RNS Number:5417H
European Goldfields Ltd
11 August 2006
European Goldfields Limited
Interim Consolidated Financial Statements
(Unaudited)
For the Three- and Six-Month Periods Ended
30 June 2005 and 2006
Disclosure of auditor review of interim consolidated financial statements
The interim consolidated financial statements of the Company for the three- and
six-month periods ended 30 June 2006 and 2005 have not been reviewed by the
auditors of the Company.
European Goldfields Limited
Consolidated Balance Sheets
As at 30 June 2006 and 31 December 2005
(Unaudited - Prepared by Management)
(in thousands of US Dollars, except per share amounts)
30 June 31 December
2006 2005
$ $
Assets Note Unaudited Audited
Current assets
Cash and cash equivalents 33,086 30,536
Accounts receivable, prepaid expenses and
supplies 7,905 5,352
Inventory 3 2,734 1,865
--------- ---------
43,724 37,753
--------- ---------
Non current assets
Plant and equipment 4 22,040 19,374
Deferred exploration and development costs 5
Greek production stage mineral properties 14,992 10,129
Greek development stage mineral properties 173,102 162,738
--------- ---------
188,094 172,867
Romanian development stage mineral properties 30,113 27,843
--------- ---------
218,207 200,710
--------- ---------
Restricted investment 6 3,815 3,543
Future tax asset 4,450 5,238
--------- ---------
292,236 266,618
--------- ---------
Liabilities
Current liabilities
Accounts payable and accrued liabilities 7,271 3,988
Non current liabilities
Future tax liability 7 46,988 43,261
Non-controlling interest 16,241 14,239
Asset retirement obligation 8 5,789 5,307
--------- ---------
69,018 62,807
--------- ---------
Shareholders' equity
Capital stock 9 244,496 240,234
Contributed surplus 9 6,816 6,197
Cumulative translation adjustment (750) (12,843)
Deficit (34,615) (33,765)
--------- ---------
215,947 199,823
--------- ---------
--------- ---------
292,236 266,618
--------- ---------
The accompanying notes are an integral part of these interim consolidated
financial statements.
Approved by the Board of Directors
(s) Timothy Morgan-Wynne (s) Jeffrey O'Leary
Timothy Morgan-Wynne, Director Jeffrey O'Leary, Director
European Goldfields Limited
Consolidated Statements of Loss and Deficit
For the three- and six-month periods ended at 30 June 2006 and 2005
(Unaudited - Prepared by Management)
(in thousands of US Dollars, except per share amounts)
3 months ended 30 June 6 months ended 30 June
2006 2005 2006 2005
$ $ $ $
Income
Sales 8,274 57 17,357 57
Cost of sales (including
amortisation and depletion
of $1,174 in 2006) (3,944) - (8,732) -
-------- -------- -------- --------
Gross profit 4,330 57 8,625 57
-------- -------- -------- --------
Other income
-------- -------- -------- --------
Interest income 267 326 567 652
-------- -------- -------- --------
Expenses
Corporate administrative and
overhead expenses 467 697 1,002 1,582
Equity-based compensation
expense 758 196 1,431 322
Foreign exchange (gain)/loss (201) (71) (217) 928
Hellas Gold administrative
and overhead expenses 1,056 140 1,800 745
Hellas Gold water treatment
expenses 893 1,250 1,386 2,207
(non-operating mines)
Hellas Gold old adit and
equipment maintenance
(Stratoni mine) 1,124 - 2,026 -
Accretion of asset
retirement obligation 28 - 54 -
Amortisation 220 75 421 334
-------- -------- -------- --------
4,345 2,287 7,903 6,118
-------- -------- -------- --------
-------- -------- -------- --------
Profit/(loss) for the period
before income tax 252 (1,904) 1,289 (5,409)
Income taxes
Current taxes - - - -
Future taxes -
(reduction)/increase of
deferred tax asset (563) 1,058 (1,439) 1,770
-------- -------- -------- --------
(563) 1,058 (1,439) 1,770
-------- -------- -------- --------
-------- -------- -------- --------
Loss for the period after
income tax (311) (846) (150) (3,639)
Non-controlling interest (225) 123 (700) 264
-------- -------- -------- --------
Loss for the period (536) (723) (850) (3,375)
Deficit - Beginning of
period (34,079) (26,007) (33,765) (23,355)
-------- -------- -------- --------
Deficit - End of period (34,615) (26,730) (34,615) (26,730)
-------- -------- -------- --------
Profit/(loss) per share (0.00) (0.01) (0.01) (0.03)
Weighted average number of
shares (in thousands) 113,847 112,174 112,673 112,109
The accompanying notes are an integral part of these interim consolidated
financial statements.
