Final Results
Kefi Minerals plc
28 March 2008
KEFI MINERALS PLC
('KEFI MINERALS' or the 'COMPANY')
PRELIMINARY RESULTS FOR THE FOURTEEN MONTHS
ENDED 31 DECEMBER 2007
KEFI Minerals, the AIM quoted gold and copper exploration Company with projects
in Turkey, is pleased to announce preliminary results for fourteen months ended
31 December 2007.
HIGHLIGHTS
• Since listing on AIM in December 2006, the Company's exploration portfolio
has been expanded to seven projects in Turkey, comprising 26 exploration
licences;
• Strong exploration team and proprietary database enable the Company to
rapidly identify and assess targets;
• The Company has evaluated joint ventures and acquisitions of properties
with known mineral resources; and
• KEFI Minerals will also actively participate in the Government tender
process so as to acquire further high quality tenure in due course.
KEFI Minerals' Managing Director, Jeff Rayner, commented: 'Since the admission
of our Company to AIM, there has been a great deal of activity. The primary
activity for 2008 is to rapidly assess current projects, to advance them as
warranted by results and to identify the most prospective areas in Turkey for
further evaluation.
'We will continue to evaluate further opportunities and monitor the exploration
licence status of geologically prospective areas on an ongoing basis so that
KEFI Minerals can acquire further exploration opportunities as soon as they
become available.'
Enquiries
KEFI Minerals plc WH Ireland Limited Bishopsgate Communications
Jeffrey Rayner David Youngman Maxine Barnes
Katy Mitchell Nick Rome
+90 533 928 1913 + 44 161 832 2174 +44 20 7562 3350
www.kefi-minerals.com
CHAIRMAN'S STATEMENT
I am pleased to present the inaugural annual report of KEFI Minerals Plc. Our
aim is to add value to our projects and create wealth for our stakeholders
through the cost-effective acquisition or discovery and subsequent development
of mineral resources.
KEFI Minerals will concentrate initially on exploring the prolific minerals
endowment of Turkey, which is widely recognised as being stable and foreign
investment-friendly, and as having a long mining history, prospective geology,
excellent infrastructure, and favourable mining, tax and investment laws.
Turkey is considered to be very prospective for gold and base metals but is not,
in our opinion, as intensively explored as many other countries. The
Tethyan-Eurasian Metallogenic Belt extends for 1,500km across Turkey. This
provides, in our opinion, a great opportunity to make very valuable mineral
discoveries in a well established mining country with a supportive government.
Turkey has a long history of mining and is host to world-class gold and base
metal deposits that are being exploited commercially. Turkey recently revised
its mining law to encourage mineral exploration and mining. Within the last
decade or so, numerous foreign mining companies, including Rio Tinto, Teck
Cominco, Newmont and Eldorado Gold, have become active in Turkey. Exploration
licences are granted for a maximum of five years and can potentially be
converted to operating licences for up to sixty years. Three major mines have
been permitted in the last few years and there are more in the pipeline.
The Directors and the Group's senior management have extensive experience in
exploration, development, financing and operation of natural resources projects
in Australasia and many other countries.
Your Company's approach is to combine international expertise with local
expertise in Turkey. This combines fresh exploration insights and methods with
talented Turkish prospectors.
Exploration Strategy
Your Company aims to grow rapidly through either grassroots discovery or by
acquiring a project with a defined resource or mine. We welcome proposals from
owners of exploration properties in Turkey who are interested in either selling
or potentially partnering with KEFI Minerals.
KEFI Minerals' exploration strategy is based on the following concepts:
• Combining strong international and local knowledge in exploration models
and techniques;
• Selecting areas within prospective stratigraphic and structural settings
with a high potential for base metal or gold mineralisation;
• Exploring projects as a package rather than individual isolated prospects;
• Rapidly identifying, prioritising and assessing targets;
• Creating new contacts and further developing knowledge using an
established local team; and
• Utilising technical and commercial support from EMED Mining as required.
The object of this strategy is to add value for shareholders by:
• Advancing our projects to resource stage through drilling;
• Targeting resources of >1 million ounces of gold or equivalent through
exploration; and
• Identifying and fostering high-quality joint venture opportunities, with
both international and local partners, for early cash flow.
KEFI Minerals owns an extensive exploration database which contains information
regarding approximately 100 further prospective sites in Turkey. Unlike most
countries, Turkey does not have an open-file reporting system whereby
exploration data from previous work on an area can be made available to the
current titleholder. KEFI Minerals' database thus provides a competitive
advantage in identifying prospective areas for project generation in Turkey.
Monitoring of the exploration licence status of geologically prospective areas
will be carried out on an ongoing basis so that KEFI Minerals can acquire
further exploration opportunities as soon as they become available.
Major Shareholders
KEFI Minerals Plc was formed on 24 October 2006 and shortly thereafter acquired
the exploration assets of EMED Mining Public Limited in Turkey and Bulgaria.
EMED Mining retains a 32% interest in KEFI Minerals and provides technical and
administrative systems and personnel on a cost-recovery basis, thus enabling
KEFI Minerals to reduce overheads and spend more on exploration.
The major shareholders in your company are EMED Mining (32%) and Starvest Plc
(17%) with the KEFI Minerals' Directors and management owning 9%. Starvest is a
UK-based company that provides early-stage finance to new businesses.
EMED Mining is owned by a range of institutions and individuals, primarily from
Australia, South Africa and the United Kingdom. Major shareholders include the
major copper-gold mining company Oxiana Limited and the world's fourth largest
gold producing company Gold Fields Limited.
Outlook
KEFI Minerals is in a strong position in a prospective part of the world, and
believes it has experienced management, a sound exploration strategy and
supportive shareholders.
The capital base will be expanded in due course as warranted by the results of
exploration and prevailing financial market conditions.
Our strategy includes building a shareholder base in Turkey as we believe that
Turkish people would like to share in the success of KEFI Minerals.
On behalf of all shareholders, I wish to thank the members of our Board,
management and staff for all of their dedicated efforts. As mineral exploration
requires a great deal of time away from home, I would also like to thank their
families for their support and commitment.
Their efforts during 2007 have placed your Company in a very good position to
create significant value for shareholders.
Harry Anagnostaras-Adams
Chairman
MANAGING DIRECTOR'S REPORT
Since the Company's admission to trading on AIM in December 2006, there has been
a great deal of activity. Our exploration portfolio has been expanded to seven
projects in Turkey, comprised of 26 Exploration Licences. Our first drilling
program intercepted gold-silver mineralisation in epithermal quartz veins worked
extensively by ancient miners at the Derinin Tepe Project. Reconnaissance
mapping led to our first grassroots discovery at the Artvin Project, Yanikli
Prospect, which contains gold and base metals.
The KEFI Minerals' team is targeting large epithermal gold or porphyry
gold-copper systems analogous to several >1 million ounce deposits recently
discovered and developed in the central and western regions of Turkey.
