We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Register for Free to get streaming real-time quotes, interactive charts, live options flow, and more.
| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| European Gold | LSE:EGU | London | Ordinary Share | CA2987741006 | COM SHS NPV |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 807.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
Hot Features
Premium
RNS Number : 3716U
European Goldfields Ltd
14 May 2008
European Goldfields Limited
Financial Statements
(Unaudited)
First Quarter 2008
Disclosure of auditor review of interim consolidated financial statements
The interim consolidated financial statements of the Company for the three-month periods ended
31 March 2008 and 2007 have not been reviewed by the auditors of the Company.
European Goldfields LimitedConsolidated
Balance SheetsAs at 31 March 2008 and 31
December 2007(Unaudited * Prepared by
Management)(in thousands of US Dollars,
except per share amounts)
31 March2008$ 31 December2007$
Note Unaudited Audited
Assets
Current assets
Cash and cash equivalents 210,682 218,839
Accounts receivable 29,384 20,408
Prepaid expenses 8,389 7,769
Inventory 3 5,983 2,110
254,438 249,126
Non current assets
Plant and equipment 4 55,517 48,776
Deferred exploration and development 5
costs
Greek production stage mineral 28,893 29,525
properties
Greek development stage mineral 402,269 401,829
properties
431,162 431,354
Romanian development stage mineral 40,413 38,285
properties
471,575 469,639
Restricted investment 6 4,900 4,900
Other financial assets 431 882
Future tax asset 8,050 8,808
794,911 782,131
Liabilities
Current liabilities
Accounts payable and accrued liabilities 15,346 9,977
Income taxes payable 13,419 12,718
28,765 22,695
Non current liabilities
Future tax liability 7 109,243 109,943
Non-controlling interest 3,575 3,341
Asset retirement obligation 8 6,839 6,805
Deferred revenue 9 68,553 65,344
188,210 185,433
Shareholders* equity
Capital stock 10 537,605 537,275
Contributed surplus 10 6,642 5,997
Accumulated other comprehensive income 37,844 38,295
Deficit (4,155) (7,564)
577,936 574,003
794,911 782,131
The accompanying notes are an integral part of these consolidated financial statements.
Approved by the Board of Directors
(s) Jeffrey O'Leary
(s) Timothy Morgan-Wynne
Timothy Morgan-Wynne, Director Dr Jeffrey O'Leary, Director
European Goldfields Limited
Consolidated Statements of Profit and Loss
For the three-month periods ended
31 March 2008 and 2007
(Unaudited - Prepared by Management)
(in thousands of US Dollars, except per share
amounts)
Three months ended
31 March 31 March
2008 2007
Note $ $
Income
Sales 12,708 17,083
Cost of sales (6,806) (6,171)
Depreciation and depletion (1,053) (773)
Gross profit 4,849 10,139
Other income
Interest income 1,757 453
Foreign exchange gain/(loss) 2,674 (152)
4,431 301
Expenses
Corporate administrative and overhead expenses 1,264 847
Equity based compensation expense 468 456
Hellas Gold administrative and overhead expenses 2,057 2,211
Hellas Gold water treatment expenses (non-operating 1,043 1,102
mines)
Accretion of asset retirement obligation 8 34 29
Amortisation 151 119
(5,017) (4,764)
Profit for the period before income tax 4,263 5,676
Income taxes
Current taxes (752) (1,161)
Future taxes 131 (558)
(621) (1,719)
Profit for the period before non-controlling 3,642 3,957
interest
Non-controlling interest (233) (1,848)
Profit for the period 3,409 2,109
Deficit - Beginning of period (7,564) (30,763)
Deficit - End of period (4,155) (28,654)
Earnings per share 19
Basic 0.02 0.02
Diluted 0.02 0.02
Weighted average number of shares (in thousands)
Basic 179,199 115,827
Diluted 180,903 117,636
The accompanying notes are an integral part of these consolidated financial statements.
European Goldfields Limited
Consolidated Statements of Equity
As at 31 March 2008 and 2007
(Unaudited - Prepared by Management)
(in thousands of US Dollars, except per share
amounts)
Accumulated Other Deficit Total
Capital Contributed Comprehensive $ $
Stock Surplus Income
$ $ $
Balance - 31 December 2006 246,890 7,135 4,276 (30,763) 227,538
Equity based compensation - 1,345 - - 1,345
expense
Share options exercised or 168 (168) - - -
exchanged
Movement in cumulative - - 1,714 - 1,714
translation adjustment
Restricted share units vested 232 (232) - - -
Profit for the period - - - 2,109 2,109
400 945 1,714 2,109 5,168
Balance - 31 March 2007 247,290 8,080 5,990 (28,654) 232,706
Equity based compensation - 1,143 - - 1,143
expense
Shares issued for equity 130,059 - - - 130,059
financing
Shares issued as consideration 161,425 - - - 161,425
for acquisition
Share issue cost (4,777) - - - (4,777)
Restricted share units vested 2,414 (2,414) - - -
Share options exercised or 864 (812) - - 52
exchanged
Movement in cumulative
translation adjustment - - 31,423 - 31,423
Change in fair value cash flow - - 882 - 882
hedge
Profit for the period - - - 21,090 21,090
289,985 (2,083) 32,305 21,090 341,297
Balance - 31 December 2007 537,275 5,997 38,295 (7,564) 574,003
Equity based compensation - 985 - - 985
expense
Restricted share units vested 340 (340) - - -
Share options exercised or - - - - -
exchanged
Share issue cost (10) - - - (10)
Change in fair value cash flow - - (451) - (451)
hedge
Profit for the period - - - 3,409 3,409
330 645 (451) 3,409 3,933
Balance - 31 March 2008 537,605 6,642 37,844 (4,155) 577,936
The accompanying notes are an integral part of these consolidated financial statements.
