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| 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 |
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TIDMEGU
RNS Number : 0708S
European Goldfields Ltd
12 May 2009
European Goldfields Limited
Financial Statements
(Unaudited)
First Quarter 2009
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 2009 and 2008 have not been reviewed by the auditors of the Company.
+----------------------------------------------------+--------+-----------+-----------+
| European Goldfields Limited | | 31 March | 31 |
| Consolidated Balance Sheets | | 2009 | December |
| As at 31 March 2008 and 31 December 2008 | | $ | 2008 |
| (Unaudited - Prepared by Management) | | | $ |
| (in thousands of US Dollars, except per share | | | |
| amounts) | | | |
| | | | |
+----------------------------------------------------+--------+-----------+-----------+
| | Note | Unaudited | Audited |
+----------------------------------------------------+--------+-----------+-----------+
| Assets | | | |
+----------------------------------------------------+--------+-----------+-----------+
| | | | |
+----------------------------------------------------+--------+-----------+-----------+
| Current assets | | | |
+----------------------------------------------------+--------+-----------+-----------+
| Cash and cash equivalents | 12 | 153,995 | 170,296 |
+----------------------------------------------------+--------+-----------+-----------+
| Accounts receivable | | 20,184 | 20,057 |
+----------------------------------------------------+--------+-----------+-----------+
| Hedge contract | 12 | 6,618 | 10,282 |
+----------------------------------------------------+--------+-----------+-----------+
| Current taxes receivable | | 3,653 | 3,820 |
+----------------------------------------------------+--------+-----------+-----------+
| Future tax assets | | 2,684 | 2,004 |
+----------------------------------------------------+--------+-----------+-----------+
| Prepaid expenses | | 1,512 | 1,414 |
+----------------------------------------------------+--------+-----------+-----------+
| Inventory | 3 | 4,648 | 3,069 |
+----------------------------------------------------+--------+-----------+-----------+
| | | 193,294 | 210,942 |
+----------------------------------------------------+--------+-----------+-----------+
| Non current assets | | | |
+----------------------------------------------------+--------+-----------+-----------+
| Plant and equipment | 4 | 82,372 | 74,401 |
+----------------------------------------------------+--------+-----------+-----------+
| Deferred exploration and | 5 | | |
| development costs | | | |
+----------------------------------------------------+--------+-----------+-----------+
| Greek production stage | | 26,039 | 26,652 |
| mineral properties | | | |
+----------------------------------------------------+--------+-----------+-----------+
| Greek exploration stage | | 404,237 | 403,907 |
| mineral properties | | | |
+----------------------------------------------------+--------+-----------+-----------+
| | | 430,276 | 430,559 |
+----------------------------------------------------+--------+-----------+-----------+
| Romanian exploration stage | | 46,291 | 45,187 |
| mineral properties | | | |
+----------------------------------------------------+--------+-----------+-----------+
| Turkish exploration stage | | 536 | 456 |
| mineral properties | | | |
+----------------------------------------------------+--------+-----------+-----------+
| | | 477,103 | 476,202 |
+----------------------------------------------------+--------+-----------+-----------+
| | | | |
+----------------------------------------------------+--------+-----------+-----------+
| Investment in associates | 6 | 2,119 | 2,075 |
+----------------------------------------------------+--------+-----------+-----------+
| | | | |
+----------------------------------------------------+--------+-----------+-----------+
| Future tax assets | | 2,318 | 2,475 |
+----------------------------------------------------+--------+-----------+-----------+
| | | | |
+----------------------------------------------------+--------+-----------+-----------+
| | | 757,206 | 766,095 |
+----------------------------------------------------+--------+-----------+-----------+
| Liabilities | | | |
+----------------------------------------------------+--------+-----------+-----------+
| | | | |
+----------------------------------------------------+--------+-----------+-----------+
| Current liabilities | | | |
+----------------------------------------------------+--------+-----------+-----------+
| Accounts payable and accrued | 12 | 14,291 | 16,263 |
| liabilities | | | |
+----------------------------------------------------+--------+-----------+-----------+
| Current taxes payable | | - | - |
+----------------------------------------------------+--------+-----------+-----------+
| Future tax liabilities | 7 | 2,250 | 3,496 |
+----------------------------------------------------+--------+-----------+-----------+
| | | 16,541 | 19,759 |
+----------------------------------------------------+--------+-----------+-----------+
| Non current liabilities | | | |
+----------------------------------------------------+--------+-----------+-----------+
| Future tax liabilities | 7 | 90,137 | 90,294 |
+----------------------------------------------------+--------+-----------+-----------+
| Asset retirement obligation | 8 | 6,967 | 6,937 |
+----------------------------------------------------+--------+-----------+-----------+
| Deferred revenue | 9 | 57,778 | 58,496 |
+----------------------------------------------------+--------+-----------+-----------+
| | | 154,882 | 155,727 |
+----------------------------------------------------+--------+-----------+-----------+
| | | | |
+----------------------------------------------------+--------+-----------+-----------+
| Non-controlling interest | | 2,691 | 2,874 |
+----------------------------------------------------+--------+-----------+-----------+
| | | | |
+----------------------------------------------------+--------+-----------+-----------+
| Shareholders' equity | | | |
+----------------------------------------------------+--------+-----------+-----------+
| Capital stock | 10 | 539,886 | 538,316 |
+----------------------------------------------------+--------+-----------+-----------+
| Contributed surplus | 10 | 7,377 | 7,788 |
+----------------------------------------------------+--------+-----------+-----------+
| Accumulated other | 10 | 41,130 | 43,676 |
| comprehensive income | | | |
+----------------------------------------------------+--------+-----------+-----------+
| Deficit | | (5,301) | (2,045) |
+----------------------------------------------------+--------+-----------+-----------+
| | | 583,092 | 587,735 |
+----------------------------------------------------+--------+-----------+-----------+
| | | | |
+----------------------------------------------------+--------+-----------+-----------+
| | | 757,206 | 766,095 |
+----------------------------------------------------+--------+-----------+-----------+
The accompanying notes are an integral part of these consolidated financial
statements.
Approved by the Board of Directors
(s) Timothy Morgan-Wynne(s) Jeffrey O'Leary
Timothy Morgan-Wynne, Director Dr Jeffrey O'Leary, Director
+-------------------------------------------------------+---+--+----------+----------+
| European Goldfields Limited | | Three months ended |
| Consolidated Statements of Profit and Loss | | |
| For the three-month periods ended | | |
| 31 March 2009 and 2008 | | |
| (Unaudited - Prepared by Management) | | |
| (in thousands of US Dollars, except per share | | |
| amounts) | | |
| | | |
+-------------------------------------------------------+---+------------------------+
| | | 31 March | 31 |
| | | | March |
+-------------------------------------------------------+------+----------+----------+
| | | 2009 | 2008 |
+-------------------------------------------------------+------+----------+----------+
| |Note | $ | $ |
+-------------------------------------------------------+------+----------+----------+
| | | | |
+-------------------------------------------------------+------+----------+----------+
| Income | | | |
+-------------------------------------------------------+------+----------+----------+
| Sales | | 10,742 | 12,708 |
+-------------------------------------------------------+------+----------+----------+
| Cost of sales | 3 | (9,611) | (6,806) |
+-------------------------------------------------------+------+----------+----------+
| Depletion of asset retirement obligation | | (105) | (109) |
+-------------------------------------------------------+------+----------+----------+
| Depreciation and depletion | | (1,368) | (944) |
+-------------------------------------------------------+------+----------+----------+
| Gross profit | | (342) | 4,849 |
+-------------------------------------------------------+------+----------+----------+
| | | | |
+-------------------------------------------------------+------+----------+----------+
| Other income | | | |
+-------------------------------------------------------+------+----------+----------+
| Hedge contract profit | | 2,417 | - |
+-------------------------------------------------------+------+----------+----------+
| Interest income | | 508 | 1,757 |
+-------------------------------------------------------+------+----------+----------+
| Foreign exchange (loss)/gain | | (2,882) | 2,674 |
+-------------------------------------------------------+------+----------+----------+
| Gain on change of interest in associate | | 86 | - |
+-------------------------------------------------------+------+----------+----------+
| Share of loss in equity investment | | (26) | - |
+-------------------------------------------------------+------+----------+----------+
| | | 103 | 4,431 |
+-------------------------------------------------------+------+----------+----------+
| | | | |
+-------------------------------------------------------+------+----------+----------+
| Expenses | | | |
+-------------------------------------------------------+------+----------+----------+
| Corporate administrative and | | 1,000 | 1,264 |
| overhead expenses | | | |
+-------------------------------------------------------+------+----------+----------+
| Equity-based compensation expense | | 428 | 468 |
+-------------------------------------------------------+------+----------+----------+
| Hellas Gold administrative and | | 1,148 | 2,057 |
| overhead expenses | | | |
