REG-Kefi Minerals PLC: Final Results
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10 June 2009
KEFI MINERALS PLC
("KEFI MINERALS" or the "COMPANY")
RESULTS FOR YEAR
ENDED 31 DECEMBER 2008
KEFI Minerals, the AIM quoted gold and copper exploration Company with projects
in Turkey, is pleased to announce results for the year ended 31 December 2008.
HIGHLIGHTS
* Formation of a joint venture on the Artvin Project in Turkey with Canadian
based Centerra Gold Inc
* Drilling at both Artvin and Derinin Tepe Projects yielding encouraging
mineralisation
* Improvement of the exploration portfolio in Turkey with the addition of two
new project areas
* Evaluation of numerous joint venture and acquisition opportunities in
Turkey and the surrounding region culminating in the formation of a joint
venture in the Kingdom of Saudi Arabia in 2009
KEFI Minerals' Managing Director, Jeff Rayner, commented:
"Looking to 2009, the year will be a very active one for the Company.
Our objectives are to rapidly assess the Company's current projects in Turkey
and to advance them as warranted by results; to conduct initial exploration of
the large (1,000 km2) Saudi Arabian exploration licence applications; and to
identify the most prospective areas in Turkey and Saudi Arabia for potential
acquisition and evaluation.
Our team continues to strive towards these objectives with an appropriate focus
on the balance between costs and the potential returns generated"
Enquiries
KEFI Minerals plc WH Ireland Limited Bishopsgate Communications
Jeffrey Rayner Katy Mitchell Michael Kinirons
Nick Rome
+90 533 928 1913 + 44 161 832 2174 +44 20 7562 3350
www.kefi-minerals.com
Chairman's Statement
Despite the global financial crisis, KEFI Minerals has continued to make steady
progress towards its key objective of discovering and developing economic
mineral deposits.
The global financial crisis has caused severe challenges for KEFI Minerals,
following the downturn in equity markets for exploration companies and the
consequent effect on our funding capability.
Our small team of dedicated professionals is targeting large epithermal gold or
porphyry gold-copper systems analogous to several >1 million ounce gold
deposits recently discovered and developed in Turkey. This is being done in a
manner that is cost effective and minimises risk for our Company, whilst
maximising the odds of making a significant discovery.
The Company's progress on exploring its projects in Turkey and assessing
numerous opportunities during the year has been accomplished during a period of
extreme contraction in the global financial markets. In response to these
challenges, your Board has taken action to further reduce costs on an already
low cost base.
Exploration Strategy
In 2008 KEFI Minerals concentrated on exploring the prolific minerals endowment
of Turkey. Turkey is widely recognised as being stable and foreign
investment-friendly, and as having a long mining history, prospective geology,
excellent infrastructure, and favourable mining, tax and investment laws.
We examined many proposals from owners of exploration properties in Turkey who
are interested in partnering with our Company. This process also led us to
consider many opportunities in the region surrounding Turkey and to the launch
of a major new initiative in Saudi Arabia.
KEFI Minerals' exploration strategy is based on the following concepts:
* Combining strong international and local knowledge in exploration models
and techniques;
* Selecting areas within prospective stratigraphic and structural settings
with a high potential for gold mineralisation in particular;
* Exploring projects as a package rather than individual isolated prospects;
* Rapidly identifying, prioritising and assessing targets; and
* Creating effective working relationships and further developing knowledge
using an established local team.
The object of this strategy is to add value for shareholders by:
* Advancing our projects to resource stage through drilling;
* Targeting resources of >1 million ounces of gold in particular, or
equivalent through exploration; and
* Identifying and fostering high-quality joint venture opportunities, with
both international and local partners, in order to source capital and
manage financing costs.
Strategic Alliances
KEFI Minerals leverages its technical expertise and available funding by
entering into strategic alliances. Its first such alliance was with EMED Mining
Public Limited of which I am Managing Director and which provides commercial,
technical and administrative support and personnel on a cost-recovery basis,
thus enabling the KEFI Minerals' staff to minimise overheads and focus on
exploration.
In 2008, the Company expanded on its approach of forming strategic alliances
with appropriate partners. The Artvin Joint Venture was formed in October 2008
with a subsidiary of Centerra Gold Inc. ("Centerra"), a Canadian-based gold
mining and exploration company. Centerra has the right to earn up to 70%
interest in the property by spending US$6 million over five years.
In 2009, this approach is set to continue. The mineral potential in the Kingdom
of Saudi Arabia is of interest to the Company and a new joint venture was
announced in May 2009 with Abdul Rahman Saad Al-Rashid & Sons Company Ltd.
("ARTAR"), a leading Saudi construction and investment group.
The primary target of the new joint venture (known as "GEMCO") is the discovery
and development of a >1 million ounce gold deposits in the under explored
Precambrian Arabian Shield of Saudi Arabia. KEFI Minerals is the operating
partner with a 40% interest with Abdul Rahman Saad Al-Rashid & Sons Company
Ltd. holding the remaining 60% and providing local support services.
The GEMCO partners have over the past year have developed the initial database,
conducted initial field reconnaissance and lodged applications for
approximately 1,000 km2 of exploration licences.
Funding
KEFI Minerals completed a private placement raising £585,000 in March 2009.
Exploration expenditure at our Artvin Project is planned to be funded entirely
by Centerra.
EMED Mining remains supportive and participated in this placing to retain its
32% interest in KEFI Minerals. EMED Mining is owned by a range of mining
industry specialists, primarily from Australia, South Africa, United States and
the United Kingdom.
Outlook
KEFI Minerals' aim is to add value to our projects and create wealth for our
stakeholders through the cost-effective acquisition or discovery and subsequent
development of mineral resources.
In 2009, the Company will continue the progress in areas where its technical
excellence is leveraged via its carefully structured strategic alliances. The
strength in the gold market (with the current gold price in the vicinity of
US$900 per ounce), combined with the opportunities identified by the Company,
provides us with an exciting opportunity to create exceptional value for
shareholders - subject to the Company continuing its tight focus and
risk-management.
I remain optimistic that the depth and quality of your Company's projects, its
opportunities and the experience of your Board and executive team will enable
your Company to weather the current challenges and become a stronger
organisation that warrants your support.
I would like to thank our shareholders, management and the families behind them
for their patience and support. It is hard enough to build an organisation at
the best of times. To do so during the current global financial crisis calls
for special commitment and performance from special people. And we are
fortunate to have such a team.
Harry Anagnostaras-Adams
Chairman
Managing Director's Statement
During 2008, our team focused on exploration of our projects in Turkey coupled
with discrete preparations for the formation of a new joint venture in Saudi
Arabia.
Key accomplishments during 2008 include:
* Forming a Joint Venture on the Artvin Project with Centerra Gold.
