TIDMEGU
RNS Number : 8279R
European Goldfields Ltd
10 November 2011
Interim consolidated balance sheet
As at 30 September 2011, 31 December 2010 and 1 January 2010
(in thousands of US Dollars, except share amounts)
30 September 31 December 1 January
Note 2011 2010 2010
US$000 US$000 US$000
===================================== ===== ============= ============ ==========
Assets
Non-current assets
Mine properties and reserves 8 278,924 271,654 262,423
Other property, plant and equipment 6 139,652 126,341 96,100
VAT and tax recoverable 5 22,021 - -
Exploration and evaluation assets 7 12,195 10,631 7,814
Investment in associate 739 743 711
Available for sale financial asset 1,982 1,975 1,490
455,513 411,344 368,538
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Current assets
Cash and cash equivalents 24,309 57,122 113,642
Trade and other receivables 10,041 29,506 40,607
Inventories 8,209 5,653 4,993
Derivative financial asset 536 - -
Current taxation - 3,668 3,954
===================================== ===== ============= ============ ==========
43,095 95,949 163,196
===================================== ===== ============= ============ ==========
Total assets 498,608 507,293 531,734
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Equity and liabilities
Capital and reserves:
Attributable to equity holders
of the Company:
Share capital 583,958 582,874 571,283
Contributed surplus 31,765 16,662 10,047
Other reserves (1,953) (3,609) (907)
Deficit (241,011) (212,071) (168,879)
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372,759 383,856 411,544
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Non-controlling interest 2,376 2,494 2,930
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Total capital and reserves 375,135 386,350 414,474
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Non-current liabilities
Deferred tax liabilities 44,715 45,613 44,141
Other liabilities and provisions 9 15,674 13,142 8,310
Deferred revenue 43,130 45,794 48,412
===================================== ===== ============= ============ ==========
103,519 104,549 100,863
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Current liabilities
Trade and other payables 15,181 11,557 10,784
Deferred revenue 4,773 3,867 4,549
Derivative financial liability - 970 1,064
===================================== ===== ============= ============ ==========
19,954 16,394 16,397
===================================== ===== ============= ============ ==========
Total liabilities 123,473 120,943 117,260
===================================== ===== ============= ============ ==========
Total equity and liabilities 498,608 507,293 531,734
===================================== ===== ============= ============ ==========
The accompanying notes are an integral part of these
consolidated financial statements.
Interim consolidated income statement
For the three month and nine month periods ended 30 September
2011 and 2010
(in thousands of US Dollars, except share amounts)
3 months ended 9 months ended
Note 30 September 30 September
2011 2010 2011 2010
US$000 US$000 US$000 US$000
======================================== ===== ========= ======== ========= =========
Revenue 16,015 9,204 40,655 31,608
Cost of sales (9,757) (7,438) (26,409) (25,281)
Depreciation and depletion (1,455) (1,218) (3,803) (4,304)
======================================== ===== ========= ======== ========= =========
Gross profit 4,803 548 10,443 2,023
======================================== ===== ========= ======== ========= =========
Corporate administrative and overhead
expenses (2,983) (3,173) (9,979) (9,401)
Hellas Gold administrative and
overhead expenses (2,865) (2,315) (5,731) (7,699)
Hellas Gold water treatment expenses
(for non-operating mines) (1,328) (855) (3,184) (2,886)
Share-based compensation expense 10 (4,476) (3,562) (14,670) (8,325)
Depreciation (301) (315) (887) (915)
Share of profit/(loss) of associate 6 (9) (5) 30
======================================== ===== ========= ======== ========= =========
Operating loss (7,144) (9,681) (24,013) (27,173)
======================================== ===== ========= ======== ========= =========
Interest income 57 65 172 162
Hedge contract profit - 183 - 577
Foreign exchange gain/(loss) (2,984) 6,930 1,609 (1,861)
Discounting of VAT and tax recoverable 5 392 - (7,398) -
Accretion of decommissioning liability (106) (98) (325) (313)
======================================== ===== ========= ======== ========= =========
Loss before tax (9,785) (2,601) (29,955) (28,608)
======================================== ===== ========= ======== ========= =========
Income tax benefit/(expense) (1,316) (37) 897 (1,530)
Loss for the period after tax (11,101) (2,638) (29,058) (30,138)
Attributable to:
Equity holders of the parent (11,029) (2,497) (28,940) (29,733)
Non controlling interest (72) (141) (118) (405)
======================================== ===== ========= ======== ========= =========
Loss per share
Basic 15 (0.06) (0.01) (0.16) (0.16)
Diluted (0.06) (0.01) (0.16) (0.16)
======================================== ===== ========= ======== ========= =========
The accompanying notes are an integral part of these
consolidated financial statements.
Interim consolidated statement of comprehensive income
For the three and nine month periods ended 30 September 2011 and
2010
(in thousands of US Dollars, except share amounts)
3 months ended 9 months ended
30 September 30 September
Note 2011 2010 2011 2010
US$000 US$000 US$000 US$000
============================================== ====== ========= ======== ========= =========
Loss for the period (11,101) (2,638) (29,058) (30,138)
====================================================== ========= ======== ========= =========
Other comprehensive income/(loss)
in the period
Currency translation differences
- equity accounted investees (59) (170) 143 8
Net gain/(loss) on derivatives
designated as cash flow hedges (796) (2,245) 1,506 1,711
Net gain/(loss) on cash flow hedge
transferred to profit in current
period - (554) - (1,748)
Tax benefit/(expense) - 371 - 1,171
Unrealised gain/(loss) on available-for-sale
financial asset 171 743 7 360
Comprehensive loss (11,785) (4,493) (27,402) (28,636)
====================================================== ========= ======== ========= =========
Attributable to:
Equity holders of the parent (11,713) (4,352) (27,284) (28,231)
Non controlling interest (72) (141) (118) (405)
====================================================== ========= ======== ========= =========
The accompanying notes are an integral part of these
consolidated financial statements.
Interim consolidated statement of changes in equity
As at 30 September 2011, 31 December 2010 and 30 September
2010
(in thousands of US Dollars except per share amounts)
Other reserves
Jointly Accumulated
owned other Non
Share Contributed equity comprehensive controlling Total
Capital Surplus reserve income Deficit Total Interest equity
US$000 US$000 U$000 US$000 US$000 US$000 US$000 US$000
=============================== ======== ============ ======== ============== ========== ========= ============ =========
Balance 1 January 2010 571,283 10,047 - (907) (168,879) 411,544 2,930 414,474
=============================== ======== ============ ======== ============== ========== ========= ============ =========
Loss for the period - - - - (29,733) (29,733) (405) (30,138)
Other comprehensive income - - - 1,502 - 1,502 - 1,502
Total comprehensive income - - - 1,502 (29,733) (28,231) (405) (28,636)
Equity-based compensation
expense - 8,670 - - - 8,670 - 8,670
Own shares issued under
joint ownership equity plan
("JOE plan") 3,301 - (3,301) - - - - -
Restricted share units vested 4,555 (4,555) - - - - - -
Share options exercised
or exchanged 1,645 (1,331) - - - 314 - 314
Balance 30 September 2010 580,784 12,831 (3,301) 595 (198,612) 392,297 2,525 394,822
=============================== ======== ============ ======== ============== ========== ========= ============ =========
Balance 31 December 2010 582,874 16,662 (3,301) (308) (212,071) 383,856 2,494 386,350
=============================== ======== ============ ======== ============== ========== ========= ============ =========
Loss for the period - - - - (28,940) (28,940) (118) (29,058)
Other comprehensive income - - - 1,656 - 1,656 - 1,656
Total comprehensive income - - - 1,656 (28,940) (27,284) (118) (27,402)
Equity-based compensation
expense - 16,187 - - - 16,187 - 16,187
Restricted share units vested 958 (958) - - - - - -
Share options exercised
or exchanged 126 (126) - - - - - -
Balance 30 September 2011 583,958 31,765 (3,301) 1,348 (241,011) 372,759 2,376 375,135
=============================== ======== ============ ======== ============== ========== ========= ============ =========
The accompanying notes are an integral part of these
consolidated financial statements.
Interim consolidated statement of cash flow
For the three and nine month periods ended 30 September 2011 and
2010
(in thousands of US Dollars, except per share amounts)
3 months ended 9 months ended
30 September 30 September
Note 2011 2010 2011 2010
US$000 US$000 US$000 US$000
======================================== ====== ========= ========= ========= =========
Cash flows from operating activities
Adjustments for the period:
Loss for the period before tax (9,785) (2,601) (29,955) (28,608)
Foreign exchange (gain)/loss 2,984 (6,930) (1,609) 1,861
Share of (profit)/loss of associate (6) 9 5 (30)
Depreciation 982 1,388 3,380 4,374
Share-based compensation expense 4,476 3,562 14,670 8,325
Accretion of decommissioning liability 106 98 325 313
Discounting of VAT and tax recoverable (392) - 7,398 -
Deferred revenue recognised (734) (532) (1,759) (2,157)
Depletion of mine properties 462 346 1,310 1,326
================================================ ========= ========= ========= =========
(1,907) (4,660) (6,235) (14,596)
=============================================== ========= ========= ========= =========
Net changes in working capital (4,562) 2,502 (5,643) 4,920
================================================ ========= ========= ========= =========
(6,469) (2,158) (11,878) (9,676)
=============================================== ========= ========= ========= =========
Cash flows from investing activities
Exploration and evaluation and
mine development costs
* Romania (1,282) (1,415) (3,684) (4,246)
Exploration and evaluation and
mine development costs
* Greece (559) (750) (1,622) (1,963)
Exploration and evaluation costs
- Turkey (471) (618) (1,064) (1,053)
Purchase of land and buildings (3,384) (844) (16,656) (844)
Purchase of equipment (107) (3,702) (352) (11,211)
(5,803) (7,329) (23,378) (19,317)
=============================================== ========= ========= ========= =========
Cash flows from financing activities
Proceeds from exercise of share
options - 199 - 312
- 199 - 312
=============================================== ========= ========= ========= =========
Effect of foreign currency translation
on cash (2,179) 7,078 2,443 (2,193)
Net decrease in cash and cash
equivalents (14,451) (2,210) (32,813) (30,874)
================================================ ========= ========= ========= =========
Cash and cash equivalents - Beginning
of period 38,760 84,978 57,122 113,642
Cash and cash equivalents - End
of period 24,309 82,768 24,309 82,768
================================================ ========= ========= ========= =========
The accompanying notes are an integral part of these
consolidated financial statements.
