TIDMEGU
RNS Number : 9943V
European Goldfields Ltd
11 November 2010
European Goldfields Limited
Consolidated Financial Statements
(Unaudited)
For the Three- and Nine- Month Periods Ended
30 September 2010 and 2009
Disclosure of auditor review of interim consolidated financial statements
The interim consolidated financial statements of the Company for the three- and
nine-month periods ended 30 September 2010 and 2009 have not been reviewed by
the auditors of the Company.
+--------------------------------------------------+------+-----------+----------+----------+
| Consolidated Balance SheetsAs at 30 September 2010 and 31 December 2009(Unaudited - |
| Prepared by Management) |
| (in thousands of US Dollars, except per share amounts) |
| |
+-------------------------------------------------------------------------------------------+
| |Note | 30 | | 31 |
| | | September | | December |
| | | 2010 | | 2009 |
| | | $ | | $ |
+--------------------------------------------------+------+-----------+ +----------+
| Assets | | Unaudited | | Audited |
+--------------------------------------------------+------+-----------+ +----------+
| | | | | |
+--------------------------------------------------+------+-----------+ +----------+
| Current assets | | | | |
+--------------------------------------------------+------+-----------+ +----------+
| Cash and cash equivalents | 13 | 82,768 | | 113,642 |
+--------------------------------------------------+------+-----------+ +----------+
| Accounts receivable | 13 | 24,357 | | 26,813 |
+--------------------------------------------------+------+-----------+ +----------+
| Derivative financial asset | 13 | 70 | | - |
+--------------------------------------------------+------+-----------+ +----------+
| Current taxes receivable | | 4,036 | | 3,954 |
+--------------------------------------------------+------+-----------+ +----------+
| Future tax assets | | 1,909 | | 119 |
+--------------------------------------------------+------+-----------+ +----------+
| Prepaid expenses | | 2,675 | | 13,794 |
+--------------------------------------------------+------+-----------+ +----------+
| Inventory | 3 | 9,129 | | 4,993 |
+--------------------------------------------------+------+-----------+ +----------+
| | | 124,944 | | 163,315 |
+--------------------------------------------------+------+-----------+ +----------+
| Non-current assets | | | | |
+--------------------------------------------------+------+-----------+ +----------+
| Property, plant and equipment | 4 | 115,590 | | 96,100 |
+--------------------------------------------------+------+-----------+ +----------+
| Deferred exploration and development costs | 5 | | | |
+--------------------------------------------------+------+-----------+ +----------+
| Greek production stage mineral properties | | 22,204 | | 24,051 |
+--------------------------------------------------+------+-----------+ +----------+
| Greek development stage mineral properties | | 407,621 | | 405,146 |
+--------------------------------------------------+------+-----------+ +----------+
| | | 429,825 | | 429,197 |
+--------------------------------------------------+------+-----------+ +----------+
| Romanian development stage mineral properties | | 55,723 | | 50,173 |
+--------------------------------------------------+------+-----------+ +----------+
| Turkish exploration stage mineral properties | | 2,747 | | 1,625 |
+--------------------------------------------------+------+-----------+ +----------+
| | | 488,295 | | 480,995 |
+--------------------------------------------------+------+-----------+ +----------+
| | | | | |
+--------------------------------------------------+------+-----------+ +----------+
| Investment in associates | 6 | 789 | | 711 |
+--------------------------------------------------+------+-----------+ +----------+
| | | | | |
+--------------------------------------------------+------+-----------+ +----------+
| Investment other | 7 | 1,851 | | 1,490 |
+--------------------------------------------------+------+-----------+ +----------+
| | | | | |
+--------------------------------------------------+------+-----------+ +----------+
| Future tax assets | | 2,783 | | 1,489 |
+--------------------------------------------------+------+-----------+ +----------+
| | | | | |
+--------------------------------------------------+------+-----------+ +----------+
| | | 734,252 | | 744,100 |
+--------------------------------------------------+------+-----------+ +----------+
| Liabilities | | | | |
+--------------------------------------------------+------+-----------+ +----------+
| | | | | |
+--------------------------------------------------+------+-----------+ +----------+
| Current liabilities | | | | |
+--------------------------------------------------+------+-----------+ +----------+
| Accounts payable and accrued liabilities | 13 | 21,809 | | 12,684 |
+--------------------------------------------------+------+-----------+ +----------+
| Derivative financial liability | 13 | - | | 1,064 |
+--------------------------------------------------+------+-----------+ +----------+
| Deferred revenue | 10 | 3,867 | | 4,549 |
+--------------------------------------------------+------+-----------+ +----------+
| Future tax liabilities | 8 | - | | - |
+--------------------------------------------------+------+-----------+ +----------+
| | | 25,676 | | 18,297 |
+--------------------------------------------------+------+-----------+ +----------+
| Non-current liabilities | | | | |
+--------------------------------------------------+------+-----------+ +----------+
| Future tax liabilities | 8 | 90,411 | | 90,083 |
+--------------------------------------------------+------+-----------+ +----------+
| Asset retirement obligation | 9 | 7,163 | | 7,068 |
+--------------------------------------------------+------+-----------+ +----------+
| Deferred revenue | 10 | 46,938 | | 48,412 |
+--------------------------------------------------+------+-----------+ +----------+
| | | 144,512 | | 145,563 |
+--------------------------------------------------+------+-----------+ +----------+
| | | | | |
+--------------------------------------------------+------+-----------+ +----------+
| Non-controlling interest | | 2,525 | | 2,930 |
+--------------------------------------------------+------+-----------+ +----------+
| | | | | |
+--------------------------------------------------+------+-----------+ +----------+
| Shareholders' equity | | | | |
+--------------------------------------------------+------+-----------+ +----------+
| Capital stock | 11 | 554,681 | | 545,180 |
+--------------------------------------------------+------+-----------+ +----------+
| Other reserves | 11 | (3,301) | | - |
+--------------------------------------------------+------+-----------+ +----------+
| Contributed surplus | 11 | 12,831 | | 10,047 |
+--------------------------------------------------+------+-----------+ +----------+
| Accumulated other comprehensive income | 11 | 37,413 | | 35,911 |
+--------------------------------------------------+------+-----------+ +----------+
| Deficit | | (40,085) | | (13,828) |
+--------------------------------------------------+------+-----------+ +----------+
| | | 561,539 | | 577,310 |
+--------------------------------------------------+------+-----------+ +----------+
| | | | | |
+--------------------------------------------------+------+-----------+ +----------+
| | | 734,252 | | 744,100 |
+--------------------------------------------------+------+-----------+----------+----------+
The accompanying notes are an integral part of these consolidated financial
statements.
Approved by the Board of Directors
(s) Timothy Morgan-Wynne (s) Bruce Burrows
Timothy Morgan-Wynne, Director
Bruce Burrows, Director
+--------------------------+------+----------+------+----------+------+-+----------+-+----------+
| Consolidated Statements of Profit and Loss |
| For the three- and nine-month periods ended 30 September 2010 and 2009 |
| (Unaudited - Prepared by Management) |
| (in thousands of US Dollars, except per share amounts) |
| |
+-----------------------------------------------------------------------------------------------+
| | | 3 months ended | | 9 months |
| | | 30 September | | ended |
| | | | | 30 September |
+--------------------------+------+----------------------------+--------+-----------------------+
| | | 2010 | | 2009 | | 2010 | | 2009 |
| | Note | $ | | $ | | $ | | $ |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| Income | | | | | | | | |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| Sales | | 9,204 | | 17,037 | | 31,608 | | 43,983 |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| Cost of sales | 3 | (7,438) | | (11,586) | | (25,281) | | (32,165) |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| Depreciation and | | (1,430) | | (1,888) | | (5,040) | | (5,411) |
| depletion | | | | | | | | |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| Gross profit | | 336 | | 3,563 | | 1,287 | | 6,407 |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| | | | | | | | | |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| Other income | | | | | | | | |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| Hedge contract profit | | 183 | | 1,030 | | 577 | | 5,248 |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| Interest income | | 65 | | 147 | | 162 | | 788 |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| Foreign exchange | | 6,930 | | (501) | | (1,861) | | (1,664) |
| gain/(loss) | | | | | | | | |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| Gain on dilution of | | - | | (135) | | - | | (36) |
| interest in associate | | | | | | | | |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| Share of profit in | | (9) | | (52) | | 30 | | (73) |
| equity investment | | | | | | | | |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| | | 7,169 | | 489 | | (1,092) | | 4,263 |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| Expenses | | | | | | | | |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| Corporate administrative | | 3,173 | | 1,135 | | 9,401 | | 3,204 |
| and overhead expenses | | | | | | | | |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| Equity-based | | 3,562 | | 1,371 | | 8,325 | | 2,332 |
| compensation expense | | | | | | | | |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| Hellas Gold | | 2,315 | | 1,900 | | 7,699 | | 4,665 |
| administrative and | | | | | | | | |
| overhead expenses | | | | | | | | |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| Hellas Gold water | | | | | | 2,885 | | 2,550 |
| treatment expenses | | 855 | | 782 | | | | |
| (non-operating mines) | | | | | | | | |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| Accretion of asset | 9 | 31 | | 34 | | 95 | | 96 |
| retirement obligation | | | | | | | | |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| Depreciation | | 315 | | 162 | | 915 | | 481 |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| | | 10,251 | | 5,384 | | 29,320 | | 13,328 |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| | | | | | | | | |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| Profit/(Loss) for the | | (2,746) | | (1,332) | | (29,125) | | (2,658) |
| period before income tax | | | | | | | | |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| | | | | | | | | |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| Income taxes | | | | | | | | |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| Current taxes | | - | | (737) | | - | | (831) |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| Future taxes | | 960 | | (1,110) | | 2,463 | | (1,554) |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| | | 960 | | (1,847) | | 2,463 | | (2,385) |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| | | | | | | | | |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| | | | | | | | | |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| Profit/(Loss) for the | | (1,786) | | (3,179) | | (26,662) | | (5,043) |
| period after income tax | | | | | | | | |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| | | | | | | | | |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| Non-controlling interest | | 141 | | 56 | | 405 | | 103 |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| | | | | | | | | |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| Profit/(Loss) for the | | (1,645) | | (3,123) | | (26,257) | | (4,940) |
| period | | | | | | | | |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| | | | | | | | | |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| Deficit - Beginning of | | (38,440) | | (3,862) | | (13,828) | | (2,045) |
| period | | | | | | | | |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| | | | | | | | | |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| Deficit - End of period | | (40,085) | | (6,985) | | (40,085) | | (6,985) |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| | | | | | | | | |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| Earnings/(loss) per | 20 | | | | | | | |
| share | | | | | | | | |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| Basic | | (0.01) | | (0.02) | | (0.14) | | (0.03) |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| Diluted | | (0.01) | | (0.02) | | (0.14) | | (0.03) |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| | | | | | | | | |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| Weighted average number | | | | | | | | |
| of shares | | | | | | | | |
| (in thousands) | | | | | | | | |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| Basic | | 182,929 | | 180,513 | | 182,544 | | 180,430 |
+--------------------------+------+----------+ +----------+ +----------+ +----------+
| Diluted | | 182,929 | | 180,513 | | 182,544 | | 180,430 |
+--------------------------+------+----------+------+----------+--------+----------+-+----------+
| | | | | | | | | | |
+--------------------------+------+----------+------+----------+------+-+----------+-+----------+
The accompanying notes are an integral part of these consolidated financial
statements.