* Drilling at our Artvin and Derinin Tepe Projects both intercepting
encouraging mineralisation;
* Improving our exploration portfolio in Turkey with the addition of two new
project areas and relinquishing two other project areas;
* Evaluating numerous joint venture and acquisition opportunities in Turkey
and the surrounding region but successfully focusing on forming the GEMCO
joint venture in the Kingdom of Saudi Arabia, which was announced in May
2009.
Health and Safety
No lost time injuries were sustained by employees or contractors during the
course of the Company's exploration activities during the year.
KEFI Minerals promotes awareness of positive health and safety practices with
all employees and actively encourages continuous improvements in this area.
Environment
All of the Company's exploration activities are undertaken with the aim of
minimising any environmental impact.
A key aspect of the Company's Exploration Environmental Policy is to
rehabilitate all project areas disturbed by our exploration activities. For
example, drill sites have been acccordingly rehabilitated as soon as
practicable after the completion of drilling.
Exploration Portfolio
In Turkey, KEFI Minerals' four most advanced projects are:
* Artvin in northeast Turkey which is very prospective for both
volcanic-hosted massive sulphide and porphyry copper style deposits;
* Derinin Tepe in western Turkey which is a low-sulphidation, epithermal
gold-silver deposit that was mined by the Romans using a primitive method
of cut-and-fill mining;
* Bakir Tepe in southwestern Turkey which is prospective for Cyprus-style
volcanic-hosted massive sulphide copper-gold-zinc deposits; and
* Yatik in western Turkey which is prospective for low-sulphidation,
epithermal gold-silver mineralisation.
The Company's Gumushane, Muratdag and Hasancelebi Projects in Turkey are at an
earlier stage of evaluation.
The Meyvali and Karalar tenements were relinquished during the year following
geochemical surveys that downgraded their prospectivity.
During the year, KEFI Minerals acquired seven new Exploration Licences (78 km2)
at Bakir Tepe and a single Exploration Licence (20 km2) at Hasancelebi through
successfully bidding in Government licence auctions and through applying for
vacant ground. The Company now has granted title covering 454km2 in area.
KEFI Minerals makes considerable efforts towards upgrading its exploration
portfolio. Our geologists evaluated numerous opportunities during 2008. The
most prospective of these exploration properties and mines were visited and
sampled by our team. However, the majority of these projects did not meet our
exploration requirements or we were unable to meet the expectations of the
vendors.
In the Kingdom of Saudi Arabia, the GEMCO partners have lodged 10 applications
for exploration licences that cover 100 km2 each. These areas all contain
historic workings for gold and some have historic copper workings.
Subject to regulatory permitting, exploration in Saudi Arabia is planned to
comprise initial prospecting of some targets that have already been identified.
Major gold deposits in the Precambrian Arabian-Nubian Shields include
Centamin's Sukari deposit (>13 million ounces) and Ma'adens' Mahd adh Dhahab
mine (>6 million ounces) and Ma'adens' recently discovered deposits which total
more than 8 million ounces.
Exploration Approach
KEFI Minerals encourages prospectors and miners to contact us with proposals
and aims to respond to them promptly and fairly.
Our proprietary database and experienced exploration team enables us to rapidly
filter and evaluate exploration properties that are offered to us as well as
assessing tenements relinquished by other explorers.
KEFI Minerals owns an extensive exploration database which contains information
regarding approximately 100 further prospective sites in Turkey. Unlike most
countries, Turkey does not have an open-file reporting system whereby
exploration data from previous work on an area can be made available to the
current titleholder. KEFI Minerals' database thus provides a competitive
advantage in identifying prospective areas for project generation in Turkey.
We will continue to evaluate advanced opportunities and to monitor the
exploration licence status of geologically prospective areas on an ongoing
basis so that KEFI Minerals can acquire further exploration opportunities as
soon as they become available.
Our approach includes working with strategic partners whose assets and skills
complement the strong exploration skills of our team, as exemplified by our
recent GEMCO joint venture in Saudi Arabia.
Over the past year, the GEMCO partners have created a substantial database of
historic workings, geology, geophysics, remote sensing, prospect geology,
alteration studies, and structural interpretation. This database, combined with
limited initial field reconnaissance, enabled the extensive ancient workings to
be rapidly assessed for the potential to host major mineral deposits.
This has allowed for rapid identification and quality assessment of extensive
ancient workings and selective targeting for potentially major mineral
deposits, with 10 ELA's (1,000 km2) submitted.
Outlook for 2009
Looking to 2009, the year will be a very active one for the Company and we will
continue our exploration focus whilst aiming to progress one or more of our
projects towards production.
The primary objectives for 2009 are:
* to rapidly assess the Company's current projects in Turkey and to advance
them as warranted by results;
* to conduct initial exploration of the large (1,000 km2) Saudi Arabian
exploration licence applications; and
* to identify the most prospective areas in Turkey and Saudi Arabia for
potential acquisition and evaluation.
Our team continues to strive towards these objectives with an appropriate focus
on the trade-off between costs and the potential returns generated if our
efforts are successful.
Jeffrey Rayner
Managing Director
Copies of the annual report and accounts will be dispatched to shareholders on
or around 10 June 2009 and will be available from the Company's website -
www.kefi-minerals.com from that date. The Company's Annual General Meeting is
to be held at the offices of Field Fisher Waterhouse, 35 Vine Street, London
EC3N 2AA at 12.00pm on 3 July 2009.
CONSOLIDATED INCOME STATEMENT
Year ended 31 December 2008
24.10.06-
Notes 31.12.08 31.12.07
GBP'000 GBP'000
Revenue - -
Exploration costs (677) (797)
Gross loss (677) (797)
Administrative expenses (563) (488)
- share-based benefits (89) (167)
Impairment charge - goodwill - (364)
Operating loss 4 (1,329) (1,816)
Foreign exchange profit 7 185 93
Finance income 12 39
Finance costs 8 (5) (3)
Loss before tax (1,137) (1,687)
Tax 9 - -
Net loss for the year (1,137) (1,687)
Loss per share (GBP) 10 0.01 0.02
The company has taken advantage of the exemption conferred by section 230 of
Companies Act 1985 from presenting its own income statement. Loss after
taxation amounting to £718,919 (2007: £738,391) has been included in the
financial statements of the parent company.
