Half Yearly Report
Centamin Egypt Limited
27 February 2008
Centamin Egypt Limited
('Centamin' or 'the Company')
Half Year Report for the Half Year Ended 31 December 2007
DIRECTORS' REPORT
The Directors of Centamin Egypt Limited (the Company) herewith submit the
financial report for the half-year ended December 31, 2007. In order to comply
with the provisions of the Corporations Act 2001, the Directors' Report is as
follows:
DIRECTORS
The names of the Directors and officers of the company during or since the end
of the half-year are:
Mr Sami El-Raghy, Executive Chairman
Mr Josef El-Raghy, Managing Director/CEO
Mr Colin Cowden, Non Executive Director
Mr Gordon B Speechly, Non Executive Director
Dr Thomas Elder, Non Executive Director
Mr H Stuart Bottomley, Non Executive Director
COMPANY SECRETARY
Mrs Heidi Brown
PRINCIPAL ACTIVITIES
The principal activity of the consolidated entity during the course of the
financial year was the exploration for precious and base metals and the ongoing
development and construction work at the Sukari Gold Project in Egypt.
REVIEW OF OPERATIONS
The Company recorded a consolidated operating profit for the period of
US$5,662,037 compared with a consolidated operating profit of US$39,726 for the
corresponding period last year. The consolidated operating profit was primarily
attributable to a foreign exchange gain of US$5,927,574 (2006: (US$101,881)) and
interest revenue of US$3,290,245 (2006: US$1,059,389) resulting from the
Company's significant cash balances achieved through equity raisings completed
in April 2007 and November 2007. The foreign exchange gain is attributable to
the strengthening of the Canadian Dollar against the United States Dollar during
the period.
During the half-year the principal focus has been threefold:
• Continuing development and construction work at the Sukari Gold Project in
Egypt;
• Upgrading the Sukari Mineral Resource to 7.46 Moz Measured and Indicated,
plus 3.7 Moz Inferred at a 0.5g/t cut off grade; and
• Regional and near mine exploration drilling at Kurdeman and Sami South
intersecting high grade and anomalous gold mineralization results
respectively.
On October 24, 2007, the Company announced that both the Kori Kollo processing
plant and the Isparta power plant had arrived safely at the Egyptian seaport of
Alexandria and their cargoes had been discharged. The dismantling of the Kori
Kollo processing facility in Bolivia and the Isparta 28MW power plant in Turkey
were completed in September and both sites were closed and signed off. Trucking
of the plant to the Sukari site has been completed without incident.
On November 23, 2007, the Company announced that it had sold on a private basis
an aggregate of 112,000,000 special warrants at a price of C$1.20 per special
warrant for aggregate gross proceeds of C$134,400,000, which includes the
exercise in full by the Underwriters of the Underwriters' option. On December
28, 2007, the special warrants were automatically converted into ordinary shares
on a one for one basis. The net proceeds of this equity financing are to be
applied to fund the continued development of the Sukari gold project,
underground development, other exploration and general corporate purposes.
The Directors consider that the Sukari Gold Project is 100% fully funded through
to gold production currently forecast to be in quarter four this calendar year.
As a result of the equity raising, referred to above, the Company no longer
needs to pursue debt financing, has no debt, no hedging and at December 31, 2007
had a cash balance of US$226M.
In the December quarter, the Sukari Mineral Resource was upgraded to 7.46 Moz
Measured and Indicated, plus 3.7 Moz Inferred at a 0.5g/t cut off grade. The
Measured and Indicated Mineral Resource has increased by 0.62 Moz or 9% to 7.46
Moz, from 6.84 Moz (September 20, 2007) showing the effectiveness of the infill
drilling programme (Table 1). Measured and Indicated resources account for 67%
of total resource. The majority of the resource growth occurred within the Amun
Deeps and Ra - Gazelle Zones, both testing the Hapi Zone and parallel
mineralized structures.
Table 1 - December 2007 Resource Calculation
Measured Indicated Total Inferred
(Measured + Indicated)
Cut-off Mt g/t Mt g/t Mt g/t Moz Mt g/t Moz
0.5 60.10 1.41 99.87 1.48 159.96 1.45 7.46 64.0 1.8 3.7
0.7 43.01 1.73 72.25 1.81 115.26 1.78 6.61 47.6 2.2 3.3
1.0 27.66 2.22 47.20 2.33 74.86 2.29 5.52 32.9 2.8 2.9
Note to Table: Figures in table may not add correctly due to rounding
Paste the following link into your web browser to download the PDF document
related to this announcement:
http://www.rns-pdf.londonstockexchange.com/rns/8393o_-2008-2-27.pdf
Figure 1 - Resource growth at Sukari from April 1997 to December 2007
Shareholders are referred to the Company's website (www.centamin.com) for
further details.
