RNS Number:7740Y
European Goldfields Ltd
17 May 2004
FOR IMMEDIATE RELEASE 17 May 2004
EUROPEAN GOLDFIELDS LIMITED
RESULTS FOR THE QUARTER ENDED 31 MARCH 2004
Introduction
The following discussion of the operations, results and financial position of
the Company for the period ended March 31, 2004 should be read in conjunction
with the March 31, 2004 unaudited Financial Statements and the related Notes.
European Goldfields Limited is a resource company involved in the acquisition,
exploration and development of precious and base metal properties. The Company's
primary focus is the continued development of its joint venture projects in
Romania and Greece.
Results of Operations
During the 1st quarter of 2004, the Company continued its regional exploration
programs in Romania, resulting in deferred exploration expenditures of
$1,597,135 (2003, $1,214,354) of this, $1,345,589 (84%) was incurred on the
Certej Belt and $156,521(10 %) on the Zlatna Belt. The 100% owned Voia
concession incurred expenditure of $ 51,629.
The results of operations are summarized in the following table:
$Cdn 2004 2003 2003 2003
1st Quarter 4th Quarter 3rd Quarter 2nd Quarter
Income Statement
Loss 7,007,542 2,157,954 409,177 491,208
Loss per share 0.24 0.11 0.01 0.02
Balance Sheet
Working Capital 18,880,139 6,544,948 7,334,737 9,095,416
Total Assets 88,914,819 59,485,286 40,404,466 40,378,492
Statement of Cash Flows
Investments in exploration and development 1,597,135 1,324,522 1,345,316 1,646,105
$Cdn 2003 2002 2002 2002
1st Quarter 4th Quarter 3rd Quarter 2nd Quarter
Income Statement
Loss 373,044 881,293 315,306 313,239
7,007,542
Loss per share 0.02 0.04 0.01 0.02
Balance Sheet
Working Capital 11,262,891 12,918,205 16,877,306 19,540,980
Total Assets 40,900,628 41,798,205 42,806,265 42,647,928
Statement of Cash Flows
Investments in exploration and development 1,214,354 1,075,639 4,205,775 1,623,503
For the three months ended March 31, 2004, the Company incurred a loss of
$7,007,542 or $0.24 per share (2003, $373,044 or $0.02 per share). The increase
in the Company's administrative and overhead costs can be primarily attributed
to recognized stock option compensation costs of $2,576,952 based on the
weighted average fair value of stock options granted during the period, the
remaining portion of financing costs of $1,488,825 relating to the issuance of
convertible loan notes expensed in the 1st quarter of 2004. Other costs include
directors being compensated with the issuance of shares with a total cost of
$1,626,000 expensed during the quarter. The company acquired a 37.98% in Hellas
Gold SA and the share of loss for the period amounted to $338,384.
An analysis of the deferred exploration expenditure for the quarter is provided
below:
Certej Belt
Certej Concession
In the three months of 2004 drilling activities continued, with a total of 5,792
meters drilled at a total cost of $599,852.
Bulk density samples, for the determination of specific gravity were collected
from the Coranda and Dealul Grozii area drill holes.
An in house QA/QC report was completed using 415 RC and 31 DC cross-check
samples sent to Chemex laboratories in Canada.
A report entitled "Certej Project Romania Review Environmental Report" by Scott
Wilson was completed.
Aker Kvaerner was retained to conduct further studies on the advancement of the
Certej project.
Project overheads of $336,621 include costs relating to the Company's local and
regional support offices.
Project management expenditures of $192,370 were principally associated with the
payment of mining tax of $141,096 in January 2004.
Bolcana Concession
In accordance with the 2004 work programme no exploration work was carried out
on the Bolcana license during the Quarter.
Voia Concession
In accordance with the work programme no drilling was carried out during the
quarter. Certain surface trenching work was carried out and composite samples
collected for analysis.
Zlatna Belt
Zlatna Concession
Expenditures of $91,086 for Diamond Drilling Core and Reverse Circulation were
incurred on the Valea Tisei gold copper porphyry target.
A total of 1,407m of drilling were completed during the period.
Related Party Transaction
The Company entered into a loan agreement with the Chief Executive Officer
whereby it has loaned him the sum of $200,000, bearing interest of 0.5%, per
annum. If he remains an executive director of the Company at January 31, 2005
50% of the remaining amount of the principal amount of the loan will be waived.