BALANCE SHEETS
31 December 2008
The The The The
Group Company Group Company
2008 2008 2007 2007
Notes GBP'000 GBP'000 GBP'000 GBP'000
ASSETS
Non-current assets
Property Plant and Equipment 11 36 - 47 -
Goodwill 12 - - - -
Fixed asset investments 13 - 2 - 2
Trade and other receivables 14 - 1,651 - 1,136
36 1,653 47 1,138
Current assets
Trade and other receivables 14 109 - 43 -
Cash and cash equivalents 15 293 288 502 472
402 288 545 472
Total assets 438 1,941 592 1,610
EQUITY AND LIABILITIES
Equity attributable to equity
holders of the parent
Share capital 16 1,296 1,296 1,088 1,088
Share premium 16 1,347 1,347 991 991
Share options reserve 17 256 256 167 167
Exchange difference reserve (292) - (86) -
Accumulated losses (2,824) (1,457) (1,687) (738)
Total equity (217) 1,442 473 1,508
Non-current liabilities
Advances received 18 266 266 - -
266 266 - -
Current liabilities
Trade and other payables 19 389 233 119 102
389 233 119 102
Total liabilities 655 499 119 102
Total equity and liabilities 438 1,941 592 1,610
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Year ended 31 December 2008
Share Share Share Accumulated Exchange Total
capital premium losses
options Difference
reserve
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Exchange difference on - - - - (86) (86)
translation of
subsidiaries
Net income recognized - - - - (86) (86)
directly in equity
Net loss for the period - - - (1,687) - (1,687)
Total recognized income - - - (1,687) (86) (1,773)
and expense for the year
Recognition of share - - 167 - - 167
based payments
Issue of share capital 1,088 1,396 - - - 2,484
Share issue costs - (405) - - - (405)
At 31 December 2007 1,088 991 167 (1,687) (86) 473
Exchange difference on - - - - (206) (206)
translation of
subsidiaries
Net income recognized - - - - (206) (206)
directly in equity
Net loss for the year - - - (1,137) - (1,137)
Total recognized income - - - (1,137) (206) (1,343)
and expense for the year
Recognition of share - - 89 - - 89
based payments
Issue of share capital 208 416 - - - 624
Share issue costs (60) - - - (60)
At 31 December 2008 1,296 1,347 256 (2,824) (292) (217)
COMPANY STATEMENT OF CHANGES IN EQUITY
Year ended 31 December 2008
Share Share Share Accumulated Total
capital premium losses
options
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Net loss for the period - - - (738) (738)
Total recognized income and - - - (738) (738)
expense for the year
Recognition of share based - - 167 - 167
payments
Issue of share capital 1,088 1,396 - - 2,484
Share issue costs - (405) - - (405)
At 31 December 2007 1,088 991 167 (738) 1,508
Net loss for the year - - - (719) (719)
Total recognized income and - - - (719) (719)
expense for the year
Recognition of share based - - 89 - 89
payments
Issue of share capital 208 416 - - 624
Share issue costs (60) - - (60)
At 31 December 2008 1,296 1,347 256 (1,457) 1,442
CONSOLIDATED CASH FLOW STATEMENT
Year ended 31 December 2008
Notes 31.12.08 24.10.06-31.12.07
GBP'000 GBP'000
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before tax (1,137) (1,687)
Adjustments for:
Depreciation of property, plant and equipment 11 23 13
Share-based benefits 17 89 167
Impairment charge - goodwill - 364
Interest income 7 (12) (39)
Exchange difference on translation of (218) (86)
subsidiaries
(1,255) (1,268)
Changes in working capital:
Trade and other receivables (66) (76)
Trade and other payables 270 119
204 43
Net cash used in operating activities (1,051) (1,225)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for purchase of property, plant and 11 - (64)
equipment
Proceeds from disposal of property, plant and 11 - 7
equipment
Acquisition of subsidiaries 20 - (334)
Advances from Centerra Gold (KB) Inc. 18 266 -
Interest received 7 12 39
Net cash generated/(used) in investing 278 (352)
activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of share capital 624 2,484
Listing and issue costs (60) (405)
Net cash from financing activities 564 2,079
Net (decrease)/increase in cash and cash (209) 502
equivalents
Cash and cash equivalents:
At beginning of the period 15 502 -
At end of the period 15 293 502
COMPANY CASH FLOW STATEMENT
Year ended 31 December 2008
Notes 31.12.08 24.10.06-
31.12.07
GBP'000 GBP'000
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before tax (712) (738)
Adjustments for:
Share-based benefits 17 89 167
Interest income 7 (12) (39)
(635) (610)
Changes in working capital:
Trade and other receivables (515) (1,136)
Trade and other payables 124 102
(391) (1,034)
Net cash used in operating activities (1,026) (1,644)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of subsidiaries 20 - (2)
Advances from Centerra Gold (KB) Inc. 18 266 -
Interest received 7 12 39
Net cash from investing activities 278 37
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of share capital 624 2,484
Listing and issue costs (60) (405)
Net cash from financing activities 564 2,079
Net (decrease)/increase in cash and cash (184) 472
equivalents
Cash and cash equivalents:
At beginning of the period 15 472 -
At end of the period 15 288 472
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Year ended 31 December 2008
1. Incorporation and principal activities
Country of incorporation
KEFI Minerals Plc (the "Company") was incorporated in United Kingdom as a
public limited company on 24 October 2006. Its registered office is at 27/28
Eastcastle Street, London W1W 8DH.
Principal activities
The principal activities of the Group for the period are:
* To explore for mineral deposits of precious and base metals and other
minerals that appear capable of commercial exploitation, including
topographical, geological, geochemical and geophysical studies and
exploratory drilling.
* To evaluate mineral deposits determining the technical feasibility and
commercial viability of development, including the determination of the
volume and grade of the deposit, examination of extraction methods,
infrastructure requirements and market and finance studies.
* To develop, operate mineral deposits and market the metals produced.
2. Accounting policies
The principal accounting policies adopted in the preparation of these financial
statements are set out below. These policies have been consistently applied
throughout the period presented in these financial statements unless otherwise
stated.
Basis of preparation and consolidation
The company and the consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRSs) as adopted
by the European Union. They comprise the accounts of KEFI Minerals Plc and all
its subsidiaries made up to 31st December 2008. The company and the
consolidated financial statements have been prepared under the historical cost
convention.
Going concern
The Directors have formed a judgment at the time of approving the financial
statements that there is a reasonable expectation that the company has adequate
resources to continue in operational existence for the foreseeable future.
The financial information has been prepared on the going concern basis, the
validity of which depends principally on the discovery of economically viable
mineral deposits and the availability of subsequent funding to extract the
resource or alternatively the availability of funding to extend the Company's
exploration activities. The financial information does not include any
adjustments that would arise from a failure to complete either option.
Functional and presentational currency
Items included in the Group's financial statements are measured using the
currency of the primary economic environment in which the entity operates
(''the functional currency''). The financial statements are presented in
British Pounds (GBP), which is the Group's functional and presentation
currency.