European Goldfields Limited
Consolidated Statements of Cash Flows
For the three-month periods ended 31 March 2008
and 2007
(Unaudited - Prepared by Management)
(in thousands of US Dollars, except per share
amounts)
Three months ended
31 March 31 March
2008 2007
Note $ $
Cash flows from operating activities
Profit for the period 3,409 2,108
Foreign exchange (gain) / loss (2,667) 196
Amortisation 543 419
Equity based compensation expense 468 456
Accretion of asset retirement obligation 8 34 29
Current taxation 752 1,720
Future tax recognised (131) -
Non-controlling interest 233 1,848
Deferred revenue recognised (354) -
Depletion of mineral properties 659 473
2,946 7,249
Net changes in non-cash working capital 12 (6,779) (4,840)
(3,833) 2,409
Cash flows from investing activities
Deferred exploration and development costs - (1,603) (696)
Romania
Plant and equipment - Greece (7,147) (1,577)
Deferred development costs - Greece (769) (421)
Restricted cash - (28)
Purchase of land (339) -
Purchase of equipment (51) (11)
(9,909) (2,733)
Cash flows from financing activities
Proceeds from exercise of share options - -
Share issue costs - -
Deferred revenue 3,563
3,563 -
Effect of foreign currency translation on cash 2,022 (304)
Decrease in cash and cash equivalents (8,157) (628)
Cash and cash equivalents - Beginning of period 218,839 34,587
Cash and cash equivalents - End of period 210,682 33,959
The accompanying notes are an integral part of these consolidated financial statements.
European Goldfields Limited
Consolidated Statements of Comprehensive Income
For the three-month periods ended 31 March 2008 and 2007
(Unaudited - Prepared by Management)
(in thousands of US Dollars, except per share amounts)
Three months ended
31 March 31 March
2008 2007
$ $
Profit for the period 3,409 2,109
Other comprehensive income in the period
Currency translation adjustment - 1,714
Cash flow hedge adjustment (451) -
Comprehensive income 2,958 3,823
The accompanying notes are an integral part of these consolidated financial statements.
European Goldfields Limited
Notes to Consolidated Financial Statements
For the three-month periods ended 31 March 2008 and 2007
(Unaudited - Prepared by Management)
(in thousands of US Dollars, except per share amounts)
1. Nature of operations
European Goldfields Limited (the "Company"), a company incorporated under the Yukon Business Corporations Act, is a resource company
involved in the acquisition, exploration and development of mineral properties in Greece, Romania and South-East Europe.
The Company's common shares are listed on the AIM Market of the London Stock Exchange and on the Toronto Stock Exchange (TSX) under the
symbol "EGU".
Greece - The Company holds a 95% (2007 - 65%) interest in Hellas Gold S.A ("Hellas Gold"). Hellas Gold owns three major gold and base
metal deposits in Northern Greece. The deposits are the polymetallic operation at Stratoni, the Olympias project which contains gold, zinc,
lead and silver, and the Skouries copper/gold porphyry project. Hellas Gold commenced production at Stratoni in September 2005 and commenced
selling an existing stockpile of gold concentrates from Olympias in July 2006. Hellas Gold is applying for permits to develop the Skouries
and Olympias projects.
Romania - The Company owns 80% of the Certej gold/silver project in Romania. The Company submitted in March 2007 a technical feasibility
study to the Romanian government in support of a permit application to develop the project. In March 2008, the Company submitted the
Environmental Impact Study to the Romanian environmental authorities to start the assessment of the environmental impact of the Certej
project.
The underlying value of the deferred exploration and development costs for mineral properties is dependent upon the existence and
economic recovery of reserves in the future, and the ability to raise long-term financing to complete the development of the properties.
For the coming year, the Company believes it has adequate funds available to meet its corporate and administrative obligations and its
planned expenditures on its mineral properties.
These consolidated financial statements have been prepared on a going concern basis, which assumes the Company will be able to realise
assets and discharge liabilities in the normal course of business for the foreseeable future. These consolidated financial statements do not
include the adjustments that would be necessary should the Company be unable to continue as a going concern.
2. Significant accounting policies
These interim consolidated financial statements have been prepared on the going concern basis in accordance with accounting principles
generally accepted in Canada ("Canadian GAAP") using the same accounting policies as those disclosed in Note 2 to the Company's audited
consolidated financial statements for the years ended 31 December 2007 and 2006.
These interim consolidated financial statements should be read in conjunction with the Company's audited consolidated financial
statements for the years ended 31 December 2007 and 2006.