AUDITOR'S INDEPENDENCE DECLARATION
The auditor's independence declaration is included on page 3 of the half-year
financial report.
Signed in accordance with a resolution of the directors made pursuant to s306(3)
of the Corporations Act 2001.
On behalf of the Directors
Josef El-Raghy
Managing Director/CEO
Perth, February 26, 2008
Deloitte Touche Tohmatsu
A.B.N. 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
26 Febraury 2008
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 review of the financial statements of Centamin
Egypt Limited for the financial half-year ended 31 December 2007, 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 review; and
(ii) any applicable code of professional conduct in relation to the review.
Yours sincerely
DELOITTE TOUCHE TOHMATSU
KEITH JONES
Partner
Chartered Accountants
Independent Auditor's Review Report
to the members of Centamin Egypt Limited
We have reviewed the accompanying half-year financial report of Centamin Egypt
Limited, which comprises the balance sheet as at 31 December 2007, and the
income statement, cash flow statement, statement of changes in equity for the
half-year ended on that date, selected explanatory notes and the directors'
declaration of the consolidated entity comprising the company and the entities
it controlled at the end of the half-year or from time to time during the
half-year as set out on pages 6 to 22.
Directors' Responsibility for the Half-Year Financial Report
The directors of the company are responsible for the preparation and fair
presentation of the half-year 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 half-year 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.
Auditor's Responsibility
Our responsibility is to express a conclusion on the half-year financial report
based on our review. We conducted our review in accordance with Auditing
Standard on Review Engagements ASRE 2410 Review of an Interim Financial Report
Performed by the Independent Auditor of the Entity, in order to state whether,
on the basis of the procedures described, we have become aware of any matter
that makes us believe that the half-year financial report is not in accordance
with the Corporations Act 2001 including: giving a true and fair view of the
consolidated entity's financial position as at 31 December 2007 and its
performance for the half-year ended on that date; and complying with Accounting
Standard AASB 134 Interim Financial Reporting and the Corporations Regulations
2001. As the auditor of Centamin Egypt Limited, ASRE 2410 requires that we
comply with the ethical requirements relevant to the audit of the annual
financial report.
A review of a half-year financial report consists of making enquiries, primarily
of persons responsible for financial and accounting matters, and applying
analytical and other review procedures. A review is substantially less in scope
than an audit conducted in accordance with Australian Auditing Standards and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly, we
do not express an audit opinion.
Auditor's Independence Declaration
In conducting our review, we have complied with the independence requirements of
the Corporations Act 2001.
Conclusion
Based on our review, which is not an audit, we have not become aware of any
matter that makes us believe that the half-year financial report of Centamin
Egypt Limited is not in accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the consolidated entity's financial
position as at 31 December 2007 and of its performance for the half-year ended
on that date; and
(b) complying with Accounting Standard AASB 134 Interim Financial Reporting
and the Corporations Regulations 2001.
DELOITTE TOUCHE TOHMATSU
KEITH JONES
Partner
Chartered Accountants
Perth, 26 February 2008
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; and
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 consolidated entity.
Signed in accordance with a resolution of the directors made pursuant to s303(5)
of the Corporations Act 2001.
On behalf of the Directors
Josef El-Raghy
Managing Director/CEO
Perth, February 26, 2008
CONDENSED CONSOLIDATED INCOME STATEMENT
Half Year Ended
December 31
2007 2006
US$ US$
Revenue - Note 4 3,290,245 1,059,389
Other income - Note 4 201,780 433,146
Corporate administration expenses (2,071,919) (843,357)
Foreign exchange gain / (loss) 5,927,574 (101,881)
Share based payments (1,381,402) (188,018)
Other expenses (304,241) (319,553)
Profit before income tax 5,662,037 39,726
Tax (expense) / income - -
Net profit for the period 5,662,037 39,726
Earnings per share
- Basic (cents per share) 0.745 0.007
- Diluted (cents per share) 0.733 0.014
The above Condensed Consolidated Income Statements should be read in conjunction
with the accompanying notes.