European Goldfields Limited
Consolidated Statements of Equity
As at 30 June 2006 and 2005
(Unaudited - Prepared by Management)
(in thousands of US Dollars, except per share amounts)
Capital Contributed Cumulative Deficit Total
Stock Surplus Translation
Adjustment
$ $ $ $ $
--------- --------- --------- --------- ---------
Balance - 31 December
2004 238,420 5,589 8,964 (23,355) 229,618
--------- --------- --------- --------- ---------
Equity-based
compensation expense - 322 - - 322
Share options exercised 287 (117) - - 170
Milestone shares issued
as compensation 725 (725) - - -
Share issue costs (14) - - - (14)
Movement in cumulative
translation adjustment - - (2,581) - (2,581)
Loss for the period - - - (3,375) (3,375)
--------- --------- --------- --------- ---------
998 (520) (2,581) (3,375) (5,478)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Balance - 30 June 2005 239,418 5,069 6,383 (26,730) 224,140
--------- --------- --------- --------- ---------
Equity-based
compensation expense - 1,943 - - 1,943
Restricted share units
vested 815 (815) - - -
Share issue costs 1 - - - 1
Movement in cumulative
translation adjustment - - (19,226) - (19,226)
Loss for the period - - - (7,035) (7,035)
--------- --------- --------- --------- ---------
816 1,128 (19,226) (7,035) (24,317)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Balance - 31 December
2005 240,234 6,197 (12,843) (33,765) 199,823
--------- --------- --------- --------- ---------
Equity-based
compensation expense - 2,429 - - 2,429
Restricted share units
vested 435 (435) - - -
Share options exercised 3,827 (1,375) - - 2,452
Movement in cumulative
translation adjustment - - 12,093 - 12,093
Loss for the period - - - (850) (850)
--------- --------- --------- --------- ---------
4,262 619 12,093 (850) 16,124
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Balance - 30 June 2006 244,496 6,816 (750) (34,615) 215,947
--------- --------- --------- --------- ---------
The accompanying notes are an integral part of these interim consolidated
financial statements.
European Goldfields Limited
Consolidated Statements of Cash Flows
For the three- and six-month periods ended 30 June 2006 and 2005
(Unaudited - Prepared by Management)
(in thousands of US Dollars, except per share amounts)
3 months ended 6 months ended
30 June 30 June
2006 2005 2006 2005
$ $ $ $
Cash flows from operating activities
Loss for the period (536) (723) (850) (3,375)
Foreign exchange loss/(gain) 170 (71) 143 928
Amortisation 458 75 876 334
Equity-based compensation expense 782 196 1,505 322
Accretion of asset retirement
obligation 28 - 54 -
Future tax asset recognised 563 (1,058) 1,439 (1,770)
Non-controlling interest 225 (123) 700 (264)
Depletion of mineral properties 440 - 677 -
--------- --------- --------- ---------
2,130 (1,704) 4,544 (3,825)
Net changes in non-cash
working capital 1,001 (404) 92 (1,337)
--------- --------- --------- ---------
3,131 (2,108) 4,636 (5,162)
--------- --------- --------- ---------
Cash flows from investing activities
Deferred exploration and
develop. costs - Romania (992) (893) (1,840) (1,752)
Plant and equipment - Greece (1,599) (2,453) (2,167) (4,035)
Deferred development costs -
Greece (999) (891) (1,475) (891)
Proceeds from disposal of
equipment - 18 - 18
Purchase of equipment (25) (57) (68) (98)
Restricted investment 12 - 12 -
--------- --------- --------- ---------
(3,603) (4,276) (5,538) (6,758)
--------- --------- --------- ---------
Cash flows from financing activities
Proceeds from exercise of
share options 2,391 - 2,452 170
Share issue costs - - - (14)
--------- --------- --------- ---------
2,391 - 2,452 156
--------- --------- --------- ---------
Effect of foreign currency
translation on cash 827 (1,760) 1,000 (3,509)
--------- --------- --------- ---------
Increase/(decrease) in cash
and cash equivalents 2,746 (8,144) 2,550 (15,273)
Cash and cash equivalents -
Beginning of period 30,340 58,124 30,536 65,253
--------- --------- --------- ---------
Cash and cash equivalents -
End of period 33,086 49,980 33,086 49,980
--------- --------- --------- ---------
The accompanying notes are an integral part of these interim consolidated
financial statements.
European Goldfields Limited
Notes to Consolidated Financial Statements
For the three- and six-month periods ended 30 June 2006 and 2005
(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 the Balkans.