+---------------------------+---------+----------+-------------+------------+------------+------------+---------------+------------+----------+----------+------------+
| Consolidated Statements of Shareholders' EquityAs at 30 September 2010 and 31 December 2009(Unaudited - Prepared by Management) |
| (in thousands of US Dollars, except per share amounts) |
| |
| |
+---------------------------------------------------------------------------------------------------------------------------------------------------------------------+
| | Capital | | Contributed | | | | Accumulated | | Deficit | | Total |
| | Stock | | Surplus | | | | Other | | $ | | $ |
| | $ | | $ | | Other | | Comprehensive | | | | |
| | | | | | Reserves | | Income | | | | |
| | | | | | | | $ | | | | |
| | | | | | $ | | | | | | |
+---------------------------+---------+ +-------------+ +------------+ +---------------+ +----------+ +------------+
| | | | | | | | | | | | |
+---------------------------+---------+ +-------------+ +------------+ +---------------+ +----------+ +------------+
| Balance - 31 December | 538,316 | | 7,788 | | - | | 43,676 | | (2,045) | | 587,735 |
| 2008 | | | | | | | | | | | |
+---------------------------+---------+ +-------------+ +------------+ +---------------+ +----------+ +------------+
| | | | | | | | | | | | |
+---------------------------+---------+ +-------------+ +------------+ +---------------+ +----------+ +------------+
| Equity-based compensation | - | | 2,315 | | - | | - | | - | | 2,315 |
| expense | | | | | | | | | | | |
+---------------------------+---------+ +-------------+ +------------+ +---------------+ +----------+ +------------+
| Share issue costs | (28) | | - | | - | | - | | - | | (28) |
+---------------------------+---------+ +-------------+ +------------+ +---------------+ +----------+ +------------+
| Restricted share units | 801 | | (801) | | - | | - | | - | | - |
| vested | | | | | | | | | | | |
+---------------------------+---------+ +-------------+ +------------+ +---------------+ +----------+ +------------+
| Share options exercised | 1,115 | | (476) | | - | | - | | - | | 639 |
| or exchanged | | | | | | | | | | | |
+---------------------------+---------+ +-------------+ +------------+ +---------------+ +----------+ +------------+
| Change in fair value of | - | | - | | - | | (6,426) | | - | | (6,426) |
| cash flow hedge | | | | | | | | | | | |
+---------------------------+---------+ +-------------+ +------------+ +---------------+ +----------+ +------------+
| Movement in cumulative | | | | | | | | | | | |
| translation adjustment | - | | - | | - | | (53) | | - | | (53) |
+---------------------------+---------+ +-------------+ +------------+ +---------------+ +----------+ +------------+
| Loss for the period | - | | - | | - | | - | | (4,940) | | (4,940) |
+---------------------------+---------+ +-------------+ +------------+ +---------------+ +----------+ +------------+
| | 1,888 | | 1,038 | | - | | (6,479) | | (4,940) | | (8,493) |
+---------------------------+---------+ +-------------+ +------------+ +---------------+ +----------+ +------------+
| | | | | | | | | | | | |
+---------------------------+---------+ +-------------+ +------------+ +---------------+ +----------+ +------------+
| Balance - 30 September | 540,204 | | 8,826 | | - | | 37,197 | | (6,985) | | 579,242 |
| 2009 | | | | | | | | | | | |
+---------------------------+---------+ +-------------+ +------------+ +---------------+ +----------+ +------------+
| | | | | | | | | | | | |
+---------------------------+---------+ +-------------+ +------------+ +---------------+ +----------+ +------------+
| | | | | | | | | | | | |
+---------------------------+---------+ +-------------+ +------------+ +---------------+ +----------+ +------------+
| Equity-based compensation | - | | 4,505 | | - | | - | | - | | 4,505 |
| expense | | | | | | | | | | | |
+---------------------------+---------+ +-------------+ +------------+ +---------------+ +----------+ +------------+
| Share issue costs | (1) | | - | | - | | - | | - | | (1) |
+---------------------------+---------+ +-------------+ +------------+ +---------------+ +----------+ +------------+
| Restricted share units | 2,516 | | (2,516) | | - | | - | | - | | - |
| vested | | | | | | | | | | | |
+---------------------------+---------+ +-------------+ +------------+ +---------------+ +----------+ +------------+
| Share options exercised | 2,461 | | (768) | | - | | - | | - | | 1,693 |
| or exchanged | | | | | | | | | | | |
+---------------------------+---------+ +-------------+ +------------+ +---------------+ +----------+ +------------+
| Change in fair value of | - | | - | | - | | (1,424) | | - | | (1,424) |
| cash flow hedge | | | | | | | | | | | |
+---------------------------+---------+ +-------------+ +------------+ +---------------+ +----------+ +------------+
| Revaluation of | - | | - | | - | | 157 | | | | 157 |
| available-for-sale asset | | | | | | | | | | | |
+---------------------------+---------+ +-------------+ +------------+ +---------------+ +----------+ +------------+
| Movement in cumulative | | | | | | | | | | | |
| translation adjustment | - | | - | | - | | (19) | | - | | (19) |
+---------------------------+---------+ +-------------+ +------------+ +---------------+ +----------+ +------------+
| Loss for the period | - | | - | | - | | - | | (6,843) | | (6,843) |
+---------------------------+---------+ +-------------+ +------------+ +---------------+ +----------+ +------------+
| | 4,976 | | 1,221 | | - | | (1,286) | | (6,843) | | (1,932) |
+---------------------------+---------+ +-------------+ +------------+ +---------------+ +----------+ +------------+
| | | | | | | | | | | | |
+---------------------------+---------+ +-------------+ +------------+ +---------------+ +----------+ +------------+
| Balance - 31 December | 545,180 | | 10,047 | | - | | 35,911 | | (13,828) | | 577,310 |
| 2009 | | | | | | | | | | | |
+---------------------------+---------+ +-------------+ +------------+ +---------------+ +----------+ +------------+
| | | | | | | | | | | | |
+---------------------------+---------+----------+-------------+ +------------+------------+---------------+------------+----------+----------+------------+
| | | | | | | | | | | | |
+---------------------------+---------+----------+-------------+ +------------+------------+---------------+------------+----------+----------+------------+
| Equity-based compensation | - | | 8,670 | | - | | - | | - | | 8,670 |
| expense | | | | | | | | | | | |
+---------------------------+---------+----------+-------------+ +------------+------------+---------------+------------+----------+----------+------------+
| Share issue costs | - | | - | | - | | - | | - | | - |
+---------------------------+---------+----------+-------------+ +------------+------------+---------------+------------+----------+----------+------------+
| Own shares issue under | | | | | | | | | | | |
| joint ownership equity | 3,301 | | - | | (3,301) | | - | | - | | - |
| plan | | | | | | | | | | | |
+---------------------------+---------+----------+-------------+ +------------+------------+---------------+------------+----------+----------+------------+
| Restricted share units | 4,555 | | (4,555) | | - | | - | | - | | - |
| vested | | | | | | | | | | | |
+---------------------------+---------+----------+-------------+ +------------+------------+---------------+------------+----------+----------+------------+
| Share options exercised | 1,645 | | (1,331) | | - | | - | | - | | 314 |
| or exchanged | | | | | | | | | | | |
+---------------------------+---------+----------+-------------+ +------------+------------+---------------+------------+----------+----------+------------+
| Change in fair value of | - | | - | | - | | 1,134 | | - | | 1,134 |
| cash flow hedge | | | | | | | | | | | |
+---------------------------+---------+----------+-------------+ +------------+------------+---------------+------------+----------+----------+------------+
| Revaluation of | - | | - | | - | | 360 | | - | | 360 |
| available-for-sale asset | | | | | | | | | | | |
+---------------------------+---------+----------+-------------+ +------------+------------+---------------+------------+----------+----------+------------+
| Movement in cumulative | | | | | | | | | | | |
| translation adjustment | - | | - | | - | | 8 | | - | | 8 |
+---------------------------+---------+----------+-------------+ +------------+------------+---------------+------------+----------+----------+------------+
| Loss for the period | - | | - | | - | | - | | (26,257) | | (26,257) |
+---------------------------+---------+----------+-------------+ +------------+------------+---------------+------------+----------+----------+------------+
| | 9,501 | | 2,784 | | (3,301) | | 1,502 | | (26,257) | | (15,771) |
+---------------------------+---------+----------+-------------+ +------------+------------+---------------+------------+----------+----------+------------+
| | | | | | | | | | | | |
+---------------------------+---------+----------+-------------+ +------------+------------+---------------+------------+----------+----------+------------+
| Balance - 30 September | 554,681 | | 12,831 | | (3,301) | | 37,413 | | (40,085) | | 561,539 |
| 2010 | | | | | | | | | | | |
+---------------------------+---------+----------+-------------+------------+------------+------------+---------------+------------+----------+----------+------------+
The accompanying notes are an integral part of these consolidated financial
statements.
+----------------------------------------------------------+
| |
| |
| Consolidated Statements of Cash Flows |
| For the three- and nine-month periods ended 30 September |
| 2010 and 2009 |
| (Unaudited - Prepared by Management) |
| (in thousands of US Dollars, except per share amounts) |
| |
+----------------------------------------------------------+
+-------------------------------------------+------+----------+------+-----------+------+-----------+--+------------+
| | | 3 months ended | | 9 months |
| | | 30 September | | ended |
| | | | | 30 September |
+-------------------------------------------+------+-----------------------------+------+---------------------------+
| | | 2010 | | 2009 | | 2010 | | 2009 |
| | Note | $ | | $ | | $ | | $ |
+-------------------------------------------+------+----------+ +-----------+ +-----------+ +------------+
| Cash flows from operating activities | | | | | | | | |
+-------------------------------------------+------+----------+ +-----------+ +-----------+ +------------+
| Profit/(Loss) for the period | | (1,645) | | (3,123) | | (26,257) | | (4,940) |
+-------------------------------------------+------+----------+ +-----------+ +-----------+ +------------+
| Foreign exchange (gain)/loss | | (5,713) | | (1,163) | | 2,001 | | (430) |
+-------------------------------------------+------+----------+ +-----------+ +-----------+ +------------+
| Share of loss in equity investment | | 9 | | 52 | | (30) | | 73 |
+-------------------------------------------+------+----------+ +-----------+ +-----------+ +------------+
| Gain on change of interest in associate | | - | | 135 | | - | | 36 |
+-------------------------------------------+------+----------+ +-----------+ +-----------+ +------------+
| Amortisation | | 1,388 | | 1,114 | | 4,374 | | 3,254 |
+-------------------------------------------+------+----------+ +-----------+ +-----------+ +------------+
| Equity-based compensation expense | | 3,562 | | 1,371 | | 8,325 | | 2,332 |
+-------------------------------------------+------+----------+ +-----------+ +-----------+ +------------+
| Accretion of asset retirement obligation | | 31 | | 34 | | 94 | | 96 |
| | | | | | | | | |
+-------------------------------------------+------+----------+ +-----------+ +-----------+ +------------+
| Current taxation | | - | | 737 | | - | | 831 |
+-------------------------------------------+------+----------+ +-----------+ +-----------+ +------------+
| Future tax asset recognised | | (960) | | 1,110 | | (2,463) | | 1,554 |
+-------------------------------------------+------+----------+ +-----------+ +-----------+ +------------+
| Non-controlling interest | | (141) | | (56) | | (405) | | (103) |
+-------------------------------------------+------+----------+ +-----------+ +-----------+ +------------+
| Deferred revenue recognised | | (532) | | (883) | | (2,157) | | (2,312) |
+-------------------------------------------+------+----------+ +-----------+ +-----------+ +------------+
| Depletion of mineral properties | | 558 | | 1,031 | | 2,062 | | 2,821 |
+-------------------------------------------+------+----------+ +-----------+ +-----------+ +------------+
| | | (3,443) | | 359 | | (14,456) | | 3,212 |
+-------------------------------------------+------+----------+ +-----------+ +-----------+ +------------+
| | | | | | | | | |
+-------------------------------------------+------+----------+ +-----------+ +-----------+ +------------+
| Net changes in non-cash working capital | 15 | 2,502 | | 2,506 | | 4,920 | | (11,003) |
+-------------------------------------------+------+----------+ +-----------+ +-----------+ +------------+
| | | (941) | | 2,865 | | 9,536 | | (7,791) |
+-------------------------------------------+------+----------+ +-----------+ +-----------+ +------------+
| | | | | | | | | |
+-------------------------------------------+------+----------+ +-----------+ +-----------+ +------------+
| Cash flows from investing activities | | | | | | | | |
+-------------------------------------------+------+----------+ +-----------+ +-----------+ +------------+
| Deferred exploration and development | | (1,415) | | (1,652) | | (4,246) | | (4,168) |
| costs - Romania | | | | | | | | |
+-------------------------------------------+------+----------+ +-----------+ +-----------+ +------------+
| Property, plant and equipment - Greece | | (3,190) | | (20,649) | | (9,903) | | (33,052) |
+-------------------------------------------+------+----------+ +-----------+ +-----------+ +------------+
| Deferred development costs - Greece | | (750) | | (129) | | (1,963) | | (1,351) |
+-------------------------------------------+------+----------+ +-----------+ +-----------+ +------------+
| Deferred exploration costs -Turkey | | (618) | | (356) | | (1,053) | | (699) |
+-------------------------------------------+------+----------+ +-----------+ +-----------+ +------------+
| Purchase of land | | (844) | | - | | (844) | | (88) |
+-------------------------------------------+------+----------+ +-----------+ +-----------+ +------------+
| Purchase of equipment | | (512) | | (7) | | (1,308) | | (133) |
+-------------------------------------------+------+----------+ +-----------+ +-----------+ +------------+
| Investment in associate | | - | | - | | - | | (143) |
+-------------------------------------------+------+----------+ +-----------+ +-----------+ +------------+
| | | (7,329) | | (22,793) | | (19,317) | | (39,634) |
+-------------------------------------------+------+----------+ +-----------+ +-----------+ +------------+
| | | | | | | | | |
+-------------------------------------------+------+----------+ +-----------+ +-----------+ +------------+
| Cash flows from financing activities | | | | | | | | |
+-------------------------------------------+------+----------+ +-----------+ +-----------+ +------------+
| Proceeds from exercise of share options | | 199 | | - | | 312 | | 638 |
+-------------------------------------------+------+----------+ +-----------+ +-----------+ +------------+
| Share issue costs | | - | | - | | - | | - |
+-------------------------------------------+------+----------+ +-----------+ +-----------+ +------------+
| | | 199 | | - | | 312 | | 638 |
+-------------------------------------------+------+----------+ +-----------+ +-----------+ +------------+
| | | | | | | | | |
+-------------------------------------------+------+----------+ +-----------+ +-----------+ +------------+
| Effect of foreign currency translation on | | 5,861 | | 1,312 | | (2,333) | | (603) |
| cash | | | | | | | | |
+-------------------------------------------+------+----------+ +-----------+ +-----------+ +------------+
| | | | | | | | | |
+-------------------------------------------+------+----------+ +-----------+ +-----------+ +------------+
| Decrease in cash and cash equivalents | | (2,210) | | (18,616) | | (30,874) | | (46,184) |
+-------------------------------------------+------+----------+ +-----------+ +-----------+ +------------+
| | | | | | | | | |
+-------------------------------------------+------+----------+ +-----------+ +-----------+ +------------+
| Cash and cash equivalents - Beginning of | | 84,978 | | 142,728 | | 113,642 | | 170,296 |
| period | | | | | | | | |
+-------------------------------------------+------+----------+ +-----------+ +-----------+ +------------+
| | | | | | | | | |
+-------------------------------------------+------+----------+ +-----------+ +-----------+ +------------+
| Cash and cash equivalents - End of period | | 82,768 | | 124,112 | | 82,768 | | 124,112 |
+-------------------------------------------+------+----------+------+-----------+------+-----------+--+------------+
The accompanying notes are an integral part of these consolidated financial
statements.
