Final Results

RNS Number : 0364Z
Centamin Egypt Limited
14 September 2009
 




Immediate Release
15 September 2009



Centamin Egypt Limited


Annual report for the year ended 30 June 2009



For a full copy of the report including diagrams please click on the pdf link: 


http://www.rns-pdf.londonstockexchange.com/rns/0364Z_1-2009-9-14.pdf

 

CHAIRMAN'S REPORT 


Dear Shareholders


Once again it's my pleasure to present to you the annual report of the Company for the year ended 30 June 2009.


This year has seen the successful transformation of Centamin from an exploration company into a mining company and the start of the ramp up in the production process which will propel the Company into one of the world's significant gold producers. I have always believed that Sukari has the potential to be a world class gold province which would match and even outshine the other multi-million ounce goldfields of the world. This vision is now starting to become a reality, and Centamin, with its new infrastructure, is set to capitalise on many years of hard work to the benefit of all of its shareholders.


The Directors report summarises the Company's operational achievements during this very active year, the increase in the Sukari resources, upgrading of the Sukari gold reserves, the progress of the open pit mining operation and the expanding of the mining fleet. The period also witnessed the completion of the construction of stage one of the plant, the commencement of the underground decline to access the rich depths of the Sukari ore body, the completion of the 25 kilometre long water pipe line with access road and overhead power line, the establishment of a Red Sea water intake to provide all the water needed for current and future operations, and many other significant items that have laid a strong foundation for the Company's future growth.


As a consequence of the Company's development and, as reflected in the growth of the Company's market capitalisation, the Board recently announced that they intend to apply for admission of its ordinary share capital to the Official List of the UK Listing Authority and to trading on the London Stock Exchange's Main Market for listed securities. The Board of Centamin believes that the Company has now reached a size and stage of maturity at which the Official List will be the most appropriate platform for future growth. The Directors believe that the move will result in the Company benefiting from an increased potential investor base, a higher profile and an increase in the liquidity of its shares. Work has commenced on the listing process and it is anticipated that this work, and a move to the main board of the LSE as a primary listing, will be concluded before the end of 2009. 


What is pleasing and very satisfying to see as a consequence of the development of the Sukari Project, is the economic and social effect that the development has had, not only on the immediate area of Marsa Alam, but on Egypt as a whole, with infrastructure and human resources development.  Egypt now has a state of the art gold mining operation, the human resources and the necessary skills needed to construct and operate a 4 million tonne per annum gold mine. This is an historic achievement for Egypt and should auger well for Centamin's future operations in the country.


I would also like to take the opportunity to formally recognise the dedication, competence and hard work of our Managing Director/CEO, Josef El-Raghy, during an extremely demanding and busy year. Josef has taken on his shoulders the responsibility of making all of the above happen. As the Chairman of the Company, I extend my respect, as a Shareholder, my gratitude and as a father, my admiration.


In Egypt, we continued to enjoy the support of His Excellency Sameh Fahmy, the Minister for Petroleum and Mineral Resources. His Excellency visited the mine twice during the year, and I would like to take this opportunity to express my appreciation for his continued support.

   

In closing, I would like to thank my co-directors for their contributions during the year, all our loyal and dedicated staff and all of our Shareholders for your continuous support.


On behalf of the Board of Directors.





Sami El-Raghy

Chairman


REVIEW OF operations 



Centamin Egypt Limited ('Centamin' or 'the Company') is a mineral exploration and development company that has been actively exploring in Egypt since 1995. The Company's principal asset is its interest in the Sukari Gold Project, located in the Eastern Desert of Egypt. The Sukari Gold Project is at an advanced stage of development, with construction having commenced in the second quarter of 2007 and first gold production occurring in the second quarter of 2009. 


A definitive feasibility study ('DFS') for the development to commercial production of the Sukari Gold Project was completed in February 2007. 


The Sukari Gold 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. The Sukari Mining Licence covers an area of 160 km2 and is for a period of 30 years, with an option to extend this by a further 30 years.


The Sukari Gold Project is hosted by a large, sheeted vein-type and brittle-ductile shear zone hosted gold deposit developed in a granitoid intrusive complex. Gold mineralisation is hosted exclusively by a granitoid body of granodiorite - tonalite composition referred to as the Sukari Porphyry. 


In April 2009 Centamin announced an updated Ore Reserve (detailed in the table below), representing an increase of 2.7 million ounces (72%) from the previously reported 3.7 million ounces in March 2007.


Sukari Open Pit Mineral Reserve Estimate as at April 2009 (reported cut off grade of 0.4g/t Au for oxide and sulphide material and 0.5g/t for transitional material)


Proven

Probable

Mineral Reserve


Tonnes (Mt)

Au

(g/t)

Tonnes (Mt)

Au

(g/t)

Tonnes (Mt)

Au

(g/t)

Cont Au

(Moz)

New Reserve

64.0

1.38

78.0

1.43

142.0

1.40

6.4

Previous Reserve

34.1

1.50

44.2

1.50

78.3

1.50

3.7


Ore and waste will be mined using conventional open pit mining methods. The operation will utilize selective mining techniques to separate ore and waste. Provision has been made for drilling and blasting all primary and oxide materials. Ore will be hauled to the run of mine pad next to the Processing Plant and either direct tipped to the crusher or stockpiled for future reclaim at the 4Mtpa Process Plant throughput rate.


Mining will be progressed at an increased rate compared to processing; approximately 5 million tonnes of ore is expected to be mined and 4 million tonnes of ore will be processed annually. Operating at an increased mining rate allows the cut-off grade for feed to the Plant (referred to as 'cutover' grade) to be increased in the early years of the schedule. This in turn increases the metal output and project revenue in these early years, thus increasing the discounted operating surplus cashflow. According to current schedules, the low-grade stockpile produced as a result of applying a cutover grade will be processed after mining has ceased, extending the current operating life of the project for a further six years. As a result, the average milled grade during the mining period is forecast to be 1.87 g/t Au, compared to 0.66 g/t Au for the low-grade stockpile. 


Centamin owns and operates its mining fleet. The production fleet is based on 380 t class excavators and 150 t class rigid body trucks. At full production, four production fleets, each comprising a single excavator and sharing a maximum of 20 trucks, will be required. The proposed process route entails:-

• crushing;

• stockpiling crushed ore;

• grinding;

• flotation of a (bulk sulphide) concentrate containing the precious metals;

• thickening of the concentrate;

• fine milling of the concentrate;

• leaching the precious metals from the concentrate in a dilute cyanide solution;

• adsorbing the precious metals onto activated carbon;

• stripping the precious metals from the carbon;

• recovering the precious metals as gold doré; and

• placing the concentrate tailing in the tailings storage facility.

Tailings from the treatment of weathered oxide ore early in the mining schedule contain too much gold to discard. Hence, the bulk flotation tail is further treated by:

• thickening;

• leaching the precious metals into a dilute cyanide solution;

• adsorbing the precious metals onto activated carbon;

• stripping the precious metals from the carbon;

• recovering the precious metals as gold doré; and

• placing these tailings in the tailings storage facility.


Process water will be drawn from the Red Sea. The seawater will be pumped approximately 25 km to the mine site to satisfy all Process Plant and mining requirements. Most of the seawater will be pumped into a raw water pond located near the Processing Plant, whilst around 500m³/day will be pumped to a Water Treatment Plant for potable and fresh water supplies.


Power will be generated on site by a 28 MW power station, operated on heavy fuel oil. A construction camp was constructed to cater for approximately 700 occupants. 


CONSTRUCTION UPDATE


The calendar status of the key milestones is as follows:

 

·       Project Go-Ahead Decision
Feb 2007
(Completed)
·       Kori Kollo Plant Arrives Egypt
Q4 2007
(Completed)
·       28MW Power Station Arrives
Q4 2007
(Completed)
·       Project Finance
Q4 2007
(Completed)
·       Plant site Civil Works
Q2 2008
(Completed)
·       Seawater Pipeline
Q4 2008
(Completed)
·       Tailings Storage Facility
Q4 2008
(Completed)
·       Mining Pre-strip
Q4 2008
(Completed)
·       First Gold Pour
Q2 2009
(Completed)
·       Commissioning and Production
Q2 2009
(Commenced)


Project Engineering and Design


MetPlant Engineering Services Pty Ltd, an Australian-based company have completed their engineering and design work for the Process Plant and have been demobilised from the project. SENET of South Africa are completing the Stage 2 piping design and are scheduled for completion during Q3 2009. An engineering office has been established on site and is currently involved in field engineering and developing as-built drawings. 


Site Works


Construction activities are well advanced. Stage 1 commissioning commenced during June 2009 with the first gold bar produced on 26 June 2009.  The Cummins Power Station has been commissioned and is now providing power to the site.


Crushing and Conveying


Construction is practically complete with only peripheral works such as plant lighting outstanding. Mechanical commissioning activities such as belt tracking are complete with final control systems testing ongoing. Ore crushing commenced in September 2009.


Grinding Circuit


Coarse Ore Stockpile and Reclaim - remaining works in this area include the termination of power and control cables.  The apron feeder mechanical commissioning is complete with the feeders successfully run. Control systems checks will continue into Q3 2009.

      

SAG and Ball Mills - Mill mechanical installation is approaching completion and follows mill assembly completion. SAG Mill rubber lining is well underway in conjunction with rubber lining the Ball Mill Heads.  Commissioning is taking place during Q3 2009.


Pebble Crushing & Conveying - Structural and mechanical installation is well advanced with pebble crusher installed and electrical and instrumentation in progress.    Commissioning is currently underway.

Oxide CIL Circuit


Structural and mechanical works are well advanced with all tank works including agitator installation now complete and associated piping, electrical and instrumentation works in progress.


Gold Recovery


Stage 1 Gold Room construction is virtually complete with only minor items outstanding.  Commissioning of major vendor packages has been completed with the first gold bar produced on 26 June 2009.  Final commissioning of the gold room is currently underway.


Reagents


Works are substantially complete with structural and mechanical works in the lime, flocculent, caustic and cyanide areas nearing completion, and all piping works commenced.  Stage 2 reagent works have commenced in the lime slaking and xanthate areas.


Air & Water Services


Construction of the raw and fresh water systems are approaching completion with tanks now being painted and all mechanical items having been installed. Piping is well advanced and electrical and instrument installation is underway. Commissioning commenced in early Q3 2009.


The reverse osmosis plant is complete and vendor support commenced final inspections ahead of commissioning during Q3 2009.


All mechanical air system items have been installed, piping is well advanced and electrical and instrument installation is underway.  


Fuel Storage & Distribution


Tank installation is nearing completion with preparations underway for painting and insulating. Mechanical and piping installation has commenced with commissioning of diesel systems taking place in Q3 2009.


Seawater Pipeline


Construction of the seawater pipeline is approaching completion with mechanical equipment successfully tested. Control systems checks are currently in progress.  Bore field installation is well advanced with 6 of 9 pumps installed and operational for site water supply. When the final pumps are installed the combined bore field system will be capable of supplying water in excess of plant water demand.


Approvals for the direct seawater intake have been received and work has commenced. Construction of the causeway for pipe installation is in progress, and the system is expected to be operational by the end of 2009.


Power Station


The Cummins Power Station was successfully commissioned during Q2 2009 and is supplying power to the site.


Work on the MAK Power Station is ongoing with activities focussed on those systems required to enable initial power production on diesel fuel.  Commissioning of the heavy fuel oil ('HFO') systems is expected to take place during Q4 2009.


Tailings Storage Facility


The tailings dam is now complete with remaining works focussed on the tailings deposition and underdrainage systems prior to the dam being ready for water storage.


MINING


Caterpillar, through their Egyptian authorised dealer Mantrac, was selected through a competitive tender as the supplier of haulage trucks, excavators, graders and dozers for the project. The current mining fleet comprises:-

CAT 785C Rear Dump Trucks (10)

CAT 785C Water Truck (1)

O&K RH120E Excavator (2)

CAT D10T Dozers (3)

CAT 14H Grader (1)

CAT 16M Grader (1)

CAT 365 BLME Excavator (1)

CAT 988G Wheel Dozers (2)

H180D Rock Breaker (1)


Further deliveries of mining fleet are scheduled for the third and fourth quarters of 2009 with no foreseeable problems in delivery times and schedule.


Strong mining safety performance was evident during the 2009 financial year with no lost time accidents recorded. All operators of mobile mining equipment are Egyptian nationals.  The mining fleet has been utilised for plant site, tails dam civil works and haul road construction in conjunction with pit mining activities.

 

First blasting took place in February 2009 and there has been a continued increase in total movement as further mining faces are brought on line.  Mining activities have focussed from Stages 1 and 2 (Amun and Ra zones respectively) with the vertical advance rate being 48m in Stage 1 to the 1148mRL and 38m in Stage 2 to the 1184mRL since the commencement of blasting operations in February 2009. 


Total movement in 2009 was 2.57 million bank cubic metres (MBCM) of which 1.83MBCM was from within the pit limits. Total mining from Stage 1 was 0.93BCM and Stage 2, 0.90MBCM.


UNDERGROUND MINE DEVELOPMENT 


Centamin announced on 03 April 2009 that it had issued a Letter of Intent to Barminco for the immediate mobilisation of personnel and equipment, and subsequent commencement of underground mining activities at the Sukari Gold Project in Egypt.  


Mobilisation of initial underground mining fleet and contractor personnel was completed in June. Site works have commenced with electrical power line and other support services being finalised. Portal construction and decline development commenced in July 2009.

 

An initial underground mining rate of 500,000 tonnes per annum at a grade between 5-10g/t Au is being targeted thus bringing higher grade ore feed into production earlier than otherwise would have been scheduled through surface mining at circa 2g/t. Full production from the underground is scheduled to be achieved approximately 18 months after commencement of the decline.


PROCESSING


In April 2009, Centamin proceeded with a small dump leach trial using low grade material mined during the period. The initial trial proved successful with just over 5 kilograms of gold being poured in June 2009 and recoveries of approximately 50%. Further trial pads are now being completed and if successful, then a larger scale version will be completed using low grade oxide material that would have otherwise have been stockpiled and treated through the CIL circuit at the end of the mine life. This will provide Centamin with the opportunity to bring forward further gold production at minimal cost.


RESOURCE ESTIMATION


The past financial year has seen continued and sustained growth in resources for the Sukari Gold Project.  Measured and Indicated ('M&I') resources are now estimated to be 201.41Mt @ 1.53g/t Au for 9.91Moz Au with additional Inferred resources of 61.3Mt @ 1.7g/t for 3.3Moz (Table 1). The Measured and Indicated resource has increased by 1.35Moz (16%) from the previous financial year (Figure 1). Measured and Indicated resources account for 75% of the global resource.


Resource increase occurred in all areas of the 2.5km strike length of the Sukari porphyry (Figure 2); from the Amun Deeps porphyry block and Hapi Zone extensions in the southern Amun Zone, through the Ra Zone and into the Pharaoh Zone north of 11200N where the continuation of the Hapi and deeper zones were tested; through to the far north around 12000N where dominantly west dipping Cleopatra and other parallel zones were defined.

  Table 1 - Total Resource (July 2009)


 

 

 

 

 

Total

 

 

 

 

Measured

Indicated

Measured + Indicated

Inferred

Cut-off

Tonnes 

Grade 

Tonnes

Grade

Tonnes

Grade

Gold

Tonnes

Grade

Gold

g/t Au

(Mt)

(g/t Au

(Mt)

(g/t Au

(Mt)

(g/t Au

(Moz)

(Mt)

(g/t Au)

(Moz)

0.5

75.65

1.48

125.77

1.56

201.41

1.53

9.91

61.3

1.7

3.3

0.7

54.48

1.82

91.50

1.93

145.97

1.89

8.85

43.9

2.1

2.9

1

35.50

2.35

60.89

2.47

96.39

2.43

7.52

29.3

2.7

2.5

Note to Table: Figures in table may not add correctly due to rounding





Figure 1 - Sukari resource growth graph from April 1997 to July 2009



South of 11312.5N, the Measured and Indicated resource is estimated at 8.81Moz, an increase of 0.98Moz or 13% the previous financial year.


The resources are estimates of recoverable tonnes and grades using Multiple Indicator Kriging ('MIK') with block support correction. Typically, 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 an approximate depth of 1mRL (approximately a maximum depth of 1050 metres below wadi level) and is based on all assay data available at 30 June 2009. The estimate has been adjusted to pre-mining land surface and historical underground mining, and all resources modelled for the Horus Zone were assigned an Inferred confidence category. The resource dataset comprises of 161,646 two metre down hole composites and surface rock chip samples; compared to 137,026 composites reported in the previous financial year.



Resource Definition Drilling Results


The drilling programme during the year concentrated in the Amun Deeps area, testing down dip extensions of the Hapi and deeper, sub-parallel mineralisation zones at depth (Figure 4), as well as north of 11200N in the Pharaoh Zone, tracking the high grade Hapi and deeper zones northwards; as well as higher up, west dipping mineralised structures. Strong zones were intersected in all areas of the deposit (Table 3).

Planned drilling will continue with up to eight diamond drill ('DD') rigs testing (Figures 2 and 3):-


  • the Hapi Zone and other gold mineralisation zones in the porphyry north of 11600N in the Pharaoh Zone;
  • down dip and along strike extensions of the Hapi, Downthrust and other zones in the Amun Deeps porphyry block between 10700 and 11200N;
  • the previously undrilled porphyry in the topographically challenging NW part of the hill as drill and blast advances tracks for drill rig access.




Figure 2 - Plan View of Porphyry with Upgraded Resource distribution and current work areas




Figure 3 - Schematic Long Section of Sukari Porphyry showing significant intersections, main mineralised zones and targeted drilling areas



Amun Deeps (9900 - 10700N)


Drilling continued in the Amun Deeps programme during the year, with many holes intersecting significant gold mineralisation (Table 3). Drilling continued to define the Hapi Zone as being the high grade upper shear zone contact between hangingwall sediments and the wedge shaped Amun Deeps porphyry block; and the Downthrust Zone as being the west dipping, basal contact shear zone. A deep, expansive low grade (0.1 - 0.4g/t Au) block of mineralised porphyry called the Horus Zone was discovered during the year's drilling, beneath the main porphyry and Downthrust Zone (Figure 4).


Infill drilling of the Hapi Zone for underground resource modelling and resource conversion intersected several strong zones, confirming the nature and continuity of the high grade mineralisation and quartz vein - shear zone structure. Hole D1387 on 10275N returned 31m @ 8.74g/t Au from 302m (including 2m @ 108.7g/t Au from 308m) in the Hapi Zone. D1380 fifty metres to the south intersected 17m @ 29.7g/t Au from 332m (including 2m @ 241g/t Au from 333m). Holes D1374 and D1379, 300m north intersected thick sequences of high grade Au mineralisation throughout the porphyry (Table 3).


Several holes were drilled to further test Downthrust Zone mineralisation, with several high grade zones being intersected. Mineralisation is controlled by units of porphyry; with typical Sukari alteration assemblages of sericite-silica-sulphide in quartz veins and brecciated porphyry, intercalated with barren zones of sediments and volcanic units. The broad geology indicates mineralised porphyry blocks within a broad, west dipping shear zone, basal to the Amun Deeps porphyry block (Figure 4).


The southern-most Downthrust zone intersection to date is on 10050N in hole D1388, where 20m @ 7.39g/t Au from 439m was returned.  Hole D1384 on 10125N, intersected two very strong zones at the upper and lower shear zone contacts of the downthrust porphyry zone (10m @ 3.92g/t Au from 512m and 33m @ 1.67g/t Au from 624m; Table 3).  At 10250N, hole D308 intersected 14m @ 4.86g/t Au from 617m in the Downthrust shear zone (Figure 4 & 5); which correlated well with D303 on 10375N (6m @ 62.15g/t Au from 611m including 2m @ 183g/t Au from 612m). The zone is open in all directions along strike and down dip.

While testing the continuity of the Downthrust and Amun Deeps porphyry blocks, several holes were drilled deeper to test for interpreted fault block continuations of the porphyry system. A zone of massive, siliceous porphyry named the Horus Zone was subsequently intersected. The Horus porphyry is similar to the Amun Deeps and Main porphyry, but is more strongly silicified, giving it a massive, glassy appearance. Higher grades occur at the upper contact shear zone. Hole RCD1187 (Table 3) on 11450N intersected these higher Au grades at the sheared top part of the Horus Zone, at the intersection with the Downthrust Zone (Figure 6).


Mineralisation is open in all directions, and further wide spaced holes are planned to the north and south along strike to test continuity and for areas of higher grade.  There is still strong potential to continue defining the Sukari mineralisation system at depth and along strike, and to locate higher grade structures within the expansive silicified porphyry block.



Figure 4 - 3D Schematic of the Amun Deeps, Hapi, Downthrust and Horus Zones, Sukari Hill



Figure 5 - Amun Zone schematic cross section 10250N - D308 illustrates the Downthrust Zone High Grade porphyry blocks at the base of the Amun Deeps porphyry block



Figure 6 - Amun Zone schematic cross section 10450 - 10475N - RCD1187; showing mineralisation in the Downthurst and Horus Zone

  Ra - Gazelle Zone - 10700N - 11200N


Although few resource infill holes were drilled in the Ra-Gazelle zone during the year, encouraging assays and intersections of porphyry in the interpreted Amun Deeps position were intersected in holes D1415, RCD1416, RCD1417 and D1434 (Table 3: Figure 7) from 10575 - 10675N.



Figure 7 - Amun Zone schematic cross section 10650N showing Amun Deeps porphyry, Hapi Zone and Downthrust structures such as intersected in recent holes D1434

  Drilling of the along-strike continuity of the fault blocked Amun Deeps, Downthrust and Hapi Zones from 10700N following up these intersections re-commenced towards the end of the year and is ongoing. Recent hole D1455 intersected a thick, strongly mineralised Amun Deeps porphyry block and Hapi Zone of 42m @ 2.79g/t Au from 423m (Table 3), and current holes around 10800N have intersected similar poprhyry units, which is highly encouraging for proving continuity of the aforementioned zones northwards and adding significant resource ounces.


Pharaoh Zone 11200 - 12100N


Drilling in the Pharaoh zone north of 11200N was the highest priority during the year and was very successful in continuing to define the porphyry dimensions and associated gold mineralisation as predicted from the geological model, along strike and down dip in all areas. Most of the resource ounces were added in this area and the continuation of the higher grade Hapi Zone was successfully traced throughout the porphyry. In addition, drilling defined a deeper, similar high grade zone at the eastern basal porphyry contact, flat to west dipping and conjugate to the Hapi, and concentrated at the highly altered and sheared porphyry margin to the surrounding serpentinite and sedimentary country rocks (Figure 3 & 8 & Table 3).


Drilling also continued to define several other strong zones of mineralisation, including a mid-level, flat to west dipping zone in the central part of the porphyry; the west dipping near surface Cleopatra and several sub-parallel zones in the far north. Ongoing drilling is continuing to define these zones, generally north of 11600N.


The year was highlighted by several thick, high grade intersections being returned around the Hapi and deeper zones of the porphyry.  Many holes returned strong intersections at the base of the porphyry intrusion. Hole D1420 on 11275N successfully tested to the footwall, extending the porphyry dimensions and returned a very encouraging high grade intersection of 79m @ 4.87g/t Au from 662m in the intensely silicified, brecciated and sulphide altered porphyry at the footwall contact (Figure 8; Table 3).


Many similar zones were intersected along strike and across the width of the porphyry around those depths (Table 3).  Holes such as D1435 (11250N - 43m @ 17.00g/t Au from 499m), D1440 (11300N - 14m @ 6.71g/t Au from 569m); D1423 (11350N - 47m @ 2.85g/t Au), D1431 (11400N - 17m @ 10.49g/t Au and 55m @ 3.48g/t Au), RCD470 (11500N - 66m @ 4.80g/t Au), D1450 (11500N - 25m @ 2.58g/t Au from 655m); D1446 (11550N - 25m @ 2.58g/t Au from 636m and D1408 (11575N - 47m @ 1.78g/t Au) highlighted the continuity and significant width and thickness of these zones and that conjugate west and east dipping mineralised structures continue to be a significant mineralisation control throughout the Sukari porphyry, over 2.5km in strike length.


Drilling also confirmed the continuity and extent of a thick, west dipping central zone of mineralisation, higher up in the porphyry outcrop, around 300m below surface, centred around 10650E (Figure 9). Holes such as D1420, D1423, D1428 and D1435 (Table 3), highlighted this zone.


Drilling in the far north of the hill confirmed the presence of high grade Au mineralisation, highlighting several sub-parallel west dipping, Cleopatra style zones, with hole D1426 on 11850N intersecting several strong mineralised zones (Table 3, Figure 9). Similar zones were also intersected in D1429, fifty metres to the north and D1367 intersected high grade quartz veining, sericitic and sulphide alteration in silicified and feldspar altered porphyry (14m @ 4.51g/t Au from 261m).


Recent hole D1462 on 11950N intersected a very high grade zone of 34m @ 3.29g/t Au from 112m at the eastern porphyry contact area.  Several other holes have returned significant surface mineralisation, confirming the previous drilling and interpretation of the strongly mineralised west dipping Cleopatra structures.  Drilling continues in this area to test these zones at the footwall contact of the porphyry body in the far north.



Figure 8 - Pharaoh Zone Composite section of 11250 / 11275N - D1420 successfully tested to the footwall, extending the porphyry dimensions and resource blocks and returned a high grade intersection of 79m @ 4.87g/t Au from 662m


  



Figure 9 - Pharaoh Zone 11850N showing west dipping Cleopatra and Antony structures



REGIONAL EXPLORATION


Extensive regional exploration work continued during the year on the 160km2 exploitation licence surrounding the Sukari Gold Mine.  Mapping and sampling followed the broad NNE - SSW - SSE curvilinear corridor along the major Najd Fault regional structure, containing the Sukari North, Sukari, Sami South, and Kurdeman prospects (Figure 10). 5,866 samples were taken during the year. Significant Au assays were returned from new prospects at 'V Shears' and 'Quartz Ridge' (Table 2).



Figure 10 - Sukari Exploitation Licence regional exploration - surface samples, prospects and geology



  Assay results were received for the five RC hole programme at Sukari North B quartz vein prospect, confirming the tenor of the surface sampling of the quartz veining and structural interpretation. Drilling intersected hard, massive siliceous intermediate to felsic dioritic rock unit with minor felsic and mafic dykes. A peak assay of 1m @ 9.96g/t Au from 15m was intersected in hole 4, from a quartz vein in a 12m halo of 0.1 - 0.4g/t Au alteration. Results are similar to previous work at nearby Sukari North prospect, with higher (+1g/t Au) grade quartz veins and shear zones being hosted in massive, siliceous brittle rocks with a weak and narrow alteration assemblage being defined adjacent to the structure.


Regional scale mapping shows a generally north east striking rock package dominated by intermediate dioritic to andesitic rocks, grading to felsic volcanics (rhyolites, dacites) in the north east quadrant of the licence, with subordinate granitic to granodiorite intrusive rocks north and east of Sukari Hill. Intercalated sedimentary units, from fine grained siltstone and shales, to sandstones and some greywacke units are intercalated with the igneous rocks, mainly north and east of Sukari, to the licence margin. Minor but consistent lenses of serpentinitic ultramafics occur to the north and east of Sukari Hill, and in the south near Kurdeman.  A comprehensive geological, geochemical, structural and alteration map for the full exploitation licence area is being generated and validated.