Notes to the interim condensed consolidated financial
statements
For the three and nine month periods ended 30 September 2011
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 registered address of the Company is Suite 200,
Financial Plaza, 204 Lambert Street, Whitehorse, Yukon, Canada, Y1A
3T2.
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".
The Company is a developer-producer with globally significant
gold reserves located within the European Union. The Company
generates cash flow from its 95% owned Stratoni operation, a high
grade lead/zinc/silver mine in North-Eastern Greece. European
Goldfields is expected to evolve into a mid-tier producer through
responsible development of its project pipeline of gold and base
metal deposits at Skouries and Olympias in Greece and Certej in
Romania. The Company plans future growth through development of its
highly prospective exploration portfolio in Greece, Romania and
Turkey. The Company's activities are not affected by seasonal
factors.
Theunderlying value of the deferred exploration and evaluation
and development costs for mine properties is dependent upon the
existence and economic recovery of reserves in the future.
The condensed consolidated interim financial statements of the
Company as at 30 September, 2011 and for the nine month period
ended 30 September 2011 and 2010 include the accounts of the
Company and its subsidiary undertakings and the Company's interest
in associates as detailed in note 2. The significant accounting
judgements, estimates and assumptions made are described in note
5.
2. Basis of Presentation
The Company's condensed consolidated interim financial
statements have been prepared in accordance with IAS 34 Interim
Financial Reporting using accounting policies consistent with
International Financial Reporting Standards ("IFRS"), as issued by
the International Accounting Standards Board (IASB). The condensed
consolidated interim financial statements for the nine month period
ended 30 September, 2011 represent part of the period covered by
the Company's first annual financial statements reported under
IFRS. The Company's accounts were previously prepared in accordance
with Canadian Generally Accepted Accounting Principles ("CGAAP").
In preparing these condensed consolidated interim financial
statements IFRS 1 First-time Adoption of International Financial
Reporting Standards has been applied. An explanation of how the
transition to IFRS has affected the reported financial position,
financial performance and cash flows of the Company is provided in
note 13. On adoption of IFRS, the Company has applied exemptions
allowed by IFRS 1 relating to business combinations and cumulative
translation differences.
The condensed consolidated interim financial statements have
been prepared on an historical cost basis, with the exception of
derivative financial instruments, liabilities for cash settled
share-based payment arrangements and financial assets available for
sale, which are measured at their balance sheet date fair
value.
The condensed consolidated interim financial statements are
presented in US dollars, the Company's functional currency, and
unless otherwise stated, all values are rounded to their nearest
thousand (US$000).
The condensed consolidated interim 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, being a
period of at least one year from the date the condensed
consolidated interim financial statements were approved and
authorised for issue.
In making this assumption the Directors have reviewed detailed
operating and cash flow forecasts, including forecast capital
requirements and forecast development of operations in Greece,
Romania and Turkey, for the period of at least one year from the
date the condensed consolidated interim financial statements were
approved and authorised for issue. As a result of their review the
Directors are satisfied that the Company will have sufficient
resources to satisfy its current and forecast future obligations,
and therefore they consider the going concern basis of preparation
is appropriate.
3. Basis of consolidation
The results of operations of subsidiaries are fully consolidated
from the acquisition date. The acquisition date is the date the
Company obtains control, being the right to govern the financial
and operating policies of the subsidiary and to benefit from its
activities. If the Company no longer controls a subsidiary
consolidation ceases from that date.
Investments in associates over which the Company has significant
influence are accounted for using the equity method.
These condensed consolidated interim financial statements
include the accounts of the Company and the following
subsidiaries.
Company Country of incorporation Ownership
Deva Gold (Barbados) Limited Barbados 100% owned
Deva Gold (Barbados) Holdings Limited Barbados 100% owned
European Goldfields (Services) Limited England 100% owned
European Goldfields Mining (Netherlands) Netherlands 100% owned
B.V.
European Goldfields (Greece) B.V. Netherlands 100% owned
European Goldfields Deva SRL Romania 100% owned
Macedonian Copper Mines SA Greece 95% owned
Hellas Gold S.A. Greece 95% owned
Deva Gold S.A. Romania 80% owned
Greater Pontides Exploration B.V. Netherlands 51% owned
Pontid Madencilik San. ve Ltd Turkey 51% owned
Pontid Altin Madencilik Ltd. Sti. Turkey 51% owned
Greek Nurseries SA (accounted for Greece 48% owned
as an associate)
4. Summary of significant accounting policies
The accounting policies set out below have been applied
consistently to all periods presented in these condensed
consolidated interim financial statements and in preparing the
opening IFRS balance sheet as at 1 January 2010 for the purpose of
transition to IFRS, unless otherwise indicated.
(a) Foreign currency translation and foreign currency transactions
Functional and presentation currency
The consolidated financial statements are expressed in US
dollars, which is the Company's presentation and functional
currency. The Company and its subsidiaries each determine their
functional currencies and items included in the financial
statements of each entity are measured using that functional
currency. The functional currencies of significant subsidiaries
have been determined as the US Dollar.
The Company has elected to take the IFRS 1, First-time Adoption
of IFRS exemption relating to cumulative translation differences,
which has allowed the Company to deem cumulative translation
differences to be zero at the date of transition to IFRS, as
described in Note 13. These cumulative translation differences
arose in subsidiary undertakings prior to their adopting the US
Dollar as the functional currency.
Foreign currency transactions
Transactions in foreign currencies are recorded at the rates of
exchange prevailing on the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end of monetary
assets and liabilities using the spot rate of exchange are
recognised in the income statement. Non-monetary items that are
measured in terms of historical cost in a foreign currency are
translated using the exchange rate as at the date of the initial
transaction.
(b) Business combinations and goodwill
The Company has taken the IFRS 1 exemption that allows them to
choose an effective date from which to adopt IFRS 3 (Revised)
Business Combinations (IFRS 3R). As a result business combinations
that occurred prior to 1 June, 2007 are not accounted for in
accordance with IFRS 3R Business Combinations or IAS 27
Consolidated and Separate Financial Statements.
Business combinations since 1 June, 2007 have been accounted for
using the acquisition method. The cost of an acquisition is
measured as the aggregate of the consideration transferred at
acquisition date fair value and the amount of any non-controlling
interest in the acquiree. For each business combination the
acquirer measures the non-controlling interest in the acquiree
either at fair value or at the proportionate share of the
acquiree's identifiable net assets. Transaction costs, other than
those associated with the issue of debt or equity securities that
the Company incurs in connection with a business combination are
expensed as incurred.
Goodwill is initially measured at cost being the excess of the
aggregate of the consideration transferred and the amount
recognised for non-controlling interest over the net identifiable
assets acquired and liabilities assumed. If this consideration is
lower than the fair value of the net assets of the subsidiary
acquired, the difference is recognised in profit or loss.
After initial recognition, goodwill is measured at cost less any
accumulated impairment losses. For the purposes of impairment
testing, goodwill is allocated to each of the Company's
cash-generating units that are expected to benefit from the
combination.
Acquisitions of non-controlling interests are accounted for as
transactions with equity holders in their capacity as equity
holders and therefore no goodwill is recognised.
(c) Investment in associates
Investments in associates are accounted for using the equity
method of accounting and are initially recognised at cost. An
associate is an entity over which the Company has significant
influence. This allows the Company to participate in that entity's
financial and operating policies, without having the power to
control or jointly control them.
The Company's share of the associates' post-acquisition profits
or losses is recognised in the income statement. Cumulative
post-acquisition movements are adjusted against the carrying amount
of the investment. When the Company's share of losses in an
associate equals or exceeds its interest in the associate,
including any long-term interests that, in substance, form part of
the investment, the Company does not recognise further losses,
unless it has unsecured obligations or has made payments on behalf
of the associate.
After application of the equity method, the Company reviews the
carrying amount of its investment to determine whether an
additional impairment loss is required with any additional loss
recognised within 'share of profit/ (loss) of associate' in the
income statement.
When the Company no longer has significant influence over an
associate, accounting for the investment as an associate ceases.
The carrying value of the investment in the associate is adjusted
to fair value as at that date and is transferred to another class
of financial asset depending on the level of influence retained.
The investment is then accounted for under the requirements of the
new financial asset designation.
