RNS Number:0552Q
Centamin Egypt Limited
23 September 2003
CENTAMIN EGYPT LIMITED
ABN 86 007 700 352
Annual Report
30 June 2003
C O N T E N T S
COMPANY PARTICULARS 1
CHAIRMAN'S REPORT 2
REVIEW OF OPERATIONS 3
DIRECTORS' REPORT 11
CORPORATE GOVERNANCE STATEMENT 17
INDEPENDENT AUDIT REPORT 21
DIRECTORS' DECLARATION 23
STATEMENT OF FINANCIAL PERFORMANCE 24
STATEMENT OF FINANCIAL POSITION 25
STATEMENT OF CASH FLOWS 26
NOTES TO THE FINANCIAL STATEMENTS 27
ADDITIONAL ASX INFORMATION 44
COMPANY PARTICULARS
DIRECTORS
Mr Sami El-Raghy Chairman
Mr Josef El-Raghy Managing Director
Mr Colin Cowden Non Executive Director
Mr Gordon B Speechly Non Executive Director
Dr Thomas Elder Non Executive Director
COMPANY SECRETARY
Mrs Cecilia Tyndall
EXPLORATION
Mr Michael Kriewaldt
PROJECT MANAGER
Mr Harry Michael
FINANCIAL CONTROLLER
Mrs Cecilia Tyndall
PERTH OFFICE MANAGER
Mr John Lynch
HEAD OFFICE EGYPT OFFICE
57 Kishorn Road 356 El-Horia Road
Mount Pleasant WA 6153 Sedi Gaber
Australia Alexandria, Egypt
Telephone: (08) 9316 2640 Tel: 203 5411 259
Facsimile: (08) 9316 2650 Fax: 203 5411 718
Website: www.centamin.com.au
BANKERS
National Australia Bank Limited MISR International Bank
197 St George's Terrace 54 Elbatal Ahmed Abdel Aziz Street
Perth WA 6000 Cairo, Egypt
AUDITORS
Deloitte Touche Tohmatsu
Level 16, Central Park
152-158 St George's Terrace
Perth WA 6000
UNITED KINGDOM NOMINATED BROKER & ADVISOR
Williams de Broe Plc
6 Broadgate
London EC 2M 2RP
United Kingdom
LOCATION OF REGISTER OF SECURITIES
Advanced Share Registry Services Computershare Investor Services
Level 7, 200 Adelaide Terrace PO Box 82 The Pavilions, Bridgewater Road
Perth, WA 6000 Bristol BS99 7NH England
Telephone: (08) 9221 7288 Telephone: 44 0870 702 0003
Facsimile: (08) 9221 7869 Facsimile: 44 0870 703 6116
STOCK EXCHANGE
The Company is listed on the Australian Stock Exchange and the Alternative
Investment Market of the London Stock Exchange. The Home Exchange is Perth.
CHAIRMAN'S REPORT
Dear Shareholders
It is my pleasure, to present to you the annual report of the Company for the
year ended 30 June 2003.
It has been a challenging year for your Company as it continues the
implementation of its business plan to become a substantial North African gold
and base metals producer and I would like to begin by acknowledging my
management and staff in Australia and Egypt for their efforts through the year.
The last three months of the year saw frustration for both employees and
shareholders as, for the first time since your company's involvement in Egypt,
we saw an interruption to our activities through the refusal to authorise
security permits. All this comes at a time when the company's steps forward had
been greater with every foot fall. The company has instigated proceedings in
both the Regional Centre for Commercial Arbitration and the Administrative Court
of Cairo as well as continuing to speak to various Government officials. The
company remains confident in obtaining a positive outcome.
Prior to the interruption, the company's activities resulted in substantial
achievements. During the year a Bankable Feasibility Study (BFS) was completed
on a 2 mtpa plant in September 2002. Whilst work on this study was ongoing the
drilling continued to add ounces and the resource at Sukari has been increased
by one million ounces, from 2.04 million ounces to 3.06 million ounces of gold.
As anticipated, the mineralised system has increased substantially in width as
the drilling has progressed northward into the RA zone, and it is expected that
many more ounces will be delineated. Encouraged by the results to date the
company has added to the drill rigs at the Sukari site in order to rapidly
increase the resource.
Utilising the increased resource, a scoping study was recently carried out by
Ausenco Limited. The study indicates that bulk mining complemented with high
process capacity provides the most attractive economics. An upgraded bankable
feasibility study on higher plant throughput rates (4-5 million tonne per annum)
was initiated. In addition to this, work on metallurgy, mine design,
engineering, tailings dam design, hydrogeology, security, and health was also
commissioned.
The company's performance on the corporate and financial front was also
substantial. Standard Bank of London, Africa's leading resource project
financier was appointed as lead banker for the Sukari project. The March 2003
options were fully underwritten and exercised, contributing A$22 million to the
company's financial reserves and so ensuring ongoing funding for exploration and
development.
The Board also acknowledges the continuous support in Egypt from those
individuals who have the interest of the Egyptian mining industry at heart and
who recognise the company's efforts in pioneering the exploration and mining
industry in Egypt.
Finally, I would like to thank the company's major shareholders and Williams de
Broe Plc in London for their continuing support.
I look forward to welcoming you to the annual general meeting of the Company.
