RNS Number:5881W
European Goldfields Ltd
15 May 2007
European Goldfields Limited
Consolidated Financial Statements
(Unaudited)
First Quarter 2007
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 2007 and 2006 have not been reviewed by the auditors of
the Company.
Consolidated Balance Sheets 31 March 31 December
As at 31 March 2007 and 31 December 2006
(Unaudited - Prepared by Management)
(in thousands of US Dollars, except per share
amounts)
2007 2006
$ $
Note Unaudited Audited
Assets
Current assets
Cash and cash equivalents 33,959 34,587
Accounts receivable 19,672 14,945
Prepaid expenses 1,381 1,270
Inventory 3 3,801 854
--------- ----------
58,813 51,656
--------- ----------
Non current assets
Plant and equipment 4 28,332 27,007
Deferred exploration and development costs 5
Greek production stage mineral properties 14,286 14,677
Greek development stage mineral properties 184,907 182,157
--------- ----------
199,193 196,834
Romanian development stage mineral properties 33,175 31,782
--------- ----------
232,368 228,616
--------- ----------
Restricted investment 6 4,000 3,926
Future tax asset 1,988 738
--------- ----------
325,501 311,943
--------- ----------
Liabilities
Current liabilities
Accounts payable and accrued liabilities 13,612 9,802
Non current liabilities
Future tax liability 7 50,538 48,150
Non-controlling interest 22,512 20,422
Asset retirement obligation 8 6,133 6,031
--------- ----------
79,183 74,603
--------- ----------
Shareholders' equity
Capital stock 9 247,290 246,890
Contributed surplus 9 8,080 7,135
Other comprehensive income 5,990 4,276
Deficit (28,654) (30,763)
--------- ----------
232,706 227,538
--------- ----------
--------- ----------
325,501 311,943
--------- ----------
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
Consolidated Statements of Profit and Loss Three months ended
For the three-month periods ended 31 March 2007 and
2006
(Unaudited - Prepared by Management)
(in thousands of US Dollars, except per share
amounts)
31 March 31 March
2007 2006
Note $ $
Income
Sales 17,083 9,083
Cost of sales (6,944) (4,788)
--------- ---------
Gross profit 10,139 4,295
--------- ---------
Other income
--------- ---------
Interest income 453 300
--------- ---------
Expenses
Corporate administrative and overhead expenses 847 535
Equity based compensation expense 456 673
Foreign exchange loss/(gain) 152 (16)
Hellas Gold administrative and overhead expenses 2,211 744
Hellas Gold water treatment expenses (non-operating
mines) 1,102 493
Hellas Gold non-recurring rehabilitation cost
(Stratoni - 902
mine)
Accretion of asset retirement obligation 8 29 26
Amortisation 119 201
--------- ---------
(4,916) (3,558)
--------- ---------
--------- ---------
Profit for the period before income tax 5,676 1,037
Income taxes
Current taxes (1,161) -
Future taxes (558) (876)
--------- ---------
(1,719) (876)
--------- ---------
--------- ---------
Profit for the period before non-controlling 3,957 161
interest
Non-controlling interest (1,848) (475)
--------- ---------
Profit/(loss) for the period 2,109 (314)
Deficit - Beginning of period (30,763) (33,765)
--------- ---------
Deficit - End of period (28,654) (34,079)
--------- ---------
Earnings/(loss) per share 15
Basic 0.02 0.00
Diluted 0.02 0.00
Weighted average number of shares (in thousands)
Basic 115,827 112,658
Diluted 117,636 112,658
The accompanying notes are an integral part of these consolidated financial
statements.
