Quarterly Report
Centamin Egypt Limited
13 February 2008
CENTAMIN EGYPT LIMITED
SECOND QUARTER REPORT
December 31, 2007
REPORT TO SHAREHOLDERS
QUARTERLY HIGHLIGHTS
- Sukari mineral resource upgraded to 7.46 million ounces of gold Measured and
Indicated, and 3.7 million ounces of gold Inferred at 0.5 g/t cut off grade
- Measured and Indicated resources account for 67% of the total resource
- An increase of 0.62 Moz Measured and Indicated ounces and 0.04 Moz Inferred
ounces above the mineral resource announced in September 2007
- Amun Deeps discovery continues to add significant high grade ounces
- New high grade structure discovered below Hapi zone
- 25,195.86m of drilling completed during the quarter
- Initial regional exploration drilling at Kurdeman returned significant assay
results
- Grade control drilling continues
- Initial mining fleet commissioned
- Blast hole drilling commences
- Delivery of Process Plant from Bolivia to Sukari site completed
- Delivery of 28MW Power Plant from Turkey to Sukari site completed
- Completion of C$134.4m equity raising
- Significant intersections received for the quarter include:
Amun Deeps (9900N - 10700N)
• RCD1221 - 22m @ 21.83g/t Au
• RCD1224 - 10.3m @ 36.09g/t Au
• RCD1225 - 83m @ 1.95g/t Au
• RCD1228 - 61m @ 4.35g/t Au
• RCD1263 - 65m @ 3.96g/t Au
• RCD1264 - 30m @ 2.69g/t Au
• D1271 - 42m @ 2.75g/t Au
• RCD1279 - 2m @ 59.77g/t Au from 629m
Ra - Gazelle (10700N - 11200N)
• D1240 - 58m @ 4.32g/t Au and 43m @ 5.01g/t
• D1251 - 18m @ 3.30g/t Au
• D1281 - 123m @ 1.86g/t Au
RESOURCE ESTIMATION AND DRILLING PROGRAMME
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 and by 9% to
7.46 Moz, from 6.84 Moz (20 September 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
http://www.rns-pdf.londonstockexchange.com/rns/8953n_-2008-2-13.pdf
Figure 1 - Resource growth at Sukari from April 1997 to December 2007
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
350mRL (approximately a maximum depth of 950 metres below the crest of the
Sukari hill) and is based on all assay data available (117,774 two metre down
hole composites and surface rock chip samples) at 12 December 2007.
DRILLING PROGRAMME
The drilling programme during the quarter was concentrated in the Amun Deeps
area. This resulted in added resource ounces down dip of the current geological
data, infilling resource block and geological data gaps at and beneath the pit
margins and increased the understanding of the mineralization trends. Strong
zones of mineralization were intersected relating to the high grade Hapi Zone
and deeper parallel structures. As mineralisation remains open, drilling will
continue in this area.
In the Ra-Gazelle Zone drilling tested open zones along the Hapi Zone structure
with several high grade intersections returned, this zone is not fully tested to
the north and there is further potential to add significant resources along
strike and at depth. Studies commenced of the underground mining potential on
the Hapi Zone structure.
Amun Deeps (9900 - 10700N)
The Amun Deeps system has been intersected over 700m along strike from 9950N,
drilling continues to define the extent of the mineralization. Several holes
returned strong assays over significant widths (Table 2); most have visible gold
in the high grade Hapi Zone quartz veins, strongly disrupted geological contacts
and areas of higher intensity arsenopyrite and pyrite mineralisation.
http://www.rns-pdf.londonstockexchange.com/rns/8953n_2-2008-2-13.pdf
Figure 2 - Long section of Sukari showing the high grade mineralized structures
(Main and Hapi Zone) and highlighting the drill intercepts through the Amun
Deeps.
High grade gold assay results were returned for RCD1221, the hole was drilled as
a step-out hole to test the down dip extension of the porphyry in the Amun zone
on northing 10525N (Figure 3). This hole intersected a high grade zone of 22m @
21.83g/t Au from 549m, containing a higher grade zone of 8m @ 58.58g/t Au from
559m. The intersection is a high grade structure parallel to and below the Hapi
Zone. This deeper structure correlates to 6m @ 15.21g/t Au in hole RCD521 from
542m, 25m north on 10550N and an adjacent extremely high grade looking zone
containing visible gold and sulphide, intersected in hole RCD1280 (assay results
are awaited) (Figure 4).
http://www.rns-pdf.londonstockexchange.com/rns/8953n_3-2008-2-13.pdf
Figure 3 - Geological Section 10500N and hole D1221
http://www.rns-pdf.londonstockexchange.com/rns/8953n_4-2008-2-13.pdf
Figure 4 - D1280 558 - 559m; massive milky quartz vein, gold veinlets and
galena, zone beneath Hapi Zone
Hole RCD1279, a further 100m north on 10650N, intersected, mineralised porphyry
with quartz veins containing several visible gold grains in a similar zone at
depth intersected 2m @ 59.77g/t from 629m. This is consistent with the
continuity along strike of the high grade Amun Deeps mineralization and the
possible presence of another significant high grade structure beneath the Hapi
Zone.
At the southern end of the Amun Deeps Zone hole RCD1263 on section 10050N
intersected a thick high grade zone (65m @ 3.96g/t Au from 283m) correlating
well with adjacent hole RCD1189. The zone contained several narrow, high grade
quartz vein/shears including 1m @ 147g/t Au from 347m.
On section 10125N RCD1225 intersected an 80m wide zone of porphyry as predicted
by the model, 83m @ 1.95g/t Au from the hangingwall (HW) contact at 366m with
the expected higher grade zones at the HW and footwall (FW) contact zones. The
HW contact Hapi Zone returned 3m @ 15.83g/t Au from 380m.
RCD1228 on section 10275N intersected very strong mineralised Hapi Zone, with
multiple specs of visible gold from 323 - 327m (2m @ 103.2g/t from 324m).
Overall porphyry mineralisation returned 61m @ 4.35g/t from the HW contact at
298m, also intersected a very high grade zone of 4m @ 36.62g/t Au from 434m, in
a block of porphyry in the FW.
Ra - Gazelle Zone - 10700N - 11200N
Results from infill holes all returned with significant mineralisation D1251 on
11050N infilling the Hapi and lower zones intersected 18m @ 3.30g/t from 661m.
D1281 on 11150N hit some very high grades around the predicted Hapi Zone area,
within a massive zone of 123m @ 1.86g/t Au. This hole also successfully
infilled a zone with high grade blocks in the resource model (Figure 5). D1240
on section 11200N intersected several high grade zones, particularly the near
footwall contact up-dip part of the Hapi zone of 58m @ 4.32g/t Au from 462m.