Significant changes in accounting policies
Capital Disclosures - Effective 1 January 2008, the Company adopted CICA Handbook, Section 1535, Capital disclosures. The new standard
requires disclosures of qualitative and quantitative information that enables users of financial statements to evaluate the Company's
objectives, policies and processes for managing capital.
Inventories - Effective 1 January 2008, the Company adopted the CICA Handbook Section 3031, Inventories. The new section requires
inventories to be measured at the lower of cost and net realisable value and provides guidance on the cost methodology used to assign costs
to inventory, disallows the use of last-in-first-out inventory costing methodology and requires that, when circumstances which previously
caused inventories to be written down below cost no longer exist, the amount previously written down is to be reversed. Upon adoption, the
impact to the financial statements arising was immaterial.
Standards of Financial Statement Presentation - Effective 1 January 2008, the Company adopted CICA Handbook Section 1400, General
Standards of Financial Statement Presentation. This section provides guidance related to management's assessment of the Company's ability to
continue as a going concern. The adoption of this standard had no impact on the Company's presentation of its financial position.
Financial Instruments Presentation and Disclosures - Effective 1 January 2008, the Company adopted CICA Handbook Sections 3862 -
Financial instruments - disclosures, and 3863 - Financial instruments - Presentation. These new Sections are a replacement of and represent
a revision and enhancement to Section 3861 - Financial instruments - Presentation and disclosure. Under the new standards, the Company is
required to disclose information about the significance of financial instruments for its financial position and performance and qualitative
and quantitative information about its exposure to risks arising from financial instruments, as well as management's objectives, policies
and processes for managing such risks. The adoption of these standards did not have an impact on the classification and valuation of
financial instruments. The new disclosures resulting from adoption of these standards are included in note 13.
Change in functional currency - During the three month period ended 31 March 2008, Hellas Gold completed a long term planning exercise
on its Stratoni mine. As a stand alone business, Stratoni was shown to generate excess of US dollar revenues over Euro expenses for its
life of mine. Hellas Gold also has a series of development projects which will increase the excess of US dollar revenues over Euro
denominated costs. Also taken into consideration along with the net cash flows, were the following factors:
* All sales are priced in US dollars;
* Sales markets are international, rather than domestic to Greece;
* Day to day activities are financed by US dollar denominated sales;
* Significant amounts of future financing earmarked for the development projects has already been raised in US dollars by
European Goldfields Limited, and other financing activities in Hellas Gold, prepaid sales receipts, have all been US dollar denominated;
Labour and materials are predominantly denominated in Euros.
Overall, it was deemed that the net exposure to the US dollar was greater than the exposure to the Euro, and that the functional
currency of Hellas Gold should change to the US dollar. The change in functional currency is effective 1 January 2008.
3. Inventory
This balance comprises the following:
31 31
March Decemb
er
2008 2007
$ $
Ore mined 365 -
Metal concentrates 4,430 865
Material and supplies 1,188 1,245
5,983 2,110
4. Plant and equipment
Plant and equipment Mine development, Leasehold Total
$ land and buildings Improvements $
$ $
Vehicles
$
Cost - 2008
At 31 December 2007 31,701 1,932 21,212 311 55,156
Additions 6,612 37 881 5 7,535
Disposals (14) (8) - - (22)
At 31 March 2008 38,299 1,961 22,093 316 62,669
Accumulated
amortisation -2008
At 31 December 2007 3,151 1,076 2,068 85 6,380
Provision for the year 400 55 328 8 791
Disposals (9) (7) - - (16)
At 31 March 2008 3,542 1,124 2,396 93 7,155
Net book value at 31 March 34,757 837 19,697 223 55,514
2008
5. Deferred exploration and development costs
Greek mineral properties:
Stratoni Olypmias Skouries Total
$ $ $ $
Balance - 31 December 2007 29,525 237,284 164,545 431,354
Deferred development costs 293 41 456 790
Depletion of mineral properties (926) (56) - (982)
Currency translation adjustment - - - -
(633) (15) 456 (192)
Balance - 31 March 2008 28,892 237,269 165,001 431,162
The Stratoni, Skouries and Olympias properties are held by the Company's 95%-owned (2007 - 65%) subsidiary, Hellas Gold. In September
2005, the Stratoni property commenced production.
Romanian mineral properties:
Baita-Craciunesti
Certej $ Voia Cainel Total
$ $ $ $
Balance - 31 December 2007 32,915 3,166 1,167 1,037 38,285
Drilling and assaying 24 - 4 - 28
Geosciences and tech. 667 6 21 1 695
consulting
Samplers, miners and surveying 13 1 9 1 24
Project management 799 11 25 18 853
Project overhead 454 8 37 10 509
Amortisation 14 2 - 3 19
1,971 28 96 33 2,128
Balance - 31 March 2008 34,886 3,194 1,263 1,070 40,413
The Certej exploitation licence and the Baita-Craciunesti exploration licence are held by the Company's 80%-owned subsidiary, Deva Gold.
Minvest S.A. (a Romanian state owned mining company), together with three private Romanian companies, hold the remaining 20% interest in
Deva Gold and the Company holds the pre-emptive right to acquire such 20% interest. The Company is required to fund 100% of all costs
related to the exploration and development of these properties. As a result, the Company is entitled to the refund of such costs (plus
interest) out of future cash flows generated by Deva Gold, prior to any dividends being distributed to shareholders. The Voia and Cainel
exploration licences are held by the Company's wholly-owned subsidiary, European Goldfields Deva SRL.