+------------------------------------------------+---------+------+---------+------+----------+-+----------+
| Consolidated Statements of Other Comprehensive Income and lossFor the three- and |
| nine-month periods ended 30 September 2010 and 2009(Unaudited - Prepared by Management) |
| (in thousands of US Dollars, except per share amounts) |
| |
| |
+----------------------------------------------------------------------------------------------------------+
| | | | |
| | 3 months ended | | 9 months |
| | 30 September | | ended |
| | | | 30 September |
+------------------------------------------------+--------------------------+------+-----------------------+
| | 2010 | | 2009 | | 2010 | | 2009 |
| | $ | | $ | | $ | | $ |
+------------------------------------------------+---------+ +---------+ +----------+ +----------+
| | | | | | | | |
+------------------------------------------------+---------+ +---------+ +----------+ +----------+
| Profit/(Loss) for the period | (1,645) | | (3,123) | | (26,257) | | (4,940) |
+------------------------------------------------+---------+ +---------+ +----------+ +----------+
| | | | | | | | |
+------------------------------------------------+---------+ +---------+ +----------+ +----------+
| Other comprehensive income/(loss) in the | | | | | | | |
| period | | | | | | | |
+------------------------------------------------+---------+ +---------+ +----------+ +----------+
| Currency translation adjustment | 170 | | 12 | | 8 | | (53) |
+------------------------------------------------+---------+ +---------+ +----------+ +----------+
| Gains and losses on derivative designated as | | | | | | | (998) |
| cash flow hedges | (2,245) | | (395) | | 1,711 | | |
+------------------------------------------------+---------+ +---------+ +----------+ +----------+
| Gains and losses on derivative designated as | | | | | | | (5,248) |
| cash flow hedges in prior periods transferred | | | | | | | |
| to profit in current period | (183) | | (1,030) | | (577) | | |
+------------------------------------------------+---------+ +---------+ +----------+ +----------+
| Unrealised gain/(loss) on available-for-sale | - | | - | | - | | - |
| financial asset | | | | | | | |
+------------------------------------------------+---------+ +---------+ +----------+ +----------+
| Comprehensive income/(loss) | (3,903) | | (4,536) | | (25,115) | | (11,239) |
+------------------------------------------------+---------+ +---------+ +----------+ +----------+
| | | | | | | | |
+------------------------------------------------+---------+------+---------+------+----------+-+----------+
The accompanying notes are not part of these consolidated financial statements.
Notes to Consolidated Financial Statements
For the periods ended 30 September 2010 and 2009
(Unaudited - Prepared by Management)
(in thousands of US Dollars, except per share amounts)
1. Nature of operations
European Goldfields Limited (the "Company"), a company incorporated under the
Yukon Business Corporations Act, is a resource company involved in the
acquisition, exploration and development of mineral properties in Greece,
Romania and South-East Europe.
The Company's common shares are listed on the AIM Market of the London Stock
Exchange and on the Toronto Stock Exchange (TSX) under the symbol "EGU".
The Company is a developer-producer with globally significant gold reserves
located within the European Union. The Company generates cash flow from its 95%
owned Stratoni operation, a high grade lead/zinc/silver mine in North-Eastern
Greece. European Goldfields will evolve into a mid tier producer through
responsible development of its project pipeline of gold and base metal deposits
at Skouries and Olympias in Greece and Certej in Romania. The Company plans
future growth through development of its highly prospective exploration
portfolio in Greece, Romania and Turkey.
The underlying value of the deferred exploration and development costs for
mineral properties is dependent upon the existence and economic recovery of
reserves in the future, and the ability to fund the development of the
properties.
For the coming year, the Company believes it has adequate funds available to
meet its corporate and administrative obligations and its planned expenditures
on its mineral properties.
2. Significant accounting policies
These interim consolidated financial statements have been prepared on the going
concern basis in accordance with accounting principles generally accepted in
Canada ("Canadian GAAP") using the same accounting policies as those disclosed
in Note 3 to the Company's audited consolidated financial statements for the
years ended 31 December 2009 and 2008.
These interim consolidated financial statements should be read in conjunction
with the Company's audited consolidated financial statements for the years ended
31 December 2009 and 2008.
3. Inventory
This balance comprises the following:
+-----------------------------------------------+-----------+----------+----------+
| | 30 | | 31 |
| | September | | December |
| | 2010 | | 2009 |
+-----------------------------------------------+-----------+ +----------+
| | $ | | $ |
+-----------------------------------------------+-----------+ +----------+
| | | | |
+-----------------------------------------------+-----------+ +----------+
| Ore mined | 1,342 | | 102 |
+-----------------------------------------------+-----------+ +----------+
| Metal concentrates | 5,370 | | 2,195 |
+-----------------------------------------------+-----------+ +----------+
| Material and supplies | 2,417 | | 2,696 |
+-----------------------------------------------+-----------+ +----------+
| | 9,129 | | 4,993 |
+-----------------------------------------------+-----------+----------+----------+
The components of cost of sales were as follows:
+------------------------------------------+---------+------+------+--------+---------+------+---------+
| | 3 months ended | | 9 months ended |
| | 30 September | | |
| | | | 30 September |
+------------------------------------------+-----------------------+ +--------------------------+
| | 2010 | | | 2009 | 2010 | | 2009 |
| | $ | | | $ | $ | | $ |
+------------------------------------------+---------+ + +--------+---------+ +---------+
| | | | | | | | |
+------------------------------------------+---------+ + +--------+---------+ +---------+
| Mining cost | 6,159 | | | 5,679 | 18,901 | | 18,053 |
+------------------------------------------+---------+ + +--------+---------+ +---------+
| Direct labour | 872 | | | 1,148 | 2,396 | | 3,352 |
+------------------------------------------+---------+ + +--------+---------+ +---------+
| Indirect labour | 261 | | | 116 | 764 | | 356 |
+------------------------------------------+---------+ + +--------+---------+ +---------+
| Other overhead costs | 1,280 | | | 1,345 | 3,796 | | 4,199 |
+------------------------------------------+---------+ + +--------+---------+ +---------+
| Change in gross inventories | (1,985) | | | 1,080 | (3,542) | | (1,268) |
+------------------------------------------+---------+ + +--------+---------+ +---------+
| Freight charges | 851 | | | 2,218 | 2,966 | | 7,473 |
+------------------------------------------+---------+ + +--------+---------+ +---------+
| | 7,438 | | | 11,586 | 25,281 | | 32,165 |
+------------------------------------------+---------+------+------+--------+---------+------+---------+
As at 30 September 2010, the value of total inventory carried at net realisable
value amounted to $Nil (2009 - $Nil), which includes a write-down of $Nil (2009
- $Nil).
4. Property, plant and equipment
+---------------------------------+-----------+--------+----------+-------+-------------+-+---------+
| | | | | | Mine | | Total |
| | | | | | development | | $ |
| | Plant | | | | land and | | |
| | and | | Vehicles | | buildings | | |
| | equipment | | $ | | $ | | |
| | $ | | | | | | |
+---------------------------------+-----------+ +----------+ +-------------+ +---------+
| | | | | | | | |
+---------------------------------+-----------+ +----------+ +-------------+ +---------+
| Cost - 2010 | | | | | | | |
+---------------------------------+-----------+ +----------+ +-------------+ +---------+
| | | | | | | | |
+---------------------------------+-----------+ +----------+ +-------------+ +---------+
| At 31 December 2009 | 64,240 | | 2,107 | | 43,464 | | 109,811 |
+---------------------------------+-----------+ +----------+ +-------------+ +---------+
| | | | | | | | |
+---------------------------------+-----------+ +----------+ +-------------+ +---------+
| Additions | 10,586 | | 447 | | 13,135 | | 24,168 |
+---------------------------------+-----------+ +----------+ +-------------+ +---------+
| At 30 September 2010 | 74,826 | | 2,554 | | 56,599 | | 133,979 |
+---------------------------------+-----------+ +----------+ +-------------+ +---------+
| | | | | | | | |
+---------------------------------+-----------+ +----------+ +-------------+ +---------+
| Accumulated depreciation - 2010 | | | | | | | |
+---------------------------------+-----------+ +----------+ +-------------+ +---------+
| | | | | | | | |
+---------------------------------+-----------+ +----------+ +-------------+ +---------+
| At 31 December 2009 | 6,269 | | 1,390 | | 6,052 | | 13,711 |
+---------------------------------+-----------+ +----------+ +-------------+ +---------+
| | | | | | | | |
+---------------------------------+-----------+ +----------+ +-------------+ +---------+
| Provision for the period | 1,495 | | 244 | | 2,939 | | 4,678 |
+---------------------------------+-----------+ +----------+ +-------------+ +---------+
| At 30 September 2010 | 7,764 | | 1,634 | | 8,991 | | 18,389 |
+---------------------------------+-----------+ +----------+ +-------------+ +---------+
| | | | | | | | |
+---------------------------------+-----------+ +----------+ +-------------+ +---------+
| Net book value at 30 September | 67,062 | | 920 | | 47,608 | | 115,590 |
| 2010 | | | | | | | |
+---------------------------------+-----------+--------+----------+-------+-------------+-+---------+
During the 9 month period ended 30 September 2010, the total depreciation charge
amounted to $4,679 (2009 - $3,260) and the net book value amount of property,
plant and equipment not amortised amounted to $75,859 (2009 - $75,173).
5. Deferred exploration and development costs
Greek mineral properties:
+----------------------------+----------+--------+----------+----------+----------+----------+-------------+-+----------+
| | | | | | | | Other | | |
| | Stratoni | | Olympias | | Skouries | | exploration | | Total |
| | $ | | $ | | $ | | $ | | $ |
+----------------------------+----------+ +----------+ +----------+ +-------------+ +----------+
| | | | | | | | | | |
+----------------------------+----------+ +----------+ +----------+ +-------------+ +----------+
| Balance - 31 December 2009 | 24,051 | | 237,311 | | 167,549 | | 286 | | 429,197 |
+----------------------------+----------+ +----------+ +----------+ +-------------+ +----------+
| | | | | | | | | | |
+----------------------------+----------+ +----------+ +----------+----------+-------------+-+----------+
| Acquisition of mineral | - | | - | | - | | - | | - |
| properties | | | | | | | | | |
+----------------------------+----------+ +----------+ +----------+----------+-------------+-+----------+
| Deferred development costs | 391 | | 856 | | 1,566 | | 53 | | 2,866 |
+----------------------------+----------+ +----------+ +----------+----------+-------------+-+----------+
| Depletion of mineral | (2,238) | | - | | - | | - | | (2,238) |
| properties | | | | | | | | | |
+----------------------------+----------+ +----------+ +----------+----------+-------------+-+----------+
| | (1,847) | | 856 | | 1,566 | | 53 | | 628 |
+----------------------------+----------+ +----------+ +----------+ +-------------+ +----------+
| | | | | | | | | | |
+----------------------------+----------+ +----------+ +----------+ +-------------+ +----------+
| Balance - 30 September | 22,204 | | 238,167 | | 169,115 | | 339 | | 429,825 |
| 2010 | | | | | | | | | |
+----------------------------+----------+ +----------+ +----------+ +-------------+ +----------+
| | | | | | | | | | |
+----------------------------+----------+--------+----------+----------+----------+----------+-------------+-+----------+
The Stratoni, Skouries and Olympias properties are held by the Company's 95%
owned subsidiary, Hellas Gold. In September 2005, the Stratoni property
commenced production.
Romanian mineral properties:
+--------------------------------------------------+----------+---------+-------------+-+---------+
| | | | Other | | |
| | Certej | | exploration | | Total |
| | $ | | $ | | $ |
+--------------------------------------------------+----------+---------+-------------+-+---------+
| | | | | | |
+--------------------------------------------------+----------+ +-------------+ +---------+
| Balance - 31 December 2009 | 44,270 | | 5,903 | | 50,173 |
+--------------------------------------------------+----------+ +-------------+ +---------+
| | | | | | |
+--------------------------------------------------+----------+ +-------------+ +---------+
| Project development and exploration | 2,615 | | 723 | | 3,338 |
+--------------------------------------------------+----------+ +-------------+ +---------+
| Permit acquisition | 56 | | - | | 56 |
+--------------------------------------------------+----------+ +-------------+ +---------+
| Project overhead | 1,903 | | 194 | | 2,097 |
+--------------------------------------------------+----------+ +-------------+ +---------+
| Depreciation | 50 | | 9 | | 59 |
+--------------------------------------------------+----------+ +-------------+ +---------+
| | 4,624 | | 926 | | 5,550 |
+--------------------------------------------------+----------+ +-------------+ +---------+
| | | | | | |
+--------------------------------------------------+----------+---------+-------------+-+---------+
| Balance - 30 September 2010 | 48,894 | | 6,829 | | 55,723 |
+--------------------------------------------------+----------+---------+-------------+-+---------+
The Certej exploitation licence and the Baita-Craciunesti exploration licence
are held by the Company's 80%-owned subsidiary, Deva Gold. Minvest S.A. (a
Romanian state owned mining company), together with three private Romanian
companies, hold the remaining 20% interest in Deva Gold. The Company is
required to fund 100% of all costs related to the exploration and development of
these properties. As a result, the Company is entitled to the refund of such
costs (plus interest) out of future cash flows generated by Deva Gold, prior to
any dividends being distributed to shareholders. The Voia and Cainel
exploration licences are held by the Company's wholly-owned subsidiary, European
Goldfields Deva SRL.