Foreign currency translation
(1) Foreign currency translation
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the date of the transactions. Gains
and losses resulting from the settlement of such transactions and from the
translation of monetary assets and liabilities denominated in foreign
currencies are recognised in the income statement.
(2) Foreign operations
On consolidation, the assets and liabilities of the consolidated entity's
foreign operations are translated at exchange rates prevailing at the
reporting date. Income and expense items are translated at the average
exchange rates for the period unless exchange rates fluctuate
significantly. Exchange differences arising, if any, are recognised in the
foreign currency translation reserve, and recognised in profit or loss on
disposal of the foreign operation.
Revenue recognition
Revenue consists of the amounts receivable from exploration tenements,
technical data, precious and base metals sold.
The Group had no sales/revenue during the period under review.
Interest income
Interest income is recognised on a time-proportion basis using the effective
interest method.
Tangible fixed assets
Tangible fixed assets are stated at their cost of acquisition at the date of
acquisition, being the fair value of the consideration provided plus incidental
costs directly attributable to the acquisition less depreciation.
Depreciation is calculated on the straight-line method to write off the cost of
each asset to their residual values over their estimated useful life. The
annual depreciation rates used are as follows:
Furniture, fixtures and office 10%
equipment
Motor Vehicles 20%
Acquisitions and goodwill
The acquisition of subsidiaries is accounted for using the purchase method. The
cost of the acquisition is measured at the aggregate of the fair values, at the
date of exchange, of assets given, liabilities incurred or assumed, and equity
instruments issued by the Group in exchange for control of the acquiree, plus
any costs directly attributable to the business combination. The acquiree's
identifiable assets, liabilities and contingent liabilities that meet the
conditions for recognition under IFRS 3 are recognised at their fair values at
the acquisition date, except for non-current assets (or disposal groups) that
are classified as held for sale in accordance with IFRS 5 Non-Current Assets
Held for Sale and Discontinued Operations, which are recognised and measured at
fair value less costs to sell.
Purchased goodwill is capitalized and classified as an asset on the balance
sheet. Goodwill arising on acquisition is recognised as an asset and initially
measured at cost, being the excess of the cost of the business combination over
the Group's interest in the net fair value of the identifiable assets,
liabilities and contingent liabilities recognised.
Goodwill is reviewed for impairment on an annual basis. When the directors
consider the initial value of the acquisition to be negligible, the goodwill is
written off to the Income Statement immediately. Trading results of acquired
subsidiary undertakings are included from the date of acquisition.
Goodwill is deemed to be impaired when the present value of the future cash
flows expected to be derived is lower than the carrying value. Any impairment
is charged to the Income Statement immediately.
Finance costs
Interest expense and other borrowing costs are charged to the income statement
as incurred.
Tax
The tax payable is based on taxable profit for the period. Taxable profit
differs from net profit as reported in the income statement because it excludes
items of income or expense that are taxable or deductible in other years and it
further excludes items that are never taxable or deductible.
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit and is accounted for using the balance sheet liability method. Deferred
tax liabilities are generally recognized for all taxable differences and
deferred tax assets are recognized to the extent that taxable profits will be
available against which deductible temporary differences can be utilized.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax liabilities
and when the deferred taxes relate to the same fiscal authority.
Investments
Investments in subsidiary companies are stated at cost less provision for
impairment in value, which is recognised as an expense in the period in which
the impairment is identified.
Exploration costs
The Group has adopted the provisions of IFRS 6 "Exploration for and Evaluation
of Mineral Resources". The Group's stage of operations as at the period end and
as at the date of approval of these financial statements have not yet met the
criteria for capitalisation of exploration costs.
Share-based compensation benefits
IFRS 2 "Share-based Payment" requires the recognition of equity-settled
share-based payments at fair value at the date of grant and the recognition of
liabilities for cash-settled share-based payments at the current fair value at
each balance sheet date. The total amount expensed is recognised over the
vesting period, which is the period over which performance conditions are to be
satisfied.
The fair value is measured using the Black Scholes pricing model. The inputs
used in the model are based on management's best estimate, for the effects of
non-transferability, exercise restrictions and behavioural considerations.
Use and revision of accounting estimates
The preparation of the financial report requires the making of estimations and
assumptions that affect the recognised amounts of assets, liabilities, revenues
and expenses and the disclosure of contingent liabilities. The estimates and
associated assumptions are based on historical experience and various other
factors that are believed to be reasonable under the circumstances, the results
of which form the basis of making the judgments about carrying values of assets
and liabilities that are not readily apparent from other sources. Actual
results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.
Financial instruments
Financial assets and financial liabilities are recognised on the Group's
balance sheet when the Group becomes a party to the contractual provisions of
the instrument.
Cash and cash equivalents
For the purposes of the cash flow statement, cash and cash equivalents comprise
cash at bank and in hand.
Borrowings
Borrowings are recorded initially at the proceeds received, net of transaction
costs incurred. Borrowings are subsequently stated at amortised cost. Any
differences between the proceeds (net of transaction costs) and the redemption
value is recognised in the income statement over the period of the borrowings
using the effective interest method.
3. Financial risk management
Financial risk factors
The Group is exposed to interest rate risk, liquidity risk, currency risk and
capital risk management arising from the financial instruments it holds. The
risk management policies employed by the Group to manage these risks are
discussed below:
Interest rate risk
Interest rate risk is the risk that the value of financial instruments will
fluctuate due to changes in market interest rates. The Group's income and
operating cash flows are substantially independent of changes in market
interest rates as the Group has no significant interest-bearing assets. The
Group is exposed to interest rate risk in relation to its non-current
borrowings. Borrowings issued at variable rates expose the Group to cash flow
interest rate risk. Borrowings issued at fixed rates expose the Group to fair
value interest rate risk. The Group's management monitors the interest rate
fluctuations on a continuous basis and acts accordingly.
Interest rate risk (continued)
At the reporting date the interest rate profile of interest-bearing financial
instruments was:
2008 2007
Variable rate instruments GBP'000 GBP'000
Financial assets 293 502
Sensitivity analysis
An increase of 100 basis points in interest rates at 31 December 2008 would
have increased (decreased) equity and profit or loss by the amounts shown
below. This analysis assumes that all other variables, in particular foreign
currency rates, remain constant. For a decrease of 100 basis points there would
be an equal and opposite impact on the profit and other equity.
Equity Profit or Equity Profit or
Loss Loss
2008 2008 2007 2007
Variable rate instruments GBP'000 GBP'000 GBP'000 GBP'000
Financial assets 4 4 8 8
Liquidity risk
Liquidity risk is the risk that arises when the maturity of assets and
liabilities does not match. An unmatched position potentially enhances
profitability, but can also increase the risk of losses. The Group has
procedures with the object of minimising such losses such as maintaining
sufficient cash and other highly liquid current assets and by having available
an adequate amount of committed credit facilities.
