RNS Number:0145M
European Goldfields Ltd
14 November 2006
Immediate Release 14 November 2006
European Goldfields Limited
Interim Consolidated Financial Statements
(Unaudited)
For the Three and Nine Month Periods Ended
30 September 2006 and 2005
Disclosure of auditor review of interim consolidated financial statements
The interim consolidated financial statements of the Company for the three- and
nine-month periods ended 30 September 2006 and 2005 have not been reviewed by
the auditors of the Company.
European Goldfields Limited 30 31
Sept December
Consolidated Balance Sheets
As at 30 September 2006 and 31 December 2005
(Unaudited - Prepared by Management)
(in thousands of US Dollars, except per share
amounts)
2006 2005
$ $
Assets Note Unaudited Audited
Current assets
Cash and cash equivalents 31,809 30,536
Accounts receivable, prepaid expenses and
supplies 12,485 5,352
Inventory 3 2,110 1,865
--------- ---------
46,404 37,753
--------- ---------
Non current assets
Plant and equipment 4 22,655 19,374
Deferred exploration and development costs 5
Greek production stage mineral properties 14,589 10,129
Greek development stage mineral properties 172,820 162,738
--------- ---------
187,409 172,867
Romanian development stage mineral properties 31,130 27,843
--------- ---------
218,539 200,710
--------- ---------
Restricted investment 6 3,782 3,543
Future tax asset 3,339 5,238
--------- ---------
294,719 266,618
--------- ---------
Liabilities
Current liabilities
Accounts payable and accrued liabilities 6,738 3,988
Non current liabilities
Future tax liability 7 46,699 43,261
Non-controlling interest 17,605 14,239
Asset retirement obligation 8 5,776 5,307
--------- ---------
70,080 62,807
--------- ---------
Shareholders' equity
Capital stock 9 244,570 240,234
Contributed surplus 9 8,289 6,197
Cumulative translation adjustment (1,819) (12,843)
Deficit (33,139) (33,765)
--------- ---------
217,901 199,823
--------- ---------
--------- ---------
294,719 266,618
--------- ---------
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 3 months ended 30 Sept. 9 months ended 30 Sept.
Limited
Consolidated Statements of
Loss and Deficit
For the three- and
nine-month periods ended at
30 September 2006 and 2005
(Unaudited - Prepared by
Management)
(in thousands of US Dollars,
except per share amounts)
2006 2005 2006 2005
$ $ $ $
Income
Sales 15,211 - 32,568 57
Cost of sales (including
amortisation and depletion
of $1,918 in 2006) (7,253) - (15,985) -
-------- -------- -------- --------
Gross profit 7,958 - 16,583 57
-------- -------- -------- --------
Other income
-------- -------- -------- --------
Interest income 485 272 1,052 924
-------- -------- -------- --------
Expenses
Corporate administrative
and overhead expenses 643 503 1,645 2,085
Equity-based compensation
expense 669 445 2,100 767
Foreign exchange
loss/(gain) 67 (27) (151) 901
Hellas Gold administrative
and overhead expenses 1,743 973 3,543 2,252
Hellas Gold water
treatment expenses 756 1,561 2,142 3,234
(non-operating mines)
Hellas Gold old adit and
equipment maintenance
(Stratoni mine) 269 - 2,295 -
Accretion of asset
retirement obligation 29 - 83 -
Amortisation 165 81 586 415
-------- -------- -------- --------
4,341 3,536 12,243 9,654
-------- -------- -------- --------
-------- -------- -------- --------
Profit/(loss) for the
period before income tax 4,102 (3,264) 5,392 (8,673)
Income taxes
Current taxes - (34) - (34)
Future taxes -
(reduction)/increase of
deferred tax asset (1,118) (431) (2,557) 1,339
-------- -------- -------- --------
(1,118) (465) (2,557) 1,305
-------- -------- -------- --------
-------- -------- -------- --------
Profit/(loss) for the
period after income tax 2,984 (3,729) 2,835 (7,368)
Non-controlling interest (1,509) 1,003 (2,209) 1,267
-------- -------- -------- --------
Profit/(loss) for the
period 1,475 (2,726) 626 (6,101)
Deficit - Beginning of
period (34,614) (26,730) (33,765) (23,355)
-------- -------- -------- --------
Deficit - End of period (33,139) (29,456) (33,139) (29,456)
-------- -------- -------- --------
Earnings/(loss) per share 0.01 (0.02) 0.01 (0.05)
Weighted average number of
shares (in thousands) 113,891 112,174 112,679 112,071
The accompanying notes are an integral part of these interim consolidated
financial statements.