Several promising anomalous Au geochemical and structural targets were generated and followed up with more detailed work. Anomalous gold assays generally relate to quartz veins, shearing and zones of stronger alteration, typically silica-sericite-ankerite, in a variety of host rocks from felsic volcanic, intermediate to mafic gabbro-diorite intrusive and ultramafic rocks. There is usually evidence of historical workings from diggings and worked spoil piles associated with each prospect area.


In addition to the regional wide spaced work, exploration then focussed on the newly discovered prospect areas to the east of Sukari at Quartz Ridge and V Shears. These areas were covered with more detailed mapping and rock chip-line sampling to test for width and tenor of alteration and Au mineralisation. Several additional high grade assays were returned from both areas (Table 2).


Results at the east-west striking, steep south dipping 400m long Main Vein shear zone at Quartz Ridge (Table 2 & Figure 11) highlighted the strongly Au anomalous (+0.1ppm Au) 20m thick halo of alteration and shearing around the 0.5 - 3m thick higher grade Main quartz vein (assays up to 26.7g/t Au). Drill sites have been prepared to test the Main Vein and shear zone system along its strike.



Figure 11 - Quartz Ridge Prospect Geology, Surface geochemical Au Assays and Proposed RC Holes


Systematic sampling and mapping in the area 300m to the south of the Main Vein, around a high grade initial 100m long NE trending shear zone has outlined a larger, +0.05ppm Au, 400m strike length, 20 - 80m wide, NE trending Au anomaly. The NE striking shear zones and quartz veins at the margins and internal to a strongly ankerite and hematite altered, weathered felsic intrusive unit are the sources of strong gold anomalism. Quartz veins generally dip moderately to the SE, and the foliation dips to the NW and SE. Sampling of the track cut for rig access highlighted some very high grade assays (Table 2) up to 10.5g/t Au, from more east-west striking high grade quartz vein shear zones. RC drilling will target the mineralised south east dipping shears, altered contacts and east-west to NE striking Au mineralised quartz veins of the felsic granodiorite intrusive body (Figure 11) and is scheduled for early in the next financial year.


Regional wide spaced mapping and rock chip geochemical sampling is continuing to complete coverage of the entire licence area and generate more targets for advanced exploration.


Table 2 - Regional Geochemical Rock chip samples - Anomalous Au Assays (>1ppm Au)

SAMPLE

PROSPECT

LITHOLOGY

Au_ppm_AR

NORTH UTM

EAST UTM

RL

323179

QTZRDG

GBD

7.11

2760234

677296

329

323182

QTZRDG

VQ

3.62

2760228

677276

330

323183

QTZRDG

VQ

4.83

2760220

677312

330

323184

QTZRDG

GBD

3.07

2760228

677300

327

328308

QTZRDG

GBD

4.89

2760270

677160

326

328352

QTZRDG

GBD

4.76

2760280

677491

324

328353

QTZRDG

GBD

4.47

2760280

677489

325

328360

QTZRDG

GBD

3.04

2760281

677475

332

328361

QTZRDG

GBD

4.02

2760281

677473

333

329208

QTZRDG

VQ

26.70

2760283

677480

331

329281

QTZRDG

GBD

7.50

2760224

677310

334

332373

QTZRDG

VQ

7.02

2760325

677534

320

332374

QTZRDG

VQ

13.40

2760329

677538

325

339702

QTZRDG

GBD

5.02

2759936

677499

342

340672

QTZRDG

Fx

2.59

2758923

676872

336

355465

QTZRDG

Fx

2.49

2759787

677454

317

355466

QTZRDG

Fx

3.32

2759788

677456

318

355488

QTZRDG

GBD

2.49

2759810

677483

326

355489

QTZRDG

GBD

4.95

2759811

677485

327

355492

QTZRDG

GBD

8.73

2759813

677490

328

359801

QTZRDG

GBD

10.50

2759850

677514

342

359834

QTZRDG

GBD

2.60

2759911

677504

350

359855

QTZRDG

GD

2.35

2759942

677509

345

359863

QTZRDG

FV

6.92

2759963

677508

345

333252

SUK_REG

VQ

6.08

2758995

676818

323

320179

VSHEARS

GBD

3.29

2762765

676960

300

320182

VSHEARS

GBD

4.70

2762790

676947

326

320186

VSHEARS

GBD

3.71

2762702

676660

313

320188

VSHEARS

GBD

2.94

2762684

676660

321

320189

VSHEARS

GBD

2.80

2762682

676658

312

323864

VSHEARS

GBD

5.28

2762708

676966

301

325946

VSHEARS

GBD

7.51

2762641

676645

306

328220

VSHEARS

LST

3.87

2762723

676657

330

328223

VSHEARS

LST

8.17

2762718

676664

337

328224

VSHEARS

LST

3.49

2762720

676664

333

328273

VSHEARS

Ux

2.82

2762592

676555

304

GBD - Gabbro-Diorite; Fx - Felsic Intrusive; GD - Granodiorite; VQ - Quartz Veining; LST - Silica-Carb Alt Rock; Ux - Ultramafic/Serpentinite




Table 3 - Significant Assay Intersections, Sukari Resource Definition and regional drilling

for the year ended 30 June 2009

HOLE

NORTH

EAST

DIP

AZI

EOH

FROM

TO

INTERVAL

AUAR1

COMMENTS

D303

10375

10590

-73

270

825.6

611

617

6

62.15

Down Thrust Zone






incl.

612

614

2

183.00













D308

10275

10600

-70

270

836

617

631

14

4.86

Down Thrust Zone






incl.

619

620

1

46.60







incl.

623

624

1

10.10













D1271

10425

10700

-77

270

936.7

575

630

55

1.01

Down Thrust Zone












D1362

10600

10835

-75

270

762.2

457

459

2

63.35

Amun Deeps Infill












D1364

11275

10745

-80

270

656.3

473

554

81

4.07

Hapi Zone - up dip western contact






incl.

495

497

2

9.85







incl.

519

527

8

18.89








564

571

7

3.68








618

623

5

26.17







incl.

621

622

1

126.00













D1366

10325

10640

-77

270

745.8

238

296

58

2.53

Hapi Zone






incl.

259

261

2

23.34







incl.

264

265

1

27.40








511

521

10

45.90

Down Thrust Zone - Upper






incl.

511

513

2

227.70








591

630

39

1.76

Down Thrust Zone - Lower






incl.

593

595

2

15.35













D1367

12050

10795

-48

270

322.08

261

275

14

4.51

Cleopatra Zone - North Pharaoh






incl.

261

262

1

15.30













D1368

11325

10644

-85

270

608.5

556

582

26

4.57

Pharaoh Zone - Hapi Up Dip






incl.

571

575

4

13.44













D1370

11300

10740

-77

270

656.6

531

572

41

2.85

Hapi Zone






incl.

544

548

4

13.33








612

627

15

1.39

FW Contact zone






incl.

620

621

1

7.13













D1374

10575

10645

-70

270

417.4

230

250

20

3.11

HW Porphyry Contact Zone






incl.

246

247

1

11.40








259

380

121

2.07

Hapi Zone Infill 






incl.

268

269

1

17.00







incl.

299

300

1

22.60







incl.

335

336

1

38.80













D1378

10325

10600

-67

270

349.2

198

223

25

2.74

Hapi Zone Infill 






incl.

198

199

1

21.60










256

280

24

1.50













D1379

10550

10770

-77

270

644.3

343

362

19

1.95








370

426

84

1.70

Hapi Zone






incl.

409

410

1

10.90







incl.

424

425

1

8.01








632

645.3

13.3

2.23

Footwall Amun Deeps Shear contact












D1380

10225

10690

-79

270

377.8

332

349

17

29.70

Hapi Zone Infill 






incl.

333

335

2

241.00













D1381

10175

10612

-72

270

681.9

216

285

69

1.32

Hapi Zone






incl.

232

233

1

8.17













D1382

11375

10650

-83

270

640

182

189

7

2.18







incl.

186

187

1

7.64








572

591

19

3.01

Hapi Zone - Footwall Contact






incl.

584

585

1

15.50













D1384

10125

10610

-70

270

878.5

201

253

52

1.49







incl.

233

234

1

7.34








262

280

18

1.75







incl.

267

269

2

7.50








512

522

10

3.92

Down Thrust Zone - Upper






incl.

520

521

1

17.90








624

643

33

1.67

Down Thrust Zone - Lower






incl.

648

649

1

8.64













D1386

10250

10595

-60

270

360

257

279

22

14.26

Hapi Zone 






incl.

277

278

1

239.00













D1387

10275

10643

-84

270

692.8

302

333

31

8.74

Hapi Zone






incl.

308

310

2

108.70








445

449

4

6.15

Footwall of Amun Deeps Contact Zone






incl.

445

446

1

21.60













D1388

10050

10550

-83

270

670.7

268

282

15

2.30

Hapi Zone






incl.

268

271

3

8.00








439

459

20

7.39







incl.

454

459

5

25.30













RCD571

11450

10652

-88

90

867.8

763.7

812

48.3

1.42

Deep Hapi Zone












D1345

10350

10730

-80

270

1151

918

921

3

2.13








932

1122

190

0.52

Horus Zone






incl.

932

956

24

1.08







incl.

1102

1108

6

1.20













RCD1391

10475

10795

-75

270

1136.7

337

349

12

2.61







incl.

346

349

3

6.49









356

545

189

2.51

Amun Deeps Block






incl.

367

372

5

34.52

Hapi Zone






incl.

435

438

3

10.31







incl.

484

485

1

99.70








860

869

9

4.52

Upper Contact of Horus Zone Porphyry






incl.

864

869

5

6.55








961

1093

132

0.30

Horus Zone






incl.

1044

1047

3

1.13













D1392

10525

10587

-86

270

1076.1

314

328

14

6.28

Hapi Zone Infill, Downthrust Test






incl.

323

328

5

14.30

Hapi Zone






incl.

985

990

5

1.98

Horus Zone






incl.

989

990

1

5.36







incl.

1170

1176.1

6.1

1.08













D1400

12050

10845

-25

270

390.92

5

52

47

1.27







incl.

19

20

1

5.33













D1408

11575

10683

-87

270

788

686

733

47

1.78

Pharaoh Zone Hapi Footwall Contact






incl.

708

709

1

7.89







incl.

729

731

2

13.55













RCD470

11500

10669

-85

90

817.5

691

757

66

4.80

Deep Hapi Zone






incl.

720

721

1

22.80







incl.

741

748

7

33.40







incl.

744

746

2

101.00













RCD1415

10575

10865

-65

270

1102.8

419

451

32

1.08







incl.

430

437

7

3.07

Hapi Zone







458

495

37

1.06

Amun Deeps Porphyry Block






incl.

479

480

1

6.25







incl.

494

495

1

11.20













D1416

10625

10874

-70

270

1157.7

365

399

34

2.16

Hapi Zone - Amun Deeps Block






incl.

368

369

1

6.23








449

511

62

2.13







incl.

474

479

5

8.67

Hapi Zone 












RCD1417

10675

10860

-70

270

1097.6

354

382

28

1.22

Amun Deeps - Hangingwall Porphyry







474

483

9

2.53

Hapi Zone 












D1418

9925

10620

-83

270

659.5

397

415

18

1.63

Amun Deeps Block






incl.

407

408

1

5.42













D1420

11275

10835

-80

270

763.5

331

337

6

4.65

Central West Dipping Zone






incl.

336

337

1

13.30








662

741

79

4.87

Deep Hapi Zone; Pharaoh






incl.

694

699

5

14.50



  

D1423

11350

10866

-88

270

644.8

380

413

33

1.62







incl.

391

396

5

5.58








542

589

47

2.85

High Grade Footwall Hapi Zone






incl.

542

544

2

22.00







incl.

562

563

1

10.90







incl.

581

589

8

5.37













D1426

11850

10827

-67

270

629.3

273

301

28

1.03

Cleopatra Zone







420

435

15

1.06













D1427

11050

10957

-70

270

548.8

87

139

52

1.30







incl.

93

94

1

7.75








178

190

12

2.02







incl.

182

184

2

7.26













D1428

11375

10880

-83

270

655

592

634

42

1.21

Eastern Contact Deep Hapi Zone 






incl.

595

596

1

8.30







incl.

605

607

2

7.90













D1429

11900

10810

-68

270

563.7

414

426

12

1.34

Cleopatra Zones






incl.

425

426

1

7.10








453

472

19

1.33

Lower West Dipping Zones






incl.

462

463

1

6.64













D1431

11400

10850

-83

270

786.1

601

605

4

8.59







incl.

602

603

1

24.10








610

627

17

10.49







incl.

624

625

1

138.00








641

696

55

3.48

Deep Hapi Zone; Pharaoh






incl.

678

690

12

10.20







incl.

680

681

1

34.90













D1432

10475

10784

-73

270

692.7

314

411

97

1.89

Amun Deeps Block/Hapi Zone






incl.

378

380

2

7.68







incl.

407

408

1

8.24








417

421

4

28.1








613

635

22

1.11

Downthrust Zone












D1434

10650

10820

-74

270

798.5

157

169

12

1.83

Hangingwall Porphyries






incl.

167

168

1

5.06








191

203

12

1.70








452

471

19

2.87

Amun Deeps Block/Hapi Zone






incl.

454

458

4

5.10













D1435

11250

10950

-84

270

584

340

350

10

3.31

Central, Flat to West Dipping Zone






incl.

340

341

1

14.1








499

542

43

17.0

Eastern Contact Deep Hapi Zone 






incl.

525

526

1

68.1







incl.

531

533

2

279.00



D1436

11950

10828

-65

270

400

3

30

27

1.16

Deep Hapi; Cleopatra Zones












D1438

11475

10770

-80

270

784.3

635

702

67

1.05

Deep Hapi Zone at FW Contact






incl.

635

636

1

7.15













D1439

12000

10828

-60

270

463.6

2

31

29

1.55

Surface - Cleopatra Zone






incl.

17

18

1

9.51








52

62

10

1.22

West Dipping Zone












D1440

11300

10883

-83

270

683.3

569

583

14

6.71

Deep Hapi Zone; Pharaoh






incl.

575

579

2

69.5













D1443

11250

10871

-80

270

870.1

734

758

24

1.69

Deep Hapi Zone; Pharaoh






incl.

744

745

1

7.78













D1446

11550

10787

-87

270

753

636

706

70

2.20

Hapi and Hapi Deeps - FW Contact Zone






incl.

642

643

1

12.1







incl.

686

688

2

8.55













D1450

11500

10778

-70

270

730.4

634

644

10

1.24








655

680

25

2.58

Hapi and Hapi Deeps - FW Contact Zone






incl.

658

659

1

8.07







incl.

672

674

2

8.43













D1453

11500

10885

-82

270

729.3

623

644

21

1.73

Hapi and Hapi Deeps - FW Contact Zone






incl.

642

643

1

5.81








672

687

15

2.69

Hapi and Hapi Deeps - FW Contact Zone












D1454

11375

10775

-89

270

776.2

120

135

15

3.28







incl.

120

122

2

14.60








691

723

32

5.65

Basal Porphyry Contact Zone - Hapi Deeps






incl.

697

706

9

13.5







incl.

722

723

1

14.6













D1455

10700

10825

-76

270

706.9

423

465

42

2.79

High Grade Amun Deeps






incl.

433

434

1

39.0













D1456

11775

10804

-78

270

668.2

600

611

11

6.63

Basal Footwall Contact Zone






incl.

607

608

1

56.0













D1458

11425

10760

-87

270

782.5

672

688

16

1.52

Basal Footwall Contact Zone; West Dipping Hapi Deeps







700

721

21

2.30







incl.

719

720

1

6.80













D1462

11950

11020

-55

270

449.7

112

146

34

3.29

Basal Footwall Contact zone; Far North






incl.

130

132

2

8.96







incl.

135

140

5

6.54







incl.

142

143

1

11.3


AUSTRALIAN PROJECTS


Nelson's Fleet


The Company is entitled to a royalty over the Nelson's Fleet gold project near St Ives, Western Australia, from the St Ives Gold Mining Co Pty Ltd, a subsidiary of Gold Fields Ltd. The Company has not been informed of any mining of the tenement to date.


Mineral Experts and Opinions


The information in this report that relates to ore reserves has been compiled by Mr Tadek Wojtowicz and internally reviewed by Mr Andrew Pardey. Mr Pardey is a Member of the Australasian Institute of Mining and Metallurgy and is a full time employee of the Company. He has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity 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 the 'National Instrument 43-101 of the Canadian Securities Administrators' and 'CIM Definition Standards For Mineral Resources and Mineral Reserves' of December 2005 as prepared by the CIM Standing Committee on Reserve Definitions of the Canadian Institute of Mining. Mr Pardey's 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 ore reserves has also been independently verified by Mr Pieter Doelman, an employee of Coffey Mining Pty Ltd Perth. Mr Doelman is a Member of the Australasian Institute of Mining and Metallurgy and has sufficient experience, relevant to the style of mineralisation and type of deposit under consideration and to the activity 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 the 'National Instrument 43-101 of the Canadian Securities Administrators' and the 'CIM Definition Standards For Mineral Resources and Mineral Reserves' of December 2005 as prepared by the CIM Standing Committee on Reserve Definitions of the Canadian Institute of Mining. Mr Doelman consents to the inclusion of this estimate in reports.


Information in this report which relates to exploration, geology, sampling and drilling is based on information compiled by geologist Mr Richard 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 assay samples were analysed by Ultra Trace Pty Ltd, Canning Vale, Western Australia.


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.


Refer to the Technical Report which was filed on www.sedar.com  in May 2009 for further discussion of the extent to which the estimate of mineral resources/reserves may be materially affected by any known environmental, permitting, legal, title, taxation, socio-political, marketing or other relevant issue.


  CORPORATE ACTIVITIES


Professor Graeme Robert Tangye Bowker was appointed to the Board on 21 July 2008. Professor Bowker had recently retired from the position of Australian Ambassador to Egypt, Libya, Sudan, Syria and Tunisia, a position he held for three years from 2005. Professor Bowker had a 37 year career with the Australian Foreign Service specialising in Middle Eastern issues and postings.


Mr Mark Di Silvio was appointed Chief Financial Officer on 25 July 2008. A graduate of Curtin University in Western Australia who holds a Master of Business and Administration from the University of Western Australia, Mr Di Silvio has held a variety of finance roles in both the gold mining and oil and gas sectors over the past 18 years.  


Following his appointment to the Board on 20 May 2008, Mr Trevor Schultz was appointed as Executive Director of Operations on 15 August 2008. Through his appointment, Mr Schultz assumed executive responsibility for the Company's day to day operations of the Sukari Gold Project.


The Company's Annual General Meeting of Shareholders was held at 11.30 am (London time) at the Bishopsgate & Chancery Rooms at the Andaz Hotel, Liverpool Street, London on Friday, 28 November 2008. All resolutions were passed without amendment by a show of hands. The Company's new Constitution was adopted on this day, following shareholder approval. 


On 20 January 2009, the Company entered into an agreement with a syndicate of underwriters led by Thomas Weisel Partners Canada Inc under which the underwriters agreed to buy 92,308,000 ordinary shares (the 'Ordinary Shares') from Centamin Egypt Limited on a bought-deal basis and sell them to the public at a price of C$0.65 per Ordinary Share. The Company also granted to the underwriters an over-allotment option to purchase up to an additional 13,846,200 Ordinary Shares at the same price, exercisable by the underwriters in whole or in part for a period of 30 days on or following the closing of the offering. Following the closure on 10 February 2009, the Company announced that a total of 106,154,200 ordinary shares were sold, of which 13,846,200 ordinary shares were issued pursuant to the exercise in full of an over-allotment option granted to the underwriters, at C$0.65 per share to raise gross proceeds of C$69,000,230.

 

On 25 March 2009, the Company accepted a letter of offer (the 'Offer') from Macquarie Bank Limited ('MBL') pursuant to which MBL agreed to provide a corporate loan facility of up to US$25 million (the 'Facility'). The Company advised that the Facility was to be made available, however at that point would remain undrawn. The Company announced its intention to fund the development of the Sukari Gold Project out of existing cash resources and internally generated cash flow however the Facility provided the Company with access to additional funds at a low cost for future use, if required. The Facility is subject to final documentation being agreed and drawdown on the Facility was subject to terms and conditions. Under the terms of the Offer, the Facility will be available for drawdown by Centamin until 31 December 2009 at which point any undrawn funds shall be withdrawn. In the event of any drawdown on the Facility, Centamin would not be required to enter into any hedging arrangements and the Facility would not impose any restrictions on the future development and operation of the Sukari Gold Project. In return for entering into this agreement, Centamin issued 1,630,150 unquoted share options to MBL, exercisable at a price of A$1.20 and expiring 31 December 2012. If the Company wishes to make a drawdown under the Facility, further Options will be issued to MBL at an exercise price equivalent to the volume weighted average price of Shares for the 10 trading days immediately prior to the date of issue. The number of Options issued will be calculated by dividing $1,250,000 by the exercise price. The Options will expire on 31 December 2012.


On 02 July 2009, the Company announced that it had attained subscriptions for a private placement of 19 million ordinary shares at an offering price of C$1.56 per ordinary share, raising gross proceeds of C$29.6 million (the 'Offering'). The Company advised that the Offer closed on 16 July 2009.


On 04 August 2009, Centamin announced its intention to apply for admission to the Official List of the UK Listing Authority and to trade on the London Stock Exchange's main market for listed securities. Work has commenced on the listing process and it is anticipated that this work and a move to the main board of the LSE will be concluded before the end of 2009.




DIRECTORS' REPORT



The Directors of Centamin Egypt Limited submit herewith the annual financial report of the Company for the financial year ended 30 June 2009. In order for the Company to comply with the provisions of the Corporations Act 2001, the Directors' Report as follows:- 


directors


The names and particulars of the directors of the Company during or since the end of the financial year are:-

 

Mr Sami El-Raghy  B.Sc. (Hons), FAusIMM, FSEG, MAICD

Executive Chairman, age 68

Director since 29 April 1993


A graduate of Alexandria University in 1962, Mr El-Raghy worked in Egypt and Europe before moving to Australia in 1968 and joining American Smelting and Refining Company (Asarco). He was instrumental in the discovery and development of a number of gold mines, including the Wiluna Gold Mine for Asarco and the Mt Wilkinson Gold mine for Chevron Exploration. Mr El-Raghy recognised the potential of the Marymia Dome and the Barwidgee Yandal Belt long before these areas became the most sought after mining areas in Australia. Mr El-Raghy brings to the board over 41 years experience in the industry, both in Australia and overseas.


Mr Josef El-Raghy  B.Comm

Managing Director / CEO, age 38

Director since 26 August 2002


Josef El-Raghy holds a Bachelor of Commerce Degree from the University of Western Australia and had a ten year career in stock broking. He was formerly a director of both CIBC Wood Gundy and Paterson Ord Minnett. His expertise in international capital markets has greatly assisted the Company in its fundraising and development activities. Mr El-Raghy was also a director of ISIS Resources Plc (now Verona Pharma Plc) from 24 February 2005 to 18 September 2006.


Mr Trevor Schultz  M.A (ECON), M.Sc (Min Eng)

Executive Director of Operations, age 67

Director since 20 May 2008


Mr Schultz has a Masters Degree in Economics from Cambridge University, a Masters of Science Degree in Mining from the Witwatersrand University and completed the Advanced Management Program at Harvard University. With more than 40 years experience at the executive management and board level with leading international mining companies, including BHP, RTZ/CRA, Pegasus Gold and Ashanti Goldfields, Trevor was most recently the President and CEO of Guinor Gold Corporation.  His roles have included development of several new mining operations in Africa, South America and the U.S.A., negotiations with various governments and their agencies and project financing and capital raisings. Mr Schultz is currently a director of Pacific Road Capital Management. From 1 April 2003 until 31 December 2005, Mr Schultz was a director of Guinor Gold Corporation, from 1 December 2003 to 15 June 2006 was a director of Southern Era Pty Ltd and from 1 October 1996 to 31 December 2003 was a director of Ashanti Goldfields Pty Ltd.

 

Mr Colin Cowden  FAII, ASA, ACIS, ACIM, FNIBA, CD

Non Executive Director, age 65

Chairman Audit Committee

Member Remuneration Committee

Director since 08 March 1982


Colin Cowden is the Executive Chairman of Cowden Limited, a licensed insurance broking company formed in 1972. Cowden Limited is a prominent broking firm in Western Australia with branch offices in Sydney, Melbourne and Adelaide. Mr Cowden is a qualified accountant and Chartered Secretary, and is a Fellow of the Australian Insurance Institute. Mr Cowden has been a director of Wentworth Holdings Limited since 26 October 2005, and from 27 November 1998 until 27 October 2005, was a director of OAMPS Limited.

 

Mr G. Brian Speechly  FAusIMM

Non Executive Director, age 76

Director since 15 August 2000


Brian Speechly is a Fellow of the Australasian Institute of Mining and Metallurgy with over 50 years experience in the mining industry. During his career, Mr Speechly has been involved in over 320 mining projects and is recognised in Australia and overseas as an expert in both underground and open pit mining and design. He is particularly noted for his innovative and low cost approaches to mining issues. Mr Speechly has been a director of Dynasty Metals & Mining Inc since 28 April 2004.


Dr Thomas G. Elder  PhD, FIMMM, FGS

Non Executive Director, age 70

Chairman Remuneration Committee

Member Compliance/Corporate Governance Committee

Director since 08 May 2002


Dr Elder is a geology graduate of Durham University and post-graduate NATO Scholar at the University of Oslo. His extensive background in mineral exploration was gained with major companies including BP and Rio Tinto. Dr Elder ran exploration programmes in the UK, Spain, Italy, Portugal and Greenland for Cominco, prior to his appointment as worldwide Exploration Manager for BP Minerals in 1983. Following the take-over by Rio Tinto in 1989, he was a director of Rio Tinto Exploration Limited until 1995, focusing on project development in the Former Soviet Union. Dr Elder was a non-executive director of Angus & Ross from 12 January 2006 to 31 January 2009 and, having held the position of President from 04 October 1998 to 30 September 2007, Dr Elder stepped down as President but remained a non-executive director of Mano River Resources Inc until 25 June 2009.


Mr H. Stuart Bottomley

Non Executive Director, age 64

Senior Independent Director

Member Audit Committee

Chairman Compliance/Corporate Governance Committee

Director since 26 September 2005


Stuart Bottomley has broad non-executive knowledge and experience in international asset management, risk management and corporate funding.  After working as a stockbroker for nine years, Stuart worked as a portfolio manager for the Target Group of Unit Trusts first under the ownership of Dawnay Day and subsequently with J Rothschild Investment Management. In 1984, he joined Fidelity International in London, working with the ERISA group, focused on UK and European markets.  Since leaving Fidelity, Stuart has consulted for numerous private and public companies, advised many Australian companies on admissions to AIM and assisted in IPOs and other fundraisings. He is currently a non-executive director of African Consolidated Resources Plc (since 27 May 2005), Polar Star Mining Corp (since 17 April 2009), Starfield Resources Inc (since 01 February 2007) and Verona Pharma Plc (since 24 February 2005).