The following tables detail the Group's remaining contractual maturity for its
financial liabilities. The tables have been drawn up based on the undiscounted
cash flows of financial liabilities based on the earliest date on which the
Group can be required to pay. The table includes both interest and principal
cash flows.
Carrying Contractual 3 months 3 - 12 1 - 2 2 - 5 More
amounts cash flows or less months years years than 5
years
31 December 2007 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Trade and other 53 53 53 - - - -
payables
53 53 53 - - - -
31 December 2008
Trade and other 389 389 389 - - - -
payables
Advances received 266 - - - - - -
from Centerra
Gold (KB) Inc
(Note 18)
655 389 389 - - - -
Currency risk
Currency risk is the risk that the value of financial instruments will
fluctuate due to changes in foreign exchange rates. Currency risk arises when
future commercial transactions and recognised assets and liabilities are
denominated in a currency that is not the Group's functional currency. The
Group is exposed to foreign exchange risk arising from various currency
exposures primarily with respect to the Euro, Bulgarian Lev and Turkish Lira.
The Group's management monitors the exchange rate fluctuations on a continuous
basis and acts accordingly.
The carrying amounts of the Group's foreign currency denominated monetary
assets and monetary liabilities at the reporting date are as follows:
Liabilities Assets Liabilities Assets
2008 2008 2007 2007
GBP'000 GBP'000 GBP'000 GBP'000
Euro 12 1 - 3
United States Dollar - - - 5
New Turkish Lira 156 103 - 11
Sensitivity analysis
A 10% strengthening of the British Pound against the following currencies at 31
December 2008 would have increased/(decreased) equity and profit or loss by the
amounts shown below. This analysis assumes that all other variables, in
particular interest rates, remain constant. For a 10% weakening of the British
Pound against the relevant currency, there would be an equal and opposite
impact on the loss and equity.
Equity Profit or Equity Profit
Loss or Loss
2008 2008 2007 2007
GBP'000 GBP'000 GBP'000 GBP'000
Euro 1 1 - -
United States Dollar - - - -
New Turkish Lira 5 5 (1) (1)
Capital risk management
The Group manages its capital to ensure that it will be able to continue as a
going concern while maximizing the return to shareholders through the
optimization of the debt and equity balance.
The capital structure of the Group consists of cash and cash equivalents (note
15) and equity attributable to equity holders of the parent, comprising issued
capital (note 16), reserves (notes 16 and 17) and accumulated losses.
Fair value estimation
The fair values of the Group's financial assets and liabilities approximate
their carrying amounts at the balance sheet date.
4. Operating loss
2008 2007
GBP'000 GBP'000
Operating loss is stated after charging the following items:
Depreciation of property, plant and equipment (Note 11) 23 13
Share-based employee benefits 89 167
Staff costs including directors in their executive capacity 490 540
Auditors' remuneration - audit 27 24
- interim review 5 3
- listing fees - 26
- subsidiary audit fees 3 2
5. Staff costs 2008 2007
GBP'000 GBP'000
Salaries 137 74
Social insurance costs and other funds 22 12
159 86
6. Business and geographical segments
Business segments
The Group has only one distinct business segment, being that of mineral
exploration.
Geographical segments
The Group's exploration activities are located in Turkey and Bulgaria and its
administration and management is based in Cyprus.
Cyprus Turkey Bulgaria Consolidation Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
2008
Operating loss (710) (618) (1) - (1,329)
Financial income 12 - - - 12
Financial costs (4) (1) - - (5)
Foreign Exchange profit/(loss) (16) 162 39 - 185
Net loss for the period (718) (457) 38 - (1,137)
Total assets 1,941 148 7 (1,658) 438
Total liabilities 492 1,650 165 (1,659) 648
Depreciation of fixed assets - 23 - - 23
Cyprus Turkey Bulgaria Consolidation Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
2007
Operating loss (775) (676) (1) (364) (1,816)
Financial income 39 - - - 39
Financial costs (2) (1) - - (3)
Foreign Exchange profit/(loss) - 83 10 - 93
Net loss for the period (738) (594) 9 (364) (1,687)
Total assets 1,610 118 6 (1,142) 592
Total liabilities 102 996 160 (1,139) 119
Depreciation of fixed assets - 13 - - 13
7. Finance income 2008 2007
GBP'000 GBP'000
Interest income 12 39
12 39
8. Finance costs
Sundry finance costs 5 3
5 3
9. Tax GBP'000 GBP'000
Loss before tax (1,137) (1,687)
Tax calculated at the applicable tax rates (159) (225)
Tax effect of expenses not deductible for tax purposes 23 59
Tax effect of tax loss for the year 64 66
Tax effect of allowances and income not subject to tax (39) (3)
Tax effect of tax losses brought forward - (7)
Tax effect on exploration expenses taxed separately 111 110
Charge for the year 0 0
The Directors believe that the company is resident in Cyprus for tax purposes.
A deferred tax asset of GBP430,735 (2007: GBP255,737) has not been accounted
for due to the uncertainty over the timing of future recoverability.
Cyprus
The corporation tax rate is 10%. Under certain conditions interest may be
subject to defence contribution at the rate of 10%. In such cases 50% of the
same interest will be exempt from corporation tax, thus having an effective tax
rate burden of approximately 15%. In certain cases, dividends received from
abroad may be subject to defence contribution at the rate of 15%.
Due to tax losses sustained in the period, no tax liability arises on the
Company. Under current legislation, tax losses may be carried forward and be
set off against taxable income of the following years. As at 31 December 2008,
the balance of tax losses which is available for offset against future taxable
profits amounts to GBP1,302,758 (2007: GBP661,799).
Bulgaria
Mediterranean Minerals (Bulgaria) EOOD, the 100% subsidiary of the Company, is
resident in Bulgaria for tax purposes.
The corporation tax rate is 10%. Due to tax losses sustained in the period, no
tax liability arises on the Mediterranean Minerals (Bulgaria) EOOD. Under
current legislation, tax losses may be carried forward and be set off against
taxable income of the following five years. As at 31 December 2008, the balance
of tax losses which is available for offset against future taxable profits
amounts to GBP165,490 (2007: GBP164,694).
Turkey
Doğu Akdeniz Mineralleri Sanayi ve Ticaret Limited Şirket (Doğu Akdeniz
Mineralleri), the 100% subsidiary of Mediterranean Minerals (Bulgaria) EOOD,
and ultimately 100% subsidiary of the Company, is resident in Turkey for tax
purposes.
The corporation tax rate is 20%. Under local tax legislation, exploration costs
are can only be set off against income from mining operations. As at 31
December 2008, the balance of exploration costs that is available for offset
against future income from mining operations amount to GBP1,419,549 (2007:
GBP865,440).