Other
Consolidated Statements Capital Contributed Comprehensive Deficit Total
of Equity Stock Surplus Income
As at 31 March 2007 and $ $ $ $ $
2006
(Unaudited - Prepared by
Management)
(in thousands of US
Dollars, except per
share amounts)
------- -------- ---------- -------- -------
Balance - 31 December 240,234 6,197 (12,843) (33,765) 199,823
2005 ------- -------- ---------- -------- -------
Equity based
compensation - 816 - - 816
expense
Share options exercised
or 100 (39) - - 61
exchanged
Share issue costs - - - - -
Currency translation - - 2,931 - 2,931
adjustment
Restricted share units 143 (143) - - -
vested
Loss for the period - - - (314) (314)
------- -------- ---------- -------- -------
243 634 2,931 (314) 3,494
------- -------- ---------- -------- -------
------- -------- ---------- -------- -------
Balance - 31 March 2006 240,477 6,831 (9,912) (34,079) 203,317
------- -------- ---------- -------- -------
Equity based
compensation - 4,283 - - 4,283
expense
Restricted share units 1,928 (1,928) - - -
vested
Share options exercised
or 4,485 (2,051) - - 2,434
exchanged
Currency translation - - 14,188 - 14,188
adjustment
Profit for the period - - - 3,316 3,316
------- -------- ---------- -------- -------
6,413 304 14,188 3,316 24,221
------- -------- ---------- -------- -------
------- -------- ---------- -------- -------
Balance - 31 December 246,890 7,135 4,276 (30,763) 227,538
2006 ------- -------- ---------- -------- -------
Equity based
compensation - 1,345 - - 1,345
expense
Restricted share units 232 (232) - - -
vested
Share options exercised
or 168 (168) - - -
exchanged
Currency translation - - 1,714 - 1,714
adjustment
Profit for the period - - - 2,109 2,109
------- -------- ---------- -------- -------
400 945 1,714 2,109 5,168
------- -------- ---------- -------- -------
------- -------- ---------- -------- -------
Balance - 31 March 2007 247,290 8,080 5,990 (28,654) 232,706
------- -------- ---------- -------- -------
The accompanying notes are an integral part of these consolidated financial
statements.
Consolidated Statements of Cash Flows Three months ended
For the three-month periods ended 31 March 2007 and
2006
(Unaudited - Prepared by Management)
(in thousands of US Dollars, except per share
amounts)
31 March 31 March
2007 2006
Note $ $
Cash flows from operating activities
Profit/(loss) for the period 2,108 (314)
Foreign exchange loss/(gain) 196 (27)
Amortisation 419 418
Equity based compensation expense 456 723
Accretion of asset retirement obligation 8 29 26
Taxation 1,720 876
Non-controlling interest 1,848 475
Depletion of mineral properties 473 237
--------- ---------
7,249 2,414
Net changes in non-cash working capital 11 (4,840) (909)
--------- ---------
2,409 1,505
--------- ---------
Cash flows from investing activities
Deferred exploration and development costs - Romania (696) (848)
Plant and equipment - Greece (1,577) (568)
Deferred development costs - Greece (421) (478)
Restricted investment (28) -
Proceeds from disposal of equipment - -
Purchase of equipment (11) (41)
--------- ---------
(2,733) (1,935)
--------- ---------
Cash flows from financing activities
Proceeds from exercise of share options - 61
Share issue costs - -
--------- ---------
- 61
--------- ---------
Effect of foreign currency translation on cash (304) 173
--------- ---------
Decrease in cash and cash equivalents (628) (196)
Cash and cash equivalents - Beginning of period 34,587 30,536
--------- ---------
Cash and cash equivalents - End of period 33,959 30,340
--------- ---------
The accompanying notes are an integral part of these consolidated financial
statements.
Consolidated Statements of Comprehensive Income Three months ended
For the three-month periods ended 31 March 2007 and 2006
(Unaudited - Prepared by Management)
(in thousands of US Dollars, except per share amounts)
31 March 31 March
2007 2006
$ $
Profit/(loss) for the period 2,109 (314)
Other comprehensive income in the period
Currency translation adjustment 1,714 2,931
--------- ---------
Comprehensive income 3,823 2,617
--------- ---------
The accompanying notes are an integral part of these consolidated financial
statements.
Notes to Consolidated Financial Statements
For the three-month periods ended 31 March 2007 and 2006
(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 65% interest in Hellas Gold S.A ("Hellas Gold").
Hellas Gold owns the three major gold and base metal deposits of Stratoni,
Skouries and Olympias in Northern Greece. Hellas Gold commenced production at
Stratoni in September 2005 and commenced selling an existing stockpile of gold
concentrates from Olympias in July 2006. Hellas Gold is applying for permits to
develop the Skouries and Olympias projects.
Romania - The Company owns 80% of the Certej gold/silver project in Romania. The
Company submitted in March 2007 a technical feasibility study to the Romanian
government in support of a permit application to develop the project.
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 2006 and 2005.
These interim consolidated financial statements should be read in conjunction
with the Company's audited consolidated financial statements for the years ended
31 December 2006 and 2005.
Effective 1 January 2007, the company adopted the revised CICA Section 1506
"Accounting Changes", which requires that: a voluntary change in accounting
principles can be made if, and only if, the changes result in more reliable and
relevant information, changes in accounting policies are accompanied with
disclosures of prior period amounts and justification for the change, and for
changes in estimates, the nature and amount of the change should be disclosed.