As at the 30 September 2010, the following cost had been incurred on the
remaining Romanian mineral properties:
+--------------------------------------------------+-----------+----------+----------+
| | 30 | | 31 |
| | September | | December |
| | 2010 | | 2009 |
| | $ | | $ |
+--------------------------------------------------+-----------+----------+----------+
| | | | |
+--------------------------------------------------+-----------+----------+----------+
| Baita-Craciunesti | 3,327 | | 3,334 |
+--------------------------------------------------+-----------+----------+----------+
| Voia | 2,106 | | 1,847 |
+--------------------------------------------------+-----------+----------+----------+
| Magura Tebii | 296 | | 181 |
+--------------------------------------------------+-----------+ +----------+
| Exploration projects | 1,100 | | 541 |
+--------------------------------------------------+-----------+ +----------+
| | 6,829 | | 5,903 |
+--------------------------------------------------+-----------+----------+----------+
Turkish Mineral Properties:
+--------------------------------------------+---------+---------+-------------+-+---------+
| | | | Other | | |
| | Ardala | | exploration | | Total |
| | $ | | $ | | $ |
+--------------------------------------------+---------+---------+-------------+-+---------+
| | | | | | |
+--------------------------------------------+---------+ +-------------+ +---------+
| Balance - 31 December 2009 | 1,468 | | 157 | | 1,625 |
+--------------------------------------------+---------+---------+-------------+-+---------+
+--------------------------------------------+---------+--------+--------+-+--------+
| Exploration | 298 | | 79 | | 377 |
+--------------------------------------------+---------+--------+--------+-+--------+
| Project overhead | 452 | | 282 | | 734 |
+--------------------------------------------+---------+--------+--------+-+--------+
| Permit acquisition | 5 | | 6 | | 11 |
+--------------------------------------------+---------+--------+--------+-+--------+
| Depreciation | - | | - | | - |
+--------------------------------------------+---------+--------+--------+-+--------+
| | 755 | | 367 | | 1,122 |
+--------------------------------------------+---------+ +--------+ +--------+
| | | | | | |
+--------------------------------------------+---------+ +--------+ +--------+
| Balance - 30 September 2010 | 2,223 | | 524 | | 2,747 |
+--------------------------------------------+---------+--------+--------+-+--------+
In April 2008, the Company entered into a Joint Venture ("JV") with Ariana
Resources plc ("Ariana") which became effective in May 2008 after the transfer
of Ariana's properties was confirmed by the General Directorate of Mining
Affairs in Turkey. The JV involves the development of Ariana's current
properties in an Area of Intent ("AOI") in the Greater Pontides region of
north-eastern Turkey, which include the Ardala copper-gold porphyry and fourteen
other licences covering a total area of 211km², and a Strategic Partnership
within the AOI to define new opportunities for the JV.
The Turkish licences are held by the JV through a Turkish Company, Pontid
Madencilik. Currently the Company has a 51% interest in all the properties
within the JV and the Company will fund 100% of all costs related to the
development of these properties. Ownership of the Ardala property may be
increased to 80% by funding to completion of a Bankable Feasibility Study. All
other concessions within the JV funded to a Bankable Feasibility Study will be
90% owned by the Company. The owner of the remaining 49% of the properties is
Ariana Resources plc.
6. Investment in associates
+-------------------------------------------------+-----------+----------+----------+
| | 30 | | 31 |
| | September | | December |
| | 2010 | | 2009 |
+-------------------------------------------------+-----------+----------+----------+
| | $ | | $ |
+-------------------------------------------------+-----------+ +----------+
| | | | |
+-------------------------------------------------+-----------+----------+----------+
| Balance - Beginning of period | 711 | | 2,075 |
+-------------------------------------------------+-----------+----------+----------+
| Shares acquired | - | | 141 |
+-------------------------------------------------+-----------+----------+----------+
| Share of loss of profit/(loss) of associate | 30 | | (76) |
+-------------------------------------------------+-----------+----------+----------+
| Cumulative translation adjustment | 48 | | (32) |
+-------------------------------------------------+-----------+----------+----------+
| Share issue cost | - | | (28) |
+-------------------------------------------------+-----------+----------+----------+
| Loss in dilution of interest in associates | - | | (36) |
+-------------------------------------------------+-----------+----------+----------+
| Reclassification as investment | - | | (1,333) |
| available-for-sale | | | |
+-------------------------------------------------+-----------+----------+----------+
| Balance - End of period | 789 | | 711 |
+-------------------------------------------------+-----------+----------+----------+
| | | | |
+-------------------------------------------------+-----------+----------+----------+
In January 2008, Hellas Gold acquired a 50% share of Greek Nurseries SA for a
consideration of $834 (EUR530), at the date of acquisition the Company had no net
assets.
In May 2008, the Company subscribed for 20.13% of the issued share capital of
Ariana through a $1,858 (GBP929) private placement of shares. The difference
between the cost of the investment of $1,830 and the underlying net book value
of Ariana was $132 at the date of acquisition. This excess represents
additional fair value assigned to mineral properties of Ariana and will be
depleted upon commencement of mining operations of Ariana.
In January 2009, Ariana undertook a share issue in which the Company subscribed
which resulted in a dilution of ownership as the Company did not subscribe to
20.13% of the new shares being issued. After the share issue the Company held
19.87% interest in Ariana. During September 2009, Ariana carried out a further
share placement in which the Company did not subscribe and as at 31 December
2009, the Company held 16.58% of the issued share capital. Since October 2009,
the Company has not had a representative on the board of Ariana and therefore no
longer has significant influence. As a result, the Company has accounted for
its investment in Ariana as an investment available-for-sale as per note 7.
7. Investment other
+-------------------------------------------------+-----------+----------+----------+
| | 30 | | 31 |
| | September | | December |
| | 2010 | | 2009 |
+-------------------------------------------------+-----------+----------+----------+
| | $ | | $ |
+-------------------------------------------------+-----------+ +----------+
| | | | |
+-------------------------------------------------+-----------+----------+----------+
| Balance - Beginning of period | 1,490 | | - |
+-------------------------------------------------+-----------+----------+----------+
| Reclassification from investment in associate | - | | 1,333 |
+-------------------------------------------------+-----------+----------+----------+
| Fair value adjustment | 361 | | 157 |
+-------------------------------------------------+-----------+----------+----------+
| Balance - End of period | 1,851 | | 1,490 |
+-------------------------------------------------+-----------+----------+----------+
| | | | |
+-------------------------------------------------+-----------+----------+----------+
The above investment is accounted for as an available-for-sale asset.
8. Future tax liability
The following table reflects future income tax liabilities:
+--------------------------------------------------+-----------+----------+----------+
| | 30 | | 31 |
| | September | | December |
| | 2010 | | 2009 |
+--------------------------------------------------+-----------+----------+----------+
| | $ | | $ |
+--------------------------------------------------+-----------+ +----------+
| | | | |
+--------------------------------------------------+-----------+ +----------+
| Mineral properties | 84,225 | | 84,491 |
+--------------------------------------------------+-----------+ +----------+
| Plant and equipment | 2,163 | | 1,329 |
+--------------------------------------------------+-----------+ +----------+
| Exploration and development expenditure | 3,386 | | 3,187 |
+--------------------------------------------------+-----------+ +----------+
| Accrued expenses & other | - | | 286 |
+--------------------------------------------------+-----------+ +----------+
| Inventory | - | | 10 |
+--------------------------------------------------+-----------+ +----------+
| Retirement obligation | 637 | | 780 |
+--------------------------------------------------+-----------+ +----------+
| | 90,411 | | 90,083 |
+--------------------------------------------------+-----------+ +----------+
| Less: Current portion | - | | - |
+--------------------------------------------------+-----------+ +----------+
| Future income tax liabilities recognised | 90,411 | | 90,083 |
+--------------------------------------------------+-----------+----------+----------+
9. Asset retirement obligation
Management has estimated the total future asset retirement obligation based on
the Company's ownership interest in the Stratoni mines and facilities. This
includes all estimated costs to dismantle, remove, reclaim and abandon the
facilities at the Stratoni property, and the estimated time period during which
these costs will be incurred in the future. The following table reconciles the
asset retirement obligation for the financial periods ended 30 September 2010
and 31 December 2009:
+--------------------------------------------------+-----------+----------+----------+
| | 30 | | 31 |
| | September | | December |
| | 2010 | | 2009 |
+--------------------------------------------------+-----------+----------+----------+
| | $ | | $ |
+--------------------------------------------------+-----------+ +----------+
| | | | |
+--------------------------------------------------+-----------+ +----------+
| Asset retirement obligation - Beginning of | 7,068 | | 6,937 |
| period | | | |
+--------------------------------------------------+-----------+ +----------+
| Accretion expense | 95 | | 131 |
+--------------------------------------------------+-----------+ +----------+
| Asset retirement obligation - End of period | 7,163 | | 7,068 |
+--------------------------------------------------+-----------+----------+----------+
As at 30 September 2010, the undiscounted amount of estimated cash flows
required to settle the obligation is $6,713 (31 December 2009 - $7,805). The
estimated cash flow has been discounted using a credit adjusted risk free rate
of 5.04% (31 December 2009 - 5.04%). The expected period until settlement is
4.25 years.
10. Deferred revenue
In April 2007, Hellas Gold agreed to sell to Silver Wheaton (Caymans) Ltd.
("Silver Wheaton") all of the silver metal to be produced from ore extracted
during the mine-life within an area of some 7 km² around its zinc-lead-silver
Stratoni mine in northern Greece (the "Silver Wheaton Transaction"). The sale
was made in consideration of a prepayment to Hellas Gold of $57.5 million in
cash, plus a fee per ounce of payable silver to be delivered to Silver Wheaton
of the lesser of $3.90 (subject to an inflationary adjustment effective from
June 2010, lesser of $3.94) and the prevailing market price per ounce. During
the nine-month period ended 30 September 2010, Hellas Gold delivered concentrate
containing ounces 504,290 (31 December 2009 - 772,865 ounces) of silver for
credit to Silver Wheaton.
In September 2007, Hellas Gold entered into an agreement with a subsidiary of
Celtic Resources Holdings ("Celtic") Plc for the sale of 50,000 wet metric
tonnes of gold bearing pyrite concentrate, for which Hellas Gold received a
prepayment of $4.71 million in cash. During the period a total of Nil wmt (31
December 2009 - 24,680 wmt) of concentrate was delivered to Celtic.
The following table reconciles movements on deferred revenue associated with
Celtic and the Silver Wheaton transaction:
+--------------------------------------------------+-----------+----------+----------+
| | 30 | | 31 |
| | September | | December |
| | 2010 | | 2009 |
+--------------------------------------------------+-----------+----------+----------+
| | $ | | $ |
+--------------------------------------------------+-----------+ +----------+
| | | | |
+--------------------------------------------------+-----------+ +----------+
| Deferred revenue - Beginning of period | 52,961 | | 58,496 |
+--------------------------------------------------+-----------+ +----------+
| Additions | - | | - |
+--------------------------------------------------+-----------+ +----------+
| Revenue recognised | (2,156) | | (5,535) |
+--------------------------------------------------+-----------+----------+----------+
| | 50,805 | | 52,961 |
+--------------------------------------------------+-----------+----------+----------+
| Less: Current portion | (3,867) | | (4,549) |
+--------------------------------------------------+-----------+----------+----------+
| Deferred revenue - End of period | 46,938 | | 48,412 |
+--------------------------------------------------+-----------+----------+----------+
11. Capital stock
Authorised:
- Unlimited number of common shares, without par value
- Unlimited number of preferred shares, issuable in series, without par value
Issued and outstanding (common shares - all fully paid)
+--------------------------------------------------+-------------+----------+----------+
| | Number | | Amount |
| | of | | $ |
| | Shares | | |
+--------------------------------------------------+-------------+ +----------+
| | | | |
+--------------------------------------------------+-------------+ +----------+
| Balance - 31 December 2009 | 181,339,813 | | 545,180 |
+--------------------------------------------------+-------------+ +----------+
| | | | |
+--------------------------------------------------+-------------+ +----------+
| Restricted share units vested | 991,233 | | 4,555 |
+--------------------------------------------------+-------------+ +----------+
| Share options exercised or exchanged | 311,255 | | 1,645 |
+--------------------------------------------------+-------------+ +----------+
| Shares issued under jointly owned equity scheme | 500,000 | | 3,301 |
+--------------------------------------------------+-------------+ +----------+
| Share issue costs, net of tax | - | | - |
+--------------------------------------------------+-------------+ +----------+
| | 1,802,488 | | 9,501 |
+--------------------------------------------------+-------------+ +----------+
| | | | |
+--------------------------------------------------+-------------+ +----------+
| Balance - 30 September 2010 | 183,142,301 | | 554,681 |
+--------------------------------------------------+-------------+----------+----------+
Contributed surplus
+--------------------------------------------------+-----------+----------+----------+
| | 30 | | 31 |
| | September | | December |
| | 2010 | | 2009 |
+--------------------------------------------------+-----------+----------+----------+
| | $ | | $ |
+--------------------------------------------------+-----------+----------+----------+
| | | | |
+--------------------------------------------------+-----------+ +----------+
| Equity-based compensation expense | 12,253 | | 9,469 |
+--------------------------------------------------+-----------+ +----------+
| Other | 578 | | 578 |
+--------------------------------------------------+-----------+ +----------+
| | 12,831 | | 10,047 |
+--------------------------------------------------+-----------+----------+----------+
Accumulated other comprehensive income
The components of accumulated other comprehensive income were as follows:
+--------------------------------------------------+-----------+----------+----------+
| | 30 | | 31 |
| | September | | December |
| | 2010 | | 2009 |
+--------------------------------------------------+-----------+----------+----------+
| | $ | | $ |
+--------------------------------------------------+-----------+----------+----------+
| | | | |
+--------------------------------------------------+-----------+ +----------+
| Cumulative translation adjustment | 36,826 | | 36,818 |
+--------------------------------------------------+-----------+ +----------+
| Fair value of cash flow hedge (net of tax) | 70 | | (1,064) |
+--------------------------------------------------+-----------+ +----------+
| Available-for-sale asset | 517 | | 157 |
+--------------------------------------------------+-----------+ +----------+
| | 37,413 | | 35,911 |
+--------------------------------------------------+-----------+----------+----------+
Other reserves
+--------------------------------------------------+-----------+----------+----------+
| | 30 | | 31 |
| | September | | December |
| | 2010 | | 2009 |
+--------------------------------------------------+-----------+----------+----------+
| | $ | | $ |
+--------------------------------------------------+-----------+----------+----------+
| | | | |
+--------------------------------------------------+-----------+ +----------+
| Own shares issued under joint ownership equity | (3,301) | | - |
| place | | | |
+--------------------------------------------------+-----------+ +----------+
| | (3,301) | | - |
+--------------------------------------------------+-----------+----------+----------+
12. Share options, restricted share units and deferred phantom units
Share Option Plan
The Company operates a Share Option Plan (together with its predecessor, the
"Share Option Plan") authorising the directors to grant options with a maximum
term of 5 years, to acquire common shares of the Company to the directors,
officers, employees and consultants of the Company and its subsidiaries, on
terms that the Board of Directors may determine, within the limitations of the
Share Option Plan. The maximum number of common shares of the Company which may
be reserved for issuance for all purposes under the Share Option Plan shall not
exceed 15% of the common shares issued and outstanding from time to time
(27,471,345 shares as at 30 September 2010).