We have established what we believe is a strong exploration group led by
Exploration Manager Malcolm Stallman and General Manager Omer Celenk with a
young and highly motivated team of Turkish nationals. We are very proud to have
secured such a high quality team and their contribution to our successful
development has been invaluable. The Company is operated and administered in
Turkey, with all management and staff based either in Turkey or in Europe.
KEFI Minerals also hires local personnel from communities near its projects to
help with exploration field work. This practice also assists the Company in
building relationships with the local community.
Our proprietary database and experienced exploration team enables us to filter
and evaluate exploration properties that are offered to us as well as tenements
relinquished by other explorers. KEFI Minerals also encourages Turkish
prospectors and miners to contact us with enquiries and proposals, and aims to
respond to them promptly and fairly.
Our geologists evaluated over 100 exploration properties during 2007, visited 30
of these properties in the field, then selected the five best opportunities to
pursue further as a high priority. In addition to grassroots exploration
properties, we have also evaluated joint ventures and acquisitions of properties
with known mineral resources.
Turkey is a very large and rugged country. Our approach ensures that our
exploration team spends as much time as practical on the ground in areas that
are prospective for large and highly profitable mines.
Exploration Portfolio
KEFI Minerals currently has seven exploration projects - Artvin, Derinin Tepe,
Gumushane, Karalar, Muratdag, Yatik and Meyvali.
The Company's two most advanced projects are Artvin in northeast Turkey and
Derinin Tepe in western Turkey.
Artvin is very prospective for both volcanic-hosted massive sulphide and
porphyry copper style deposits. Mining has been carried out at Artvin for over
one hundred years with evidence of numerous base metals workings in the area.
KEFI Minerals has identified a number of coherent zones of polymetallic
vein-style and disseminated mineralisation over a large area.
Derinin Tepe is an epithermal gold deposit that was mined by the Romans using a
primitive method of cut and fill mining.
After further evaluation during the first half of 2007, the decision was made to
relinquish KEFI Minerals' Lehovo Project in Bulgaria as the Company has more
prospective projects to explore in Turkey.
Monitoring of the exploration licence status of geologically prospective areas
in Bulgaria will continue to be carried out on an ongoing basis so that KEFI
Minerals can acquire attractive exploration opportunities as they become
available.
Finance
KEFI Minerals commenced trading on AIM (Code 'KEFI') on 18 December 2006
following the successful placing of 46,666,667 shares at 3p to raise £1.4
million. During 2007, two placements of ordinary shares raised a further
£542,000 at prices higher than 3p per share.
The exploration team is cognisant of ensuring that shareholders funds are spent
effectively. To mitigate against excessive financial risk on an aggregate basis,
any of KEFI Minerals' projects can be terminated by the Company at its
discretion and without penalty.
The Company's accounting policy is conservative. All expenditure is written off
until the Board decides to commence development of a project, from which point
development costs would be capitalised.
Outlook for 2008
The primary objective for 2008 is to rapidly assess the Company's current
projects, to advance them as warranted by results and to identify the most
prospective areas in Turkey for further evaluation.
We will continue to evaluate further opportunities and monitor the exploration
licence status of geologically prospective areas on an ongoing basis so that
KEFI Minerals can acquire further exploration opportunities as soon as they
become available.
I would like to thank our employees for their hard work and commitment and our
shareholders for the ongoing support. KEFI Minerals' first year has been one of
substantial achievement and we now have built a strong foundation on which to
continue growing and adding value. We look forward to further growing our
portfolio and updating shareholders of our progress in due course.
Jeffrey Rayner
Managing Director
REVIEW OF EXPLORATION ACTIVITIES
Historical records and such legends as those of Croesus and Midas indicate that
mining for metals has been undertaken in Turkey for over 7,000 years. Copper,
gold, iron, lead, mercury, silver, tin, and other metals have been mined during
this time by Phoenicians, Greeks, Hittites, Romans, Ottomans, Russians and
modern-day Turkish people. Despite this long history of mining and the country's
significant mineral endowment, today's exploration methodologies have only been
applied in the last two decades.
Turkey lies at the eastern end of the Alpine orogenic belt, part of the
Alpine-Himalayan orogenic system that extends from Europe to Asia, which has
been active from the Jurassic-Cretaceous to the present. The complex tectonic
activity, and the processes of subduction, collision, post-collision and
rifting, that occurred during this orogeny gave rise to many different types of
mineral deposits. Most mineral deposits in Turkey are found in rocks of Late
Mesozoic to Tertiary age.
Since the Company's admission to trading on AIM in December 2006, KEFI Minerals
has undertaken the following activities:
• Application for, and granting of, seven additional Exploration Licences,
thus strengthening its tenement position within Turkey.
• Field inspection, mapping, and sampling of each tenement.
• Stream sediment, soil and rock chip sampling of priority targets
throughout the tenement package.
• Diamond drilling at the Derinin Tepe Project.
• Identification of the Yanikli and Uzumlu prospects within the Artvin
Project.
• Desktop assessment of over 100 potential joint venture opportunities and
field inspection and sampling of over 30 of these opportunities.
• Study of KEFI Minerals' proprietary exploration database leading to the
identification of targets for further assessment.
The Company's major exploration focus during its first year of exploration
activities has been its two highest priority project areas, Derinin Tepe, where
the target is low sulphidation epithermal-style gold-silver mineralisation, and
Artvin, which the Company considers has potential for porphyry-style copper-gold
mineralisation.
Exploration activities are well advanced on these properties with the initial
drilling campaign being completed at Derinin Tepe during July 2007. Field
reconnaissance and geochemical sampling at Artvin led to the discovery of the
Yanikli Prospect in September 2007. On the Company's other properties, first
pass exploration has commenced and we expect to advance a number of these to
drill target status during the coming year.
Additionally, in line with the Company's principal objective of the discovery of
economically mineable mineral deposits and its major focus being the exploration
for gold and base metals deposits, KEFI Minerals has significantly expanded its
exploration portfolio in Turkey during the year. KEFI Minerals has acquired
seven new Exploration Licences through successfully bidding in Government
licence auctions and now has granted title covering 373km2 in area.
Derinin Tepe Project (100%) - Western Anatolia
The Derinin Tepe Project is currently the most advanced project in the KEFI
Minerals portfolio. Through systematic exploration, comprising rock chip
sampling, mapping, trenching and diamond drilling over the past year, the
potential for the discovery of economic gold-silver mineralisation has been
significantly upgraded.
Derinin Tepe comprises a single Exploration Licence of 1,231 hectares in
Balikesir Province, western Turkey. The project is located in a region of
multiple low-sulphidation epithermal gold-silver mineralisation occurrences. It
lies 125km northeast of Ovacik Gold Mine (1 million ounce gold deposit), 120km
southeast of Kucukdere Gold Mine (250,000 ounce gold deposit) and 20km northeast
of the Kiziltepe Prospect (100,000 ounce gold deposit). KEFI Minerals is the
first company to utilise modern exploration methods to explore at Derinin Tepe.