The company has not made any voluntary change in accounting principles since the
adoption of the revised standard.
Financial Instruments - Recognition and Measurement, Section 3855
This standard prescribes when a financial asset, financial liability, or
non-financial derivative is to be recognised on the balance sheet and whether
fair value or cost-based methods are used to measure the recorded amounts. It
also specifies how financial instrument gains and losses are to be presented.
Effective 1 January 2007, the Company's cash equivalents, temporary investments
and investments in marketable securities have been classified as
available-for-sale and are recorded at fair value on the balance sheet. Fair
values are determined directly by reference to published price quotations in an
active market. Changes in the fair value of these instruments are reflected in
other comprehensive income and included in shareholders' equity on the balance
sheet.
All derivatives are to be recorded on the balance sheet at fair value.
Mark-to-market adjustments on these instruments will be included in net profit,
unless the instruments are designated as part of a cash flow hedge relationship.
In accordance with the standard's transitional provisions, the Company
recognises as separate assets and liabilities only embedded derivatives acquired
or substantively modified on or after 1 January, 2003.
All other financial instruments will be recorded at cost or amortised cost,
subject to impairment reviews. The criteria for assessing on other than
temporary impairment remain unchanged. Transaction costs incurred to acquire
financial instruments are included in the underlying balance. The Company has
determined that the adoption of Section 3855 had no effect on these financial
statements.
Hedges, Section 3865
This standard is applicable when a company chooses to designate a hedging
relationship for accounting purposes. It builds on the previous AcG-13 "Hedging
Relationships" and Section 1650 "Foreign Currency Translation", by specifying
how hedge accounting is applied and what disclosures are necessary when it is
applied. The Company has determined that the adoption of Section 3865 had no
effect on these financial statements.
Comprehensive Income, Section 1530
This standard requires the presentation of a statement of comprehensive income
and its components. Comprehensive income includes both net earnings and other
comprehensive income. Other comprehensive income includes holding gains and
losses on available-for-sale investments, gains and losses on certain derivative
instruments and foreign currency gains and losses relating to self-sustaining
foreign operations, all of which are not included in the calculation of net
earnings until realised. This statement has been included in the consolidated
financial statements starting this period.
3. Inventory
This balance comprises the following:
31 March 31 December
2007 2006
$ $
Ore mined 88 225
Metal concentrates 2,773 154
Material and supplies 940 475
------------ ----------
3,801 854
------------ ----------
4. Plant and equipment
Exploration
/ office Land and Leasehold
equipment Vehicles buildings Improvements Total
$ $ $ $ $
Cost - 2007
At 31 December 2006 13,220 1,236 15,608 256 30,320
Additions 1,575 - 13 - 1,588
Disposals (14) - - - (14)
Currency translation
adjustment 152 12 188 - 352
-------- ------- -------- --------- --------
At 31 March 2007 14,933 1,248 15,809 256 32,246
-------- ------- -------- --------- --------
Accumulated
amortisation -2007
At 31 December 2006 1,681 685 888 58 3,312
Provision for the year 296 68 195 6 565
Disposals (10) - - - (10)
Currency translation
adjustment 23 8 16 - 47
-------- ------- -------- --------- --------
At 31 March 2007 1,990 761 1,099 64 3,914
-------- ------- -------- --------- --------
-------- ------- -------- --------- --------
Net book value at 31
March 2007 12,943 487 14,710 192 28,332
-------- ------- -------- --------- --------
5. Deferred exploration and development costs
Greek mineral properties:
Stratoni Olympias Skouries Total
$ $ $ $
--------- --------- --------- ---------
Balance - 31 December 2006 14,677 108,078 74,079 196,834
--------- --------- --------- ---------
Deferred development costs - 130 517 647
Depletion of mineral properties (521) (120) - (641)
Currency translation adjustment 130 1,320 903 2,353
--------- --------- --------- ---------
(391) 1,330 1,420 2,359
--------- --------- --------- ---------
Balance - 31 March 2007 14,286 109,408 75,499 199,193
--------- --------- --------- ---------
The Stratoni, Skouries and Olympias properties are held by the Company's
65%-owned subsidiary, Hellas Gold. In September 2005, the Stratoni property
commenced production.