+-------------------------------------------------------+------+----------+----------+
| Hellas Gold water treatment | | 955 | 1,043 |
| expenses (non-operating mines) | | | |
+-------------------------------------------------------+------+----------+----------+
| Accretion of asset retirement | 8 | 30 | 34 |
| obligation | | | |
+-------------------------------------------------------+------+----------+----------+
| Amortisation | | 179 | 151 |
+-------------------------------------------------------+------+----------+----------+
| | | (3,740) | (5,017) |
+-------------------------------------------------------+------+----------+----------+
| | | | |
+-------------------------------------------------------+------+----------+----------+
| | | | |
+-------------------------------------------------------+------+----------+----------+
| (Loss)/Profit for the period before | | (3,979) | 4,263 |
| income taxes | | | |
+-------------------------------------------------------+------+----------+----------+
| | | | |
+-------------------------------------------------------+------+----------+----------+
| Income taxes | | | |
+-------------------------------------------------------+------+----------+----------+
| Current taxes | | - | (752) |
+-------------------------------------------------------+------+----------+----------+
| Future taxes | | 540 | 131 |
+-------------------------------------------------------+------+----------+----------+
| | | 540 | (621) |
+-------------------------------------------------------+------+----------+----------+
| | | | |
+-------------------------------------------------------+------+----------+----------+
| (Loss)/Profit for the period before | | (3,439) | 3,642 |
| non-controlling interest | | | |
+-------------------------------------------------------+------+----------+----------+
| | | | |
+-------------------------------------------------------+------+----------+----------+
| Non-controlling interest | | 183 | (233) |
+-------------------------------------------------------+------+----------+----------+
| | | | |
+-------------------------------------------------------+------+----------+----------+
| (Loss)/Profit for the period | | (3,256) | 3,409 |
+-------------------------------------------------------+------+----------+----------+
| | | | |
+-------------------------------------------------------+------+----------+----------+
| | | | |
+-------------------------------------------------------+------+----------+----------+
| Earnings per share | 19 | | |
+-------------------------------------------------------+------+----------+----------+
| Basic | | (0.02) | 0.02 |
+-------------------------------------------------------+------+----------+----------+
| Diluted | | (0.02) | 0.02 |
+-------------------------------------------------------+------+----------+----------+
| | | | |
+-------------------------------------------------------+------+----------+----------+
| Weighted average number of shares | | | |
| (in thousands) | | | |
+-------------------------------------------------------+------+----------+----------+
| Basic | | 179,884 | 179,199 |
+-------------------------------------------------------+------+----------+----------+
| Diluted | | 179,884 | 180,903 |
+-------------------------------------------------------+---+--+----------+----------+
The accompanying notes are an integral part of these consolidated financial
statements.
+-------------------------------------+---------+-------------+-------------------+---------+---------+
| European | Capital | Contributed | Accumulated Other | Deficit | Total |
| Goldfields | Stock | Surplus | Comprehensive | $ | $ |
| Limited | $ | $ | Income | | |
| Consolidated | | | $ | | |
| Statements | | | | | |
| of Equity | | | | | |
| As at 31 | | | | | |
| March 2009 | | | | | |
| and 2008 | | | | | |
| (Unaudited - | | | | | |
| Prepared by | | | | | |
| Management) | | | | | |
| (in | | | | | |
| thousands of | | | | | |
| US Dollars, | | | | | |
| except per | | | | | |
| share | | | | | |
| amounts) | | | | | |
| | | | | | |
+-------------------------------------+---------+-------------+-------------------+---------+---------+
| | | | | | |
+-------------------------------------+---------+-------------+-------------------+---------+---------+
| Balance | 537,275 | 5,997 | 38,295 | (7,564) | 574,003 |
| - 31 | | | | | |
| December 2007 | | | | | |
+-------------------------------------+---------+-------------+-------------------+---------+---------+
| | | | | | |
+-------------------------------------+---------+-------------+-------------------+---------+---------+
| Equity | - | 985 | - | - | 985 |
| based | | | | | |
| compensation | | | | | |
| expense | | | | | |
+-------------------------------------+---------+-------------+-------------------+---------+---------+
| Share | (10) | - | - | - | (10) |
| issue | | | | | |
| costs | | | | | |
+-------------------------------------+---------+-------------+-------------------+---------+---------+
| | 340 | (340) | - | - | - |
| Restricted | | | | | |
| share | | | | | |
| units | | | | | |
| vested | | | | | |
+-------------------------------------+---------+-------------+-------------------+---------+---------+
| Share | - | - | - | - | - |
| options | | | | | |
| exercised | | | | | |
| or | | | | | |
| exchanged | | | | | |
+-------------------------------------+---------+-------------+-------------------+---------+---------+
| | - | - | (451) | - | (451) |
| Change | | | | | |
| in | | | | | |
| fair | | | | | |
| value | | | | | |
| cash | | | | | |
| flow | | | | | |
| hedge | | | | | |
+-------------------------------------+---------+-------------+-------------------+---------+---------+
| Profit | - | - | - | 3,409 | 3,409 |
| for | | | | | |
| the | | | | | |
| period | | | | | |
+-------------------------------------+---------+-------------+-------------------+---------+---------+
| | 330 | 645 | (451) | 3,409 | 3,933 |
+-------------------------------------+---------+-------------+-------------------+---------+---------+
| | | | | | |
+-------------------------------------+---------+-------------+-------------------+---------+---------+
| Balance | 537,605 | 6,642 | 37,844 | (4,155) | 577,936 |
| - 31 | | | | | |
| March | | | | | |
| 2008 | | | | | |
+-------------------------------------+---------+-------------+-------------------+---------+---------+
| | | | | | |
+-------------------------------------+---------+-------------+-------------------+---------+---------+
| Equity | - | 1,803 | - | - | 1,803 |
| based | | | | | |
| compensation | | | | | |
| expense | | | | | |
+-------------------------------------+---------+-------------+-------------------+---------+---------+
| Restricted | 633 | (633) | - | - | - |
| share | | | | | |
| units | | | | | |
| vested | | | | | |
+-------------------------------------+---------+-------------+-------------------+---------+---------+
| Share | 78 | (24) | - | - | 54 |
| options | | | | | |
| exercised | | | | | |
| or | | | | | |
| exchanged | | | | | |
+-------------------------------------+---------+-------------+-------------------+---------+---------+
| Movement | - | - | 523 | - | (523) |
| in | | | | | |
| cumulative | | | | | |
| translation | | | | | |
| adjustment | | | | | |
+-------------------------------------+---------+-------------+-------------------+---------+---------+
| | - | - | 6,355 | - | 6,355 |
| Change | | | | | |
| in | | | | | |
| fair | | | | | |
| value | | | | | |
| cash | | | | | |
| flow | | | | | |
| hedge | | | | | |
+-------------------------------------+---------+-------------+-------------------+---------+---------+
| Profit | - | - | - | 2,110 | 2,110 |
| for | | | | | |
| the | | | | | |
| period | | | | | |
+-------------------------------------+---------+-------------+-------------------+---------+---------+
| | 711 | 1,146 | 5,832 | 2,110 | 9,799 |
+-------------------------------------+---------+-------------+-------------------+---------+---------+
| | | | | | |
+-------------------------------------+---------+-------------+-------------------+---------+---------+
| Balance | 538,316 | 7,788 | 43,676 | (2,045) | 587,735 |
| - 31 | | | | | |
| December | | | | | |
| 2008 | | | | | |
+-------------------------------------+---------+-------------+-------------------+---------+---------+
| | | | | | |
+-------------------------------------+---------+-------------+-------------------+---------+---------+
| Equity | - | 611 | - | - | 611 |
| based | | | | | |
| compensation | | | | | |
| expense | | | | | |
+-------------------------------------+---------+-------------+-------------------+---------+---------+
| Restricted | 630 | (630) | - | - | - |
| share | | | | | |
| units | | | | | |
| vested | | | | | |
+-------------------------------------+---------+-------------+-------------------+---------+---------+
| Share | 950 | (392) | - | - | 558 |
| options | | | | | |
| exercised | | | | | |
| or | | | | | |
| exchanged | | | | | |
+-------------------------------------+---------+-------------+-------------------+---------+---------+
| Share | (10) | - | - | - | (10) |
| issue | | | | | |
| cost | | | | | |
+-------------------------------------+---------+-------------+-------------------+---------+---------+
| Movement | - | - | (128) | - | (128) |
| in | | | | | |
| cumulative | | | | | |
| translation | | | | | |
| adjustment | | | | | |
+-------------------------------------+---------+-------------+-------------------+---------+---------+
| | - | - | (2,418) | - | (2,418) |
| Change | | | | | |
| in | | | | | |
| fair | | | | | |
| value | | | | | |
| cash | | | | | |
| flow | | | | | |
| hedge | | | | | |
+-------------------------------------+---------+-------------+-------------------+---------+---------+
| Loss | - | - | - | (3,256) | (3,256) |
| for | | | | | |
| the | | | | | |
| period | | | | | |
+-------------------------------------+---------+-------------+-------------------+---------+---------+
| | 1,570 | (411) | (2,546) | (3,256) | (4,643) |
+-------------------------------------+---------+-------------+-------------------+---------+---------+
| | | | | | |
+-------------------------------------+---------+-------------+-------------------+---------+---------+
| Balance | 539,886 | 7,377 | 41,130 | (5,301) | 583,092 |
| - 31 | | | | | |
| March | | | | | |
| 2009 | | | | | |
+-------------------------------------+---------+-------------+-------------------+---------+---------+
The accompanying notes are an integral part of these consolidated financial
statements.