There exists further potential to add resource ounces to the north in this area.
http://www.rns-pdf.londonstockexchange.com/rns/8953n_5-2008-2-13.pdf
Figure 5 - Geological Section 11150N, high grade thick zone in D1281
REGIONAL EXPLORATION
Regional and near mine exploration continued, drilling at Kurdeman and Sami
South intersected high grade and anomalous gold mineralization results
respectively. Follow up drilling, detailed mapping and sampling continued at
Sukari North, Sami South and Kurdeman (Figure 6).
http://www.rns-pdf.londonstockexchange.com/rns/8953n_6-2008-2-13.pdf
Figure 6 - Regional map of prospects and the current 160km2 licence area.
Kurdeman
The initial 5 hole drill program (KRC001 to KRC005) at the Kurdeman prospect
intersected the targeted quartz vein-shear zone, which was worked by ancient and
colonial miners, hosted in felsic to intermediate volcanic and intrusive rocks.
The high grade gold mineralisation intersected is associated with smoky grey
quartz veins and sulphides. Hole KRC002 returned a high grade intercept of
downhole thickness 9m @ 9.29g/t Au from 27m, including 2m @ 32.2g/t Au from 32m
in the smoky quartz vein. The shallow high grade interval was in a wider 30m
zone of Au anomalous, hydrothermally altered and sheared felsic to intermediate
rock.
Hole KRC005, drilled 140m south along strike of KRC002, intersected similar
zones involving smoky, massive quartz veining in sheared and altered felsic
rocks. Two high grade zones were returned, 3m @ 4.56g/t Au from 18m (including
1m @ 8.54g/t from 19m) and 2m @ 11.92g/t from 26m, with a similar halo of
mineralisation in altered and sheared rock. The intersections are open along
strike and down dip.
Follow up holes, detailed geological mapping and sampling are in progress to
assess the depth, thickness, strike and nature of the Kurdeman Shear Zone and
quartz vein, results are awaited. The area beneath the historical underground
workings has yet to be tested.
Sami South
Numerous anomalous gold samples associated with quartz veining, shear zones and
alteration in sedimentary and volcanic rocks, were returned from three RC drill
holes and surface rock chip samples. The data is currently being assessed.
Sukari North
Detailed geological mapping and rock chip sampling is underway, following up on
historic work to fully define the felsic intrusive unit and the weakly
mineralised quartz veins. Adjacent to the felsic unit are several thicker (up to
3m), yet short strike length (<20m) quartz reefs oriented at right angles to the
schistosity and these have minor Ancient workings.
Drill pads will be planned to test the quartz veins and shear zones delineated
by the mapping and sampling.
GRADE CONTROL
Grade control drilling continued on available tracks on Sukari Hill within the
mine footprint, 5,094m was drilled. Gold mineralisation estimated from grade
control modeling corresponds to expected mineralisation in the resource model;
assay results highlight shallow easterly and westerly dipping structures.
SUKARI GOLD PROJECT (CONSTRUCTION UPDATE)
The project schedule has been updated to 31 December 2007, covering all phases
of the project. Key completion dates are listed below:
Project Go-Ahead Decision Feb 2007 (Completed)
Kori Kollo Plant Arrives Egypt Q4 2007 (Completed)
Project Finance Q4 2007 (Completed)
Construction Camp Q1 2008 (Commenced)
Project Engineering & Design Q2 2008 (Commenced)
Site Works Q2 2008 (Commenced)
Tailings Storage Facility Q2 2008 (Commenced)
Mining Pre-strip Q2 2008
Seawater Pipeline Q3 2008
Commissioning and Production Q4 2008
Progress pictures can be viewed on the Company's website - www.centamin.com.
Kori Kollo Process Plant / Isparta Power Station
On 24 October 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. All staff
from Bolivia and Turkey have now relocated to Egypt to continue with the
reassembly of the plants at Sukari. The Isparta power plant consisted of 24
pieces of break bulk and 56 containers holding more than 900 individual
packages. The Kori Kollo processing plant comprised 270 pieces of break bulk and
55 containers.
Trucking of freight to the Sukari site is now complete. This latest development
represents an exciting phase for the Company as it takes another step towards
the commissioning of the first modern gold mine in Egypt which is scheduled for
the fourth quarter of 2008.
Project Finance
On 23 November 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.
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 Sukari Gold Project is 100% fully funded through to gold production
currently forecast to be in quarter four this calendar year. As a result the
Company no longer needs to pursue debt financing, has no debt, no hedging and at
31 December 2007, had a cash balance of US$226M.
Construction Camp
Completion of the 700 man accomodation facility is nearing finalisation with
several of the first accomodation parcels available for occupation during the
early part of quarter one. The accomodation facilities are a combination of the
traditional dome style bricked facility and conventional demountable style.
Project Engineering and Design
MetPlant Engineering Services Pty Ltd, an Australian-based company have
continued with the engineering and design work for the Process Plant.
Site Works
Activities completed and commenced to the end of the quarter are as follows:
• Upgrading of the 10km access road to the Sukari site (completed)
• Establishment of container & mine lay down and security hut complex
facilities (completed)
• Temporary maintenance, warehousing and fuelling facilities (completed)
• Bulk earthworks for the plant site (commenced)
• Crushed ore stockpile reclaim tunnel (commenced)
A significant amount of rocky outcrops overlaying the plant site area have been
removed through the utilisation of the new mining equipment which has
facilitated in the training of owner personnel.
Tailings Storage Facility
Knight Piesold Pty Ltd has been appointed to carry out the design and
construction supervision of the Tailings Storage Facility. Design work is
forecast to be completed in early the first quarter of 2008 with commencement of
earthworks to follow in the same quarter. The bulk earthworks component of the
tailings dam will be undertaken by the Company utilising the available capacity
of its own mining department and fleet combined with a local contractor.
Mining Pre-strip
Caterpillar, through their Egyptian authorised dealer Mantrac, was selected
through a competitive tender as the supplier of haulage trucks, articulated dump
trucks, excavators, graders and dozers for the project. The initial mining fleet
sufficient to commence mining pre-strip work will largely comprise:
CAT 785C Rear Dump Trucks (5)
CAT 785C Water Truck (1)
O&K RH120E Excavator (1)
CAT D10T Dozers (2)
CAT 14H Grader (1)
CAT 16M Grader (1)
CAT 365 BLME Excavator (1)
CAT 988G Wheel Dozers (2)
H180D Rock Breaker (1)
Atlas Copco has been selected to supply grade control and blast hole drilling
equipment. Initial fleet selection comprises:
ROC F9 Pioneer Drill (1)
L8 MKII Production Drill (1)
L8 MKII RC Rig (1)
During the quarter, following assembly and completion test, the Company took
possession of the five CAT 785C Rear Dump Trucks, one O&K RH120E Excavator, one
CAT 365 BLME Excavator, one CAT D10T Dozer and one CAT 14H Grader. The equipment
has been utilised since handover in various site works activity.
Mining pre-strip activity is scheduled to commence in quarter two of 2008.
Seawater Supply System
Tender documents were distributed during the quarter for the Seawater Supply
System which will draw in and transport raw seawater, via a staged pumped
pipeline, to the Sukari site where it will be processed through a desalination
plant for end use as process plant water, mine site dust suppression water and,
after secondary processing and treatment for construction camp drinking water.