(d) Exploration and evaluation costs
When the Company has obtained the legal right to explore all
exploration and evaluation expenditure is capitalised. Costs
considered directly attributable to exploration and evaluation
activity include the acquisition of rights to explore;
topographical, geological, geochemical and geophysical studies;
exploratory drilling; trenching; sampling and assessing the
technical and commercial viability of extracting a mineral
resource.
If there is an indication that the carrying amount of the
exploration and evaluation assets may exceed their recoverable
amounts, the Company carries out an impairment review, either
individually or at the cash generating unit level. To the extent
that this occurs, the excess is fully provided against, in the
financial year in which this is determined. Exploration and
evaluation assets are reassessed on a regular basis and these costs
are carried forward provided the conditions outlined in IFRS 6
Exploration and Evaluation of Mineral Resources are met.
Once sufficient exploration and evaluation work has been
performed and has demonstrated the existence of economically
recoverable reserves, the costs capitalised are transferred to
'Mine properties and reserves'.
Exploration and evaluation assets acquired in a business
combination are recognised initially at fair value and are stated
subsequently at cost less accumulated impairment.
(e) Property, plant and equipment and mine properties
Mine properties and reserves
The cost of acquiring mineral reserves and resources is
capitalised within 'Mine properties and reserves' on the balance
sheet as incurred.
All subsequent expenditure on the construction, installation or
completion of facilities is capitalised within 'Mine properties and
reserves'. 'Mine properties and reserves' are not depreciated until
production starts. After production starts, all capitalised costs
are transferred to 'Producing mines'.
Producing mines are stated at cost less accumulated depletion
and accumulated impairment losses. The capitalisation of certain
mine construction costs ceases and costs are either regarded as
inventory or expensed, with the exception of those costs that
continue to qualify for capitalisation relating to underground mine
development or mineable reserve development.
Producing mines are depreciated on a unit of production basis
over the economically recoverable reserves of the mine
concerned.
Other property, plant and equipment
Other property, plant and equipment are stated at cost less
accumulated depreciation and accumulated impairment losses. Other
property, plant and equipment include vehicles, land and buildings
and other plant and equipment at all locations within the Company.
Other property plant and equipment, excludes capitalised costs and
mining reserves and resources, which are included within 'Mine
properties and reserves.' Cost comprises the aggregate amount paid
and the fair value of any other consideration given to acquire the
asset and includes costs directly attributable to making the asset
capable of operating as intended.
Depreciation is provided on all property, plant and equipment on
a straight-line basis over its expected useful life as follows
Buildings 4 - 20 years straight
line
Equipment & Fittings 3 - 10 years straight
line
Motor Vehicles 6 years straight
line
Residual values and useful lives are reviewed on an annual
basis. If management consider an asset's residual value or useful
life has changed, the change is considered a change in accounting
estimate and accounted for prospectively.
(f) Impairment of assets
At each reporting date management review all non-financial
assets to identify any indicator that an asset that may be
impaired, excluding exploration and evaluation assets, which are
assessed under IFRS 6 as described in (d) above. If there are
indicators of impairment, a review is undertaken to determine if
the carrying amounts are in excess of their recoverable
amounts.
With the exception of those assets that generate cash flows
largely independent from other assets, assets are allocated to
cash-generating units (CGUs) for the purpose of this review. For
individual assets and CGUs the recoverable amount is calculated,
being the higher of its fair value less costs to sell and value in
use (net present value of expected future cash flows). Where the
carrying amount of an asset or CGU exceeds its recoverable amount,
the asset is considered to be impaired and it is written down to
its recoverable amount.
To assess an asset or CGU's value in use the estimated future
cash flows attributable to that asset or CGU are discounted to
present value using a pre-tax market based discount rate. The
estimated future cash flows are based on financial models, which
are prepared for all of the Company's CGUs to which individual
assets are allocated. Fair value less costs to sell is determined
as the amount that would be obtained from the sale of the asset in
an arms' length transaction between knowledgeable and willing
parties.
All non-financial assets are held at cost and any impairment
losses that result are therefore recognised in the income
statement.
A previously recognised impairment loss is reversed if the
impairment no longer exists or has decreased. The reversal is
limited to the extent that the carrying amount of the asset does
not exceed the carrying amount that would have been determined, net
of depreciation, had no impairment loss been recognised.
(g) Inventories
Inventories of ore mined and metal concentrates are valued at
the lower of combined production cost and net realisable value.
Production costs include the costs directly related to bringing the
inventory to its current condition and location. These costs
include materials, labour, mine site overheads, related
depreciation of mining and processing facilities and related
depletion of mineral properties and deferred exploration and
development costs. Exploration materials and supplies are valued at
the lower of cost on a weighted average basis and net realisable
value.
(h) Financial instruments
The classification of financial assets and liabilities is
determined at initial recognition with subsequent measurement
dependent on their initial classification.
Cash and cash equivalents
Cash and cash equivalents include cash at banks and at hand and
deposits with original maturities of three months or less.
Trade and other receivables
Trade and other receivables that have fixed and determinable
payments and that are not quoted in active markets are carried at
amortised cost less any impairment losses recognised. If trade and
other receivables are expected to be settled in a period greater
than twelve months they are discounted using the effective interest
rate method. Trade and other receivables are assessed for
impairment at each reporting date.
Trade and other receivables are recorded initially at their
original invoiced amounts and are adjusted to reflect subsequent
changes to these recoverable amounts. A number of the Company's
concentrate products are sold under pricing arrangements where
final prices are determined by quoted market prices in a period
subsequent to the date of sale. At each reporting date sales are
adjusted to fair value through revenue until the date of final
price determination with trade receivables adjusted to reflect
these changes to recoverable amounts.
Impairment
At each reporting date, trade and other receivables are assessed
for impairment by identifying one or more events that have occurred
since initial recognition that will impact estimated future cash
flows and that can be estimated reliably. Evidence of impairment
may include indications that debtors are experiencing significant
difficulty, at which point the risks of default or probability of
bankruptcy are considered.
Available for sale investments
The Company's investments and investments in marketable
securities have been classified as available-for-sale and are
recorded at fair value on the balance sheet. Available-for-sale
financial assets are those non-derivative financial assets,
principally equity securities, which are designated as
available-for-sale or are not classified in any other investment
category. After initial recognition available for sale financial
assets are measured at fair value with gains or losses recognised
as a separate component of equity until the investment is
derecognised or until the investment is determined to be impaired.
If the investment is determined to be impaired the cumulative gain
or loss previously reported in equity is recognised in profit or
loss.
Fair values are determined directly by reference to published
price quotations in an active market.
Derivative financial instruments designated as effective cash
flow hedges
The Company uses derivative and non-derivative financial
instruments to manage changes in commodity prices. Hedge accounting
is optional and it requires the Company to document the hedging
relationship and test the hedging item's effectiveness in
offsetting changes in fair values or cash flows of the underlying
hedged item on an ongoing basis.
The Company uses cash flow hedges to manage base metal commodity
prices. The effective portion of the change in fair value of a cash
flow hedging instrument is recorded in other comprehensive income
and is reclassified to earnings when the hedge item impacts profit.
Any ineffectiveness is recorded in the income statement.
If a derivative financial instrument designated as a cash flow
hedge ceases to be effective or is terminated, hedge accounting is
discontinued and the gain or loss at that date is deferred in other
comprehensive income and recognised concurrently with the
settlement of the related transaction. If a hedged anticipated
transaction is no longer probable, the gain or loss is recognised
immediately in the income statement. Subsequent gains and losses
from ineffective derivative instruments are recognised in the
income statement in the period they occur.
(i) Provisions
Provisions are recognised when the Company has a present
obligation, whether legal or constructive, as a result of a past
event for which it is probable that an outflow of resources
embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the
obligation.
Provisions are measured at the present value of management's
best estimate of the expenditure required to settle the obligation
at the balance sheet date. If the effect of the time value of money
is material, provisions are discounted using a current pre tax rate
that reflects the current market assessments of the time value of
money and the risks specific to the liability. Where discounting is
used, the increase in the provision due to the passage of time is
recognised as a finance cost.
Decommissioning liability
Decommissioning costs are provided in full based on management's
estimates of future costs to be incurred. Applicable costs include
dismantling and removing structures, rehabilitating mines and
tailings dams, dismantling operating facilities, closure of plant
and waste sites, and restoration, reclamation and re-vegetation of
affected areas.
When a provision is recognised it is either capitalised as part
of the cost of the related property or written off to the income
statement if utilised within one year. If costs are capitalised the
provision is discounted to present value using a rate that reflects
risks specific to the liability. At each reporting date management
review the discount rate used. The periodic unwinding of the
discount is recognised in the income statement as a finance cost.
Changes in estimated future costs or in the discount rate applied
are added or deducted from the cost of the asset.
(j) Share-based compensation
The Company operates a share option scheme (Share Incentive
Plan) and an equity participation plan (Restricted Share Units
'RSU'). The Company accounts for equity-based compensation granted
under such plans using the fair value method of accounting. Under
this method, the cost of equity-based compensation is estimated at
fair value at the grant date and is recognised in the income
statement as an expense, or capitalised as exploration and
evaluation assets and mine properties when the compensation can be
attributed to these activities. This cost is recognised over the
relevant vesting period for grants to directors, officers and
employees, and measured in full at the earlier of performance
completed or vesting for grants to non-employees. Any consideration
received by the Company on exercise of share options is credited to
share capital.
Cash settled awards
The Company operates a deferred phantom unit plan ('DPU'). The
Company accounts for the compensation using the fair value method.