Professor G. Robert Bowker  PhD, GAICD

Non Executive Director, age 59

Member Remuneration Committee

Member Audit Committee

Member Compliance/Corporate Governance Committee

Director since 21 July 2008


Professor Bowker retired from the Australian Foreign Service in June 2008 after a 37 year career specialising in Middle East issues. He was Australian Ambassador to Egypt (2005 to 2008) and Jordan (1989 to 1992), in addition to postings in Syria (1979 to 1981) and Saudi Arabia (1974 to 1976). Professor Bowker was accredited from Cairo as a non-resident ambassador to Libya, Sudan, Syria and Tunisia. Professor Bowker has a PhD from the Centre for Arab and Islamic Studies, Australian National University 2001, an MA from the Centre for Middle East and Central Asian Studies, Australian National University 1995, a BA (Hons) Indonesian and Malayan Studies and Political Science, Melbourne University 1970 and completed an RAF Arabic course, Beaconsfield, UK 1988.


MANAGEMENT


Mrs Heidi Brown  GCertAppFin (Finsia)

Company Secretary


Mrs Brown has over 11 years experience in the finance and securities industries and has completed the Chartered Secretaries Australia Graduate Diploma of Corporate Governance. Mrs Brown also holds a Graduate Certificate of Applied Finance and Investment and a Diploma of Financial Advising through the Financial Services Institute of Australasia (Finsia). 


Mr Mark Di Silvio B.Bus, MBA, CPA

Chief Financial Officer


Mr Di Silvio holds a Bachelor of Business from Curtin University in Western Australia and completed a Master of Business and Administration at the University of Western Australia.  A Certified Practicing Accountant with over 18 years post graduate experience in the resources sector, Mr Di Silvio commenced his career with a variety of finance based roles within the gold mining sector whilst based in Kalgoorlie, Western Australia.  Mr Di Silvio joined oil and gas independent Woodside Energy Limited in 1998, gaining oilfield experience through the financial management of joint ventures and the development of accounting and compliance management systems.  Prior to leaving Woodside in 2007, Mr Di Silvio was responsible for the financial management of Woodside's Mauritanian oilfield assets.  Most recently, Mr Di Silvio was CFO for Central Petroleum Limited, a junior oil and gas exploration company based in Perth, Western Australia. Mr Di Silvio was appointed on 25 July 2008.


Mr Youssef El-Raghy

General Manager - Egyptian Operations


An officer graduate of the Egyptian Police Academy Mr El-Raghy held senior management roles within the Egyptian Police force for a period in excess of ten years, having attained the rank of captain, prior to joining the Company. Mr El-Raghy has extensive contacts within the government and industry and maintains excellent working relationships with all of the Company's stakeholders within Egypt.


directors' meetings


The following table sets out the number of directors' meetings (including meetings of the committees of directors) held during the financial year and the number of meetings attended by each director (while they were a director or committee member). During the financial year, 9 Board meetings, 3 Nomination and Remuneration Committee meetings, 3 Compliance/Corporate Governance Committee meetings and 6 Audit Committee meetings were held. 

Board 

of Directors

Nomination and Remuneration Committee

Compliance/

Corporate Governance

Committee

Audit 

Committee


Director

Held

Attended

Held

Attended

Held

Attended

Held

Attended

Mr S El-Raghy

9

8

-

-

-

-

-

-

Mr C Cowden

9

9

3

3

-

-

6

6

Mr G B Speechly 

9

9

-

-

-

-

-

-

Dr T G Elder

9

9

3

3

3

3

-

-

Mr J El-Raghy

9

9

-

-

-

-

-

-

Mr H S Bottomley

9

8

-

-

3

3

6

6

Mr T S Schultz

9

9

-

-

-

-

1

1

Professor G R T Bowker*

8

8

2

2

3

3

5

5

* Professor G R T Bowker became a Director of the Company on 21 July 2008 and became a member of the Remuneration Committee, Audit Committee and Compliance/Corporate Governance Committee on 15 August 2008.


In addition to these formal meetings, during the year the Directors considered and passed seventeen (17) Circular Resolutions pursuant to clause 61 of the Company's Constitution. 


principal activities


The consolidated entity's principal activities during the course of the financial year were the exploration for precious and base metals, and ongoing development at the Sukari project.


DIVIDENDS


No dividends have been declared or paid since the end of the previous financial year.


CHANGES IN state of affairs


There was no change in the state of affairs of the consolidated entity during the financial year.


FUTURE DEVELOPMENTS


It is the objective of the Company, to continue to drill at the Sukari project, so as to increase the overall size of the geological resource, whilst at the same time, finalise construction of the processing plant and ancillary infrastructure. Commissioning and commercial production is anticipated in the second half of 2009. Gold production from the Sukari project is forecast to have a positive cashflow effect on the Company and consolidated entity.


SHARE OPTIONS


OPTIONS CONVERTED DURING THE FINANCIAL YEAR


A total of 2,860,000 unlisted options were exercised during the financial year to 30 June 2009. The details of these options are as follows:-


Number of Ordinary shares under option

Exercise Price

A$

Expiry Date

620,000

0.3500

31 October 2010

250,000

0.6566

30 August 2009

760,000

0.7106

31 January 2010

1,000,000

0.4355

08 December 2008

125,000

0.6750

28 November 2011

105,000

1.0500

31 May 2010


The issuing entity was Centamin Egypt Limited. The market weighted average closing price of Centamin Egypt Limited shares during the 2008-2009 year was A$1.0579 (2007-2008: A$1.3938). No amount was unpaid on these shares. 


OPTIONS EXERCISED SUBSEQUENT TO BALANCE DATE


1,470,000 options have been exercised subsequent to balance date. The issuing entity was Centamin Egypt Limited. No amount was unpaid on these shares.  The details of these options are as follows:-


Number

Exercise Price

A$

Expiry Date

600,000

0.7106

31 January 2010

670,000

1.0500

31 May 2010

200,000

0.3500

31 October 2010


OPTIONS LAPSED SUBSEQUENT TO BALANCE DATE


125,000 options have lapsed subsequent to balance date. The details of these options are as follows:-


Number

Exercise Price

A$

Expiry Date

125,000

0.6750

28 November 2011


EMPLOYEE OPTION PLANS


At the Annual General Meeting on 29 November 2002, shareholders approved the Employee Option Plan 2002. There are no options issued to Executives and Employees in existence as at the date of this report.


At the Annual General Meeting on 20 November 2006, shareholders approved the Employee Option Plan 2006. The following options issued to Executives and Employees are in existence as at the date of this report:


Number of Ordinary shares under option

Exercise Price

A$

Expiry Date

90,000

0.7106

31 January 2010

1,390,000

1.0500

24 May 2010

250,000

1.4034

15 October 2010

3,500,000

1.7022

16 April 2011

250,000

1.1999

25 August 2011

750,000

0.7033

28 October 2011

1,000,000 

1.0000

19 December 2011

350,000

1.8658

6 August 2012


The following options were not issued under any of the Employee Option Plans, however were issued in accordance with employment contracts and/or agreements and are in existence at the date of this report:

Number of Ordinary shares under option

Exercise Price

A$

Expiry Date

850,000

0.3500

31 October 2010

1,630,150

1.2000

31 December 2012


The holders of these options do not have the right, by virtue of the option, to participate in any share issue or interest issue of the Company, body corporate or registered scheme.  The issuing entity for all options was Centamin Egypt Limited.


BROKER WARRANTS 


BROKER WARRANTS CONVERTED DURING THE FINANCIAL YEAR


A total of 5,507,260 unlisted broker warrants were exercised during the financial year to 30 June 2009. The details of these broker warrants are as follows:-


Number of Ordinary shares under warrant

Exercise Price

C$

Expiry Date

3,393,678

0.8600

11 April 2009

613,582

0.8600

20 April 2009

829,280

1.2000

23 November 2009

670,720

0.6500

10 February 2011


The issuing entity was Centamin Egypt Limited. No amount was unpaid on these shares.


BROKER WARRANTS ISSUED AND CONVERTED SUBSEQUENT TO BALANCE DATE


The following broker warrants were issued subsequent to 30 June 2009 as at the date of this report: 


Number of ordinary shares under warrant 

Exercise price

C$

Expiry Date

788,437

1.56

16 July 2011

161,563

1.52

26 August 2011


The following broker warrants were converted subsequent to 30 June 2009 as at the date of this report: 


Number of ordinary shares under warrant 

Exercise price

C$

Expiry Date

1,329,280

1.20

23 November 2009


The following broker warrants are in existence as at the date of this report: 


Number of ordinary shares under warrant 

Exercise price

C$

Expiry Date

3,441,440

1.20

23 November 2009

4,636,990

0.65

10 February 11

788,437

1.56

16 July 2011

161,563

1.52

26 August 2011


The holders of these warrants do not have the right, by virtue of the warrant, to participate in any share issue or interest issue of the Company or any other body corporate or registered scheme.  The issuing entity for all warrants was Centamin Egypt Limited.


ENVIRONMENTAL REGULATIONS


The consolidated entity is currently complying with relevant environmental regulations and has no outstanding environmental orders against it. 


EVENTS SUBSEQUENT TO BALANCE DATE


On 02 July 2009, the Company announced that it had attained subscriptions for a private placement of 19 million ordinary shares at an offering price of C$1.56 per ordinary share, raising gross proceeds of C$29.6 million. The Company advised that the Offer closed on 16 July 2009.


On 04 August 2009, Centamin announced its intention to apply for admission to the Official List of the UK Listing Authority and to trade on the London Stock Exchange's main market for listed securities. Work has commenced on the listing process and it is anticipated that this work and a move to the main board of the LSE will be concluded before the end of 2009.


REVIEW OF OPERATIONS


A review of the Company's operations is located at the beginning of the Annual Report.


INDEMNIFICATION OF DIRECTORS & AUDITORS 


During the financial year, the Company paid a premium in respect of a contract insuring the directors and officers of the Company and any related body corporate against a liability incurred as a director or officer to the extent permitted by the Corporations Act 2001. 


The Company has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified or agreed to indemnify an officer or auditor of the Company or of any related body corporate against a liability incurred as such an officer or auditor.

REMUNERATION REPORT (AUDITED)


The Directors of Centamin Egypt Limited present the Remuneration Report prepared in accordance with section 300A of the Corporations Act 2001 for the Company and the consolidated entity for the financial year ended 30 June 2009. For the purposes of this report, Directors and executives of the Company and consolidated entity are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company and consolidated entity ('the Group'), directly or indirectly, including any director (whether executive or otherwise) of the parent company. This Remuneration Report forms part of the Directors' Report.


OVERVIEW


Remuneration levels for Directors and executives are competitively set to attract the most qualified and experienced candidates. Details of the Company's remuneration strategy for the 2009 financial year are set out in this Remuneration Report.


This Remuneration Report:

  • explains the Board's policies relating to remuneration of Directors and executives;
  • discusses the relationship between these policies and the Company's performance; and
  • sets out remuneration details for each director and senior executive.


The fees paid to Non-Executive Directors are set at levels which reflect both the responsibilities of, and the time commitments required from, each Non-Executive Director to discharge their duties and are not linked to the performance of the Company.


The remuneration strategy for the Managing Director / Chief Executive Officer (CEO) and executives, including the Company Secretary, comprise a fixed cash component and where applicable, statutory superannuation contributions, an annual merit based performance bonus and the issue of share options in the Company which is intended to provide competitive rewards to attract high calibre executives. The issue of performance bonuses and share options, whilst not dependent on the performance of the Company, are aligned with the ongoing performance assessment of the incumbent, following review and assessment by the Board of Directors. 


Criteria used to determine the annual merit based performance bonus for the CEO and executives, during the preproduction phase, is the setting of key objectives for each executive and measuring performance against these objectives. Key objectives will normally include capital budget criteria where performance will be measured against progress indicators. These key objectives will largely be determinable by the objective assessment of performance by the CEO. There are no specific performance based key financial indicators set and bonuses and/or options are at the discretion of the Board. The Nomination and Remuneration Committee reviews the CEO's performance and makes a recommendation to the Directors.


Share options are offered to executives at the discretion of the Directors, having regard, among other things, to the length of service with the Group, the past and potential contribution of the person to the Group and in some cases, performance of the individual. 


There is no Board policy in relation to limiting the recipient exposure to risk in relation to securities. 


The table below sets out summary information about the consolidated entity's earnings and movements in shareholder wealth for the five years to 30 June 2009:

30 June 2009

US$

30 June 2008

US$

30 June 2007

US$

30 June 2006

A$

30 June 2005

A$

Revenue

2,893,141

6,789,038

2,815,271

1,140,700

1,046,309

Net profit/(loss) before tax

(22,271,374)

4,646,988

6,890,186

1,010,830

(870,412)

Net profit/(loss) after tax

(22,102,390)

4,203,119

6,890,186

1,010,830

(870,412)

Share price at start of year

A$1.21

A$1.12

A$0.74

0.27

0.19

Share price at end of year

A$1.79

A$1.21

A$1.12

0.74

0.27

Dividends

-

-

-

-

-

Basic earnings per share

(2.40)

0.51

1.11

0.19

(0.16)

Diluted earnings per share

(2.40)

0.51

1.10

0.19

(0.16)

  DIRECTORS AND SENIOR MANAGEMENT


The following persons acted as directors of the company during or since the end of the financial year:-

  • Mr Sami El-Raghy (Chairman)
  • Mr Josef El-Raghy (Managing Director/CEO)
  • Mr Trevor Schultz (Executive Director of Operations)
  • Dr Thomas G Elder (Non-Executive Director)
  • Mr Colin Cowden (Non-Executive Director)
  • Mr G Brian Speechly (Non-Executive Director)
  • Mr H Stuart Bottomley (Non-Executive Director)
  • Professor G. Robert Bowker (Non-Executive Director), appointed 21 July 2008


The term 'senior management' is used in this remuneration report to refer to the following persons:

  • Mrs Heidi Brown (Company Secretary)
  • Mr Mark Di Silvio (Chief Financial Officer), appointed 25 July 2008
  • Mr Mark Smith (Chief Financial Officer), resigned 7 August 2008


REMUNERATION OF DIRECTORS AND SENIOR MANAGEMENT


The Nomination and Remuneration Committee reviews the remuneration packages of all Directors and senior management on an annual basis. Remuneration packages are reviewed and determined with due regard to current market rates and are benchmarked against comparable industry salaries. 


 
 
 
 
2009
Short-term employee benefits
Post-employment benefits
Share-based payment
 
Salary & Fees
A$
Bonus
A$
Non-monetary
A$
Superannuation
A$
Options & rights
A$1
Total
A$
Non-executive directors
 
 
 
 
 
 
T Elder
50,815
-
-
-
-
50,815
C Cowden
46,965
-
-
4,226
-
51,191
G B Speechly
35,297
-
-
3,176
-
38,473
H Bottomley
50,815
-
-
-
-
50,815
G Bowker3
45,056
-
-
4,506
-
49,562
Executive officers
 
 
 
 
 
 
S El-Raghy
430,000
-
43,0005
-
-
473,000
J El-Raghy
411,118
-
41,1185
-
-
452,236
T Schultz2
348,173
-
68,0815
-
291,709
707,963
M Di Silvio4
266,613
-
52,3255
-
72,442
391,380
H Brown
150,000
-
10,586
13,500
61,888
235,974
M Smith6
116,268
 
23,0975
-
-
139,365
Total
1,951,120
 
238,207
25,408
426,039
2,640,774

 

 
 
 
 
2008
Short-term employee benefits
Post-employment benefits
Share-based payment
 
Salary & Fees
A$
Bonus
A$
Non-monetary5
A$
Superannuation
A$
Options & rights1
A$
Total
A$
Non-executive directors
 
 
 
 
 
 
T Elder
49,794
-
-
-
-
49,794
C Cowden
27,500
-
-
2,475
-
29,975
G B Speechly
27,500
-
-
2,475
-
29,975
H Bottomley
49,794
-
-
-
-
49,794
T Schultz2
-
-
-
-
-
-
G Bowker3
-
-
-
-
-
-
Executive officers
 
 
 
 
 
 
S El-Raghy
425,000
-
42,500
-
-
467,500
J El-Raghy7
478,125
184,434
47,812
-
-
710,371
M Smith 6
250,000
-
49,127
-
193,166
492,293
J McLeod8
310,313
-
28,650
-
160,944
499,907
H Brown9
95,833
30,000
-
11,325
73,167
210,325
Total
1,713,859
214,434
168,089
16,275
427,277
2,539,934

 

 

1 Options value is calculated in accordance with the Black-Scholes pricing method. 

2 Mr Schultz became a director of Centamin on 20 May 2008 and was made Executive Director of Operations on 15 August 2008.

3 Professor Bowker became a director of Centamin on 21 July 2008.

4 Mr Di Silvio was appointed 25 July 2008.

5 Values shown represent taxes paid in Egypt on behalf of the Executive Officer.

6 Mr Smith resigned on 7 August 2008.

7The bonus represented 27.8% of total remuneration and was paid on 31 August 2007. The bonus was paid for performance related to capital raising and associated Toronto Stock Exchange listing, helping to increase the wealth of all shareholders. The bonus was awarded at the discretion of the Board. 

8 Mr McLeod resigned from the Company on 12 February 2008. This figure includes reversal of remuneration recognised in prior year in relation to 500,000 options which had not vested at date of resignation.

9 The bonus represented 14.3% of total remuneration and was paid on 20 December 2007. The bonus was paid to recognize the efforts associated with the TSX listing and compliance burden, and was awarded at the discretion of the Board. 


No director or senior management person appointed during the period received a payment as part of his or her consideration for agreeing to hold the position.


EMPLOYMENT CONTRACTS


Remuneration and other terms of employment for the following Directors and executives are formalised in employment agreements, the terms of which are set out below:-


Josef El-Raghy, Managing Director/CEO

  - term: 3 years (expiring 01 September 2010), 3 months notice of termination period

  - base salary: A$387,000 (net of taxes in Egypt) pa, reviewed annually by the Remuneration Committee


Sami El-Raghy, Chairman

  - term: no specific term, 3 months notice of termination period

  - base salary: A$430,000 (net of taxes in Egypt) pa, reviewed annually by the Remuneration Committee


Trevor Schultz, Executive Director of Operations (appointed 20 May 2008)

  - term: 3 years (expiring 15 August 2011), 3 months notice of termination period 

  - base salary: A$360,000 (net of taxes in Egypt) pa, reviewed annually by the Remuneration Committee


Mark Di Silvio, Chief Financial Officer (appointed 25 July 2008)

  - term: 2 years (expiring 09 August 2010), 3 months notice of termination period

  - base salary: A$285,000 (net of taxes in Egypt) pa, reviewed annually by the Remuneration Committee


Heidi Brown, Company Secretary

  - term: 2 years (expiring 21 July 2010), 3 month notice of termination period

  - base salary: A$150,000 + 9% superannuation, reviewed annually by the Remuneration Committee 


No Director or executive is entitled to any termination payments apart from remuneration payable up to and including the date of termination and all payments due by way of accrued leave. 


Options Issued to Directors and senior management


Options are issued to Directors and senior management under the Employee Option Plan 2006 (previously under the Employee Option Plan 2002) as part of their remuneration. Options are offered to Directors and senior management at the discretion of the Directors, having regard, among other things, to the length of service with the Group, the past and potential contribution of the person to the Group. The following options have been issued to Directors and senior management up to 30 June 2009 and granted subsequent to balance date:-

 

Name

Office

Grant Date

No of Unquoted Options

  Fair Value at Grant Date A($)

Exercise Price A($)

Expiry Date

C N Cowden

Non-Executive Director

   8 December 2005

500,000

0.1495

0.4355 

8 December 2008

T G Elder

Non-Executive Director

   8 December 2005

500,000

0.1495

0.4355 

8 December 2008

H S Bottomley

Non-Executive Director

8 December 2005

500,000

0.1495

0.4355 

8 December 2008

T S Schultz

Executive Director of Operations

19 December 2008*

1,000,000

0.3568

1.0000

19 December 2011

M Di Silvio

Chief Financial Officer

25 August 2008*

250,000

0.3070

1.1999

25 August 2011



6 August 2009**

350,000

0.6714

1.8658

6 August 2012

H Brown

Company Secretary

31 January 2007

200,000

0.3706

0.7106 

31 January 2010



16 April 2008

250,000

0.4015

1.7022

16 April 2011

 * As at 30 June 2009, only 50% of these options had vested.  However, these options have vested as at the date of this report.

** These options have not yet vested. 

The options granted vest and are exercisable over a period of 12 months, with 50% vesting and exercisable after 6 months and the other 50% vesting and exercisable after 12 months of grant. These options have a term of 3 years. 


Options Exercised by Directors and Senior Management


The following options were exercised by Directors and senior management during the year:-


Name

Office

Exercise Date

No of Unquoted Options

Exercise Price A($)

Expiry Date

 M Smith

Chief Financial Officer

6 August 2008

250,000

0.6566

30 August 2009

 M Smith

Chief Financial Officer

6 August 2008

250,000

0.7106

31 January 2010

 H S Bottomley

Non-Executive Director

1 October 2008

500,000

0.4355

8 December 2008

 C N Cowden

Non-Executive Director

25 November 2008

500,000

0.4355

8 December 2008


The options exercised by M Smith during the year were issued on 30 August 2006 and 31 January 2007 respectively.  The value of the options as at grant date is determined internally using the Black and Scholes Pricing Model and are included in the remuneration on a proportionate basis from grant date to vesting date. These options vest and are exercisable over a period of 12 months, with 50% vesting and exercisable after 6 months and the other 50% vesting and exercisable after 12 months of issue. These options expire after 3 years. The closing market price at the date of exercise was A$0.99.  


The options exercised by both H S Bottomley and C N Cowden during the year were issued on 08 December 2005. The value of the options as at grant date is determined internally using the Black and Scholes Pricing Model and are included in the remuneration on a proportionate basis from grant date to vesting date. These options vest and are exercisable over a period of 12 months, with 50% vesting and exercisable after 6 months (08 June 2006) and the other 50% vesting and exercisable after 12 months of issue (08 December 2006). These options expire after 3 years. The closing market price at the date of exercise was A$0.81 for H S Bottomley and A$0.72 for C N Cowden. At the date of exercise, a total of 1,000,000 shares were issued and allotted at a price of A$0.4355 per share. No amount is unpaid on these shares. 


Value of Director and senior management Options Granted, Exercised and Lapsed During the Year


The following table shows the value of Director and senior management options granted, exercised and lapsed during the year:-


Name
 
Options Granted
Options Exercised
Options Lapsed
Value of Options Included in Remuneration for the Year
(1)
Percentage of Total Remuneration for the Year that Consists of Options
 
Value at Grant Date
Value at Exercise Date
Value at Time of Lapse(2)
 
A$
A$
A$
A$
%
S El-Raghy
-
-
-
-
-
J El-Raghy
-
-
-
-
-
C N Cowden
-
360,000
-
-
-
T G Elder
-
-
435,000
-
-
G B Speechly
-
-
-
-
-
H S Bottomley
-
405,000
-
-
-
T Schultz
378,655
-
-
291,709
41.2%
G Bowker
-
-
-
-
-
M Di Silvio
78,577
-
-
72,442
18.5%
M Smith
-
495,000
495,000
-
-
H Brown
-
-
-
61,888
26.2%


(1) The value of options granted during the period is recognised in compensation over the vesting period of the grant, in accordance with Australian Accounting Standards.

(2) The value of options lapsing during the period due to failure to satisfy a vesting condition is determined on the assumption that the vesting condition had been satisfied.








directors' SHAREHOLDINGS


The relevant interest of each Director in the share capital of the Company shown in the Register of Directors' Shareholdings as at the date of this report are:-


Director

No. of Fully paid ordinary shares 

No. of share options 

S El-Raghy

*78,235,754

-

J El-Raghy

*79,185,754

-

C Cowden

1,203,626

-

G Speechly

250,000

-

T Elder

250,000

-

H Bottomley

2,900,000

-

  T Schultz

-

1,000,000

  G Bowker

-

-

*The total shares held by Mr S El-Raghy and Mr J El-Raghy arise due to them both having a controlling interest in the securities of the following entities:

- Nordana Pty Ltd 4,990,668 shares

- Nordana Pty Ltd <Super Fund A/C> 17,595,714 shares

- El-Raghy Kriewaldt Pty Ltd 55,299,372 shares

- S & M El-Raghy <The El-Raghy Family Account> 350,000 shares

The balance of 950,000 shares are held by Mr J El-Raghy being a director of Montana Realty Pty Ltd <Super Fund A/C>


Since the end of the previous financial year, no Director of the Company has received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of remuneration received or due and receivable by Directors shown in the consolidated accounts) because of a contract made by the Company, its controlled entities or a related body corporate with the Director or with a firm of which the Director is a member, or with an entity in which the Director has a substantial interest. 


AUDITOR'S INDEPENDENCE DECLARATION 


The Auditor's Independence Declaration is included on page 50 of the financial report.


  Non-audit services


Tax and due diligence services were provided by Deloitte Touche Tohmatsu during the year. The Audit Committee is satisfied that the provision of non-audit services, during the year, by the auditor (or by another person or firm on the auditor's behalf) is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The Audit Committee is satisfied that the services provided did not compromise the external auditor's independence for the following reasons:- 


  • all non-audit services have been reviewed by the Audit Committee to ensure they do not adversely affect the integrity and objectivity of the auditor; and
  • none of the audit services undermine the general principles relating to auditor independence as set out in the Code of Conduct - APES 110 Code of Ethics for Professional Accountants, issued by the Accounting Professional & Ethics Standards Board, including reviewing or auditing the auditor's own work, acting in a management or decision making capacity for the Company or jointly sharing economic risks and rewards. 


Details of amounts paid or payable to the auditor for non-audit services provided during the year by the auditor are outlined in Note 23 to the financial statements. 


This directors' report is signed in accordance with a resolution of the directors made pursuant to s. 298(2) of the Corporations Act 2001.


On behalf of the Directors






__________________________

Sami El-Raghy 

Chairman


Perth, 14 September 2009

 

 

 


MANAGEMENT DISCUSSION & 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 Directors' Report and the audited Financial Report for the year ended 30 June 2009. The effective date of this MD&A is 14 September 2009.


The financial information presented in this MD&A has been prepared in accordance with Australian Accounting Standards and Interpretations, other mandatory professional reporting requirements and the Corporations Act 2001. 


In addition to these Australian requirements, further information has been included in the Consolidated Financial Statements for the year ended 30 June 2009 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 other public announcements and the Company's Annual Information Form, is available at www.centamin.com and www.sedar.com. 


All amounts in this MD&A are expressed in United States 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.


GENERAL


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, construction commenced July 2007 with first gold production occurring in the second quarter of 2009.


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. An update on progress to date is contained within the Review of Operations section of the 2009 Annual Report.


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.


  HIGHLIGHTS FOR THE YEAR


The Company's highlights for the year were:


Construction & Development


  • The first gold pour was achieved from the Sukari Gold Project on 26 June 2009. Stage 1 construction and commissioning activities progressed well throughout the financial year. Stage 1 commissioning is currently in various stages of progress and Stage 2 commissioning is programmed for completion at the end of 2009.


Exploration


  • The Sukari mineral resource was upgraded to 9.91 million ounces of gold Measured and Indicated, plus 3.3 million ounces of gold Inferred at a 0.5g/t cut off grade. An Increase of 16% or 1,350,000 ounces in Measured and Indicated resources compared to last financial year. Measured and Indicated resources account for 75% of the total resource.
  • In April 2009, the Company announced that the total reserves had increased to 6.4 million ounces, an increase of 2.7 million ounces (72%) from the previously reported 3.7 million ounces as announced in March 2007. The new mineral reserves are based on drilling up to 25 January 2009 and utilized a gold price of US$700 per ounce.