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 assets in northern Greece which consist of three deposits
within 70-year mining concessions covering a total area of 317 km(2). The
deposits include the polymetallic projects of Stratoni and Olympias which
contain gold, lead, zinc and silver, and the copper/gold porphyry body referred
to as Skouries.
The three deposits are located within a 10 km radius of each other. Both
Stratoni and Olympias were previously in production and have existing mining and
plant infrastructure and a ship-loading facility on the Aegean Sea.
Hellas Gold's assets also include revenue-generating stockpiles of gold
concentrates.
In September 2005, Hellas Gold resumed production at Stratoni following the
award by the Greek state of all necessary environmental and mining permits.
Hellas Gold is in the process of applying for similar permits for Olympias and
Skouries, having met its first milestone by submitting business plans to the
Greek government in January 2006.
Romania - The Company holds four mineral properties located within the "Golden
Quadrilateral" area of Romania. The Company recently announced the conversion of
resources into Canadian NI 43-101 compliant reserves for its 80%-owned Certej
project, underpinning the value of the project. The Company is now completing a
final feasibility study for submission to the Romanian government by the end of
2006, in support of an application for environmental and mining permits to
develop 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 interim 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 interim 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 Canadian GAAP using the same accounting
policies as those disclosed in Note 4 to the Company's audited consolidated
financial statements for the years ended 31 December 2005 and 2004.
These interim consolidated financial statements should be read in conjunction
with the Company's audited consolidated financial statements for the years ended
31 December 2005 and 2004.
3. Inventory
This balance comprises the following:
30 June 31 December
2006 2005
$ $
Ore mined 950 583
Metal concentrates 1,236 1,274
Material and supplies 548 8
--------- -----------
2,734 1,865
--------- -----------
4. Plant and equipment
Exploration Vehicles Land and Leasehold Total
/office buildings improvements
equipment
$ $ $ $ $
Cost - 2006
At 31 December 2005 5,559 1,134 13,402 223 20,318
Additions 2,202 - - 33 2,235
Disposals - - - - -
Currency translation
adjustment 423 71 1,089 - 1,583
-------- -------- -------- ---------- --------
At 30 June 2006 8,184 1,205 14,491 256 24,136
-------- -------- -------- ---------- --------
Accumulated
amortisation - 2006
At 31 December 2005 420 372 119 33 944
Provision for
the period 574 132 318 13 1,037
Disposals - - - - -
Currency translation
adjustment 48 30 37 - 115
-------- -------- -------- ---------- --------
At 30 June 2006 1,042 534 474 46 2,096
-------- -------- -------- ---------- --------
-------- -------- -------- ---------- --------
Net book value
at 30 June 2006 7,142 671 14,017 210 22,040
-------- -------- -------- ---------- --------
5. Deferred exploration and development costs
Romanian mineral properties:
Certej Baita- Voia Cainel Total
Craciunesti
$ $ $ $ $
-------- -------- -------- -------- --------
Balance - 31 December
2005 23,400 2,948 513 982 27,843
-------- -------- -------- -------- --------
Drilling and assaying 487 1 57 1 546
Geosciences and tech.
consulting 390 17 35 6 448
Samplers, miners and
surveying 26 1 - - 27
Project management 593 7 9 - 609
Project overhead 521 14 43 13 591
Amortisation 39 4 1 5 49
-------- -------- -------- -------- --------
2,056 44 145 25 2,270
-------- -------- -------- -------- --------
Balance - 30 June 2006 25,456 2,992 658 1,007 30,113
-------- -------- -------- -------- --------
The Certej exploitation licence and the Baita-Craciunesti exploration licence
are held by the Company's 80%-owned subsidiary, Deva Gold S.A. ("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 30 June 2006.
Greek mineral properties:
Stratoni Skouries Olympias Total
$ $ $ $
---------- ---------- ----------- --------
Balance - 31 December 2005 14,861 62,624 95,382 172,867
---------- ---------- ----------- --------
Deferred development costs - 1,093 945 2,038
Depletion of mineral properties (695) - - (695)
Currency translation adjustment 826 5,176 7,882 13,884
---------- ---------- ----------- --------
131 6,269 8,827 15,227
---------- ---------- ----------- --------
Balance - 30 June 2006 14,992 68,893 104,209 188,094
---------- ---------- ----------- --------
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.