An option holder under the Share Option Plan may elect to dispose of its rights
under all or part of its options (the "Exchanged Rights") in exchange for the
following number of common shares of the Company (or at the Company's option for
cash) in settlement thereof (the "Settlement Common Shares"):
+------------+-+------------------------+--+-------------------------+
| Number of |=| Number of Optioned |X | (Current Price - |
| Settlement | | Shares issuable on | | Exercise Price) |
| Common | | exercise of the | | Current Price |
| Shares | | Exchanged Rights | | |
+------------+-+------------------------+--+-------------------------+
As at 30 September 2010, the following share options were outstanding:
+--------------------------------------------------+-----------+----------+----------+
| Expiry date | Number | | Exercise |
| | of | | price |
| | Options | | C$ |
+--------------------------------------------------+-----------+----------+----------+
| | | | |
+--------------------------------------------------+-----------+----------+----------+
| 2011 | 17,000 | | 3.25 |
+--------------------------------------------------+-----------+----------+----------+
| 2011 | 600,000 | | 3.85 |
+--------------------------------------------------+-----------+----------+----------+
| 2011 | 50,000 | | 4.10 |
+--------------------------------------------------+-----------+----------+----------+
| 2012 | 250,000 | | 5.66 |
+--------------------------------------------------+-----------+----------+----------+
| 2012 | 250,000 | | 5.87 |
+--------------------------------------------------+-----------+----------+----------+
| 2013 | 360,000 | | 3.54 |
+--------------------------------------------------+-----------+----------+----------+
| 2013 | 95,000 | | 5.07 |
+--------------------------------------------------+-----------+----------+----------+
| 2013 | 18,332 | | 6.80 |
+--------------------------------------------------+-----------+ +----------+
| 2014 | 1,300,000 | | 6.00 |
+--------------------------------------------------+-----------+ +----------+
| 2014 | 50,000 | | 7.00 |
+--------------------------------------------------+-----------+ +----------+
| 2014 | 1,383,334 | | 6.03 |
+--------------------------------------------------+-----------+ +----------+
| 2015 | 62,500 | | 6.06 |
+--------------------------------------------------+-----------+ +----------+
| 2015 | 75,000 | | 7.24 |
+--------------------------------------------------+-----------+ +----------+
| 2015 | 62,500 | | 11.66 |
+--------------------------------------------------+-----------+ +----------+
| | 4,573,666 | | 5.57 |
+--------------------------------------------------+-----------+----------+----------+
During the nine-month period ended 30 September 2010, share options were
granted, exercised, exchanged and forfeited as follows:
+--------------------------------------------------+-----------+----------+----------------+
| | Number | | Weighted |
| | of | | average |
| | Options | | exercise price |
| | | | C$ |
+--------------------------------------------------+-----------+ +----------------+
| | | | |
+--------------------------------------------------+-----------+ +----------------+
| Balance - 31 December 2009 | 3,406,665 | | 5.10 |
+--------------------------------------------------+-----------+ +----------------+
| | | | |
+--------------------------------------------------+-----------+ +----------------+
| Options granted | 1,800,000 | | 6.03 |
+--------------------------------------------------+-----------+ +----------------+
| Options exercised | (143,333) | | 2.29 |
+--------------------------------------------------+-----------+ +----------------+
| Options exchanged for shares | (449,666) | | 5.77 |
+--------------------------------------------------+-----------+ +----------------+
| Options forfeited | (40,000) | | 6.80 |
+--------------------------------------------------+-----------+ +----------------+
| Balance - 30 September 2010 | 4,573,666 | | 5.57 |
+--------------------------------------------------+-----------+----------+----------------+
Of the 4,573,666 (2009 - 2,891,665) share options outstanding as at 30 September
2010, 3,319,501 (2009 - 2,314,999) were fully vested and had a weighted average
exercise price of C$5.28 (2009 - C$3.85) per share. The share options
outstanding as at 30 September 2010, had a weighted average remaining
contractual life of years 3.28 (2009 - 2.15 years).
The weighted average grant date fair value cost of the 1,800,000 share options
granted during the period ended 30 September 2010 was C$6.28. No share options
were granted in the period ending 30 September 2009. For outstanding share
options, including options granted during the three-month period and those which
were not fully vested during the nine-month period ended 30 September 2010, the
Company incurred a total equity-based compensation cost of $3,740 (2009 - $703)
of which $2,938 (2009 - $520) has been recognised as an expense in the statement
of profit and loss and $801 (2009 - $183) has been capitalised to deferred
exploration and development costs.
The fair value of the share options granted has been estimated at the date of
grant using a Black-Scholes and Parisian option pricing model with the following
assumptions: weighted average risk free interest rate of (0.05% - 0.65%);
volatility factor of the expected market price of the Company's shares of
(67.10% -68.40%); a weighted average expected life of the share options of 5
years, maximum term of 5 years and a dividend yield of Nil.
Restricted Share Unit Plan
The Company operates a Restricted Share Unit Plan (the "RSU Plan") authorising
the directors, based on recommendations received from the Compensation
Committee, to grant Restricted Share Units ("RSUs") to designated directors,
officers, employees and consultants. The RSUs are "phantom" shares that rise
and fall in value based on the value of the Company's common shares and are
redeemed for actual common shares on the vesting dates determined by the Board
of Directors when the RSUs are granted. The RSUs vest on the dates below;
however, upon a change of control of the Company they would typically become
100% vested. The maximum number of common shares of the Company which may be
reserved for issuance for all purposes under the RSU Plan shall not exceed 2.5%
of the common shares issued and outstanding from time to time (4,578,558 shares
as at 30 September 2010).
As at 30 September 2010, the following RSUs were outstanding:
+-----------------------------------------------------+-----------+---------+------------+
| | Number | | Grant |
| | of | | date |
| | RSUs | | fair |
| | | | value |
| Vesting date | | | of |
| | | | underlying |
| | | | shares |
| | | | C$ |
+-----------------------------------------------------+-----------+ +------------+
| | | | |
+-----------------------------------------------------+-----------+ +------------+
| 08 December 2010 | 70,102 | | 6.18 |
+-----------------------------------------------------+-----------+ +------------+
| 31 December 2010 | 283,332 | | 6.19 |
+-----------------------------------------------------+-----------+ +------------+
| 25 January 2011 | 31,250 | | 6.32 |
+-----------------------------------------------------+-----------+ +------------+
| 01 February 2011 | 37,500 | | 7.11 |
+-----------------------------------------------------+-----------+ +------------+
| 15 March 2011 | 31,250 | | 11.76 |
+-----------------------------------------------------+-----------+ +------------+
| 31 December 2011 | 200,000 | | 6.02 |
+-----------------------------------------------------+-----------+ +------------+
| 31 December 2011 | 133,332 | | 6.19 |
+-----------------------------------------------------+-----------+ +------------+
| 25 January 2012 | 31,250 | | 6.32 |
+-----------------------------------------------------+-----------+ +------------+
| 01 February 2012 | 37,500 | | 7.11 |
+-----------------------------------------------------+-----------+ +------------+
| 15 March 2012 | 31,250 | | 11.76 |
+-----------------------------------------------------+-----------+ +------------+
| 31 December 2012 | 133,336 | | 6.19 |
+-----------------------------------------------------+-----------+ +------------+
| | 1,020,102 | | 6.57 |
+-----------------------------------------------------+-----------+---------+------------+
During the nine-month period ended 30 September 2010, RSUs were granted, vested
and forfeited as follows:
+-----------------------------------------------------+-----------+---------+------------+
| | | | Weighted |
| | | | average |
| | | | grant |
| | | | date |
| | | | fair |
| | Number | | value of |
| | of | | underlying |
| | RSUs | | shares |
| | | | C$ |
+-----------------------------------------------------+-----------+ +------------+
| | | | |
+-----------------------------------------------------+-----------+ +------------+
| Balance - 31 December 2009 | 1,261,334 | | 5.09 |
+-----------------------------------------------------+-----------+ +------------+
| | | | |
+-----------------------------------------------------+-----------+ +------------+
| RSUs granted | 750,000 | | 6.76 |
+-----------------------------------------------------+-----------+ +------------+
| RSUs vested | (991,232) | | 4.82 |
+-----------------------------------------------------+-----------+ +------------+
| RSUs forfeited | - | | - |
+-----------------------------------------------------+-----------+ +------------+
| Balance - 30 September 2010 | 1,020,102 | | 6.57 |
+-----------------------------------------------------+-----------+---------+------------+
The weighted average grant date fair value cost of underlying shares of the
750,500, RSUs granted during the nine-month period ended 30 September 2010 (2009
- 1,072,839) was C$6.76 (2009 - C$2.99). For outstanding RSUs which were not
fully vested, including RSU's granted during the nine-month period ended 30
September 2010, the Company incurred a total equity-based compensation cost of
$4,930 (2009 - $1,612) of which $3,512 (2009 - $965) has been recognised as an
expense in the statement of profit and loss and $1,418 (2009 - $647) has been
capitalised to deferred exploration and development costs.
Jointly Owned Equity Plan
On 31 March 2010, the Company executed a trust deed constituting the European
Goldfields Employee Share Trust (the "Trust") which is operated by an
independent trustee (the "Trustee"). The establishment of the Trust enables the
Trustee to acquire shares in the Company and to make available interests in
those shares as jointly owned equity ("JOE") for the benefit of current and
future employees under the Company's Share Option Plan and Restricted Share Unit
("RSU") Plan (the "Plans").
The Company has amended its Plans to enable the grant of share options and RSUs
in the form of JOE awards, with the shares underlying such awards being jointly
owned by the Trust and employees. The amendments to facilitate the JOE structure
in each of the Plans do not alter the commercial or economic terms of the Plans
or the benefits to the employees. The Company obtained approval from its
shareholders at its annual general meeting on 12 May 2010, and as such, the
Company accounts for the Trust under this "extension of parent" method.
On 1 April, 2010, the Trustee subscribed for 500,000 shares of the Company at a
price per share of C$6.71 under the JOE structure, which relate to the RSUs
granted in March 2010. Neither the Trustee nor any employee is entitled to vote
or receive dividends in respect of these shares. None of these shares will vest
until after the achievement of certain performance targets. To the extent that
the relevant approvals are not obtained, the JOE awards will be cancelled.
Deferred Phantom Unit Plan
The company operates a Deferred Phantom Unit plan (the "DPU Plan") authorising
the directors based on recommendation by the Human Capital Management Committee
to grant Deferred Phantom Units ("DPUs") to all directors. The DPU are units
which give rise to a right to receive a cash payment the value of which, on a
particular date should be the market value of the equivalent number of shares at
that date. The market value at 30 September 2010 has been included in current
liabilities.
As at 30 September 2010, the following DPUs were outstanding:
+--------------------------------------------------------------+---------+
| | Number |
| | of |
| | DPUs |
| Grant date | |
+--------------------------------------------------------------+---------+
| | |
+--------------------------------------------------------------+---------+
| 05 December 2008 | 135,500 |
+--------------------------------------------------------------+---------+
| 23 March 2009 | 3,092 |
+--------------------------------------------------------------+---------+
| 15 May 2009 | 3,856 |
+--------------------------------------------------------------+---------+
| 18 August 2009 | 3,459 |
+--------------------------------------------------------------+---------+
| 07 October 2009 | 55,000 |
+--------------------------------------------------------------+---------+
| 15 November 2009 | 3,064 |
+--------------------------------------------------------------+---------+
| 19 February 2010 | 40,065 |
+--------------------------------------------------------------+---------+
| 22 March 2010 | 3,009 |
+--------------------------------------------------------------+---------+
| 18 May 2010 | 3,441 |
+--------------------------------------------------------------+---------+
| 18 August 2010 | 31,621 |
+--------------------------------------------------------------+---------+
| | 282,107 |
+--------------------------------------------------------------+---------+
During the nine-month period ended 30 September 2010, DPUs were granted and
forfeited as follows:
+--------------------------------------------------------------+-----------+
| | Number |
| | of |
| | DPUs |
+--------------------------------------------------------------+-----------+
| | |
+--------------------------------------------------------------+-----------+
| Balance - 31 December 2009 | 351,410 |
+--------------------------------------------------------------+-----------+
| | |
+--------------------------------------------------------------+-----------+
| DPUs granted | 78,136 |
+--------------------------------------------------------------+-----------+
| DPUs exchanged | (147,439) |
+--------------------------------------------------------------+-----------+
| Balance - 30 September 2010 | 282,107 |
+--------------------------------------------------------------+-----------+
Of the 78,136 (2009 - 31,221) DPU's granted during the period, 51,426 (2009 -
31,221) were fully vested.