The cost of each unit is measured initially at fair value and
expensed over the period until the vesting date. The provision is
measured to fair value based on the Company's share price at the
end of every reporting period and movements expensed in the
period.
(k) Revenue recognition
Revenues from the sale of concentrates are recognised when the
risks and rewards of ownership have been transferred to the
customer and the revenue can be reliably measured. Revenue is
measured at the fair value of the consideration received.
A number of the Company's concentrate products are sold under
pricing arrangements where final prices are determined by quoted
market prices in a period subsequent to the date of sale. These
concentrates are provisionally priced at the time of sale based on
forward prices for the expected date of the final settlement. The
provisionally priced sales of concentrate contain an embedded
derivative, which does not qualify for hedge accounting. These
embedded derivatives are recognised at fair value through revenue
until the date of final price determination. Subsequent variations
in the price are recognised as revenue adjustments as they occur
until the price is finalised.
(l) Income taxes
Current tax assets and liabilities are measured at the amount
expected to be recovered or paid to the taxation authorities, based
on tax rates and laws that are enacted or substantively enacted at
the balance sheet date.
Deferred income tax is recognised on all temporary differences
arising between the tax bases of assets and liabilities and their
carrying amounts in the financial statements, with the following
exceptions:
-- Where the temporary difference arises from the initial
recognition of goodwill or of an asset or liability in a
transaction that is not a business combination that at the time of
the transaction affects neither accounting nor taxable profit or
loss.
-- In respect of taxable temporary differences associated with
investments in subsidiaries, associates and joint ventures, where
the timing of the reversal of the temporary differences can be
controlled and it is probable that the temporary differences will
not reverse in the foreseeable future.
-- Deferred income tax assets are recognised only to the extent
that it is probable that taxable profit will be available against
which the deductible temporary differences, carried forward tax
credits or tax losses can be utilised.
Deferred income tax assets and liabilities are measured on an
undiscounted basis at the tax rates that are expected to apply when
the related asset is realised or liability is settled, based on tax
rates and laws enacted or substantively enacted at the balance
sheet date.
The carrying amount of deferred income tax assets is reviewed at
each balance sheet. Deferred income tax assets and liabilities are
offset, only if a legally enforceable right exists to set off
current tax assets against current tax liabilities, the deferred
income taxes relate to the same taxation authority and that
authority permits the Company to make a single net payment.
Income tax is charged or credited directly to equity if it
relates to items that are credited or charged to equity, otherwise
income tax is recognised in the income statement.
(m) Deferred revenue
The Company received prepayments for the sale of all of the
silver metal to be produced from ore extracted during the mine-life
within an area of some 7 km(2) around its zinc-lead-silver Stratoni
mine as well as for sale of gold pyrite concentrate in northern
Greece. The prepayments, which are accounted for as deferred
revenue, are recognised as sales revenue on the basis of the
proportion of the settlements during the period expected to the
total settlements.
The terms of the sale contract contain pricing provisions
establishing a cap on the price to be received for the sale of the
metals in concentrate. This pricing provision is considered as an
embedded derivative, which is not required to be separated from the
host contract for accounting purposes. The economic characteristics
of the embedded derivative are closely related to the economic
characteristics of the host contract.
(n) Earnings per share ("EPS")
EPS is calculated based on the weighted average number of common
shares issued and outstanding. Diluted per share amounts are
calculated using the treasury stock method whereby proceeds deemed
to be received on the exercise or exchange of share options and
warrants and on the granting of restricted share units in the per
share calculation are applied to reacquire common shares at the
average market price during the period.
(o) Operating leases
Leases where the lessor retains a significant portion of the
risks and benefits of ownership of the asset are classified as
operating leases and rentals payable are charged to the income
statement on a straight line basis over the lease term.
The Company has no finance lease arrangements.
5. Critical accounting judgements, estimates and assumptions
Estimates, risks and uncertainties - The preparation of
financial statements in conformity with IFRS requires management to
make estimates and assumptions that affect the reported amount of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amount of revenues and expenses during the period.
Significant estimates and assumptions include those related to the
recoverability of deferred costs in relation to mine properties and
exploration and evaluation, decommissioning obligations and
share-based compensation, current and deferred tax and VAT
receivable. While management believes that these estimates and
assumptions are reasonable, actual results could vary
significantly
Ore reserves and depletion of mine properties - In accordance
with the Company's accounting policy, once production starts mine
properties are classified as producing mines, which are stated at
cost less accumulated depletion and impairment. Producing mines are
depreciated on a unit of production basis over the economically
recoverable reserves of the mine concerned. The estimation of
recoverable reserves is based on professional evaluations using
accepted international standards for the assessment of mineral
reserves. The assessment involves the study of geological,
geophysical and economic data and relies on a number of financial
and technical assumptions. The estimate of reserves may be subject
to change based on new information gained subsequent to the initial
assessment, which may include additional information available from
continuing exploration, results from the reconciliation of actual
mining and plant production data against the original reserve
estimates, or the impact of economic factors such as changes in
metal prices, exchange rates or the cost of components of
production. If actual reserves prove to be significantly different
to current estimates, a material change to amounts charged to
earnings could occur.
Decommissioning liability - The Company records a mine
rehabilitation provision ('decommissioning liability') at fair
value when legally incurred with the corresponding increase to the
mineral property depreciated over the life of the mine. Management
assesses the calculation of the mine rehabilitation provision
annually, including the underlying assumptions and judgments
made.
The liability is adjusted over time to reflect an accretion
element. In accordance with IFRS the provision is discounted using
a discount rate that reflects risks specific to the liability, with
any change in the discount rate treated as a change in accounting
estimate. Changes to estimated future costs are recognised in the
statement of financial position by either increasing or decreasing
the rehabilitation liability and asset if the initial estimate was
recognised as part of an asset measured in accordance with IAS
16.
Any significant change to management's previous assumptions and
to the cost of rehabilitation activities or the market based
discount rate may result in future actual expenditure differing
from the amounts currently provided. These changes or a change to
the market based discount rate may result in a material change to
amounts charged to earnings. At each reporting date the provision
represents management's best estimate of the present value of the
future rehabilitation costs required.
Share-based compensation - The Company operates a share option
scheme ('Share Incentive Plan'), an equity participation plan
('RSU') and a deferred phantom unit plan ('DPU'). Equity based
compensation granted under these plans is accounted for using the
fair value method of accounting. Under this method the cost of
equity and cash-based compensation is estimated at fair value at
the grant date and recognised in the income statement as an
expense, or capitalised to exploration and evaluation assets and
mine properties when the compensation can be attributed to those
assets.
For cash settled awards, the cost of each unit is measured
initially at fair value and expensed over the period until the
vesting date. The associated liability is revalued to fair value at
each reporting date with movements expensed in the period.
Current and deferred tax - Tax regimes in certain jurisdictions
can be subject to differing interpretations and are often subject
to legislative change and changes in administrative interpretation
in those jurisdictions. The interpretation by the Company and its
subsidiary undertakings of relevant tax law as applied to their
transactions and activities may not coincide with that of the
relevant tax authorities. As a result, transactions may be
challenged by tax authorities and may be assessed to additional tax
or additional transactions taxes (for example stamp duty or VAT),
which, in each case, could result in significant additional taxes,
penalties and interest. These could have a material adverse impact
on the Company's business, financial position and performance.
VAT receivable and income taxes- Hellas Gold SA has a total of
$29.4 million in recoverable VAT and income taxes due from the
Greek authorities, which has to-date been reported as a current
asset in the Company's financial statements. In accordance with the
Company's accounting policies, it was decided in Q2 2011 to take a
conservative position for accounting purposes and re-classify these
amounts as long term debtors on a net present value basis, given
that these amounts can be recovered in full by offsetting against
future taxes payable upon production from the development projects
at Olympias and Skouries. The amounts have been discounted using a
weighted average cost of capital specific to the development
projects. An adjustment of $7.8 million was made through the income
statement in Q2 to reflect this re-classification and discounting,
which has been offset by a credit of $0.4 million during Q3 to
reflect movements in foreign exchange rates. This amount will be
unwound as the Company reaches production in Greece or when earlier
repayment is received. After the period end, Hellas Gold received
repayment of EUR11 million in relation to these amounts. This
reclassification will be reassessed in Q4 2011.
Long lived assets - All long lived assets held and used by the
Company are reviewed for possible impairment at least annually or
whenever events or changes in circumstances indicate that the
carrying value of an asset may not be recoverable. If changes in
circumstances indicate that the carrying value of an asset that an
entity expects to hold and use may not be recoverable, future cash
flows expected to result from the continued use of the asset and
its disposition must be estimated. An asset is considered to be
impaired where its recoverable amount (being the higher of the
asset's fair value less costs to sell and its value in use) is less
than its current carrying amount. Under IFRS a significant adverse
change during the period or anticipated to take place in the near
future in the market in which the Company operates or in the market
to which an asset is dedicated can be considered an indication of
possible impairment. An example of such a change would be a fall in
metal prices. In such circumstances management use cash flow
forecasts to establish whether actual impairment has occurred.
Estimates are based on future expectations and a number of
assumptions and judgments made by management. Current metal prices
do not suggest that there has impairment of any of the Company's
non-current assets, although if such an impairment were to occur,
it could result in a material charge to earnings.