+----------------------------------------------------------+------+----------+---------+
| European Goldfields Limited | Three months ended |
| Consolidated Statements of Cash Flows | |
| For the three-month periods ended 31 March 2009 and 2008 | |
| (Unaudited - Prepared by Management) | |
| (in thousands of US Dollars, except per share amounts) | |
| | |
+----------------------------------------------------------+---------------------------+
| | | 31 | 31 |
| | | March | March |
+----------------------------------------------------------+------+----------+---------+
| | | 2009 | 2008 |
+----------------------------------------------------------+------+----------+---------+
| |Note | $ | $ |
+----------------------------------------------------------+------+----------+---------+
| Cash flows from operating | | | |
| activities | | | |
+----------------------------------------------------------+------+----------+---------+
| (Loss)/Profit for the period | | (3,256) | 3,409 |
+----------------------------------------------------------+------+----------+---------+
| Foreign exchange loss/(gain) | | 3,146 | (2,667) |
+----------------------------------------------------------+------+----------+---------+
| Share of loss in equity investment | | 26 | - |
+----------------------------------------------------------+------+----------+---------+
| Gain on change of interest in | | (86) | - |
| associate | | | |
+----------------------------------------------------------+------+----------+---------+
| Amortisation | | 1,062 | 543 |
+----------------------------------------------------------+------+----------+---------+
| Equity based compensation expense | | 428 | 468 |
+----------------------------------------------------------+------+----------+---------+
| Accretion of asset retirement | 8 | 30 | 34 |
| obligation | | | |
+----------------------------------------------------------+------+----------+---------+
| Current taxation | | - | 752 |
+----------------------------------------------------------+------+----------+---------+
| Future tax recognised | | (540) | (131) |
+----------------------------------------------------------+------+----------+---------+
| Non-controlling interest | | (183) | 233 |
+----------------------------------------------------------+------+----------+---------+
| Deferred revenue recognised | | (718) | (354) |
+----------------------------------------------------------+------+----------+---------+
| Depletion of mineral properties | | 786 | 659 |
+----------------------------------------------------------+------+----------+---------+
| | | 695 | 2,946 |
+----------------------------------------------------------+------+----------+---------+
| | | | |
+----------------------------------------------------------+------+----------+---------+
| Net changes in non-cash working | 13 | (3,618) | (6,779) |
| capital | | | |
+----------------------------------------------------------+------+----------+---------+
| | | (2,923) | (3,833) |
+----------------------------------------------------------+------+----------+---------+
| | | | |
+----------------------------------------------------------+------+----------+---------+
| Cash flows from investing | | | |
| activities | | | |
+----------------------------------------------------------+------+----------+---------+
| Deferred exploration and | | (885) | (1,603) |
| development costs - Romania | | | |
+----------------------------------------------------------+------+----------+---------+
| Plant and equipment - Greece | | (8,953) | (7,147) |
+----------------------------------------------------------+------+----------+---------+
| Deferred development costs - | | (519) | (769) |
| Greece | | | |
+----------------------------------------------------------+------+----------+---------+
| Deferred development costs - | | (77) | - |
| Turkey | | | |
+----------------------------------------------------------+------+----------+---------+
| Purchase of land | | - | (339) |
+----------------------------------------------------------+------+----------+---------+
| Purchase of equipment | | (97) | (51) |
+----------------------------------------------------------+------+----------+---------+
| Investment in associates | | (143) | - |
+----------------------------------------------------------+------+----------+---------+
| | | (10,674) | (9,909) |
+----------------------------------------------------------+------+----------+---------+
| | | | |
+----------------------------------------------------------+------+----------+---------+
| Cash flows from financing | | | |
| activities | | | |
+----------------------------------------------------------+------+----------+---------+
| Proceeds from exercise of share | | 558 | - |
| options | | | |
+----------------------------------------------------------+------+----------+---------+
| Deferred revenue | | - | 3,563 |
+----------------------------------------------------------+------+----------+---------+
| | | 558 | 3,563 |
+----------------------------------------------------------+------+----------+---------+
| | | | |
+----------------------------------------------------------+------+----------+---------+
| Effect of foreign currency | | (3,262) | 2,022 |
| translation on cash | | | |
+----------------------------------------------------------+------+----------+---------+
| | | | |
+----------------------------------------------------------+------+----------+---------+
| Decrease in cash and cash | | (16,301) | (8,157) |
| equivalents | | | |
+----------------------------------------------------------+------+----------+---------+
| | | | |
+----------------------------------------------------------+------+----------+---------+
| Cash and cash equivalents - | | 170,296 | 218,839 |
| Beginning of period | | | |
+----------------------------------------------------------+------+----------+---------+
| | | | |
+----------------------------------------------------------+------+----------+---------+
| Cash and cash equivalents - End of | | 153,995 | 210,682 |
| period | | | |
+----------------------------------------------------------+------+----------+---------+
The accompanying notes are an integral part of these consolidated financial
statements.
+---------------------------------------------------------+------+---------+---------+
| European Goldfields Limited | Three months ended |
| Consolidated Statements of Comprehensive Income | |
| For the three-month periods ended 31 March 2009 and | |
| 2008 | |
| (Unaudited - Prepared by Management) | |
| (in thousands of US Dollars, except per share amounts) | |
| | |
+---------------------------------------------------------+--------------------------+
| | | 31 | 31 |
| | | March | March |
+---------------------------------------------------------+------+---------+---------+
| | | 2009 | 2008 |
+---------------------------------------------------------+------+---------+---------+
| | | $ | $ |
+---------------------------------------------------------+------+---------+---------+
| | | | |
+---------------------------------------------------------+------+---------+---------+
| (Loss)/Profit for the period | | (3,256) | 3,409 |
+---------------------------------------------------------+------+---------+---------+
| | | | |
+---------------------------------------------------------+------+---------+---------+
| Other comprehensive income in the | | | |
| period | | | |
+---------------------------------------------------------+------+---------+---------+
| Currency translation adjustment | | (128) | - |
+---------------------------------------------------------+------+---------+---------+
| Cash flow hedge adjustment | | (2,418) | (451) |
+---------------------------------------------------------+------+---------+---------+
| Comprehensive (loss)/income | | (5,802) | 2,958 |
+---------------------------------------------------------+------+---------+---------+
| | | | |
+---------------------------------------------------------+------+---------+---------+
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 2009 and 2008
(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% 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 contain 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. In
July 2008, the National Agency of Mineral Resources approved the technical
feasibility study in support of its permit application and issued a new mining
permit for 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 2008 and 2007.
These interim consolidated financial statements should be read in conjunction
with the Company's audited consolidated financial statements for the years ended
31 December 2008 and 2007.
Goodwill and intangible assets - In February 2008, the Canadian Institute of
Chartered Accountants ("CICA") issued Section 3064 Goodwill and intangible
assets, replacing Section 3062, Goodwill and other intangible assets. 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
adopted the new standards on 01 January 2009. The adoption of this new Section
had no impact on the consolidated financial statements.