The mineralisation at Derinin Tepe occurs within a Cretaceous ophiolitic
sequence and is hosted within a series of northwest-trending micro to coarse
crystalline quartz-vein structures with colloform-crustiform, cockscomb, comb
and carbonate replacement textures, locally containing manganese oxide,
limonite, pyrite and malachite. The main vein (Western Vein) attains a true
width of 8m and is >1km in strike length. Numerous ancient mine workings,
possibly of Roman vintage, attain a maximum size of 200m along the vein and up
to 5m width, have been excavated on the veins.
Rock-chip sampling of the western quartz vein by KEFI Minerals personnel
returned up to 152g/t gold and 1,320g/t silver. Channel sampling of the western
quartz vein returned 6m at 3.3g/t gold, 2m at 9.6g/t gold and 1m at 7.2g/t gold.
Trenching across the vein zones revealed large back-filled stopes from
historical mining. An initial diamond drilling program, targeting 50m vertically
below the surface expressions of the veins, was completed in July 2007 with
gold-silver mineralisation being intersected in six of the nine holes drilled.
The first three drillholes (KDTD01-03) all intersected significant widths of 3
to 4m of mineralised backfill associated with ancient workings at the expected
position of the epithermal quartz veins at depth. It is interpreted that the
ancient miners backfilled the stopes to create greater stability for deeper
underground mining. Some of the backfill is comprised of lower grade waste
material as was intersected in KDTD01 where a backfilled zone contains 3.1m at
2.1g/t gold and 118g/t silver.
The remaining drillholes all intersected epithermal quartz veins and associated
quartz-vein stockwork zones. Drillhole KDTD04 returned the best intercept of the
program with 3.6m at 3.3g/t gold and 90g/t silver from 38m downhole and 1m at
3.3 g/t gold and 327g/t silver. Other intercepts included 1.7m at 2.0g/t gold
and 72g/t silver in KDTD05.
Given that the ancient mining techniques required high gold grades in quartz
veins for economic extraction, the significant lateral and vertical extent of
the ancient workings attests to the potential of the epithermal quartz veins at
Derinin Tepe to host shoots of high-grade gold mineralisation.
A diamond drilling program is planned for 2008 that will test at greater depths
for steep, north-plunging high-grade ore shoots below the old workings.
Artvin Project (100%) - Northeast Pontides
The Artvin Project comprises 15 Exploration Licences, which total 25,396
hectares, in the Artvin Province, northeast Turkey. Exploration by KEFI Minerals
personnel, comprising stream sediment sampling, rock chip sampling, soil
sampling and mapping, over the past year returned encouraging geochemical assays
from the Uzumlu Prospect and discovered a new gold occurrence at the Yanikli
Prospect.
The project is located in a region with an extensive mining history. Early
mining activities for lead-zinc were carried out in the area by Turkish and
Russian miners in the late 19th and early 20th centuries. In the 1990s, the
area was explored for copper by Placer Dome and BHP. However, their exploration
work was largely reconnaissance in nature. Rio Tinto also explored for copper
and gold within the current project area in the 1990s. Currently, a Canadian
junior company is exploring the large Berta porphyry copper-gold prospect, which
is located adjacent to the southwest corner of the Artvin Project area.
First pass exploration by KEFI Minerals in 2007 identified stream sediment
copper anomalies (>100ppm copper) that focussed exploration to a 25km2 area, the
Uzumlu Prospect, with old workings, clay-pyrite alteration with base metals
sulphide veining, and stratigraphically controlled silicification. Rock chip
assays up to 0.5g/t gold, 104g/t silver and 1.4% copper have been returned from
the old Uzumlu Copper Mine.
Yanikli Prospect
Reconnaissance mapping in September 2007, in an area 4km to the south of Uzumlu,
resulted in a new gold discovery, called the Yanikli Prospect.
Initial sampling of road-cut exposures returned 44m at 0.5g/t gold (including 1m
at 8.2g/t gold), 45m at 1,202ppm lead and 36m at 1,840ppm zinc.
Prospect-scale rock chip sampling and soil sampling has outlined a series of
gold-in-soil anomalies at >50ppb gold within a 1.7km x 1.5km area. Highly
anomalous gold and base metal results have been received with maximum soil
values of 2.4g/t gold, 13.4g/t silver, 4,010ppm lead and 2,230ppm zinc, and
maximum rock chip values of 8.2g/t gold, 42.3g/t silver, 6,600ppm lead and
4,790ppm zinc, have been returned.
The Yanikli Prospect is located within a prominent northeast-trending structural
corridor that also contains the large Berta copper-gold porphyry system,
approximately 15km to the southwest. The vein-style and disseminated gold-base
metals mineralisation at Yanikli is hosted in altered felsic and mafic volcanic
tuffs. Vein-style and disseminated galena and sphalerite generally occurs
peripheral to the pyrite envelope of typical porphyry copper deposits. The
highly anomalous lead and zinc +/- copper +/- gold mineralisation encountered at
Yanikli within structurally-controlled silica-clay alteration zones is
indicative of the distal portions of a porphyry system.
The Artvin Project area is located in mountainous terrain and is inaccessible
during winter months due to snow cover. It is expected that exploration will
recommence in March-April 2008.
Exploration in 2008 will consist of an IP geophysical survey to assist in target
definition for follow-up RC percussion drilling.
Muratdag Project (100%) - Western Anatolia
The Muratdag Project comprises two Exploration Licences, which total 1,466
hectares, in the Usak Province, western Turkey. The tenements cover Mesozoic
limestone and ophiolite which have been intruded by Tertiary granite and
overlain by Tertiary sediments.
Numerous old mercury mines and occurrences are found within the region. A soil
geochemistry survey undertaken by KEFI Minerals has defined a triangular shaped
soil anomaly up to 350m by 250m at >20ppb gold within this tenement. The source
of the strong multi-element (gold, silver, arsenic, bismuth, mercury,
molybdenum, antimony and base metals) anomalism is still enigmatic as much of
the anomalism apparently overlies weakly recrystallised limestone with no
significant alteration or veining. However, the geochemical associations suggest
the potential for skarn-style gold-base metals mineralisation and/or
epithermal-Carlin style gold-silver mineralisation at depth.
The tenements are strategically located, being adjacent to ground held by major
and junior companies who are undertaking active exploration programmes for gold,
base metals and nickel.
Meyvali Project (100%) - Western Anatolia
The Meyvali Project comprises a single Exploration Licence of 700 hectares in
Balikesir Province, western Turkey. The licence covers Palaeozoic schists.
Reconnaissance prospecting identified gold anomalous gossanous shear zones
within schists and foliated porphyritic intrusives just outside the western
boundary of the tenement. However, detailed stream sediment sampling and
follow-up rock chip sampling returned disappointing results from within the
tenement.
The area was found to contain minor quartz veins and some weak gold and copper
geochemistry, however, the potential for gold and gold-copper mineralised
systems of sufficient size and grade to be of interest to KEFI Minerals has been
downgraded. Therefore, the Meyvali Project will be divested or relinquished.