Individual property spending commitments for each of the Company's Romanian licences have been met as at 31 March 2008.
6. Restricted investment
The balance consists of an amount of $4,900 pledged by Hellas Gold to the National Bank of Greece as collateral for a letter of
guarantee issued by the National Bank of Greece to the Greek Ministry of Development to guarantee Hellas Gold's environmental commitments
under its mining permit at Stratoni. The letter of guarantee expires on 31 December 2010. The investment bears a rate of interest of
Euribor plus 0.8% per annum.
7. Future tax liability
The following table reflects future income tax liabilities:
31 December
31 March 2007
2008 $
$
Mineral properties 104,638 104,752
Plant and equipment 888 701
Exploration and development expenditure 3,426 3,003
Accrued expenses & other 291 1,487
109,243 109,943
The tax liability arises as a result of the increase in value placed on the mineral properties held by Hellas Gold on acquisition by the
Company. This future tax liability will reverse as the corresponding mineral properties are amortised.
8. Asset retirement obligation
Management has estimated the total future asset retirement obligation based on the Company's net ownership interest in the Olympias,
Skouries and Stratoni mines and facilities. This includes all estimated costs to dismantle, remove, reclaim and abandon the facilities at
the Stratoni property, and the estimated time period during which these costs will be incurred in the future. The following table
reconciles the asset retirement obligation as at 31 March 2008 and 31 December 2007:
31 March 31 December
2008 2007
$ $
Asset retirement obligation - Beginning of period 6,805 6,031
Currency translation adjustment - 650
Accretion expense 34 124
Asset retirement obligation - End of period 6,839 6,805
As at 31 March 2008, the undiscounted amount of estimated cash flows required to settle the obligation is $6,894 (31 December 2007 -
$7,421). The estimated cash flow has been discounted using a credit adjusted risk free rate of 5.04% (31 December 2007 - 5,04%). The
expected period until settlement is six years.
9. Deferred revenue
In April 2007, Hellas Gold agreed to sell to Silver Wheaton (Caymans) Ltd. ("Silver Wheaton") all of the silver metal to be produced
from ore extracted during the mine-life within an area of some 7 km² around its zinc-lead-silver Stratoni mine in northern Greece (the
"Silver Wheaton Transaction"). The sale was made in consideration of a prepayment to Hellas Gold of $57.5 million in cash, plus a fee per
ounce of payable silver to be delivered to Silver Wheaton of the lesser of $3.90 (subject to an inflationary adjustment beginning after year
three) and the prevailing market price per ounce. The current Stratoni proven and probable silver reserve contains approximately 12 million
ounces of silver.
In April 2007, Hellas Gold entered in an agreement with MRI Trading AG for the sale of 25,000 wet metric tonnes of gold bearing pyrite
concentrate. Hellas Gold received a prepayment of $2.18 million in cash. In September 2007, Hellas Gold entered into an agreement with a
subsidiary of Celtic Resources Holdings Plc for the sale of 50,000 wet metric tonnes of gold bearing pyrite concentrate, for which Hellas
Gold received a prepayment of $4.71 million in cash. In March 2008, Hellas Gold entered in an agreement with MRI Trading AG for the sale of
25,000 wet metric tonnes of gold bearing pyrite concentrate. Hellas Gold received a prepayment of $3.56 million in cash.
The following table reconciles movements on deferred revenue associated with the MRI and Celtic Resources prepayments, and the Silver
Wheaton Transaction:
31 March 31 December
2008 2007
$ $
Deferred revenue - Beginning of period 65,344 -
Additions 3,563 64,389
Revenue recognised (354) (3,738)
Foreign currency translation adjustment - 4,693
Deferred revenue - End of period 68,553 65,344
For the three months period ended 31 March 2008, Hellas Gold delivered concentrate containing 92,674 ounces (Year to 31 December 2007 -
952,729 ounces) of silver for credit to Silver Wheaton.
10. Capital stock
Authorised:
- Unlimited number of common shares, without par value
- Unlimited number of preferred shares, issuable in series, without par value
Issued and outstanding (common shares - all fully paid):
Number of Amount
Shares $
Balance - 31 December 2007 179,162,381 537,275
Restricted share units vested 50,000 340
Share options exercised or exchanged - -
Share issue costs - (10)
50,000 330
Balance - 31 March 2008 179,212,381 537,605
As at 31 March 2008, the Company had Nil (2007 - Nil) common shares held in escrow or in respect of which trading restrictions applied.
Contributed surplus:
31 31 December
March
2008 2007
$ $
Equity based compensation expense 6,064 5,419
Broker warrants 578 578
6,642 5,997
11. Share options and restricted share units
Share Option Plan
The Company operates a Share Option Plan (together with its predecessor, the "Share Option Plan") authorising the directors to grant
options with a maximum term of 5 years, to acquire common shares of the Company to the directors, officers, employees and consultants of the
Company and its subsidiaries, on terms that the Board of Directors may determine, within the limitations of the Share Option Plan. The
maximum number of common shares of the company which may be reserved for issuance for all purposes under the Share Option Plan shall not
exceed 15% of the common shares issued and outstanding from time to time (26,881,857 shares as at 31 March 2008).