Open Pit Mine Production


  • Following the award of blasting permits in early 2009, mining operations commenced in February 2009, focussing on Stage 1 (Amun) and Stage 2 (Ra) zones for a total movement of 2.6 million bank cubic metres of material. Additional mining fleet comprising five 785C Caterpillar dump trucks and one RH120E O&K excavator were delivered and commissioned on site, allowing for a sustained increase in mining operations throughout the second half of the year. 


Underground Development


  • Following completion of underground mining feasibility studies during 2009, negotiations with several underground mining contractors took place during the course of the year.  Centamin announced on 03 April 2009 that it had issued a letter of intent to Barminco, a specialised underground mining contractor based in Australia.
  • Mobilisation of initial underground mining fleet and contractor personnel was completed in June. Site works have commenced with electrical power line and other support services being finalised ahead of portal construction which commenced in July 2009.


Corporate


  • In January 2009, the Company entered into a bought deal agreement with a syndicate of underwriters to buy 106,152,200 ordinary shares and sell them to the public at a price of C$0.65 per Ordinary Share. The gross proceeds raised from the offering was C$69,000,230. 

  • On 25 March 2009, the Company accepted a letter of offer (the 'Offer') from Macquarie Bank Limited ('MBL') pursuant to which MBL agreed to provide a corporate loan facility of up to US$25 million (the 'Facility'). The Company advised that the Facility was to be made available, however at that point would remain undrawn. The Company announced its intention to fund the development of the Sukari Gold Project out of existing cash resources and internally generated cash flow however the Facility provided the Company with access to additional funds at a low cost for future use, if required. The Facility is subject to final documentation being agreed and drawdown on the Facility was subject to terms and conditions. Under the terms of the Offer, the Facility will be available for drawdown by Centamin until 31 December 2009 at which point any undrawn funds shall be withdrawn. 

  • On 02 July 2009, the Company announced that it had attained subscriptions for a private placement of 19 million ordinary shares at an offering price of C$1.56 per ordinary share, raising gross proceeds of C$29.6 million (the 'Offering'). The Company advised that the Offer closed on 16 July 2009.


  RESULTS OF OPERATIONS


The Company recorded a loss for the year primarily due to the negative effect of foreign exchange rate movements. The results for the year reflect only corporate activity with all Sukari and exploration related expenditure being capitalised according to the Company's accounting policies.


Selected Financial Information


The table below sets forth selected financial data relating to the Company's years ended 30 June 2009, 30 June 2008 and 30 June 2007. This financial data is derived from the Company's audited consolidated financial statements.


Consolidated Income Statement

Year ended 

30 June 2009

Year ended 

30 June 2008

Year ended 

30 June 2007


$US'000

$US'000

$US'000





Revenue

2,893

6,789

2,815

Other income

12

202

443





Foreign exchange (loss)/gain

(19,284)

3,427

9,655

General and administration

(2,142)

(3,432)

(2,263)

Depreciation

(544)

(309)

(384)

Share based payments

(3,206)

(2,030)

(3,377)





 (Loss)/ Profit before income tax

(22,271)

4,647

6,889

Tax income/(expense)

169

(444)

-





Net (loss)/ profit for the period

(22,102)

4,203

6,889





(Loss)/Earnings per share




- Basic (cents per share)

(2.40)

0.51

1.11

- Diluted (cents per share)

(2.40)

0.51

1.10



Revenue comprises interest revenue received on the Company's available cash on hand, working capital balances and term deposit amounts. Interest revenue is lower than for the period last year due to lower average cash holdings for the period in 2009, coupled with lower bank interest rates.


Foreign exchange loss is attributable to negative exchange rate movements during the period due to the effect of the significant deterioration in the Canadian Dollar against the United States Dollar during the first half of this financial year. More recently, the majority of the Company's cash balances are denominated in Australian and United States Dollars in line with forecast expenditure trends for these currencies. 


General and administration expenses for 2009 are lower compared to the same period in 2008 due to a $926,000 project finance and due diligence fee in 2008 where the Company did not proceed with external project debt finance for the Sukari Gold Project.


Share based payments have increased in the 2009 year compared to the 2008 year due to an increase in the number of options and warrants granted. Share based payments reported relate to the requirement to recognise the cost of granting options (or warrants) to directors, company executives and employees under the Share Option Plan or for payment for services rendered under a contractual arrangement with a supplier which are subsequently approved at a general meeting of the Company's shareholders. Recognition of the cost is done under Australia Accounting Standards over the option (or warrant) vesting period. 


The loss after tax of the consolidated entity for the twelve months ended 30 June 2009 was $22,102,000 and is a significant reduction on the 30 June 2008 profit figure primarily due to the foreign exchange loss incurred during the year. 






Consolidated Balance Sheets

Year ended 

30 June 2009

Year ended 

30 June 2008

Year ended 

30 June 2007


$US '000

$US '000

$US '000





Total current assets

73,364

185,529

136,736

Total non-current assets

333,058

174,968

81,983

Total assets

406,422

360,497

218,719





Total current liabilities

8,504

6,762

6,368

Total non-current liabilities

1,736

778

150

Total liabilities

10,240

7,540

6,518

Net assets

396,182

352,957

212,201


Current assets for the 2009 year are lower than previous years due to the consumption of funds made in favour of continued investment in the development and construction of the Sukari Gold Project.


Non-current assets have increased throughout 2009 as a result of net expenditure incurred for construction and development related to the Sukari project and for ongoing exploration resource drilling at Sukari. The Company's accounting policy is to capitalise expenditure of this nature under the category of Exploration, Evaluation & Development.


Current liabilities have increased marginally during 2009 compared to the same period last year, representing additional creditor commitments associated with the development of the Sukari Gold Project.


Non-current liabilities as at 30 June 2008 have increased from that reported last financial year end due to the continued provision for restoration and rehabilitation.


Consolidated Statement of Changes in Equity

Year ended 

30 June 2009

Year ended 

30 June 2008


$US'000

$US'000

Total equity at beginning of period

352,957

212,201

Movement in issued equity

63,938

135,033

Movement in reserves

1,389

1,520

Profit/(Loss) for the period

(22,102)

4,203

Total equity at end of period

396,182

352,957


Issued equity increased during the 2009 year driven by an equity raising completed in February 2009 and the exercising of employee options previously granted under the employee share options scheme. During February 2009, the Company announced that a total of 106,154,200 ordinary shares were sold to a syndicate of underwriters led by Thomas Weisel Partners at C$0.65 per share to raise gross proceeds of C$69,000,230.


Reserves have increased due to the effect of expensing share based option payments.


Profit for the year ended 30 June 2009 is analysed under the section Consolidated Income Statement.


Consolidated Cashflow Statements

Year ended 

30 June 2009

Year ended 

30 June 2008


$US'000

$US'000

Net cash flow from operating activities

(8,555)

  (9,251)

Net cash flow from investing activities

(169,511)

  (83,297)

Net cash flow from financing activities

58,186

  134,523 

Net increase/(decrease) in cash and cash equivalents

(119,880)

  41,975 




Cash and cash equivalents at the beginning of the financial period

182,329

  136,501 




Effects of exchange rate changes 

6,160

  3,853 

Cash and cash equivalents at the end of the financial period

68,609

  182,329 


The net cash flow from operating activities for the year ended 30 June 2009 is attributable to payments for exploration expenditure, corporate administration and compliance related costs offset by interest revenue received.


The net cash flow from investing activities for the year ended 30 June 2009 is attributable to Sukari development expenditure which includes acquisition of mining fleet, preproduction overhead and materials cost. 


The net cash flow from financing activities for the year ended 30 June 2008 is attributable to equity raised during February 2009, offset by costs of equity raising, and the conversion of employee share options.


SELECTED QUARTERLY INFORMATION

The following table sets out selected financial information for and as of the end of the quarterly periods as shown in the table. Information for the quarter ended 30 June 2009 is derived from management-prepared unaudited financial statements of the Company.


Three months ended

30 Jun 09

31 Mar 09

31 Dec 08

30 Sep 08

30 Jun 08

31 Mar 08

31 Dec 07

30 Sep 07

Income ($USD'000)

414

385

998

1,108

887

2,611

1,777

1,513

Net income/(loss) ($USD'000)

5,302

(2,970)

(21,225)

(3,209)

2,971

(4,430)

132

5,530

Net income/(loss) c.p.s **

0.53

(3.05)

(2.78)

(0.36)

0.36

(0.55)

0.01

0.73

Net income/(loss) c.p.s - diluted

0.53

(3.05)

(2.78)

(0.36)

0.36

(0.55)

0.01

0.71

Net assets ($USD'000)

396,182

383,385

329,694

350,883

352,957

348,960

352,273

218,586

** Cents per share


Revenue for the three months ended 30 June 2009 comprises interest revenue applicable on the Company's available cash and working capital balances and term deposit amounts. The amount reported in the March and June quarters are lower than previous quarters reflecting lower short term interest rates received and a reduction in the average cash balance.


Net income for the three months ended 30 June 2009 is a significant improvement against previous quarters of the 2009 financial year and is primarily due to the positive effect of foreign exchange gains received during the quarter.


LIQUIDITY AND CAPITAL RESOURCES


At 30 June 2009, the Company had cash and cash equivalents of $68,609,000 compared to $182,329,000 at 30 June 2008. The majority of funds have been invested in short term deposits.  The decrease in cash position is due to the continued development and construction of the Sukari Gold Project.


The following is a summary of the Company's outstanding commitments as at 30 June 2009:


Payments due

Total


US$'000

Less than 1 year

US$'000

1 to 5 years


US$'000

After 5 years 


US$'000

Employee entitlements

736

606

130

-

Creditors

7,454

7,454

-


Provision for Rehabilitation

1,606

-

-

1,606

Current tax liabilities

444

444

-

-

Total commitments

10,240

8,504

130

1,606


The Company's financial commitments are limited to discretionary spending on work programmes at the Sukari Project, administration expenditure at the Egyptian and Australia office locations and for general working capital purposes.


The Company entered into an agreement with Macquarie Bank Limited ('MBL') to provide a corporate loan facility of up to US$25 million. The facility remains subject to final documentation and remains undrawn to date. In return for entering into this agreement, Centamin issued MBL with 1,630,150 unquoted share options, exercisable at a price of A$1.20 and expiring 31 December 2012. 


Other than described above the company has no other off balance sheet arrangements.


OUTSTANDING SHARE INFORMATION


As at 14 September 2009, the Company had 1,013,739,903 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:



As at 14 September 2009 

Number



Shares on Issue

1,013,739,903

Options issued but not exercised

10,060,150

Warrants issued but not exercised

9,028,430


1,032,828,483


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


In the application of the Group's accounting policies, which are described in Note 3, management is required to make judgments, estimates, and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstance, the results of which form the basis of making the judgments. Actual results may differ from these estimates.


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.


The following are the critical judgments that management has made in the process of applying the Group's accounting policies and that have the most significant effect on the amounts recognised in the financial statements:


Impairment of Inter Company Loans


The Company made loans and advances to its subsidiaries as detailed in Note 9 to the financial statements. These loans and advances were established for the purpose of routing funds out of Australia to fund exploration and resource development in Egypt. The recovery of these loans and advances is entirely dependent upon returns from the successful development of mining operations in Egypt or from surpluses from the sale of either the subsidiary companies or their projects.


Recovery of Capitalised Exploration Evaluation and Development Expenditure


The Company capitalises exploration, evaluation and development expenditure incurred on ongoing projects. The recoverability of this capitalised exploration expenditure is entirely dependent upon returns from the successful development of mining operations or from surpluses from the sale of the projects or the subsidiary companies that control the projects. At the point that it is determined that any capitalised exploration expenditure is definitely not recoverable, it is written off.


INTERNAL CONTROLS


Disclosure controls and procedures are designed to provide reasonable assurance that all relevant information is gathered and reported to management, including the CEO and CFO, on a timely basis so that appropriate decisions can be made regarding public disclosure. Management, with the participation of the certifying officers, has evaluated the effectiveness of the design and operation, as of 30 June 2009, of the Company's disclosure controls and procedures (as defined by the Canadian Securities Administrators). Based on that evaluation, the certifying officers have concluded that such disclosure controls and procedures are effective and designed to ensure that material information relating to the Company and its subsidiaries is known to them by others within those entities. 


Internal controls over financial reporting are designed to provide reasonable assurance regarding the reliability of our financial reporting and compliance with Canadian generally accepted accounting principles in our financial statements. Management has evaluated the design of internal control over financial reporting and has concluded that such internal controls over financial reporting are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in Canada. In addition, there have been no changes in the Company's internal control over financial reporting during the year ended 30 June 2009 that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.


FINANCIAL INSTRUMENTS


At 30 June 2009, 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 United States dollars. The Company has no significant monetary foreign currency assets and liabilities apart from Canadian dollar and United States dollar 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.


FOREIGN INVESTMENT IN EGYPT


Foreign investments in the petroleum and mining sectors in Egypt are governed by individual production sharing agreements (concession agreements) between foreign companies and the Ministry for Petroleum and Mineral Resources or EMRA (as the case may be) and are individual Acts of Parliament.


Title, exploitation and development rights to the Sukari Project are granted under the terms of the Concession Agreement promulgated as Law No. 222 of 1994, signed on 29 January 1995 and effective from 13 June 1995. The Concession Agreement was issued by way of Presidential Decree after the approval of the People's Assembly in accordance with the Egyptian Constitution and Law No. 61 of 1958. The Concession Agreement was issued in accordance with the Egyptian Mines and Quarries Law No. 86 of 1956 which allows for the Ministry to grant the right to parties to explore and mine for minerals in Egypt. 


While the Company will be the first foreign company to develop a modern large-scale gold mine in Egypt there is significant foreign investment in the petroleum sector. Several large multinational oil and gas companies operate successfully in Egypt, some of which have long histories in the country and have dedicated significant amounts of capital. The Company believes that the successful track record of foreign investment established by these companies in the petroleum sector is an important indication of the ability of foreign companies to attract financing and receive development approvals for the construction of major projects in Egypt. 


OVERVIEW OF SUKARI CONCESSION AGREEMENT


Through its wholly owned subsidiary, Pharaoh Gold Mines NL ('PGM'), the Company has entered into a Concession Agreement with EGSMA (now Egyptian Mineral Resource Authority, or 'EMRA') and the Arab Republic of Egypt granting PGM and EMRA the right to explore, develop, mine and sell gold and associated minerals in specific concession areas located in the Eastern Desert of Egypt. The Concession Agreement came into effect under Egyptian law on 13 June 1995.


In accordance with the terms of the Concession Agreement, PGM undertook a feasibility study to support its application to EMRA for a 'Commercial Discovery' (within the meaning of the Concession Agreement) with respect to the Sukari Project. On 09 November 2001, EMRA notified PGM that the feasibility submission had demonstrated that a Commercial Discovery had been made at the Sukari Project. As a result, the Concession Agreement was converted from exploration to exploitation status and PGM, together with EMRA, were granted an Exploitation Lease over 160 km2 surrounding the Sukari Project site. The Exploitation Lease was signed by PGM, EMRA and the Egyptian Minister of Petroleum and gives tenure for a period of 30 years, commencing 24 May 2005 and extendable by PGM for an additional 30 years upon PGM providing reasonable commercial justification. The Exploitation Lease will lapse if production of gold is not achieved within five years of the signing date.


Following demonstration of a Commercial Discovery, PGM and EMRA were required to establish an operating company owned 50% by each party (the 'Operating Company').The Operating Company, named Sukari Gold Mining Company, was incorporated under the laws of Egypt on 27 March 2006. The Operating Company was formed to conduct exploration, development and exploitation in accordance with the Concession Agreement.  The registered office of the Operating Company is at 361 El-Horreya Road, Sedi Gaber, Alexandria, Egypt.


The ARE is entitled to a royalty of 3% of net sales revenue from the sale of gold and associated minerals from the Sukari Project, payable in cash in each calendar half year. Net sales revenue is calculated by deducting from sales revenue all shipping, insurance, smelting and refining costs, delivery costs not payable by customers, all commercial discounts and all penalties (relating to the quality of gold and associated minerals shipped).  


Under the Concession Agreement, PGM solely funds the Operating Company but is entitled to recover the following costs and expenses payable from sales revenue (excluding the royalty payable to ARE):


  • all current operating expenses incurred and paid after the initial commercial production; 

  • exploration costs, including those accumulated to the commencement of commercial production (at the rate of 33.3% per annum); and 

  • exploitation capital costs, including those accumulated prior to the commencement of commercial production (at the rate of 33.3% per annum).  


Recovery of capital costs shall include interest on a maximum of 50% of investment borrowed from financial institutions not affiliated with PGM provided that PGM shall use best efforts to obtain the most favourable rate of interest, not to exceed LIBOR + 1%. If costs recoverable by PGM exceed the sales revenue (excluding any royalty payable to ARE) in any financial year, the excess is carried forward for recovery in the next financial year or years until fully recovered, but in no case after the termination of the Concession Agreement.


After deduction of the royalty payments and recoverable expenses by PGM, the remainder of the sales revenue from the Sukari Project will be shared equally by PGM and EMRA except that for the first and second years in which there are net proceeds for the entire year, an additional 10% of such proceeds will be paid to PGM as an incentive (i.e. 60% to PGM and 40% to EMRA), and for each of the next two years in which there are net proceeds for the entire year, an additional 5% of such proceeds will be paid to PGM (i.e. 55% to PGM and 45% to EMRA).  


In addition, under the Concession Agreement, certain tax exemptions have been granted, including the following:


  • commencing on the date of commercial production, PGM will be entitled to a 15 year exemption from any taxes imposed by the Egyptian government. The parties intend that the Operating Company will in due course file an application to extend the tax-free period for a further 15 years. The extension of tax-free period requires that certain activities in remote areas of the lands under the Concession Area have been programmed and agreed by all parties;

  • PGM, EMRA and the Operating Company are exempt from custom taxes and duties with respect to the importation of machinery, equipment and consumable items required for the purpose of exploration and mining activities at the Sukari Project;

  • PGM, EMRA, the Operating Company and their respective buyers will be exempt from any duties or taxes on the export of gold and associated minerals produced from the Sukari Project;

  • PGM will at all times be free to transfer in US dollars or other freely convertible foreign currency any cash of PGM representing its share of net proceeds and recovery of costs, without any Egyptian government limitation, tax or duty; and

  • PGM's contractors and sub-contractors are entitled to import machinery, equipment and consumable items under the 'Temporary Release System' which provides exemption from Egyptian customs duty.


Under the Concession Agreement, all land in the Sukari Project shall be the property of EMRA as soon as it is purchased. The title to the fixed and movable assets are to be transferred by PGM to EMRA as soon as their costs are recovered by PGM, with PGM being entitled to use all fixed and movable assets during the term of the Exploitation Lease and any extensions thereof.


In case of national emergency, due to war or imminent expectation of war or internal causes, ARE may requisition all or part of the production from the areas that are the subject of the Concession Agreement, and require the Operating Company to increase production to the utmost extent. ARE may also requisition the mine itself and, if necessary, related facilities. In the event of any requisition, ARE must indemnify EMRA and PGM for the period during which the requisition is maintained. 


ARE has the right to terminate the Concession Agreement in the following circumstances:


  • PGM has knowingly submitted any material false statements to the Egyptian government;

  • PGM assigns any interest to any unrelated party without the written consent of the Egyptian government;

  • PGM does not comply with any final decision reached as a result of provisions in the Concession Agreement with respect to disputes and arbitration;

  • PGM intentionally extracts any mineral other than gold and associated minerals authorized by the Concession Agreement without the approval of the Egyptian government; or

  • PGM commits any material breach of the Concession Agreement.


If the Egyptian government deems that any one of the foregoing causes exists, the government is required to give PGM 90 days' notice to remedy the defaults. If the default remains unremedied at the expiration of the grace period, the Egyptian government may terminate the Concession Agreement.


RISKS AND UNCERTAINTIES


The operations of the Company are speculative due to the high risk nature of its business which includes the acquisition, financing, exploration, development and operation of mining properties. These risk factors could materially affect the Company's future operations and could cause actual events to differ materially from those described in forward-looking statements relating to the Company.


Calculation of Mineralisation, Resources and Reserves


There is a degree of uncertainty attributable to the calculation of mineralisation, resources and reserves and corresponding grades being mined or dedicated to future production. Until reserves or mineralisation are actually mined and processed, the quantity of mineralisation and reserve grades must be considered estimates only. In addition, the quantity of reserves and mineralisation may vary depending on commodity prices. Any material change in quantity of reserves, mineralisation, grade or stripping ratio may affect the economic viability of a project. In addition, there can be no assurance that recoveries from laboratory tests will be duplicated in tests under on-site conditions or during production.


Infrastructure


Mining, processing, development and exploration activities depend, to one degree or another, on adequate infrastructure. Reliable roads, bridges and port facilities are important determinants that affect capital and operating costs. Unusual or infrequent weather phenomena, sabotage, government or other interference in the maintenance or provision of such infrastructure could adversely affect the Company's activities and profitability.


Title Matters


Any changes in the laws of Egypt relating to mining could materially affect the rights and title to the interests held there by the Company. No assurance can be given that applicable governments will not revoke or significantly alter the conditions of the applicable exploration and mining authorizations nor that such exploration and mining authorizations will not be challenged or impugned by third parties.


Mineral Prices


Factors such as inflation, foreign currency fluctuation, interest rates, supply and demand and industrial disruption have an adverse impact on operating costs, commodity prices and stock market prices and on the Company's ability to fund its activities. The Company's possible revenues and share price can be affected by these and other factors which are beyond the control of the Company. The market price of minerals, including industrial minerals, is volatile and cannot be controlled. The Company's ongoing operations are influenced by fluctuation in the world gold price. If the price of gold or other minerals should drop significantly, the economic prospects of the Company's current project could be significantly reduced or rendered uneconomic. There is no assurance that, even if commercial quantities of ore are discovered, a profitable market will continue to exist for the sale of products from that ore. Factors beyond the control of the Company may affect the marketability of any minerals discovered. Mineral prices have fluctuated widely, particularly in recent years. The marketability of minerals is also affected by numerous other factors beyond the control of the Company, including government regulations relating to royalties, allowable production and importing and exporting of minerals, the effect of which cannot be accurately predicted.





Funding Requirements


Mining exploration and development involves financial risk and capital investment. The capital development of the Sukari Gold Project and the continuance of the Company's development and exploration activities depend upon the Company's ability to generate positive cash flows, obtain financing through the joint venturing of projects, private and public equity project financing, debt and/or other means. There is no assurance that the Company will be successful in obtaining additional financing on a timely basis, or at all.


Uninsured Risks


The mining business is subject to a number of risks and hazards including environmental hazards, industrial accidents, labour disputes, encountering unusual or unexpected geologic formations or other geological or grade problems, encountering unanticipated ground or water conditions, cave-ins, pit wall failures, flooding, rock bursts, periodic interruptions due to inclement or hazardous weather conditions and other acts of God. Such risks could result in damage to, or destruction of, mineral properties or facilities, personal injury or death, environmental damage, delays in mining, monetary losses and possible legal liability. The Company maintains insurance against certain risks associated with its business in amounts that it believes to be reasonable. Such insurance, however, contains exclusions and limitations on coverage. There can be no assurance that such insurance will continue to be available, will be available at economically acceptable premiums or will be adequate to cover any resulting claim.


Foreign Operations


Operations, development and exploration activities carried out by the Company are or may be affected to varying degrees by taxes and government regulations relating to such matters as environmental protection, land use, water use, health, safety, labor, restrictions on production, price controls, currency remittance, maintenance of mineral rights, mineral tenure, and expropriation of property. There is no assurance that future changes in taxes or such regulation in the various jurisdictions in which the Company operates will not adversely affect the Company's operations. Industrial disruptions, work stoppages and accidents in the course of the Company's operations can result in future production losses and delays, which may adversely affect future profitability. The Company's principal asset is held outside of Australia in Egypt, North Africa. Although the operating environment in Egypt is considered favorable compared to that in other developing countries there are still political risks. The risks include, but are not limited to, terrorism, hostage taking, military repression, expropriation, extreme fluctuations in currency exchange rates, high rates of inflation and labor unrest. Changes in mining or investment policies or shifts in political attitudes may also adversely affect the Company's business. Operations may be affected in varying degrees by government regulations with respect to, but not limited to, restrictions on production, price controls, export controls, currency remittance, income taxes, maintenance of claims, environmental legislation, expropriation of property, land use, land claims of local people, water use and safety. The effect of these factors cannot be accurately predicted.


Exploration and Development Risks


The successful exploration and development of mineral properties is speculative and subject to a number of uncertainties which even a combination of careful evaluation, experience and knowledge may not eliminate. There is no certainty that the expenditures made or to be made by the Company in the exploration and development of its mineral properties or properties in which it has an interest will result in the discovery of mineralized materials in commercial quantities. Most exploration projects do not result in the discovery of commercially mineable deposits. While discovery of a base metal or precious metal bearing structure may result in substantial rewards, few properties that are explored are ultimately developed into producing mines. Major expenses may be required to establish reserves by drilling and to construct mining and processing facilities at a site. It is impossible to ensure that exploration programs carried out by the Company will result in profitable commercial mining operations. The Company's operations are subject to all of the hazards and risks normally incident to mineral exploration, mine development and operation, any of which could result in damage to life or property, environmental damage and possible legal liability for any or all damage. Hazards such as unusual or unexpected formations, pressures or other conditions may also be encountered.


Environmental and Other Regulatory Requirements


The current or future operations of the Company, including development activities and, if warranted, commencement of production on properties in which it has an interest, require permits from various governmental authorities, and such operations are and will be governed by laws and regulations governing prospecting, development, mining, production, exports, taxes, labour standards, occupational health and safety, waste disposal, toxic substances, land use, environmental protection, mine safety and other matters. Companies engaged in the development and operation of mines and related facilities generally experience increased costs and delays in production and other schedules as a result of the need to comply with applicable laws, regulations and permits. The Company believes it is in substantial compliance with all material laws and regulations that currently apply to its activities. However, there can be no assurance that all permits which the Company may require for the conduct of mineral exploration and development can be obtained or maintained on reasonable terms or that such laws and regulations would not have an adverse effect on any such mineral exploration or development which the Company might undertake. Amendments to current laws, regulations and permits governing operations and activities of mineral exploration companies, or more stringent interpretation, implementation or enforcement thereof, could have a material adverse impact on the Company.


Mining and Investment Policies


Changes in mining or investment policies or shifts in political attitude may adversely affect the Company's business. Operations may be affected in varying degrees by government regulations with respect to restrictions on production, price controls, export controls, income taxes, expropriation of property, maintenance of claims, environmental legislation, land use, land claims of local people, water use and safety regulations. The effect of these factors cannot be accurately predicted.


Hedging and Foreign Exchange


While hedging of commodity prices and exchange rates is possible, there is no guarantee that appropriate hedging will be available at an acceptable cost should the Company choose or need to enter into these types of transactions.


RELATED PARTY TRANSACTIONS


The related party transactions for financial year ended 30 June 2009 are summarised below:


Mr S El-Raghy and Mr J El-Raghy are also directors and shareholders of El-Raghy Kriewaldt Pty Ltd ('El-Raghy Kriewaldt'). El-Raghy Kriewaldt provides office premises to the Company. All dealings with El-Raghy Kriewaldt are in the ordinary course of business and on normal terms and conditions. Rent and office outgoings paid to El-Raghy Kriewaldt during the year were A$64,475 (2008: A$62,118). 


Mr S El-Raghy provides office premises in Alexandria, Egypt to the Company. All dealings with Mr S El-Raghy are in the ordinary course of business and on normal terms and conditions. Rent and office outgoings paid to Mr S El-Raghy during the year were GBP7,800 (2008: GBP7,800).