10. Loss per share
The calculation of the basic and diluted earnings per share attributable to the
ordinary equity holders of the parent is based on the following data:
2008 2007
GBP'000 GBP'000
Net loss attributable to equity shareholders 1,137 1,687
'000 '000
Average number of ordinary shares for the purposes of basic 122,708 102,392
earnings per share
Earnings per share: GBP GBP
Basic and fully diluted losses per share 0.01 0.02
The effect of share options on earnings per share is anti-dilutive; no separate
disclosure is required.
11. Property Plant and Equipment Motor Furniture, Total
fixtures
vehicles and office
equipment
The Group GBP'000 GBP'000 GBP'000
Cost
Additions 47 17 64
Disposals (7) - (7)
At 31 December 2007 / 1 January 40 17 57
2008
Exchange difference on translation of 5 2 7
subsidiaries
At 31 December 2008 45 19 64
Accumulated Depreciation
Charge for the period 11 2 13
On disposal (3) - (3)
At 31 December 2007 / 1 January 8 2 10
2008
Charge for the period 18 5 23
Exchange difference on translation of (4) (1) (5)
subsidiaries
At 31 December 2008 22 6 28
Net Book Value at 31 December 23 13 36
2008
Net Book Value at 31 December2007 32 15 47
The above fixed assets are located in Turkey.
The Company has no fixed assets.
12. Intangible assets - goodwill
Total
Cost GBP'000
Additions 364
Provision for impairment (364)
At 31 December 2007/ 1 January 2008 -
Additions -
Provision for impairment -
At 31 December 2008 -
13. Investment in subsidiaries
2008 2007
The Company GBP'000 GBP'000
Cost and Net Book Value
At 1 January 2 -
Additions (note 20) - 2
At 31 December 2 2
Subsidiary companies Date of Country of Effective
acquisition/ incorporation proportion of
shares held
incorporation
Mediterranean Minerals (Bulgaria) EOOD 8/11/2006 Bulgaria 100%-Direct
Doğu Akdeniz Mineralleri Sanayi ve 8/11/2006 Turkey 100%-Indirect
Ticaret Limited Şirket
On 8 November 2006, the Company entered into an agreement to acquire from EMED
Mining Public Limited the whole of the issued share capital of Mediterranean
Minerals (Bulgaria) EOOD, a company incorporated in Bulgaria, in consideration
for the issue of 29,999,998 ordinary shares in the Company.
Mediterranean Minerals (Bulgaria) EOOD owns 100% of the share capital of Doğu
Akdeniz Mineralleri, a private limited liability company incorporated in
Turkey, engaging in activities for exploration and developing of natural
resources.
Significant aggregate amounts in respect of subsidiaries:
GBP'000
Net liabilities 1 January 2007 (458)
Net loss for the year (574)
Net liabilities at 31 December 2007 (1,032)
Loss for the year (638)
Net liabilities at 31 December 2008 (1,670)
Pre-acquisition reserves, mainly, exploration costs incurred by the
subsidiaries prior to acquisition amounted to GBP364,000.
The movement in the net assets of subsidiaries is based on their audited
financial statements which have been prepared on the basis of International
Financial Reporting Standards (IFRSs) as adopted by the European Union and the
IFRSs as issued by IASB.
14. Trade and other receivables 2008 2007
The Group GBP'000 GBP'000
Other receivables 99 39
Deposits and prepayments 10 4
109 43
The Company
Owed by group companies 1,651 1,136
15. Cash and cash equivalents 2008 2007
The Group GBP'000 GBP'000
Cash at bank and in hand 293 502
The Company
Cash at bank and in hand 288 472
16. Share capital Number Share Share Total
of Capital premium
shares GBP'000
'000 GBP'000 GBP'000
Authorised
Ordinary shares of GBP0.01 each 300,000 3,000 - 3,000
Issued and fully paid
Foundation shares 42,000 420 36 456
Initial Public Offering 46,667 467 933 1,400
Issued
19 February 2007 at GBP0.03 11,667 117 233 350
12 March 2007 at GBP0.03 250 2 5 7
4 June 2007 at GBP0.035 1,000 10 25 35
4 June 2007 at GBP0.035 1,250 12 32 44
3 October 2007 at GBP0.032 6,000 60 132 192
Share issue costs - - (405) (405)
At 31 December 2007 / 1 January 2008 108,834 1,088 991 2,079
Issued 8 May 2008 at GBP0.03 20,812 208 416 624
Share issue costs - - (60) (60)
At 31 December 2008 129,646 1,296 1,347 2,643
Authorised capital
Under its Memorandum the Company fixed its share capital at 200,000,000
ordinary shares of nominal value of GBP 0.01 each.
On 23 April 2008 the Company passed the following special resolution:
That the authorized share capital of the Company be increased from GBP2,000,000
divided into 200,000,000 shares of GBP 0.01 each, by GBP1,000,000 by the
creation of 100,000,000 new ordinary shares of GBP0.01 each, resulting in
GBP3,000,000 divided into 300,000,000 shares of GBP0.01 each.
Issued capital
During the Seed Round the Company issued 42,000,000 shares.
On admission of the Company to AIM in December 2006, 46,666,667 shares were
issued at the price of GBP 0.03. Upon the issue an amount of GBP 933,333 was
credited to the Company's share premium reserve.
On 19 February 2007 11,666,667 shares of GBP 0.01 were issued at a price of GBP
0.03. Upon the issue an amount of GBP 233,333 was credited to the company's
share premium reserve.
On 12 March 2007 250,000 shares of GBP 0.01 were issued to Mr. Omer Celenk at
the price of GBP 0.03. Upon the issue an amount of GBP5,000 was credited to the
Company's share premium reserve.
On 4 June 2007 1,000,000 shares of GBP 0.01 were issued to Malcolm Stallman at
the price of GBP 0.035. Upon the issue an amount of GBP25,000 was credited to
the Company's share premium reserve.
On 4 June 2007 1,250,000 shares of GBP 0.01 were issued for Muratdag Licence in
Turkey at the price of GBP 0.035. Upon the issue an amount of GBP31,250 was
credited to the Company's share premium reserve.
On 3 October 2007 6,000,000 shares of GBP 0.01 were issued at a price of GBP
0.032. Upon the issue an amount of GBP 132,000 was credited to the company's
share premium reserve.
On 8 May 2008 20,812,242 shares of GBP 0.01 were issued at a price of GBP 0.03.
Upon the issue an amount of GBP 416,245 was credited to the company's share
premium reserve.
Warrants
In conjunction with the issue of shares on 8 May 2008 the Company issued
10,406,121 warrants to subscribe for new ordinary shares of GBP 0.01 each at
GBP 0.05 per share.