Romanian mineral properties:
Baita-
Certej Craciunesti Voia Cainel Total
$ $ $ $ $
-------- -------- ------- -------- --------
Balance - 31 December
2006 26,862 3,064 844 1,012 31,782
-------- -------- ------- -------- --------
Drilling and assaying 37 1 1 - 39
Geosciences and tech.
consulting 135 7 14 - 156
Samplers, miners and
surveying 15 - - - 15
Project management 576 4 5 - 585
Project overhead 539 8 29 - 576
Amortisation 17 2 - 3 22
-------- -------- ------- -------- --------
1,319 22 49 3 1,393
-------- -------- ------- -------- --------
Balance - 31 March 2007 28,181 3,086 893 1,015 33,175
-------- -------- ------- -------- --------
The Certej exploitation licence and the Baita-Craciunesti exploration licence
are held by the Company's 80%-owned subsidiary, Deva Gold. Minvest S.A. (a
Romanian state owned mining company), together with three private Romanian
companies, hold the remaining 20% interest in Deva Gold and the Company holds
the pre-emptive right to acquire such 20% interest. The Company is required to
fund 100% of all costs related to the exploration and development of these
properties. As a result, the Company is entitled to the refund of such costs
(plus interest) out of future cash flows generated by Deva Gold, prior to any
dividends being distributed to shareholders. The Voia and Cainel exploration
licences are held by the Company's wholly-owned subsidiary, European Goldfields
Deva SRL.
Individual property spending commitments for each of the Company's Romanian
licences have been met as at 31 March 2007.
6. Restricted investment
The balance consists of an amount of $4,000 pledged by Hellas Gold to the
National Bank of Greece as collateral for a letter of guarantee issued by the
National Bank of Greece to the Greek Ministry of Development to guarantee Hellas
Gold's environmental commitments under its mining permit at Stratoni. The letter
of guarantee expires on 31 December 2010. The investment bears a rate of
interest of Euribor plus 0.8% per annum.
7. Future tax liability
The following table reflects future income tax liabilities:
31 March 31 December
2007 2006
----------- -----------
$ $
----------- -----------
Mineral properties 47,366 45,674
Plant and equipment 561 244
Exploration and development expenditure 2,416 2,232
Accrued expenses 195 -
----------- -----------
50,538 48,150
----------- -----------
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 2007
and 31 December 2006:
31 March 31 December
2007 2006
$ $
----------- -----------
Asset retirement obligation - Beginning of period 6,031 5,307
Currency translation adjustment 73 613
Accretion expense 29 111
----------- -----------
Asset retirement obligation - End of period 6,133 6,031
----------- -----------
As at 31 March 2007, the undiscounted amount of estimated cash flows required to
settle the obligation is $6,732 (31 December 2006 - $6,639). The estimated cash
flow has been discounted using a credit adjusted risk free rate of 5.04%. The
expected period until settlement is six years.
9. 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 2006 114,801,848 246,890
----------- ---------
Restricted share units vested 100,000 232
Share options exercised or exchanged 93,618 168
Share issue costs - -
----------- ---------
193,618 400
----------- ---------
----------- ---------
Balance - 31 March 2007 114,995,466 247,290
----------- ---------
As at 31 March 2007, the Company had Nil common shares held in escrow or in
respect of which trading restrictions applied.
Contributed surplus:
31 March 31 December
2007 2006
$ $
Equity based compensation expense 7,502 6,557
Broker warrants 578 578
------------ ----------
8,080 7,135
------------ ----------
10. Share options and restricted share units
Share Option Plan
The Company operates a Share Option Plan (together with its predecessor, the
"Share Option Plan") authorising the directors to grant options 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 (17,249,320 shares as
at 31 March 2007).
As at 31 March 2007, the following share options were outstanding:
Exercise
Number of price
Options C$
Expiry date
2007 50,000 2.50
2009 325,000 2.80
2009 120,000 3.20
2009 250,000 4.20
2009 535,000 3.07
2009 75,000 3.15
2010 590,999 2.00
2010 50,000 2.11
2010 150,000 2.40
2011 100,000 3.25
2011 600,000 3.85
2011 200,000 4.10
2012 250,000 5.66
---------- ----------
3,295,999 3.30
---------- ----------
During the three-month period ended 31 March 2007, share options were granted,
exercised, exchanged and cancelled as follows:
Number of Weighted
Options average
exercise
price
C$
----------- ----------
Balance - 31 December 2006 3,213,665 3.06
----------- ----------
Options granted 250,000 5.66
Options exchanged for shares (167,666) 2.34
Options cancelled - -
----------- ----------
Balance - 31 March 2007 3,295,999 3.30
----------- ----------
Of the 3,295,999 share options outstanding as at 31 March 2007, 2,370,999 were
fully vested and had a weighted average exercise price of C$2.95 per share.