The fair value cost of the 282,107 (2009 - 31,221) DPUs as at the 30 September
2010, based on the period end share price of C$10.90 (2009 - C$4.98), amounted
to C$3,074 (2009 - C$1,444).
13. Financial instruments and financial risk management
Financial exposures, in varying degrees, arise in the normal course of the
Company's consolidated operations and include commodity price risk, foreign
exchange risk, interest rate risk, liquidity risk and credit risk associated
with trade and financial counterparties. These exposures are monitored by
Senior Management and are assessed and mitigated in accordance to the Group Risk
Management Policy.
The Company's financial instruments consist of cash and cash equivalents,
accounts receivable, accounts payable, accrued liabilities and hedge contracts.
Short-term financial assets are amounts that are expected to be settled within
one year. The carrying amounts in the consolidated balance sheets approximate
fair value because of the short term nature of these instruments.
The carrying amounts of the financial instruments and their fair values as at 30
September 2010 and 31 December 2009 are as follows:
+------------------------+------------+----------+----------+----------+-----------+----------+----------+
| | Carrying | | Fair value |
| | amount | | |
+------------------------+----------------------------------+----------+---------------------------------+
| | 30 | | 31 | | 30 | | 31 |
| | September | | December | | September | | December |
| | 2010 | | 2009 | | 2010 | | 2009 |
+------------------------+------------+----------+----------+ +-----------+ +----------+
| Financial assets | | | | | | | |
+------------------------+------------+----------+----------+ +-----------+ +----------+
| | | | | | | | |
+------------------------+------------+----------+----------+----------+-----------+----------+----------+
| Cash and cash | 82,768 | | 113,642 | | 82,768 | | 113,642 |
| equivalents | | | | | | | |
+------------------------+------------+----------+----------+----------+-----------+----------+----------+
| Accounts receivable | 24,357 | | 26,813 | | 24,357 | | 26,813 |
+------------------------+------------+----------+----------+----------+-----------+----------+----------+
| Derivative financial | 70 | | - | | 70 | | - |
| asset | | | | | | | |
+------------------------+------------+----------+----------+----------+-----------+----------+----------+
| Available-for-sale | 1,851 | | 1,490 | | 1,851 | | 1,490 |
| asset | | | | | | | |
+------------------------+------------+----------+----------+----------+-----------+----------+----------+
| | | | | | | | |
+------------------------+------------+----------+----------+----------+-----------+----------+----------+
| Financial liabilities | | | | | | | |
+------------------------+------------+----------+----------+----------+-----------+----------+----------+
| | | | | | | | |
+------------------------+------------+----------+----------+----------+-----------+----------+----------+
| Accounts payable and | 21,809 | | 12,684 | | 21,809 | | 12,684 |
| accrued liabilities | | | | | | | |
+------------------------+------------+----------+----------+----------+-----------+----------+----------+
| Derivative financial | - | | 1,064 | | - | | 1,064 |
| liability | | | | | | | |
+------------------------+------------+----------+----------+----------+-----------+----------+----------+
+-----------------------+-----------+----------+----------+----------+-----------+----------+----------+
| | | | Fair value valuation |
| | Fair value | | technique market |
| | quoted market price | | observation inputs |
| | (Level 1) | | (Level 2) |
+-----------------------+---------------------------------+----------+---------------------------------+
| | 30 | | 31 | | 30 | | 31 |
| | September | | December | | September | | December |
| | 2010 | | 2009 | | 2010 | | 2009 |
+-----------------------+-----------+----------+----------+ +-----------+ +----------+
| | | | | | | | |
+-----------------------+-----------+----------+----------+ +-----------+ +----------+
| Financial assets | | | | | | | |
+-----------------------+-----------+----------+----------+----------+-----------+----------+----------+
| | | | | | | | |
+-----------------------+-----------+----------+----------+----------+-----------+----------+----------+
| Available-for-sale | 1,851 | | 1,490 | | - | | - |
| asset | | | | | | | |
+-----------------------+-----------+----------+----------+----------+-----------+----------+----------+
| Derivative financial | - | | - | | 70 | | - |
| asset | | | | | | | |
+-----------------------+-----------+----------+----------+----------+-----------+----------+----------+
| | | | | | | | |
+-----------------------+-----------+----------+----------+----------+-----------+----------+----------+
| Financial liabilities | | | | | | | |
+-----------------------+-----------+----------+----------+----------+-----------+----------+----------+
| | | | | | | | |
+-----------------------+-----------+----------+----------+----------+-----------+----------+----------+
| Derivative financial | - | | - | | - | | 1,064 |
| liability | | | | | | | |
+-----------------------+-----------+----------+----------+----------+-----------+----------+----------+
| | | | | | | | |
+-----------------------+-----------+----------+----------+----------+-----------+----------+----------+
| | | | | | | | |
+-----------------------+-----------+----------+----------+----------+-----------+----------+----------+
| | | | | | | | |
+-----------------------+-----------+----------+----------+----------+-----------+----------+----------+
Quoted market price represents the fair value determined based on quoted prices
on active markets as at the reporting date without any deduction for transaction
costs. The fair value of the listed equity investments are based on quoted
market prices.
For financial instruments not quoted in active markets, the Company used
valuation techniques such as present value and Black - Scholes option valuation
techniques, comparison to similar instruments for which market observable prices
exist and other relevant models used by market participants. These valuation
techniques use both observable and unobservable market inputs.
Commodity price risk - The Company's net profit and value of the mineral
resource properties are related to the prices of gold, silver, copper, zinc and
lead and the outlook for these commodities.
Gold prices historically have fluctuated widely and are affected by numerous
factors outside of the company's control, including, but not limited to,
industrial and retail demand, central bank lending, forward sales by market
participants, levels of worldwide production, macro-economic and political
variables and certain other factors related specifically to gold. Silver and,
in particular, base metal prices have historically tended to be driven more by
the demand and supply fundamentals for each metal, however, they are also
influenced by speculative activity, macro-economic and political variables and
certain other factors related specifically to silver and base metals.
The long term profitability of the Company's operations is highly correlated to
the market price of its commodities and in particular gold. To the extent that
these prices increase, asset values increase and cash flows improve; conversely,
declines in metal prices directly impact value and cash flows. A protracted
period of depressed prices could impair the Company's operations and development
opportunities, and significantly erode shareholder value.
Hedging commitments - The Company enters into financial transactions in the
normal course of business and in line with Board guidelines for the purpose of
hedging and managing its expected exposure to commodity prices. There are a
number of financial institutions which offer metal hedging services and the
Company deals with highly rated banks and institutions who have demonstrated
long term commitment to the mining industry. The Company has one counterparty
in respect of its lead and zinc hedge contracts noted below. Market conditions
and prices would affect the fair value of these hedge contracts and in certain
market conditions, where the fair value of the hedge contract is positive to the
Company and the counterparty were unable to honour its obligations under the
hedge contract, the Company would be exposed to the value of the hedge being the
difference between the hedged price and the then current market price on the
date of the settlement. The hedges below are treated as cash flow hedges in
accordance with CICA 3865: Hedges.
Lead and Zinc hedging contracts - As at 30 September 2010, the Company had
entered into hedging arrangements as illustrated below which, for the amount of
production shown, protect the Company from decreasing prices below the floor
price and limit participation in increasing prices above the cap price. The
remaining period of the hedge is from 01 October 2010 until 31 December 2010 and
is cash settled on a monthly basis between the monthly average of the relevant
commodity price and the cap and floor price, as applicable. As at 30 September
2010, these contracts had a fair value of $70 (2009 - ($1,064)), determined by a
third party valuation using the appropriate Black-Scholes options valuation
model, based on the then prevailing market prices including lead and zinc
prices, interest rates and market volatility.
+----------------+------------------------------+------+-------+----------+-------+
| | | | |
| Period October 2010 - December 2010 | Lead | | Zinc |
+------------------------------------------------------+-------+----------+-------+
| | | | | | |
+----------------+------------------------------+------+-------+----------+-------+
| Total Volume | (tonne) | | 1,500 | | 1,950 |
+----------------+------------------------------+------+-------+----------+-------+
| Monthly Volume | (tonne) | | 500 | | 650 |
+----------------+------------------------------+------+-------+----------+-------+
| | | | | | |
+----------------+------------------------------+------+-------+----------+-------+
| Floor Price | ($/tonne) | | 2,000 | | 2,000 |
+----------------+------------------------------+------+-------+----------+-------+
| Cap Price | ($/tonne) | | 2,900 | | 2,925 |
+----------------+------------------------------+------+-------+----------+-------+
During the nine and three-month period ended 30 September 2010, the Company
recorded income relating to its hedging program of $577 (2009 - $5,248) and $183
(2009 - $1,030).
Given the current maturity profile of the hedge, market expectations and
parameters, we expect that the fair value of $70 with regard to the existing
hedge contracts will be released to net income within the next 3 months.
Currency risk - The Company is exposed to currency risk on accounts receivable,
accounts payable and cash holdings that are denominated in currencies other than
the functional currencies of the operating entities in the group. As at the 30
September 2010, the Company held the equivalent of $58,364 (31 December 2009 -
$16,133) in net assets denominated in foreign currencies. These balances are
primarily made up of Euro and, to a lesser extent, Pound Sterling.
The Company publishes its consolidated financial statements in US dollars and as
a result, it is also subject to foreign exchange translation risk in respect of
Euro denominated assets and liabilities in its foreign operations.
For the three- and nine-month period ended 30 September 2010 the Company
recorded a foreign exchange loss of $1,861 (2009 - a loss of $1,664) and a gain
of $6,930 (2009 - a loss of $501), mainly due to the translation of Euro cash
balances held at the end of the period.
Liquidity risk - Liquidity risk is the risk that the Company will not be able to
meet its financial obligations when they become due.
The Company manages its liquidity risk by ensuring there is sufficient capital
to meet working capital, short and long term business requirements after taking
into account cash flows from operations and holdings of cash and cash
equivalents. Senior management is actively involved in the review and approval
of planned expenditures by regularly monitoring cash flows from operations and
anticipated investing and financing activities.
The Company does not have any borrowing or debt facilities and settles its
obligations out of cash and cash equivalents. The ability to do this relies on
the Company collecting its accounts receivable in a timely manner and
maintaining cash on hand.
Financial liabilities consist of trade payables, accrued liabilities and
financial derivatives. As at 30 September 2010, the Company's trade payables
and accrued liabilities amounted to $21,809 (2009 - $12,684), all of which fall
due for payment within 12 months of the balance sheet date. The average credit
period achieved during the period ended 30 September 2010 was 30 days (2009 - 30
days).
As at 30 September 2010, cash and cash equivalents comprises the following:
+------------------------------------------------+-----------+----------+----------+
| | 30 | | 31 |
| | September | | December |
| | 2010 | | 2009 |
| | $ | | $ |
+------------------------------------------------+-----------+ +----------+
| | | | |
+------------------------------------------------+-----------+ +----------+
| Interest bearing bank accounts | 53,672 | | 102,686 |
+------------------------------------------------+-----------+ +----------+
| Short-term deposits | 29,096 | | 10,956 |
+------------------------------------------------+-----------+ +----------+
| | 82,768 | | 113,642 |
+------------------------------------------------+-----------+----------+----------+
The Company has accounts receivable from trading counterparties to whom
concentrate products are sold. Where traders are chosen as counterparties, only
the larger and most financially secure metal trading groups are dealt with. The
company may also transact agreements with trading groups who have direct
interests in smelting capacity or direct to the smelters themselves.
Of the total trade receivable as at 30 September 2010, 4 (31 December 2009 - 4)
customers represented 100% (31 December 2009 - 84%) of the total. The Company
does not anticipate any loss for non-performance.
As at 30 September 2010, the accounts receivable comprises the following:
+------------------------------------------------+------------+----------+----------+
| | 30 | | 31 |
| | September | | December |
| | 2010 | | 2009 |
| | $ | | $ |
+------------------------------------------------+------------+ +----------+
| | | | |
+------------------------------------------------+------------+ +----------+
| Trade receivables | 964 | | 6,712 |
+------------------------------------------------+------------+ +----------+
| Valued added taxes recoverable | 21,903 | | 18,360 |
+------------------------------------------------+------------+ +----------+
| Other accounts receivable | 1,490 | | 1,741 |
+------------------------------------------------+------------+ +----------+
| | 24,357 | | 26,813 |
+------------------------------------------------+------------+ +----------+
| | | | |
+------------------------------------------------+------------+----------+----------+
As at 30 September 2010, the Company considers its accounts receivable excluding
Value Added Taxes recoverable and other accounts receivable to be aged as
follows:
+-----------------------------------------------+------------+----------+----------+
| | 30 | | 31 |
| Ageing | September | | December |
| | 2010 | | 2009 |
| | $ | | $ |
+-----------------------------------------------+------------+ +----------+
| | | | |
+-----------------------------------------------+------------+ +----------+
| Current | 931 | | 4,139 |
+-----------------------------------------------+------------+ +----------+
| Past due (1-30 days) | - | | 2,283 |
+-----------------------------------------------+------------+ +----------+
| Past due (31-60 days) | - | | 233 |
+-----------------------------------------------+------------+ +----------+
| Past due (more than 60 days) | 33 | | 57 |
+-----------------------------------------------+------------+ +----------+
| | 964 | | 6,712 |
+-----------------------------------------------+------------+----------+----------+
Interest rate risk - The Company is exposed to interest rate risk arising from
fluctuations in interest rates on its cash equivalents. The Company does not
have any borrowings or debt facilities and seeks to maximise returns on cash
equivalents without risking capital values. The Company's objectives of
managing its cash and cash equivalents are to ensure sufficient liquid funds are
maintained to meet day to day requirements and to place any amounts which are
considered in excess of this on short-term deposits with the Company's banks to
earn interest. The Company uses top rated institutions and ensures that access
to the amounts can be gained at short notice. During the nine-month period
ended 30 September 2010 the company earned interest income of $152 (30 September
2009 - $788) and $65 for the three-month period (30 September 2009 - $147) on
cash and cash equivalents, based on rates of returns for the nine-month period
up to 1.5% (30 September 2009 - between 0.15% and 3.59%) and for the three-month
period up to 1.5% (30 September 2009 - between 0.15% and 1.23%).