European Goldfields Capital Contributed Cumulative Deficit Total
Limited
Consolidated Stock Surplus Translation $ $
Statements of Equity
As at 30 September $ $ Adjustment
2006 and 2005
(Unaudited - Prepared $
by Management)
(in thousands of US
Dollars, except per
share amounts)
--------- --------- --------- --------- ---------
Balance - 31 December
2004 238,420 5,589 8,964 (23,355) 229,618
--------- --------- --------- --------- ---------
Equity-based
compensation expense - 767 - - 767
Share options
exercised 287 (117) - - 170
or exchanged
Milestone shares
issued 725 (725) - - -
as compensation
Share issue costs (14) - - - (14)
Movement in cumulative
translation adjustment - - (2,554) - (2,554)
Loss for the period - - - (6,101) (6,101)
--------- --------- --------- --------- ---------
998 (75) (2,554) (6,101) (7,732)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Balance - 30 September
2005 239,418 5,514 6,410 (29,456) 221,886
--------- --------- --------- --------- ---------
Equity-based
compensation expense - 1,498 - - 1,498
Restricted share units
vested 815 (815) - - -
Share issue costs 1 - - - 1
Movement in cumulative
translation adjustment - - (19,253) - (19,253)
Loss for the period - - - (4,309) (4,309)
--------- --------- --------- --------- ---------
816 683 (19,253) (4,309) (22,063)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Balance - 31 December
2005 240,234 6,197 (12,843) (33,765) 199,823
--------- --------- --------- --------- ---------
Equity-based
compensation expense - 3,976 - - 3,976
Restricted share units
vested 435 (435) - - -
Share options
exercised 3,901 (1,449) - - 2,452
or exchanged
Movement in cumulative
translation adjustment - - 11,024 - 11,024
Loss for the period - - - 626 626
--------- --------- --------- --------- ---------
4,336 2,092 11,024 626 18,078
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Balance - 30 September
2006 244,570 8,289 (1,819) (33,139) 217,901
--------- --------- --------- --------- ---------
The accompanying notes are an integral part of these interim consolidated
financial statements.
European Goldfields 3 months ended 30 Sept. 9 months ended 30 Sept.