6. Other property, plant and equipment
Plant Land and
and equipment Vehicles buildings TOTAL
US$000 US$000 US$000 US$000
========================== =============== ========= =========== ========
Cost - 2010:
As at 1 January 2010 64,240 2,107 43,464 109,811
Additions 14,982 380 20,798 36,160
Disposals (20) (5) - (25)
Reclassification (16,060) - 16,060 -
========================== =============== ========= =========== ========
As at 31 December 2010 63,142 2,482 80,322 145,946
========================== =============== ========= =========== ========
Accumulated depreciation
- 2010:
As at 1 January 2010 6,269 1,390 6,052 13,711
Charge for the period 1,814 235 3,845 5,894
As at 31 December 2010 8,083 1,625 9,897 19,605
Net carrying value at 31
December 2010 55,059 857 70,425 126,341
========================== =============== ========= =========== ========
Cost - 2011:
As at 1 January 2011 63,142 2,482 80,322 145,946
Additions 275 - 16,728 17,003
Disposals (4) (66) - (70)
As at 30 September 2011 63,413 2,416 97,050 162,879
========================== =============== ========= =========== ========
Accumulated depreciation
- 2011:
As at 1 January 2011 8,083 1,625 9,897 19,605
Charge for the period 1,232 182 2,274 3,688
Disposals - (66) - (66)
As at 30 September 2011 9,315 1,741 12,171 23,227
Net carrying value at 30
September 2011 54,098 675 84,879 139,652
========================== =============== ========= =========== ========
7. Exploration and evaluation assets
Greece Romania Turkey TOTAL
US$000 US$000 US$000 US$000
===================================== ======= ======== ======= =======
Cost as at 1 January 2010 286 5,903 1,625 7,814
===================================== ======= ======== ======= =======
Capitalised expenditure:
Project development and exploration 396 985 661 2,042
Permit acquisition - - 11 11
Project overhead - 332 990 1,322
Capitalised depreciation - 13 19 32
Impairment - (590) - (590)
===================================== ======= ======== ======= =======
Cost as at 31 December 2010 682 6,643 3,306 10,631
===================================== ======= ======== ======= =======
Capitalised expenditure:
Project development and exploration 120 93 667 880
Permit acquisition - - 382 382
Project overhead - 211 71 282
Capitalised depreciation - 10 10 20
------------------------------------- ------- -------- ------- -------
Cost as at 30 September 2011 802 6,957 4,436 12,195
===================================== ======= ======== ======= =======
(a) Greece
As at 30 September 2011 capitalised exploration and evaluation
expenditure in Greece related to further exploratory activity on
the Greek mine properties.
(b) Romania
The Baita-Craciunesti exploration licence is 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 other exploration licences are held by the
Company's wholly-owned subsidiary, European Goldfields Deva
SRL.
As at 30 September 2011, the following cost had been incurred on
the Romanian mineral properties:
30 September 31 December
2011 2010
US$000 US$000
============================ ============= ============
Baita-Craciunesti 3,394 3,325
Voia 2,223 2,030
Other exploration projects 1,340 1,288
============================ ============= ============
6,957 6,643
============================ ============= ============
(c) Turkey
The Turkish licences are held through a Turkish Company, Pontid
Madencilik. Currently the Company has a 51% interest in all the
properties and the Company will fund 100% of all costs related to
the development of these properties. Ownership of the Ardala
property may be increased to 80% by funding to completion of a
Bankable Feasibility Study. All other concessions 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.
As at 30 September 2011 the following costs had been incurred on
the Turkish mineral properties:
30 September 31 December
2011 2010
US$000 US$000
=================== ============= ============
Ardala 4,265 2,582
Other concessions 171 724
=================== ============= ============
4,436 3,306
=================== ============= ============
8. Mine properties and reserves
(a) Greece
Mine Producing
development mines TOTAL
US$000 US$000 US$000
============= ========== ========
Cost - 2010:
As at 1 January 2010 206,170 18,867 225,037
Additions 4,354 451 4,805
Adjustment to decommissioning liability - (238) (238)
As at 31 December 2010 210,524 19,080 229,604
========================================= ============= ========== ========
Depletion - 2010:
As at 1 January 2010 - 6,883 6,883
Charge for the period - 1,736 1,736
As at 31 December 2010 - 8,619 8,619
Net carrying value at 31 December 2010 210,524 10,461 220,985
========================================= ============= ========== ========
Cost - 2011:
As at 1 January 2011 210,524 19,080 229,604
Additions 3,595 261 3,856
Adjustment to decommissioning liability - (123) (123)
========================================= ============= ========== ========
As at 30 September 2011 214,119 19,218 233,337
========================================= ============= ========== ========
Depletion - 2011:
As at 1 January 2011 - 8,619 8,619
Charge for the period - 1,605 1,605
As at 30 September 2011 - 10,224 10,224
========================================= ============= ========== ========
Net carrying value at 30 September
2011 214,119 8,994 223,113
========================================= ============= ========== ========
Included within mine development and producing mines are amounts
with cost of $192,676 and $11,457 respectively that were recognised
as fair value uplift when the Company acquired Hellas Gold SA in
November 2004.
(b) Romania
Mine development TOTAL
US$000 US$000
Cost - 2010:
As at 1 January 2010 44,270 44,270
Additions 6,399 6,399
========================= ================= =======
As at 31 December 2010 50,669 50,669
========================= ================= =======
Cost - 2011:
As at 1 January 2011 50,669 50,669
Additions 5,142 5,142
========================= ================= =======
As at 30 September 2011 55,811 55,811
========================= ================= =======
Mines development relates to the Certej exploitation licence
that is held by the Company's 80%-owned subsidiary, Deva Gold SA.
No depletion has been charged in respect of the Certej licence.
9. Other liabilities and provisions
Decommissioning DPU
provision liability TOTAL
US$000 US$000 US$000
========================= ================ =========== ========
As at 01 January 2010 6,410 1,900 8,310
========================= ================ =========== ========
Arising during the year - 4,657 4,657
Accretion expense 413 - 413
Change in estimate (238) - (238)
========================= ================ =========== ========
As at 31 December 2010 6,585 6,557 13,142
========================= ================ =========== ========
Arising during the year - 2,330 2,330
Accretion expense 325 - 325
Change in estimate (123) - (123)
========================= ================ =========== ========
As at 30 September 2011 6,787 8,887 15,674
========================= ================ =========== ========
Provision for decommissioning costs
Management has estimated the total future decommissioning
obligation based on the Company's ownership interest in the
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.
As at 30 September 2011, the undiscounted amount of estimated
cash flows required to settle the obligation is $9,769 (2010 -
$8,529). The estimated cash flow has been discounted using a risk
adjusted rate specific to the liability of 5.76 % (2010 - 6.674%).
The expected period until settlement is seven years (2010 - five
years).
DPU plan
The provision represents the fair value of amounts payable to
eligible persons under the Company's DPU plan at each reporting
date. Refer to note 10 for outstanding DPUs as at 30 September 2011
and 31 December 2010.
10. Share options, restricted share units and deferred phantom units
There were no amendments made to share-based compensation plans
in the period to 30 September 2011. Movements in existing plans
during the period, being shares granted and vested under existing
schemes are set out in the tables below. The majority of the
share-based payment charges relate to senior management.
Share incentive plan
Weighted
average
Number exercise
of options price
C$
Balance as at 31 December 2010 6,315,332 8.87
Share options granted 225,000 12.50
Share options exchanged (87,000) 4.16
================================= ============ ==========
Balance as at 30 September 2011 6,453,332 9.06
================================= ============ ==========
During the period ended 30 September 2011, the Company granted
225,000 (2010 - 1,800,000) options under its Share Incentive Plan.
The fair value of the share options granted has been estimated at
the date of the grant using a Black-Scholes and Parisian option
pricing model with the following assumptions: weighted average risk
free interest rate of 2.73% (2010 - 0.05%); volatility factor of
the expected market price of the Company's shares of 50% (2010 -
68.4%); a weighted average expected life of the share options of 5
years, maximum term of 5 years and a dividend yield of Nil. The
weighted fair value price for the above grant amounted to
C$4.49.
Equity participation plan
Weighted
average
grant
date fair
value
Number of underlying
of RSUs price
C$
Balance as at 31 December 2010 1,838,527 9.11
RSUs granted 235,000 12.44
RSUs vested (114,030) 8.86
RSUs cancelled (1,308) 14.65
Balance as at 30 September 2011 1,958,189 9.52
================================= ========== ===============
DPU plan
Number
of DPUs
Balance as at 31 December 2010 1,962,570
DPUs granted 11,314
================================= ==========
Balance as at 30 September 2011 1,973,884
================================= ==========
11. Commitments and operating leases
Commitments
The Company has spending commitments of $448 (2010 - $435) per
year (plus service charges and value added tax) for a term of five
years under the lease for its office in London, England, which
commenced in November 2009.
Hellas Gold has spending commitments of $148 (2010 - $150) per
year for a term of 9 years under the lease for its office in
Athens, Greece, which commenced in December 2007. After the second
anniversary, the rent escalates annually at a rate of consumer
price index +1%. Hellas Gold's commitment through the lease
agreement is extended to payment of all rental taxes, utilities,
proportion of common charges as well as proportion of municipal
taxes.
Deva Gold has spending commitments of $167 (2010 - $155) per
year, with the Local Council of Certejul de Sus commune, for a term
of 20 years, for forested land situated in Hondol village, Romania.
The lease commenced in November 2010 and has the option of being
extended for a period equal with a maximum of half of the initial
period and by mutual agreement.