6. Restricted investment
The balance consists of an amount of $3,815 (Euro3 million) 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:
30 June 31 December
2006 2005
$ $
--------- ----------
Mineral properties 44,519 41,213
Plant and equipment 1,118 1,276
Exploration and development expenditure 1,351 772
--------- ----------
46,988 43,261
--------- ----------
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 and the estimated time period during which
these costs will be incurred in the future. The following table reconciles the
asset retirement obligations as at 30 June 2006 and 31 December 2005:
30 June 31 December
2006 2005
$ $
--------- ----------
Asset retirement obligation - Beginning of period 5,307 5,811
Additional obligation - -
Currency translation adjustment 428 (771)
Accretion expense 54 267
--------- ----------
Asset retirement obligation - End of period 5,789 5,307
--------- ----------
As at 30 June 2006, the undiscounted amount of estimated cash flows required to
settle the obligation was $6,448 (31 December 2005 - $5,970). 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 2005 112,598,708 240,234
--------- ----------
Restricted share units vested 165,000 435
Share options exercised 1,084,168 3,827
Share issue costs - -
--------- ----------
1,249,168 4,262
--------- ----------
--------- ----------
Balance - 30 June 2006 113,847,876 244,496
--------- ----------
As at 30 June 2006, the Company had Nil common shares held in escrow or in
respect of which trading restrictions applied.
Contributed surplus:
30 June 31 December
2006 2005
$ $
Equity-based compensation expense 6,238 5,619
Broker warrants 578 578
---------- ----------
6,816 6,197
---------- ----------
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.
As at 30 June 2006, the following share options were outstanding:
Number of Exercise
Options price
C$
Expiry date
2007 50,000 2.50
2009 325,000 2.80
2009 240,000 3.20
2009 250,000 4.20
2009 535,000 3.07
2009 285,000 3.15
2010 1,020,999 2.00
2010 75,000 2.11
2010 150,000 2.40
2011 600,000 3.85
2011 200,000 4.10
--------- ---------
3,730,999 2.97
--------- ---------
During the six-month period ended 30 June 2006, share options were granted,
exercised and cancelled as follows:
Number of Weighted
Options average
exercise
price
C$
--------- ---------
Balance - 31 December 2005 4,684,333 2.58
--------- ---------
Options granted 800,000 3.91
Options exercised (1,084,168) 2.47
Options cancelled (669,166) 2.43
--------- ---------
Balance - 30 June 2006 3,730,999 2.97
--------- ---------
Of the 3,730,999 share options outstanding as at 30 June 2006, 2,547,166 were
fully vested and had a weighted average exercise price of C$2.80 per share.
The weighted average grant date fair value of the 800,000 share options granted
during the six-month period ended 30 June 2006 (2005 - Nil) was C$3.91 (2005 -
Nil). For outstanding share options which were not fully vested during the
six-month period ended 30 June 2006, the Company incurred a total equity-based
compensation cost of $675 (2005 - $1,431) of which $613 (2005 - $1,431) has been
recognised as an expense in the income statement and $62 (2005 - Nil) has been
capitalised to deferred exploration and development costs.
Restricted Share Unit Plan
The Company operates a Restricted Share Unit Plan (the "RSU Plan") authorising
the directors, based on recommendations received from the Compensation
Committee, to grant Restricted Share Units ("RSUs") to designated directors,
officers, employees and consultants. The RSUs are "phantom" shares that rise and
fall in value based on the value of the Company's common shares and are redeemed
for actual common shares on the vesting dates determined by the Board of
Directors when the RSUs are granted. The RSUs would typically become 100% vested
upon a change of control of the Company. The maximum number of common shares of
the Company which may be reserved for issuance for all purposes under the RSU
Plan shall not exceed 2.5% of the common shares issued and outstanding from time
to time.
As at 30 June 2006, the following RSUs were outstanding:
Vesting date Number of Grant date
RSUs fair value of
underlying
shares
C$
31 December 2006 400,000 2.19
31 December 2006 * 415,000 4.04
1 July 2007 ** 250,000 4.04
31 December 2007 350,000 2.19
31 December 2007 235,000 4.04
--------- ---------
1,650,000 3.20
--------- ---------
* Of which 100,000 RSUs vest on 31 December 2006 provided certain operational
milestones are achieved by such date.
** Or earlier if certain operational milestones are achieved. Vesting
conditional upon such milestones being achieved by 1 July 2007.