CONDENSED CONSOLIDATED BALANCE SHEET
December 31, 2007 June 30,
2007
US$ US$
CURRENT ASSETS
Cash and cash equivalents 226,117,391 136,501,015
Trade and other receivables 43,840 86,893
Inventories - 140,400
Prepayments 768 7,407
Total current assets 226,161,999 136,735,715
NON-CURRENT ASSETS
Plant and equipment 11,943,285 12,067,243
Exploration, evaluation and development expenditure - Note 5 117,082,165 69,915,454
Total non-current assets 129,025,450 81,982,697
Total assets 355,187,449 218,718,412
CURRENT LIABILITIES
Trade and other accounts payable 2,161,250 5,910,093
Provisions 602,752 457,875
Total current liabilities 2,764,002 6,367,968
NON-CURRENT LIABILITIES
Trade and other accounts payable 150,000 150,000
Total non-current liabilities 150,000 150,000
Total liabilities 2,914,002 6,517,968
NET ASSETS 352,273,447 212,200,444
EQUITY
Issued Capital - Note 7 352,770,663 217,915,069
Reserves 5,603,112 6,047,740
Accumulated losses (6,100,328) (11,762,365)
TOTAL EQUITY 352,273,447 212,200,444
The above Condensed Consolidated Balance Sheets should be read in conjunction
with the accompanying notes.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Issued Accumulated
Capital Reserves Options Reserve Losses Total
US$ US$ US$ US$ US$
At June 30, 2006 94,219,681 2,294,794 433,192 (18,646,792) 78,300,875
Profit for the period - - - 39,726 39,726
Share options exercised 270,276 - - - 270,276
Cost of share based payments - - 195,410 - 195,410
Contributions of equity - - - - -
Transfer to issued capital - - - (5,758) (5,758)
At December 31, 2006 94,489,957 2,294,794 628,602 (18,612,824) 78,800,529
At June 30, 2007 217,915,069 2,294,794 3,752,946 (11,762,365) 212,200,444
Profit for the period - - - 5,662,037 5,662,037
Share options exercised 7,031,179 - - - 7,031,179
Cost of share based payments - - 1,381,402 - 1,381,402
Contributions of equity 125,998,385 - - - 125,998,385
Transfer to issued capital 1,826,030 - (1,826,030) - -
At December 31, 2007 352,770,663 2,294,794 3,308,317 (6,100,328) 352,273,446
The above Condensed Consolidated Statement of Changes in Equity should be read
in conjunction with the accompanying notes.
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Half Year Ended
December 31
2007 2006
US$ US$
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees (1,881,205) (1,189,366)
Payments for exploration (5,115,174) (4,388,022)
Other income 201,780 -
Net cash generated by/(used in) operating activities (6,794,599) (5,577,388)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for development (44,859,095) (7,456,472)
Interest received 3,290,245 1,059,389
Net cash generated by/(used in) investing activities (41,568,850) (6,397,083)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issue of equity & conversion of options 133,029,564 270,276
Project finance due diligence (926,435) -
Financial activity (bank charges and realised foreign exchange gain / (loss)) (620,478) 32,613
Net cash generated by/(used in) financing activities 131,482,651 302,888
Net increase / (decrease) in cash and cash equivalents 83,119,202 (11,671,582)
Cash and cash equivalents at the beginning of the financial period 136,501,015 44,513,500
Effects of exchange rate changes on the balance of cash held in foreign 6,497,174 (155,686)
currencies
Cash and cash equivalents at the end of the financial period 226,117,391 32,686,232
The above Condensed Consolidated Cash Flow Statements should be read in
conjunction with the accompanying notes.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations, Going Concern and Accounting Policies
Statement of Compliance
The half-year financial report is a general purpose financial report prepared in
accordance with the Corporations Act 2001 and AASB 134 Interim Financial
Reporting. Compliance with AASB 134 ensures compliance with International
Financial Reporting Standard IAS 34 Interim Financial Reporting. The half-year
report does not include notes of the type normally included in an annual
financial report and shall be read in conjunction with the most recent annual
financial report.
Basis of Preparation
The condensed consolidated financial statements have 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. All amounts are presented in United States
Dollars, unless otherwise noted.
The accounting policies and methods of computation adopted in the preparation of
the half-year financial report are consistent with those adopted and disclosed
in the company's 2007 annual financial report for the financial year ended June
30, 2007. The presentation currency for the consolidated entity changed from
Australian Dollars to United States Dollars on July 01, 2007.
The significant accounting policies which have been adopted in the preparation
of these condensed consolidated financial statements are:
(A) 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.
(B) DEBT AND EQUITY INSTRUMENTS ISSUED BY THE COMPANY
Debt and equity instruments are classified as either liabilities or as equity in
accordance with the substance of the contractual arrangement.