3. Inventory
This balance comprises the following:
+---------------------------------------------------------+---------+------------+
| | 31 | 31 |
| | March | December |
+---------------------------------------------------------+---------+------------+
| | 2009 | 2008 |
+---------------------------------------------------------+---------+------------+
| | $ | $ |
+---------------------------------------------------------+---------+------------+
| Ore mined | 678 | 397 |
+---------------------------------------------------------+---------+------------+
| Metal concentrates | 1,915 | 767 |
+---------------------------------------------------------+---------+------------+
| Material and supplies | 2,055 | 1,905 |
+---------------------------------------------------------+---------+------------+
| | 4,648 | 3,069 |
+---------------------------------------------------------+---------+------------+
As at 31 March 2009, the value of total inventory carried at net realisable
value amounted to $1,754 (2008 - $767), which includes a write-down of $314
(2008 - $953)
The components of cost of sales were as follows:
+---------------------------------------------------------+----------+------------+
| | 31 March | 31March |
+---------------------------------------------------------+----------+------------+
| | 2009 | 2008 |
+---------------------------------------------------------+----------+------------+
| | $ | $ |
+---------------------------------------------------------+----------+------------+
| | | |
+---------------------------------------------------------+----------+------------+
| Mining cost | 5,639 | 6,245 |
+---------------------------------------------------------+----------+------------+
| Direct labour | 1,075 | 1,140 |
+---------------------------------------------------------+----------+------------+
| Indirect labour | 204 | 233 |
+---------------------------------------------------------+----------+------------+
| Other overhead costs | 1,510 | 1,712 |
+---------------------------------------------------------+----------+------------+
| Change in gross inventories | (1,558) | (3,288) |
+---------------------------------------------------------+----------+------------+
| Freight charges | 2,427 | 764 |
+---------------------------------------------------------+----------+------------+
| Write down of inventory to net realisable value | 314 | - |
+---------------------------------------------------------+----------+------------+
| | 9,611 | 6,806 |
+---------------------------------------------------------+----------+------------+
4. Plant and equipment
+---------------------------------------------------------+-----------+----------+---------------+--------------+--------+
| | Plant | Vehicles | Mine | Leasehold | Total |
| | and | $ | development, | improvements | $ |
| | equipment | | land and | $ | |
| | $ | | buildings | | |
+---------------------------------------------------------+-----------+----------+---------------+--------------+--------+
| Cost | | | | | |
| - | | | | | |
| 2009 | | | | | |
+---------------------------------------------------------+-----------+----------+---------------+--------------+--------+
| | | | | | |
+---------------------------------------------------------+-----------+----------+---------------+--------------+--------+
| At | 46,354 | 2,062 | 35,422 | 316 | 84,154 |
| 31 | | | | | |
| December | | | | | |
| 2008 | | | | | |
+---------------------------------------------------------+-----------+----------+---------------+--------------+--------+
| | | | | | |
+---------------------------------------------------------+-----------+----------+---------------+--------------+--------+
| Additions | 8,292 | 104 | 600 | - | 8,996 |
| | | | | | |
+---------------------------------------------------------+-----------+----------+---------------+--------------+--------+
| Disposals | - | - | - | - | - |
| | | | | | |
+---------------------------------------------------------+-----------+----------+---------------+--------------+--------+
| | | | | | |
+---------------------------------------------------------+-----------+----------+---------------+--------------+--------+
| | | | | | |
+---------------------------------------------------------+-----------+----------+---------------+--------------+--------+
| At | 54,646 | 2,166 | 36,022 | 316 | 93,150 |
| 31 | | | | | |
| March | | | | | |
| 2009 | | | | | |
+---------------------------------------------------------+-----------+----------+---------------+--------------+--------+
| | | | | | |
+---------------------------------------------------------+-----------+----------+---------------+--------------+--------+
| Accumulated | | | | | |
| | | | | | |
| amortisation | | | | | |
| - 2009 | | | | | |
+---------------------------------------------------------+-----------+----------+---------------+--------------+--------+
| | | | | | |
+---------------------------------------------------------+-----------+----------+---------------+--------------+--------+
| At | 4,688 | 1,284 | 3,684 | 117 | 9,753 |
| 31 | | | | | |
| December | | | | | |
| 2008 | | | | | |
+---------------------------------------------------------+-----------+----------+---------------+--------------+--------+
| | | | | | |
+---------------------------------------------------------+-----------+----------+---------------+--------------+--------+
| Provision | 368 | 43 | 606 | 8 | 1,025 |
| for the | | | | | |
| year | | | | | |
+---------------------------------------------------------+-----------+----------+---------------+--------------+--------+
| Disposals | - | - | - | - | - |
+---------------------------------------------------------+-----------+----------+---------------+--------------+--------+
| | | | | | |
+---------------------------------------------------------+-----------+----------+---------------+--------------+--------+
| | | | | | |
+---------------------------------------------------------+-----------+----------+---------------+--------------+--------+
| At | 5,036 | 1,327 | 4,290 | 125 | 10,778 |
| 31 | | | | | |
| March | | | | | |
| 2009 | | | | | |
+---------------------------------------------------------+-----------+----------+---------------+--------------+--------+
| | | | | | |
+---------------------------------------------------------+-----------+----------+---------------+--------------+--------+
| Net | 49,610 | 839 | 31,732 | 191 | 82,372 |
| book | | | | | |
| value | | | | | |
| at 31 | | | | | |
| March | | | | | |
| 2009 | | | | | |
+---------------------------------------------------------+-----------+----------+---------------+--------------+--------+
During 2009, the net book value amount of plant and equipment not amortised
amounted to $51,363 (2008 - $43,095)
5. Deferred exploration and development costs
Greek mineral properties:
+----------------------------------+----------+----------+----------+-------------+---------+
| | Stratoni | Olypmias | Skouries | Other | Total |
| | $ | $ | $ | exploration | $ |
| | | | | $ | |
+----------------------------------+----------+----------+----------+-------------+---------+
| Balance - 31 December 2008 | 26,652 | 237,362 | 166,292 | 253 | 430,559 |
+----------------------------------+----------+----------+----------+-------------+---------+
| | | | | | |
+----------------------------------+----------+----------+----------+-------------+---------+
| Deferred development costs | 101 | 94 | 383 | 6 | 584 |
+----------------------------------+----------+----------+----------+-------------+---------+
| Depletion of mineral properties | (714) | (153) | - | - | (867) |
+----------------------------------+----------+----------+----------+-------------+---------+
| | (613) | (59) | 383 | 6 | (283) |
+----------------------------------+----------+----------+----------+-------------+---------+
| Balance - 31 March 2009 | 26,039 | 237,303 | 166,675 | 259 | 430,276 |
+----------------------------------+----------+----------+----------+-------------+---------+
The Stratoni, Skouries and Olympias properties are held by the Company's 95%
owned subsidiary, Hellas Gold. In September 2005, the Stratoni property
commenced production.
Romanian mineral properties:
+-------------------------------------------------------------------------------+----------+-------------+--------+
| | Certej | Other | Total |
| | $ | exploration | $ |
| | | $ | |
+-------------------------------------------------------------------------------+----------+-------------+--------+
| | | | |
+-------------------------------------------------------------------------------+----------+-------------+--------+
| Balance | 38,832 | 6,355 | 45,187 |
| - 31 | | | |
| December | | | |
| 2008 | | | |
+-------------------------------------------------------------------------------+----------+-------------+--------+
| | | | |
+-------------------------------------------------------------------------------+----------+-------------+--------+
| Exploration | 666 | 78 | 744 |
| | | | |
+-------------------------------------------------------------------------------+----------+-------------+--------+
| Project management | 6 | - | 6 |
+-------------------------------------------------------------------------------+----------+-------------+--------+
| Project | 321 | 14 | 335 |
| overhead | | | |
+-------------------------------------------------------------------------------+----------+-------------+--------+
| Amortisation | 16 | 3 | 19 |
+-------------------------------------------------------------------------------+----------+-------------+--------+
| | 1,009 | 95 | 1,104 |
+-------------------------------------------------------------------------------+----------+-------------+--------+
| Balance | 39,841 | 6,450 | 46,291 |
| - 31 | | | |
| March | | | |
| 2009 | | | |
+-------------------------------------------------------------------------------+----------+-------------+--------+
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. 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.