If he remains a director at January 31, 2006 the remaining amount of the loan
will be waived. To the extent not waived, the loan will be repayable in the
event that he ceases for whatever reason to be employed by the Company.
New Accounting Policies
The Company adopted the following accounting policies during the quarter.
Investments in companies and partnerships in which the Company does not have
joint control, but does have significant influence on them, are accounted for
using the equity method.
Goodwill represents the difference between the price the Company paid for the
business, using the purchase method of accounting, and the fair value of the net
tangible assets and identifiable intangible assets acquired. The Company will
test goodwill annually for impairment, rather than amortize goodwill over a
specific period.
Contractual Obligations
The Company has spending commitments of US$1,649,270 over the five year term of
the Voia exploration license.
Acquisition of Investment
In February 2004, the Group acquired 38% of the issued share capital in Hellas
Gold S.A, a joint venture company established for the purposes of acquiring the
Stratoni, Olympias and Skouries mines in Chalkidiki, Greece from the Greek
government. Hellas Gold S.A completed the acquisition of these interests on
January 28, 2004. The 38% shareholding will be subsequently diluted to 30% on
completion of subscriptions by all parties to the transaction.
Liquidity and Capital Resources
As at 31 March 2004, European Goldfields' working capital stands at $18,880,139.
In February 2004, the Company raised a further $23.6 million by way of a
non-brokered private placing of 9,458,750 special warrants at a price of $2.50
per special warrant. The special warrants were exercised, effective as of
February 12, 2004 convertible into one common share in the Company. The
subscription proceeds were used to part fund the subscription by the Group of
its interest in Hellas Gold S.A.
During the period, the Company received proceeds of $7,778,675 through the
exercise of 3,111,470 share warrants at a price of $2.50. Following Quarter end,
a further 807,500 warrants were exercised for an aggregate total of 3,918,970
warrants converted into common shares, for total proceeds to the Company of
$9,797,425. After the exercise there were no warrants outstanding and the
Company's issued share capital was 43,933,798 common shares.
The Company presently has sufficient funds to fully fund planned expenditures
for 2004.
Risks and Uncertainties
Foreign Country and Political Risks
All of the Group's property interests are located in Romania and Greece and,
consequently, the Group is subject to certain risks, including currency
fluctuations and possible political or economic instability in those countries
or in the region which may result in the impairment or loss of mineral
concessions or other mineral rights, and mineral exploration and mining
activities may be affected in varying degrees by political stability and
government regulations relating to the mining industry. Any changes in
regulations or shifts in political attitudes are beyond control of the Group and
may adversely affect its business. Exploration may be affected in varying
degrees by government regulations with respect to restrictions on future
exploitation and production, price controls, export controls, foreign exchange
controls, income taxes, expropriation of property, environmental legislation and
mine and site safety.
Exploration and Mining Risks
The business of exploring for minerals and mining involves a high degree of
risk. Only a small proportion of the properties that are explored are ultimately
developed into producing mines. At present, none of the Group's properties in
Romania have proven or probable reserves and the resource estimates relating to
the Greeks Assets are historic. The proposed work programs assigned to these
projects are for the purposes of exploratory search for proven or probable
reserves. The mining areas presently being assessed by the Group may not contain
economically recoverable volumes of minerals or metals.
Financing Risks
The Directors are of the opinion having made due and careful enquiry that, the
working capital available to the Company and the Group will be sufficient for
its present requirements, and is for the next 12 months. Thereafter, further
exploration and development of one or more of the Group's properties will be
dependant upon the Group's ability to obtain financing through joint ventures,
equity or debt financing or other means, and although the Group has been
successful in the past in obtaining financing through the sale of equity
securities, there can be no assurance that the Group will be able to obtain
adequate financing in the future or that the terms of financing will be
favourable. Failure to obtain such additional financing could result in delay or
indefinite postponement of further exploration and development of its projects
with the possible loss of such properties.
No Experience of Development- Stage Mining Operations
The Group has no previous experience in placing resource properties into
production and its ability to do so will be dependant upon using the services of
appropriately experienced personnel or entering into agreements with other major
resource companies that can provide such expertise. There can be no assurance
that the Group will have available to it the necessary expertise when and if it
places its resource properties into production.