(C) 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.
(D) 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.
(E) 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 classified into the following specified categories:
financial assets 'at fair value through profit or loss', 'held to maturity
investments', available for sale' financial assets, and '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.
Interest income is recognised on an effective interest rate basis for debt
instruments other than those financial assets 'at fair value through profit and
loss'.
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.
(F) FOREIGN CURRENCY
The individual financial statements of each group entity are presented in the
currency of the primary economic environment in which the entity operates (its
functional currency). 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. The
presentation currency was changed from Australian Dollars to United States
Dollars from July 01, 2007 to align the presentation currency with the
functional currency.
In preparing the financial statements of the individual entities, transactions
in currencies other than the entity's functional currency (foreign currencies)
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.
On consolidation, the assets and liabilities of the Group's foreign operations
(including comparatives) are translated into United States Dollars at exchange
rates prevailing on the balance sheet date. Income and expense items (including
comparatives) are translated at the average exchange rates for the period,
unless exchange rates fluctuated significantly during that period, in which case
the exchange rates at the dates of the transactions are used. Exchange
differences arising, if any, are classified as equity and transferred to the
Group's translation reserve. Such exchange differences are recognised in profit
or loss in the period in which the foreign operation is disposed.
(G) 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.
(H) IMPAIRMENT OF ASSETS (OTHER THAN EXPLORATION AND EVALUATION)
At each reporting date, the consolidated entity reviews the carrying amounts of
its tangible and intangible assets to determine whether there is any indication
that those assets have suffered an impairment loss. If any such indication
exists, the recoverable amount of the asset is estimated in order to determine
the extent of the impairment loss (if any). Where the asset does not generate
cash flows that are independent from other assets, the consolidated entity
estimates the recoverable amount of the cash-generating unit to which the asset
belongs.
Recoverable amount is the higher of fair value less costs to sell and value in
use. In assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects current
market assessment of the time value of money and the risks specific to the asset
for which the estimates of future flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to
be less than its carrying amount, the carrying amount of the asset
(cash-generating unit) is reduced to its recoverable amount. Each cash
generated unit is determined on an area of interest basis.
Where an impairment loss subsequently reverses, the carrying amount of the asset
(cash-generating unit) is increased to the revised estimate of its recoverable
amount, but only to the extent that the increased carrying amount does not
exceed the carrying amount that would have been determined had no impairment
loss been recognised for the asset (cash generating unit) in prior years.
(I) 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.
(J) JOINT VENTURE ARRANGEMENTS
Jointly controlled assets
Interests in jointly controlled assets in which the Group is a venturer (and so
has joint control) are included in the financial statements by recognising the
Group's share of jointly controlled assets (classified according to their
nature), the share of liabilities incurred (including those incurred jointly
with other venturers) and the Group's share of expenses incurred by or in
respect of each joint venture.
The Group's interests in assets where the Group does not have joint control are
accounted for in accordance with the substance of the Group's interest. Where
such arrangements give rise to an undivided interest in the individual assets
and liabilities of the joint venture, the Group recognises its undivided
interest in each asset and liability and classifies and presents those items
according to their nature.
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.
(K) 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.
(L) PLANT AND EQUIPMENT
Plant and equipment, and equipment under finance lease are stated at cost less
accumulated depreciation and impairment. Plant and equipment will include
capitalised development expenditure. Cost includes expenditure that is directly
attributable to the acquisition of the item as well as the estimated cost of
abandonment. In the event that settlement of all or part of the purchase
consideration is deferred, cost is determined by discounting the amounts payable
in the future to their present value as at the date of acquisition.
Depreciation is provided on plant and equipment. Depreciation of capitalised
development expenditure will be provided on a unit of production basis over
recoverable reserves, whilst on other fixed assets are calculated on a straight
line basis so as to write off the cost or other re-valued amount of each asset
over its expected useful life to its estimated residual value.
The estimated useful lives, residual values and depreciation method are reviewed
at the end of each annual reporting period.
The following estimated useful lives are used in the calculation of
depreciation:
Plant & Equipment & Office Furniture - 4- 10 years
Motor Vehicles - 2 - 8 years
(M) 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.
(N) PRINCIPLES OF CONSOLIDATION
The consolidated financial statements are prepared by combining the financial
statements of all the entities that comprise the consolidated entity, being the
company (the parent entity) and its subsidiaries as defined in Accounting
Standard AASB 127 'Consolidated and Separate Financial Statements'. Consistent
accounting policies are employed in the preparation and presentation of the
consolidated financial statements.