SUKARI GOLD PROJECT (BACKGROUND)
Centamin is a mineral exploration and development company that has been actively
exploring in Egypt since 1995. The principal asset of Centamin is its interest
in the Sukari 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 quarter two of 2007 and first gold production expected during the
fourth quarter of 2008.
A definitive feasibility study (the 'DFS') for the development to commercial
production of the Sukari Gold Project was completed in February 2007.
A summary of the findings of the DFS were:
• the DFS concluded that a 4mpta plant producing on average 200,000 ounces
per annum, over 15 years of mining, is economically robust; and
• total Capital Construction costs are estimated at US$216m with average
cash operating costs of US$290/oz (inclusive of 3% royalty) over the 15 year
mining period.
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 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 mineralization is hosted exclusively by a granitoid body
of granodiorite - tonalite composition referred to as the Sukari Porphyry. The
Company has entered into a Concession Agreement with the Egyptian Government
that provides for exploration and exploitation rights at the Sukari Gold Project
and whereby the Operating Company, owned 50% by the Company's wholly owned
subsidiary, Pharaoh Gold Mines NL ('PGM') and 50% by Egyptian Mineral Resource
Authority ('EMRA'), has been established. Centamin is entitled to recover all of
its exploration, operating and capital costs from operating surpluses of the
operating company.
The Sukari Mining Licence covers an area of 160 km2 and is for a period of 30
years, with an option for a further 30 years.
The Sukari Gold Project has been scheduled for open pit mining over an initial
15-year period. During that time 78 Mt ore @ 1.5 g/t Au is expected to be mined,
producing 3.7 Moz gold. A further 374 Mt of waste material is also expected to
be mined resulting in a waste to ore strip ratio of 4.8:1.
Ore and waste will be mined using conventional open pit mining methods. The
operation is planned to 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 4 Mtpa Process Plant throughput rate.
Mining will be progressed at an increased rate compared to processing;
approximately 5 Mt of ore is expected to be mined and 4 Mt 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 will own and operate its mining fleet. The production fleet will be
based on 380 t class excavators and 150 t class rigid body trucks. At full
production, three production fleets, each comprising a single excavator and
sharing a maximum of 21 trucks, will be required. The capital cost of the
initial mining fleet has been estimated by AMC at US$48.8 million.
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 dore; 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 dore; 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 500m(3)/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 temporary construction camp facility will be required to cater for
approximately 500 construction employees and 20 senior staff. This is being
constructed at the Sukari Gold Project site.
On behalf of Centamin Egypt Limited
Josef El-Raghy
Managing Director/CEO
February 13, 2008
For more information please contact:
Centamin Egypt Limited Pelham Public Relations Ambrian Partners Limited
+ 61 (8) 9316 2640 Te l : + 44 (0) 207 743 6376 + 44 (0) 207 776 6400
Josef El-Raghy Mobile : + 44 (0) 7894 462 114 Richard Brown
Candice Sgroi
Information in this report which relates to exploration, geology, sampling and
drilling is based on information compiled by geologist Mr R Osman who is a full
time employee of the Company, and is a member of the Australasian Institute of
Mining and Metallurgy with more than five years experience in the fields of
activity being reported on, and is a 'Competent Person' for this purpose and is
a 'Qualified Person' as defined in 'National Instrument 43-101 of the Canadian
Securities Administrators'. His written consent has been received by the Company
for this information to be included in this report in the form and context which
it appears. The 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 in March 2007 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.
Table 2 - Significant Intersections December 2007 Quarter
HOLE NORTH EAST DIP AZI EOH FROM TO INTERVAL Au ppm
D403 10875 10680 -82 270 636.00 509 547 38 1.14
incl. 512 513 1 6.38
incl. 527 528 1 5.54
568 582 14 0.94
RCD1174 10100 10665 -85 270 579.00 371 475 104 1.59
incl. 386 388 2 8.13
RCD1221 10525 10800 -85 270 666.20 393 415 22 2.01
incl. 401 404 3 4.14
455 481 26 3.07
incl. 463 472 9 6.35
501 504 3 1.40
519 520 1 73.40
549 571 22 21.83
incl. 559 567 8 58.58
RCD1224 10175 10665 -87 270 556.50 251 257 6 3.87
incl. 256 257 1 19.50
284 286 2 76.74
338 348.3 10.3 36.09
incl. 343 345 2 176.45
368 389 21 1.30
493 497 4 4.41
incl. 493 494 1 13.90
RCD1225 10125 10662 -88 270 586.70 366 449 83 1.95
incl. 373 374 1 5.62
incl. 380 383 3 15.83
incl. 435 437 2 5.75
incl. 447 448 1 8.68
RCD1228 10275 10700 -73 270 467.10 298 359 61 4.35
incl. 324 326 2 103.20
369 371 3 5.65
434 438 4 36.62
incl. 437 438 1 101.00
D1231 10500 10795 -80 270 705.70 241 245 4 2.93
375 379 4 3.14
541 575 34 1.77
RCD1235 10450 10800 -85 270 668.20 419 427 8 4.70
incl. 424 425 1 26.10
RCD1236 10025N 10568 -90 0 525.60 236 238 2 1.54
244 257 13 1.17
324 335 11 1.24
373 392 19 1.11
429 433 4 1.44
D1240 11200 10700 -77 270 652.20 426 437 11 1.27
462 520 58 4.32
incl. 472 474 2 36.63
incl. 479 481 2 7.75
incl. 488 489 1 20.70
incl. 501 507 6 6.83
incl. 511 513 2 5.49
incl. 518 519 1 9.31
532 564 32 1.49
incl. 542 543 1 15.80
incl. 562 563 1 6.36
593 636 43 5.01
incl. 628 629 1 24.80
incl. 632 634 2 79.51
RCD1241 9900 10546 -77 270 343.00 202 204 2 1.56
D1244 11950 10820 -10 270 299.27 0 15 15 1.25
incl. 488 489 1 20.70
D1251 11050 10716 -82 270 771.30 174 201 27 0.96
226 229 3 1.72
283 342 59 1.43
incl. 334 335 1 9.06
348 393 45 1.22
incl. 378 381 3 8.06
412 441 29 0.91
465 484 19 1.29
493 516 23 1.72
584 591 7 1.54
596 610 14 1.32
634 638 4 1.23
661 679 18 3.30
incl. 662 663 1 5.13
incl. 670 671 1 44.10
701 704 3 1.11
RCD1263 10050 10625 -87 270 540.40 203 205 2 4.10
283 348 65 3.96
incl. 287 291 4 5.58
incl. 298 299 1 12.00
incl. 347 348 1 147.00
389 392 3 2.00
RCD1264 10600 10833 -78 270 668.10 109 122 13 2.01
incl. 117 118 1 14.60
277 307 30 2.69
incl. 294 297 3 9.66
D1271 10425 10700 -77 270 481.80 297 339 42 2.75
incl. 311 314 3 9.52
incl. 317 319 2 7.58
incl. 328 329 1 11.70
363 392 29 1.65
incl. 364 365 1 6.00
incl. 387 389 2 6.33
398 410 12 1.16
RCD1279 10650 10818 -78 270 729.00 71 78 7 1.25
363 366 3 4.66
406 409 3 1.10
629 631 2 59.77
incl. 629 630 1 113.00
D1280 10550 10843 -82 270 726.70 430 454 24 0.93
461 500 31 1.82
incl. 471 473 2 6.47
incl. 477 478 1 5.71
D1281 11150 10630 -83 270 697.80 475 598 123 1.86
incl. 506 507 1 14.20
incl. 512 513 1 9.37
incl. 520 521 1 9.17
incl. 523 525 2 14.15
incl. 553 555 2 7.18
635 646 11 1.42
incl. 637 638 1 8.59
664 670 6 16.09
D1283 9900N 10562 -80 270 375.00 282 298 16 1.56
incl. 288 289 1 5.28
KRC002 2752141 671189 -60 270 150.00 27 36 9 9.29
incl. 32 34 2 32.20
145 146 1 14.00
KRC005 2751991 671194 -60 270 150.00 18 21 3 4.56
incl. 19 20 1 8.54
26 28 2 11.92
incl. 27 28 1 20.40
MANAGEMENT DISCUSSION AND ANALYSIS
The following Management's Discussion and Analysis of the Financial Condition
and Results of Operations ('MD&A') for Centamin Egypt Limited (the 'Company' or
'Centamin') should be read in conjunction with Unaudited Interim Consolidated
Financial Statements for the three months ended December 31, 2007 and 2006 and
related notes thereto. The effective date of this report is February 13, 2008.