This relinquishment is consistent with KEFI Mineral's objective to generate a
pipeline of high quality projects by rapidly assessing them, and where
applicable, surrendering those that do not meet the Company's exploration
criteria.
Project Generation
KEFI Minerals is pursuing an on-going regional project generation and
acquisition programme that is targeting >1 million ounce gold or gold-copper
equivalent deposits. The principal deposit types being explored for are
low-sulphidation epithermal gold-silver, porphyry-style copper-gold, and
Cyprus-type copper, associated with Tertiary and Cretaceous arcs within the
Tethyan-Eurasian Metallogenic Belt that extends from the Balkans in the west to
Iran and Pakistan in the east. The Tethyan-Eurasian Metallogenic Belt hosts a
number of significant gold and base metals deposits and has a current mineral
endowment of 89 million ounces of gold and 34 million tonnes of copper metal.
KEFI Minerals owns an extensive exploration database that contains individual
target assessments of 100 prospects in Turkey. It comprises 14 hard copy
reports, 38 hard copy maps and a large volume of other data in digital format.
KEFI Minerals' extensive, and expanding, exploration database provides the
Company with a competitive advantage to identify prospective areas for project
generation in Turkey.
During the year, KEFI Minerals' personnel have assessed many strategic
opportunities, mostly exploration properties available for joint venture. Whilst
all projects submitted to us have been reviewed, our main focus has been on
those opportunities which may provide an early entry to production. Turkey is
currently perceived as being a country with high exploration potential, and
along with the mining and exploration industries in general, is experiencing a
period of sustained strong competitive demand for resources.
2008 WORK PROGRAMME
KEFI Minerals' budget for 2008 is planned to enable the Company to continue the
evaluation and testing of the potential of the areas currently within the
exploration portfolio and to generate new targets for evaluation.
At the Derinin Tepe Project, exploration activities will consist of second and
third phase diamond drill testing of deeper targets potentially leading to
resource-definition drilling of high-grade epithermal ore shoots.
At the Artvin Project, which has attracted interest from a number of potential
farm-in partners, the Company will undertake IP geophysical surveying in order
to assist in the definition of porphyry-style copper-gold target for follow-up
RC percussion drilling.
In addition to undertaking generative studies and greenfields exploration, the
Company is also assessing opportunities with the aim of acquiring advanced
projects in Turkey. Mapping, channel chip sampling, soil sampling and
geophysical surveys will be carried out so as to advance at least 1-2 other
projects to the drill testing stage. KEFI Minerals will also actively
participate in the Government tender process so as to acquire further high
quality tenure.
CONSOLIDATED INCOME STATEMENT
Period from 24 October 2006 to 31 December 2007
24 Oct 2006-
Notes 31 Dec 2007
GBP'000
Revenue -
Exploration costs (797)
Gross loss (797)
Administrative expenses (488)
- share-based benefits (167)
Impairment charge - goodwill (364)
Operating loss 4 (1,816)
Finance income 7 132
Finance costs 8 (3)
Loss before tax (1,687)
Tax 9 -
Net loss for the period (1,687)
Loss per share (pence) 10 0.02
BALANCE SHEETS
as at 31 December 2007
The The
Group as Company
at 31/12 as at 31/12
2007 2007
Notes GBP'000 GBP'000
ASSETS
Non-current assets
Property Plant and Equipment 11 47 -
Goodwill 12 - -
Fixed asset investments 13 - 2
47 2
Current assets
Trade and other receivables 14 43 1,136
Cash and cash equivalents 15 502 472
545 1,608
Total assets 592 1,610
EQUITY AND LIABILITIES
Capital and reserves
Share capital 16 1,088 1,088
Share premium 16 991 991
Share options reserve 17 167 167
Exchange difference reserve (86) -
Accumulated losses (1,687) (738)
Total equity 473 1,508
Current liabilities
Trade and other payables 18 119 102
119 102
Total equity and liabilities 592 1,610
On 13 March 2008, the Board of Directors of KEFI Minerals plc authorized these
financial statements for issue.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Period from 24 October 2006 to 31 December 2007
Share Exchange
Share Share options Accumulated Difference
capital premium reserve losses reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Net loss for the period - - - (1,687) - (1,687)
Issue of share capital 1,088 1,396 - - - 2,484
Share issue costs - (405) - - - (405)
Recognition of share based - - 167 - - 167
payments
Exchange difference on
translation of - - - - (86) (86)
subsidiaries 1,088 991 167 (1,687) (86) 473
The company has taken advantage of the exemption conferred by section 230 of
Companies Act 1985 from presenting its own income statement.
Loss after taxation amounting to £738,391 has been included in the financial
statements of the parent company.
CONSOLIDATED CASH FLOW STATEMENT
Period from 24 October 2006 to 31 December 2007
24 Oct 2006
- 31 Dec
Notes 2007
GBP'000
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before tax (1,687)
Adjustments for:
Depreciation of property, plant and equipment 11 13
Share-based benefits 17 167
Impairment charge - goodwill 364
Interest income 7 (39)
Exchange difference on translation of subsidiaries (86)
Operating loss before working capital changes (1,268)
Changes in working capital:
Trade and other receivables (76)
Trade and other payables 119
Cash flows used in operations 43
Net cash used in operating activities (1,225)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for purchase of property, plant and equipment 11 (64)
Proceeds from disposal of property, plant and equipment 11 7
Acquisition of subsidiaries 19 (334)
Interest received 39
Net cash used in investing activities (352)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of share capital 2,484
Listing and issue costs (405)
Net cash from financing activities 2,079
Net increase in cash and cash equivalents 502
Cash and cash equivalents:
At beginning of the period 15 -
At end of the period 15 502
COMPANY CASH FLOW STATEMENT
Period from 24 October 2006 to 31 December 2007
24 Oct
2006 -
Notes 31 Dec
2007
GBP'000
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before tax (738)
Adjustments for:
Share-based benefits 17 167
Interest income 7 (39)
Operating loss before working capital changes (610)
Changes in working capital:
Trade and other receivables (1,136)
Trade and other payables 102
Cash flows used in operations (1,034)
Net cash used in operating activities (1,644)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of subsidiaries 19 (2)
Interest received 39
Net cash from investing activities 37
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of share capital 2,484
Listing and issue costs (405)
Net cash from financing activities 2,079
Net increase in cash and cash equivalents 472
Cash and cash equivalents:
At beginning of the period 15 -
At end of the period 15 472
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Period from 24 October 2006 to 31 December 2007
1. Incorporation and principal activities
Country of incorporation
KEFI Minerals plc (the 'Company') was incorporated in United Kingdom as a public
limited company on 24 October 2006. Its registered office is at 27/28
Eastcastle Street, London W1W 8DH.
Principal activities
The principal activities of the Group for the period are:
• To explore for mineral deposits of precious and base metals and
other minerals that appear capable of commercial exploitation, including
topographical, geological, geochemical and geophysical studies and exploratory
drilling.
• To evaluate mineral deposits determining the technical feasibility
and commercial viability of development, including the determination of the
volume and grade of the deposit, examination of extraction methods,
infrastructure requirements and market and finance studies.