A director of the Company, Mr C Cowden has an interest as a director and shareholder of Cowden Limited, Insurance Brokers. This Company provides insurance broking services to the Company. All dealings with this Company are in the ordinary course of business and on normal terms and conditions. Cowden Limited was paid A$51,977 during the year (2008: A$32,994) for these services. In addition, amounts of A$320,428 (2008: A$203,259) were paid to Cowden Limited to be passed on to underwriters for premiums during the year.


A director of the Company, Mr G B Speechly is also a director and shareholder of Speechly Mining Pty Ltd, a mining consultancy company. During the financial year, no payment was made to Speechly Mining Pty Ltd for work on the Sukari underground potential (2008: A$91,881). 


For further details of the related party transactions see Note 31 of the Notes to the financial statements.


SUBSEQUENT EVENTS


On 02 July 2009, the Company announced that it had attained subscriptions for a private placement of 19 million ordinary shares at an offering price of C$1.56 per ordinary share, raising gross proceeds of C$29.6 million. The Company advised that the Offer closed on 16 July 2009.


On 04 August 2009, Centamin announced its intention to apply for admission to the Official List of the UK Listing Authority and to trade on the London Stock Exchange's main market for listed securities. Work has commenced on the listing process and it is anticipated that this work and a move to the main board of the LSE will be concluded before the end of 2009.








Deloitte Touche Tohmatsu
ABN 74 490 121 060

Woodside Plaza
Level 14
240 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia

DX 206
Tel:  +61 (0) 8 9365 7000
Fax:  +61 (0) 8 9365 7001
www.deloitte.com.au




The Board of Directors

Centamin Egypt Limited

57 Kishorn Road

Mt Pleasant WA 6153


14 September 2009



Dear Board Members

Centamin Egypt Limited


In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of Centamin Egypt Limited.


As lead audit partner for the audit of the financial statements of Centamin Egypt Limited for the financial year ended 30 June 2009, I declare that to the best of my knowledge and belief, there have been no contraventions of:

 

(i)     the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii)    any applicable code of professional conduct in relation to the audit. 
 

 

Yours sincerely




DELOITTE TOUCHE TOHMATSU




Ross Jerrard

Partner 

Chartered Accountants 






CORPORATE GOVERNANCE STATEMENT 



The Board of Directors of Centamin Egypt Limited is responsible for the corporate governance of the consolidated entity. The Board guides and monitors the business and affairs of Centamin Egypt Limited on behalf of the shareholders by whom they are elected and to whom they are accountable.


Unless disclosed below, the best practice recommendations of the ASX Corporate Governance Council,  the Financial Reporting Council's Combined Code On Corporate Governance ('Combined Code') and the best practice recommendations of the Toronto Stock Exchange and those prescribed under National Policy 58-201 - Corporate Governance Guidelines ('NP 58-201') have been applied for the entire financial year ended 30 June 2009. Where there has been any variation from the recommendations, those practices continue to be the subject of the scrutiny of the full Board.


The Company has announced that it intends to move from AIM to the Official List of the Financial Services Authority and to trading on the London Stock Exchange Plc's main market for listed securities (together the 'Main Market') and accordingly proposes to make certain changes noted below, to make its corporate governance policies and practices more consistent with the Combined Code.


Copies of the current Board and Committee Charters and Policies are available on the Company's website www.centamin.com.  


Board Composition:


The Board comprises eight Directors, of whom the Chairman, the Managing Director/CEO and the Executive Director of Operations are the only Executive Directors. The ASX Listing Rules, the Combined Code on Corporate Governance and NP 58-201 favour that the Chairman be an independent Director. However, as the Executive Chairman Mr Sami El-Raghy has been primarily based in Egypt during the Company's development, where his knowledge of the Company's project, the Arabic language, culture and government contacts are invaluable, the Board believes that it is appropriate in the Company's circumstances that his role and status continues to be both as an Executive and as Chairman.


The period of office held, skills, experience and expertise relevant to the position of each Director who is in office at the date of the annual report, their attendances at meetings and their term of office are detailed in the Directors' Report.  


The names of the Directors of the Company in office at the date of this statement are:


Name

Position

Committees

Sami El-Raghy

Chairman - Executive Director

-

Josef El-Raghy

Managing Director/CEO

-

Trevor Schultz

Executive Director of Operations

-

G Brian Speechly

Non Executive Director

-

Colin N Cowden

Independent Non Executive Director

Audit Committee

Nomination and Remuneration Committee

Thomas G Elder

Independent Non Executive Director

Nomination and Remuneration Committee

Compliance/Corporate Governance Committee

H Stuart Bottomley

Independent Non Executive Director

(and Senior Independent Director)

Audit Committee

Compliance/Corporate Governance Committee

G Robert T Bowker

Independent Non Executive Director

Audit Committee

Nomination and Remuneration Committee

Compliance/Corporate Governance Committee


Sami El-Raghy, Josef El-Raghy, Colin Cowden and Brian Speechly are also Directors of the wholly owned subsidiary companies, Pharaoh Gold Mines NL, Viking Resources Ltd, and North African Resources NL. Josef El-Raghy and Tom Elder are also Directors of the fully owned subsidiary, Centamin Limited. External directorships of the Company's directors are detailed in the Directors' Report.  


Non executive directors have the right to seek independent professional advice in the furtherance of their duties as Directors, at the Company's expense. Written approval must be obtained from the Managing Director prior to incurring expenses on behalf of the Company.


When determining whether a Director is independent, the Board has established a Directors' Test of Independence Policy, which is based predominantly on the definition of independence as defined in Canadian Securities Administrators' Multilateral Instrument 52-110 ('MI 52-110'), The criteria in MI 52-110 are mandatory and are more stringent in certain respects than the independence criteria suggested by the ASX Corporate Governance Council or the Combined Code. Based on this Policy, half of the Board are considered to be independent non executive directors. Though Mr Speechly performed work for the Company on the underground potential of the Sukari Gold Project during the 2008 financial year, the Board believes that Mr Speechly still exerts independent judgement when carrying out his responsibilities even though he does not necessarily fit the definition of 'independent' because the fees Mr Speechly received for the work he performed exceeded the threshold defined in MI 52-110. The Board considers that Mr Cowden is independent, notwithstanding his tenure on the Board would potentially be a relevant factor for determining independence under the Combined Code. Furthermore, the Board believes that Mr Cowden's financial expertise and experience provide a valuable contribution to the deliberations and operations of the Board and certain Committees. In addition, the Board considers that Dr Tom Elder and Mr Stuart Bottomley are each independent, notwithstanding circumstances which may appear relevant to determining their independence under the Combined Code, such as their previous participation in the Company's Employee Option Plan, because the Board believes that each of Dr Tom Elder and Mr Stuart Bottomley still exert independent judgment when carrying out their responsibilities as a non-executive director.


The directors are aware of the need for the composition of Board to evolve with the development of Company, and propose to revise the composition of the Board in due course, including the possibility of appointing additional independent non-executive directors.


A copy of the Directors' Test of Independence of Policy is available on the Company's website or upon request. 


Meetings of Independent Directors:


The Board has recently appointed Mr Stuart Bottomley as the Company's Senior Independent Director. He will be responsible for meeting with other non-executive directors and major shareholders on a regular basis. The Company intends to implement regularly scheduled meetings which exclude non-independent directors and members of management, to be chaired by the Senior Independent Director, Mr Bottomley. Although the Company has not implemented formal structures or procedures for the independent functioning of the board of directors, the board of directors believes that it operates independently of management.  


Position Descriptions:


The Company intends to develop, as part of the move to the Main Market of the London Stock Exchange, formal written position descriptions for the Chairman of the board of directors, the Chair of each board committee and the Managing Director/Chief Executive Officer. The roles of Chairman and Managing Director/Chief Executive Officer are however already strictly separated as defined in the Company's Board Charter, which was revised during the year. 


Mandate/Charter of the Board of Directors:

The board of directors supervises the management of the business and affairs of the Company.  The board of directors assumes responsibility for the stewardship of the Company, and the functions the Company has established that are reserved to the Board include:


  • Strategic Planning:  The board of directors regularly reviews and approves strategic plans and initiatives of the Company at board of directors meetings, and otherwise as required.
  • Risk Assessment:  The board of directors has primary responsibility to identify principal risks in the Company's business and ensure the implementation of appropriate systems to manage these risks. See 'Managing Risks' below.
  • Succession Planning:  The board of directors is responsible for succession planning, including the appointment, training and monitoring of senior management.
  • Communications: The board of directors oversees the Company's public communications with shareholders and others interested in the Company.
  • Internal Controls:  The board of directors and the audit committee of the board of directors oversee the Company's internal control and management information systems.


In addition to its general oversight responsibilities, significant transactions out of the ordinary course of the Company's business or which may be material to the Company are considered and approved by the board of directors.  The board of directors generally has at least six regularly scheduled meetings in each financial year.  Additional meetings may be held depending upon opportunities or issues to be dealt with by the Company from time to time.  During the financial year ended 30 June 2009, the board of directors held nine (9) meetings, and considered and passed seventeen (17) circular resolutions pursuant to the Company' Constitution.


A full copy of the Company's Board Charter is available on the Company's website or upon request. 


Orientation and Continuing Education:


The Company's formal orientation or education program for new directors begins with new board members receiving an orientation package which includes reports on operations and results, and public disclosure filings by the Company. Board of directors' meetings are combined with presentations by the Company's management and employees to give the directors additional insight into the Company's business. In addition, management of the Company makes itself available for discussion with all members of the board of directors. New board members are also encouraged to broaden their skills and knowledge by undertaking continuing education. 


Managing risks:


The Board meets regularly to evaluate, control, review and implement the Company's operations and objectives.


Regular controls established by the Board include:    

  • detailed monthly financial reporting;
  • implementation of operating plans, cash flows and budgets by management and Board monitoring of progress against projections; and
  • procedures to allow directors, and management in the furtherance of their duties, to seek independent professional advice via the utilisation of various external technical consultants.


The Board is responsible for reviewing and approving the Company's risk management strategy, policy and key risk parameters, including determining the Group's appetite for country risk and major investment decisions. Management reports to the Board on the Company's key risks and the extent to which it believes these risks are being managed. This is performed on an ad hoc basis. The Board is also responsible for satisfying itself that management has developed and implemented a sound system of risk management and internal control. The Board has delegated oversight of the Risk Management Policy, including review of the effectiveness of the Company's internal control framework and risk management process to the Audit Committee. Management is responsible for designing, implementing, reviewing and providing assurance as to the effectiveness of the Policy. This responsibility includes developing business and functional risk identification, specific risk treatment, controls, monitoring and reporting capability. A standardized approach to risk assessment is used to ensure that risks are consistently assessed and reported to an appropriate level. The Board regularly discusses risks associated with the Company's business and operations along with the Company's risk tolerance. The Company has developed a series of operational risks which the Company believes to be inherent to the Company. These operational risks are summarized in the Management, Discussion and Analysis section of this annual report. Mitigation and optimization strategies are considered equally important in risk management. 


The Risk Management Policy is available on the Company's website or upon request. 


Monitoring of the Board's Performance 


In order to ensure that the Board continues to discharge its responsibilities in an appropriate manner, the performance of all Directors is constantly reviewed by the Chairman. The Company does not presently have a formal process for evaluation of the board, the board members, or board committees, though performance is discussed at board level at least annually. An internal evaluation of the Board and individual directors took place during the year by way of a strategic planning session, attended by all Directors. The Company did not utilize any external search consultancy or open advertising during this process. 


Nomination and Remuneration Committee and policies:


The Company had previously established a Remuneration Committee, however the Committee's Charter was amended during the year to include nomination duties. The newly formed Nomination and Remuneration Committee comprises Dr Tom Elder (Chairman), Mr Colin Cowden and Professor Robert Bowker, all independent Directors of the Company.


The Committee's primary functions are to:- 


(a)       make recommendations to the board on:-
i)             The Company’s remuneration, recruitment, retention, termination, superannuation and incentive policies and procedures for directors and senior executives;
ii)             The Employee Option Plan;
iii)            The development of a process for evaluation of the performance of the board, its committees and directors.
(b)       Review the necessary and desirable competencies, skills, knowledge and experience of Directors;
(c)        Review the board succession plans; and
(d)       Make recommendations for the appointment, re-election and removal of Directors to the Board.
 

The Board believes that whilst the Company has the current number of independent non executive directors located in different jurisdictions (the United Kingdom and Australia), a single committee combining both nomination and remuneration functions, rather than separate committees, is appropriate in the Company's circumstances, as this allows committee meetings to be held in an efficient manner and on a timely basis. Such a combined committee is consistent with Australian corporate governance practices. 


The Nomination and Remuneration Committee establishes guidelines for the future nomination and selection of potential new directors. The full Board (subject to members voting rights in general meeting) is ultimately responsible for selection of new members and has regard to a candidate's experience and competence in areas such as mining, exploration, geology, finance, administration and other areas of relevance that can assist the Company in meeting its corporate objectives and plans.


Under the Company's current Constitution:


  • the maximum number of Directors on the Board is ten;
  • a Director (other than the Managing Director) may not retain office for more than three years without submitting for re-election; 
  • at the Annual General Meeting (AGM) each year effectively one third of the Directors in office (other than the Managing Director) retire by rotation and must seek re-election by shareholders; and
  • any Director appointed by the Board must have their election confirmed by shareholders at the next AGM.


The Company plans to amend its Constitution at the upcoming AGM so that all directors, including the Managing Director/CEO, are subject to re-election at the AGM every three years. 


Non executive directors who have served more than nine years on the Board will be subject to annual re-election at the Company's AGM. Where a non executive director has served six years or longer on the Board, their re-election will be subject to particularly rigorous review and will take into account the need for progressive refreshing of the Board. 


During the year, the Board established a Remuneration Policy which sets out the structure of the remuneration of key senior executives, executive directors, non executive directors, termination, disclosure of remuneration etc. The Board also established a Selection, Appointment and Re-Appointment of Directors Policy which details the procedures for the selection, appointment, re-appointment and evaluation of the Company's directors. The Committee considers both policies before making recommendations to the Board on nomination and remuneration matters. Both Policies, along with the Nomination and Remuneration Committee Charter are available on the Company's website or upon request.


All compensation arrangements for directors and senior executives are determined by the Committee and approved by the Board, after taking into account the current competitive arrangements prevailing in the market. This approach is consistent with the practices of other Australian companies.


The amount of remuneration for all directors including the full remuneration packages, comprising all monetary and non-monetary components of the executive directors and executives, are detailed in the Directors' Report. Non executive directors receive annual fees within an aggregate directors' fee pool limited to an amount which is approved by shareholders. The Board Nomination and Remuneration Committee reviews and recommends, for Board approval, remuneration levels and policies for Directors within this overall Directors' fee pool. The fees which are paid are also periodically reviewed. The current annual fee for non executive directors is a base fee of A$40,000 per annum. Due to the additional time required, the Chairperson of the Board's various Committees receives an additional fee (currently A$10,000) for Chairing that Committee, and the members of each committee also receive an additional fee (currently A$5,000) for being a Committee member. These amounts include any statutory superannuation payments.


  Although no formal written policy has been established, the senior executives are responsible for:- 

  • developing corporate strategy, performance objectives, business plans, budgets etc for review and approval by the Board;
  • managing the day to day business of the Company;
  • managing the risk and compliance frameworks including reporting to the Board and, where necessary, the market;
  • appointing staff, evaluating their performance and training requirements as well as development of Company policies;
  • ensuring all available information in connection with items to be discussed at a meeting of the Board is provided to each director prior to the meeting.

 

The Managing Director/CEO is responsible for ensuring senior executives properly discharge the responsibilities delegated and for keeping the Board informed on these matters.

 

The performance of senior executives is evaluated by the Nomination and Remuneration Committee, often taking into account recommendations from the Managing Director/CEO. The Board can exercise its discretion in relation to approving incentives, bonuses and options and can recommend changes to the Committee's recommendations. All executives receive base salary and superannuation (if applicable) and in some cases, performance incentives and fringe benefits. These packages are reviewed on an annual basis and in some cases are reviewed against predetermined performance criteria. All remuneration paid to executives is valued at the cost to the Company and is measured in accordance with the applicable accounting standards. 


The performance of our senior executives was evaluated in the current year by the Nomination and Remuneration Committee. The Committee reviewed recommendations received from the Managing Director/CEO, considered the performance of the senior executive, his/her current contract, and whether a bonus and/or the grant of employee options was warranted. At this stage of the project, the Board believes it to be appropriate to base performance on how well the executive performs his/her role, and not necessarily base it on meeting financial objectives. 


Directors, executives and employees, are from time to time invited to participate in the shareholder approved Employee Option Plan. Separate shareholder approval is sought before any director can be issued options. Shares issued are valued as the difference between the market price of those shares and the amount paid by the Executive. Options are valued using the Black-Scholes methodology. Non executive directors have long been encouraged by the Board to hold shares in the Company to align their interests more closely to those of the Company's shareholders. 


The Company proposes to seek shareholder approval at the upcoming AGM for a revised Employee Option Plan on substantially similar terms as the current plan but which also will takes account of the Company's proposed move to the Main Market of the London Stock Exchange.


The Board expects that the remuneration structure that is implemented will result in the Company being able to attract and retain the best Executives to manage the economic entity. It will also provide the executives with the necessary incentives to work to grow long-term shareholder value.


There are no schemes for retirement benefits other than statutory superannuation for non executive directors.


Compliance/Corporate Governance Committee:


The Compliance/Corporate Governance Committee comprises Mr Stuart Bottomley (Chairman), Professor Robert Bowker and Dr Tom Elder, all independent Directors of the Company.


The Committee assists the Board in fulfilling its fiduciary responsibilities by making recommendations to the Board with respect to the formulation or re-formulation of and implementation, maintenance and monitoring of the Company's Corporate Compliance Program and Code of Conduct as may be modified, supplemented or replaced from time to time, designed to ensure compliance with corporate governance policies and legal rules and regulations. Fundamental to the Company's corporate governance policy and practice is that all directors and employees reflect the Company's key values of accountability, fairness, integrity and openness. The Committee oversees the Company's activities in the area of corporate compliance that may impact the Company's business operations or public image, in light of applicable government and industry standards, legal and business trends and public policy issues. It will pay particular attention to health and safety, environmental, archaeological and social responsibility issues addressed by the Company.


  Audit Committee:


The Audit Committee comprises Mr Colin Cowden (Chairman), Mr Stuart Bottomley and Professor Robert Bowker, all independent directors of the Company.


The Company has a duly constituted Audit Committee which comprises two Australia based independent Directors and one UK resident director whose names, qualifications and attendances are included in the Directors' Report. The responsibilities of the Audit Committee are laid out in its Charter, and amongst other things, includes the responsibility to ensure that an effective internal control framework exists within the entity, and to produce quarterly, half yearly and annual financial statements for submission to the Board for approval. The Committee receives regular reports from management and external auditors on accounting and internal control matters. This includes the safeguarding of assets, the maintenance of proper accounting records, and the reliability of financial information as well as non-financial considerations. The Audit Committee will also recommend the appointment, and will review the fees, of external auditors.


A copy of the Audit Committee Charter is available on the Company's website or upon request.


External auditors:


The auditors of the Company, Deloitte Touche Tohmatsu ('Deloitte'), have open access to the Board of Directors at all times. Deloitte have audited the Company and its subsidiaries for a number of years and have adopted a policy of rotating audit partners every five years. The last rotation of the audit partner occurred during the current financial year.


Deloitte do attend the Company's Annual General Meeting and it is consistent with their current business practice, and is in accordance with s250RA of the Corporations Act 2001.


Securities Trading Policy:


The Company has adopted a formal securities trading policy restricting directors, senior executives and employees from acting on material information until it has been released to the market in accordance with the ASX requirements of continuous disclosure. Directors and senior management of AIM listed companies are restricted in a number of ways, by statute, common law and by Rule 21 of the AIM Rules to deal in the Company's securities. This rule imposes restrictions beyond those imposed by law in that the Directors and certain employees and persons connected with them do not abuse and do not place themselves under suspicion of abusing price-sensitive information that they have or are thought to have, especially in periods leading up to announcement of results (close periods). The Company's Securities Trading Policy is available on the Company's website or upon request. 


As part of the move to the Main Market of the London Stock Exchange, the Company intends to review the Securities Trading Policy to ensure compliance with the Model Code. The Company has not yet established a policy on prohibiting transactions in associated products which limit risk of participating in unvested entitlements under any equity based remuneration scheme but intends to deal with this in its revised Securities Trading Policy.


Commitment to stakeholders & ethical standards: 


The Board supports the highest standards of corporate governance and requires its members and the management and staff of the Company to act with integrity and objectivity in relation to:


  • Compliance with laws and regulations affecting the Company's operations;
  • ASX Corporate Governance, the AIM Rules for Companies, the Combined Code On Corporate Governance, and NP 58-201;
  • Employment practices;
  • Responsibilities to the community;
  • Responsibilities to the individual;
  • The environment;
  • Conflict of interests;
  • Confidentiality;
  • Ensure that shareholders and the financial community are at all times fully informed in accordance with the spirit and letter of the ASX's continuous disclosure requirements, the AIM Rules for Companies and the Canadian Securities Administrators' National Instrument 51-102;
  • Corporate opportunities or opportunities arising from these for personal gain or to compete with the Company;
  • Protection of and proper use of the Company's assets; and
  • Active promotion of ethical behaviour.


The Company has a formal Code of Conduct, which all directors, employees and contractors are required to observe, and a range of corporate policies which detail the framework for acceptable corporate behaviour. These set out the procedures that personnel are required to follow in a range of areas, including compliance with the law, dealing with conflicts of interest, use of knowledge and information, gifts and entertainment, responsibility to shareholders and the financial community etc. The Company's policies are reviewed periodically. 


A copy of the Code of Conduct is available on the Company's website or upon request. 


Communication to Shareholders:


The board of directors aims to ensure that Shareholders are provided with important information in a timely manner through written and electronic communications. It is for this reason that the Company established a Shareholder Communications Policy during the year.


The Board of Directors aims to ensure that the shareholders, on behalf of whom they act, are informed of all information necessary to assess the performance of the Company. Information is communicated to the shareholders through:


  • the Annual Report;
  • the availability of the Company's Quarterly Report, Half-Yearly Report and other announcements distributed to shareholders so requesting;
  • adherence to continuous disclosure requirements;
  • the Annual General Meeting and other meetings called to obtain shareholder approval for Board action as appropriate; and
  • the provision of the Company's website containing all of the above mentioned reports and its constant update and maintenance.


The Managing Director/CEO communicates with major shareholders on a regular basis in the way of face to face contact, telephone conversations, analyst and broker briefings to help better understand the views of the shareholders. 


The Board recognises the importance of keeping the market fully informed of the Company's activities and of communicating openly and clearly with all stakeholders. The Company established a formal Continuous Disclosure Policy during the year to ensure that this occurs. The Policy is designed to ensure compliance with the listing rules in all jurisdictions in which the Company is listed. A copy of this Policy is available on the Company's website or by request. In accordance with the Policy, Company information considered to be material is announced immediately to the ASX, AIM and TSX. All key communications are placed immediately on the Company website, and when necessary, provided directly to shareholders. As part of the move to the Main Market of the London Stock Exchange, the Company will need to comply with the various obligations imposed on it pursuant to the Disclosure Rules and the Transparency Rules ('DTRs'). The Company intends to review the Continuous Disclosure Policy in due course to ensure compliance with the DTRs. 


Statement by the Managing Director and Chief Financial Officer


The Board receives written assurance from the Managing Director/CEO and Chief Financial Officer to confirm that to the best of their knowledge and belief, the group's financial position presents a true and fair view and that the financial statements are founded on a sound system of risk management, internal compliance and control. Further, it is confirmed that the group's risk management and internal compliance is operating efficiently and effectively. The Board notes that due to its nature, internal control assurance from the Managing Director/CEO and Chief Financial Officer can only be reasonable rather than absolute, and therefore is not and cannot be designed to detect all weaknesses in control procedures. 






Independent Auditor's Report

to the Members of Centamin Egypt Limited



Report on the Financial Report 

We have audited the accompanying financial report of Centamin Egypt Limited, which comprises the balance sheet as at 30 June 2009, and the income statement, cash flow statement and statement of changes in equity for the year ended on that date, a summary of significant accounting policies, other explanatory notes and the directors' declaration of the consolidated entity comprising the company and the entities it controlled at the year's end or from time to time during the financial year as set out on pages 60 to 97. 


Directors' Responsibility for the Financial Report


The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In Note 3, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that compliance with the Australian equivalents to International Financial Reporting Standards ensures that the financial report, comprising the financial statements and notes, complies with International Financial Reporting Standards.


Auditor's Responsibility


Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.  


An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

Deloitte Touche Tohmatsu
ABN 74 490 121 060

Woodside Plaza
Level 14
240 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia

DX 206
Tel:  +61 (0) 8 9365 7000
Fax:  +61 (0) 8 9365 7001
www.deloitte.com.au



  We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.


Auditor's Independence Declaration


In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. 


Auditor's Opinion


In our opinion: 

(a)   the financial report of Centamin Egypt Limited is in accordance with the Corporations Act 2001, including:
(i)     giving a true and fair view of the company’s and consolidated entity’s financial position as at 30 June 2009 and of their performance for the year ended on that date; and
(ii)    complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and
 
(b)   the financial report also complies with International Financial Reporting Standards as disclosed in Note 3.
 

Report on the Remuneration Report


We have audited the Remuneration Report included in pages 33 to 36 of the directors' report for the year ended 30 June 2009. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.


Auditor's Opinion


In our opinion the Remuneration Report of Centamin Egypt Limited for the year ended 30 June 2009, complies with section 300A of the Corporations Act 2001. 





DELOITTE TOUCHE TOHMATSU





Ross Jerrard

Partner

Chartered Accountants

Perth, 14 September 2009



DIRECTORS' DECLARATION




The directors declare that:


a)     in the directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable;
 
b)     in the directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001, including compliance with accounting standards and giving a true and fair view of the financial position and performance of the Company and the consolidated entity; and
 
c)     the directors’ have been given the declarations required by s.295A of the Corporations Act 2001.
 


At the date of this declaration, the Company is within the class of companies affected by ASIC Class Order 98/1418. The nature of the deed of cross guarantee is such that each company which is party to the deed guarantees to each creditor payment in full of any debt in accordance with the deed of cross guarantee. In the directors' opinion, there are reasonable grounds to believe that the Company and the companies to which the ASIC Class Order applies, as detailed in Note 22 to the financial statements will, as a group, be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross guarantee.



Signed in accordance with a resolution of the directors made pursuant to s. 295(5) of the Corporations Act 2001.