Estimates of Mineral Resources and Production Risks
The mineral resource estimates included in this document are estimates only and
no assurance can be given that any proven or provable reserves will be
discovered or that any particular level of recovery of minerals will in fact be
realized or that an identified reserve or resource will ever qualify as a
commercially mineable (or viable) deposit which can be legally and economically
exploited. In addition, the grade of mineralization which may ultimately be
mined may differ from that indicated by drilling results and such differences
could be material. Production can be affected by such factors as permitting
regulations and requirements, weather, environmental factors, unforeseen
technical difficulties, unusual or unexpected geological formations and work
interruptions.
Mineral Prices
The mineral exploration and development industry in general is intensely
competitive and there is no assurance that, even if commercial quantities of
proven and probable reserves are discovered, a profitable market may exist for
the sale of the same. Factors beyond control of the Group may affect the
marketability of any substances discovered. Mineral prices have fluctuated
widely, particularly in the recent years. The marketability of minerals is also
affected by numerous other factors beyond the control of the Group, including
government regulations relating to price, royalties, allowable production and
exporting of minerals, the effect of which cannot accurately be predicted.
Uninsured Risks
In the course of exploration, development and production of mineral properties,
certain risks, and in particular, unexpected or unusual geological operating
conditions including rock bursts, cave-ins, fore, flooding and earthquakes may
occur. It is not always possible to fully insure against such risks as a result
of high premiums or other reasons. Should such liabilities arise, they could
reduce or eliminate any future profitability and result in increased costs, have
a material adverse effect on the Group's results and a decline in the value of
the securities of the Company.
Competition
The Group competes with many companies and individuals that have substantially
greater financial and technical resources than the Group for the acquisition of
mineral concessions as well as for the recruitment and retention of qualified
employees.
Environmental and other Regulatory Requirements
The activities of the Group are subject to environmental regulations promulgated
by government agencies from time to time. Environmental legislation generally
provides for restrictions and prohibitions on spills, releases or emissions of
various substances produced in association with certain mining industry
operations, such as seepage from tailings disposal areas, which would result in
imposition of fines and penalties. In addition, certain types of operations
require the submission and approval of environmental impact assessments.
Environmental legislation is evolving in a manner which means stricter
standards, and enforcement, fines and penalties for non-compliance are more
stringent. Environmental assessments of proposed projects carry a heightened
degree of responsibility for companies and their directors, offices and
employees. The cost of compliance with changes in governmental regulations has a
potential to reduce the profitability of operations.
Exploration, Mining and Other Licences
The Group's exploration and mining activities are dependant upon the grant of
appropriate licences, concessions, leases, permits and regulatory consents ("
Authorisations") which may not be granted or may be withdrawn or made subject to
limitations. There can be no assurance that such Authorisations will be renewed
following expiry or granted (as the case may be) or as to the terms of such
grants or renewals.
Title Matters
The acquisition of title to mineral concessions in Romania and Greece is a
detailed and time consuming process. Title to and the area of mining concessions
may be disputed. While the Group has diligently investigated title to all
mineral concessions and, to the best of its knowledge, title to all of its
properties in good standing, this should not be construed as a guarantee of
title. Title to properties may be affected by undisclosed and undetected
defects.
Conflicts of Interest
The Company's directors and officers may serve as directors or officers of other
companies or have significant shareholdings in other resource companies and, to
the extent that such other companies may participate in ventures in which the
Group may participate, the directors of the Company may have a conflict of
interest in negotiating and concluding terms respecting the extent of such
participation. In the event that such a conflict of interest arises at a meeting
of the Company's directors, a director who has such a conflict will abstain from
voting for or against the approval of such participation or such terms. From
time to time several companies may participate in the acquisition, exploration
and development natural resource properties thereby allowing for their
participation in larger programs, permitting of involvement in a greater number
of programs and reducing financial exposure in respect of any one program. It
may also occur that a particular company will assign all or a portion of its
interest in a particular assignment. In accordance with the laws of the Yukon
Territory, the directors of the Company are required to act honestly, in good
faith and in the best interests of the Company. In determining whether or not
the Company will participate in a particular program and the interest therein to
be acquired by it, the directors will primarily consider the degree of risk to
which the Company may be exposed and its financial position at that time.