Limited Consolidated
Statements of Equity
As at 30 September 2006
and 2005(Unaudited -
Prepared byManagement)
(in thousandsof US Dollars,
except per share amounts)
2006 2005 2006 2005
$ $ $ $
Cash flows from operating
activities
Profit/(loss) for the
period 1,475 (2,726) 626 (6,101)
Foreign exchange
loss/(gain) 132 (27) 274 901
Amortisation 568 81 1,444 415
Equity-based compensation
expense 642 445 2,147 767
Accretion of asset
retirement obligation 29 - 83 -
Future tax asset
recognised 1,118 431 2,557 (1,339)
Non-controlling interest 1,509 (1,003) 2,209 (1,267)
Depletion of mineral
properties 383 - 1,060 -
--------- --------- --------- ---------
5,856 (2,799) 10,400 (6,624)
Net changes in non-cash
working capital (4,615) (141) (4,524) (1,478)
--------- --------- --------- ---------
1,241 (2,940) 5,876 (8,102)
--------- --------- --------- ---------
Cash flows from investing
activities
Deferred exploration and
develop. costs - Romania (598) (1,068) (2,438) (2,820)
Plant and equipment -
Greece (1,268) (2,506) (3,435) (6,541)
Deferred development costs
- Greece (462) (439) (1,937) (1,330)
Proceeds from disposal of
equipment - - - 18
Purchase of equipment (6) (3) (74) (101)
Restricted investment 6 (3,612) 18 (3,612)
--------- --------- --------- ---------
(2,328) (7,628) (7,866) (14,386)
--------- --------- --------- ---------
Cash flows from financing
activities
Proceeds from exercise of
share options - - 2,452 170
Share issue costs - - - (14)
--------- --------- --------- ---------
- - 2,452 156
--------- --------- --------- ---------
Effect of foreign currency
translation on cash (189) 54 811 (3,455)
--------- --------- --------- ---------
Increase/(decrease) in
cash and cash equivalents (1,276) (10,514) 1,273 (25,787)
Cash and cash equivalents
- Beginning of period 33,085 49,980 30,536 65,253
--------- --------- --------- ---------
Cash and cash equivalents
- End of period 31,809 39,466 31,809 39,466
--------- --------- --------- ---------
The accompanying notes are an integral part of these interim consolidated
financial statements.
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 selling an
existing stockpile of Olympias gold concentrates in July 2006. Hellas Gold is
applying for permits to develop the Skouries and Olympias projects.
Romania - The Company owns 80% of the Certej project in Romania. European
Goldfields is completing a feasibility study for submission to the Romanian
government in Q1 2007, 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 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 Sept. 31 December
2006 2005
$ $
Ore mined 286 583
Metal concentrates 1,175 1,274
Material and supplies 649 8
--------- -----------
2,110 1,865
--------- -----------
4. Plant and equipment
European Goldfields Exploration Vehicles Land and Leasehold Total
Limited Consolidated / office buildings improvements
Statements of Equity equipment
As at 30 September $ $ $ $ $
2006 and 2005(Unaudited
Prepared by Management)
(in thousands of US
Dollars, except per
share amounts)
Cost - 2006
At 31 December
2005 5,559 1,134 13,402 223 20,318
Additions 3,476 - - 33 3,509
Disposals - - - - -
Currency
translation
adjustment 383 65 986 - 1,434
-------- -------- -------- ---------- --------
At 30
September 2006 9,418 1,199 14,388 256 25,261
-------- -------- -------- ---------- --------
Accumulated
amortisation -
2006
At 31 December
2005 420 372 119 33 944
Provision for
the period 871 200 471 19 1,561
Disposals - - - - -
Currency
translation
adjustment 41 27 33 - 101
-------- -------- -------- ---------- --------
At 30
September 2006 1,332 599 623 52 2,606
-------- -------- -------- ---------- --------
-------- -------- -------- ---------- --------
Net book value
at 30
September 2006 8,086 600 13,765 204 22,655
-------- -------- -------- ---------- --------
5. Deferred exploration and development costs
Romanian mineral properties:
Certej Baita-Craciunes Voia Cainel Total
ti
$ $ $ $ $
-------- -------- -------- -------- --------
Balance - 31 December
2005 23,400 2,948 513 982 27,843
-------- -------- -------- -------- --------
Drilling and assaying 588 2 79 1 670
Geosciences and tech.
consulting 512 26 50 8 596
Samplers, miners and
surveying 41 2 5 - 48
Project management 528 9 15 - 552
Project overhead 1,238 30 71 11 1,350
Amortisation 57 6 1 7 71
-------- -------- -------- -------- --------
2,964 75 221 27 3,287
-------- -------- -------- -------- --------
Balance - 30 September
2006 26,364 3,023 734 1,009 31,130
-------- -------- -------- -------- --------
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 September 2006.