• To develop, operate mineral deposits and market the metals
produced.
2. Accounting policies
The principal accounting policies adopted in the preparation of these financial
statements are set out below. These policies have been consistently applied
throughout the period presented in these financial statements unless otherwise
stated.
Basis of preparation and consolidation
The consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRSs) as adopted by the European
Union. They comprise the accounts of KEFI Minerals plc and all its subsidiaries
made up to 31st December 2007.
Going concern
The Directors have formed a judgment at the time of approving the financial
statements that there is a reasonable expectation that the company has adequate
resources to continue in operational existence for the foreseeable future.
The financial information has been prepared on the going concern basis, the
validity of which depends principally on the discovery of economically viable
mineral deposits and the availability of subsequent funding to extract the
resource or alternatively the availability of funding to extend the Company's
exploration activities. The financial information does not include any
adjustments that would arise from a failure to complete either option.
Functional and presentational currency
Items included in the Group's financial statements are measured using the
currency of the primary economic environment in which the entity operates (''the
functional currency''). The financial statements are presented in British Pounds
(GBP), which is the Group's functional and presentation currency.
Foreign currency translation
(1) Foreign currency translation
Foreign currency transactions are translated into the measurement currency using the exchange rates
prevailing at the date of the transactions. Gains and losses resulting from the settlement of such
transactions and from the translation of monetary assets and liabilities denominated in foreign currencies
are recognised in the income statement.
(2) Foreign operations
On consolidation, the assets and liabilities of the consolidated entity's overseas operations are translated
at exchange rates prevailing at the reporting date. Income and expense items are translated at the average
exchange rates for the period unless exchange rates fluctuate significantly. Exchange differences arising, if
any, are recognised in the foreign currency translation reserve, and recognised in profit or loss on disposal
of the foreign operation.
Revenue recognition
Revenue consists of the amounts receivable from exploration tenements, technical
data, precious and base metals sold.
The Group had no sales/revenue during the period under review.
Revenues earned by the Group are recognised on the following bases:
Interest income
Interest income is recognised on a time-proportion basis using the effective
interest method.
Tangible fixed assets
Tangible fixed assets are stated at their cost of acquisition at the date of
acquisition, being the fair value of the consideration provided plus incidental
costs directly attributable to the acquisition less depreciation.
Depreciation is calculated on the straight-line method to write off the cost of
each asset to their residual values over their estimated useful life. The annual
depreciation rates used are as follows:
Furniture, fixtures and office equipment 10%
Motor Vehicles 20%
Acquisitions and goodwill
The acquisition of subsidiaries is accounted for using the purchase method. The
cost of the acquisition is measured at the aggregate of the fair values, at the
date of exchange, of assets given, liabilities incurred or assumed, and equity
instruments issued by the Group in exchange for control of the acquiree, plus
any costs directly attributable to the business combination. The acquiree's
identifiable assets, liabilities and contingent liabilities that meet the
conditions for recognition under IFRS 3 are recognised at their fair values at
the acquisition date, except for non-current assets (or disposal groups) that
are classified as held for sale in accordance with IFRS 5 Non-Current Assets
Held for Sale and Discontinued Operations, which are recognised and measured at
fair value less costs to sell.
Purchased goodwill is capitalized and classified as an asset on the balance
sheet. Goodwill arising on acquisition is recognised as an asset and initially
measured at cost, being the excess of the cost of the business combination over
the Group's interest in the net fair value of the identifiable assets,
liabilities and contingent liabilities recognised.
Goodwill is reviewed for impairment on an annual basis. When the directors
consider the initial value of the acquisition to be negligible, the goodwill is
written off to the Income Statement immediately. Trading results of acquired
subsidiary undertakings are included from the date of acquisition.
Goodwill is deemed to be impaired when the present value of the future cash
flows expected to be derived is lower than the carrying value. Any impairment
is charged to the Income Statement immediately.
Finance costs
Interest expense and other borrowing costs are charged to the income statement
as incurred.
Tax
The tax payable is based on taxable profit for the period. Taxable profit
differs from net profit as reported in the income statement because it excludes
items of income or expense that are taxable or deductible in other years and it
further excludes items that are never taxable or deductible.
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit and is accounted for using the balance sheet liability method. Deferred
tax liabilities are generally recognized for all taxable differences and
deferred tax assets are recognized to the extent that taxable profits will be
available against which deductible temporary differences can be utilized.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax liabilities
and when the deferred taxes relate to the same fiscal authority.
Investments
Investments in subsidiary companies are stated at cost less provision for
impairment in value, which is recognised as an expense in the period in which
the impairment is identified.
Exploration costs
The Group has adopted the provisions of IFRS 6 'Exploration for and Evaluation
of Mineral Resources'. The Group's stage of operations as at the period end and
as at the date of approval of these financial statements have not yet met the
criteria for capitalisation of exploration costs.
Share-based compensation benefits
IFRS 2 'Share-based Payment' requires the recognition of equity-settled share-
based payments at fair value at the date of grant and the recognition of
liabilities for cash-settled share-based payments at the current fair value at
each balance sheet date.
The fair value is measured using the Black Scholes pricing model. The inputs
used in the model are based on management's best estimate, for the effects of
non-transferability, exercise restrictions and behavioural considerations.
For 2007, the impact of share-based payments is a net charge to income of
£166,894. At 31 December 2007, the equity reserve recognized for share based
payments amounted to £166,894.
Use and revision of accounting estimates
The preparation of the financial report requires the making of estimations and
assumptions that affect the recognised amounts of assets, liabilities, revenues
and expenses and the disclosure of contingent liabilities. The estimates and
associated assumptions are based on historical experience and various other
factors that are believed to be reasonable under the circumstances, the results
of which form the basis of making the judgments about carrying values of assets
and liabilities that are not readily apparent from other sources. Actual
results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.
Financial instruments
Financial assets and financial liabilities are recognised on the Group's balance
sheet when the Group becomes a party to the contractual provisions of the
instrument.
Cash and cash equivalents
For the purposes of the cash flow statement, cash and cash equivalents comprise
cash at bank and in hand.
Borrowings
Borrowings are recorded initially at the proceeds received, net of transaction
costs incurred. Borrowings are subsequently stated at amortised cost. Any
differences between the proceeds (net of transaction costs) and the redemption
value is recognised in the income statement over the period of the borrowings
using the effective interest method.
3. Financial risk management
Financial risk factors
The Group is exposed to interest rate risk, liquidity risk, currency risk and
capital risk management arising from the financial instruments it holds. The
risk management policies employed by the Group to manage these risks are
discussed below:
Interest rate risk
Interest rate risk is the risk that the value of financial instruments will
fluctuate due to changes in market interest rates. The Group's income and
operating cash flows are substantially independent of changes in market interest
rates as the Group has no significant interest-bearing assets. The Group is
exposed to interest rate risk in relation to its non-current borrowings.
Borrowings issued at variable rates expose the Group to cash flow interest rate
risk. Borrowings issued at fixed rates expose the Group to fair value interest
rate risk. The Group's management monitors the interest rate fluctuations on a
continuous basis and acts accordingly.