The consolidated financial statements include the information and results of
each subsidiary from the date on which the company obtains control and until
such time as the company ceases to control such entity.
In preparing the consolidated financial statements, all significant intercompany
balances and transactions, and unrealised profits arising within the
consolidated entity are eliminated in full.
(O) SHARE-BASED PAYMENTS
Employee share options that vested before January 01, 2005 have not been
expensed. The shares are recognised when the options are exercised and the
proceeds are allocated to share capital.
Equity-settled share-based payments granted after November 07, 2002 that were
vested on or after January 01, 2005, are measured at fair value at the date of
grant. Fair value is measured under the Black-Scholes option valuation model.
The fair value determined at the grant date of the equity-settled share-based
payments is expensed on a straight-line basis over the vesting period, based on
the consolidated entity's estimate of shares that will eventually vest.
(P) TAXATION
Current tax
Current tax is calculated by reference to the amount of income taxes payable or
recoverable in respect of the taxable profit or tax loss for the period. It is
calculated using tax rates and tax laws that have been enacted or substantively
enacted by reporting date. Current tax for current and prior periods is
recognised as a liability (or asset) to the extent that it is unpaid (or
refundable).
Deferred tax
Deferred tax is accounted for using the comprehensive balance sheet liability
method in respect of temporary differences arising from differences between the
carrying amount of assets and liabilities in the financial statements and the
corresponding tax base of those items.
In principle, deferred tax liabilities are recognised for all taxable temporary
differences. Deferred tax assets are recognised to the extent that it is
probable that sufficient taxable amounts will be available against which
deductible temporary differences or unused tax losses and tax offsets can be
utilised. However, deferred tax assets and liabilities are not recognised if
the temporary differences giving rise to them arise from the initial recognition
of assets and liabilities (other than as a result of a business combination)
which affects neither taxable income nor accounting profit.
Furthermore, a deferred tax liability is not recognised in relation to taxable
temporary differences arising from goodwill.
Deferred tax assets and liabilities are offset when they relate to income taxes
levied by the same taxation authority and the company/consolidated entity
intends to settle its current tax assets and liabilities on a net basis.
Current and deferred tax for the period
Current and deferred tax is recognised as an expense or income in the income
statement, except when it relates to items credited or debited directly to
equity, in which case the deferred tax is also recognised directly in equity, or
where it arises from the initial accounting for a business combination, in which
case it is taken into account in the determination of goodwill or excess.
Tax Consolidation
The Company and all its wholly-owned Australian resident entities are part of a
tax-consolidated group under Australian taxation law. Centamin Egypt Limited is
the head entity in the tax-consolidated group. Tax expense/income, deferred tax
liabilities and deferred tax assets arising from temporary differences of the
members of the tax-consolidated group are recognised in the separate financial
statements of the members of the tax-consolidated group using the 'separate
taxpayer within group' approach. Current tax liabilities and assets and deferred
tax assets arising from unused tax losses and tax credits of the members of the
tax-consolidated group are recognised by the company (as the head entity in the
tax-consolidated group).
Due to the existence of a tax funding arrangement between the entities in the
tax-consolidated group, amounts are recognised as payable to or receivable by
the company and each member of the group in relation to the tax contribution
amounts paid or payable between the parent entity and the other members of the
tax-consolidated group in accordance with the arrangement. Where the tax
contribution amount recognised by each member of the tax-consolidated group for
a particular period is different to the aggregate of the current tax liability
or asset and any deferred tax asset arising from unused tax losses and tax
credits in respect of that period, the difference is recognised as a
contribution to (or distribution to) equity participants.
NOTE 2: SEGMENT REPORTING
Primary reporting - Business Segments
The economic entity is engaged in the business of exploration for precious and
base metals only, which is characterised as one business segment only.
Secondary reporting - Geographical Segments
The principal activity of the economic entity during the year was the
exploration for precious and base metals in Egypt and funding is sourced from
Canada.
NOTE 3: EVENTS SUBSEQUENT TO BALANCE DATE
Other than as set out above there has not risen in the interval between the end
of the financial year and the date of this report any item, transaction or event
of a material and unusual nature likely in the opinion of the Directors of the
Company to affect significantly the operations of the company, the results of
those operations, or the state of affairs of the Company in subsequent financial
years.