As at the 31 March 2009, the following cost had been incurred on the remaining
Romanian mineral properties:
+----------------------------------------------------------+--------+------------+
| | 31 | 31 |
| | March | December |
| | 2009 | 2008 |
| | $ | $ |
+----------------------------------------------------------+--------+------------+
| | | |
+----------------------------------------------------------+--------+------------+
| Baita- Craciunesti | 3,325 | 3,312 |
+----------------------------------------------------------+--------+------------+
| Voia | 1,749 | 1,741 |
+----------------------------------------------------------+--------+------------+
| Magura Tebii | 138 | 136 |
+----------------------------------------------------------+--------+------------+
| Cainel | 1,238 | 1,166 |
+----------------------------------------------------------+--------+------------+
| | 6,450 | 6,355 |
+----------------------------------------------------------+--------+------------+
Turkish Mineral Properties
+--------------------------------------------------+---------+-------------+---------+
| | Ardala | Other | Total |
| | $ | exploration | $ |
| | | $ | |
+--------------------------------------------------+---------+-------------+---------+
| Balance - 31 December 2008 | 449 | 7 | 456 |
+--------------------------------------------------+---------+-------------+---------+
+-------------------------------------------------------------------------------+---------+----------+---------+
| Exploration | 7 | 4 | 11 |
| | | | |
+-------------------------------------------------------------------------------+---------+----------+---------+
| Project | 38 | 16 | 54 |
| overhead | | | |
+-------------------------------------------------------------------------------+---------+----------+---------+
| Permit | 11 | 4 | 15 |
| acquisition | | | |
+-------------------------------------------------------------------------------+---------+----------+---------+
| Amortisation | - | - | - |
+-------------------------------------------------------------------------------+---------+----------+---------+
| | 56 | 24 | 80 |
+-------------------------------------------------------------------------------+---------+----------+---------+
| | | | |
+-------------------------------------------------------------------------------+---------+----------+---------+
| Balance | 505 | 31 | 536 |
| - 31 | | | |
| March | | | |
| 2009 | | | |
+-------------------------------------------------------------------------------+---------+----------+---------+
The Turkish licences are held by a Joint Venture ("JV") through a Turkish
Company Pontid Madencilik. Currently the Company has a 51% interest in all the
properties within the JV and the Company will fund 100% of all costs related to
the development of these properties. Ownership of these properties may be
increased to 80% by funding to completion of a Bankable Feasibility Study. Any
new concessions within the JV funded to a Bankable Feasibility Study will be 90%
owned by the Company. The owner of the remaining 49% of the properties is Ariana
Resources plc.
6. Investment in associates
+----------------------------------------------------------+----------+-----------+
| | 31 March | 31 |
| | 2009 | December |
| | $ | 2008 |
| | | $ |
+----------------------------------------------------------+----------+-----------+
| | | |
+----------------------------------------------------------+----------+-----------+
| Balance - Beginning of period | 2,075 | - |
+----------------------------------------------------------+----------+-----------+
| Shares acquired | 143 | 2,692 |
+----------------------------------------------------------+----------+-----------+
| Share of loss | (26) | (105) |
+----------------------------------------------------------+----------+-----------+
| Cumulative translation adjustment | (149) | (517) |
+----------------------------------------------------------+----------+-----------+
| Equity-based compensation expense | - | 5 |
+----------------------------------------------------------+----------+-----------+
| Share issue cost | (10) | - |
+----------------------------------------------------------+----------+-----------+
| Gain on change of interest in associate | 86 | - |
+----------------------------------------------------------+----------+-----------+
| Balance - End of period | 2,119 | 2,075 |
+----------------------------------------------------------+----------+-----------+
In January 2008, Hellas Gold acquired a 50% share of Greek Nurseries SA for a
consideration of $834 (EUR530).
In May 2008, the Company subscribed for 20.13% of the issued share capital of
Ariana through a $1,858 (GBP929) private placement of shares. The difference
between the cost of the investment of $1,830 and the underlying net book value
of Ariana is $132 at the date of acquisition. This excess represents additional
fair value assigned to mineral properties of Ariana and will be depleted upon
commencement of mining operations of Ariana. In January 2009, the Company
acquired further shares in Ariana so that at 31 March 2009, the company held
19.87% of the issued share capital.
7.Future tax liability
The following table reflects future income tax liabilities:
+---------------------------------------------------------+----------+-----------+
| | 31 March | 31 |
| | 2009 | December |
| | $ | 2008 |
| | | $ |
+---------------------------------------------------------+----------+-----------+
| Mineral properties | 84,997 | 85,167 |
+---------------------------------------------------------+----------+-----------+
| Plant and equipment | 896 | 882 |
+---------------------------------------------------------+----------+-----------+
| Exploration and development expenditure | 2,683 | 2,709 |
+---------------------------------------------------------+----------+-----------+
| Accrued expenses & other | 716 | 663 |
+---------------------------------------------------------+----------+-----------+
| Inventory | 35 | - |
+---------------------------------------------------------+----------+-----------+
| Retirement obligation | 810 | 873 |
+---------------------------------------------------------+----------+-----------+
| Hedge contract | 2,250 | 3,496 |
+---------------------------------------------------------+----------+-----------+
| | 92,387 | 93,790 |
+---------------------------------------------------------+----------+-----------+
| Less: Current portion | (2,250) | (3,496) |
+---------------------------------------------------------+----------+-----------+
| Future income tax liabilities recognised | 90,137 | 90,294 |
+---------------------------------------------------------+----------+-----------+
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 2009
and 31 December 2008:
+---------------------------------------------------------+----------+-----------+
| | 31 March | 31 |
| | | December |
+---------------------------------------------------------+----------+-----------+
| | 2009 | 2008 |
+---------------------------------------------------------+----------+-----------+
| | $ | $ |
+---------------------------------------------------------+----------+-----------+
| Asset retirement obligation - Beginning | 6,937 | 6,805 |
| of period | | |
+---------------------------------------------------------+----------+-----------+
| Accretion expense | 30 | 132 |
+---------------------------------------------------------+----------+-----------+
| Asset retirement obligation - End of | 6,967 | 6,937 |
| period | | |
+---------------------------------------------------------+----------+-----------+
As at 31 March 2009, the undiscounted amount of estimated cash flows required to
settle the obligation is $7,805 (31 December 2008 - $7,805). The estimated cash
flow has been discounted using a credit adjusted risk free rate of 5.04% (31
December 2008 - 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. A further agreement with MRI
Trading AG was entered into in March 2008, for the sale of a further 23,372 dry
metric tonnes, for which Hellas Gold received a prepayment of $3.56 million in
cash. The remaining balances relating to MRI prepayments were transferred to
current liabilities reflecting the repayment of these amounts to MRI in February
2009. 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.
The following table reconciles movements on deferred revenue associated with the
MRI and Celtic Resources prepayments, and the Silver Wheaton Transaction:
+---------------------------------------------------------+---------+------------+
| | 31 | 31 |
| | March | December |
+---------------------------------------------------------+---------+------------+
| | 2009 | 2008 |
+---------------------------------------------------------+---------+------------+
| | $ | $ |
+---------------------------------------------------------+---------+------------+
| Deferred revenue - Beginning of period | 58,496 | 65,344 |
+---------------------------------------------------------+---------+------------+
| Additions | - | 3,564 |
+---------------------------------------------------------+---------+------------+
| Revenue recognised | (718) | (6,399) |
+---------------------------------------------------------+---------+------------+
| Transferred to current liabilities | - | (4,013) |
+---------------------------------------------------------+---------+------------+
| Deferred revenue - End of period | 57,778 | 58,496 |
+---------------------------------------------------------+---------+------------+
For the three-month period ended 31 March 2009, Hellas Gold delivered
concentrate containing 183,504 ounces (31 December 2008 - 1,038,762 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 2008 | 179,382,381 | 538,316 |
+--------------------------------------------------------+-------------+------------+
| | | |
+--------------------------------------------------------+-------------+------------+
| Restricted share units vested | 175,000 | 630 |
+--------------------------------------------------------+-------------+------------+
| Share options exercised or exchanged | 250,000 | 950 |
+--------------------------------------------------------+-------------+------------+
| Share issue costs | - | (10) |
+--------------------------------------------------------+-------------+------------+
| | 425,000 | 1,570 |
+--------------------------------------------------------+-------------+------------+
| | | |
+--------------------------------------------------------+-------------+------------+
| Balance - 31 March 2009 | 179,807,381 | 539,886 |
+--------------------------------------------------------+-------------+------------+
Contributed surplus:
+---------------------------------------------------------+---------+------------+
| | 31 | 31 |
| | March | December |
+---------------------------------------------------------+---------+------------+
| | 2009 | 2008 |
+---------------------------------------------------------+---------+------------+
| | $ | $ |
+---------------------------------------------------------+---------+------------+
| | | |
+---------------------------------------------------------+---------+------------+
| Equity based compensation expense | 6,799 | 7,210 |
+---------------------------------------------------------+---------+------------+
| Broker warrants | 578 | 578 |
+---------------------------------------------------------+---------+------------+
| | 7,377 | 7,788 |
+---------------------------------------------------------+---------+------------+
Accumulated other comprehensive income
The components of accumulated other comprehensive income were as follows:
+---------------------------------------------------------+---------+------------+
| | 31 | 31 |
| | March | December |
| | 2009 | 2008 |
+---------------------------------------------------------+---------+------------+
| | $ | $ |
+---------------------------------------------------------+---------+------------+
| | | |
+---------------------------------------------------------+---------+------------+
| Cumulative translation adjustment | 36,762 | 36,890 |
+---------------------------------------------------------+---------+------------+
| Fair value of cash flow hedge (net of tax) | 4,368 | 6,786 |
+---------------------------------------------------------+---------+------------+
| | 41,130 | 43,676 |
+---------------------------------------------------------+---------+------------+
11.Share options, restricted share units and deferred phantom 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
(26,971,107 shares as at 31 March 2009).
