financial conditions, results of operations and cash flows
of the issuer, as of the date and for the period presented in the interim filings;
4. The issuer's other certifying officers and I are responsible for establishing and
maintaining disclosure controls and procedures for the issuer, and we have designed
such disclosure controls and procedures, or caused them to be designed under our
supervision, to provide reasonable assurance that material information relating to
the issuer, including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which the interim filings
are being prepared.
Date: May 14, 2007
Mark Smith
Chief Financial Officer
Egypt : May 14, 2007
Form 52-109F2 - Certification of Interim Filings
I, Josef El-Raghy, Managing Director/CEO of Centamin Egypt Limited, certify
that:
1. I have reviewed the interim filings (as this term is defined in Multilateral
Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim
Filings) of Centamin Egypt Limited (the issuer) for the interim period ended
March 31, 2007;
2. Based on my knowledge, the interim filings do not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated or that is necessary to make a statement not misleading in light of the
circumstances under which it was made, with respect to the period covered by the
interim filings;
3. Based on my knowledge, the interim financial statements together with the other
financial information included in the interim filings fairly present in all
material respects the financial conditions, results of operations and cash flows
of the issuer, as of the date and for the period presented in the interim filings;
4. The issuer's other certifying officers and I are responsible for establishing and
maintaining disclosure controls and procedures for the issuer, and we have designed
such disclosure controls and procedures, or caused them to be designed under our
supervision, to provide reasonable assurance that material information relating to
the issuer, including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which the interim filings
are being prepared.
Date: May 14, 2007
Josef El-Raghy
Managing Director
Egypt : May 14, 2007
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