Greek mineral properties:
Stratoni Skouries Olympias Total
$ $ $ $
---------- ---------- ----------- --------
Balance - 31 December 2005 14,861 62,624 95,382 172,867
---------- ---------- ----------- --------
Deferred development costs - 1,763 1,234 2,997
Depletion of mineral properties (1,019) - - (1,019)
Currency translation adjustment 747 4,684 7,133 12,564
---------- ---------- ----------- --------
(272) 6,447 8,367 14,542
---------- ---------- ----------- --------
Balance - 30 September 2006 14,589 69,071 103,749 187,409
---------- ---------- ----------- --------
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 $3,782 (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 Sept. 31 December
2006 2005
$ $
--------- ----------
Mineral properties 44,205 41,213
Plant and equipment 1,202 1,276
Exploration and development expenditure 1,292 772
--------- ----------
46,699 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 September 2006 and 31 December 2005:
30 Sept. 31 December
2006 2005
$ $
--------- ----------
Asset retirement obligation - Beginning of period 5,307 5,811
Additional obligation - -
Currency translation adjustment 387 (771)
Accretion expense 82 267
--------- ----------
Asset retirement obligation - End of period 5,776 5,307
--------- ----------
As at 30 September 2006, the undiscounted amount of estimated cash flows
required to settle the obligation was $6,382 (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 or exchanged 1,127,168 3,901
Share issue costs - -
--------- ----------
1,292,168 4,336
--------- ----------
--------- ----------
Balance - 30 September 2006 113,890,876 244,570
--------- ----------
As at 30 September 2006, the Company had Nil common shares held in escrow or in
respect of which trading restrictions applied.
Contributed surplus:
30 Sept. 31 December
2006 2005
$ $
Equity-based compensation expense 7,711 5,619
Broker warrants 578 578
---------- ----------
8,289 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 September 2006, the following share options were outstanding:
Expiry Date Number of Exercise
Options price
C$
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 954,332 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
--------- ---------
3,739,332 3.00
--------- ---------
During the nine-month period ended 30 September 2006, share options were
granted, exercised, exchanged for shares and cancelled as follows:
Number of Weighted
Options average
exercise
price
C$
--------- ---------
Balance - 31 December 2005 4,684,333 2.58
--------- ---------
Options granted 900,000 3.84
Options exercised (1,084,168) 2.55
Options exchanged for shares (91,667) 2.03
Options cancelled (669,166) 2.43
--------- ---------
Balance - 30 September 2006 3,739,332 3.00
--------- ---------
Of the 3,739,332 share options outstanding as at 30 September 2006, 2,522,166
were fully vested and had a weighted average exercise price of C$2.81 per share.
The weighted average grant date fair value of the 900,000 share options granted
during the nine-month period ended 30 September 2006 (2005 - 1,401,000) was
C$2.01 (2005 - C$0.97). For outstanding share options which were not fully
vested during the nine-month period ended 30 September 2006, the Company
incurred a total equity-based compensation cost of $1,100 (2005 - $767) of which
$878 (2005 - $767) has been recognised as an expense in the income statement and
$222 (2005 - Nil) has been capitalised to deferred exploration and development
costs.
Restricted Share Unit Plan
The Company operates a Restricted Share Unit Plan (the "RSU Plan") authorising
the directors, based on recommendations received from the Compensation
Committee, to grant Restricted Share Units ("RSUs") to designated directors,
officers, employees and consultants. The RSUs are "phantom" shares that rise and
fall in value based on the value of the Company's common shares and are redeemed
for actual common shares on the vesting dates determined by the Board of
Directors when the RSUs are granted. The RSUs would typically become 100% vested
upon a change of control of the Company. The maximum number of common shares of
the Company which may be reserved for issuance for all purposes under the RSU
Plan shall not exceed 2.5% of the common shares issued and outstanding from time
to time.