On behalf of the Directors






__________________________

Sami El-Raghy

Chairman


Perth, 14 September 2009



income STATEMENT 

for the FINANCIAL YEAR ENDED 30 JUNE 2009    





  

Consolidated

Company



2009

$US'000

2008

$US'000

2009

$US'000

2008

$US'000







Revenue

5

2,893

6,789

2,591

6,565







Other revenue

5

12

202

8

1,646







Foreign exchange (loss) / gain

6

(19,284)

3,427

(18,722)

4,274







General and administration expenses

6

(2,142)

(3,432)

(1,857)

(3,078)







Depreciation expense

6

(544)

(309)

(22)

(26)







Share based payments

6

(3,206)

(2,030)

(3,206)

(2,030)







 (Loss) / Profit before tax 


(22,271)

4,647

(21,208)

7,351







Income tax income/(expense) 

7

169

(444)

18

(489)







Net (Loss) / Profit for the year


(22,102)

4,203

(21,190)

6,862







 (Loss) / Earnings Per Share: 






Basic (cents per share)

25

(2.40)

0.51



Diluted (cents per share)

25

(2.40)

0.51




Notes to the financial statements are included on pages 66 to 97



balance sheet

AS AT 30 JUNE 2009

Consolidated

Company


Note

2009

2008

2009

2008



$US'000

$US'000

$US'000

$US'000

CURRENT ASSETS






Cash and cash equivalents

26(a)

68,609

182,329

58,747

154,198

Trade and other receivables

9

30

25

14

12

Inventories

10

3,780

2,584

-

-

Other assets

11

945

591

-

-

Total current assets


73,364

185,529

58,761

154,210







NON-CURRENT ASSETS






Trade and other receivables

9

-

-

337,604

201,757

Plant and equipment

12

59,879

37,802

18

37

Other financial assets

13

-

-

4,502

4,502

Deferred tax assets

7

4,104

-

3,904

-

Exploration, evaluation and development

14

269,075

137,166

302

293

Total non-current assets


333,058

174,968

346,330

206,589







Total assets


406,422

360,497

405,091

360,799







CURRENT LIABILITIES






Trade and other payables

15

7,454

5,687

145

9

Current tax liabilities

7

444

444

489

489

Provisions

16

606

631

70

51

Total current liabilities


8,504

6,762

704

549







NON-CURRENT LIABILITIES






Trade and other payables

15

-

150

-

-

Provisions

16

1,736

628

-

-

Total non-current liabilities


1,736

778

-

-







Total liabilities


10,240

7,540

704

549







Net assets


396,182

352,957

404,387

360,250







EQUITY






Issued capital

17

416,886

352,948

416,886

352,948

Reserves

18

8,957

7,568

9,447

8,058

Accumulated losses


(29,661)

(7,559)

(21,946)

(756)

Total equity


396,182

352,957

404,387

360,250


Notes to the financial statements are included on pages 66 to 97



STATEMENT OF CHANGES IN EQUITY

for the FINANCIAL YEAR ENDED 30 JUNE 2009


Consolidated 2009


Fully Paid Ordinary Shares

$US'000

Other

Reserves

$US'000

Share Options Reserve

$US'000

Accumulated Losses

$US'000

Total

$US'000

Balance as at 30 June 2008

352,948

2,295

5,273

(7,559)

352,957

Loss for the year

-

-

-

(22,102)

(22,102)

Total recognised income and expense 

-

-

-

(22,102)

(22,102)

Recognition of share based payments


-

3,206

-

3,206

Transfer from share options reserve

1,817

-

(1,817)

-

-

Issues of shares under ESOP*

1,278

-

-

-

1,278

Issues of shares

60,127

-

-

-

60,127

Share issue costs

(3,219)

-

-

-

(3,219)

Tax effect of prior and current period share issue costs

3,935

-

-

-

3,935

Balance as at 30 June 2009

416,886

2,295

6,662

(29,661)

396,182



Consolidated 2008


Fully Paid Ordinary Shares

$US'000

Other

Reserves

$US'000

Share Options Reserve

$US'000

Accumulated Losses

$US'000

Total

$US'000

Balance as at 30 June 2007

217,915

2,295

3,753

(11,762)

212,201

Profit for the year

-

-

-

4,203

4,203

Total recognised income and expense 

-

-

-

4,203

4,203

Recognition of share based payments

-

-

4,083

-

4,083

Transfer from share options reserve

2,563

-

(2,563)

-

-

Issues of shares under ESOP*

1,959

-

-

-

1,959

Issues of shares

139,852

-

-

-

139,852

Share issue costs

(9,341)

-

-

-

(9,341)

Balance as at 30 June 2008

352,948

2,295

5,273

(7,559)

352,957


* Employee share option plan   

STATEMENT OF CHANGES IN EQUITY

for the FINANCIAL YEAR ENDED 30 JUNE 2009 (cont')


Company 2009


Fully Paid Ordinary Shares

$US'000

Other

Reserves

$US'000

Share Options Reserve

$US'000

Accumulated Losses

$US'000

Total

$US'000

Balance as at 30 June 2008

352,948

2,785

5,273

(756)

360,250

Loss for the year

-

-

-

(21,190)

(21,190)

Total recognised income and expense 

-

-

-

(21,190)

(21,190)

Recognition of share based payments

-

-

3,206

-

3,206

Transfer from share options reserve

1,817

-

(1,817)

-

-

Issues of shares under ESOP*

1,278

-

-

-

1,278

Issues of shares

60,127

-

-

-

60,127

Share issue costs

(3,219)

-

-

-

(3,219)

Tax effect of prior and current period share issue costs

3,935

-

-

-

3,935

Balance as at 30 June 2009

416,886

2,785

6,662

(21,946)

404,387



Company 2008


Fully Paid Ordinary Shares

$US'000

Other

Reserves

$US'000

Share Options Reserve

$US'000

Accumulated Losses

$US'000

Total

$US'000

Balance as at 30 June 2007

217,915

2,785

3,753

(7,618)

216,835

Profit for the year

-

-

-

6,862

6,862

Total recognised income and expense 

-

-

-

6,862

6,862

Recognition of share based payments

-

-

4,083

-

4,083

Transfer from share options reserve

2,563

-

(2,563)

-

-

Issues of shares under ESOP*

1,959

-

-

-

1,959

Issues of shares

139,852

-

-

-

139,852

Share issue costs

(9,341)

-

-

-

(9,341)

Balance as at 30 June 2008

352,948

2,785

5,273

(756)

360,250

* Employee share option plan 

Notes to the financial statements are included on pages 66 to 97


cash flow STATEMENT 

for the FINANCIAL YEAR ENDED 30 JUNE 2009


Consolidated

Company


Note

2009

2008

2009

2008



$US'000

$US'000

$US'000

$US'000

Cash flows from operating activities






Interest received 


2,893

6,789

2,591

6,565

Other income


12

202

8

2

Receipts from subsidiaries


-

-

-

1,645

Payments for exploration & evaluation


(9,424)

(12,805)

(9)

(23)

Payments to suppliers and employees


(2,036)

(3,437)

(1,705)

(3,050)

Net cash (used in)/generated by operating activities

26(b)

(8,555)

(9,251)

885

5,139







Cash flows from investing activities






Payment for plant and equipment


(30,026)

(27,168)

(2)

(1)

Advances to subsidiaries


-

-

(160,698)

(122,225)

Payments for mine development


(139,485)

(56,129)

-

-

Net cash used in investing activities


(169,511)

(83,297)

(160,700)

(122,226)







Cash flows from financing activities






Proceeds from the conversion of options


5,344

1,959

5,344

1,959

Proceeds from issues of shares


56,061

139,852

56,061

139,852

Share issue costs


(3,219)

(7,288)

(3,219)

(7,288)

Net cash provided by financing activities


58,186

134,523

58,186

134,523







Net (decrease)/increase in cash and cash equivalents


(119,880)

41,975

(101,629)

17,436







Cash and cash equivalents at the beginning of the financial year


182,329

136,501

154,198

132,492

Effect of exchange rate changes on the balance of cash held in foreign currencies


6,160

3,853

6,178

4,270

Cash and cash equivalents at the end of the financial year

26(a)

68,609

182,329

58,747

154,198


Notes to the financial statements are included on pages 66 to 97

NOTES TO THE FINANCIAL STATEMENTS

for the FINANCIAL YEAR ENDED 30 JUNE 2009



1.    General information


Centamin Egypt Limited (the Company) is a listed public company, incorporated in Australia and operating in Egypt.


Registered Office                                                         Principal Place of Business

57 Kishorn Road                                                             361 El-Horreya Road

Mount Pleasant WA 6153                                                Sedi Gaber

Australia                                                                          Alexandria, Egypt

Tel: + 61 8 9316 2640                                                     Tel: + 203 5411 259


2.    Adoption of new and revised accounting standards


At the date of authorisation of the financial report, the following Standards and Interpretations were in issue but not yet effective.


Initial application of the following Standards will not affect the amounts recognised in the financial report, but will change the disclosures presently made in relation to the Group and the Company's financial report:


Standard

Effective for annual reporting periods beginning on or after

Expected to be initially applied in the financial year ending

  • AASB 101 'Presentation of Financial Statements' (revised September 2007), AASB 2007-8 'Amendments to Australian Accounting Standards arising from AASB 101', AASB 2007-10 'Further Amendments to Australian Accounting Standards arising from AASB 101'

1 January 2009

30 June 2010

  • AASB 8 'Operating Segments', AASB 2007-3 'Amendments to Australian Accounting Standards arising from AASB 8'

  • AASB 2009-2 'Amendments to Australian Accounting Standards - Improving Disclosures about Financial Instruments'

1 January 2009



1 January 2009 (and that ends on or after 30 April 2009)

30 June 2010



30 June 2010

Initial application of the following Standards and Interpretations are not expected to have any material impact on the financial report of the Group and the Company: 

Standard/Interpretation

Effective for annual reporting periods beginning on or after

Expected to be initially applied in the financial year ending

  • AASB 123 'Borrowing Costs' (revised), AASB 2007-6 'Amendments to Australian Accounting Standards arising from AASB 123'

1 January 2009

30 June 2010

  • AASB 3 'Business Combinations' (2008), AASB 127 'Consolidated and Separate Financial Statements' and AASB 2008-3 'Amendments to Australian Accounting Standards arising from AASB 3 and AASB 127'

AASB 3 (business combinations occurring after the beginning of annual reporting periods beginning 1 July 2009), AASB 127 and AASB 2008-3 (1 July 2009)

30 June 2010


  • AASB 2008-1 'Amendments to Australian Accounting Standard - Share-based Payments: Vesting Conditions and Cancellations'


1 January 2009


30 June 2010

  • AASB 2008-2 'Amendments to Australian Accounting Standards - Puttable Financial Instruments and Obligations arising on Liquidation'

1 January 2009

30 June 2010

  • AASB 2008-5 'Amendments to Australian Accounting Standards arising from the Annual Improvements Project'

1 January 2009

30 June 2010

  • AASB 2008-6 'Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project'

1 July 2009

30 June 2010

  • AASB 2008-7 'Amendments to Australian Accounting Standards - Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate'

1 January 2009

30 June 2010

  • AASB 2008-8 'Amendments to Australian Accounting Standards - Eligible Hedged Items'

  • AASB 2009-4 'Amendments to Australian Accounting Standards arising from the Annual Improvements Process'

  • AASB 2009-5 'Further Amendments to Australian Accounting Standards arising from the Annual Improvements Process'

  • AASB 2009-6 'Amendments to Australian Accounting Standards'

  • AASB 2009-7 'Amendments to Australian Accounting Standards'

  • AASB 2009-8 'Group Cash Settled Share Based Payment Transactions'

  • AASB 1 'First-time Adoption of Australian Accounting Standards'

  • AASB Interpretation 15 'Agreements for the Construction of Real Estate'

  • AASB Interpretation 16 'Hedges of a Net Investment in a Foreign Operation'

1 July 2009


1 July 2009


1 January 2010


1 January 2009


1 July 2009


1 July 2009


1 July 2009


1 January 2009



1 October 2008 

30 June 2010


30 June 2010


30 June 2011


30 June 2010


30 June 2010


30 June 2010


1 January 2010


30 June 2010



30 June 2010

  • AASB Interpretation 17 'Distributions of Non-cash Assets to Owners', AASB 2008-13 'Amendments to Australian Accounting Standards arising from AASB Interpretation 17 - Distributions of Non-cash Assets to Owners'

  • AASB Interpretation 18 'Transfers of Assets from Customers'

1 July 2009



1 July 2009

30 June 2010



30 June 2010

3.    Summary of significant accounting policies


Statement of Compliance

The financial report is a general purpose financial report which has been prepared in accordance with the Corporations Act 2001, Accounting Standards and Interpretations, and complies with other requirements of the law. The financial report includes the separate financial statements of the company and the consolidated financial statements of the Group. Accounting Standards include Australian equivalents to International Financial Reporting Standards 
('A-IFRS'). Compliance with A-IFRS ensures that the financial statements and notes of the company and the Group comply with International Financial Reporting Standards ('IFRS'). 




The financial statements were authorised for issue by the directors on 14 September 2008.

 (A)    BASIS OF PREPARATION

This financial report is denominated in United States Dollars, which is the functional currency of Centamin Egypt Limited. The Company is a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and in accordance with that Class Order, all financial information presented in United States Dollars has been rounded to the nearest thousand dollars, unless otherwise stated.  

The financial report has been prepared on the basis of historical cost, except for the revaluation of certain non-current assets and financial instruments. Cost is based on the fair values of the consideration given in exchange for assets. 

In the application of A-IFRS management is required to make judgments, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstance, the results of which form the basis of making the judgments. Actual results may different from these estimates. 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. 

Judgments made by management in the application of A-IFRS that have significant effects on the financial statements and estimates with a significant risk of material adjustments in the next year are disclosed, where applicable, in the relevant notes to the financial statements. 

Accounting policies are selected and applied in a manner which ensures that the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported. 

The following significant policies have been adopted in the preparation and presentation of the financial report:

(B)    CASH AND CASH EQUIVALENTS

Cash comprises cash on hand and demand deposits. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

(C)    FINANCIAL INSTRUMENTS ISSUED BY THE COMPANY

Debt and Equity Instruments

Debt and equity instruments are classified as either liabilities or as equity in accordance with the substance of the contractual arrangement. An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.

Other financial liabilities


Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.  Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period.


(D)    EMPLOYEE BENEFITS

A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave, long service leave and sick leave when it is probable that settlement will be required and they are capable of being measured reliably.

Liabilities recognised in respect of employee benefits expected to be settled within 12 months, are measured at their nominal values using the remuneration rate expected to apply at the time of settlement. Liabilities recognised in respect of employee benefits which are not expected to be settled within 12 months are measured as the present value of the estimated future cash flows to be made by the consolidated entity in respect of services provided by employees up to reporting date.

Superannuation

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.

(E)    EXPLORATION, EVALUATION AND DEVELOPMENT EXPENDITURE

Exploration and evaluation expenditures in relation to each separate area 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.

Development expenditure is recognised at cost less accumulated amortisation and any impairment losses. When commercial production in an area of interest has commenced, the associated costs are amortised over the estimated economic life of the mine on a units of production basis.

Changes in factors such as estimates of proved and probable reserves that affect unit-of-production calculations are dealt with on a prospective basis.

(F)    FINANCIAL ASSETS

Investments are recognised and derecognised on trade date where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, net of transaction costs except for those financial assets classified as at fair value through the profit or loss which are initially measured at fair value.

Subsequent to initial recognition, investments in subsidiaries are measured at cost in the company financial statements.

Other financial assets are as 'loans and receivables'. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimate future cash receipts through the expected life of the financial asset, or, where appropriate, a shorter period.

Loans and receivables

Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as 'loans and receivables'. Loans and receivables are measured at amortised cost using the effective interest rate method less impairment.

Interest is recognised by applying the effective interest rate. 

Impairment of financial assets

Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at each balance sheet date. Financial assets are impaired where there is objective evidence that as a result of one or more events that occurred after the initial recognition of the financial asset the estimated future cash flows of the investment have been impacted. For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. 

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables where the carrying amount is reduced through the use of an allowance account. When a trade receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.

With the exception of available-for-sale equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised. 

In respect of available-for-sale equity instruments, any subsequent increase in fair value after an impairment loss is recognised directly in equity.

(G)    FOREIGN CURRENCY

The individual financial statements of each group entity are presented in its functional currency being the currency of the primary economic environment in which the entity operates. For the purpose of the consolidated financial statements, the results and financial position of each entity are expressed in United States dollars, which is the functional currency of Centamin Egypt Limited and the presentation currency for the consolidated financial statements.


In preparing the financial statements of the individual entities, transactions in currencies other than the entity's functional currency are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences are recognised in profit or loss in the period in which they arise.


Goodwill and fair value adjustments arising on the acquisition of a foreign entity on or after the date of transition to A-IFRS are treated as assets and liabilities of the foreign entity and translated at exchange rates prevailing at the reporting date. Goodwill arising on acquisitions before the date of transition to A-IFRS is treated as an Australian dollar denominated asset.


 (H)    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.


Cash flows are included in the cash flow statement on a gross basis. The GST component of cash flows arising from investing and financing activities which is recoverable from, or payable to, the taxation authority is classified as operation cash flows.


(I)    IMPAIRMENT OF ASSETS (OTHER THAN EXPLORATION AND EVALUATION AND FINANCIAL ASSETS)

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.

(J)    INVENTORIES

Inventories are valued at the lower of cost and net realisable value. Costs including an appropriate portion of fixed and variable overhead expenses, are assigned to inventory on hand by the method appropriate to each particular class of inventory, with the majority being valued on a weighted average cost basis. Net realisable value represents the estimated selling price less all estimated costs of completion and costs necessary to make the sale.

(K)    JOINT VENTURE ARRANGEMENTS

Jointly controlled operations

Where the Group is a venturer (and so has joint control) in a jointly controlled operation, the Group recognises the assets that it controls and the liabilities that is incurs, along with the expenses that it incurs and the Group's share of the income that it earns from the sale of goods or services by the joint venture.

(L)    LEASED ASSETS

Leased assets are classified as finance leases when the terms of the lease transfer substantially all the risks and rewards incidental to ownership of the leased asset to the lessee. All other leases are classified as operating leases.


Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where other systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.


(M)    PLANT AND EQUIPMENT

Plant and equipment is 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. Fixed assets are calculated on a straight line basis so as to write off the net 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, with the affect of any changes recognised on a prospective basis.

The following estimated useful lives are used in the calculation of depreciation:

                Plant & Equipment & Office Equipment        -    4 - 10 years

Motor Vehicles                                           -    2 - 8 years

Land & Buildings                                        -    4 - 20 years

(N)    REVENUE

Revenue is measured at the fair value of the consideration received or receivable. 

Interest revenue

Interest revenue is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount.

     (O)    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. Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

In preparing the consolidated financial statements, all intercompany balances and transactions, and unrealised profits arising within the consolidated entity are eliminated in full.

(P)     SHARE-BASED PAYMENTS

Equity-settled share-based payments with employees and others providing similar services are measured at the fair value of the equity instrument at grant date. Fair value is measured by the use of the Black and Scholes 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.

Equity-settled share based transactions with other parties are measured at the fair value of the goods or services received, except where the fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counter party renders the service.

The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations. Further details on how the fair value of equity-settled share-based transactions has been determined can be found in Notes 28 and 29. At each reporting date, the Group revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit or loss over the remaining vesting period, with corresponding adjustment to the equity-settled employee benefits reserve.

 

(Q)    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. Further information about the tax funding arrangement is detailed in Note 7 to the financial statements. 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.


(R)    RESTORATION AND REHABILITATION


A provision for restoration and rehabilitation is recognised when there is a present obligation as a result of exploration, development and production activities undertaken, it is probable that an outflow of economic benefits will be required to settle the obligation, and the amount of the provision can be measured reliably. The estimated future obligations include the costs of dismantling and removal of facilities, restoration and monitoring of the affected areas. The provision for future restoration costs is the best estimate of the present value of the expenditure required to settle the restoration obligation at the reporting date. Future restoration costs are reviewed annually and any changes in the estimate are reflected in the present value of the restoration provision at each reporting date.


The initial estimate of the restoration and rehabilitation provision relating to exploration, development and mining production activities is capitalised into the cost of the related asset and amortised on the same basis as the related asset, unless the present obligation arises from the production of the inventory in the period, in which case the amount is included in the cost of production for the period. Changes in the estimate of the provision of restoration and rehabilitation are treated in the same manner, except that the unwinding of the effect of discounting on the provision is recognised as a finance cost rather than being capitalised into the cost of the related asset.




4.    Critical accounting judgements and key sources of estimation uncertainty


Critical Judgments in Applying the Entity's Accounting Policies

The following are the critical judgments that management has made in the process of applying the Group's accounting policies and that have the most significant effect on the amounts recognised in the financial statements:


(a) Provision for restoration and rehabilitation costs

The Group is required to decommission, rehabilitate and restore mines and processing sites at the end of their producing lives to a condition acceptable to the relevant authorities. The provision has been calculated taking into account the estimated future obligations including the costs of dismantling and removal of facilities, restoration and monitoring of the affected areas. The provision for future restoration costs is the best estimate of the present value of the expenditure required to settle the restoration obligation at the reporting date.


Key Sources of Estimation Uncertainty

The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year:


(a) Impairment of Inter Company Loans

The Company made loans and advances to its subsidiaries as detailed in Note 9 to the financial statements. These loans and advances were established for the purpose of routing funds out of Australia to fund exploration and resource development in Egypt. The recovery of these loans and advances is entirely dependent upon returns from the successful development of mining operations in Egypt or from surpluses from the sale of either the subsidiary companies or their projects.


(b) Recovery of Capitalised Exploration Evaluation and Development Expenditure

The Group capitalises exploration, evaluation and development expenditure incurred on ongoing projects. The recoverability of this capitalised exploration expenditure is entirely dependent upon returns from the successful development of mining operations or from surpluses from the sale of the projects or the subsidiary companies that control the projects. At the point that it is determined that any capitalised exploration expenditure is not recoverable, it is written off.



5.    Revenue


An analysis of the consolidated entity's and Company's revenue for the year, from continuing operations, is as follows:


  

Consolidated

Company



2009

$US'000

2008

$US'000

2009

$US'000

2008

$US'000

Interest revenue:






Bank deposits


2,893

6,789

2,591

6,565



2,893

6,789

2,591

6,565

Other revenue:






Intercompany management fees


-

-

-

1,644

Other


12

202

8

2



12

202

8

1,646



2,905

6,991

2,599

8,211


  6.    Profit/(Loss) for the year


Profit/(loss) for the year has been arrived at after crediting/(charging) the following gains/(losses) and expenses:


  

Consolidated

Company



2009

$US'000

2008

$US'000

2009

$US'000

2008

$US'000

Gains and Losses






Net foreign exchange (loss) / gain


(19,284)

3,427

(18,722)

4,274



(19,284)

3,427

(18,722)

4,274

Expenses






General and administration:






Employee entitlements


(104)

(238)

(10)

(10)

Salary and wages


(187)

(195)

(154)

(167)

Superannuation


(53)

(15)

(53)

(15)

Travel and accommodation


(356)

(204)

(353)

(201)

Director fees


(147)

(132)

(147)

(132)

Auditor fees


(247)

(236)

(247)

(236)

Other Administration expenses


(367)

(468)

(218)

(384)

Minimum lease payments - operating leases


(45)

(49)

(45)

(48)

Corporate consultants


(80)

(1,079)

(76)

(1,070)

Investor relations


(297)

(283)

(297)

(283)

Corporate compliance


(222)

(497)

(220)

(496)

Insurance


(37)

(36)

(37)

(36)



(2,142)

(3,432)

(1,857)

(3,078)

Depreciation:






Depreciation of non-current assets


(544)

(309)

(22)

(25)



(544)

(309)

(22)

(25)

Share based payments:






Employee equity settled share based payments


(790)

(2,030)

(790)

(2,030)

Non-employee settled share based payments


(2,416)

-

(2,416)

-



(3,206)

(2,030)

(3,206)

(2,030)


7.    Income taxes


Income tax expense recognised in the profit or loss:

  

Consolidated

Company



2009

$US'000

2008

$US'000

2009

$US'000

2008

$US'000

(a) Income tax expense





Current income tax





Current tax expense/(income) in respect of the current year


4,501


917

4,452

977

Benefit arising from previously unrecognised tax losses, tax credits or temporary differences of a prior period that is used to reduce current tax expense

(4,501)

-

(4,452)

-


-

917

-

977

Deferred income tax





Deferred tax expense/(income) relating to the origination and reversal of temporary differences

(9,607)

1,771

(9,475)

2,020

Benefit/(liability) arising from previously unrecognised tax losses, tax credits or temporary differences of a prior period

9,438

(2,244)

9,457

(2,508)

Total tax expense/(income)

(169)

444

(18)

489

Income tax expense/(credit) reported in income statement

(169)

444

(18)

489






The prima facie income tax expense/(benefit) on the profit/loss before income tax reconciles to the income tax in the financial statements as follows:


Profit /(Loss) before income tax

(22,271)

4,647

(21,208)

7,351

Tax expense / (income) calculated at 30% of Profit before income tax (2008: 30%)

(6,681)

1,394

(6,362)

2,205

Tax effect of amounts which are not deductible/taxable in calculating taxable income:





Non-deductible expenses

1,575

1,294

1,340

792

Previously unrecognised tax losses, tax offsets and temporary differences now recognised as deferred tax (asset)/liability

9,438

(1,771)

9,438

(2,020)

Tax benefit of previously unrecognised tax losses and tax credits of prior periods

(4,501)

(473)

(4,434)

(488)

Tax expense/(income) attributable to profit/(loss) before tax

(169)

444

(18)

489


The tax rate used in the above reconciliation is the corporate tax rate of 30% payable by Australian corporate entities on taxable profits under the Australian tax law. There has been no change in the corporate tax rate when compared to the previous reporting period.

  

Consolidated

Company



2009

$US'000

2008

$US'000

2009

$US'000

2008

$US'000

(b) Income tax recognised directly in equity





The following current and deferred amounts were charged/(credited) directly to equity during the period:





- Share issue expenses

(3,935)

-

(3,935)

-






(c) Current tax liabilities





Current tax payable 

444

444

489

489


444

444

489

489






(d) Deferred tax balances





Deferred tax assets comprise:





  Share issue expenses

3,852

-

3,852

-

  Unrealised foreign exchange gains and losses

31

-

31

-

  Provisions

221

-

21

-


4,104

-

3,904

-




Unrecognised deferred tax assets



The following have not been brought to account as assets:





Tax Losses - revenue

-

4,287

-

4,287

Tax Losses - capital

493

509

493

509

Temporary Differences

-

5,264

-

4,467


493

10,060

493

9,263

Tax Effect at 30%

148

3,018

148

2,779

 

TAX CONSOLIDATION 

 

Relevance of tax consolidation to the consolidated entity


The company and its wholly-owned Australian resident entities have formed a tax-consolidated group with effect from 01 July 2003. The head entity within the tax-consolidated group is Centamin Egypt Limited. The members of the tax-consolidated group are identified at Note 22.


Nature of tax funding arrangements and tax sharing agreements


Entities within the tax-consolidated group have entered into a tax funding arrangement and a tax-sharing agreement with the head entity. Under the terms of the tax funding agreement, Centamin Egypt Limited and each of the entities in the tax-consolidated group has agreed to pay a tax equivalent payment to or from the head entity, based on the current tax liability or current tax asset of the entity. Such amounts are reflected in amounts receivable from or payable to other entities in the tax-consolidated group.


The tax sharing agreement entered into between members of the tax-consolidated group provides for the determination of the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations. No amounts have been recognised in the financial statements in respect of this agreement as payment of any amounts under the tax sharing agreement is considered remote.

 

8.    Segment reporting


Business Segment

The economic entity is engaged in the business of exploration and development of precious and base metals, which is characterised as one business segment only. As the consolidated entity has only one business segment, all the necessary reporting disclosures are disclosed elsewhere in the notes to the financial statements.


Geographical Segment

The principal activity of the consolidated entity operates in one geographical segment only through the exploration and development for precious and base metals in Egypt. 