The weighted average grant date fair value of the 250,000 share options granted
during the period ended 31 March 2007 (2006 - Nil) was C$5.66 (2006 - C$ Nil).
For outstanding share options which were not fully vested during the period
ended 31 March 2007, the Company incurred a total equity-based compensation cost
of $226 (2006 - $335) of which $181 (2006 - $335) has been recognised as an
expense in the income statement and $45 (2006 - $Nil) has been capitalised to
deferred exploration and development costs.
The fair value of the share options granted has been estimated at the date of
grant using a Black-Scholes option pricing model with the following assumptions:
weighted average risk free interest rate of 3.10% (2006 - Nil%); volatility
factor of the expected market price of the Company's shares of 59%
(2006 - Nil%); and a weighted average expected life of the share options of five
years (2006 - Nil years).
Restricted Share Unit Plan
The Company operates a Restricted Share Unit Plan (the "RSU Plan") authorising
the directors, based on recommendations received from the Compensation
Committee, to grant Restricted Share Units ("RSUs") to designated directors,
officers, employees and consultants. The RSUs are "phantom" shares that rise and
fall in value based on the value of the Company's common shares and are redeemed
for actual common shares on the vesting dates determined by the Board of
Directors when the RSUs are granted. The RSUs vest on the dates below however
upon a change of control of the Company they would typically become 100% vested.
The maximum number of common shares of the Company which may be reserved for
issuance for all purposes under the RSU Plan shall not exceed 2.5% of the common
shares issued and outstanding from time to time (2,874,887 shares as at 31 March
2007).
As at 31 March 2007, the following RSUs were outstanding:
Vesting date Number of Grant date
RSUs fair value of
underlying
shares
C$
31 May 2007 75,000 3.24
30 June 2007 60,000 3.24
1 July 2007 * 250,000 4.04
31 August 2007 *** 50,000 5.36
31 December 2007 350,000 2.19
31 December 2007 235,000 4.04
31 December 2007 ** 60,000 3.24
31 December 2007 30,000 5.36
31 May 2008 75,000 3.24
------------- --------
1,185,000 3.40
------------- --------
* Or earlier if certain operational milestones are achieved. Vesting conditional
upon such milestones being achieved by 1 July 2007.
** Provided certain operational milestones are achieved by 1 July 2007.
*** Provided certain operational milestones are achieved by 31 August 2007.
During the three-month period ended 31 March 2007, RSUs were granted, vested and
cancelled as follows:
Number of Weighted
RSUs average
grant date
fair value of
underlying
shares
C$
----------- --------
Balance - 31 December 2006 1,105,000 3.26
----------- --------
RSUs granted 180,000 5.36
RSUs vested (100,000) 5.36
RSUs cancelled - -
----------- --------
Balance - 31 March 2007 1,185,000 3.40
----------- --------
The weighted average grant date fair value of underlying shares of the 180,000
RSUs granted during the period ended 31 March 2007 (2006 - 165,000) was C$5.36
(2006 - C$3.01). For outstanding RSUs which were not fully vested during the
period ended 31 March 2007, the Company incurred a total equity-based
compensation cost of $1,125 (2006 - $338) of which $275 (2006 - $338) has been
recognised as an expense in the income statement and $850 (2006 - $Nil) has been
capitalised to deferred exploration and development costs.
11. Supplementary cash flow information
31 March 31 March
2007 2006
$ $
---------- ----------
Changes in non-cash operating accounts:
Accounts receivable and prepaid expenses (4,838) (4,291)
Inventory (2,633) 991
Accounts payable and accrued liabilities 2,631 2,391
---------- ----------
(4,840) (909)
---------- ----------
Supplemental disclosure of non-cash transactions:
Share options issued for non-cash consideration 1,345 -
Exercise or exchange of share options - Transfer from
contributed surplus to share capital (168) (39)
Vesting of restricted share units (232) (143)
12. Commitments
As at 31 March 2007, the Company had remaining spending commitments of $1,080
(2006 - $1,415) over the remaining term of its Voia exploration licence in
Romania which expires in March 2007.
The Company has spending commitments of $187 per year (plus service charges and
value added tax) for a term of ten years under the lease for its office in
London, England, which commenced in April 2004. The rent will be reviewed on the
fifth anniversary of the commencement of the term to reflect any increase in
rents in the market.