The accompanying unaudited interim consolidated financial statements have been
prepared in accordance with generally accepted accounting principles in
Australia. The financial statements are prepared using the same accounting
policies and methods of application as those disclosed in note 3 to the
consolidated financial statements for the year ended June 30, 2007, but they do
not include all the disclosures required by Australian Accounting Standards for
annual financial statements.
In addition to these Australian requirements, further information has been
included in the Unaudited Interim Consolidated Financial Statements for the six
months ended December 31, 2007 and 2006 in order to comply with applicable
Canadian securities law, as the Company is listed on the Toronto Stock Exchange.
Additional information relating to the Company, including the Company's most
recent Annual Report for the year ended June 30, 2007 and other public
announcements is available at www.centamin.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, with construction having
commenced in March 2007 and first gold production expected during the fourth
quarter of 2008.
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.
A definitive feasibility study (the 'DFS') for the development to commercial
production of the Sukari Project was compiled in February 2007 by Roche Process
Engineering Pty Ltd. The DFS provides that the capital cost to develop the
project is estimated at US$216.5 million (including mining fleet and
contingencies but not including the leased mining fleet). According to the DFS,
the Sukari Project reserve will be mined by a single open pit over a 15-year
period. During that time 78 Mt ore grading 1.5 g/t is expected to be mined,
containing 3.7M oz gold. Over this 15-year mining period the project is expected
to produce on average 200,000 oz of gold annually at an average cash operating
cost of US$290/oz.
SELECTED FINANCIAL INFORMATION FROM THE UNAUDITED INTERIM CONSOLIDATED INCOME
STATEMENTS
Three Months Ended Six Months Ended
December 31 December 31
2007 2006 2007 2006
US$ US$ US$ US$
Revenue 1,777,407 506,038 3,290,245 1,059,389
Other income 199,940 433,146 201,780 433,146
Corporate administration expenses (1,518,328) (444,002) (2,071,919) (843,357)
Foreign exchange gain / (loss) 412,502 (303,495) 5,927,574 (101,881)
Share based payments (593,947) (188,018) (1,381,402) (188,018)
Other expenses (145,412) (314,965) (304,241) (319,553)
Profit (loss) before income tax 132,162 (311,296) 5,662,037 39,726
Tax (expense)/income - - - -
Net profit (loss) for the period 132,162 (311,296) 5,662,037 39,726
Earnings per share
- Basic (cents per share) 0.745 0.007
- Diluted (cents per share) 0.733 0.014
Revenue reported comprises interest revenue applicable on the Company's
available cash and working capital balances and term deposit amounts. On a
comparative year to date basis the Revenue figure is significantly higher due to
the higher average cash holdings. Other income reported represents an unbudgeted
asset sale of minor equipment from the purchase of the Kori Kollo plant in
Bolivia deemed not necessary for transportation to Egypt.
Corporate administration expenses reported comprise expenditure incurred for
communications, consultants, directors' fees, stock exchange listing fees, share
registry fees, employee salaries and general office administration expenses. The
amount also includes a once off charge of $926,436 for project debt financing
and due diligence fees incurred during the financing process with Barclays
Capital. As reported on page 18 the Company has raised the funding for the
Sukari project from the equity markets and no longer needs to pursue debt
financing discussions with Barclays Capital.
Foreign exchange gain reported is attributable to positive exchange rate
movements during the period as a result of the weakening United States dollar
against the Canadian dollar.
Share based payments reported relate to the requirement to recognise the cost of
granting options to directors, company executives and employees under AIFRS over
the option vesting period.
Other expenses reported comprise non-cash expenses for depreciation and employee
entitlements.
The profit after tax of the consolidated entity for the three months ended
December 31, 2007 was $132,162.
SELECTED FINANCIAL INFORMATION FROM THE UNAUDITED INTERIM CONSOLIDATED BALANCE
SHEETS
December 31, 2007 June 30, 2007
US$ US$
Total current assets 226,161,999 136,735,715
Total non-current assets 129,025,450 81,982,697
Total assets 355,187,449 218,718,412
Total current liabilities 2,764,002 6,367,968
Total non-current liabilities 150,000 150,000
Total liabilities 2,914,002 6,517,968
Net assets 352,273,447 212,200,444
Current assets reported have increased due to the capital raising completed
during the period. 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.
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.
Non-current assets reported have increased during the period as a result of the
expenditure incurred with regard to ongoing exploration resource drilling at
Sukari and initial construction activities at Sukari. The Company's accounting
policy is to capitalise expenditure of this nature under the categories of
Property, Plant and Equipment and Exploration, Evaluation & Development.
Current liabilities reported have decreased during the period due to the final
payment in the amount of US$1.7M being made for the acquisition of a second hand
power plant in Turkey. Non-current liabilities reported during the period remain
unchanged and represent a payment due to a related party upon commencement of
gold production from the Sukari project.
SELECTED FINANCIAL INFORMATION FROM THE UNADUITED INTERIM CONSOLIDATED
STATEMENTS OF CHANGES IN EQUITY
Three Months Ended Six Months Ended
December 31, 2007 December 31, 2007
US$ US$
Total equity at beginning of period 218,586,092 212,200,444
Movement in issued equity 134,757,435 134,855,594
Movement in reserves (1,202,242) (444,628)
Profit for the period 132,162 5,662,037
Total equity at end of period 352,273,447 352,273,447
Issued equity reported has increased due to the exercise of employee options and
the announcement on November 23, 2007 that the Company 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$134,400,000 which includes the
exercise in full by the Underwriters of the Underwriters' option.