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 | = | Number of | X | (Current Price - Exercise |
| of | | Optioned Shares | | Price) |
| Settlement | | issuable on | | Current Price |
| Common | | exercise of the | | |
| Shares | | Exchanged Rights | | |
+--------------------+----+-------------------+----+-----------------------------+
As at 31 March 2009, the following share options were outstanding:
+-----------------------------------------------------------+-----------+----------+
| Expiry date | Number of | Exercise |
| | Options | price |
| | | C$ |
+-----------------------------------------------------------+-----------+----------+
| 2009 | 360,000 | 3.07 |
+-----------------------------------------------------------+-----------+----------+
| 2009 | 75,000 | 3.15 |
+-----------------------------------------------------------+-----------+----------+
| 2009 | 250,000 | 4.20 |
+-----------------------------------------------------------+-----------+----------+
| 2010 | 359,999 | 2.00 |
+-----------------------------------------------------------+-----------+----------+
| 2011 | 66,666 | 3.25 |
+-----------------------------------------------------------+-----------+----------+
| 2011 | 600,000 | 3.85 |
+-----------------------------------------------------------+-----------+----------+
| 2011 | 150,000 | 4.10 |
+-----------------------------------------------------------+-----------+----------+
| 2012 | 250,000 | 5.66 |
+-----------------------------------------------------------+-----------+----------+
| 2012 | 150,000 | 5.71 |
+-----------------------------------------------------------+-----------+----------+
| 2012 | 270,000 | 5.87 |
+-----------------------------------------------------------+-----------+----------+
| 2013 | 50,000 | 1.99 |
+-----------------------------------------------------------+-----------+----------+
| 2013 | 360,000 | 3.54 |
+-----------------------------------------------------------+-----------+----------+
| 2013 | 135,000 | 5.07 |
+-----------------------------------------------------------+-----------+----------+
| 2013 | 165,000 | 6.80 |
+-----------------------------------------------------------+-----------+----------+
| | 3,241,665 | 4.10 |
+-----------------------------------------------------------+-----------+----------+
During the three-month period ended 31 March 2009, share options were granted,
exercised, exchanged and cancelled as follows:
+---------------------------------------------------------+-----------+-----------+
| | Number | Weighted |
| | of | average |
| | Options | exercise |
| | | price |
| | | C$ |
+---------------------------------------------------------+-----------+-----------+
| | | |
+---------------------------------------------------------+-----------+-----------+
| Balance - 31 December 2008 | 3,491,665 | 4.01 |
+---------------------------------------------------------+-----------+-----------+
| | | |
+---------------------------------------------------------+-----------+-----------+
| Options granted | - | - |
+---------------------------------------------------------+-----------+-----------+
| Options exchanged for shares | (250,000) | 2.80 |
+---------------------------------------------------------+-----------+-----------+
| Options forfeited | - | - |
+---------------------------------------------------------+-----------+-----------+
| Balance - 31 March 2009 | 3,241,665 | 4.10 |
+---------------------------------------------------------+-----------+-----------+
Of the 3,241,665 (2008 - 3,171,665) share options outstanding as at 31 March
2009, 2,310,001 (2008 - 2,053,332) were fully vested and had a weighted
average exercise price of C$3.77 (2008 - C$3.24) per share.The share options
outstanding as at 31 March 2009, had a weighted average remaining contractual
life of 2.44 years (2008 - 2.83 years)
The weighted average grant date fair value of the Nil share options granted
during the period ended 31 March 2009 (2008 - 165,000) was C$ Nil (2008 -
C$ 353). For outstanding share options which were not fully vested during the
three-month period ended 31 March 2009, the Company incurred a
total equity-based compensation cost of $294 (2008 - $313) of which
$221 (2008 - $279) has been recognised as an expense in the income statement and
$73 (2008 - $34) has been capitalised to deferred exploration and development
costs.
The fair value of the share options granted has been estimated at the date of
grant using a Black-Scholes option pricing model with the following assumptions:
weighted average risk free interest rate of Nil (2008 - 2.95%); volatility
factor of the expected market price of the Company's shares of Nil
(2008 - 32.68% -48.94%); and a weighted average expected life of the share
options of Nil years (2008 - 1.68-3.68 years).
Restricted Share Unit Plan
The Company operates a Restricted Share Unit Plan (the "RSU Plan") authorising
the directors, based on recommendations received from the Compensation
Committee, to grant Restricted Share Units ("RSUs") to designated directors,
officers, employees and consultants. The RSUs are "phantom" shares that rise and
fall in value based on the value of the Company's common shares and are redeemed
for actual common shares on the vesting dates determined by the Board of
Directors when the RSUs are granted. The RSUs vest on the dates below however
upon a change of control of the Company they would typically become 100% vested.
The maximum number of common shares of the Company which may be reserved for
issuance for all purposes under the RSU Plan shall not exceed 2.5% of the common
shares issued and outstanding from time to time (4,495,185 shares as at 31 March
2009).
As at 31 March 2009, the following RSUs were outstanding:
+-------------------------------------------------------+------------+------------+
| Vesting date | Number of | Grant date |
| | RSUs | fair value |
| | | of |
| | | underlying |
| | | shares |
| | | C$ |
+-------------------------------------------------------+------------+------------+
| | | |
+-------------------------------------------------------+------------+------------+
| 30 June 2009 | 30,000 | 5.74 |
+-------------------------------------------------------+------------+------------+
| 30 June 2009* | 100,000 | 2.74 |
+-------------------------------------------------------+------------+------------+
| 04 January 2010 | 242,390 | 2.65 |
+-------------------------------------------------------+------------+------------+
| 04 January 2011 | 242,389 | 2.65 |
+-------------------------------------------------------+------------+------------+
| | 614,779 | 2.82 |
+-------------------------------------------------------+------------+------------+
* Or earlier if certain operational milestones are achieved.
During the three-month period ended 31 March 2009, RSUs were granted, vested and
cancelled as follows:
+-------------------------------------------------------+------------+------------+
| | Number of | Weighted |
| | RSUs | average |
| | | grant date |
| | | fair value |
| | | of |
| | | underlying |
| | | shares |
| | | C$ |
+-------------------------------------------------------+------------+------------+
| | | |
+-------------------------------------------------------+------------+------------+
| Balance - 31 December 2008 | 205,000 | 4.09 |
+-------------------------------------------------------+------------+------------+
| | | |
+-------------------------------------------------------+------------+------------+
| RSUs granted | 584,779 | 2.67 |
+-------------------------------------------------------+------------+------------+
| RSUs vested | (175,000) | 3.80 |
+-------------------------------------------------------+------------+------------+
| RSUs forfeited | - | - |
+-------------------------------------------------------+------------+------------+
| Balance - 31 March 2009 | 614,779 | 2.82 |
+-------------------------------------------------------+------------+------------+
The weighted average grant date fair value of underlying shares of the 584,779
RSUs granted during the period ended 31 March 2009 (2008 - 190,000) was
C$1,559 (2008 - C$699). For outstanding RSUs which were not fully vested during
the period ended 31 March 2009, the Company incurred a total equity-based
compensation cost of $318 (2008 - $672) of which $118 (2008 - $190) has been
recognised as an expense in the income statement and $200 (2008 - $482) has been
capitalised to deferred exploration and development costs.
Deferred Phantom Unit Plan
The Company operates a Deferred Phantom Unit plan (the "DPU Plan") authorising
the directors based on recommendation by the Human Capital Management Committee
to grant Deferred Phantom Units ("DPUs") to independent eligible directors. The
DPU are units which gives rise to a right to receive a cash payment the value of
which, on a particular date should be the market value of the equivalent number
of shares at that date. The market value at 31 March, 2009 has been included in
current liabilities.
As at 31 March 2009, the following DPUs were outstanding:
+-------------------------------------------------------+------------+------------+
| Grant date | Number of | Grant date |
| | DPUs | Fair Value |
| | | of |
| | | DPUs |
| | | C$ |
+-------------------------------------------------------+------------+------------+
| 05 December 2008 | 406,500 | 1.86 |
+-------------------------------------------------------+------------+------------+
| 23 March 2009 | 9,276 | 3.63 |
+-------------------------------------------------------+------------+------------+
| | 415,776 | 1.90 |
+-------------------------------------------------------+------------+------------+
During the three-month period ended 31 March 2009, DPUs were granted and
forfeited as follows:
+-------------------------------------------------------+-----------+------------+
| | Number of | Fair Value |
| | | of DPUs |
| | DPUs | C$ |
+-------------------------------------------------------+-----------+------------+
| Balance - 31 December 2008 | 406,500 | 3.24 |
+-------------------------------------------------------+-----------+------------+
| | | |
+-------------------------------------------------------+-----------+------------+
| DPUs granted and vested | 9,276 | 3.63 |
+-------------------------------------------------------+-----------+------------+
| DPUs forfeited | - | - |
+-------------------------------------------------------+-----------+------------+
| Balance - 31 March 2009 | 415,776 | 3.35 |
+-------------------------------------------------------+-----------+------------+
Of the 9,276 (2008 - Nil) DPU's granted during the period, 9,276 (2008 - Nil)
were fully vested.