NOTE 4: REVENUE
Half Year Ended
December 31
2007 2006
US$ US$
(a) Revenue
Interest revenue 3,290,245 1,059,389
(b) Other income
Sale of plant and equipment 199,940 433,146
VAT refund 1,840 -
3,492,024 1,492,535
NOTE 5: EXPLORATION, EVALUATION AND DEVELOPMENT EXPENDITURE
Half Year Ended
December 31
2007 2006
US$ US$
Exploration and evaluation phase expenditure
- At Cost (a)
Balance at the beginning of the period 4,627,793 33,808,721
Expenditure for the period 5,178,431 6,629,648
Transfer to Development phase expenditure - -
Balance at the end of the period 9,806,224 40,438,369
Development expenditure
- At Cost (b)
Balance at the beginning of the period 65,287,661 -
Expenditure for the period 41,988,280 -
Transfer from Exploration and evaluation phase expenditure - -
Balance at the end of the period 107,275,941 -
Net book value of exploration, evaluation and development phase expenditure 117,082,165 40,438,369
(a) Included within the cost amount of exploration evaluation and development
assets is $5,311,744 being the excess of consideration over the net tangible
assets acquired on the acquisition of Pharaoh Gold Mines NL in January 1999.
This amount has been treated as part of the cost of exploration, evaluation and
development. Management believe that the recovery of these amounts will
satisfactorily be made through the exploitation of the project in due course.
(b) Development of the Sukari Gold Project commenced in March 2007. Items of
development phase expenditure relevant to the project are being separately
accounted for as development phase expenditure.
NOTE 6: CONTINGENT LIABILITIES
The Directors are not aware of any contingent liabilities as at the date of
these unaudited interim consolidated financial statements.
NOTE 7: ISSUED CAPITAL
Half Year Ended
December 31
2007 2006
US$ US$
Fully paid ordinary shares
Balance at beginning of the period 217,915,069 94,280,380
Issue of shares under Employee option plan 7,031,179 209,577
Transfer from share options reserve 1,826,030 -
Placements 125,998,385 -
Balance at end of the period 352,770,663 94,489,957
Change to the then Corporations Law abolished the authorised capital and par
value concept in relation to share capital from July 01, 1998. Therefore, the
Company does not have a limited amount of authorised capital and issued shares
do not have a par value.
Fully Paid Ordinary Shares
Half Year Ended
December 31, 2007
Number US$
Balance at beginning of the period 755,734,232 217,915,069
Employee share option plan 7,424,931 7,031,179
Transfer from share options reserve - 1,826,030
Placements 112,000,000 125,998,385
Balance at end of the period 875,159,163 352,770,663
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
December 31, 2007, executives and employees have options over 11,102,500
ordinary shares. The expiry dates of the granted options are detailed in Note
10. 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 10 to the financial statements.
Share warrants on issue
As part of the Canadian listing process undertaken during the financial year on
the Toronto Stock Exchange (TSX) the Company was required to issue to its
nominated share broker share warrants as part of the arrangement. Share 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 December 31, 2007 there were 4,007,260 broker
warrants on issue over and equivalent number of ordinary shares (all of which
are vested). Further details of the share warrants are contained in Note 10 to
the financial statements.
NOTE 8: RELATED PARTY TRANSACTIONS
The related party transactions for the six months ended December 31, 2007 are
summarised below:
- Salaries, superannuation contributions, consulting and
Directors fees paid to Directors during the six months ended December 31, 2007
amounted to A$687,040 (December 31, 2006: A$505,053).
- Mr S El-Raghy and Mr J El-Raghy are Directors and
shareholders of El-Raghy Kriewaldt Pty Ltd ('ELK'), which provides office
premises to the Company in Australia. All dealings with ELK are in the ordinary
course of business and on normal terms and conditions. Rent paid to ELK during
the six months ended December 31, 2007 amounted to A$30,916 (December 31, 2006:
A$27,142).
- Mr S El-Raghy provides office premises to the Company in
Alexandria, Egypt. All dealings are in the ordinary course of business and on
normal terms and conditions. Rent paid during the six months ended December 31,
2007 amounted to GBP 3,900 (December 31, 2006: GBP 3,900).
- Mr C Cowden, a non-executive director, is also a director
and shareholder of Cowden Limited, which provides insurance broking services to
the Company. All dealings with Cowden Limited are in the ordinary course of
business and on normal terms and conditions. Amounts paid to Cowden Limited for
insurances during the six months ended December 31, 2007 amounted to A$199,908
(December 31, 2006: A$110,195) of which A$27,692 was retained by Cowden Limited
as Brokerage (December 31, 2006: A$15,561).