Reserves reported comprise two separate and distinct transactions within the
reported figure. Firstly there is requirement to recognise the cost of granting
options to directors, company executives and employees under AIFRS over the
option vesting period and secondly upon exercise of the option an amount is
required under AIFRS to be transferred from the reserve to the issued equity
account.
Profit for the three months ended December 31, 2007 is analysed under the
section Consolidated Income Statement.
SELECTED FINANCIAL INFORMATION FROM THE UNAUDITED INTERIM CONSOLIDATED CASH FLOW
STATEMENTS
Three Months Ended Six Months Ended
December 31 December 31
2007 2006 2007 2006
US$ US$ US$ US$
Net cash flow from operating activities (3,020,925) (2,721,127) (6,794,599) (5,577,388)
Net cash flow from investing activities (23,267,444) (6,270,825) (41,568,850) (6,397,083)
Net cash flow from financing activities 131,863,709 205,911 131,482,651 302,889
Net increase / (decrease) in cash and cash 105,575,340 (8,786,041) 83,119,202 (11,671,582)
equivalents
Cash and cash equivalents at the beginning of 119,722,952 41,819,302 136,501,015 44,513,500
the financial period
Effects of exchange rate changes 819,099 (347,029) 6,497,174 (155,686)
Cash and cash equivalents at the end of the 226,117,391 32,686,232 226,117,391 32,686,232
financial period
Net cash flow from operating activities reported comprises payments for
corporate salary and wages, corporate administration and compliance, and
exploration expenditure costs offset by interest revenue received. On a
comparative three month and six month period basis expenditure is higher due to
additional compliance and exploration activity.
Net cash flow from investing activities reported comprises preproduction and
capital development expenditures at the Sukari project. On a comparative three
month and six month period basis expenditure is significantly higher due to
commencement of preproduction and capital development activity which in the same
period last year had not yet commenced. Figures reported for the comparative
period last year comprised work directed towards completion of the definitive
feasibility study into the Sukari project which was completed in February 2007.
Net cash flow from financing activities reported comprises funding obtained
through the exercise of employee options and equity raisings undertaken.
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 January 29, 1995 and effective from June 13, 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
Pharaoh Gold Mines NL (PGM) a 100% wholly owned subsidiary of the Company, EGSMA
(now EMRA) and the Arab Republic of Egypt (ARE) entered into the Concession
Agreement dated January 29, 1995, 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 identified in the Concession Agreement.
The Concession Agreement came into effect under Egyptian law on June 13, 1995.
The initial term of the Concession Agreement was for one year and was extended
by the parties for three two-year periods in accordance with its terms.
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 November 9, 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 May 24, 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 5
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 March 27, 2006. The Operating Company
was formed to conduct exploration, development, exploitation and marketing
operations 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.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal source of liquidity as at December 31, 2007 is cash of
$226,117,391 (December 31, 2006 - $32,686,232). Of this amount $225,012,430 has
been invested in weekly rolling short term higher interest money market
deposits. The reason for the significant change to the cash position is the
equity raising completed on November 23, 2007 where it was announced that the
Company 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$134,400,000, which includes the exercise in full by the Underwriters of the
Underwriters' option.
The net proceeds of this equity financing are to be applied to fund the
continued development of the Sukari gold project, underground development, other
exploration and general corporate purposes.
The following is a summary of the Company's outstanding commitments as at
December 31, 2007:
Payments due Total Less than 1 year 1 to 5 years
US$ US$ US$
Creditors 2,108,222 2,108,222 -
Total commitments 2,108,222 2,108,222 -
The Company's financial commitments are limited to controllable discretionary
spending on work programs at the Sukari Project, administration expenditure at
the Egyptian and Australia office locations and for general working capital
purposes.
The following is a summary of the Company's estimated cash outflow for the next
quarter as at December 31, 2007:
Cash outflow Total
US$
Exploration & Evaluation 3,164,091
Corporate Administration 632,300
Preproduction and Sukari Development 40,496,039
Total commitments 44,292,430
Funding for the Sukari project was completed during the quarter with the receipt
of funds raised through the equity raising mentioned above. Previously the
Company had announced that it had Barclays Capital, the investment banking
division of Barclays Bank PLC, as Mandated Lead Arranger to arrange a financing
facility of up to US$100M for the Sukari Gold Project. However with the receipt
equity funds the need to arrange external project debt finance is no longer
required.
Other than described above the company has no other off balance sheet
arrangements.
OUTSTANDING SHARE INFORMATION
As at February 12, 2008 the Company had 875,659,163 fully paid ordinary shares
issued and outstanding. The following table sets out the fully paid ordinary
shares on issue, and the outstanding unquoted options and broker warrants on
issue:
As at February 12, 2008 Number
Shares on Issue 875,659,163
Options issued but not exercised 10,565,000
Broker Warrants issued but not exercised 9,607,260
895,831,423
SEGMENT DISCLOSURE
The Company is engaged in the business of exploration for precious and base
metals only, which is characterised as one business segment only.
SIGNIFICANT ACCOUNTING ESTIMATES
Management is required to make various estimates and judgements in determining
the reported amounts of assets and liabilities, revenues and expenses for each
period presented and in the disclosure of commitments and contingencies. The
significant areas where management uses estimates and judgements in preparing
the consolidated financial statements are the determination of carrying values
and impaired values of exploration assets.
INTERNAL CONTROLS
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 June 30, 2007, 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 quarter ended December 31, 2007 that have
materially affected, or are reasonably likely to materially affect, its internal
control over financial reporting.
FINANCIAL INSTRUMENTS
At December 31, 2007 the Company has exposure to interest rate risk which is
limited to the floating market rate for cash.
The Company does not have foreign currency risk for non-monetary assets and
liabilities of the Egyptian operations as these are deemed to have a functional
currency of 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.
RELATED PARTY TRANSACTIONS
The related party transactions for the three months ended December 31, 2007 are
summarised below:
- Salaries, superannuation contributions, consulting and
Directors fees paid to Directors during the three months ended December 31, 2007
amounted to A$257,175 (December 31, 2006: A$303,788).
- 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 three months ended December 31, 2007 amounted to A$15,601 (December 31,
2006: A$13,747).
- 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 three months ended December
31, 2007 amounted to GBP 1,950 (December 31, 2006: GBP 1,950).
- 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 3 months ended December 31, 2007 amounted to $167,497
(December 31, 2006: A$87,337) of which $24,292 was retained by Cowden Limited as
Brokerage (December 31, 2006: A$12,663).
- 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 three months ended December
31, 2007 amounted to A$91,881 (December 31, 2006: A$0).
SUBSEQUENT EVENTS
Other than as set out above there has not arisen in the interval between the end
of the financial year and the date of this report any item, transaction or event
of a material and unusual nature likely in the opinion of the Directors of the
Company to affect significantly the operations of the company, the results of
those operations, or the state of affairs of the Company in subsequent financial
years.
The accompanying Interim Consolidated Financial Statements for the quarter ended
December 31, 2007 have been prepared in accordance with Australian Equivalents
to International Financial Reporting Standards and has not been audited by the
Company's Auditors.