9. Trade and other receivables

  

Consolidated

Company


2009

$US'000

2008

$US'000

2009

$US'000

2008

$US'000

Current






GST receivable


30

25

14

12



30

25

14

12

Non-current






Loans and advances to subsidiaries


-

-

340,141

204,294

Less: Allowance for doubtful debts


-

-

(2,537)

(2,537)



-

-

337,604

201,757


The intercompany loans receivable are interest free and have no set terms of repayment. The recoverability of the loans from the controlled entities is dependent on the successful development and economic exploitation of the controlled entities exploration interests.  The repayments of the loans are not expected to occur within the next 12 months.


10. Inventories

  

Consolidated

Company


2009

$US'000

2008

$US'000

2009

$US'000

2008

$US'000

Current






Stores inventories at cost


3,780

2,584

-

-



3,780

2,584

-

-



11. Other Assets

  

Consolidated

Company


2009

$US'000

2008

$US'000

2009

$US'000

2008

$US'000

Current






Prepayments


75

53

-

-

Performance Bonds


870

538





945

591

-

-


  12. Property, plant and equipment


Consolidated

Office Equipment

Land and Buildings

Plant and Equipment 

Motor Vehicles

Total


$US'000

$US'000

$US'000

$US'000

$US'000

Gross Carrying Amount






Balance at 30 June 2008

1,013

14

14,876

24,290

40,193

Additions

559

-

5,948

18,700

25,207

Disposals

-

-

-

-

-

Balance at 30 June 2009

1,572

14

20,824

42,990

65,400







Accumulated Depreciation






Balance at 30 June 2008

(341)

(6)

(568)

(1,476)

(2,391)

Depreciation expense

(290)

(1)

(487)

(2,352)

(3,130)

Disposals

-

-

-

-

-

Balance at 30 June 2009

(631)

(7)

(1,055)

(3,828)

(5,521)







Net Book Value






As at 30 June 2008

672

8

14,308

22,814

37,802

As at 30 June 2009

941

7

19,769

39,162

59,879



Company

Office Equipment

Land and Buildings

Plant and Equipment 

Motor Vehicles

Total


$US'000

$US'000

$US'000

$US'000

$US'000

Gross Carrying Amount






Balance at 30 June 2008

136

5

289

6

436

Additions

2

-

1

-

3

Disposals

-

-

-

-

-

Balance at 30 June 2009

138

5

290

6

439







Accumulated Depreciation






Balance at 30 June 2008

(103)

(3)

(289)

(4)

(399)

Depreciation expense

(19)

-

(1)

(2)

(22)

Disposals

-

-

-

-

-

Balance at 30 June 2009

(122)

(3)

(290)

(6)

(421)







Net Book Value






As at 30 June 2008

33

2

-

2

37

As at 30 June 2009

16

2

-

-

18


The following useful lives are used in the calculation of depreciation:


Plant & Equipment         -    4 - 10 years

Office Equipment           -    4 - 10 years

Land and Buildings       -    4 - 20 years

Motor Vehicles              -    2 - 8 years


  Aggregate depreciation allocated, whether recognised as an expense or capitalised as part of the carrying amount of other assets during the year:


  

Consolidated

Company


2009

$US'000

2008

$US'000

2009

$US'000

2008

$US'000

Plant & Equipment


487

185

1

-

Office Equipment


290

180

19

24

Land and Buildings    


1

1

-

1

Motor Vehicles


2,352

1,068

1

1



3,130

1,434

21

26


13. Other financial assets

  

Consolidated

Company


2009

$US'000

2008

$US'000

2009

$US'000

2008

$US'000

Non-current






Investments in subsidiaries


-

-

4,868

4,868

Recoverable amount write down


-

-

(366)

(366)



-

-

4,502

4,502


14. Exploration, evaluation and development expenditure


  

Consolidated

Company


2009

$US'000

2008

$US'000

2009

$US'000

2008

$US'000

Exploration and evaluation phase (at cost) (a)





Balance at the beginning of the year


16,236

4,628

293

270

Expenditure for the year


10,463

11,608

9

23







Balance at the end of the year 


26,699

16,236

302

293







Development phase (at cost) (b)






Balance at the beginning of the year


120,930

65,287

-

-







Expenditure for the year


121,446

55,643

-

-

Balance at the end of the year 


242,376

120,930 

-

-







Net book value of exploration, evaluation and development phase expenditure


269,075

137,166

302

293







(a)     Included within the cost amount of exploration evaluation and development 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, evaluation and development. Management believe that the recovery of these amounts will satisfactorily be made through the exploitation of the project in due course.

(b)     During the year ended 30 June 2007, development of the Sukari Gold Project commenced. Items of development phase expenditure relevant to the project are being separately accounted for as development phase expenditure. 


  15. Trade and other payables

Consolidated

Company



2009

$US'000

2008

$US'000

2009

$US'000

2008

$US'000

Current






Trade payables

(i)

7,290

5,632

-

-

Other creditors and accruals*


164

55

145

9



7,454

5,687

145

9

Non-current






Other creditors and accruals*


-

150

-

-



-

150

-

-


(i) Trade payables are interest free for periods ranging from 30 to 180 days. Thereafter interest is charged at commercial rates. The consolidated entity has financial risk management policies in place to ensure that all payables are paid within the credit timeframe.


* This amount includes an unsecured loan of US$150,000 payable 14 days after commencement of commercial production at the Sukari project. There is no interest payable. As at 30 June 2008, the loan was not expected to be settled within 12 months and was therefore classified as a non-current liability.


16. Provisions

  

Consolidated

Company


2009

$US'000

2008

$US'000

2009

$US'000

2008

$US'000

Current






Employee benefits

(i)

606

631

70

51



606

631

70

51

Non-current






Employee Benefits


130

106

-

-

Restoration and rehabilitation

(ii)

1,606

522

-

-



1,736

628

-

-









Consolidated





2009

$US'000

2008

$US'000

Movement in restoration and rehabilitation provision






Balance at beginning of financial year




522

-

Provision for the year




1,084

522

Balance at end of financial year




1,606

522


(i) Employee benefits relate to annual, sick and long service leave entitlements outstanding as at 30 June 2009. The current provision for employee benefits includes $280,000 (Company $28,000) of annual leave entitlements accrued but not expected to be taken within 12 months. (2008: $246,000 and $17,000 for the Group and Company respectively).


(ii) The provision for restoration and rehabilitation represents the present value of the directors' best estimate of the future sacrifice of the economic benefits that will be required to remove the facilities and restore the affected areas at the Company's sites.  This estimate has been made on the basis of benchmark assessments of restoration works required following mine closure and after taking into account the projected area to be disturbed over the life of the mine.  Cash outflows are expected to commence toward the end of current mine life.


  17. Issued capital

Consolidated

Company



2009

$US'000

2008

$US'000

2009

$US'000

2008

$US'000

Fully paid ordinary shares






Balance at beginning of financial year


352,948

217,915

352,948

217,915

Issue of shares upon exercise of options 

and warrants



1,278


1,959


1,278


1,959

Transfer from share options reserve


1,817

2,563

1,817

2,563

Other placements


60,127

139,852

60,127

139,852

Share issue costs


(3,219)

(9,341)

(3,219)

(9,341)

Tax effect on share issue costs


3,935

-

3,935

-

Balance at end of financial year


416,886

352,948

416,886

352,948


Change to the then Corporations Law abolished the authorised capital and par value concept in relation to share capital from 01 July 1998. Therefore, the Company does not have a limited amount of authorised capital and issued shares do not have a par value.

2009

2008

Fully Paid Ordinary Shares


Number

$'000

Number

$'000

Balance at beginning of financial year


877,419,163

352,948

755,734,232

217,915

Issue of shares upon exercise of options and warrants



2,240,000


3,095


4,897,500


4,522

Other placements (net of share issue costs)


112,281,460

60,843

116,787,431

130,511

Balance at end of financial year


991,940,623

416,886

877,419,163

352,948


Fully paid ordinary shares carry one vote per share and carry the right to dividends.


Share options granted under the employee share option plan

In accordance with the provisions of the employee share option plans, as at 30 June 2009, executives and employees have options over 11,305,150 ordinary shares (of which 1,125,000 are unvested). The expiry dates of the granted options are detailed in Note 28. Share options granted under the employee share option plan carry no rights to dividends and no voting rights. Further details of the employee share option plan are contained in Note 28 to the financial statements.


Share warrants on issue

As part of capital raisings undertaken in Canada during the previous and current financial years, the Company was required to issue broker warrants as part of the fees. Broker warrants are identical in nature to share options however they are differentiated as such because the latter in Canada typically relates to options issued to employees under employee share plans. As at 30 June 2009 there were 9,407,710 broker warrants (2008: 9,607,260) on issue over an equivalent number of ordinary shares (of which 9,407,710 are vested) (2008: 9,607,260). Further details of the share warrants are contained in Note 29 to the financial statements.


18. Reserves

Consolidated

Company



2009

$US'000

2008

$US'000

2009

$US'000

2008

$US'000

Option reserve


1,857

1,857

1,857

1,857

Asset realisation reserve


438

438

438

438

Capital reserve


-

-

490

490

Share option reserve


6,662

5,273

6,662

5,273



8,957

7,568

9,447

8,058

Option reserve

Balance at beginning of financial year


1,857

1,857

1,857

1,857

Movements during the period


-

-

-

-

Balance at the end of financial year


1,857

1,857

1,857

1,857


The option reserve has been created from the issuing of options for a consideration greater than their then nominal or par value.


Consolidated

Company



2009

$US'000

2008

$US'000

2009

$US'000

2008

$US'000

Asset realisation reserve

Balance at beginning of financial year


438

438

438

438

Movements during the period


-

-

-

-

Balance at the end of financial year


438

438

438

438


The asset realisation reserve has been created from the realisation of particular assets.


Capital reserve

Balance at beginning of financial year


-

-

490

490

Movements during the period


-

-

-

-

Balance at the end of financial year


-

-

490

490


The capital reserve has been created from the cancellation of shares in the Company held by Pharaoh Gold mines NL.


Share option reserve

Balance at beginning of financial year


5,273

3,753

5,273

3,753

Cost of share based payments


3,206

4,083

3,206

4,083

Transfer to issued capital


(1,817)

(2,563)

(1,817)

(2,563)

Balance at the end of financial year


6,662

5,273

6,662

5,273


The share option reserve arises on the grant of share options to employees under the employee share option plan and on grant of broker warrants. Amounts are transferred out of the reserve and into issued capital when the options are exercised.


19. Commitments for expenditure

Consolidated

Company



2009

$US'000

2008

$US'000

2009

$US'000

2008

$US'000

(a) Capital expenditure commitments






Plant and equipment






Not longer than 1 year


21,341

6,632

-

9

Longer than 1 year and not longer than 5 years


-

-

-

-

Longer than 5 years


-

-

-

-



21,341

6,632

-

9

(b) Operating Lease commitments






Office premises






Not longer than 1 year


62

74

45

59

Longer than 1 year and not longer than 5 years


-

-

-

-

Longer than 5 years


-

-

-

-



62

74

45

59


Operating lease commitments are limited to office accommodation in Alexandria, Egypt and Perth, Australia.


20. Contingent liabilities and contingent assets


There are no contingent liabilities and contingent assets to report as at 30 June 2009.


21. Net assets of the consolidated entity


The net asset position of the consolidated entity is lower than that of the Company. This position is a result of fees being charged to the subsidiary in prior periods through the inter-company account which are expensed within the subsidiary. Management believe that it would be misleading to impair the inter-company receivable and believe that the recovery of these amounts will satisfactorily be made through the exploitation of the project in due course.

 


22. Particulars in relation to subsidiaries


Ownership Interest


Country of Incorporation

2009

2008

Parent entity


%

%

Centamin Egypt Limited

Australia




Subsidiaries




Viking Resources Limited

Australia

100

100

North African Resources NL

Australia

100

100

Pharaoh Gold Mines NL

Australia

100

100

Centamin Limited

Bermuda

100

100


The parent entity is the head of the group for tax consolidation purposes and the subsidiaries, with the exception of Centamin Limited, are all members of this same tax consolidation group.


Pursuant to ASIC Class Order 98/1418 (as amended) dated 13 August 1998, the wholly owned Australian subsidiaries listed above are relieved from the Corporations Act 2001 requirements for preparation, audit and lodgement of financial reports and directors' report.  It is a condition of the Class Order that the Company and each of the subsidiaries enter into a Deed of Cross Guarantee. The effect of the Deed is that the Company guarantees to each creditor payment in full of any debt in the event of winding up of any of the subsidiaries under certain provisions of the Corporations Act 2001. If a winding up occurs under the provisions of the Act, the Company will only be liable in the event that after six months any creditor has not been paid in full. The subsidiaries have also given similar guarantees in the event the Company is wound up.


A consolidated income statement and consolidated balance sheet, comprising the Company and controlled entities which are party to the Deed, after eliminating all transactions between parties to the Deed of Cross Guarantee, at 30 June 2009 is set out as follows:


(a)    Summarised Income Statement


2009

2008


$US'000

$US'000

 (Loss)/Profit Before tax

(22,164)

4,659

Income Tax Expense

169

(444)

(Loss)/Profit after tax

(21,995)

4,215




(b)    Summarised Balance Sheet

2009

2008


$US'000

$US'000

ASSETS



Cash and cash equivalents

68,601

182,329

Trade and other receivables

30

25

Inventories

3,780

2,584

Other Assets

945

591

Total current assets

73,356

185,529

Trade and other receivables

-

-

Plant and equipment

59,879

37,802

Deferred tax assets

4,104

-

Exploration, evaluation and development

269,154

137,222

Total non-current assets

333,137

175,024

Total assets

406,493

360,553




LIABILITIES



Trade and other payables

7,454

5,687

Current tax liabilities

444

444

Provisions

606

631

Total current liabilities

8,504

6,762

Trade and other payables

-

150

Provisions

1,736

628

Total non-current liabilities

1,736

778

Total liabilities

10,240

7,540

Net assets

396,253

353,013




EQUITY



Issued capital

416,781

352,935

Reserves

8,957

7,568

Accumulated losses

(29,485)

(7,490)

Total equity

396,253

353,013


23. Auditors' remuneration*

Consolidated

Company

*disclosure made in whole US Dollars.

2009

$

2008

$

2009

$

2008

$

Auditor of the parent entity 





Auditing or review of the financial report

226,655

207,683

226,655

207,683

Preparation of the tax return

31,885

33,298

31,885

33,298

Other non-audit services

-

28,816

-

28,816


258,540

269,797

258,540

269,797


The auditor of Centamin Egypt Limited is Deloitte Touche Tohmatsu.


24. Jointly controlled operations


The consolidated entity has material interests in the following ventures:-


Name of joint venture

Principal Activities

Percentage Interest



2009

2008



%

%

Egyptian Pharaoh Investments

Exploration

50

50

Sukari Gold Mines

Exploration

50

50


The consolidated entity's interest as a joint venture partner, in assets employed in the above jointly controlled operations and assets is detailed below. The amounts are included in the consolidated financial statements under their respective asset categories.

Consolidated & Company


2009

$US'000

2008

$US'000

Current assets



Cash and cash equivalents

5

4


5

4

Non-current assets



Exploration, evaluation and development

210

210


210

210


Contingent liabilities and capital commitments arising from the Group's interests in joint ventures are disclosed in Notes 19 and 20.


25. Earnings per share

Consolidated


2009

2008


Cents Per Share

Cents Per Share

Basic (loss)/earnings per share

(2.40)

0.51

Diluted (loss)/earnings per share

(2.40)

0.51




  

Basic (Loss)/Earnings per Share



The earnings and weighted average number of ordinary shares used in the calculation of basic loss and earnings per share are as follows:


2009

$'000

2008

$'000

(Loss)/Earnings used in the calculation of basic EPS

(22,102)

4,203






2009


2008


No.

No.

Weighted average number of ordinary shares for the purposes of basic EPS

920,993,978

817,909,388




Diluted (Loss)/Earnings per Share



The (loss)/earnings and weighted average number of ordinary shares used in the calculation of diluted earnings per share are as follows:


2009

$'000

2008

$'000

(Loss)/Earnings used in the calculation of diluted EPS

(22,102)

4,203





2009

No.

2008

No.

Weighted average number of ordinary shares for the purposes of diluted EPS

920,993,978

824,906,490




Weighted average number of ordinary shares for the purposes of basic EPS

920,993,978

817,909,388

Shares deemed to be issued for no consideration in respect of employee options

-

5,103,015

Shares deemed to be issued for no consideration in respect of broker warrants

-

1,894,087

Weighted average number of ordinary shares used in the calculation of diluted EPS

920,993,978

824,906,490




No potential ordinary shares were excluded from the calculation of weighted average number of ordinary shares for the purposes of diluted (loss)/earnings per share.


26. Notes to the statements of cash flows


(a)    Reconciliation of cash and cash equivalents


For the purposes of the cash flow statement, cash includes cash on hand and at bank and deposits. Cash and cash equivalents as at the end of the financial year as shown in the cash flow statement is reconciled to the related item in the balance sheet as follows:

 

 
Consolidated
Company
 
2009
$US’000
2008
$US’000
2009
$US’000
2008
$US’000
Cash and cash equivalents
68,609
182,329
58,747
154,198
 
 
 
 
 
(b) Reconciliation of (loss)/profit for the year to net cash flows from operating activities
 
 (Loss)/Profit for the year
(22,102)
4,203
(21,190)
6,862
Add/(less) non-cash items:
 
 
 
 
Depreciation of non-current assets
544
309
21
25
Foreign exchange rate (gain)/loss
19,284
(3,427)
18,722
(4,272)
Equity settled share based payments
3,206
2,030
3,206
2,030
Changes in assets and liabilities during the year:
 
 
 
 
Decrease/(increase) in receivables
(5)
62
(2)
17
Decrease/(increase) in inventories
(1,196)
(2,444)
-
-
Decrease/(increase) in prepayments
(354)
(584)
-
-
Decrease/(increase) in capitalised exploration
(10,463)
(11,608)
(9)
(23)
Increase/(decrease) in trade creditors and  accruals
1,617
1,485
136
(4)
Increase/(decrease) in provisions
1,083
279
19
15
Increase/(decrease) in deferred tax balances
(169)
-
(18)
-
Increase/(decrease) in current tax liability
-
444
-
489
Net cash generated by/(used in) operating activities
(8,555)
(9,251)
885
5,139

 

(c) Non-cash financing and investing activities


During the year, 5,307,710 broker warrants with an exercise price of C$0.65 each and an expiry date of 10 February 2011,  were issued as partial compensation in relation to the capital raising which closed 10 February 2009.


In addition to the above, the Company entered into an agreement with Macquarie Bank Limited ('MBL') to provide a corporate loan facility of up to US$25 million.  The facility remains subject to final documentation and remains undrawn to date.  In return for entering into this agreement, Centamin issued MBL with 1,630,150 unquoted share options, exercisable at a price of A$1.20 and expiring 31 December 2012. 


27. Financial instruments


a) Group risk management


The Group manages its capital to ensure that entities within the Group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the cash and equity balance. The Group's overall strategy remains unchanged from 2008.


The capital structure consists of cash and cash equivalents and equity attributable to equity holders of the parent, comprising issued capital and reserves as disclosed in Notes 17 and 18. The Group operates in Australia and Egypt. None of the Group's entities are subject to externally imposed capital requirements.


The Group utilises inflows of funds toward the ongoing exploration and development of the Sukari Gold Project in Egypt.

 

b) Financial risk management and objectives


The Group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential risk adverse effects and ensure that net cash flows are sufficient to support the delivery of the Group's financial targets whilst protecting future financial security. The Group continually monitors and tests its forecast financial position against these objectives.


The Group's activities expose it to a variety of financial risks: market, commodity, credit, liquidity, foreign exchange and interest rate. These risks are managed under Board approved directives through the Audit Committee. The Group's principal financial instruments comprise interest bearing cash and short term deposits. Other financial instruments include trade receivables and trade payables, which arise directly from operations.

 
Consolidated
Company
 
2009
$US’000
2008
$US’000
2009
$US’000
2008
$US’000
Financial assets
 
 
 
 
Cash and cash equivalents
68,609
182,329
58,747
154,198
Loans and receivables
30
25
337,618
201,769
 
68,639
182,354
396,365
355,967
Financial liabilities
 
 
 
 
Amortised cost 
7,454
5,837
145
9
 
7,454
5,837
145
9


It is, and has been throughout the period under review, Group policy that no speculative trading in financial instruments be undertaken.


c) Market risk


The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the Australian and Canadian dollars. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities that are denominated in a currency that is not the entity's functional currency. The risk is measured by regularly monitoring, forecasting and performing sensitivity analysis on the Group's financial position.


Exposure to the Canadian dollar has been minimised during the course of the financial year as the Group has undertaken to hold currencies in line with underlying forecast expenditure, namely United States and Australian dollars.


During the financial year the Group recorded a significant foreign currency loss as a result of the Canadian dollar depreciating against the United States dollar in the first half of the financial year. During this period the Group held a significant portion of its cash in Canadian dollars, derived from capital raisings in North America. The loss recorded in the first half of the financial year has been offset to an extent by the appreciation of the Australian dollar against the United States dollar during the second half of the year, subsequent to the decision by the Group to hold currencies in United States and Australian Dollars.


The financial instruments denominated in Australian and Canadian dollars are as follows:

 
Australian dollar
Canadian Dollar
 
2009
A$’000
2008
A$’000
2009
C$’000
2008
C$’000
 
 
 
 
 
Financial assets
 
 
 
 
Cash
48,675
20,207
1,982
148,739
Trade and other receivables
23
25
-
-
 
48,698
20,232
1,982
148,739
Financial liabilities
 
 
 
 
Trade and other payables 
520
9
-
-
 
520
9
-
-
Net exposure
48,178
20,223
1,982
148,739



The following table summarises the sensitivity of financial instruments held at the balance sheet date to movements in the exchange rate of the Australian and Canadian dollar to the United States dollar, with all other variables held constant. The 10% sensitivity is based on reasonably possible changes, over a financial year, using the observed range of actual historical rates for the preceeding five year period.

 

 
Impact on profit
Impact on equity
 
2009
US$’000
2008
US$’000
2009
US$’000
2008
US$’000
 
 
 
 
 
Post-tax gain / (loss)
 
 
 
 
AUD / USD +10%
4,818
1,970
-
-
AUD / USD -10%
(4,379)
(1,782)
-
-
CAD / USD +10%
198
15,497
-
-
CAD / USD -10%
(180)
(14,021)
-
-



The Group's sensitivity to foreign currency has decreased at the end of the current period mainly due to the decreased foreign currency cash holdings in Canadian dollars and Australian dollars.


The Group has not entered into forward foreign exchange contracts. Natural hedges are utilised wherever possible to offset foreign currency liabilities.


During the year, there were unforeseen, unprecedented and large movements in the USD versus almost all other currencies. This unprecedented and rapid shift in foreign exchange markets impacted the Company through its substantial Canadian dollar holdings. The Company maintains a policy of not hedging its currency positions and maintains currency holdings in line with underlying requirements and commitments.


d) Commodity price risk


The Group's future revenue forecasts are exposed to commodity price fluctuations, in particular gold prices.


The Group has not entered into forward gold hedging contracts. 


e) Interest rate risk


The Group's main interest rate risk arises from cash and short term deposits and is not considered to be a material risk due to the short term nature of these financial instruments. Cash deposits are placed on term period of no more than 30 days at a time.


The financial instruments exposed to interest rate risk and the consolidated entity's exposure to interest rate risk as at balance sheet date were as follows:

Weighted Average

Effective Interest Rate 

Less than 1 month

1-12 months

>12 months

Total


%

$US'000

$US'000

$US'000

$US'000

Consolidated






2009






Financial assets






Variable interest rate instruments

2.53

-

67,633

-

67,633

Non- interest bearing

-

1,006

-

-

1,006



1,006

67,633

-

68,639

Financial liabilities






Variable interest rate instruments  

-

-

-

-

-

Non-interest bearing

-

7,454

1,050

130

8,634



7,454

1,050

130

8,634

2008






Financial assets






Variable interest rate instruments

3.17

-

178,053

-

178,053

Non-interest bearing

-

4,301

-

-

4,301



4,301

178,053

-

182,354

Financial liabilities






Variable interest rate instruments  

-

-

-

-

-

Non-interest bearing

-

5,687

1,181

-

6,868



5,687

1,181

-

6,868






Company


Weighted Average

Effective Interest Rate 





Less than 1 month






1-12 months






>12 months






Total

2009

%

$US'000

$US'000

$US'000

$US'000

Financial assets






Variable interest rate instruments

2.50

-

57,771

-

57,771

Non- interest bearing

-

990

-

337,555

338,545



990

57,771

337,555

396,316

Financial liabilities






Variable interest rate instruments  

-

-

-

-

-

Non-interest bearing

-

145

559

-

704



145

559

-

704

2008






Financial assets






Variable interest rate instruments

3.32

-

153,046

-

153,046

Non-interest bearing

-

1,164

-

201,757

202,921



1,164

153,046

201,757

355,967

Financial liabilities






Variable interest rate instruments  

-

-

-

-

-

Non-interest bearing

-

9

540

-

549



9

540

-

549


f) Liquidity risk 


The Group's liquidity position is managed to ensure that sufficient funds are available to meet its financial commitments in a timely and cost effective manner.


Ultimate responsibility or liquidity risk management rests with the board of directors, who have built an appropriate management framework for the management of the Group's funding requirements. The Group manages liquidity risk by maintaining adequate cash reserves and management monitors rolling forecasts of the Group's liquidity on the basis of expected cash flow. The tables above reflect a balanced view of cash inflows and outflows and shows the implied risk based on those values. Trade payables and other financial liabilities originate from the financing of assets used in the Group's ongoing operations. These assets are considered in the Group's overall liquidity risk.


Management continually reviews the Group liquidity position including cash flow forecast to determine the forecast liquidity position and maintain appropriate liquidity levels.


g) Credit Risk


Credit risk refers to the risk that counter-party will default on its contractual obligations resulting in financial loss to the Group. The Group has adopted a policy of only dealing with credit-worthy counter-parties and obtaining sufficient collateral or other security where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group measures credit risk on a fair value basis.


The Group does not have any significant credit risk exposure to any single counter-party or any Group counter-parties having similar characteristics, except for the cash balances held in Canadian and Australian dollars which are held with a financial institution with a high credit rating.


The gross carrying amount of financial assets recorded in the financial statements represents the Group's maximum exposure to credit risk without taking account of the value of collateral or other security obtained.


h) Fair Value


The carrying amount of financial assets and financial liabilities recorded in the financial statements represents their respective fair values, determined in accordance with the accounting policies disclosed in Note 3 to the financial statements.

 

28. Share based payments


The consolidated entity has an Employee Option Plan in place for executives and employees.


Options are issued to key management personnel under the Employee Option Plan 2006 (previously the Employee Option Plan 2002) as part of their remuneration. Options are offered to key management personnel at the discretion of the Directors, having regard, among other things, to the length of service with the consolidated entity, the past and potential contribution of the person to the consolidated entity and in some cases, individual performance.


Each employee share option converts into one ordinary share of the Company on exercise. The options carry neither rights to dividends nor voting rights. Options vest over a period of 12 months, with 50% vesting and exercisable after six months and the other 50% vesting and exercisable after 12 months of issue. All options are issued with a term of three years. At the discretion of the Directors part or all of the options issued to an executive or employee may be subject to performance based hurdles. No performance based hurdles have been applied for options granted to date.