17. Share option plan
Details of share options outstanding as at 31 December 2008:
Grant date Expiry date Exercise price Number of
shares
GBP 000's
12 December 2006 12 December 2012 0.0300 16,000
12 March 2007 11 March 2013 0.0350 250
18 April 2007 17 April 2013 0.0350 1,200
04 June 2007 03 June 2013 0.0350 500
08 October 2007 07 October 2010 0.0400 300
24 June 2008 23 June 2014 0.0325 250
Total 18,500
The options, except for those noted below which expire after three years,
expire six years after grant date and are exercisable at the exercise price in
whole or in part no more than one third after one year from the grant date, two
thirds after two years from the grant date and the balance after three years
from the grant date.
Number of
shares
000's
Outstanding options at 1 January 2008 18,250
- granted 250
- cancelled/forfeited -
- exercised -
Outstanding options at 31 December 2008 18,500
The Company has issued share options to directors, employees and advisers to
the Group. All options, except those noted below, expire six years after grant
date and are exercisable at the exercise price in whole or in part no more than
one third from the grant date, two thirds after two years from the grant date
and the balance after three years from the grant date.
On 8 October 2007, 19,531 options were issued to W.H. Ireland Limited which
expire three years after the grant date, and are exercisable at any time within
that period.
On 8 October 2007, 280,469 options were issued to Loeb Aaron & Company Limited
which expire three years after the grant date, and are exercisable at any time
within that period.
The option agreements contain provisions adjusting the exercise price in
certain circumstances including the allotment of fully paid Ordinary Shares by
way of a capitalisation of the Company's reserves, a sub division or
consolidation of the Ordinary Shares, a reduction of share capital and offers
or invitations (whether by way of rights issue or otherwise) to the holders of
Ordinary Shares.
The estimated fair values of the options were calculated using the Black
Scholes option pricing model. The inputs into the model and the results are as
follows:
24 Jun. 8 Oct. 4 Jun. 18 Apr. 12 Mar. 18 Dec.
08 07 07 07 07 06
Closing share price at 3.25p 3.00p 3.62p 3.88p 3.30p 3.88p
issue date
Weighted average exercise 3.25p 4.00p 3.50p 3.50p 3.50p 3.00p
price
Expected volatility 147.60% 85.58% 68.06% 68.06% 68.06% 50%
Expected life 6 yrs 3 yrs 6 yrs 6yrs 6yrs 6yrs
Risk free rate 5.00% 4.75% 6.08% 5.95% 5.73% 5.97%
Expected dividend yield Nil Nil Nil Nil Nil Nil
Discount factor 30% 30% 30% 30% 30% 30%
Estimated fair value 2.13p 1.06p 1.71p 1.85p 1.50p 1.427p
Expected volatility was estimated based on the likely range of volatility of
the share price.
For 2008, the impact of share-based payments is a net charge to income of £
89,000. At 31 December 2008, the equity reserve recognized for share based
payments amounted to £256,000.
18. Advances Received
On 22 October 2008, the company entered into a Joint Venture Agreement ("Joint
Venture Agreement") in respect of its 100%-owned Artvin Project ("the Project")
with Centerra Gold (KB) Inc("Centerra"), a wholly-owned subsidiary of Centerra
Gold Inc., a Canadian-based gold mining and exploration company which is listed
on the Toronto Stock Exchange.
The Artvin Project is located in the Artvin Province of north eastern Turkey
and comprises 15 tenements, which cover approximately 254km2 within the eastern
portion of the Eastern Pontide Belt. The Eastern Pontide Belt is a major
metallogenic province in the eastern Black Sea coastal region and is
prospective for volcanic-hosted massive sulphide (VHMS) deposits, porphyry
copper-gold deposits and epithermal gold-silver mineralisation.
Under the terms of the Joint Venture Agreement, the licences relating to the
Project area are to be transferred to the new KEFI group subsidiary Kackar
Madencilik Sanayi ve Ticaret Limited Sirketi ("Kackar"), incorporated in Turkey
on 15 January 2009 and Centerra has the exclusive right to acquire up to a 70%
shareholding in this subsidiary. In order to acquire the initial 50%
shareholding in Kackar Centerra must spend US$3.0 million over three years with
a minimum expenditure of US$0.5 million in the first year. Centerra may then
elect to acquire an additional 20% shareholding through the expenditure of a
further US$3.0 million over the next two years. The joint venture is in respect
of a one-kilometre area of interest which extends from the outer boundary of
the Project area.
KEFI Minerals is the manager of the Project and Centerra has the right to
become manager at any time. Once Centerra has earned its 50% or 70%
shareholding in Kackar, KEFI and Centerra will fund their respective percentage
interests of future expenditure subject to dilution for non-participation in
such expenditure. If either party's interest is diluted to less than 10%, that
party's interest will automatically be converted to a 3% net smelter return
royalty, in which case the other party has the right to purchase half of the
royalty (1.5%) for US$1.5 million.
The Joint Venture Agreement contains certain warranties given by KEFI and its
group companies in respect of the Project and while KEFI is the Manager of the
Project and majority shareholder in the Kackar any advances made by Centerra
which are not expended on the Project are repayable in certain circumstances.
The Joint Venture Agreement also contains a number of matters concerning the
business of Kackar for which Centerra's consent must be obtained.
The cumulative expenditure from Centerra Gold (KB) Inc until 31 December 2008
amounted to £266,310.
19. Trade and other payables
2008 2007
The Group GBP'000 GBP'000
Trade payables 203 53
Accruals 44 9
Payable to related companies (Note 21) 142 57
389 119
The Company
Trade payables 61 45
Accruals 30 -
Payable to related companies (Note 21) 142 57
233 102
20. Acquisition of subsidiaries
On 8 November 2006, the Company entered into an agreement to acquire from EMED
Mining Public Limited (formerly Easter Mediterranean Resources Public Ltd) the
whole of the issued share capital of Mediterranean Minerals (Bulgaria) EOOD, a
company incorporated in Bulgaria, in consideration for the issue of 29,999,998
ordinary shares in the Company. This issue of shares was also partly in
satisfaction of indebtedness due to EMED Mining Public Ltd.
The consolidated net assets of Bulgaria and Turkey at the date of acquisition
and at 31 December 2005 were as follows:
8.11.06 31.12.05
GBP'000 GBP'000
Cost of investment 2
Less: Fair values of net liabilities acquired 362
Goodwill 364
The net liabilities acquired were as follows:
Cash at bank and in hand 6 12
Payable to EMED Mining Public Ltd (334) (167)
Payable to Kefi Minerals Plc (34) -
(362) 155
Consideration - shares issued at premium 336
Cash and cash equivalents acquired (6)
Net consideration in shares on acquisition 330
21. Related party transactions
The following transactions were carried out with related parties:
21.1 Compensation of key management personnel
The total remuneration of the Directors and other key management personnel was
as follows:
2008 2007
GBP'000 GBP'000
Directors' fees 163 158
Share-based benefits to directors 57 114
Other key management personnel fees 93 163
Share-based benefits to other key management personnel 11 19
324 454
The Company has an ongoing service agreement with EMED Mining Public Ltd for
provision of management and other professional services (Note 23).