At the reporting date the interest rate profile of interest-bearing financial
instruments was:
2007
Variable rate instruments GBP'000
Financial assets 502
Sensitivity analysis
An increase of 100 basis points in interest rates at 31 December 2007 would have
increased (decreased) equity and profit or loss by the amounts shown below. This
analysis assumes that all other variables, in particular foreign currency rates,
remain constant. For a decrease of 100 basis points there would be an equal and
opposite impact on the profit and other equity.
Profit or
Equity Loss
2007 2007
Variable rate instruments GBP'000 GBP'000
Financial assets 8 8
Liquidity risk
Liquidity risk is the risk that arises when the maturity of assets and
liabilities does not match. An unmatched position potentially enhances
profitability, but can also increase the risk of losses. The Group has
procedures with the object of minimising such losses such as maintaining
sufficient cash and other highly liquid current assets and by having available
an adequate amount of committed credit facilities.
The following tables detail the Group's remaining contractual maturity for its
financial liabilities. The tables have been drawn up based on the undiscounted
cash flows of financial liabilities based on the earliest date on which the
Group can be required to pay. The table includes both interest and principal
cash flows.
31 December 2007 Carrying Contractual 3 months or 3 - 12 1 - 2 2 - 5 More than 5
amounts cash flows less months years years years
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Trade and other payables 53 53 53 - - - -
53 53 53 - - - -
Currency risk
Currency risk is the risk that the value of financial instruments will fluctuate
due to changes in foreign exchange rates. Currency risk arises when future
commercial transactions and recognised assets and liabilities are denominated in
a currency that is not the Group's measurement currency. The Group is exposed to
foreign exchange risk arising from various currency exposures primarily with
respect to the Euro, Bulgarian Lev and Turkish Lira. The Group's management
monitors the exchange rate fluctuations on a continuous basis and acts
accordingly.
The carrying amounts of the Group's foreign currency denominated monetary assets
and monetary liabilities at the reporting date are as follows:
Liabilities Assets
2007 2007
GBP'000 GBP'000
Euro - 3
United States Dollar - 5
New Turkish Lira - 11
Sensitivity analysis
A 10% strengthening of the British Pound against the following currencies at 31
December 2007 would have increased/(decreased) equity and profit or loss by the
amounts shown below. This analysis assumes that all other variables, in
particular interest rates, remain constant. For a 10% weakening of the British
Pound against the relevant currency, there would be an equal and opposite impact
on the profit and other equity.
Profit or
Equity Loss
2007 2007
GBP'000 GBP'000
Euro - -
United States Dollar - -
New Turkish Lira (1) 1
Capital risk management
The Group manages its capital to ensure that it will be able to continue as a
going concern while maximizing the return to shareholders through the
optimization of the debt and equity balance.
The capital structure of the Group consists of cash and cash equivalents (note
15) and equity attributable to equity holders of the parent, comprising issued
capital (note 16), reserves (notes 16 and 17) and accumulated losses.
Fair value estimation
The fair values of the Group's financial assets and liabilities approximate
their carrying amounts at the balance sheet date.
4. Operating loss
2007
GBP'000
Operating loss is stated after charging the following items:
Depreciation of property, plant and equipment (Note 11) 13
Share-based employee benefits (including directors) 167
Directors' remuneration 158
Auditors' remuneration - audit 24
- interim review 3
- listing fees 26
- subsidiary audit fees 2
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Period from 24 October 2006 to 31 December 2007
5. Staff costs 2007
GBP'000
Salaries 74
Social insurance costs and other funds 12
86
6. Business and geographical segments
Business segments
The Group has only one distinct business segment, being that of mineral
exploration.
Geographical segments
The Group's exploration activities are located in Turkey and Bulgaria and its
administration and management is based in Cyprus.
Cyprus Turkey Bulgaria Consolidation Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
2007
Operating loss (775) (676) (1) (364) (1,816)
Financial income 39 83 10 - 132
Financial costs (2) (1) - - (3)
Net loss for the period (738) (594) 9 (364) 1,687
Total assets 1,610 118 6 (1,142) 592
Total liabilities 102 996 160 (1,139) 119
Depreciation of fixed assets - 13 - - 13
7. Finance income 2007
GBP'000
Interest income 39
Net foreign exchange transaction gains 93
132
8. Finance costs
Sundry finance costs 3
9. Tax GBP'000
Loss before tax (1,687)
Tax calculated at the applicable tax rates (225)
Tax effect of expenses not deductible for tax purposes 59
Tax effect of tax loss for the year 66
Tax effect of allowances and income not subject to tax (3)
Tax effect of tax losses brought forward (7)
Tax effect on exploration expenses taxed separately 110
Charge for the year 0
The Directors believe that the company is resident in Cyprus for tax purposes.
A deferred tax asset of GBP255,737 has not been accounted for due to the
uncertainty over the timing of future recoverability.
Cyprus
The corporation tax rate is 10%. Under certain conditions interest may be
subject to defence contribution at the rate of 10%. In such cases 50% of the
same interest will be exempt from corporation tax, thus having an effective tax
rate burden of approximately 15%. In certain cases, dividends received from
abroad may be subject to defence contribution at the rate of 15%.
Due to tax losses sustained in the period, no tax liability arises on the
Company. Under current legislation, tax losses may be carried forward and be set
off against taxable income of the following years. As at 31 December 2007, the
balance of tax losses which is available for offset against future taxable
profits amounts to GBP661,799.
Bulgaria
Mediterranean Minerals (Bulgaria) EOOD, the 100% subsidiary of the Company, is
resident in Bulgaria for tax purposes.
The corporation tax rate is 10%. Due to tax losses sustained in the period, no
tax liability arises on the Mediterranean Minerals (Bulgaria) EOOD. Under
current legislation, tax losses may be carried forward and be set off against
taxable income of the following five years. As at 31 December 2007, the balance
of tax losses which is available for offset against future taxable profits
amounts to GBP164,694.
Turkey
Dogu Akdeniz Mineralleri Sanayi ve Ticaret Limited Sirket (Dogu Akdeniz
Mineralleri), the 100% subsidiary of Mediterranean Minerals (Bulgaria) EOOD, and
ultimately 100% subsidiary of the Company, is resident in Turkey for tax
purposes.
The corporation tax rate is 20%. Under local tax legislation, exploration costs
can only be set off against income from mining operations. As at 31 December
2007, the balance of exploration costs that will be taxed separately against
future income from mining operations amount to GBP865,440.
10. Loss per share
The calculation of the basic and diluted earnings per share attributable to the
ordinary equity holders of the parent is based on the following data:
2007
GBP'000
Net loss attributable to equity shareholders 1,687
'000
Average number of ordinary shares for the purposes of basic earnings per share 102,392
Earnings per share: GBP
Basic and fully diluted losses per share (pence) 0.02
The effect of share options on earnings per share is anti-dilutive; no separate
disclosure is required.