UNAUDITED INTERIM CONSOLIDATED INCOME STATEMENTS
Three Months Ended Six Months Ended
December 31 December 31
2007 2006 2007 2006
US$ US$ US$ US$
Revenue - Note 4 1,777,407 506,038 3,290,245 1,059,389
Other income - Note 4 199,940 433,146 201,780 433,146
Corporate administration expenses (1,518,328) (444,002) (2,071,919) (843,357)
Foreign exchange gain / (loss) 412,502 (303,495) 5,927,574 (101,881)
Share based payments (593,947) (188,018) (1,381,402) (188,018)
Other expenses (145,412) (314,965) (304,241) (319,553)
Profit (loss) before income tax 132,162 (311,296) 5,662,037 39,726
Tax (expense) / income - - - -
Net profit (loss) for the period 132,162 (311,296) 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 Unaudited Interim Consolidated Income Statements should be read in
conjunction with the accompanying notes.
UNAUDITED INTERIM CONSOLIDATED BALANCE SHEETS
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 Unaudited Interim Consolidated Balance Sheets should be read in
conjunction with the accompanying notes.
UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Issued Options Accumulated
Capital Reserves 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 retain earnings - - - (5,758) (5,758)
At December 31, 2006 94,489,957 2,294,794 628,602 (18,612,824) 78,800,529
Profit for the period - - - 6,850,459 6,850,459
Share options exercised 93,910 - - - 93,910
Cost of share based payments - - 3,188,836 - 3,188,836
Contributions of equity 123,266,710 - - - 123,266,710
Transfer to issued capital 64,492 - (64,492) - -
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 3,308,318 (6,100,328) 352,273,447
The above Unaudited Interim Consolidated Statement of Changes in Equity should
be read in conjunction with the accompanying notes.
UNAUDITED INTERIM CONSOLIDATED CASH FLOW STATEMENT
Three Months Ended Six Months Ended
December 31 December 31
2007 2006 2007 2006
US$ US$ US$ US$
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees (883,503) (657,202) (1,881,205) (1,189,366)
Payments for exploration (2,337,362) (2,063,925) (5,115,174) (4,388,022)
Other income 199,940 - 201,780 -
Net cash generated by/(used in) operating (3,020,925) (2,721,127) (6,794,599) (5,577,388)
activities
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for development (25,044,851) (6,776,863) (44,859,095) (7,456,472)
Interest received 1,777,407 506,038 3,290,245 1,059,389
Net cash generated by/(used in) investing (23,267,444) (6,270,825) (41,568,850) (6,397,083)
activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issue of equity & conversion 132,961,245 178,982 133,029,564 270,276
of options
Project finance due diligence costs (650,135) - (926,435) -
Financial activity (bank charges and realised (447,401) 26,929 (620,478) 32,613
foreign exchange gain / (loss))
Net cash generated by/(used in) financing 131,863,709 205,911 131,482,651 302,889
activities
Net increase / (decrease) in cash and cash 105,575,340 (8,786,041) 83,119,202 (11,671,582)
equivalents
Cash and cash equivalents at the beginning of 119,722,952 41,819,302 136,501,015 44,513,500
the financial period
Effects of exchange rate changes on the balance 819,099 (347,029) 6,497,174 (155,686)
of cash held in foreign currencies
Cash and cash equivalents at the end of the 226,117,391 32,686,232 226,117,391 32,686,232
financial period
The above Interim Consolidated Cash Flow Statements should be read in
conjunction with the accompanying notes.
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations, Going Concern and Accounting Policies
Statement of Compliance
Centamin Egypt Limited (the 'Company') and its subsidiaries (collectively 'the
Group') are engaged in the exploration for precious and base metals located in
the eastern desert region of Egypt. The Company was incorporated under the
Corporations Law of South Australia on March 24, 1970.
These consolidated financial statements have been prepared in accordance with
Australian general accepted accounting principles, as applicable to a going
concern. Accordingly, they do not give effect to adjustments that would be
necessary should the Company be unable to continue as a going concern and
therefore be required to realise its assets and liquidate its liabilities and
commitments in other than the normal course of business and at amounts different
from those in the accompanying consolidated financial statements. The Company
has a need for financing for working capital, and the exploration and
development of its mineral properties. The Company's continuance as a going
concern is dependent upon its ability to obtain adequate financing and to reach
profitable levels of operations. It is not possible to predict whether financing
efforts will be successful or if the Company will attain profitable levels of
operations.
Basis of Preparation
The accompanying unaudited interim consolidated financial statements have been
prepared in accordance with generally accepted accounting principles in
Australia. The financial statements are prepared using the same accounting
policies and methods of application as those disclosed in note 3 to the
consolidated financial statements for the year ended 30 June 2007, but they do
not include all the disclosures required by Australian Accounting Standards for
annual financial statements. In the opinion of management, all adjustments
considered necessary for fair presentation have been included in these financial
statements. Operating results for the six months ended December 31, 2007 are not
necessarily indicative of the results that may be expected for the full year
ending June 30, 2008. For further information see the Company's consolidated
financial statements, including notes thereto, for the year ended June 30, 2007.
The significant accounting policies which have been adopted in the preparation
of these unaudited interim consolidated financial statements are:
(A) ACCOUNTS PAYABLE
Trade payables and other accounts payable are recognised when the consolidated
entity becomes obliged to make future payments resulting from the purchase of
goods and services.
(B) DEBT AND EQUITY INSTRUMENTS ISSUED BY THE COMPANY
Debt and equity instruments are classified as either liabilities or as equity in
accordance with the substance of the contractual arrangement.
(C) EXPLORATION, EVALUATION AND DEVELOPMENT EXPENDITURE
Exploration and evaluation expenditures in relation to each separate 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.
(D) FOREIGN CURRENCY
All foreign currency transactions during the period have been brought to account
using the exchange rate in effect at the date of the transaction. Foreign
currency monetary items at balance date are translated at the exchange rate
existing at that date.
Non-monetary assets and liabilities carried at fair value that are denominated
in foreign currencies are translated at the rates prevailing at the date when
the fair value was determined. All exchange differences are brought to account
in the interim consolidated income statement in the financial period in which
they arise.
(E) GOODS AND SERVICES TAX
Revenues, expenses and assets are recognised net of the amount of goods and
services tax (GST), except:
i. Where the amount of GST incurred is not recoverable from the taxation
authority, it is recognised as part of the cost of acquisition of an asset or as
part of an item of expense; or
ii. For receivables and payables which are recognised inclusive of GST.
The net amount of GST recoverable from, or payable to, the taxation authority is
included as part of receivables or payables.
(F) IMPAIRMENT OF ASSETS (OTHER THAN EXPLORATION AND EVALUATION)
At each reporting date, the consolidated entity reviews the carrying amounts of
its tangible and intangible assets to determine whether there is any indication
that those assets have suffered an impairment loss. If any such indication
exists, the recoverable amount of the asset is estimated in order to determine
the extent of the impairment loss (if any). Where the asset does not generate
cash flows that are independent from other assets, the consolidated entity
estimates the recoverable amount of the cash-generating unit to which the asset
belongs.