- Mr Brian Speechly, a non-executive director, is also a
director and shareholder of Speechly Mining Pty Ltd, a mining consultancy
company. Invoices received for payment during the six months ended December 31,
2007 amounted to A$91,881 (December 31, 2006: A$0)
The amount of US$150,000 appearing in non-current liabilities of the unaudited
interim consolidated balance sheet as at December 31, 2007 represents an
unsecured loan payable 14 days after commencement of commercial production at
the Sukari project to Egyptian Mineral Commodities, a company which Mr S
El-Raghy has a financial interest in. This transaction was entered into by the
Company on September 27, 2001.
NOTE 9: EARNINGS PER SHARE
Basic earnings per share are calculated using the weighted average number of
shares outstanding. Diluted earnings per share are calculated using the treasury
stock method. In order to determine diluted earnings per share, the treasury
stock method assumes that any proceeds from the exercise of dilutive stock
options and warrants would be used to repurchase common shares at the average
market price during the period, with the incremental number of shares being
included in the denominator of the diluted earnings per share calculation. The
diluted earnings per share calculation exclude any potential conversion of
options and warrants that would increase earnings per share.
The weighted average number of ordinary shares used in the calculation of basic
earnings per share is 759,650,488 (December 31, 2006: 578,830,706). The weighted
average number of ordinary shares used in the calculation of diluted earnings
per share is 772,852,988 (December 31, 2006: 585,702,826). The earnings used in
the calculation of basic and diluted earnings per share are US$5,662,037
(December 31, 2006: US$39,726).
NOTE 10: SHARE BASED PAYMENTS
The consolidated entity has an Employee Share 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, 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 issues granted to date.
In addition options (Series 8) were issued to the Company's share broker in
Canada as a gratitude payment for professional services provided during the
listing process on the Toronto Stock Exchange in January 2007. Details of those
options were:
• Exercisable any time within 2 years of grant date.
The following reconciles the outstanding share options granted under the
Employee Share Option Plan, and other share based payment arrangements, at the
beginning and end of the financial year:
Half Year Ended
December 31,
2007
Number of
options
Balance at beginning of the period (a) 13,490,000
Granted during the period (b) 250,000
Forfeited during the period -
Exercised during the period (c) 2,637,500
Expired during the period -
Balance at the end of the period (d) 11,102,500
Exercisable at the end of the period 7,030,000
a) Balance at the start of the period
Fair value at
Expiry / Exercise price grant date
Options series Number Grant date Exercise Date A$ A$
Series 3 395,000 04 Feb 05 04 Feb 08 0.2804 0.1357
Series 4 200,000 17 Feb 05 17 Feb 08 0.2804 0.1435
Series 5 1,700,000 31 Oct 05 31 Oct 10 0.3500 0.1753
Series 6 1,500,000 08 Dec 05 08 Dec 08 0.4355 0.1495
Series 7 250,000 30 Aug 06 30 Aug 09 0.6566 0.2785
Series 8 2,000,000 10 Jan 07 10 Jan 09 0.8000 0.2393
Series 9 3,615,000 31 Jan 07 31 Jan 10 0.7106 0.3518
Series 10 2,330,000 24 May 07 24 May 10 1.0500 0.4661
Series 11 1,500,000 25 Jun 07 25 Jun 10 1.1636 0.3210
13,490,000
b) Issued during the period
Fair value at
Expiry / Exercise price grant date
Options series Number Grant date Exercise Date A$ A$
Series 12 250,000 15 Oct 07 15 Oct 10 1.4034 0.4002
250,000
c) Exercised during the period
Options series Number Exercise Date Share price at
exercised exercise date
A$
Series 3 20,000 25 Oct 07 1.4350
50,000 07 Nov 07 1.5000
25,000 08 Nov 07 1.5750
Series 4 50,000 18 Jul 07 1.2800
50,000 09 Nov 07 1.5700
Series 5 30,000 22 Oct 07 1.4200
Series 7 10,000 08 Aug 07 1.275
15,000 12 Sep 07 1.210
10,000 24 Sep 07 1.390
35,000 27 Sep 07 1.330
Series 8 1,000,000 19 Oct 07 1.4000
1,000,000 20 Nov 07 1.4200
Series 9 20,000 02 Oct 07 1.3700
25,000 08 Oct 07 1.3350
55,000 10 Oct 07 1.3400
25,000 19 Oct 07 1.4000
25,000 22 Oct 07 1.4200
15,000 23 Oct 07 1.4400
15,000 07 Nov 07 1.5000
37,500 08 Nov 07 1.5750
15,000 12 Nov 07 1.5200
10,000 16 Nov 07 1.4650
100,000 17 Nov 07 1.4650
2,637,500
d) Balance at the end of the period
Exercise Fair value at
Expiry / price grant date