As at 31 March 2007, Hellas Gold had entered into off-take agreements pursuant
to which Hellas Gold agreed to sell the following quantities of metal
concentrates during the next three years:
1 Year 2-3 Years +3 Years
(dry metric tonnes)
----------------------------------------
Zinc concentrates (Stratoni) 63,351 15,000 -
Lead/silver concentrates (Stratoni) 35,265 20,000 -
Gold concentrates (Olympias) 87,622 82,824 55,000
----------- ---------- ---------
186,238 117,824 55,000
----------- ---------- ---------
As at 31 March 2007, 8,244 dmt of zinc concentrates, 3,744 dmt of lead/silver
concentrates and 12,882 dmt of gold concentrates had been sold on account of the
2007 commitments.
13. Transactions with related parties
During the three-month period ended 31 March 2007, Hellas Gold incurred costs of
$6,265 (2006 - $3,267) for management, technical and engineering services
received from a related party, Aktor S.A., a 35% shareholder in Hellas Gold. As
at 31 March 2007, Hellas Gold had accounts payable of $7,409 (2006 - $3,597) 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.
14. Segmented information
The Company has one operating segment: the acquisition, exploration and
development of precious and base metal mineral resources properties located in
Greece and Romania.
Geographic segmentation of plant and equipment and deferred exploration and
development costs and operating liabilities is as follows:
31 March 31 December
2007 2006
$ $
----------- -----------
Revenue
Canada - -
Greece 17,083 52,438
Romania - -
United Kingdom - -
----------- -----------
17,083 52,438
----------- -----------
Plant and equipment and deferred exploration and
development costs
Canada - -
Greece 227,021 223,286
Romania 33,371 32,010
United Kingdom 308 325
----------- -----------
260,700 255,621
----------- -----------
Operating liabilities
Canada 275 226
Greece 12,334 7,625
Romania 211 304
United Kingdom 795 1,647
----------- -----------
13,615 9,802
----------- -----------
15. 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
2007 2006
$ $
----------- -----------
Earnings 2,108 (314)
Effect of dilutive potential common shares - -
----------- -----------
Diluted earnings 2,108 (314)
----------- -----------
Weighted average number of common shares for the
purpose 115,827 112,658
of basic earnings per share
Incremental shares - Share options 1,809 -
----------- -----------
Weighted average number of common shares for the
purpose 117,636 112,658
of diluted earnings per share ----------- -----------
16. Reclassification of comparative figures
Certain comparative figures have been reclassified to conform to the current
year's presentation.
17. Legal proceedings
The Company, from time to time, is involved in various claims, legal proceedings
and complaints arising in the ordinary course of business, including with
respect to its licences and permits. Such legal proceedings are, in the opinion
of management, either unfounded (in fact or in law) or would not have a material
adverse effect on the consolidated financial condition or future results of the
Company. There are no such proceedings known to the Company to be contemplated.
18. Post balance sheet event
Since 31 March 2007, the Company issued 9,155 common shares pursuant to the
exchange of 14,000 outstanding share options under the Company's Share Option
Plan.
In April 2007, Hellas Gold entered into a third take-off agreement with MRI
Trading AG of Switzerland for the sale of an additional 25,000 wet metric tonnes
(wmt) of gold pyrite concentrates previously produced at the Olympias mine in
Greece. MRI trading also has the option to increase its order by a further
25,000 wmt, which is exercisable by 31 July 2007.
In April 2007, Hellas Gold agreed to sell to Silver Wheaton Corp. all of the
silver metal to be produced from ore extracted during the mine-life within an
area of some 7km(2) around its zinc-lead-silver Stratoni mine in northern
Greece. Silver production at Stratoni is a by product of lead-zinc operations.
The sale was made in consideration of an upfront payment of Hellas Gold of
US$57.5 million in cash, plus a fee per ounce of silver to be delivered to
Silver Wheaton of the lesser of US$3.90 (subject to an inflationary adjustment
beginning after year three) and the prevailing market price per ounce. The
current Stratoni proven & probable silver reserve contains some 10Moz of payable
silver. The transaction does not apply to any additional silver resources within
Hellas Gold's 317 km(2) of mining and exploration licences in northern Greece,
including silver resources at Hellas Gold's other mine of Olympias, except for a
right of first refusal granted to Silver Wheaton on similar future transactions
involving silver.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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