Credit risk- Credit risk represents the financial loss the Company would suffer
if the Company's counterparties to a financial instrument, in owing an amount to
the Company, fail to meet or discharge their obligation to the Company.
Financial instruments that expose the Company to credit risk consist of cash and
cash equivalents, accounts receivable and in certain market conditions, hedging
contracts. The cash equivalents consist mainly of short-term investments, such
as money market deposits. The Company does not invest in asset-backed
commercial paper and has deposited the cash equivalents only with the largest
banks within a particular region or with top rated institutions.
The Company's concentrate offtake arrangement also expose it to credit risk
which would result should the Company's offtaker default under these
arrangements, as a result of which the Company would not realise its trade
receivable amount. The Company manages this exposure through assessing the
offtaker's credit risk before entering the offtake agreement, the structure of
the offtake contract and sells to a number of different offtakers which
diversifies this risk.0
Included in the Company's accounts receivable is an amount of $21,264 relating
to value added taxes recoverable which is subject to Greek government credit
risk.
Sensitivity analysis - The Company has completed a sensitivity analysis to
estimate the impact on net profit/(loss) of a 5% change in foreign exchange
rates, a 1% change in interest rates and a 10% change in base metal prices,
excluding the effect of hedging, during the three- and nine-month ended 30
September 2010 and 2009. The results of the sensitivity analysis can be seen in
the following table:
+--------------------------------------------+-------+------+------+-------+---------+------+---------+
| | 3 months ended | | 9 months |
| | 30 September | | ended |
| | | | 30 September |
+--------------------------------------------+---------------------+ +--------------------------+
| Impact on Net (Loss)/Profit (+/-) | 2010 | | | 2009 | 2010 | | 2009 |
| | $ | | | $ | $ | | $ |
+--------------------------------------------+-------+ + +-------+---------+ +---------+
| | | | | | | | |
+--------------------------------------------+-------+ + +-------+---------+ +---------+
| Change of - 5 % US$: EUR foreign exchange | (744) | | | (907) | (1,508) | | (2,026) |
| rate | | | | | | | |
+--------------------------------------------+-------+ + +-------+---------+ +---------+
| Change of + 5 % US$: EUR foreign exchange | 733 | | | 894 | 1,504 | | 2,013 |
| rate | | | | | | | |
+--------------------------------------------+-------+ + +-------+---------+ +---------+
| Change of +/- 1% in interest rates | 149 | | | 221 | 159 | | 697 |
+--------------------------------------------+-------+ + +-------+---------+ +---------+
| Change of +/- 10% in commodities prices | 729 | | | 1,699 | 1,256 | | 7,273 |
+--------------------------------------------+-------+ + +-------+---------+ +---------+
| | | | | | | | |
+--------------------------------------------+-------+------+------+-------+---------+------+---------+
Limitations of sensitivity analysis - The above table demonstrates the effect of
each sensitivity in isolation. In reality, there may be a correlation between a
combination of any of these sensitivities. Additionally, the financial position
of the Company may vary at the time any of these factors occurs, causing the
impact on the Company's results to differ from that shown above.
14. Capital Risk Management
The Company's objectives when managing its capital are to maintain financial
flexibility to achieve its long term business development plan, whilst managing
its costs, optimizing its access to capital markets and preserving capital
value. Further, it ensures that there is sufficient liquidity available to meet
day to day operating requirements.
The Company currently has no debt and considers its Shareholders' Equity and
cash and cash equivalents as components of its capital structure.
The Company's Board of Directors continually assesses the Company's capital
through its short-term budgets and long-term development plan, meeting regularly
through quarterly board meetings and regular communication with Officers and
senior management to assess the requirements, changes to Company's set of
assumptions and capital market conditions.
Going forward, as part of its capital management, the Company expects to raise a
level of debt based on the forecast cashflows of its projects. As a result, the
Company will need to comply with certain financial covenants and financial
restrictions accordingly.
In order to maximise ongoing development efforts, the company does not pay out
dividends.
The Company's investment policy is to invest its cash in high-grade investment
securities with varying terms, maturity and counterparties, selected with
regards to the expected timing of expenditures from continuing operations and
counterparty risk.
The Company expects its current capital resources and anticipated debt raising
will be sufficient to carry out its plans and operations through its current
operating period.
The Company is not subject to externally imposed capital requirements and there
has been no change in the overall capital risk management as at 30 September
2010.
Capital under management was as follows:
+-------------------------------------------------+----------------+----------+-----------+
| | 30 | | 31 |
| | September 2010 | | December |
| | | | 2009 |
+-------------------------------------------------+----------------+----------+-----------+
| | $ | | $ |
+-------------------------------------------------+----------------+ +-----------+
| | | | |
+-------------------------------------------------+----------------+ +-----------+
| Capital stock | 554,681 | | 545,180 |
+-------------------------------------------------+----------------+ +-----------+
| Other reserves | (3,301) | | - |
+-------------------------------------------------+----------------+ +-----------+
| Contributed surplus | 12,831 | | 10,047 |
+-------------------------------------------------+----------------+ +-----------+
| Accumulated other comprehensive income | 37,413 | | 35,911 |
+-------------------------------------------------+----------------+ +-----------+
| Deficit | (40,085) | | (13,828) |
+-------------------------------------------------+----------------+ +-----------+
| | 561,539 | | 577,310 |
+-------------------------------------------------+----------------+----------+-----------+
15. Supplementary cash flow information
+-------------------------------------------+---------+------+-------+---------+---------+------+----------+
| | 3 months ended | | 9 months ended |
| | 30 September | | 30 September |
+-------------------------------------------+------------------------+ +---------------------------+
| | 2010 | | | 2009 | 2010 | | 2009 |
| | $ | | | $ | $ | | $ |
+-------------------------------------------+---------+ + +---------+---------+ +----------+
| Changes in non-cash working capital: | | | | | | | |
+-------------------------------------------+---------+ + +---------+---------+ +----------+
| Accounts receivable and prepaid expenses | (3,608) | | | 2,497 | 1,628 | | (5,334) |
+-------------------------------------------+---------+ + +---------+---------+ +----------+
| Accounts payable and accrued liabilities | 8,130 | | | 282 | 7,252 | | (3,325) |
+-------------------------------------------+---------+ + +---------+---------+ +----------+
| Taxation | - | | | (831) | - | | (831) |
+-------------------------------------------+---------+ + +---------+---------+ +----------+
| Inventory | (2,020) | | | 558 | (3,960) | | (1,513) |
+-------------------------------------------+---------+ + +---------+---------+ +----------+
| | | | | | | | |
+-------------------------------------------+---------+ + +---------+---------+ +----------+
| | 2,502 | | | 2,506 | 4,920 | | (11,003) |
+-------------------------------------------+---------+ + +---------+---------+ +----------+
| | | | | | | | |
+-------------------------------------------+---------+------+-------+---------+---------+------+----------+
| Supplemental disclosure of non-cash | | | | | | | |
| transactions: | | | | | | | |
+-------------------------------------------+---------+------+-------+---------+---------+------+----------+
| | | | | | | | |
+-------------------------------------------+---------+------+-------+---------+---------+------+----------+
| Share options and restricted share units | | | | | 8,670 | | 2,315 |
| issued for non-cash consideration | 2,696 | | 601 | | | | |
+-------------------------------------------+---------+------+-------+---------+---------+------+----------+
| Exercise or exchange of share options - | | | - | | | | |
| Transfer from contributed surplus to | (1,287) | | | | (1,331) | | (476) |
| share capital | | | | | | | |
+-------------------------------------------+---------+------+-------+---------+---------+------+----------+
| Vesting of restricted share units | - | | - | | (4,555) | | (801) |
+-------------------------------------------+---------+------+-------+---------+---------+------+----------+
| Own shares issue under joint ownership | - | | - | | (3,301) | | - |
| equity plan | | | | | | | |
+-------------------------------------------+---------+------+-------+---------+---------+------+----------+
16. Commitments
The Company has spending commitments of $227 (GBP166) (2009 - $236) per year
(plus service charges and value added tax) for a term of five years under the
lease for its office in London, England, which commenced in November 2009.
Hellas Gold has spending commitments of $142 (EUR104) per year for a term of 9
years under the lease for its office in Athens, Greece, which commenced in
December 2007. The rent will be reviewed on the second anniversary of the
commencement of the term to reflect any increase in rents in the market.
As at 30 September 2010, Hellas Gold had entered into off-take agreements
pursuant to which Hellas Gold agreed to sell 30,830 dmt of zinc concentrates,
16,124 dmt of lead/silver concentrates and 20,869 dmt of gold concentrates until
the financial year ending 2012.
During 2007, Hellas Gold entered into purchase agreements with Outotec Minerals
OY for long-lead time equipment for the Skouries project with a cost of $44,686
(EUR32,742) which is to be paid in full by the end of March 2011. As at 30
September 2010, $44,218 (EUR32,399) of the commitment had been paid. The Company
has pledged $342 in support of a letter of credit issued on behalf of Outotec
Minerals OY through Nordea Bank of Finland.
17. Transactions with related parties
Aktor S.A ("Aktor") Greece's largest construction Company owns 5% of Hellas Gold
the Company's 95% owned subsidiary. Aktor is a 100% subsidiary of Ellaktor
S.A., which owns 19.4% of the Company's issued share capital. Aktor, which is
deemed a related party, contracts management, technical and engineering services
to Hellas Gold.
During the nine-month period ended 30 September 2010, Hellas Gold incurred costs
of $27,080 (2009 - $24,768) and during the three-month period ended 30 September
2010 Hellas Gold incurred costs of $9,753 (2009 -$6,945) which have been
recognised as cost of sales in the statements of profit and loss and capitalised
to property, plant and equipment, for services received from Aktor. As at 30
September 2010, Hellas Gold had accounts payable of $12,702 (2009 - $8,673) to
Aktor. These expenditures were contracted in the normal course of operations
and are recorded at the exchange amount agreed by the parties. The terms of the
payable is 30 days (2009 - 30 days).
During the nine-month period ended 30 September 2010, the Company loaned three
of its directors a total of $97 (GBP61), in relation to employee withholding
taxes paid by the Company on behalf of the directors. These loans, which were
taken out in the context of the Company's long term incentive plan to increase
directors' equity investment in the Company, are interest free and repayable by
mutual agreement.
18. Segmented report
During the nine-month period ended 30 September 2010 and 2009, the Company had
four reporting segments. The Company has identified its operating segments
based on internal reports prepared by management. Management has identified the
operating segments based on the location of its activities. The Company's
operations are managed on a regional basis. The Greek reporting segment
includes the production activities of the Stratoni mine and development
activities of the Olympias and Skouries. The Romanian reporting segment
includes the development activities of the Certej project. The Turkish
reporting segment includes the exploration activities of the Ardala project.
The other reporting segment includes the operation of the Company's corporate
office. The accounting policy used by the Company in reporting segments are in
accordance with the measurement principles of Canadian GAAP.