Repatriation of Earnings
Currently there are no restrictions on the repatriation from Romania and Greece
of earnings to foreign entities. However, there can be no assurance that
restrictions of earnings from Romania and Greece will not be imposed in the
future.
Dependence on Management
The Group's development to date has largely depended and in the future will
continue to depend on the efforts of key management. Loss of any of these people
could have a material adverse effect on the Group and its business. The Company
has not taken out and does not intend to take out key man insurance in respect
of any Directors or other employees.
Joint Ventures
Members of the Group hold, and expect to hold in the future, interests in joint
ventures. Joint ventures may involve special risks associated with the
possibility that the joint venture partners may (i) have economic or business
interests or targets that are inconsistent with those of the Group; (ii) take
action contrary to the Group's policies or objectives with the respect to their
investments, for instance by veto of proposals in respect of joint venture
operations; (iii) be unable or unwilling to fulfil their obligations under the
joint venture or other agreements; or (iv) experience financial or other
difficulties. Any of the foregoing may have a material adverse effect on the
results of the operations or financial condition of the Group. In addition, the
termination of certain of these joint venture agreements, if not replaced on
similar terms, could have a material adverse effect on the results of operations
or financial condition of the Group.
Share Price Fluctuations
In recent years, the securities market have experienced a high level of price
and volume volatility, and the market price of securities of many companies,
particularly those considered to be development stage companies, have
experienced wide fluctuations in price which have not necessarily been related
to the operating performance, underlying asset values or prospects of such
companies.
General Economic Conditions
Changes in the general economic climate in which the Group operates may
adversely affect the financial performance of the Group. Factors which may
contribute to that general economic climate include the level of direct and
indirect competition against the Group, industrial disruption, the rate of
growth or gross domestic product, interest rates and the rate of inflation for
each country in which the Group operates.
AIM
The Common Shares trade on AIM rather than the Official List of the UK Listing
Authority. An investment in shares traded on AIM may carry a higher risk than an
investment in shares quoted on the Official List. Investors should be aware that
the value of the Common Shares may be volatile and may go down as well as up and
investors may therefore not recover their original investment, especially as the
market in the Common Shares on AIM may have limited liquidity.
The market price of the Common Shares may not reflect the underlying value of
the Company's net assets.
The price at which investors may dispose of their shares in the Company may be
influenced by a number of factors, some of which may pertain to the Company, and
others of which are extraneous. Investors may realize less than the original
amount they invested.
Legislative Changes
Changes in governmental regulations and policies may adversely affect the
financial performance of the Group. Future Romanian and Greek legislations and
regulations relating to labour may further increase the Group's costs or
otherwise alter the Group's relationship with its employees.
Tax Risk on Migration
The Company is currently resident for fiscal purposes in Canada. Any subsequent
relocation of the Company (by reference to the location of its management or
otherwise) may give rise to a significant tax charge.
Enforcement of Civil Liabilities
As substantially all of the assets of the Company and its subsidiaries are
located outside of Canada and the UK, and certain directors and officers of the
Company are resident outside of Canada and the UK, it may be difficult or
impossible to enforce judgments granted by a court in Canada or the UK against
the assets of the Company and its subsidiaries or the directors and officers of
the Company residing outside of Canada or the UK.
Currency Fluctuations
The Group's operations in Romania and Greece make it subject to foreign currency
fluctuations and such fluctuations may materially affect the Group's financial
position and results.
Outlook
The Company intends to continue to grow its portfolio of assets by investigating
projects of interests within its area of strategic focus of operations. As well,
the Company will define work programs for its Greek assets in partnership with
its local partner and complete an intensive technical study of its Romanian
based Certej project.
For Further Information:
IR/Media Contact:
Ed Baer
London Office: +44 (0)20 7763-7118 e-mail:
info@egoldfields.com
London Mobile: +44 (0)77 4681-5902 website:
www.egoldfields.com
Buchanan Communications +44 (0)20 7466 5000
Tim Thompson / Catherine Miles
Disclosure of auditor review of interim financial statements
The interim quarterly financial statements for the period ended 31st March 2004
have not been reviewed by the auditors.