An optionee under the Share Option Plan may elect to dispose of its rights under all or part of its options (the "Exchanged Rights") in
exchange for the following number of common shares of the Company (or at the Company's option for cash) in settlement thereof (the
"Settlement Common Shares"):
Number of Settlement Common = Number of Optioned Shares X (Current Price -
Shares issuable on exercise of the Exercise Price)
Exchanged Rights Current Price
As at 31 March 2008, the following share options were outstanding:
Number of Exercise
Options price
C$
Expiry date
2009 250,000 2.80
2009 250,000 4.20
2009 360,000 3.07
2009 75,000 3.15
2010 359,999 2.00
2010 25,000 2.11
2010 150,000 2.40
2011 66,666 3.25
2011 600,000 3.85
2011 200,000 4.10
2012 250,000 5.66
2012 150,000 5.71
2012 270,000 5.87
2013 165,000 6.80
3,171,665 3.96
During the three-month period ended 31 March 2008, share options were granted, exercised, exchanged and cancelled as follows:
Number of Weighted
Options average
exercise
price
C$
Balance - 31 December 2007 3,006,665 3.80
Options granted 165,000 6.80
Options exchanged for shares - -
Options cancelled - -
Balance - 31 March 2008 3,171,665 3.96
Of the 3,171,665 (2007 - 3,295,999) share options outstanding as at 31 March 2008, 2,053,332 (2007 - 2,370,999) were fully vested and
had a weighted average exercise price of C$3.24 (2007 - C$3.94) per share. The share options outstanding as at 31 March 2008, had a
weighted average remaining contractual life of 2.83 years (2007 - 3.43 years).
The weighted average grant date fair value of the 165,000 share options granted during the period ended 31 March 2008 (2007 - 250,000)
was C$353 (2007 - C$ 747). For outstanding share options which were not fully vested during the period ended 31 March 2008, the Company
incurred a total equity-based compensation cost of $313 (2007 - $226) of which - $279 (2007 - $181) has been recognised as an expense in the
income statement and $34 - (2007 - $45) has been capitalised to deferred exploration and development costs.
The fair value of the share options granted has been estimated at the date of grant using a Black-Scholes option pricing model with the
following assumptions: weighted average risk free interest rate of 2.95% (2007 - 3.10%); volatility factor of the expected market price of
the Company's shares of 32.68% - 48.94% (2007 - 59%); and a weighted average expected life of the share options of 1.68 - 3.68 years (2007 -
5 years).
Restricted Share Unit Plan
The Company operates a Restricted Share Unit Plan (the "RSU Plan") authorising the directors, based on recommendations received from the
Compensation Committee, to grant Restricted Share Units ("RSUs") to designated directors, officers, employees and consultants. The RSUs are
"phantom" shares that rise and fall in value based on the value of the Company's common shares and are redeemed for actual common shares on
the vesting dates determined by the Board of Directors when the RSUs are granted. The RSUs vest on the dates below however upon a change of
control of the Company they would typically become 100% vested. The maximum number of common shares of the Company which may be reserved for
issuance for all purposes under the RSU Plan shall not exceed 2.5% of the common shares issued and outstanding from time to time (4,480,310
shares as at 31 March 2008).
As at 31 March 2008, the following RSUs were outstanding:
Vesting date Number of Grant date
RSUs fair value
of
underlying
shares
C$
19 May 2008 40,000 5.94
31 May 2008 75,000 3.24
30 June 2008 30,000 5.74
31 December 2008 * 50,000 6.22
31 December 2008 * 100,000 6.77
30 June 2009 30,000 5.74
325,000 5.58
* Or earlier if certain operational milestones are achieved. Vesting conditional upon such milestones being achieved by 31 December
2008
During the three-month period ended 31 March 2008, RSUs were granted, vested and cancelled as follows:
Weighted
average
grant date
fair value
of
underlying
shares
C$
Number of
RSUs
Balance - 31 December 2007 185,000 4.86
RSUs granted 190,000 6.60
RSUs vested (50,000) 5.94
RSUs cancelled - -
Balance - 31 March 2008 325,000 5.58
The weighted average grant date fair value of underlying shares of the 190,000 RSUs granted during the period ended 31 March 2008 (2007
- 180,000) was C$699 (2007 - C$965). For outstanding RSUs which were not fully vested during the period ended 31 March 2008, the Company
incurred a total equity-based compensation cost of $672 (2007 - $1,125) of which $190 (2007 - $275) has been recognised as an expense in the
income statement and - $483 (2007 - $850) has been capitalised to deferred exploration and development costs.
12. Supplementary cash flow information
31 March 31 March
2008 2007
$ $
Changes in non-cash operating accounts:
Accounts receivable and prepaid expenses (9,595) (4,838)
Inventory (3,252) (2,633)
Accounts payable and accrued liabilities 6,068 2,631
(6,779) (4,840)
Supplemental disclosure of non-cash transactions:
Equity based compensation issued for non-cash 985 1,345
consideration
Exercise or exchange of share options - Transfer from -
contributed surplus to share capital (168)
Vesting of restricted share units 340 (232)
13. Financial instruments and financial risk management
The Company's financial instruments consist of cash and cash equivalents, accounts receivable, restricted cash, accounts payable,
accrued liabilities, embedded derivatives and hedge contracts.