As at 30 September 2011, Hellas Gold had entered into off-take
agreements pursuant to which Hellas Gold agreed to sell 13,581 dmt
of zinc concentrates, 7,435 dmt of lead/silver concentrates and
20,869 dmt of gold concentrates until the financial year ending 31
December 2011.
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 $44,211 which is to be paid in full by the
end of December 2011. As at 30 September 2011, $43,749 of the
commitment has been paid.
Operating leases
30 September 31 December
2011 2010
US$000 US$000
============================================= ============= ============
Within one year 615 731
After one year but not more than five years 2,325 2,491
More than five years 1,925 2,437
============================================= ============= ============
4,865 5,659
============================================= ============= ============
The amount recognised in the income statement for the three and
nine month period ended 30 September 2011 in respect of operating
leases amounted to $145 (2010 - $68) and $419 (2010 - $133)
respectively.
12. Transactions with related parties
These consolidated financial statements incorporate the accounts
of the Company, and its subsidiary undertakings as disclosed in
note 3. The following are also considered related parties of the
Company.
Greek Nurseries SA
The Company's investment in Greek Nurseries SA is held through
Hellas Gold SA who subscribed for 50% of the share capital.
Hellas Gold SA holds two out of the five Board positions and is
not involved in the operating and management decision making
process of Greek Nurseries SA. The investment is therefore
accounted for as an associate, and Greek Nurseries SA is considered
a related party of the consolidated Company.
Ellaktor SA
As at the balance sheet date, Ellaktor SA ("Ellaktor") owned
19.3% of the Company's issued share capital. Aktor SA ("Aktor")
Greece's largest construction Company and a 100% subsidiary of
Ellaktor owns 5% of Hellas Gold SA, the Company's 95% owned
subsidiary. On 1 October 2011, Ellaktor disposed of 13 million
shares to Qatar Holding LLC, to reduce its holding to 12.2% of the
Company's issued share capital.
Ellaktor is deemed a related party and contracts management,
technical and engineering services to Hellas Gold SA through its
subsidiary undertakings including Aktor.
These costs have been recognised as costs of sales or
capitalised as mine properties depending on the nature of services
rendered. These expenditures were contracted in the normal course
of operations and are recorded at the exchange amount agreed by the
parties. The terms of the payable is 30 days (2010 - 30 days).
Transactions with related parties
For the three and nine month periods ended 30 September, 2011
and 2010 the following transactions were entered into with related
parties and the following amounts were outstanding as at 30
September 2011 and 31 December 2010.
Greek Nurseries SA
30 September 31 December
2011 2010
US$000 US$000
==================== ============= ============
Amounts receivable - 28
Amounts payable (2) -
(2) 28
==================== ============= ============
In the nine month period ended 30 September 2011 the value of
services provided to the Company by Greek Nurseries SA was $2 (2010
- Nil) and by the Company to Greek Nurseries SA was Nil (2010 -
$1). For the three month period ended 30 September 2011 the value
of services provided to the Company by Greek Nurseries SA was
$1.
Ellaktor SA
3 months ended 9 months ended
30 September 30 September
Services received: 2011 2010 2011 2010
US$000 US$000 US$000 US$000
===================================== ======== ======= ======== =======
Exploration and evaluation services - 20 - 89
Mining services 7,153 9,142 22,839 30,128
Other services 38 22 144 104
7,191 9,184 22,983 30,321
===================================== ======== ======= ======== =======
30 September 31 December
2011 2010
US$000 US$000
==================== ============= ============
Amounts receivable - -
Amounts payable (8,039) (3,883)
(8,039) (3,883)
==================== ============= ============
13. Transition to IFRS
For accounting periods up to and including the year ending 31
December 2010, the Company presented its financial statements in
accordance with Canadian Generally Accepted Accounting Principles
(CGAAP). As stated in note 2, the condensed consolidated interim
financial statements for the period ended 30 September 2011
represent part of the period covered by the Company's first annual
financial statements prepared in accordance with International
financial Reporting Standards (IFRS).
In adopting IFRS for the first time in the year ending 31
December 2011, the Company has adjusted amounts previously reported
in accordance with CGAAP with an explanation of how the transition
has affected the Company's financial position and performance
outlined below.
Reconciliation of equity at 1 January 2010:
Effect
Canadian of transition
Note GAAP to IFRSs IFRSs
US$ '000 US$ '000 US$ '000
===================================== ====== ========= =============== ==========
Assets
Non-current assets
Mine properties and reserves (b) 479,370 (216,947) 262,423
Other property, plant and equipment 96,100 - 96,100
Exploration and evaluation assets (a) 1,625 6,189 7,814
Investment in associate 711 - 711
Available for sale financial
asset 1,490 - 1,490
Deferred tax asset (c) 1,608 (1,608) -
===================================== ====== ========= =============== ==========
580,904 (212,366) 368,538
============================================ ========= =============== ==========
Current assets
Cash and cash equivalents 113,642 - 113,642
Trade and other receivables 40,607 - 40,607
Inventories 4,993 - 4,993
Current taxation 3,954 - 3,954
============================================= ========= =============== ==========
163,196 - 163,196
============================================ ========= =============== ==========
Total assets 744,100 (212,366) 531,734
============================================= ========= =============== ==========
Equity and liabilities
Capital and reserves
Attributable to equity holders
of the Company:
Share capital (d) 545,180 26,103 571,283
Contributed surplus 10,047 - 10,047
Other reserves (e) 35,911 (36,818) (907)
Deficit (f) (13,828) (155,051) (168,879)
===================================== ====== ========= =============== ==========
577,310 (165,766) 411,544
============================================ ========= =============== ==========
Non-controlling interest 2,930 - 2,930
============================================= ========= =============== ==========
Total capital and reserves 580,240 (165,766) 414,474
============================================= ========= =============== ==========
Non-current liabilities
Deferred tax liabilities (c) 90,083 (45,942) 44,141
Provisions (g) 8,968 (658) 8,310
Deferred revenue 48,412 - 48,412
============================================= ========= =============== ==========
147,463 (46,600) 100,863
============================================ ========= =============== ==========
Current liabilities
Trade and other payables 10,784 - 10,784
Deferred revenue 4,549 - 4,549
Derivative financial liability 1,064 - 1,064
============================================= ========= =============== ==========
16,397 - 16,397
============================================ ========= =============== ==========
Total liabilities 163,860 (46,600) 117,260
============================================= ========= =============== ==========
Total equity and liabilities 744,100 (212,366) 531,734
============================================= ========= =============== ==========
Reconciliation of equity at 30 September 2010:
Effect
Canadian of transition
Note GAAP to IFRSs IFRSs
US$ '000 US$ '000 US$ '000
===================================== ====== ========= =============== ==========
Assets
Non-current assets
Mine properties and reserves (b) 485,548 (216,954) 268,594
Other property, plant and equipment 115,590 - 115,590
Exploration and evaluation assets (a) 2,747 7,168 9,915
Investment in associate 789 - 789
Available for sale financial
asset 1,851 - 1,851
Deferred tax asset (c) 4,692 (4,692) -
===================================== ====== ========= =============== ==========
611,217 (214,478) 396,739
============================================ ========= =============== ==========
Current assets
Cash and cash equivalents 82,768 - 82,768
Trade and other receivables 27,032 - 27,032
Inventories (b) 9,129 (164) 8,965
Derivative financial asset 70 - 70
Current taxation 4,036 - 4,036
============================================= ========= =============== ==========
123,035 (164) 122,871
============================================ ========= =============== ==========
Total assets 734,252 (214,642) 519,610
============================================= ========= =============== ==========
Equity and liabilities
Capital and reserves
Attributable to equity holders
of the Company:
Share capital (d) 554,681 26,103 580,784
Contributed surplus 12,831 - 12,831
Other reserves (e) 34,112 (36,818) (2,706)
Deficit (f) (40,085) (158,527) (198,612)
===================================== ====== ========= =============== ==========
561,539 (169,242) 392,297
============================================ ========= =============== ==========
Non-controlling interest 2,525 - 2,525
============================================= ========= =============== ==========
Total capital and reserves 564,064 (169,242) 394,822
============================================= ========= =============== ==========
Non-current liabilities
Deferred tax liabilities (c) 90,411 (45,033) 45,378
Provisions (g) 7,163 (367) 6,796
Deferred revenue 46,938 - 46,938
============================================= ========= =============== ==========
144,512 (45,400) 99,112
============================================ ========= =============== ==========
Current liabilities
Trade and other payables 21,809 - 21,809
Deferred revenue 3,867 - 3,867
============================================= ========= =============== ==========
25,676 - 25,676
============================================ ========= =============== ==========
Total liabilities 170,188 (45,400) 124,788
============================================= ========= =============== ==========
Total equity and liabilities 734,252 (214,642) 519,610
============================================= ========= =============== ==========
Reconciliation of equity at 31 December 2010
Effect
Canadian of transition
Note GAAP to IFRSs IFRSs
US$ '000 US$ '000 US$ '000
===================================== ====== ========= =============== ==========
Assets
Non-current assets
Mine properties and reserves (b) 488,811 (217,157) 271,654
Other property, plant and equipment 126,341 - 126,341
Exploration and evaluation assets (a) 3,306 7,325 10,631
Investment in associate 743 - 743
Available for sale financial
asset 1,975 - 1,975
Deferred tax asset (c) 1,608 (1,608) -
===================================== ====== ========= =============== ==========
622,784 (211,440) 411,344
============================================ ========= =============== ==========
Current assets
Cash and cash equivalents 57,122 - 57,122
Trade and other receivables 29,506 - 29,506
Inventories (b) 5,733 (80) 5,653
Current taxation 3,668 - 3,668
96,029 (80) 95,949
============================================ ========= =============== ==========
Total assets 718,813 (211,520) 507,293
============================================= ========= =============== ==========
Equity and liabilities
Capital and reserves
Attributable to equity holders
of the Company:
Share capital (d) 556,771 26,103 582,874
Contributed surplus 16,662 - 16,662
Other reserves (e) 33,209 (36,818) (3,609)
Deficit (f) (56,635) (155,436) (212,071)
===================================== ====== ========= =============== ==========
550,007 (166,151) 383,856
============================================ ========= =============== ==========
Non-controlling interest 2,494 - 2,494
============================================= ========= =============== ==========
Total capital and reserves 552,501 (166,151) 386,350
============================================= ========= =============== ==========
Non-current liabilities
Deferred tax liabilities (c) 90,372 (44,759) 45,613
Provisions (g) 13,752 (610) 13,142
Deferred revenue 45,794 - 45,794
============================================= ========= =============== ==========
149,918 (45,369) 104,549
============================================ ========= =============== ==========
Current liabilities
Trade and other payables 11,557 - 11,557
Deferred revenue 3,867 - 3,867
Derivative financial liability 970 - 970
============================================= ========= =============== ==========
16,394 - 16,394
============================================ ========= =============== ==========
Total liabilities 166,312 (45,369) 120,943
============================================= ========= =============== ==========
Total equity and liabilities 718,813 (211,520) 507,293
============================================= ========= =============== ==========
Notes to the reconciliations of equity at 1 January and 30
September 2010 and 31 December 2010
(a) Under Canadian GAAP (CGAAP) the Company recognised mineral
properties at the exploration stage, development stage and
production stage as deferred exploration and development costs.