European Goldfields Limited
Consolidated Financial Statements March 31, 2004 and 2003
(Expressed in Canadian dollars)
Consolidated Balance Sheets as at March 31, 2004 and December 31, 2003
(Canadian Dollars)
2004 2003
$ $
Unaudited Audited
Assets
Note
Current assets
Cash and cash equivalents 17,565,223 19,409,354
Short-term investments 1,765,000 4,000,000
Accounts receivable, prepaid expenses and supplies 1,265,865 2,591,094
20,596,088 26,000,448
Non current assets
Equity Investment 4 33,214,085 -
Capital assets 2 584,298 629,790
Mineral properties and deferred exploration costs 3 34,520,348 32,855,048
88,914,819 59,485,286
Liabilities
Current liabilities
Accounts payable and accrued liabilities 1,715,949 918,668
Convertible loan notes - 18,536,832
1,715,949 19,455,500
Shareholders' Equity
Capital stock and warrants 6 95,343,252 42,840,058
Contributed surplus 6 4,843,350 3,169,918
Deficit (12,987,732) (5,980,190)
87,198,870 40,029,786
88,914,819 59,485,286
Approved by Board of Directors
David Grannell Glenn Featherby
Executive Director Non Executive Director
European Goldfields Limited
Consolidated Statements of Loss and Deficit
For the three months ended March 31, 2004 and 2003
(Canadian Dollars)
March 31, March 31,
2004 2003
$ $
General and administrative expenses
Administrative and overhead costs 4,846,302 177,409
Audit, accounting, legal and other professional fees 983,343 273,277
Financing Costs - Convertible loan notes 1,488,825 -
Foreign Exchange gain (627,998) -
Interest income (23,997) (79,903)
Amortization 2,683 2,261
Share of loss in Investment 338,384 -
Loss for the period 7,007,542 373,044
Deficit - Beginning of period 5,980,190 2,548,807
Deficit - End of period 12,987,732 2,921,851
Loss per share 0.24 0.02
The accompanying notes are an integral part of these consolidated financial
statements.
European Goldfields Limited
Consolidated Statements of Cash Flows
For the three months ended March 31, 2004 and 2003
(Canadian Dollars)
March 31, March 31,
2004 2003
$ $
Cash flows from operating activities
Loss for the period (7,007,542) (373,044)
Amortization 2,683 2,261
Financing Costs - convertible loan notes 1,488,825 -
Stock option expense 2,576,952 -
Loss on disposal of capital assets 3,041 -
Share of loss 338,384 -
Directors' compensation shares 1,626,000 -
Net changes in non-cash working capital 197,222 (277,682)
(774,435) (648,465)
Cash flows from investing activities
Exploration expenditures (1,597,137) (1,214,354)
Short term investment 2,235,000 -
Acquisition of investment (33,116,004) -
Proceeds from disposal of capital assets 29,187 -
Purchase of capital assets (57,583) (70,734)
(32,506,537) (1,285,088)
Cash flows from financing activities
Proceeds for exercise of share purchase warrants 31,425,550 -
Financing Costs - Non brokered private placement (331,209) -
Proceeds from stock options 342,500 -
31,436,841 -
Decrease in cash and cash equivalents (1,844,131) (1,933,553)
Cash and cash equivalents - Beginning of period 19,409,354 13,218,589
Cash and cash equivalents - End of period 17,565,223 11,285,036
The accompanying notes are an integral part of these consolidated financial
statements.
European Goldfields Limited
Notes to Consolidated Financial Statements
For the three months ended March 31, 2004 and 2003
(Canadian Dollars)
1. Nature of operations
European Goldfields Limited (the "Company") is in the process of exploring its
mineral properties in Romania and has not yet determined whether those
properties contain economic reserves. The underlying value of the mineral
properties and deferred exploration costs is dependent upon the existence and
economic recovery of such reserves in the future, and the ability to raise
long-term financing to complete the development of the properties.
The Company believes it has adequate funds available to meet its corporate and
administrative obligations for the coming year and its planned expenditures on
its mineral properties.
These consolidated financial statements have been prepared on a going concern
basis, which assumes the Company will be able to realize assets and discharge
liabilities in the normal course of business for the foreseeable future. These
consolidated financial statements do not include the adjustments that would be
necessary should the Company be unable to continue as a going concern.
The interim consolidated financial statements of the Company have been prepared
in accordance with accounting principles generally accepted in Canada using the
same accounting policies as those disclosed in note 2 to the Company's audited
consolidated financial statements for the year ended December 31, 2003.