Short-term financial assets are amounts that are expected to be settled within one year. The carrying amounts in the consolidated
balance sheets approximate fair value because of the short term nature of these instruments.
The embedded derivatives are classified as a short term financial asset.
The carrying amounts for the financial instruments as at 31 March 2008 are as follows:
31 31 December
March 2007
2008 $
$
Financial Assets:
Held-for-trading, measured at fair value
Cash and cash equivalents 210,682 218,839
Restricted cash 4,900 4,900
215,582 223,739
Loans and receivables, measured at amortised cost
Accounts receivable 29,384 20,408
Prepaid expenses 8,389 7,769
37,773 28,177
Financial Liabilities
Current liabilities, measured at amortised costs
Accounts payable and accrued liabilities 28,765 22,695
28,765 22,695
Derivative Financial instruments - measured at fair
value
Designated as cash flow hedges
Lead hedging contratcts 431 882
431 882
Credit risk - Credit risk represents the financial loss the Company would suffer if the Company's counterparties to a financial
instrument, in owing an amount to the Company, fail to meet or discharge their obligation to the Company.
Financial instruments that potentially subject the Company to concentration of credit risk consist of cash and cash equivalents,
accounts receivable and hedging contracts. The cash equivalents consist mainly of short-term investments, such as money market deposits. The
Company has deposited the cash equivalents only with the largest banks within a particular region or with top rated institutions, from which
management believes the risk of loss to be remote and does not invest in asset-backed commercial papers.
As at 31 March 2008, the cash and restricted cash comprises the following:
31 March 31 December
2008 2007
$ $
Interest bearing bank accounts 134,450 216,569
Short-term deposits 81,132 7,170
215,582 223,739
The Company has accounts receivable from trading counterparties to whom concentrate products are sold. Where traders are chosen as
counterparties, only the larger and most financially secure metal trading groups are dealt with. The Company may also transact agreements
with trading groups who have direct interests in smelting capacity, or direct to the smelters themselves. For the three-month period ended
31 March 2008, two base metal concentrate customers represented 87% (86% 2007) of total sales.
Of the total trade receivable as at 31 March 2008, three customers represented 94%(97% - 2007) of the total. The Company does not
anticipate any loss for non-performance.
As at 31 March 2008, the accounts receivable comprises the following:
31 March 31 December
2008 2007
$ $
Trade receivables 6,792 2,412
Value added taxes recoverable 21,957 17,996
Other accounts receivable 635 -
29,384 20,408
As at the 31 March 2008, the Company considers its accounts receivable excluding Value added taxes recoverable and other accounts
receivable to be aged as follows:
Aging 31
March
2008
$
Current 365
Past due (1-30 days) 3,708
Past due (31-60 days) 2,667
Past due (more than 60 days) 52
6,792
Interest rate risk - The Company is exposed to interest rate risk arising from fluctuations in interest rates on its cash equivalents.
The Company seeks to maximise returns on cash equivalents, without risking capital values. The Company's objectives of managing its cash and
cash equivalents are to ensure sufficient funds are maintained on hand at all times to meet day to day requirements and to place any amounts
which are considered in excess of day to day requirements on short-term deposits with the Company's banks so they earn interest. Upon
placing amounts of cash and cash equivalents on short-term deposits, the Company uses top rated institutions and ensures that access to the
amounts can be gained at short notice. During the three-month period ended 31 March 2008 interest income of $1,757 ($453 - 2007) on cash and
cash equivalents, based on rates of returns between 2.15% and 5.20% (2.50% and 5.40% - 2007).
Currency risk - The Company is exposed to currency risk on sales, purchases and cash holdings that are denominated in a currency other
than the functional currencies of the individual entities in the group. As at the 31 March 2008, the Company held the equivalent of $24,575
(31 December 2007- $36,107) in foreign currencies. These balances are primarily made up of Euro and to a lesser extent Pound Sterling.
For the three month period ended 31 March 2008 the Company recorded a foreign exchange gain/ (loss) of $ 2,672 (2007 - $(102)), mainly
due to the translation of its Euro balances in Hellas Gold.
The Company publishes its consolidated financial statements in US dollars and as a result, it is also subject to foreign exchange
translation risk in respect of assets and liabilities nominated in Euros in its foreign operations.
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations when they become due.
The Company manages its liquidity risk by ensuring there is sufficient capital to meet short and long term business requirements after
taking into account cash flows from operations and holdings of cash and cash equivalents. The Company believes that these sources will be
sufficient to cover the likely short to medium term requirements. Senior management is also actively involved in the review and approval of
planned expenditures by regularly monitoring cash flows from operations and anticipated investing and financing activities.
The Company does not have any borrowing or debt facilities and settles its obligations out of cash and cash equivalents. The ability to
do this relies on the Company collecting its accounts receivable in a timely manner and maintaining cash on hand.
Financial liabilities consist of trade payables, accrued liabilities and income taxes payable. As at 31 March 2008, the Company's trade
payables and accrued liabilities amounted to $15,346 (31 December 2007 - $9,977) all which fall due for payment within 12 months of the
balance sheet date. The average credit period taken during the three-month period ended 31 March 2008 was 30 days (2007 - 30 days)
Commodity Price Risk
The value of the Company's mineral resource properties is related to the prices of gold, copper, zinc, lead and silver and outlook for
these commodities.