As at 30 September 2006, the following RSUs were outstanding:
Vesting date Number of Grant date
RSUs fair value of
underlying
shares
C$
31 December 2006 400,000 2.19
31 December 2006 * 415,000 4.04
31 May 2007 75,000 3.24
30 June 2007 60,000 3.24
1 July 2007 ** 250,000 4.04
31 December 2007 350,000 2.19
31 December 2007 235,000 4.04
31 December 2007 *** 60,000 3.24
31 May 2008 75,000 3.24
--------- ---------
1,920,000 3.20
--------- ---------
* Of which 150,000 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.
*** Provided certain operational milestones are achieved by 1 July 2007.
During the nine-month period ended 30 September 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 1,335,000 3.75
RSUs vested (165,000) 3.00
RSUs cancelled - -
--------- ---------
Balance - 30 September 2006 1,920,000 3.20
--------- ---------
The weighted average grant date fair value of underlying shares of the 1,335,000
RSUs granted during the nine-month period ended 30 September 2006 (2005 - Nil)
was C$3.75 (2005 - Nil). For outstanding RSUs which were not fully vested during
the nine-month period ended 30 September 2006, the Company incurred a total
equity-based compensation cost of $2,561 (2005 - Nil) of which $1,222 (2005 -
Nil) has been recognised as an expense in the income statement and $1,340 (2005
- Nil) has been capitalised to deferred exploration and development costs.
11. Supplementary cash flow information
30 Sept. 30 Sept.
2006 2005
$ $
--------- ---------
Changes in non-cash operating accounts:
Accounts receivable, prepaid expenses and supplies (7,133) (1,633)
Accounts payable 2,750 155
Inventory (141) -
--------- ---------
(4,524) (1,478)
--------- ---------
Supplemental disclosure of non-cash transactions:
Equity based compensation issued for non-cash 3,976 767
consideration
Exercise or exchange of share options - Transfer from
contributed surplus (1,449) (117)
to share capital
Vesting of restricted share units (435) -
12. Commitments
As at 30 September 2006, the Company had remaining spending commitments of
$1,242 (2005 - $1,470) 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 September 2006, 21,926 dmt of zinc concentrates and 10,656 dmt of lead/
silver concentrates had been sold on account of the 2006 commitments.
13. Transactions with related parties
During the nine-month period ended 30 September 2006, Hellas Gold incurred costs
of $12,972 (2005 - $6,684) for management, technical and engineering services
received from a related party, Aktor S.A., a 35% shareholder in Hellas Gold. As
at 30 September 2006, Hellas Gold had accounts payable of $3,139 (2005 - $2,002)
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 31 December
Sept.
2006 2005
$ $
--------- ---------
Revenue
Canada - -
Greece 32,568 1,521
Romania - -
United Kingdom - -
--------- ---------
32,568 1,521
--------- ---------
Plant and equipment and deferred exploration and
development costs
Canada - -
Greece 209,555 191,659
Romania 31,294 28,081
United Kingdom 345 344
--------- ---------
241,194 220,084
--------- ---------
Operating liabilities
Canada 83 214
Greece 6,140 3,144
Romania 394 310
United Kingdom 121 320
--------- ---------
6,738 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 Sept. 31 December
2006 2005
$ $
--------- ---------
Non current assets
Greek mineral properties under Canadian GAAP 187,409 172,867
Adjustment for IAS 92,885 88,234
--------- ---------
Greek mineral properties under IAS 280,294 261,101
--------- ---------
Non current liabilities
Non current liabilities under Canadian GAAP 70,080 62,807
Adjustment to future tax 23,375 22,069
Adjustment for non-controlling interest (17,605) (14,239)
--------- ---------
Non current liabilities under IAS 75,850 70,637
--------- ---------
Shareholders' equity
Shareholders' equity under Canadian GAAP 217,901 199,823
Adjustment to cumulative translation adjustment account 12,613 (26,388)
Non-controlling interest under IAS 80,143 72,706
Additional depletion 536 41
--------- ---------
Shareholders' equity under IAS 311,193 246,182
--------- ---------
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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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