+----------------------------+----------+-------+---------+--------+----------+--+-----------+--+-----------+
| | | | | | | | | | 30 |
| | | | | | | | Corporate | | September |
| | Greece | | Romania | | Turkey | | | | 2010 |
| | | | | | | | | | Total |
+----------------------------+----------+ +---------+ +----------+ +-----------+ +-----------+
| Assets | | | | | | | | | |
+----------------------------+----------+ +---------+ +----------+ +-----------+ +-----------+
| | | | | | | | | | |
+----------------------------+----------+ +---------+ +----------+ +-----------+ +-----------+
| Production stage mineral | 22,204 | | - | | - | | - | | 22,204 |
| properties | | | | | | | | | |
+----------------------------+----------+ +---------+ +----------+ +-----------+ +-----------+
| Development stage mineral | 407,621 | | 55,723 | | - | | - | | 463,344 |
| properties | | | | | | | | | |
+----------------------------+----------+ +---------+ +----------+ +-----------+ +-----------+
| Exploration stage mineral | - | | - | | 2,747 | | - | | 2,747 |
| properties | | | | | | | | | |
+----------------------------+----------+ +---------+ +----------+ +-----------+ +-----------+
| Property, plant and | 110,052 | | 4,738 | | 51 | | 749 | | 115,590 |
| equipment | | | | | | | | | |
+----------------------------+----------+ +---------+ +----------+ +-----------+ +-----------+
| Segment assets | 539,877 | | 60,461 | | 2,798 | | 749 | | 603,885 |
+----------------------------+----------+ +---------+ +----------+ +-----------+ +-----------+
| | | | | | | | | | |
+----------------------------+----------+ +---------+ +----------+ +-----------+ +-----------+
| | | | | | | | | | |
+----------------------------+----------+ +---------+ +----------+ +-----------+ +-----------+
| Income | | | | | | | | | |
+----------------------------+----------+ +---------+ +----------+ +-----------+ +-----------+
| | | | | | | | | | |
+----------------------------+----------+ +---------+ +----------+ +-----------+ +-----------+
| Sales to external | 32,355 | | - | | - | | - | | 32,355 |
| customers | | | | | | | | | |
+----------------------------+----------+ +---------+ +----------+ +-----------+ +-----------+
| | | | | | | | | | |
+----------------------------+----------+ +---------+ +----------+ +-----------+ +-----------+
| Base metal concentrate | - | | - | | - | | - | | - |
| sales | | | | | | | | | |
+----------------------------+----------+ +---------+ +----------+ +-----------+ +-----------+
| Gold pyrite sales | (747) | | - | | - | | - | | (747) |
+----------------------------+----------+ +---------+ +----------+ +-----------+ +-----------+
| Total segment income | 31,608 | | - | | - | | - | | 31,608 |
+----------------------------+----------+ +---------+ +----------+ +-----------+ +-----------+
| | | | | | | | | | |
+----------------------------+----------+ +---------+ +----------+ +-----------+ +-----------+
| | | | | | | | | | |
+----------------------------+----------+-------+---------+--------+----------+--+-----------+--+-----------+
| Result | | | | | | | | | |
+----------------------------+----------+-------+---------+--------+----------+--+-----------+--+-----------+
| Segment result excluding | | | | | | | | | |
| hedge contract profit and | | | | | | | | | |
| equity based compensation | (10,389) | | - | | (10) | | (9,314) | | (19,713) |
+----------------------------+----------+-------+---------+--------+----------+--+-----------+--+-----------+
| | | | | | | | | | |
+----------------------------+----------+-------+---------+--------+----------+--+-----------+--+-----------+
| Hedge contract profit | - | | - | | - | | 577 | | 577 |
+----------------------------+----------+-------+---------+--------+----------+--+-----------+--+-----------+
| Equity-based compensation | - | | - | | - | | (8,325) | | (8,325) |
+----------------------------+----------+-------+---------+--------+----------+--+-----------+--+-----------+
| | | | | | | | | | |
+----------------------------+----------+-------+---------+--------+----------+--+-----------+--+-----------+
| Total segment result | | | | | | | | | |
| before income taxes | (10,389) | | - | | (10) | | (17,062) | | (27,461) |
+----------------------------+----------+-------+---------+--------+----------+--+-----------+--+-----------+
| Income taxes | 2,197 | | - | | - | | 266 | | 2,463 |
| (expense)/benefit | | | | | | | | | |
+----------------------------+----------+-------+---------+--------+----------+--+-----------+--+-----------+
| | | | | | | | | | |
+----------------------------+----------+-------+---------+--------+----------+--+-----------+--+-----------+
| Total segment result | (8,192) | | - | | (10) | | (16,796) | | (24,998) |
+----------------------------+----------+-------+---------+--------+----------+--+-----------+--+-----------+
| | | | | | | | | | |
+----------------------------+----------+-------+---------+--------+----------+--+-----------+--+-----------+
| Reconciliation of segment | | | | | | | | | |
| loss | | | | | | | | | |
| after income taxes | | | | | | | | | |
+----------------------------+----------+-------+---------+--------+----------+--+-----------+--+-----------+
| Depletion | | | | | | | | | (1,570) |
+----------------------------+----------+-------+---------+--------+----------+--+-----------+--+-----------+
| Accretion | | | | | | | | | (94) |
+----------------------------+----------+-------+---------+--------+----------+--+-----------+--+-----------+
| Write-down of mineral | | | | | | | | | - |
| property | | | | | | | | | |
+----------------------------+----------+-------+---------+--------+----------+--+-----------+--+-----------+
| | | | | | | | | | |
+----------------------------+----------+-------+---------+--------+----------+--+-----------+--+-----------+
| Loss for the period | | | | | | | | | 26,662 |
+----------------------------+----------+-------+---------+--------+----------+--+-----------+--+-----------+
+---------------------------+---------+-------+---------+--------+----------+--+-----------+--+-----------+
| | | | | | | | | | 30 |
| | | | | | | | Corporate | | September |
| | Greece | | Romania | | Turkey | | | | 2009 |
| | | | | | | | | | Total |
+---------------------------+---------+ +---------+ +----------+ +-----------+ +-----------+
| Assets | | | | | | | | | |
+---------------------------+---------+ +---------+ +----------+ +-----------+ +-----------+
| | | | | | | | | | |
+---------------------------+---------+ +---------+ +----------+ +-----------+ +-----------+
| Production stage mineral | 24,417 | | - | | - | | - | | 24,417 |
| properties | | | | | | | | | |
+---------------------------+---------+ +---------+ +----------+ +-----------+ +-----------+
| Development stage mineral | 404,897 | | 49,880 | | - | | - | | 454,777 |
| properties | | | | | | | | | |
+---------------------------+---------+ +---------+ +----------+ +-----------+ +-----------+
| Exploration stage mineral | - | | - | | 1,207 | | - | | 1,207 |
| properties | | | | | | | | | |
+---------------------------+---------+ +---------+ +----------+ +-----------+ +-----------+
| Property, plant and | 101,225 | | 2,833 | | 58 | | 251 | | 104,367 |
| equipment | | | | | | | | | |
+---------------------------+---------+ +---------+ +----------+ +-----------+ +-----------+
| Segment assets | 530,539 | | 52,713 | | 1,265 | | 251 | | 584,768 |
+---------------------------+---------+ +---------+ +----------+ +-----------+ +-----------+
| | | | | | | | | | |
+---------------------------+---------+ +---------+ +----------+ +-----------+ +-----------+
| | | | | | | | | | |
+---------------------------+---------+ +---------+ +----------+ +-----------+ +-----------+
| Income | | | | | | | | | |
+---------------------------+---------+ +---------+ +----------+ +-----------+ +-----------+
| | | | | | | | | | |
+---------------------------+---------+ +---------+ +----------+ +-----------+ +-----------+
| Sales to external | | | | | | | | | |
| customers | | | | | | | | | |
+---------------------------+---------+ +---------+ +----------+ +-----------+ +-----------+
| | | | | | | | | | |
+---------------------------+---------+ +---------+ +----------+ +-----------+ +-----------+
| Base metal concentrate | 25,907 | | - | | - | | - | | 25,907 |
| sales | | | | | | | | | |
+---------------------------+---------+ +---------+ +----------+ +-----------+ +-----------+
| Gold pyrite sales | 18,076 | | - | | - | | - | | 18,076 |
+---------------------------+---------+ +---------+ +----------+ +-----------+ +-----------+
| Total segment income | 43,983 | | - | | - | | - | | 43,983 |
+---------------------------+---------+ +---------+ +----------+ +-----------+ +-----------+
| | | | | | | | | | |
+---------------------------+---------+ +---------+ +----------+ +-----------+ +-----------+
| | | | | | | | | | |
+---------------------------+---------+-------+---------+--------+----------+--+-----------+--+-----------+
| Result | | | | | | | | | |
+---------------------------+---------+-------+---------+--------+----------+--+-----------+--+-----------+
| Segment result excluding | | | | | | | | | |
| hedge contract profit and | | | | | | | | | |
| equity based compensation | 1,626 | | - | | 13 | | (4,686) | | (3,047) |
+---------------------------+---------+-------+---------+--------+----------+--+-----------+--+-----------+
| | | | | | | | | | |
+---------------------------+---------+-------+---------+--------+----------+--+-----------+--+-----------+
| Hedge contract profit | - | | - | | - | | 5,248 | | 5,248 |
+---------------------------+---------+-------+---------+--------+----------+--+-----------+--+-----------+
| Equity-based compensation | - | | - | | - | | (2,332) | | (2,332) |
+---------------------------+---------+-------+---------+--------+----------+--+-----------+--+-----------+
| | | | | | | | | | |
+---------------------------+---------+-------+---------+--------+----------+--+-----------+--+-----------+
| Total segment result | | | | | | | | | |
| before income taxes | 1,626 | | - | | 13 | | (1,770) | | (131) |
+---------------------------+---------+-------+---------+--------+----------+--+-----------+--+-----------+
| | | | | | | | | | |
+---------------------------+---------+-------+---------+--------+----------+--+-----------+--+-----------+
| Income taxes | (1,720) | | - | | - | | (665) | | (2,385) |
| (expense)/benefit | | | | | | | | | |
+---------------------------+---------+-------+---------+--------+----------+--+-----------+--+-----------+
| Total segment result | (94) | | - | | 13 | | (2,435) | | (2,516) |
+---------------------------+---------+-------+---------+--------+----------+--+-----------+--+-----------+
| | | | | | | | | | |
+---------------------------+---------+-------+---------+--------+----------+--+-----------+--+-----------+
| Reconciliation of segment | | | | | | | | | |
| loss | | | | | | | | | |
| after income taxes | | | | | | | | | |
+---------------------------+---------+-------+---------+--------+----------+--+-----------+--+-----------+
| Depletion | | | | | | | | | (2,431) |
+---------------------------+---------+-------+---------+--------+----------+--+-----------+--+-----------+
| Accretion | | | | | | | | | (96) |
+---------------------------+---------+-------+---------+--------+----------+--+-----------+--+-----------+
| Write-down of mineral | | | | | | | | | - |
| property | | | | | | | | | |
+---------------------------+---------+-------+---------+--------+----------+--+-----------+--+-----------+
| | | | | | | | | | |
+---------------------------+---------+-------+---------+--------+----------+--+-----------+--+-----------+
| Loss for the period | | | | | | | | | (5,043) |
+---------------------------+---------+-------+---------+--------+----------+--+-----------+--+-----------+
19. Pension plans and other post-retirement benefits
The Company's subsidiary, European Goldfields (Services) Limited, maintains a
defined contribution pension plan for its employees. The defined contribution
pension plan provides pension benefits based on accumulated employee and Company
contributions. Company contributions to these plans are a set percentage of
employees' annual income and may be subject to certain vesting requirements.
The cost of defined contribution benefits is expensed as earned by employees.
As at 30 September 2010 and 2009, the Company recognised the following costs:
+-------------------------------------------+------+------+------+------+------+-+------+
| | 3 months ended | | 9 months |
| | 30 September | | ended |
| | | | 30 September |
+-------------------------------------------+--------------------+------+---------------+
| | 2010 | | 2009 | | 2010 | | 2009 |
| | $ | | $ | | $ | | $ |
+-------------------------------------------+------+ +------+ +------+ +------+
| | | | | | | | |
+-------------------------------------------+------+ +------+ +------+ +------+
| Defined contribution plans | 67 | | 56 | | 187 | | 100 |
+-------------------------------------------+------+------+------+------+------+-+------+
20. Loss per share
The calculation of the basic and diluted earnings per share attributable to
holders of the Company's common shares is based as follows:
+-------------------------------------------+---------+------+---------+------+----------+------+---------+
| | 3 months ended | | 9 months ended |
| | 30 September | | 30 September |
+-------------------------------------------+--------------------------+------+---------------------------+
| | 2010 | | 2009 | | 2010 | | 2009 |
| | $ | | $ | | $ | | $ |
+-------------------------------------------+---------+ +---------+ +----------+ +---------+
| | | | | | | | |
+-------------------------------------------+---------+ +---------+ +----------+ +---------+
| Earnings/(Loss) for the period | (1,645) | | (3,123) | | (26,257) | | (4,940) |
+-------------------------------------------+---------+------+---------+ +----------+------+---------+
| Effect of dilutive potential common | | | - | | | | - |
| shares | | | | | | | |
+-------------------------------------------+---------+------+---------+------+----------+------+---------+
| Diluted earnings/(loss) | (1,645) | | (3,123) | | (26,257) | | (4,940) |
+-------------------------------------------+---------+------+---------+------+----------+------+---------+
| | | | | | | | |
+-------------------------------------------+---------+------+---------+------+----------+------+---------+
| Weighted average number of common shares | | | | | | | 180,430 |
| for the purpose | 182,929 | | 180,513 | | 182,544 | | |
| of basic earnings per share | | | | | | | |
+-------------------------------------------+---------+------+---------+------+----------+------+---------+
| Incremental shares - Share options | - | | - | | - | | - |
+-------------------------------------------+---------+------+---------+------+----------+------+---------+
| Weighted average number of common shares | | | | | | | 180,430 |
| for the purpose | 182,929 | | 180,513 | | 182,544 | | |
| of diluted earnings per share | | | | | | | |
+-------------------------------------------+---------+------+---------+------+----------+------+---------+
21. Comparative figures
Certain prior period amounts have been reclassified from statements previously
presented to conform to the presentation of the nine- and three-month period
ended 30 September 2010 and 2009, Consolidated Financial Statements.
22. Recently issued accounting standards
Business Combination, Consolidated Financial Statements and Non Controlling
Interest - In January 2009, the CICA issued Handbook Sections 1582 - Business
Combinations, 1601 - Consolidated Financial Statements and 1602 -
Non-Controlling Interests which replace CICA Handbook Sections 1581 - Business
Combinations and 1600 - Consolidated Financial Statements. Section 1582
establishes standards for the accounting for business combinations that is
equivalent to the business combination accounting standard under International
Financial Reporting Standards. Section 1582 is applicable for the Company's
business combinations with acquisition dates on or after January 1, 2011. Early
adoption of this Section is permitted. Section 1601 together with Section 1602
establishes standards for the preparation of consolidated financial statements.
Section 1601 is applicable for the Company's interim and annual consolidated
financial statements for its fiscal year beginning January 1, 2011. Early
adoption of this Section is permitted. If the Company chooses to early adopt
any one of these Sections, the other two sections must also be adopted at the
same time.
International Financial Reporting Standards - ("IFRS") - In 2006, the Canadian
Accounting Standards Board ("AcSB") published a new strategic plan that will
significantly affect financial reporting requirements for Canadian companies.
The AcSB strategic plan outlines the convergence of Canadian GAAP with IFRS over
an expected five year transitional period. In February 2008, the AcSB confirmed
that publicly listed companies will be required to adopt IFRS for interim and
annual financial statements relating to fiscal years beginning on or after
January 1, 2011, and in April 2008, the AcSB issued for comment it's Omnibus
Exposure Draft, Adopting IFRS in Canada. Early adoption may be permitted,
however it will require exemptive relief on a case by case basis from the
Canadian Securities Administrators.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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