The weighted average grant date fair value cost of the 9,276 DPU's granted
during the three-month period ended 31 March 2009 (2008 - Nil) was $27 (2008 -
Nil). The weighted average fair value cost of the 415,776 DPU's as at the 31
March 2009, based on the period end share price, amounted to C$3.35 (2008 -
Nil).
12. Financial instruments and financial risk management
The Company's financial instruments consist of cash and cash equivalents,
accounts receivable, 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 2009 and 31
December 2008, are as follows:
+---------------------------------------------------------+----------+------------+
| | 31 March | 31 |
| | 2009 | December |
| | $ | 2008 |
| | | $ |
+---------------------------------------------------------+----------+------------+
| Financial Assets: | | |
+---------------------------------------------------------+----------+------------+
| | | |
+---------------------------------------------------------+----------+------------+
| Held for trading, measured at fair value | | |
+---------------------------------------------------------+----------+------------+
| Cash and cash equivalents | 153,995 | 170,296 |
+---------------------------------------------------------+----------+------------+
| | | |
+---------------------------------------------------------+----------+------------+
| Loans and receivables, measured at amortised cost | | |
+---------------------------------------------------------+----------+------------+
| Accounts receivable | 20,184 | 20,057 |
+---------------------------------------------------------+----------+------------+
| | | |
+---------------------------------------------------------+----------+------------+
| Financial Liabilities | | |
+---------------------------------------------------------+----------+------------+
| | | |
+---------------------------------------------------------+----------+------------+
| Other liabilities, measured at amortised costs | | |
+---------------------------------------------------------+----------+------------+
| Accounts payable, accrued liabilities and income taxes | 14,291 | 16,263 |
| payable | | |
+---------------------------------------------------------+----------+------------+
| | | |
+---------------------------------------------------------+----------+------------+
| Derivative Financial instruments, measured at fair | | |
| value | | |
+---------------------------------------------------------+----------+------------+
| Designated as cash flow hedge | | |
+---------------------------------------------------------+----------+------------+
| Hedge contract | 6,618 | 10,282 |
+---------------------------------------------------------+----------+------------+
| | | |
+---------------------------------------------------------+----------+------------+
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 does not invest in
asset-backed commercial papers and has deposited the cash equivalents only with
the largest banks within a particular region or with top rated institutions.
As at 31 March 2009, cash and cash equivalent comprises the following:
+---------------------------------------------------------+---------+------------+
| | 31 | 31 |
| | March | December |
| | 2009 | 2008 |
| | $ | $ |
+---------------------------------------------------------+---------+------------+
| | | |
+---------------------------------------------------------+---------+------------+
| Interest bearing bank accounts | 125,707 | 123,297 |
+---------------------------------------------------------+---------+------------+
| Term deposits | 28,288 | 46,999 |
+---------------------------------------------------------+---------+------------+
| | 153,995 | 170,296 |
+---------------------------------------------------------+---------+------------+
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.
Of the total trade receivable as at 31 March 2009, 4 (31 December 2008 - 3)
customers represented 94% (31 December 2008 - 90%) of the total. The Company
does not anticipate any loss for non-performance.
As at 31 March 2009, the accounts receivable comprises the following:
+---------------------------------------------------------+----------+------------+
| | 31 March | 31 |
| | 2009 | December |
| | $ | 2008 |
| | | $ |
+---------------------------------------------------------+----------+------------+
| | | |
+---------------------------------------------------------+----------+------------+
| Trade receivables | 4,365 | 4,986 |
+---------------------------------------------------------+----------+------------+
| Valued added taxes recoverable | 13,503 | 11,780 |
+---------------------------------------------------------+----------+------------+
| Other accounts receivable | 2,316 | 3,291 |
+---------------------------------------------------------+----------+------------+
| | 20,184 | 20,057 |
+---------------------------------------------------------+----------+------------+
| | | |
+---------------------------------------------------------+----------+------------+
As at 31 March 2009, the Company considers its accounts receivable excluding
Value Added Taxes recoverable and other accounts receivable to be aged as
follows:
+---------------------------------------------------------+----------+------------+
| Ageing | 31 March | 31 |
| | 2009 | December |
| | $ | 2008 |
| | | $ |
+---------------------------------------------------------+----------+------------+
| | | |
+---------------------------------------------------------+----------+------------+
| Current | - | 1,807 |
+---------------------------------------------------------+----------+------------+
| Past due (1-30 days) | 2,115 | 2,632 |
+---------------------------------------------------------+----------+------------+
| Past due (31-60 days) | 1,487 | 417 |
+---------------------------------------------------------+----------+------------+
| Past due (more than 60 days) | 763 | 130 |
+---------------------------------------------------------+----------+------------+
| | 4,365 | 4,986 |
+---------------------------------------------------------+----------+------------+
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 2009, the Company earned interest income of $508 (2008 - $1,757) on cash
and cash equivalents, based on rates of returns between 0.25% and
2.50% (2008 - 2.15% and 5.20%)
Currency risk - The Company is exposed to currency risk on accounts receivable,
accounts payable 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 2009, the Company held the equivalent of $8,755 (31 December 2008 -
$30,246) in net assets denominated 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 2009 the Company recorded a foreign
exchange loss of $2,882 (and a gain of $2,674 in 2008), mainly due to the
translation of its Euro balances in its subsidiaries, with the Euro weakening
against the US Dollar. The gain in 2008 had arisen due to the translation of its
Euro balances in its subsidiaries, with the Euro strengthening against the US
Dollar.
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 2009, the Company's trade payables and accrued
liabilities amounted to $14,291 (2008 - $16,263), all which fall due for payment
within 12 months of the balance sheet date. The average credit period taken
during the year ended 31 March 2009 was 30 days (30 days - 31 December 2008).
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
factors 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 long term profitability of the Company's operations is highly correlated to
the market price of its commodities and 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, a 1% change in interest rates
and a 10% change in commodity prices during the years ended 31 March 2009 and
2008. The results of the sensitivity analysis can be seen in the following
table:
+----------------------------------------------------------+----------+----------+
| Impact on (Loss)/Profit (+/-) | 31 March | 31 March |
| | | 2008 |
| | 2009 | $ |
| | $ | |
+----------------------------------------------------------+----------+----------+
| Change of - 5 % US$: EUR foreign exchange rate | 988 | 1,612 |
+----------------------------------------------------------+----------+----------+
| Change of + 5 % US$: EUR foreign exchange rate | (893) | (1,464) |
+----------------------------------------------------------+----------+----------+
| Change of +/- 1% in interest rates | 691 | 600 |
+----------------------------------------------------------+----------+----------+
| Change of +/- 10% in commodities prices | 830 | 593 |
+----------------------------------------------------------+----------+----------+
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 Company has one counterparty relating to the remaining
lead hedge contracts. If this counterparty were unable to honour its
obligations under the hedge contracts, the Company would be exposed up to the
entire value of the hedge stated in the accounts and would be exposed to the
difference between the hedge and the then current market price at the date of
the settlement of the hedged item. The hedges below are treated as cash flow
hedges in accordance with CICA 3865: Hedges.
Lead hedging contracts - As at 31 March 2009, the Company had entered into
forward hedging arrangements over 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 02 January 2009 and 05 January 2010
where the fair value amounted to $6,618 (2008 - $10,282), established by
reference to market prices for lead.