The Company adopted the following accounting policies during the quarter.
Investments in companies and partnerships in which the Company does not have
joint control, but does have significant influence on them, are accounted for
using the equity method.
Goodwill represents the difference between the price the Company paid for the
business, using the purchase method of accounting, and the fair value of the net
tangible assets and identifiable intangible assets acquired. The Company will
test goodwill annually for impairment, rather than amortize goodwill over a
specific period.
These interim consolidated financial statements should be read in conjunction
with the Company's audited annual consolidated financial statements for the year
2003.
2. Capital Assets
March 31, March 31, 2003
2004
$ $
Vehicles 560,417 540,851
Field/Office equipment 475,149 423,894
1,035,566 964,745
Less: Accumulated amortization 451,268 252,872
584,298 711,873
3. Mineral properties and deferred exploration costs
Certej Zlatna Bolcana Baita-Craciunesti Voia Total
$ $ $ $ $ $
Balance - December 31, 2003 21,587,477 5,556,601 2,730,276 2,629,781 350,913 32,855,048
Drilling and assaying 599,852 91,086 1,774 28,559 375 721,646
Geosciences and technical 195,249 19,466 - 207 21,039 235,961
consulting
Samplers, miners and surveying 21,497 846 - - 199 22,542
Project management 192,370 50 - 360 - 192,780
Project overhead 336,621 45,073 717 11,779 30,016 424,206
Amortization 47,714 6,817 6,817 6,817 - 68,165
1,393,303 163,338 9,308 47,722 51,629 1,665,300
Balance - March 31, 2004 22,980,780 5,719,939 2,739,584 2,677,503 402,542 34,520,348
Romanian mineral properties
The Company's 80% owned subsidiary, Deva Gold S.A. ("Deva") presently holds 100%
interests in four mineral resource properties in Romania. Exploitation licenses
have been issued to Deva as titleholder for the Certej, Zlatna and Bolcana
projects. An exploration license has been issued to Deva as titleholder for the
Baita-Craciunesti project. Minvest S.A., together with three private Romanian
companies, holds a 20% interest in Deva and the Company holds the pre-emptive
right to acquire such 20% interest.
The Company is required to fund 100% of all expenditure related to the
exploration and development of these properties. The Company holds a
preferential right to recover all funding plus interest from future cash flows
prior to the shareholders receiving dividends.
Individual property spending commitments for the Certej, Zlatna, Bolcana and
Baita-Craciunesti licenses have been met as at December 31, 2003.
The Company's 100% owned subsidiary European Goldfields (Romania) SRL holds a
100% interest in the Voia exploration license. The license was granted from
March 2002. The Company has spending commitments of US$1,649,270 over the
initial five year term of the license.
4. Equity Investment
March 31, March 31,
2004 2003
$ $
Cost 33,552,469 -
Loss (338,384) -
Balance at 31March 2004 33,214,085 -
A 37.98% indirect investment in Hellas Gold S.A. Hellas Gold S.A. owns the
Kassandra Mines asset in Northern Greece. The property hosts the Skouries
gold-copper, Olympias and Stratoni poly-metallic deposits.
The difference between the carrying value of the investment and the Company's
37.98% share of the net assets of Hellas Gold S.A. $ 14,854,838 is represented
by goodwill. The goodwill will be tested for impairment on an annual basis.
Summary financial information of the equity investment converted at the quarter
end exchange rate is as follows.
March 31, 2004
$
Current Assets 20,014,939
Non Current Assets 17,817,189
Current Liabilities (45,921)
Net Equity 37,786,207
Interest Income 47,488
Operating Costs (919,443)
Net Loss (871,955)
5. Related party transaction
The Company entered into an agreement on the January 31, 2004 with the Chief
Executive Officer whereby it has loaned him the sum of $200,000, bearing
interest of 0.5 per cent, per annum. If he remains an executive director of the
Company at January 31, 2005, 50 per cent, of the principal amount of the loan
will be waived. If he remains a director at January 31, 2006, the remaining
amount of the loan will be waived. To the extent not waived, the loan will be
repayable in the event that he ceases for whatever reason to be employed by the
Company.