Under IFRS a distinction is made between exploration and evaluation
assets, accounted for under IFRS 6 Exploration and Evaluation of
Mineral Resources, and mine properties - including mines under
construction and producing mines - which are accounted for in
accordance with IAS 16 Property, Plant and Equipment. Summaries of
assets at 30 September 2011 are shown in notes 6-8.
(b) The Company has taken the IFRS 1 Business Combinations
exemption, which allows them to choose an effective date from which
to adopt IFRS 3 (Revised) Business Combinations (IFRS 3R). IAS 27
(Revised) Consolidated and Separate Financial Statements (IAS 27R)
must also be adopted from that date. The Company has chosen to
apply IFRS retrospectively to all business combinations that
occurred on or after 01 June 2007.
The acquisition of a further 30% stake in Hellas Gold on 29 June
2007 has therefore been accounted for under IFRSs. Under CGAAP this
was considered a business combination, with the excess of the fair
value of the non-controlling interest acquired recognised as
additional mine properties and reserves in the balance sheet,
whereas under IFRS the transaction is an equity transaction with
the Company's controlling and non-controlling interests adjusted to
reflect changes in its relative interests in Hellas Gold. This
results in a reduction to the carrying value of the mine properties
and reserves (IFRS 3R adjustment), with cumulative translation
differences that were capitalised to the mine properties and
reserves under CGAAP written back and depletion that was recognised
on the additional mine properties and reserves added back to the
date of transition. The reduction in the value of mine properties
and reserves on transition results in a corresponding decrease in
the deferred tax liability relating to those assets. In the period
to 30 September 2010 and the year to 31 December 2010 further
depletion relating to the additional mine properties and reserves
is also added back against either cost of sales or inventory
depending on its previous allocation under CGAAP.
The following table reconciles all movements in mine properties
and reserves on conversion to IFRS.
Mine properties and reserves 1 January 2010 Canadian GAAP: 479,370
IFRS 3R adjustment (198,517)
Cumulative translation differences (note (e)) (15,524)
Add back of depletion 3,941
Adjustment to decommissioning liability (658)
Reclassification as exploration and evaluation assets (note
(a)) (6,189)
Total transition adjustments at 1 January 2010 (216,947)
Mine properties and reserves 1 January 2010 IFRS 262,423
============================================================= ==========
Mine properties and reserves 30 September 2010 Canadian
GAAP: 485,548
Transition adjustments at 1 January 2010 (216,947)
Add back of depletion 1 January 2010 to 30 September 2010
(inventory) 164
Add back of depletion 1 January 2010 to 30 September (cost
of sales) 736
Adjustment to decommissioning liability 72
Reclassification as exploration and evaluation assets (note
(a)) (979)
============================================================= ==========
Mine properties and reserves 30 September 2010 IFRS 268,594
============================================================= ==========
Mine properties and reserves 31 December 2010 Canadian
GAAP 488,811
Transition adjustments at 1 January 2010 (216,947)
Add back of depletion 1 January 2010 to 31 December 2010
(inventory) 80
Add back of depletion 1 January 2010 to 31 December 2010
(cost of sales) 1,083
Adjustment to decommissioning liability (237)
Reclassification as exploration and evaluation assets (note
(a)) (1,136)
============================================================= ==========
Mine properties and reserves 31 December 2010 IFRS 271,654
============================================================= ==========
(c) Under CGAAP income tax bases of certain assets were
translated into US$ using historical exchange rates. In accordance
with IAS 12 income tax bases are translated using exchange rates
ruling at each reporting date.
There is no deferred tax asset disclosed under IFRS since
deferred tax assets are offset against the deferred tax liability
where the relevant entity has a legally enforceable right to set
off current assets against current tax liabilities and the deferred
tax assets and the deferred tax liabilities relate to income taxes
levied by the same taxation authority on either the same taxable
entity, or different taxable entities that intend either to settle
current tax liabilities and assets on a net basis.
The deferred tax liability decreased as a result of the
reduction in the value of mine properties and reserves, as
described in note (b).
(d) Under CGAAP shares issued as consideration in a business
combination are valued using the average share price for a period
prior to and subsequent to the announcement of the transaction,
whereas under IFRS, shares are valued at their acquisition date
fair value. This results in an increase of $26,103 to share capital
at transition.
(e) The Company has taken the IFRS 1 exemption relating to
cumulative translation differences, which allows them to deem the
cumulative translation reserve to be zero at the date of
transition. In addition to the write back of $15,524 of cumulative
translation differences on the additional mineral property the
transfer of remaining cumulative translation differences to deficit
reduces other components of equity by $21,294 at transition and the
Company's deficit by the same amount.
(f) Movements in deficit between CGAAP and IFRS as at 1 January,
30 September and 31 December 2010 can be reconciled as follows:
Deficit 1 January 2010 Canadian GAAP: 13,828
Transfer of mineral property to deficit (note (b)) 174,991
Add back of depletion expense (note (b)) (3,941)
Net adjustment to deferred tax 5,295
Transfer of cumulative translation differences to deficit
(note (e)) (21,294)
=============================================================== =========
Deficit 01 January 2010 IFRS 168,879
=============================================================== =========
CGAAP loss for the 9 month period ended 30 September 2010 26,257
Add back of depletion expense (1 January 2010 to 30 September
2010) (736)
Adjustment to decommissioning liability 219
Net adjustment to deferred tax 3,993
=============================================================== =========
Deficit 30 September 2010 IFRS: 198,612
=============================================================== =========
Deficit 01 January 2010 IFRS 168,879
CGAAP loss for the year ended 31 December 2010 42,807
Add back of depletion expense (1 January 2010 to 31 December
2010) (1,083)
Adjustment to decommissioning liability 286
Net adjustment to deferred tax 1,182
=============================================================== =========
Deficit 31 December 2010 IFRS 212,071
=============================================================== =========
(g) Under CGAAP a decommissioning liability was set at inception
and could only be changed if the provision was increased, with only
the increased portion discounted at the revised rate. Under IFRS
the entire provision is discounted using a rate specific to the
liability at each balance sheet date. If the rate changes the
entire provision is discounted using that rate. This resulted in a
decrease of $658 in the value of the decommissioning provision at
the date of transition. At 30 September 2010, the adjustment to
decrease the decommissioning provision was $365 and at 31 December
2010 an adjustment of $610 was required to decrease the CGAAP
provision.