Gold prices historically have fluctuated widely and are affected by numerous factor outside of the company's control, including, but not
limited to, industrial and retail demand, central bank lending, forward sales by producers and speculators, levels of worldwide production,
short-term changes in supply and demand because of speculative investing activities, macro-economic and political variables, and certain
other factors related specifically to gold. Base metal prices have historically tended to be driven more by the demand and supply
fundamentals for each metal. However, levels of speculative activity in the base metals market have increased in recent years.
The profitability of the Company's operations is highly correlated to the market price of its commodities in particular gold. To the
extent that these prices increase, asset values increase and cash flows improve; conversely, declines in metal prices directly impact value
and cash flows. A protracted period of depressed prices could impair the Company's operations and development opportunities, and
significantly erode shareholder value.
The Company has completed a sensitivity analysis to estimate the impact on net profit of a 5% change in foreign exchange rates or a 1%
change in interest rates during the period ended 31 March 2008.
The results of the sensitivity analysis can be seen in the following table:
Period to
31 March
2008
$
Impact on Net Profit (+/-)
Change of +/- 5 % US$: EUR foreign exchange rate 995
Change of +/- 1% in interest rates 539
Limitations of sensitivity analysis
The above table demonstrates the effect of either a change in foreign exchange rates or interest rates in isolation. In reality, there
is a correlation between the two factors. Additionally, the financial position of the Company may vary at the time that a change in either
of these factors occurs, causing the impact on the Company's results to differ from that shown above.
Hedging and specific commitments - The Company enters into financial transactions in the normal course of business and in line with
Board guidelines for the purpose of hedging and managing its expected exposure to commodity prices. There are a number of financial
institutions which offer metal hedging services. As with cash deposits, the Company deals with highly rated banks and in addition, those
institutions who have demonstrated long term commitment to the mining sector. The hedges below are treated as cash flow hedges in accordance
with CICA 3865: Hedges.
Lead hedging contracts - As at 31 March 2008, the Company had entered into forward hedging arrangements over 14,400 tonnes of lead,
using options to provide a minimum: maximum price exposure. The hedging contracts are put/call option collar contracts with maturity dates
between 2 April 2008 and 31 December 2009 and strike prices as shown in the table below. The fair value of these contracts as 31 March 2008
amounted to $431 (31 December 2007 - $882) established by reference to market prices for lead.
31 Total
March
2008
Lead tonnes 14,400 14,400
US dollar price ($/tonne) - Put 2,453 2,553
US dollar contract amount ($'000) - Put 35,325 35,325
US dollar price ($/tonne) - Call 3,416 3,416
US dollar contract amount ($'000) - Call 49,185 49,185
14. Capital risk management
The Company includes cash and cash equivalents and equity, comprising share capital, contributed surplus and accumulated deficit.
The Company's objectives when managing capital is to maintain its ability to continue as a going concern in order to provide returns for
shareholders and benefits for other stakeholders and to ensure sufficient resources are available to meet day to day operating requirement.
The Company's Board of Directors takes full responsibility for managing the Company's capital and does so through quarterly board
meetings, review of financial information, and regular communication with Officers and senior management.
The Company is not subject to externally imposed capital requirements and there has been no change in the overall capital risk
management strategy during the three-month period ended 31 March 2008.
15. Commitments
As at 31 March 2008, the Company had remaining spending commitments of $710 (2007 -$1,080) over the remaining term of its Voia
exploration licence in Romania which expires in March 2010.
The Company has spending commitments of $193 per year (plus service charges and value added tax) for a term of ten years under the lease
for its office in London, England, which commenced in April 2004. The rent will be reviewed on the fifth anniversary of the commencement of
the term to reflect any increase in rents in the market.
As at 31 March 2008, Hellas Gold had entered into off-take agreements pursuant to which Hellas Gold agreed to sell 34,632 dmt of zinc
concentrates, and 25,270 dmt of lead/silver concentrates until the end of 2008 and 209,304 dmt of gold concentrates until the financial
year's ending 2011.
During the year, the Company entered into purchase agreements with Outotec Minerals OY for long-lead -time equipment for the Skouries
project with a cost of $57,014 (EUR36,057) of which is to be paid over three years beginning 2007. As at 31 March 2008, $14,177 (EUR8,966)
of the commitment had been paid. Hellas Gold has pledged $26,393 (EUR18,692) in support of a letter of credit issued on behalf of Outotec
Minerals OY through Nordea Bank of Finland.
16. Transactions with related parties
During the three-month period ended 31 March 2008, Hellas Gold incurred costs of $8,497 (2007 - $6,265) for management, technical and
engineering services received from a related party, Aktor S.A., a 5% shareholder in Hellas Gold. As at 31 March 2008, Hellas Gold had
accounts payable of $10,385 (2007 - $7,409) to Aktor S.A. These expenses were contracted in the normal course of operations and are recorded
at the exchange amount agreed by the parties.
17. Segmented information
The Company has one operating segment: the acquisition, exploration and development of precious and base metal mineral resources
properties located in Greece and Romania.