11. Property Plant and Equipment Furniture,
fixtures and
Motor office
2007 vehicles equipment Total
The Group GBP'000 GBP'000 GBP'000
Cost
Additions 47 17 64
Disposals (7) - (7)
At 31 December 2007 40 17 57
Accumulated Depreciation
Charge for the period 11 2 13
On disposal (3) - (3)
At 31 December 2007 8 2 10
Net Book Value at 31 December 2007 32 15 47
The above fixed assets are located in Turkey.
The Company has no fixed assets.
12. Intangible assets - goodwill
2007 Goodwill Total
Cost GBP'000 GBP'000
Additions 364 364
At 31 December 2007 364 364
Provision for impairment
Provision for the period (364) (364)
At 31 December 2007 (364) (364)
Closing Net Book Value at 31 December 2007 - -
The impairment provision has been made based on the directors' assessment of the
current state of the group's development.
13. Investment in subsidiaries
2007
The Company GBP'000
Cost and Net Book Value
Additions (note 19) 2
At 31 December 2007 2
Date of Effective
acquisition/ Country of proportion of
incorporation incorporation shares held
Subsidiary companies
Mediterranean Minerals (Bulgaria) EOOD 8/11/2006 Bulgaria 100%-Direct
Dogu Akdeniz Mineralleri Sanayi ve Ticaret Limited Sirket 8/11/2006 Turkey 100%-Indirect
On 8 November 2006, the Company entered into an agreement to acquire from EMED
Mining Public Limited (formerly Eastern Mediterranean Resources Public Limited)
the whole of the issued share capital of Mediterranean Minerals (Bulgaria) EOOD,
a company incorporated in Bulgaria, in consideration for the issue of 29,999,998
ordinary shares in the Company.
Mediterranean Minerals (Bulgaria) EOOD owns 100% of the share capital of Dogu
Akdeniz Mineralleri, a private limited liability company incorporated in Turkey,
engaging in activities for exploration and developing of natural resources.
Significant aggregate amounts in respect of subsidiaries:
GBP'000
Net liabilities 1 January 2006 (153)
Net loss for the year (305)
Net liabilities at 31 December 2006 (458)
Loss for the year (574)
Net liabilities at 31 December 2007 (1,032)
Pre-acquisition reserves, mainly, exploration costs incurred by the subsidiaries
prior to acquisition amounted to GBP364,000.
The movement in the net assets of subsidiaries is based on their audited
financial statements which have been prepared on the basis of International
Financial Reporting Standards (IFRSs) as adopted by the European Union and the
IFRSs as issued by IASB.
14. Trade and other receivables 2007
The Group GBP'000
Other receivables 39
Deposits and prepayments 4
43
The Company
Owed by group companies 1,136
Amounts owed by group companies will not be repaid until the resources of those
companies permit.
15. Cash and cash equivalents 2007
The Group GBP'000
Cash at bank and in hand 502
The Company
Cash at bank and in hand 472
16. Share capital
Share Share
Number of Capital premium Total
shares '000 GBP'000 GBP'000 GBP'000
Authorised
Ordinary shares of GBP0.01 each 200,000 2,000 - 2,000
Issued and fully paid
Seed round 42,000 420 36 456
IPO round 46,667 467 933 1,400
Issued
19 February 2007 at GBP0.03 11,667 117 233 350
12 March 2007 at GBP0.03 250 2 5 7
4 June 2007 at GBP0.035 1,000 10 25 35
4 June 2007 at GBP0.035 1,250 12 32 44
3 October 2007 at GBP0.032 6,000 60 132 192
Share issue costs - - (405) (405)
At 31 December 2007 108,834 1,088 991 2,079
Authorised capital
Under its Memorandum the Company fixed its share capital at 200,000,000 ordinary
shares of nominal value of GBP 0.01 each.
Issued capital
During the Seed Round the Company issued 42,000,000 shares.
On admission of the Company to AIM in December 2006, 46,666,667 shares were
issued at the price of GBP 0.03. Upon the issue an amount of GBP 933,333 was
credited to the Company's share premium reserve.
On 19 February 2007 11,666,667 shares of GBP 0.01 were issued at a price of GBP
0.03. Upon the issue an amount of GBP 233,333 was credited to the company's
share premium reserve.
On 12 March 2007 250,000 shares of GBP 0.01 were issued to Mr. Omer Celenk at
the price of GBP 0.03. Upon the issue an amount of GBP5,000 was credited to the
Company's share premium reserve.
On 4 June 2007 1,000,000 shares of GBP 0.01 were issued to Malcolm Stallman at
the price of GBP 0.035. Upon the issue an amount of GBP25,000 was credited to
the Company's share premium reserve.
On 4 June 2007 1,250,000 shares of GBP 0.01 were issued for Muratdag Licence in
Turkey at the price of GBP 0.035. Upon the issue an amount of GBP31,250 was
credited to the Company's share premium reserve.
On 3 October 2007 6,000,000 shares of GBP 0.01 were issued at a price of GBP
0.032. Upon the issue an amount of GBP 132,000 was credited to the company's
share premium reserve.
17. Share option plan
Details of share options outstanding as at 31 December 2007:
Number of
Grant date Expiry date Exercise price shares
GBP '000
18 December 2006 18 December 2012 0.030 16,000
12 March 2007 11 March 2013 0.035 250
18 April 2007 17 April 2013 0.035 1,200
04 June 2007 03 June 2013 0.035 500
08 October 2007 07 October 2010 0.040 300
Total 18,250
The options expire six years after grant date and are exercisable at the
exercise price in whole or in part no more than one third after one year from
the grant date, two thirds after two years from the grant date and the balance
after three years from the grant date.
Number of
shares
'000
- granted 18,250
- cancelled/forfeited -
- exercised -
18,250
The Company has issued share options to directors, employees and advisers to the
Group. All options, except those noted below, expire six years after grant date
and are exercisable at the exercise price in whole or in part no more than one
third from the grant date, two thirds after two years from the grant date and
the balance after three years from the grant date.
On 8 October 2007, 19,531 options were issued to W.H. Ireland Limited which
expire three years after the grant date, and are exercisable at any time within
that period.
On 8 October 2007, 280,469 options were issued to Loeb Aaron & Company Limited
which expire three years after the grant date, and are exercisable at any time
within that period.
The option agreements contain provisions adjusting the exercise price in certain
circumstances including the allotment of fully paid Ordinary Shares by way of a
capitalisation of the Company's reserves, a sub division or consolidation of the
Ordinary Shares, a reduction of share capital and offers or invitations (whether
by way of rights issue or otherwise) to the holders of Ordinary Shares.