Reconciliation of comprehensive income for the nine month period
ended 30 September 2010:
Effect
Canadian of transition
Note GAAP to IFRSs IFRSs
US$ '000 US$ '000 US$ '000
====================================== ====== ========= =============== =========
Revenue 31,608 - 31,608
Cost of sales (25,281) - (25,281)
Depreciation and depletion (h) (5,040) 736 (4,304)
====================================== ====== ========= =============== =========
Gross Profit 1,287 736 2,023
============================================== ========= =============== =========
Corporate administrative and
overhead expenses (9,401) - (9,401)
Hellas Gold administrative and
overhead expenses (7,699) - (7,699)
Hellas Gold water treatment expenses
(for non-operating mines) (2,886) - (2,886)
Share-based compensation expense (8,325) - (8,325)
Depreciation (915) - (915)
Share of (loss)/ profit of associate 30 - 30
Operating (loss)/profit (27,909) 736 (27,173)
============================================== ========= =============== =========
Interest income 162 - 162
Hedge contract profit 577 - 577
Foreign exchange (loss)/ gain (1,861) - (1,861)
Accretion of decommissioning
liability (i) (94) (219) (313)
(Loss)/profit before tax (29,125) 517 (28,608)
============================================== ========= =============== =========
Income tax credit/(expense) (j) 2,463 (3,993) (1,530)
(Loss)/profit for the period
after tax (26,662) (3,476) (30,138)
============================================== ========= =============== =========
Attributable to:
Equity holders of the parent (26,257) (3,476) (29,733)
Non-controlling interest (405) - (405)
Other comprehensive income 1,502 - 1,502
Total comprehensive loss for
the period attributable to equity
holders of the parent (24,755) (3,476) (28,231)
============================================== ========= =============== =========
Reconciliation of comprehensive income for the three month
period ended 30 September 2010:
Effect
Canadian of transition
Note GAAP to IFRSs IFRSs
US$ '000 US$ '000 US$ '000
====================================== ====== ========= =============== ====================
Revenue 9,204 - 9,204
Cost of sales (7,438) - (7,438)
Depreciation and depletion (h) (1,430) 212 (1,218)
====================================== ====== ========= =============== ====================
Gross Profit 336 212 548
============================================== ========= =============== ====================
Corporate administrative and
overhead expenses (3,173) - (3,173)
Hellas Gold administrative and
overhead expenses (2,315) - (2,315)
Hellas Gold water treatment expenses
(for non-operating
mines) (855) - (855)
Share-based compensation expense (3,562) - (3,562)
Depreciation (315) - (315)
Share of (loss)/profit of associate (9) - (9)
Operating (loss)/profit (9,893) 212 (9,681)
============================================== ========= =============== ====================
Hedge contract profit 183 - 183
Interest income 65 - 65
Foreign exchange (loss)/gain 6,930 - 6,930
Accretion of decommissioning
liability (i) (31) (67) (98)
(Loss)/profit before tax (2,746) 145 (2,601)
============================================== ========= =============== ====================
Income tax credit/(expense) (j) 960 (997) (37)
(Loss)/profit for the period
after tax (1,786) (852) (2,638)
============================================== ========= =============== ====================
Attributable to:
Equity holders of the parent (1,645) (852) (2,497)
Non-controlling interest (141) - (141)
Other comprehensive income (1,855) - (1,855)
Total comprehensive loss for
the period attributable to equity
holders of the parent (3,500) (852) (4,352)
============================================== ========= =============== ====================
Reconciliation of comprehensive income for the year ended 31
December 2010:
Effect
Canadian of transition
Note GAAP to IFRSs IFRSs
US$ '000 US$ '000 US$ '000
===================================== ====== ========= =============== =========
Revenue 49,855 - 49,855
Cost of sales (37,577) (37,577)
Depreciation and depletion (h) (7,462) 1,083 (6,379)
===================================== ====== ========= =============== =========
Gross Profit 4,816 1,083 5,899
============================================= ========= =============== =========
Corporate administrative and
overhead expenses (15,313) - (15,313)
Hellas Gold administrative and
overhead expenses (8,294) - (8,294)
Hellas Gold water treatment
expenses (for non-operating
mines) (3,556) - (3,556)
Depreciation (1,221) - (1,221)
Share-based compensation expense (15,907) (15,907)
Write down of mineral property (590) - (590)
Share of (loss)/profit of associate 10 - 10
============================================= ========= =============== =========
Operating (loss)/profit (40,055) 1,083 (38,972)
============================================= ========= =============== =========
Hedge contract profit 577 - 577
Interest income 306 - 306
Foreign exchange (loss)/ gain (3,321) - (3,321)
Accretion of decommissioning
liability (i) (127) (286) (413)
(Loss)/profit before tax (42,620) 797 (41,823)
============================================= ========= =============== =========
Income tax expense (j) (623) (1,182) (1,805)
(Loss)/profit for the year after
tax (43,243) (385) (43,628)
============================================= ========= =============== =========
Attributable to:
Equity holders of the parent (42,807) (385) (43,192)
Non controlling interest (436) - (436)
Other comprehensive income 599 - 599
Total comprehensive loss for
the year attributable to equity
holders of the parent (42,208) (385) (42,593)
============================================= ========= =============== =========
Notes to the reconciliation of profit or loss for the period
ended 30 September 2010 and 31 December 2010:
(h) Relates to the write-back off depletion on the mineral
property derecognised under IFRS, (as outlined in (b) above) of
which $736 affected reported loss under CGAAP in the nine month
period ended 30 September 2010 and $1,083 for the year ended 31
December 2010.
(i) Relates to the finance cost charge on the decommissioning
liability, with an adjustment required as a result of the GAAP
difference outlined in note (g) above.
(j) Relates to adjustments to deferred tax, as discussed in (c) above.
Statement of Cash Flow for the three and nine month periods
ended 30 September 2010
IFRS transition adjustments noted above did not have any impact
on cash and cash equivalents. The IFRS loss for the period (as
reconciled from CGAAP above) was used for cash flow calculation.
Certain prior year amounts have been reclassified from statements
previously presented to confirm to 2011 presentation. There is no
net impact on cash and cash equivalents as a result of the
presentation change.
14. Segmented report
There were no changes in the company's designation of its
reporting segments in the six month period to 30 September 2011,
the financial position and performance of the reporting segments as
at 30 September 2011 and in the nine-month period ended 30
September 2011 is as follows:
Greece Romania Turkey Corporate TOTAL
============================ ======== ========= ======== =========== ========
Assets - 30 September
2011:
Mine properties and
reserves 223,113 55,811 - - 278,924
Property, plant and
equipment 116,744 22,134 31 743 139,652
Exploration and evaluation
assets 802 6,957 4,436 - 12,195
Cash 1,173 879 219 22,038 24,309
Other assets* 38,127 455 522 4,424 43,528
Segment assets 379,959 86,236 5,208 27,205 498,608
============================ ======== ========= ======== =========== ========
Assets - 31 December
2010:
Mine properties and
reserves 220,985 50,669 - - 271,654
Property, plant and
equipment 114,076 11,395 45 825 126,341
Exploration and evaluation
assets 682 6,643 3,306 - 10,631
Cash 3,978 1,070 410 51,664 57,122
Other assets* 35,179 1,516 481 4,369 41,545
Segment assets 374,900 71,293 4,242 56,858 507,293
============================ ======== ========= ======== =========== ========
*Other assets consist of investments, trade and other
receivables and inventories. Movements in trade payables and
inventories are a direct result of timing differences between
period ends.
Profit and loss -
three months ended 30 TOTAL
September 2011: Greece Romania Turkey Corporate
============================== ======== ========= ======== =========== =========
Sales to external customers: 16,015 - - - 16,015
Profit/(loss) before
tax 958 3,898 (123) (14,518) (9,785)
Tax benefit/(expense) (1,316) - - - (1,316)
Total segment result (358) 3,898 (123) (14,518) (11,101)
============================== ======== ========= ======== =========== =========
Profit and loss -
three months ended 30 TOTAL
September 2010: Greece Romania Turkey Corporate
============================== ======== ========= ======== =========== ========
Sales to external customers: 9,204 - - - 9,204
Profit/(loss) before
tax (5,201) - (10) 2,610 (2,601)
Tax benefit/(expense) (41) - - 4 (37)
Total segment result (5,242) - (10) 2,614 (2,638)
============================== ======== ========= ======== =========== ========
Profit and loss -
nine months ended 30 TOTAL
September 2011: Greece Romania Turkey Corporate
============================== ======= ======== ======= ========== =========
Sales to external customers: 40,655 - - - 40,655
Profit/(loss) before
tax 901 130 (279) (30,707) (29,955)
Tax benefit/(expense) (29) - - 926 897
Total segment result 872 130 (279) (29,781) (29,058)
============================== ======= ======== ======= ========== =========
Profit and loss -
nine months ended 30 TOTAL
September 2010: Greece Romania Turkey Corporate
============================== ========= ======== ======= ========== =========
Sales to external customers: 31,608 - - - 31,608
Profit/(loss) before
tax (11,536) - (10) (17,062) (28,608)
Tax benefit/(expense) (1,689) - - 159 (1,530)
Total segment result (13,225) - (10) (16,903) (30,138)
============================== ========= ======== ======= ========== =========
15. Loss 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:
3 months ended 9 months ended
30 September 30 September
2011 2010 2011 2010
US$000 US$000 US$000 US$000
====================================== ========= ======== ========= =========
Loss for the period (11,345) (2,497) (29,257) (29,733)
====================================== ========= ======== ========= =========
Effect of dilutive potential common - - - -
shares
Weighted average number of common
shares for the purpose
of basic earnings per share 183,847 182,929 183,795 182,544
Incremental shares - share options - - - -
Weighted average number of shares
for the purpose of diluted earnings
per share 183,847 182,929 183,795 182,544
====================================== ========= ======== ========= =========
16. Post balance sheet events
Financing
On 1 October 2011, the Company announced Heads of Terms with
Qatar Holding LLC for the provision of a US$600 million 7 year
Senior Secured Loan Facility ("The Facility"). The Company also
proposed to offer US$150 million of unsecured Loan Notes to certain
existing shareholders on the same economic terms as the Facility.
This US$750 million debt package will provide all the required
capital for the Company's current project development, with
additional funding for exploration. In addition, the Company will
issue 50.5 million warrants pro-rata to Qatar Holding and the
subscribers to the Loan Notes. The financing package is subject to
shareholder approval and the Company will be distributing the Proxy
Circular and Proxy Form to shareholders shortly, with the meeting
scheduled to take place in December.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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