Recoverable amount is the higher of fair value less costs to sell and value in
use. In assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects current
market assessment of the time value of money and the risks specific to the asset
for which the estimates of future flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to
be less than its carrying amount, the carrying amount of the asset
(cash-generating unit) is reduced to its recoverable amount. Each cash
generated unit is determined on an area of interest basis.
Where an impairment loss subsequently reverses, the carrying amount of the asset
(cash-generating unit) is increased to the revised estimate of its recoverable
amount, but only to the extent that the increased carrying amount does not
exceed the carrying amount that would have been determined had no impairment
loss been recognised for the asset (cash generating unit) in prior years.
(G) LOANS AND RECEIVABLES
Trade receivables, loans, and other receivables are recorded at amounts due less
any allowance for doubtful debts.
(H) PLANT AND EQUIPMENT
Plant and equipment, and equipment under finance lease are stated at cost less
accumulated depreciation and impairment. Plant and equipment will include
capitalised development expenditure. Cost includes expenditure that is directly
attributable to the acquisition of the item as well as the estimated cost of
abandonment. In the event that settlement of all or part of the purchase
consideration is deferred, cost is determined by discounting the amounts payable
in the future to their present value as at the date of acquisition.
Depreciation is provided on plant and equipment. Depreciation of capitalised
development expenditure will be provided on a unit of production basis over
recoverable reserves, whilst on other fixed assets are calculated on a straight
line basis so as to write off the cost or other re-valued amount of each asset
over its expected useful life to its estimated residual value.
The estimated useful lives, residual values and depreciation method are reviewed
at the end of each annual reporting period.
The following estimated useful lives are used in the calculation of
depreciation:
Plant & Equipment & Office Furniture - 4-10 years
Motor Vehicles - 2 -8 years
(I) PRINCIPLES OF CONSOLIDATION
The consolidated financial statements are prepared by combining the financial
statements of all the entities that comprise the consolidated entity, being the
company (the parent entity) and its subsidiaries as defined in Accounting
Standard AASB 127 'Consolidated and Separate Financial Statements'. Consistent
accounting policies are employed in the preparation and presentation of the
consolidated financial statements.
The consolidated financial statements include the information and results of
each subsidiary from the date on which the company obtains control and until
such time as the company ceases to control such entity.
In preparing the consolidated financial statements, all significant intercompany
balances and transactions, and unrealised profits arising within the
consolidated entity are eliminated in full.
(J) REVENUE RECOGNITION
Interest revenue is recognised on a time proportionate basis that takes into
account the effective yield on the financial asset.
(K) SHARE-BASED PAYMENTS
Employee share options that vested before January 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.
(L) SUPERANNUATION FUND
The Company contributes to, but does not participate in, compulsory
superannuation funds on behalf of the Employees and Directors in respect of
salaries and directors' fees paid. Contributions are charged against income as
they are made.
(M) TAXATION
Current tax
Current tax is calculated by reference to the amount of income taxes payable or
recoverable in respect of the taxable profit or tax loss for the period. It is
calculated using tax rates and tax laws that have been enacted or substantively
enacted by reporting date. Current tax for current and prior periods is
recognised as a liability (or asset) to the extent that it is unpaid (or
refundable).
Deferred tax
Deferred tax is accounted for using the comprehensive balance sheet liability
method in respect of temporary differences arising from differences between the
carrying amount of assets and liabilities in the financial statements and the
corresponding tax base of those items.
In principle, deferred tax liabilities are recognised for all taxable temporary
differences. Deferred tax assets are recognised to the extent that it is
probable that sufficient taxable amounts will be available against which
deductible temporary differences or unused tax losses and tax offsets can be
utilised. However, deferred tax assets and liabilities are not recognised if
the temporary differences giving rise to them arise from the initial recognition
of assets and liabilities (other than as a result of a business combination)
which affects neither taxable income nor accounting profit.
Furthermore, a deferred tax liability is not recognised in relation to taxable
temporary differences arising from goodwill.
Deferred tax assets and liabilities are offset when they relate to income taxes
levied by the same taxation authority and the company/consolidated entity
intends to settle its current tax assets and liabilities on a net basis.
Current and deferred tax for the period
Current and deferred tax is recognised as an expense or income in the income
statement, except when it relates to items credited or debited directly to
equity, in which case the deferred tax is also recognised directly in equity, or
where it arises from the initial accounting for a business combination, in which
case it is taken into account in the determination of goodwill or excess.
Tax Consolidation
The Company and all its wholly-owned Australian resident entities are part of a
tax-consolidated group under Australian taxation law. Centamin Egypt Limited is
the head entity in the tax-consolidated group. Tax expense/income, deferred tax
liabilities and deferred tax assets arising from temporary differences of the
members of the tax-consolidated group are recognised in the separate financial
statements of the members of the tax-consolidated group using the 'separate
taxpayer within group' approach. Current tax liabilities and assets and deferred
tax assets arising from unused tax losses and tax credits of the members of the
tax-consolidated group are recognised by the company (as the head entity in the
tax-consolidated group).
Due to the existence of a tax funding arrangement between the entities in the
tax-consolidated group, amounts are recognised as payable to or receivable by
the company and each member of the group in relation to the tax contribution
amounts paid or payable between the parent entity and the other members of the
tax-consolidated group in accordance with the arrangement. Where the tax
contribution amount recognised by each member of the tax-consolidated group for
a particular period is different to the aggregate of the current tax liability
or asset and any deferred tax asset arising from unused tax losses and tax
credits in respect of that period, the difference is recognised as a
contribution to (or distribution to) equity participants.
NOTE 2: SEGMENT REPORTING
Primary reporting - Business Segments
The economic entity is engaged in the business of exploration for precious and
base metals only, which is characterised as one business segment only.
Secondary reporting - Geographical Segments
The principal activity of the economic entity during the year was the
exploration for precious and base metals in Egypt and funding is sourced from
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 AND OTHER INCOME
Three Months Ended Six Months Ended
December 31 December 31
2007 2006 2007 2006
US$ US$ US$ US$
(a) Revenue
Interest revenue 1,777,407 506,038 3,290,245 1,059,389
(b) Other income
Sale of plant and equipment 199,940 433,146 199,940 433,146
VAT refund - - 1,840 -
1,977,347 939,184 3,492,025 1,492,535
NOTE 5: EXPLORATION, EVALUATION AND DEVELOPMENT EXPENDITURE
Three months Six months
ended ended
December 31, December 31,
2007 2007
US$ US$
Exploration and evaluation phase expenditure
- At Cost (a)
Balance at the beginning of the period 7,409,793 4,627,793
Expenditure for the period 2,396,431 5,178,431
Transfer to Development phase expenditure - -
Balance at the end of the period 9,806,224 9,806,224
Development expenditure
- At Cost (b)
Balance at the beginning of the period 85,622,941 65,287,661
Expenditure for the period 21,653,000 41,988,280
Transfer from Exploration and evaluation phase expenditure - -
Balance at the end of the period 107,275,941 107,275,941
Net book value of exploration, evaluation and development phase expenditure 117,082,165 117,082,165
(a) Included within the cost amount of exploration evaluation and development assets is $5,311,744 being the excess
of consideration over the net tangible assets acquired on the acquisition of Pharaoh Gold Mines NL in January 1999.