In addition 4,250,000 options (Series 5) were issued to three employees outside of the Employee Share Option Plan on 31 October 2005. Details of those options were:

  • 2,500,000 of those options were subject to performance based hurdles. Due to the cessation of employment by the employee to whom the options were issued they lapsed in May 2007.
  • 1,000,000 of those options vest and are exercisable over a period of two years, with 50% vesting and exercisable after 12 months and the other 50% vesting and exercisable after 24 months of issue. These options have a term of 5 years. As at 30 June 2009, 350,000 of these options remained unexercised.
  • 750,000 of those options vest and are exercisable immediately. These have a term of 5 years. As at 30 June 2009, 700,000 of these options remained unexercised. 


In addition 2,000,000 options (Series 8) were issued to the Company's share broker in Canada as part compensation for professional services provided during the listing process on the Toronto Stock Exchange in January 2007, and subsequent capital raising in November 2007. Those options were exercisable any time within 2 years of grant date.


In addition, 1,630,150 options (series 18) were issued pursuant with the agreement with Macquarie Bank Limited to provide a corporate loan facility of up to US$25 million (as announced on 02 April 2009). Those options were exercisable any time on or before 31 December 2012.


The following share based payment arrangements were in existence during the current and comparative reporting periods:


Options series


Number Originally Issued

Number 

Outstanding

Grant date

Expiry /

Exercise Date


Exercise price

A$

Fair value at grant date

A$

Series 3

775,000

-

04 Feb 2005

04 Feb 2008

0.2804

0.1357

Series 4

410,000

-

17 Feb 2005

17 Feb 2008

0.2804

0.1435

Series 5

4,250,000

1,050,000

31 Oct 2005

31 Oct 2010

0.3500

0.1753

Series 6

1,500,000

-

08 Dec 2005

08 Dec 2008

0.4355

0.1495

Series 7

250,000

-

30 Aug 2006

30 Aug 2009

0.6566

0.2785

Series 8

2,000,000

-

09 Jan 2007

09 Jan 2010

0.8000

0.2393

Series 9

3,615,000

690,000

31 Jan 2007

31 Jan 2010

0.7106

0.3706

Series 10

2,330,000

2,060,000

24 May 2007

24 May 2010

1.0500

0.4661

Series 11

1,500,000

-

25 Jun 2007

25 Jun 2010

1.1636

0.3210

Series 12

250,000

250,000

15 Oct 2007

15 Oct 2010

1.4034

0.4002

Series 13

3,500,000

3,500,000

16 Apr 2008

15 Apr 2011

1.7022

0.4015

Series 14

250,000

250,000

25 Aug 2008

25 Aug 2011

1.1999

0.3070

Series 15

750,000

750,000

28 Oct 2008

25 Oct 2011

0.7033

0.1964

Series 16

250,000

125,000

28 Nov 2008

28 Nov 2011

0.6750

0.3676

Series 17

1,000,000

1,000,000

19 Dec 2008

19 Dec 2011

1.0000

0.3568

Series 18

1,630,150

1,630,150

15 Apr 2009

31 Dec 2012

1.2000

0.4326


24,260,150







The weighted average fair value of the share options granted during the financial year was A$0.3551 (2008: A$0.3875). The share options granted to executive and employees have been valued internally by the Company using the Black and Scholes option pricing method. Options are offered to executives and employees at the discretion of the Directors, having regard, among other things, to the length of service with the consolidated entity, and to the past and potential contribution of the person to the consolidated entity and in some cases, individual performance.  The number of options granted is at the Directors discretion. The weighted average closing price of the shares in Centamin Egypt Limited for the financial year was A$1.0579 (2008: A$1.39380). The volatility input into the model was 70.00% based on the historical share price volatility over the past 3 years (2008: 52.00%) and the government rate similar to the term of the option used was 4.805% (2008: 5.835%).

Options series


Series 3

Series 4

Series 5

Series 6

Series 7

Series 8

Series 9

Series 10

Grant date share price

A$0.33

A$0.34

A$0.38

A$0.43

A$0.72

A$0.85

A$0.87

A$1.12

Exercise price

A$0.28

A$0.28

A$0.35

A$0.436

A$0.657

A$0.80

A$0.711

A$1.05

Expected volatility

60.00%

60.00%

60.00%

60.00%

60.00%

60.00%

60.00%

60.00%

Option life

3 years 

3 years

5 years 

3 years 

3 years 

2 years 

3 years  

3 years 

Dividend yield

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Risk-free interest rate

5.50%

5.50%

5.25%

5.25%

5.50%

5.50%

5.50%

5.50%


Options series


Series 11

Series 12

Series 13

Series 14

Series 15

Series 16

Series 17

Series 18

Grant date share price

A$1.071

A$1.400

A$1.490

A$1.09

A$0.58

A$0.81

A$0.95

A$1.14

Exercise price

A$1.164

A$1.403

A$1.702

A$1.20

A$0.703

A$0.675

A$1.00

A$1.20

Expected volatility

60.00%

52.00%

52.00%

52.00%

70%

70%

70%

70%

Option life

3 years 

3 years

3 years

3 years 

3 years

3 years

3 years

 45 months

Dividend yield

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Risk-free interest rate

5.50%

5.84%

5.84%

5.65%

5.29%

4.58%

4.02%

4.02%


The following reconciles the outstanding share options granted under the Employee Option Plan, and other share based payment arrangements, at the beginning and end of the financial year:


 
2009
2008
 
Number of options
A$ Weighted average exercise price
Number of options
A$ Weighted average exercise price
Balance at beginning of financial year
11,785,000
0.3790
13,490,000
0.6256
Granted during the financial year (a)
3,880,150
1.0186
3,750,000
1.6823
Forfeited/Expired/Lapsed during the financial year (b)
(1,500,000)
0.7699
(557,500)
1.1169
Exercised during the financial year (c)
(2,860,000)
0.5424
(4,897,500)
0.7475
Balance at the end of the financial year (d)
11,305,150
1.1674
11,785,000
0.3790
Exercisable at the end of the financial year
10,180,150
1.1990
8,160,000
0.7130

  

a) Granted during the financial year 


Options series

Number 

Grant date

Expiry /

Exercise Date

Exercise price

A$

Fair value at grant date

A$

Series 14

250,000

25 Aug 2008

25 Aug 2011

1.1999

0.3070

Series 15

750,000

28 Oct 2008

25 Oct 2011

0.7033

0.1964

Series 16

250,000

28 Nov 2008

28 Nov 2011

0.6750

0.3676

Series 17

1,000,000

19 Dec 2008

19 Dec 2011

1.0000

0.3568

Series 18

1,630,150

15 Apr 2009

31 Dec 2012

1.2000

0.4326


3,880,150






b) Forfeited/Expired/Lapsed during the financial year


Options series

Number 

Grant date

Expiry /

Exercise Date

Exercise price

A$

Fair value at grant date

A$

Series 6

500,000

08 Dec 2005

08 Dec 2008

0.4355

0.1495

Series 9

500,000

31 Jan 2007

31 Jan 2010

0.7106

0.3706

Series 11

500,000

25 Jun 2007

25 Jun 2010

1.1636

0.3210


1,500,000






c) Exercised during the financial year


2009 - Options series

Number exercised

Exercise Date

Share price at exercise date

A$

Series 5 

600,000

20,000

04 Aug 08

24 Mar 09

1.1700

1.0950

Series 6 

500,000

500,000

1 Oct 08

25 Nov 08

0.8100

0.7200

Series 7

250,000

06 Aug 08

0.9900

Series 9 

250,000

75,000

50,000

50,000

100,000

100,000

100,000

35,000

06 Aug 08

22 May 09

25 May 09

28 May 09

02 Jun 09

04 Jun 09

12 Jun 09

29 Jun 09

0.9900

1.6450

1.6200

1.6250

1.7250

1.6700

1.6000

1.8300

Series 10

100,000

5,000

29 Jun 09

30 Jun 09

1.8300

1.7900

Series 16

125,000

03 Jun 09

1.7000


2,860,000






 2008 - Options series

Number exercised

Exercise Date

Share price at exercise date

A$

Series 3

20,000

50,000

25,000

50,000

100,000

150,000

25 Oct 2007

07 Nov 2007

08 Nov 2007

18 Jan 2008

24 Jan 2008

30 Jan 2008

1.4350

1.5000

1.5750

1.4150

1.3450

1.4500

Series 4

50,000

50,000

100,000

18 Jul 2007

09 Nov 2007

30 Jan 2008

1.2800

1.5700

1.4500

Series 5

30,000

22 Oct 2007

1.4200

Series 7

1,000,000

1,000,000

19 Oct 2007

20 Nov 2007

1.4000

1.4200

Series 9

10,000

15,000

10,000

35,000

20,000

25,000

55,000

25,000

25,000

15,000

15,000

37,500

15,000

10,000

100,000

45,000

45,000

300,000

200,000

110,000

25,000

30,000

25,000

200,000

100,000

40,000

75,000

08 Aug 2007

12 Sep 2007

24 Sep 2007

27 Sep 2007

02 Oct 2007

08 Oct 2007

10 Oct 2007

19 Oct 2007

22 Oct 2007

23 Oct 2007

07 Nov 2007

08 Nov 2007

12 Nov 2007

16 Nov 2007 

17 Dec 2007

31 Jan 2008

11 Feb 2008 

13 Feb 2008

15 Feb 2008

21 Feb 2008

25 Feb 2008

26 Feb 2008

29 Feb 2008

06 Mar 2008

10 Mar 2008

24 Apr 2008

28 May 2008

1.2750

1.2100

1.3900

1.3300

1.3700

1.3350

1.3400

1.4000

1.4200

1.4400

1.5000

1.5750

1.5200

1.4650

1.2350

1.4300

1.4900

1.6350

1.6500

1.6200

1.6300

1.6300

1.6900

1.6800

1.6250

1.4300

1.4300

Series 10

10,000

10,000

10,000

10,000

125,000

31 Jan 2008

13 Feb 2008

21 Feb 2008

29 Feb 2008

14 Mar 2008

1.4300

1.6350

1.6200

1.6900

1.6100

Series 11

40,000

43,830

53,000

47,000

46,000

270,170

18 Apr 2008

21 Apr 2008

30 Apr 2008

02 May 2008

06 May 2008

07 May 2008

1.5500

1.5500

1.3550

1.3500

1.3900

1.4000


4,897,500





  d) Balance at the end of the financial year


Options series

Number 

Grant date

Expiry /

Exercise Date

Exercise price

A$

Fair value at grant date

A$

Series 5

1,050,000

31 Oct 2005

31 Oct 2010

0.3500

0.1753

Series 9

690,000

31 Jan 2007

31 Jan 2010

0.7106

0.3518

Series 10

2,060,000

24 May 2007

24 May 2010

1.0500

0.4661

Series 12

250,000

15 Oct 2007

15 Oct 2010

1.4034

0.4002

Series 13

3,500,000

16 Apr 2008

16 Apr 2011

1.7022

0.4015

Series 14

250,000

25 Aug 2008

25 Aug 2011

1.1999

0.3070

Series 15

750,000

28 Oct 2008

28 Oct 2011

0.7033

0.1964

Series 16

125,000

28 Nov 2008

28 Nov 2011

0.6750

0.3676

Series 17

1,000,000

19 Dec 2008

19 Dec 2011

1.0000

0.3568

Series 18

1,630,150

15 Apr 2009

31 Dec 2012

1.2000

0.4326


11,305,150






The weighted average remaining contractual life of options outstanding is 679 days (2008: 648 days).

 

29. Share warrants


The following share warrants were in existence during the current and comparative reporting periods:-


Warrants series

Number 

Grant date

Expiry Date

Exercise price

C$

Fair value at grant date

A$

Series 1

3,751,431

05 Apr 2007

05 Apr 2009

0.8600

0.3011

Series 2

4,429,678

13 Apr 2007

11 Apr 2009

0.8600

0.2743

Series 3

613,582

20 Apr 2007

20 Apr 2009

0.8600

0.2868

Series 4

5,600,000

10 Jan 2008

23 Nov 2009

1.2000

0.3782

Series 5

5,307,710

10 Feb 2009

10 Feb 2011

0.6500

0.4288


19,702,401






Share warrants are specific to the Company's listing on the Toronto Stock Exchange (TSX) and retain the same characteristics as share options but are referred to separately under the TSX listing rules.


The weighted average fair value of the share warrants granted during the financial year was A$0.4288 (2008: A$0.3782). The share warrants granted have been valued internally by the Company using the Black and Scholes option pricing method. Warrants were offered to the Company's share broker in Canada as part of the equity raising process during the current and prior years. The weighted average closing price of the shares in Centamin Egypt Limited for the financial year was A$1.0579 (2008: A$1.3938). The volatility input into the model was 70% (2008: 52%) (and this was based on the historical share price volatility over the past 2 years) and the government rate similar to the term of the warrant used was 4.02% (2008: 5.84%).

Broker Warrant Series


Series 1

Series 2

Series 3

Series 4

Series 5

Grant date share price

A$1.0100

A$0.9700

A$0.9900

A$1.4900

A$1.0700

Exercise price

A$0.9133

A$0.9097

A$0.9137

A$1.3532

A$0.7888

Expected volatility

60.00%

60.00%

60.00%

52.00%

70%

Option life

2 year term 

2 year term 

2 year term 

2 year term

2 year term

Dividend yield

0.00

0.00

0.00

0.00

0.00

Risk-free interest rate

5.50%

5.50%

5.50%

5.84%

4.02%


  The following reconciles the outstanding share warrants at the beginning and end of the financial year:

 

 
2009
2008
 
Number of options
Weighted average exercise price
Number of options
Weighted average exercise price
 
 
C$
 
C$
Balance at beginning of financial year
9,607,260
1.0582
8,794,691
0.8600
Granted during the financial year (a)
5,307,710
0.6500
5,600,000
1.2000
Forfeited during the financial year
-
-
-
-
Exercised during the financial year (b)
(5,507,260)
1.1463
(4,787,431)
0.8600
Expired during the financial year
-
-
-
-
Balance at the end of the financial year (b)
9,407,710
0.9425
9,607,260
1.0582
Exercisable at the end of the financial year
9,407,710
0.9425
9,607,260
1.0582



a) Granted during the financial year


Broker Warrants series

Number 

Grant date

Expiry /

Exercise Date

Exercise price

C$

Fair value at grant date

A$

Series 5

5,307,710

10 Feb 09

10 Feb 11

0.65

0.4288


b) Exercised during the financial year


 2009 Broker Warrants - Series

Number exercised

Exercise Date

Share price at exercise date

A$

Series 2

1,000,000

500,000

500,000

305,000

61,300

893,678

133,700

20 Mar 09

23 Mar 09

25 Mar 09

27 Mar 09

31 Mar 09

03 Apr 09

06 Apr 09

1.1350

1.1250

1.0750

1.2600

1.3000

1.1900

1.1500

Series 3

613,582

14 Apr 09

1.1850

Series 4

329,280

500,000

26 May 09

25 Jun 09

1.6400

1.8500

Series 5

670,720

26 May 09

1.6400


5,507,260




b) Balance at the end of the financial year


Broker Warrants series

Number 

Grant date

Expiry /

Exercise Date

Exercise price

C$

Fair value at grant date

A$

Series 4

4,770,720

10 Jan 2008

23 Nov 2009

1.20

0.3782

Series 5

4,636,990

10 Feb 09

10 Feb 11

0.65

0.4288


9,407,710






The weighted average remaining contractual life of broker warrants outstanding is 354 days (2008: 363 days).

 

30. Key management personnel compensation


The aggregate compensation made to key management personnel of the consolidated entity and the Company is set out below:-


 
Consolidated
Company
*disclosure made in whole dollars
2009
A$
2008
A$
2009
A$
2008
A$
Short-term employee benefits
2,189,327
2,096,382
389,534
280,421
Post-employment benefits
25,408
16,275
25,408
16,275
Share-based payments
426,039
427,277
61,888
57,089
Total
2,640,774
2,539,934
476,830
353,785


 

31. Related party transactions


a) Equity interests in related parties


Equity interests in subsidiaries

Details of the percentage of ordinary shares held in subsidiaries are disclosed in Note 22 to the financial statements. 


Equity interests in associates and joint ventures

Details of interests in joint ventures are disclosed in Note 24 to the financial statements.


b) Key management personnel compensation

Details of key management personnel compensation are disclosed in Note 30 to the financial statements. 


c) Key management personnel equity holdings 

The details of the movement in key management personnel equity holdings of fully paid ordinary shares in Centamin Egypt Limited during the financial year are as follows:-


2009

Balance at

01 July 08

Granted

as remuneration

Received on exercise of options

Net other change

Balance at

30 June 09

Balance held nominally

S El-Raghy*

78,235,754

-

-

-

78,235,754

-

C Cowden

603,626

-

500,000

100,000

1,203,626

-

J El-Raghy*

79,185,754

-

-

-

79,185,754

-

H Bottomley

2,800,000

-

500,000

(400,000)

2,900,000

-

T Elder

250,000

-

-

-

250,000

-

G Speechly

250,000

-

-

-

250,000

-

H Brown

400,000

-

-

(200,000)

200,000

-


2008

Balance at

01 July 07

Granted

as remuneration

Received on exercise of options

Net other change

Balance at

30 June 08

Balance held nominally

S El-Raghy*

78,235,754

-

-

-

78,235,754

-

C Cowden

578,626

-

-

25,000

603,626

-

J El-Raghy*

79,185,754

-

-

-

79,185,754

-

H Bottomley

2,800,000

-

-

-

2,800,000

-

T Elder

250,000

-

-

-

250,000

-

G Speechly

250,000

-

-

-

250,000

-

H Brown

200,000

-

200,000

-

400,000

-

* The total shares held by Mr S El-Raghy and Mr J El-Raghy arise due to them both having a controlling interest in the securities of the following entities:

- Nordana Pty Ltd 4,990,668 shares

- Nordana Pty Ltd <Super Fund A/C> 17,595,714 shares

- El-Raghy Kriewaldt Pty Ltd 55,299,372 shares

- S & M El-Raghy <The El-Raghy Family Account> 350,000 shares

The balance of 950,000 shares are held by Mr J El-Raghy being a director of Montana Realty Pty Ltd <Super Fund A/C>

'Net other change' relates to the on market acquisition or disposal of fully paid ordinary shares.

d) Key management personnel share option holdings 


The details of the movement in key management personnel options to acquire ordinary shares in Centamin Egypt Limited are as follows:-


2009

Balance at 01 July 08

Granted

as remuneration

Exercised

Other changes

Balance at

30 June 09

Balance vested during the year

Balance vested and exerciseable at 30 June 09

S El-Raghy

-

-

-

-

-

-

-

C Cowden

500,000

-

(500,000)

-

-

-

-

G Speechly

-

-

-

-

-

-

-

T Elder

500,000

-

-

*(500,000)

-

-

-

T Schultz

-

1,000,000

-

-

1,000,000

500,000

500,000

J El-Raghy

-

-

-

-

-

-

-

H Bottomley

500,000

-

(500,000)

-

-

-

-

H Brown

250,000

-

-

-

250,000

250,000

250,000

M Smith

1,000,000

-

(500,000)

*(500,000)

-

-

-

M Di Silvio

-

250,000

-

-

250,000

125,000

125,000

* T Elder's options expired on 08 December 2008.

* Mark Smith resigned on 7 August 2008. Other change of (500,000) represents options lapsed due to Mr Smith ceasing employment with the Company prior to the vesting date of these options. 


2008

Balance at 01 July 07

Granted

as remuneration

Exercised

Other changes

Balance at

30 June 08

Balance vested during the year

Balance vested and exerciseable at 30 June 08

S El-Raghy

-

-

-

-

-

-

-

C Cowden

500,000

-

-

-

500,000

-

500,000

G Speechly

-

-

-

-

-

-

-

T Elder

500,000

-

-

-

500,000

-

500,000

J El-Raghy

-

-

-

-

-

-

-

H Bottomley

500,000

-

-

-

500,000

-

500,000

H Brown

200,000

250,000

(200,000)

-

250,000

200,000

-

M Smith

1,000,000

-

-

-

1,000,000

875,000

1,000,000

J McLeod*

1,000,000

-

(500,000)

(500,000)

-

1,000,000

-

* Mr McLeod resigned on 12 February 2008. Other change of (500,000) represents options lapsed due to Mr McLeod ceasing employment with the Company prior to the vesting date of these options. Refer to Note 28 to the Financial Statements for details on the Series 11 options.


Apart from the details disclosed in this note, no key management personnel has entered into a material contract with the Company or the economic entity since the end of the previous financial year and there were no material contracts involving key management personnel interests at year-end.


During the financial year 1,500,000 options (2008: 700,000) were exercised by directors or key management personnel. H Bottomley exercised 500,000 options at a price of A$0.4355 per share for 500,000 ordinary shares in Centamin Egypt Limited. C Cowden exercised 500,000 options at a price of A$0.4355 per share for 500,000 ordinary shares in Centamin Egypt Limited. M Smith exercised 250,000 options at a price of A$0.6566 per share and 250,000 options at a price of A$0.7106 per share for 500,000 ordinary shares in Centamin Egypt Limited.  No amounts remain unpaid on the options exercised during the financial year at year end. 


e) Other transactions with key management personnel


Mr S El-Raghy and Mr J El-Raghy are also directors and shareholders of El-Raghy Kriewaldt Pty Ltd ('El-Raghy Kriewaldt'). El-Raghy Kriewaldt provides office premises to the Company. All dealings with El-Raghy Kriewaldt are in the ordinary course of business and on normal terms and conditions. Rent and office outgoings paid to El-Raghy Kriewaldt during the year were A$64,475 (2008: A$62,118). 


Mr S El-Raghy provides office premises in Alexandria, Egypt to the Company. All dealings with Mr S El-Raghy are in the ordinary course of business and on normal terms and conditions. Rent and office outgoings paid to Mr S El-Raghy during the year were GBP7,800 (2008: GBP7,800).


A director of the Company, Mr C Cowden has an interest as a director and shareholder of Cowden Limited, Insurance Brokers. This Company provides insurance broking services to the Company. All dealings with this Company are in the ordinary course of business and on normal terms and conditions. Cowden Limited was paid A$51,977 during the year (2008: A$32,994) for these services. In addition, amounts of A$320,428 (2008: A$203,259) were paid to Cowden Limited to be passed on to underwriters for premiums during the year.


A director of the Company, Mr G B Speechly is also a director and shareholder of Speechly Mining Pty Ltd, a mining consultancy company. During the financial year, no payment was made to Speechly Mining Pty Ltd for work on the Sukari underground potential (2008: A$91,881). 


f) Transactions with other related parties


Other related parties include:

  • the parent entity

  • subsidiaries

  • other related parties


During the prior financial year, the Company recognised tax payable in respect of the tax liabilities of its wholly owned subsidiaries. Payments to/from the Company are made in accordance with terms of the tax funding arrangement. 


During the year the Company provided funds to and received funding from subsidiaries. Current loans totalling $340,092,000 (2008: $204,294,000) are repayable to the Company by subsidiaries.


All amounts advanced to related parties are unsecured. No expense has been recognised in the period for bad or doubtful debts in respect of amounts owed by related parties.


Transactions and balances between the Company and its subsidiaries were eliminated in the preparation of consolidated financial statements of the Group.

 

32. Subsequent events


On 02 July 2009, the Company announced that it had attained subscriptions for a private placement of 19 million ordinary shares at an offering price of C$1.56 per ordinary share, raising gross proceeds of C$29.6 million. The Company advised that the Offer closed on 16 July 2009.


On 04 August 2009, Centamin announced its intention to apply for admission to the Official List of the UK Listing Authority and to trade on the London Stock Exchange's main market for listed securities. Work has commenced on the listing process and it is anticipated that this work and a move to the main board of the LSE will be concluded before the end of 2009.


ADDITIONAL ASX INFORMATION 


Additional information required by the Australian Securities Exchange Limited Listing Rules and not disclosed elsewhere in this report is as follows. The information is as at 28 August 2009. 


SUBSTANTIAL SHAREHOLDERS (holding more than 5%)

Fully Paid Ordinary Shares 

Shareholder

Ordinary Shares

Percentage Held (%)

Paulson & Co Inc

110,000,000

10.86

Massachusetts Mutual Life Insurance Company Group

87,710,263

8.66

El-Raghy Kriewaldt Pty Ltd

55,299,372

5.46



TOP 20 SHAREHOLDERS


(a) Fully Paid Ordinary Shares

Quoted Shares


Number

Percentage Held (%)

CDS & Co

401,039,571

39.58

El-Raghy Kriewaldt Pty Ltd

55,299,372

5.46

Pershing Nominees Limited <PSL981>

33,081,160

3.26

Vidacos Nominees Limited <5437>

25,599,873

2.53

State Street Nominees Limited <CIF4>

22,271,474

2.20

Jayvee & Co Tr Franklin Gold and Precious Metals Fund

20,000,000

1.97

Nortrust Nominees Limited <GSYLENDA>

18,530,925

1.83

Nordana Pty Ltd <Super Fund Account>

17,595,714

1.74

Chase Nominees Limited

17,304,534

1.71

Nortrust Nominees Limited

14,070,603

1.39

Barclayshare Nominees Limited

12,088,998

1.19

Credit Suisse International <VFPRINC>

12,063,299

1.19

TD Waterhouse Nominees (Europe) Limited <SMKTNOMS>

10,865,696

1.07

Chase Nominees Limited <CMBL>

10,610,000

1.05

BNY Mellon Nominees Limited <BSDTGUSD>

10,078,899

0.99

State Street Nominees Limited <OM02>

9,578,673

0.95

State Street Nominees Limited <HG22>

9,570,037

0.94

L R Nominees Limited <NOMINEE>

9,383,711

0.93

Chase Nominees Limited <LEND>

7,887,957

0.78

Citicorp Nominees Pty Limited

7,008,603

0.69


732,929,099

71.45


At 28 August 2009, there were 1,013,233,903 fully paid ordinary shares held by 3,525 individual shareholders. All issued ordinary shares carry one vote per share.


(b) Options

Unquoted Options


Number

Percentage Held (%)

Issued under Employee Share Option Plan 2006

7,705,000

75.65

Other

2,480,150

24.35


10,185,150

100.00


  (c) Broker Warrants

Unquoted Broker Warrants


Number

Percentage Held (%)

Issued to Cormark Securities Inc

1,983,135

20.81

Issued to Macquarie Capital Markets Canada Ltd

988,400

10.37

Issued to Thomas Weisel Partners Canada Inc

6,556,895

68.82


9,528,430

100.00



DISTRIBUTION OF HOLDERS OF EQUITY SECURITIES


Holding Range

Ordinary Shares

Unquoted Options

Unquoted Broker Warrants

1 - 1,000

497

-

-

1,001 - 5,000

1,341

-

-

5,001 - 10,000

617

-

-

10,001 - 100,000

810

82

-

100,001 and over

260

15

3


3,525

97

3


As at 28 August 2009, there were 75 shareholders with less than marketable parcel.



CLASS OF SHARES AND VOTING RIGHTS


The voting rights attaching to the ordinary shares, set out in Clause 40.2 of the Company's Constitution are: 'Subject to the rights or restrictions attached to any Shares, on a show of hands every Member present in person or by proxy or attorney or by duly authorised representative has one vote'.



VENDOR SHARES


There are no vendor securities on issue at the date of this report.




This information is provided by RNS
The company news service from the London Stock Exchange
 
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