Share-based benefits
The directors and key management personnel have been granted ordinary share
options that expire six years after grant date and are exercisable at the
exercise price in whole or in part no more than one third after one year from
the grant date, two thirds after two years from the grant date and the balance
after three years from the grant date. No options have been exercised during
the period from grant date to 31 December 2008.
21.2 Payable to related 2008 2007
parties
Name Nature of transactions GBP'000 GBP'000
EMED Mining Public Ltd Finance 142 57
21.3 Transactions with related parties 2008 2007
Name Nature of transactions GBP'000 GBP'000
EMED Mining Public Ltd Provision of management 57 50
services
and other professional
services
21.4 Purchases geological survey data 2008 2007
GBP'000 GBP'000
Data acquisition - 13
In June 2007, the Company issued the first tranche of shares in settlement of
its obligations under the terms of the agreement disclosed in Note 21. The
amount disclosed above, represents the share of a director. The transaction was
made on commercial terms and conditions.
22. Contingent liabilities
In 2006, EMED Mining Public Ltd acquired a proprietary geological database that
covers extensive parts of Turkey and Greece and also EMED transferred to the
Company that part of the geological database that relates to areas in Turkey.
Under the agreement, the Company has undertaken to make a payment of
approximately GBP46,000 (AUD105,000) for each tenement it is subsequently
awarded in Turkey and which was identified from the database. The maximum
number of such payments required under the agreement is four, resulting in a
contingent liability of up to GBP184,000. These payments are to be settled by
issuing shares in the Company. To date, only one tranche of shares have been
issued under this agreement in June 2007 for GBP43,750 (AUD105,000) (Note 16).
Under the joint venture agreement with Centerra Gold (KB) Inc (see note 18)
there are certain warranties given by KEFI and its group companies whereby
KEFI, while manager and majority shareholder in the project, must in certain
circumstances repay any advances made by Centerra not expended on the Project.
As at 31 December such unexpended balances stood at Nil.
23.Relationship deed
A Relationship Deed between EMED and the Company dated 7 November 2006, by
which EMED agrees not to operate in Bulgaria and Turkey, and the Company agrees
not to operate in Albania, Armenia, Azerbaijan, Cyprus, Greece, Hungary, Iran,
Oman, Romania, Saudi Arabia, Serbia or Slovakia the "EMED Area".
The Relationship Deed provides that EMED has the right to appoint one
non-executive director of the Company. It also provides EMED with a right of
first refusal in respect of funding any proposed mining or exploration project
of the Company. The Relationship Deed provides that the Company shall refer any
opportunity to conduct mining or exploration activity in the EMED Area to EMED,
and EMED shall refer any such opportunity in Bulgaria or Turkey to the Company.
EMED has since granted the Company the right to explore in Saudi Arabia in
return for which it will receive, to the extent possible under legislation in
Saudi Arabia, first right of refusal over participation in any projects
developed (or not taken up) by the joint venture established on May 28, 2009 in
that country with Abdul Rahman Saad Al-Rashid & Sons Company Limited. (see Note
25)
24. Capital commitments
The Group has no capital or other commitments as at 31 December 2008.
25. Subsequent events
On 9 March 2009, the company completed an issue of 58,434,004 new shares at a
price of 1p to raise an additional £584 340. There were no other material
subsequent events which have a bearing on the understanding of the financial
statements.
A joint venture agreement was signed on 28 May 2009 with Abdul Rahman Saad
Al-Rashid & Sons Company Limited ("ARTAR") to explore in Saudi Arabia and a
joint venture company, Gemco Limited ("Gemco") has been established for this
purpose. KEFI Minerals is the operating partner with a 40 per cent shareholding
and ARTAR holding the remaining 60 per cent. (The "Gemco Joint Venture")
26. Standards effective but not in force
At the date of approval of these financial statements the following accounting
standards were issued by the International Accounting Standards Board but were
not yet effective:
Standard / Interpretation Effective for annual
periods beginning on or
after
(i) Adopted by the European Union
Improvements to IFRSs - 2008 1 January 2009
Amendments to IFRS 1 and International Accounting 1 July 2009
Standard (IAS) 27 "Cost of an Investment in a
Subsidiary, Jointly Controlled Entity or Associate"
Amendment to IFRS 2 "Share Based Payment: Vesting 1 January 2009
Conditions and Cancellations"
IFRS 8 "Operating Segments" 1 January 2009
IAS 1 (Revised) "Presentation of Financial Statements" 1 January 2009
IAS 23 (Revised) "Borrowing Costs" 1 January 2009
Amendments to IAS 32 and IAS 1 "Puttable Financial 1 January 2009
Instruments and Obligations arising on Liquidation"
International Financial Reporting Interpretation 1 July 2008
Committee (IFRIC) 13 "Customer Loyalty Programmes"
(ii) Not adopted by the European Union
IFRS 1 (Revised) "First Time Adoption of International 1 January 2009
Financial Reporting Standards"
IFRS 3 (Revised) "Business Combinations" 1 July 2009
IAS 27 (Revised) "Consolidated and Separate Financial 1 July 2009
Statements"
Amendment to IAS 39 "Eligible Hedged Items" 1 July 2009
Amendment to IAS 39 "Reclassification of Financial 1 July 2008
Assets: Effective date and Transition"
IFRIC 15 "Agreements for the Construction of Real 1 January 2009
Estate"
IFRIC 16 "Hedges of a Net Investment in a Foreign 1 October 2008
Operation"
IFRIC 17 "Distributions of Non cash Assets to Owners" 1 July 2009
IFRIC 18 "Transfers of Assets from Customers" 1 July 2009
The Board of Directors expects that the adoption of these accounting standards
in future periods will not have a material effect on the financial statements
of the Group except from the application of IAS 1 (Revised) "Presentation of
Financial Statements" which will have a material effect on the presentation of
the financial statements.
27. Statutory Information
The financial information set out above does not constitute the Company's
statutory accounts for the period ended 31 December 2008, but is derived from
those accounts. Statutory accounts for 2008 will be delivered to the Registrar
of Companies following the Company's Annual General Meeting. The auditors have
reported on those accounts and their report was not qualified, but drew
attention by way of emphasis to going concern uncertainties disclosed in Note
2.
END
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