This amount has been treated as part of the cost of exploration, evaluation and development. Management believe that
the recovery of these amounts will satisfactorily be made through the exploitation of the project in due course.
(b) Development of the Sukari Gold Project commenced in March 2007. Items of development phase expenditure relevant
to the project are being separately accounted for as development phase expenditure.
NOTE 6: CONTINGENT LIABILITIES
The Directors are not aware of any contingent liabilities as at the date of
these unaudited interim consolidated financial statements.
NOTE 7: ISSUED CAPITAL
Three months Six months
ended ended
December 31, December 31,
2007 2007
US$ US$
Fully paid ordinary shares
Balance at beginning of the period 218,013,229 217,915,069
Issue of shares under Employee option plan 6,962,860 7,031,179
Transfer from share options reserve 1,796,189 1,826,030
Placements 125,998,385 125,998,385
Balance at end of the period 352,770,663 352,770,663
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
Three months ended Six months ended
December 31, 2007 December 31, 2007
Number US$ Number US$
Balance at beginning of the period 755,854,232 218,013,229 755,734,232 217,915,069
Issue of shares under Employee option plan 7,304,931 6,962,860 7,424,931 7,031,179
Transfer from share options reserve - 1,796,189 - 1,826,030
Placements 112,000,000 125,998,385 112,000,000 125,998,385
Balance at end of the period 875,159,163 352,770,663 875,159,163 352,770,663
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 previous 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 three months ended December 31, 2007 are
summarised below:
- Salaries, superannuation contributions, consulting and
Directors fees paid to Directors during the three months ended December 31, 2007
amounted to A$257,175 (December 31, 2006: A$303,788).
- 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 three months ended December 31, 2007 amounted to A$15,601 (December 31,
2006: A$13,747).
- 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 three months ended December
31, 2007 amounted to GBP 1,950 (December 31, 2006: GBP 1,950).
- 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 3 months ended December 31, 2007 amounted to $167,497
(December 31, 2006: A$87,337) of which $24,292 was retained by Cowden Limited as
Brokerage (December 31, 2006: A$12,663).
- 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 three 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 period:
Three months Three months
ended ended
December 31, December 31,
2007 2006
Number of Number of
options options
Balance at beginning of the period (a) 13,370,000 7,390,000
Granted during the period (b) 250,000 -
Forfeited during the period - -
Exercised during the period (c) 2,517,500 685,000
Expired during the period - -
Balance at the end of the period (d) 11,102,500 6,705,000
Exercisable at the end of the period 7,030,000 5,705,000
a) Balance at the start of the period
Options series Number Grant date Expiry / Fair value at
Exercise Date Exercise price grant date
A$ A$
Series 3 395,000 04 Feb 05 04 Feb 08 0.2804 0.1357
Series 4 150,000 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 3,545,000 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
13,370,000
b) Issued during the period
Options series Number Grant date Expiry / Fair value at
Exercise Date Exercise price grant 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 09 Nov 07 1.5700
Series 5 30,000 22 Oct 07 1.4200
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
2,517,500
d) Balance at the end of the period
Options series Number Grant date Expiry / Exercise Fair value at
Exercise Date price grant 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
Warrants series Number Grant date Expiry Date Exercise price Fair value at
grant date
C$ A$
Series 1 3,751,431 05/04/2007 05/04/2009 0.8600 0.3011
Series 2 4,429,678 13/04/2007 11/04/2009 0.8600 0.2743
Series 3 613,582 20/04/2007 20/04/2009 0.8600 0.2868
8,794,691
b) Exercised during the period
Warrants series Number Exercise Date Share price
exercised at exercise
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
Options series Number Grant date Expiry / Exercise Fair value at
Exercise Date price grant 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 Loss, 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 Loss, 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, this
statement has not been presented in this report.
CERTIFICATE OF INTERIM FILINGS
Form 52-109F2
Certification of interim filings
I, Mark Smith, Chief Financial Officer of Centamin Egypt Limited, certify that:
1. I have reviewed the interim filings (as this term is defined in
Multilateral Instrument 52-109 Certification of Disclosure in Issuers' Annual
and Interim Filings) of Centamin Egypt Limited, (the issuer) for the interim
period ended December 31, 2007;
2. Based on my knowledge, the interim filings do not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated or that is necessary to make a statement not misleading in light of
the circumstances under which it was made, with respect to the period covered by
the interim filings;
3. Based on my knowledge, the interim financial statements together
with the other financial information included in the interim filings fairly
present in all material respects the financial condition, results of operations
and cash flows of the issuer, as of the date and for the periods presented in
the interim filings;
4. The issuer's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures and internal
control over financial reporting for the issuer, and we have:
(a) designed such disclosure controls and procedures, or caused them
to be designed under our supervision, to provide reasonable assurance that
material information relating to the issuer, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which the interim filings are being prepared; and
(b) designed such internal control over financial reporting, or caused
it to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with the issuer's GAAP;
and
5. I have caused the issuer to disclose in the interim MD&A any
change in the issuer's internal control over financial reporting that occurred
during the issuer's most recent interim period that has materially affected, or
is reasonably likely to materially affect, the issuer's internal control over
financial reporting.
Mark Smith
Chief Financial Officer
Egypt : February 13, 2008
Form 52-109F2
Certification of interim filings
I, Josef El-Raghy, Managing Director/CEO of Centamin Egypt Limited, certify
that:
1. I have reviewed the interim filings (as this term is defined in
Multilateral Instrument 52-109 Certification of Disclosure in Issuers' Annual
and Interim Filings) of Centamin Egypt Limited, (the issuer) for the interim
period ended December 31, 2007;
2. Based on my knowledge, the interim filings do not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated or that is necessary to make a statement not misleading in light of
the circumstances under which it was made, with respect to the period covered by
the interim filings;
3. Based on my knowledge, the interim financial statements together
with the other financial information included in the interim filings fairly
present in all material respects the financial condition, results of operations
and cash flows of the issuer, as of the date and for the periods presented in
the interim filings;
4. The issuer's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures and internal
control over financial reporting for the issuer, and we have:
(a) designed such disclosure controls and procedures, or caused them
to be designed under our supervision, to provide reasonable assurance that
material information relating to the issuer, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which the interim filings are being prepared; and
(b) designed such internal control over financial reporting, or caused
it to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with the issuer's GAAP;
and
5. I have caused the issuer to disclose in the interim MD&A any
change in the issuer's internal control over financial reporting that occurred
during the issuer's most recent interim period that has materially affected, or
is reasonably likely to materially affect, the issuer's internal control over
financial reporting.
Josef El-Raghy
Managing Director/CEO
Egypt : February 13, 2008
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