During the six-month period ended 30 June 2006, RSUs were granted, vested and
cancelled as follows:
Number of Weighted
RSUs average
grant date
fair value of
underlying
shares
C$
--------- ---------
Balance - 31 December 2005 750,000 2.19
--------- ---------
RSUs granted 1,065,000 3.88
RSUs vested (165,000) 3.00
RSUs cancelled - -
--------- ---------
Balance - 30 June 2006 1,650,000 3.20
--------- ---------
The weighted average grant date fair value of underlying shares of the 1,065,000
RSUs granted during the six-month period ended 30 June 2006 (2005 - Nil) was
C$3.88 (2005 - Nil). For outstanding RSUs which were not fully vested during the
six-month period ended 30 June 2006, the Company incurred a total equity-based
compensation cost of $1,797 (2005 - Nil) of which $893 (2005 - Nil) has been
recognised as an expense in the income statement and $904 (2005 - Nil) has been
capitalised to deferred exploration and development costs.
11. Supplementary cash flow information
30 June 30 June
2006 2005
$ $
--------- ---------
Changes in non-cash operating accounts:
Accounts receivable, prepaid expenses and supplies (2,552) (1,270)
Accounts payable 3,283 (67)
Inventory (639) -
--------- ---------
92 (1,337)
--------- ---------
Supplemental disclosure of non-cash transactions:
Exercise of share options - Transfer from contributed
surplus to share capital (1,375) (117)
Vesting of restricted share units (435) -
12. Commitments
As at 30 June 2006, the Company had remaining spending commitments of $1,345
(2005 - $1,490) 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.
In November 2005, Hellas Gold entered into off-take agreements pursuant to which
Hellas Gold agreed to sell the following quantities of metal concentrates
produced at the Stratoni mine during the financial years ending 31 December
2006, 2007 and 2008:
2006 2007 2008
(dry metric tonnes (dmt))
--------- ---------
Zinc concentrates 42,700 51,000 15,000
Lead/silver concentrates 25,000 26,000 20,000
--------- --------- ---------
67,700 77,000 35,000
--------- --------- ---------
As at 30 June 2006, 10,796 dmt of zinc concentrates and 6,959 dmt of lead/silver
concentrates had been sold on account of the 2006 commitments.
13. Transactions with related parties
During the six-month period ended 30 June 2006, Hellas Gold incurred costs of
$8,303 (2005 - $4,307) for management, technical and engineering services
received from a related party, Aktor S.A., a 35% shareholder in Hellas Gold. As
at 30 June 2006, Hellas Gold had accounts payable of $4,195 (2005 - $1,985) 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:
30 June 31 December
2006 2005
$ $
--------- ---------
Revenue
Canada - -
Greece 17,357 1,521
Romania - -
United Kingdom - -
--------- ---------
17,357 1,521
--------- ---------
Plant and equipment and deferred exploration and
development costs
Canada -
Greece 209,583 191,659
Romania 30,300 28,081
United Kingdom 364 344
--------- ---------
240,247 220,084
--------- ---------
Operating liabilities
Canada 137 214
Greece 6,526 3,144
Romania 144 310
United Kingdom 464 320
--------- ---------
7,271 3,988
--------- ---------
15. Reconciliation to International Accounting Standards ("IAS")
These financial statements have been prepared in accordance with Canadian GAAP.
For Canadian GAAP, the Company has accounted for its investment in Hellas Gold
from the parent entity perspective which, focuses on the parent entity
shareholders and their interests in the subsidiary. For International Financial
Reporting purposes, the Company would account for its investment in Hellas Gold
from the economic entity perspective which views both the controlling and
non-controlling shareholders as equity holders in a consolidated entity that
should be viewed as, and accounted for, as a whole.
The effect of the differences between Canadian GAAP and IAS on the Company's
consolidated balance sheets and statements of equity is summarised as follows:
30 June 31 December
2006 2005
$ $
--------- ---------
Non current assets
Greek mineral properties under Canadian GAAP 188,094 172,867
Adjustment for IAS 94,194 88,234
--------- ---------
Greek mineral properties under IAS 282,288 261,101
--------- ---------
Non current liabilities
Non current liabilities under Canadian GAAP 69,018 62,807
Adjustment to future tax 23,478 22,069
Adjustment for non-controlling interest (16,241) (14,239)
--------- ---------
Non current liabilities under IAS 76,255 70,637
--------- ---------
Shareholders' equity
Shareholders' equity under Canadian GAAP 215,947 199,823
Adjustment to cumulative translation adjustment account 13,937 (26,388)
Non-controlling interest under IAS 79,260 72,706
Additional depletion 371 41
--------- ---------
Shareholders' equity under IAS 309,515 246,182
--------- ---------
Other than the differences noted above, management considers that there are no
material differences between amounts reported under Canadian GAAP and those that
would result from the application of IAS.
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. There are no legal
proceedings to which the Company or any of its subsidiaries is a party or of
which any of their properties is the subject that would 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 30 June 2006, the Company granted 330,000 restricted share units under the
Company's Restricted Share Unit Plan.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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