Geographic segmentation of plant and equipment and deferred exploration and development costs and operating liabilities is as follows:
31 31
March Decembe
2008 r
$ 2008
$
Revenue
Canada - -
Greece 12,708 86,405
Romania - -
United Kingdom - -
12,708 86,405
Plant and equipment and deferred exploration and
development costs
Canada - -
Greece 485,872 479,656
Romania 40,885 38,418
United Kingdom 336 341
527,093 518,415
Operating liabilities
Canada 432 832
Greece 27,390 20,037
Romania 290 659
United Kingdom 653 1,167
28,765 22,695
18. Pension plans and other post-retirement benefits
The Company's subsidiary, European Goldfields (Services) Limited, maintains a defined contribution pension plan for its employees. The
defined contribution pension plan provides pension benefits based on accumulated employee and Company contributions. Company contributions
to these plans are a set percentage of employees' annual income and may be subject to certain vesting requirements. The cost of defined
contribution benefits is expensed as earned by employees.
As at 31 March 2008, the Company recognised the following costs:
31 31
Mar Mar
ch ch
200 200
8 7
$ $
Defined contribution plans 73 58
19. Earnings per share
The calculation of the basic and diluted earnings per share attributable to holders of the Company's common shares is based as follows:
31 March 31 March
2008 2007
$ $
Earnings 3,409 2,108
Effect of dilutive potential common shares - -
Diluted earnings 3,409 2,108
Weighted average number of common shares for the 179,199
purpose of basic earnings per share 115,827
Incremental shares - Share options 1,704 1,809
Weighted average number of common shares for the 180,903
purpose of diluted earnings per share 117,636
20. Reclassification of comparative figures
Certain comparative figures have been reclassified to conform to the current year's presentation.
21. Legal proceedings
In June 2005, certain residents of Stratoniki village submitted a request for the annulment of the Greek government's joint ministerial
decision approving the environmental impact study for the Stratoni mine (the "JMD Approval"). In November 2005, the same petitioners
submitted a request for the annulment of the decision of the Minister of Development approving the Technical Study for the exploitation of
the Mavres Petres mine that forms part of the Stratoni complex (the "MOD Approval"). The JMD Approval and the MOD Approval are necessary
for the continued operation of the Stratoni mine. In both cases the petitioners alleged a lack of legal basis for the approvals and
potential harm to the environment and their properties. The Greek government, supported by the Company, the Association of Extractive
Companies, and two workers' unions, has taken a position that the approvals are valid. In December 2005 the petitioners requested an
injunction to stop work on the Stratoni project pending the hearing of the requests for annulment, but the court rejected the request. A hearing on both requests for annulment will be held shortly. The
management of the Company believes that both requests for annulment are unfounded and unlikely to succeed.
22. Post Balance Sheet
In April 2008, the Company signed definitive documentation governing a Joint Venture ("JV") with Ariana Resources plc (AIM: AAU)
("Ariana"). The transaction completed and the JV became effective in May after the transfer of Ariana's properties was confirmed by the
General Directorate of Mining Affairs in Turkey. The JV involves the development of Ariana's current properties in the Greater Pontides
region of north-eastern Turkey ("the AOI"), which include the Ardala copper-gold porphyry and fifteen other licences covering a total area
of 229km2 and a Strategic Partnership within the AOI to define new opportunities for the JV. Upon completion, European Goldfields
subscribed for 20% of the issued share capital of Ariana through a £929,000 private placement of shares and David Reading joined the board
of Ariana as a non-executive director.
23. New accounting pronouncements
Goodwill and intangible assets - In February 2008, the Canadian Institute of Chartered Accountants issued Section 3064 Goodwill and
intangible assets, replacing Section 3062, Goodwill and other intangible assets. The new Section will be applicable to financial statements
relating to fiscal years beginning on or after 1 October 2008. Accordingly, the Company will adopt the new standards for its fiscal year
beginning 1 January 2009. It establishes standards for the recognition, measurement, presentation and disclosure of goodwill subsequent to
its initial recognition and of intangible assets by profit-oriented enterprises. Standards concerning goodwill are unchanged from the
standards included in the previous Section 3062. The Company is currently evaluating the impact of the adoption of this new Section on its
consolidated financial statements.
International Financial Reporting Standards ("IFRS) - In 2006, the Canadian Accounting Standards Board ("AcSB") published a new
strategic plan that will significantly affect financial reporting requirements for Canadian companies. The AcSB strategic plan outlines the
convergence of Canadian GAAP with IFRS over an expected five year transitional period. In February 2008 the AcSB announced that 2011 is the
changeover date for public accountable companies to use IFRS, replacing Canada's own GAAP. The transition date is for interim and annual
financial statements relating to fiscal years beginning on or after January 1, 2011. The transition date of January 1, 2011 will require the
restatement for comparative purposes of amounts reported by the Company for the year ended December 31, 2010. While the Company has begun
assessing the adoption of IFRS for 2011, the financial reporting impact of the transition to IFRS cannot be reasonably estimated at this
time.
This information is provided by RNS
The company news service from the London Stock Exchange
END
QRFUOOKRWRRVAAR
1 Year European Gold Chart |
1 Month European Gold Chart |
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