6. Capital stock
Authorized:
Unlimited number of common shares
Unlimited number of preferred shares, issuable in series
Issued and outstanding:
Number of Amount
shares $
Common shares
Balance - December 31, 2003 22,021,126 42,840,058
Shares issued on conversion of convertible loan 8,309,957 19,528,400
Shares issued from non brokered private placement 9,458,750 23,646,875
Share options exercised 225,000 342,500
Warrants Exercised 3,111,470 7,778,675
Shares issued as compensation to directors 600,000 1,626,000
Share issue costs (419,256)
Balance - March 31, 2004 43,726,303 95,343,252
In February 2004, the Company raised $23.6 million by way of non-brokered
private placement of up to 9,458,750 warrants at a price of $2.50 per warrant.
Each warrant is convertible into one common share in the Company. The warrants
were exercised during the period.
Pursuant to the Company's share compensation arrangement, on March 9, 2004,
subject to acceptance by the TSX Venture Exchange, the directors conditionally
issued common shares at a deemed price of $2.71 per share to senior officers as
follows: Eduardo Baer, 350,000 common shares and David Grannell, 250,000 common
shares. Such shares were conditionally issued in recognition of Messrs. Baer's
and Grannell's performance in achieving a number of corporate milestones.
Contributed Surplus
2004 2003
$ $
Stock option Compensation 3,967,359 1,395,272
Equity component of convertible loan notes - 991,568
Financing costs - convertible loan notes - (92,913)
Brokers warrants 875,991 875,991
4,843,350 3,169,918
7. Stock options
The plan allows that the Directors are authorized to grant stock options, which
enable the directors, officers, consultants and employees to acquire common
shares. The exercise price of the options equals the closing price on the day
prior to the option allotment.
As at March 31, 2004, common share stock options held by directors and employees
are as follows:
Number of Options Exercise
price $
Expiry date
2004 786,000 1.40
2004 639,000 2.50
2004 50,000 2.04
2004 500,000 2.05
2004 75,000 2.20
2005 15,000 1.40
2005 200,000 2.50
2006 25,000 1.40
2008 175,000 2.20
2009 1,710,000 2.80
4,175,000 2.33
During the period ended March 31, 2004 stock options were issued, exercised and
expired as follows:
Number of Stock Weighted Average
Warrants Exercise Price $
Balance - December 31, 2003 2,690,000 1.96
Options granted - 2004 1,710,000 2.80
Options exercised - 2004 (225,000) 1.52
Balance - March 31, 2004 4,175,000 2.33
On 9th March 2004, the company granted 1,225,000 fully vested stock options to
directors and 485,000 stock options (of which 50% vest in November 2004 and 50%
in August 2005) to employees and consultants; all are exercisable at $2.80 per
common share and expire five years from the date granted.
The weighted average grant-date fair value of 1,710,000 stock options granted to
employees, directors and officers during the period ended March 31, 2004 was
$2,576,952. A compensation cost has been recognised in the income statement for
theses stock options.
The fair value of the options granted has been estimated at the date of grant
using a Black-Scholes option pricing model with the following assumptions:
weighted average risk free interest rate of 4.0% (2003 - 4.3%); volatility
factor of the expected market price of the Company's stock of 93.4% (2003 -
93.4%); and a weighted average expected life of the options of 4 to 5 years
(2003 - 5 years).
8. Warrants
As at March 31, 2004, the following common share purchase and broker warrants
were outstanding:
Expiry Date Numbers of Exercise Price $
Warrants
Share purchase warrants April 4 2004 942,500 2.50
Broker warrants April 4 2004 186,030 2.50
Broker warrants June 12, 2005 415,498 2.35
1,544,028
2.46
During the period ended March 31, 2004 warrants were issued, exercised
and expired as follows:
Number of Stock Weighted Average
Warrants Exercise Price $
Balance - December 31, 2003 4,655,498 2.49
Warrants granted - 2004 9,458,750 2.50
Warrants exercised - 2004 (12,570,220) 2.50
Balance - March 31, 2004 1,544,028 2.46
9. Segmented information
The Company has one operating segment: the acquisition, exploration and
development of precious metal projects located principally in Romania.
Geographic segmentation of capital assets and deferred exploration costs
is as follows:
March 31, 2004 March 31, 2003
$ $
Romania 35,067,583 29,088,747
Canada 37,063 27,126
35,104,646 29,115,873
This information is provided by RNS
The company news service from the London Stock Exchange
END
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