The estimated fair values of the options were calculated using the Black Scholes
option pricing model. The inputs into the model and the results are as follows:
8 Oct. 4 June 18 April 12 March 18 Dec.
2007 2007 2007 2007 2006
Closing share price at issue date 3.00p 3.62p 3.88p 3.30p 3.88p
Weighted average exercise price 4.00p 3.50p 3.50p 3.50p 3.00p
Expected volatility 85.58% 68.06% 68.06% 68.06% 50%
Expected life 3 yrs 6 yrs 6yrs 6yrs 6yrs
Risk free rate 4.75% 6.08% 5.95% 5.73% 5.97%
Expected dividend yield Nil Nil Nil Nil Nil
Discount factor 30% 30% 30% 30% 30%
Estimated fair value 1.06p 1.71p 1.85p 1.50p 1.427p
Expected volatility was estimated based on the likely range of volatility of the
share price.
18. Trade and other payables
2007
The Group GBP'000
Trade payables 53
Accruals 9
Payable to related companies (Note 20) 57
119
The Company
Trade payables 45
Payable to related companies (Note 20) 57
102
19. Acquisition of subsidiaries
On 8 November 2006, the Company entered into an agreement to acquire from EMED
Mining Public Limited (formerly Easter Mediterranean Resources Public Ltd) the
whole of the issued share capital of Mediterranean Minerals (Bulgaria) EOOD, a
company incorporated in Bulgaria, in consideration for the issue of 29,999,998
ordinary shares in the Company. This issue of shares was also partly in
satisfaction of indebtedness due to EMED Mining Public Ltd.
The consolidated net assets of Bulgaria and Turkey at the date of acquisition
and at 31 December 2005 were as follows:
8 November 31 December
2006 2005
GBP'000 GBP'000
Cost of investment 2
Less: Fair values of net liabilities acquired 362
Goodwill 364
The net liabilities acquired were as follows:
Cash at bank and in hand 6 12
Payable to EMED Mining Public Ltd (334) (167)
Payable to KEFI Minerals plc (34) -
(362) 155
Consideration - shares issued at premium 336
Cash and cash equivalents acquired (6)
Net consideration in shares on acquisition 330
20. Related party transactions
The following transactions were carried out with related parties:
20.1 Compensation of key management personnel
The total remuneration of the Directors and other key management personnel was
as follows:
2007
GBP'000
Directors' fees 158
Share-based benefits to directors 114
Other key management personnel fees 163
Share-based benefits to other key management personnel 19
454
The Company has an ongoing service agreement with EMED Mining Public Ltd for
provision of management and other professional services (Note 22).
Share-based benefits
The directors and key management personnel have been granted ordinary share
options that expire six years after grant date and are exercisable at the
exercise price in whole or in part no more than one third after one year from
the grant date, two thirds after two years from the grant date and the balance
after three years from the grant date. No options have been exercised during the
period from grant date to 31 December 2007.
20.2 Payable to related parties 2007
Name Nature of transactions GBP'000
EMED Mining Public Ltd Finance 57
20.3 Transactions with related parties 2007
Name Nature of transactions GBP'000
EMED Mining Public Ltd Provision of management services and other
professional services
50
20.4 Purchases geological survey data 2007
GBP'000
Data acquisition 13
In June 2007, the Company issued the first tranche of shares in settlement of
its obligations under the terms of the agreement disclosed in Note 21. The
amount disclosed above, represents the share of a director. The transaction was
made on commercial terms and conditions.
21. Contingent liabilities
During the six months ended 30 June 2006, EMED Mining Public Ltd acquired a
proprietary geological database that covers extensive parts of Turkey and
Greece. The cost of obtaining the database was shared equally by the Company and
Eastern Mediterranean Resources A.E. (Greece) a wholly owned subsidiary of EMED.
Under the terms of the original agreement, an additional contingent
consideration of GBP216,000 was to be settled by the issuance of 1,728,984
ordinary shares in EMED at 12.5p each if EMED secured at least four tenements in
Turkey or Greece identified from the database.
Under the revised agreement of 22 November 2006, EMED transferred to the Company
that part of the geological database that relates to areas in Turkey.
Consequently, EMED has been discharged from the original contingent
consideration in respect of Turkey.
Under the agreement, the Company has undertaken to make a payment of
approximately GBP46,000 (AUD105,000) for each tenement it is subsequently
awarded in Turkey and which was identified from the database. The maximum number
of such payments required under the agreement is four, resulting in a contingent
liability of up to GBP184,000. These payments are to be settled by issuing
shares in the Company. The first tranche of shares was issued under this
agreement in June 2007 for GBP43,750, the equivalent of AUD105,000 (Note 16).
22. Relationship deed
A Relationship Deed between EMED and the Company dated 7 November 2006, by which
EMED agrees not to operate in Bulgaria and Turkey, and the Company agrees not to
operate in Albania, Armenia, Azerbaijan, Cyprus, Greece, Hungary, Iran, Oman,
Romania, Saudi Arabia, Serbia or Slovakia the 'EMED Area'. The Relationship Deed
provides that EMED has the right to appoint one non-executive director of the
Company. It also provides EMED with a right of first refusal in respect of
funding any proposed mining or exploration project of the Company. The
Relationship Deed provides that the Company shall refer any opportunity to
conduct mining or exploration activity in the EMED Area to EMED, and EMED shall
refer any such opportunity in Bulgaria or Turkey to the Company.
23. Capital commitments
The Group has no capital or other commitments as at 31 December 2007.
24. Subsequent events
There were no material subsequent events, which have a bearing on the
understanding of the financial statements.
25. Standards effective but not in force
The following standards and interpretations are in issue, but not in force at 31
December 2007:
New Standards and Interpretations
IFRS 8 Operating Segments
IFRIC 11 Group and Treasury Share Transactions
IFRIC 12 Service Concession Arrangements
IFRIC 13 Customer Loyalty Programmes
IFRIC 14 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and
their Interaction
Revisions to existing standards
IAS 1 Presentation of Financial Statements
IAS 23 Borrowing costs
The directors do not expect the new standards and interpretations, or the
revisions to existing standards, to have any impact on the primary statements.
However:
IAS 1 The revisions to this standard will require additional
disclosures both qualitative and quantitative, concerning the income statement
and the restriction of the statement of changes in equity to capital items. The
revisions to this standard are effective for accounting periods beginning on or
after 1 January 2009.
IAS 23 The revisions to this standard will require capitalisation of
borrowing costs incurred on qualifying assets together with transitional
provisions for companies who have previously written off such costs. The
revisions to this standard are effective for accounting periods beginning on or
after 1 January 2009.
26. Statutory Information
The financial information set out above does not constitute the Company's
statutory accounts for the period ended 31 December 2007, but is derived from
those accounts. Statutory accounts for 2007 will be delivered to the Registrar
of Companies following the Company's Annual General Meeting. The auditors have
reported on those accounts and their report was not qualified. Copies of the
statutory accounts will be posted to shareholders shortly.
27. It is expected that the annual report will be dispatched to shareholders on
31 March 2008. At that time a copy of the annual report and accounts will also
be available from the Company's website: www.kefi-minerals.com
28. The Company intends to hold its AGM at 2.30pm on 23 April 2008 at the
offices of Field Fisher Waterhouse LLP at 35 Vine Street, London EC3N 2AA.
This information is provided by RNS
The company news service from the London Stock Exchange
Friday, 22nd November 2024
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