Options series Number Grant date Exercise Date A$ A$
Series 3 300,000 04 Feb 05 04 Feb 08 0.2804 0.1357
Series 4 100,000 17 Feb 05 17 Feb 08 0.2804 0.1435
Series 5 1,670,000 31 Oct 05 31 Oct 10 0.3500 0.1753
Series 6 1,500,000 08 Dec 05 08 Dec 08 0.4355 0.1495
Series 7 250,000 30 Aug 06 30 Aug 09 0.6566 0.2785
Series 9 3,202,500 31 Jan 07 31 Jan 10 0.7106 0.3518
Series 10 2,330,000 24 May 07 24 May 10 1.0500 0.4661
Series 11 1,500,000 25 Jun 07 25 Jun 10 1.1636 0.3210
Series 12 250,000 15 Oct 07 15 Oct 10 1.4034 0.4002
11,102,500
NOTE 11: SHARE WARRANTS
a) Balance at the start of the period
The following share warrants were in existence during the current reporting
period:-
Fair value at
Warrants series Number Grant date Expiry Date Exercise price grant date
C$ A$
Series 1 3,751,431 05 Apr 07 05 Apr 09 0.8600 0.3011
Series 2 4,429,678 13 Apr 07 11 Apr 09 0.8600 0.2743
Series 3 613,582 20 Apr 07 20 Apr 09 0.8600 0.2868
8,794,691
b) Exercised during the period
Share price
Warrants series Number at exercise
exercised Exercise Date date
A$
Series 1 1,000,000 28 Nov 07 1.4050
500,000 03 Dec 07 1.3800
500,000 07 Dec 07 1.3600
1,000,000 10 Dec 07 1.3900
751,431 13 Dec 07 1.3600
Series 2 1,036,000 18 Dec 07 1.2800
4,787,431
c) Balance at the end of the period
Exercise Fair value at
Expiry / price grant date
Options series Number Grant date Exercise Date A$ A$
Series 2 3,393,678 13 Apr 07 11 Apr 09 0.8600 0.2743
Series 3 613,582 20 Apr 07 20 Apr 09 0.8600 0.2868
4,007,260
Following a general meeting of the Company's shareholders held on 10 January
2008 a resolution was passed to approve the issue of 5,600,000 share warrants
with an exercise price of C$1.29 each and an expiry date of 23 November 2009.
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.
NOTE 12: Impact of reconciliation between Australian accounting standards and
Canadian GAAP
There are no material differences between the Income Statements, Balance Sheets,
Statement of Changes in Equity and Cash Flow Statements presented under
Australian accounting standards and Canadian GAAP.
The Company would be required under Canadian GAAP to adopt the provisions of
Sections 3855 (Financial Instruments - Recognition and Measurement), 3861
(Financial Instruments - Disclosure and Presentation) and 1530 (Comprehensive
Income) from July 01, 2007 which address the classification, recognition and
measurement of financial instruments in the financial statements and the
inclusion of other comprehensive income. These new standards require that the
Company identifies all financial instruments and accounts for these financial
instruments at their fair value. Costs associated at the recognition date with
these financial standards can be either immediately expensed or offset against
the fair value of the financial instruments.
The Company has elected to expense all costs associated with the acquisition of
financial instruments. Financial assets are classified as one of the following
groupings: loans and receivables, assets held to maturity, available for sale
financial assets or assets held for trading. Changes in the fair value of
available for sale financial assets are taken to equity and reported in the new
Statement of Comprehensive Income, until the financial asset is either
derecognized or impaired, where it is then accounted for in the Statement of
Operations. Changes in the fair value of assets held for trading are reflected
in the Statement of Operations. Assets held to maturity and loans and
receivables are measured at amortised cost. Financial liabilities are classified
as either trading or at amortised costs. Comparative periods have not been
adjusted to reflect the implementation of these new standards.
In addition to recognising the unrealized fair value changes in available for
sale financial assets in the Statement of Comprehensive Income, unrealized gains
and losses on translating financial statements of self sustaining foreign
operations, unrealized gains and losses on foreign currency translation
associated with hedges, donations from non-owners and appraisal credit
increases are also recognized in the new statement.
As the company does not presently hold any financial instruments for which
amounts would be required to be recognised in a Statement of Comprehensive
Income, this statement has not been presented in this report.
This information is provided by RNS
The company news service from the London Stock Exchange