+--------------------------------------------------------------------+----------+
| | 31 March |
| | |
| | 2009 |
| | $ |
+--------------------------------------------------------------------+----------+
| | |
+--------------------------------------------------------------------+----------+
| Lead tonnes | 5,400 |
+--------------------------------------------------------------------+----------+
| | |
+--------------------------------------------------------------------+----------+
| US dollar price ($/tonne) - Put | 2,500 |
+--------------------------------------------------------------------+----------+
| US dollar contract amount ($'000) - Put | 13,500 |
+--------------------------------------------------------------------+----------+
| | |
+--------------------------------------------------------------------+----------+
| US dollar price ($/tonne) - Call | 3,500 |
+--------------------------------------------------------------------+----------+
| US dollar contract amount ($'000) - Call | 18,900 |
+--------------------------------------------------------------------+----------+
| | |
+--------------------------------------------------------------------+----------+
13. Supplementary cash flow information
+----------------------------------------------------------+----------+---------+
| | 31 March | 31 |
| | 2009 | March |
| | | 2008 |
+----------------------------------------------------------+----------+---------+
| | $ | $ |
+----------------------------------------------------------+----------+---------+
| Changes in non-cash operating accounts: | | |
+----------------------------------------------------------+----------+---------+
| Accounts receivable and prepaid expenses | (58) | (9,595) |
+----------------------------------------------------------+----------+---------+
| Inventory | (1,497) | (3,252) |
+----------------------------------------------------------+----------+---------+
| Accounts payable and accrued liabilities | (2,063) | 6,068 |
+----------------------------------------------------------+----------+---------+
| | (3,618) | (6,779) |
+----------------------------------------------------------+----------+---------+
| | | |
+----------------------------------------------------------+----------+---------+
| Supplemental disclosure of non-cash transactions: | | |
+----------------------------------------------------------+----------+---------+
| Equity based compensation issued for non-cash | 611 | 985 |
| consideration | | |
+----------------------------------------------------------+----------+---------+
| Exercise or exchange of share options - Transfer from | 392 | - |
| contributed surplus to share capital | | |
+----------------------------------------------------------+----------+---------+
| Vesting of restricted share units | 630 | 340 |
+----------------------------------------------------------+----------+---------+
14. Capital Risk Management
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 requirements.
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.
In order to maximise ongoing development efforts, the company does not pay out
dividends.
The Company's investment policy is to invest its cash in high-grade investment
securities with varying terms and maturity, selected with regards to the
expected timing of expenditures from continuing operations.
The Company expects its current capital resources will be sufficient to carry
out its plans and operations through its current operating period.
The Company is not subject to externally imposed capital requirements and there
has been no change in the overall capital risk management as at 31 March 2009.
Capital under management was as follows:
+--------------------------------------------------------+----------+------------+
| | 31 March | 31 |
| | 2009 | December |
| | | 2008 |
+--------------------------------------------------------+----------+------------+
| | $ | $ |
+--------------------------------------------------------+----------+------------+
| | | |
+--------------------------------------------------------+----------+------------+
| Capital stock | 539,886 | 538,316 |
+--------------------------------------------------------+----------+------------+
| Contributed surplus | 7,377 | 7,788 |
+--------------------------------------------------------+----------+------------+
| Accumulated other comprehensive income | 41,130 | 43,676 |
+--------------------------------------------------------+----------+------------+
| Deficit | (5,301) | (2,045) |
+--------------------------------------------------------+----------+------------+
| | 583,092 | 587,735 |
+--------------------------------------------------------+----------+------------+
15. Commitments
The Company has spending commitments of $180 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.
Hellas Gold has spending commitments of $138 (EUR104) per year for a term of 9
years under the lease for its office in Athens, Greece, which commenced in
December 2007. The rent will be reviewed on the second anniversary of the
commencement of the term to reflect any increase in rents in the market.
As at 31 March 2009, Hellas Gold had entered into off-take agreements pursuant
to which Hellas Gold agreed to sell 40,592dmt of zinc concentrates and
128,419 dmt of gold concentrates until the financial year's ending 2012.
During 2007, Hellas Gold entered into purchase agreements with Outotec Minerals
OY for long-lead time equipment for the Skouries project with a cost of $45,872
(EUR34,470) which is to be paid by the end of 2009. As at 31 March 2009, $23,876
(EUR17,941) of the commitment had been paid. Hellas Gold has pledged $13,920 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 2009, Hellas Gold incurred costs of
$9,384 (2008 - $8,497) for management, technical and engineering services
received from a related party, Aktor S.A., a 5% shareholder in Hellas Gold. As
at 31 March 2009, Hellas Gold had accounts payable of $9,044 (2008 - $10,385) 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, Romania and Turkey.
Geographic segmentation of plant and equipment and deferred exploration and
development costs and operating liabilities is as follows:
+-----------------------------------------------------+------------+--------------+
| | 31 March | 31 December |
+-----------------------------------------------------+------------+--------------+
| | 2009 | 2008 |
+-----------------------------------------------------+------------+--------------+
| | $ | $ |
+-----------------------------------------------------+------------+--------------+
| Revenue | | |
+-----------------------------------------------------+------------+--------------+
| Canada | - | - |
+-----------------------------------------------------+------------+--------------+
| Greece | 10,742 | 60,044 |
+-----------------------------------------------------+------------+--------------+
| Romania | - | - |
+-----------------------------------------------------+------------+--------------+
| Turkey | - | - |
+-----------------------------------------------------+------------+--------------+
| United Kingdom | - | - |
+-----------------------------------------------------+------------+--------------+
| | 10,742 | 60,044 |
+-----------------------------------------------------+------------+--------------+
| | | |
+-----------------------------------------------------+------------+--------------+
| Plant and equipment and deferred exploration and | | |
| development costs | | |
+-----------------------------------------------------+------------+--------------+
| Canada | - | - |
+-----------------------------------------------------+------------+--------------+
| Greece | 509,541 | 501,852 |
+-----------------------------------------------------+------------+--------------+
| Romania | 49,063 | 47,946 |
+-----------------------------------------------------+------------+--------------+
| Turkey | 577 | 496 |
+-----------------------------------------------------+------------+--------------+
| United Kingdom | 294 | 309 |
+-----------------------------------------------------+------------+--------------+
| | 559,475 | 550,603 |
+-----------------------------------------------------+------------+--------------+
| | | |
+-----------------------------------------------------+------------+--------------+
| Operating liabilities | | |
+-----------------------------------------------------+------------+--------------+
| Canada | 1,447 | 1,503 |
+-----------------------------------------------------+------------+--------------+
| Greece | 12,335 | 14,084 |
+-----------------------------------------------------+------------+--------------+
| Romania | 258 | 252 |
+-----------------------------------------------------+------------+--------------+
| Turkey | - | 80 |
+-----------------------------------------------------+------------+--------------+
| United Kingdom | 251 | 344 |
+-----------------------------------------------------+------------+--------------+
| | 14,291 | 16,263 |
+-----------------------------------------------------+------------+--------------+
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 2009, the Company recognised the following costs:
+-----------------------------------------------------------+----------+----------+
| | 31 March | 31 March |
| | | 2008 |
| | 2009 | |
+-----------------------------------------------------------+----------+----------+
| | $ | $ |
+-----------------------------------------------------------+----------+----------+
| Defined contribution plans | 44 | 73 |
+-----------------------------------------------------------+----------+----------+
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 |
+------------------------------------------------------+-----------+------------+
| | 2009 | 2008 |
+------------------------------------------------------+-----------+------------+
| | $ | $ |
+------------------------------------------------------+-----------+------------+
| (Loss)/Earnings | (3,256) | 3,409 |
+------------------------------------------------------+-----------+------------+
| Effect of | - | - |
| dilutive | | |
| potential common | | |
| shares | | |
+------------------------------------------------------+-----------+------------+
| Diluted earnings | (3,256) | 3,409 |
+------------------------------------------------------+-----------+------------+
| | | |
+------------------------------------------------------+-----------+------------+
| Weighted average | 179,884 | 179,199 |
| number of common | | |
| shares for the | | |
| purpose of basic | | |
| earnings per | | |
| share | | |
+------------------------------------------------------+-----------+------------+
| Incremental | - | 1,704 |
| shares - Share | | |
| options | | |
+------------------------------------------------------+-----------+------------+
| Weighted average | 179,884 | 180,903 |
| number of common | | |
| shares for the | | |
| purpose of | | |
| diluted earnings | | |
| per share | | |
+------------------------------------------------------+-----------+------------+
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. New accounting pronouncements.
Business Combination, Consolidated Financial Statements and non controlling
interest - In January 2009, the CICA issued Handbook Sections 1582 - Business
Combinations, 1601 - Consolidated Financial Statements and 1602 -
Non-controlling Interests which replace CICA Handbook Sections 1581 - Business
Combinations and 1600 - Consolidated Financial Statements. Section 1582
establishes standards for the accounting for business combinations that is
equivalent to the business combination accounting standard under International
Financial Reporting Standards. Section 1582 is applicable for the Company's
business combinations with acquisition dates on or after January 1, 2011. Early
adoption of this Section is permitted. Section 1601 together with Section 1602
establishes standards for the preparation of consolidated financial statements.
Section 1601 is applicable for the Company's interim and annual consolidated
financial statements for its fiscal year beginning January 1, 2011. Early
adoption of this Section is permitted. If the Company chooses to early adopt any
one of these Sections, the other two sections must also be adopted at the same
time.
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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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