On behalf of the Board
Sami El-Raghy
Chairman
REVIEW OF operations
HIGHLIGHTS
* Completion of 2mtpa Bankable Feasibility Study
* Sukari resource exceeds 3 million ounces of contained gold
* Increased drilling capacity at Sukari
* Upgrade of 2mtpa Bankable Feasibility Study
* March 2003 options exercised raising A$22m
* Appointment of Project Manager
Tenure
The company holds the Egyptian Eastern Desert Exploitation Lease (granted 4th
November 2001) via its wholly owned subsidiary, Pharaoh Gold Mines NL (PGM). The
exploitation lease covers an area of approximately 4600km2 and has tenure for an
initial period of thirty years with an option to renew for a further thirty
years. The lease consists of three discrete areas containing over sixty known
historic gold and base metal workings. At time of writing the company is in
dispute with the EGSMA and the Minister for Industry over their failure to
authorise the required security permits to continue drilling at the Sukari site.
The company has initiated proceedings in both the Regional Centre for Commercial
Arbitration and the Administrative Court of Cairo as well as continuing to speak
with various Government officials. The company remains confident in obtaining a
positive outcome and has not received any formal notification from either EGSMA
or the Minister of Industry of any material breach of the Concession Agreement
by the company that would justify a halt to work.
Geological Mapping
The first phase of geological mapping of the Sukari Hill and surrounds has been
completed and the information entered into the geological database. Independent
consultants have confirmed the geological boundaries, verified data, and carried
out interpretation of the fact mapping to produce a geological map of the
immediate Sukari Hill area. The steep north west area of the hill is difficult
to climb and mapping here remains incomplete. The mapping that has been
completed over the rest of the Sukari porphyry shows the mineralised quartz
veining in detail and highlights the zones of intense alteration, particularly
in the Gazelle zone which is expected to show significant resources of gold when
fully drilled.
This mapping is the most detailed of any carried out at the Sukari Hill project,
and it greatly assists in understanding the geology, setting and origin of the
gold.
Sukari Geology
The ancient Sukari gold mine is in the Eastern Desert of Egypt west of the
rapidly growing small town of Marsa Alam on the Red Sea. From Marsa Alam, the
old mine is some 20 km west along a bitumen highway and then 10 km south by
gravel road. There is a new international tourist airport about 70 km north of
Marsa Alam.
The following gives a brief view of the geology of Sukari. In essence, gold at
Sukari is in fractured zones in a composite body of felsic rocks, the Sukari
porphyry, that is considered here to be part of a late Proterozoic,
weakly-metamorphosed, andesitic sequence. Long-lived faulting with accompanying
intrusions of mafic and ultramafic rocks, and metasomatism affect the sequence.
The host to gold mineralisation at Sukari is a porphyry body about 2.3 km long
in outcrop, and from 100 to 600 metres wide. The porphyry body is dominantly
feldspar and quartz porphyries with minor rhyolite and dacite.
Various combinations of albitization, silicification, and sericitization
extensively alter the Sukari porphyry. These are pre-mineralisation. In places
in the altered rocks there are disseminated cubes of pyrite. Gold mineralization
at Sukari is commonly localised in brecciated porphyry occurring as tabular
zones of crackle-breccia with quartz and fine-grained pyrite as matrix to the
breccia.
At the south end of the deposit there are auriferous zones dipping about 40
degrees easterly, whereas at the northern end the dip is about 30 degrees
westerly. In the centre of the body there are auriferous zones dipping easterly,
and others northerly. In addition, auriferous fracture zones have been
recognised in the Amun zone, dipping westerly.
There is also significant gold mineralisation in rocks within a kilometre of the
Sukari porphyry.
Resource
In April 2003, consultants Hellman and Schofield completed a further review of
the resource model, resulting in an increase in the contained gold to 3.06
million ounces, at a cut off grade of 0.5g/t.
The current recoverable resource at a cut-off grade of 0.5g/t, gold for the
different categories is:
Recoverable Resource by category including uncut Hapi Shoot
Measured Indicated Inferred Total Gold
Cut M g/t M g/t M g/t MTonnes g/t M
off Tonnes Tonnes Tonnes Ounces
0.5 14.79 1.29 25.68 1.35 24.06 1.72 64.63 1.48 3.062
1.0 7.17 1.91 13.23 1.94 13.03 2.57 33.43 2.18 2.341
Recoverable Resource by category including cut Hapi Shoot
Measured Indicated Inferred Total Gold
Cut M g/t M g/t M g/t MTonnes g/t M
off Tonnes Tonnes Tonnes Ounces
0.5 14.79 1.29 25.68 1.33 24.06 1.59 64.53 1.42 2.944
1.0 7.17 1.91 13.23 1.91 13.03 2.32 33.43 2.07 2.223
Cut Hapi Shoot Resource
Measured Indicated Inferred Total Gold
Cut M g/ M g/t M g/t M g/t M
off Tonnes t Tonnes Tonnes Tonnes Ounces
0.5 - - 0.044 8.9 0.109. 19.6 0.153 16.5 0.082
Uncut Hapi Shoot Resource
Measured Indicated Inferred Total Gold
Cut M g/ M g/t M g/t M g/t M
off Tonnes t Tonnes Tonnes Tonnes Ounces
0.5 - - 0.044 18.6 0.109 49.3 0.154 40.4 0.200
Drilling
In the twelve months from 1 July 2002 the company drilled 21 678 metres of
diamond drilling and 992 metres of RC with almost every hole intersecting
mineralisation. This compares with 7 252 metres of diamond and 4 922 of RC
drilled from 1 July 2001 to 30 June 2002.
Diamond infill drilling continued over the northern part of the Amun zone to
upgrade the resource, while additional holes were drilled into the Ra zone. The
drilling of the Ra zone confirmed the continuity of mineralisation with
significant intersections encountered as far north as 10950N. Hole 297 returned
assays of 60m @ 2.20g/t, 14m @4.43g/t, 4m @ 3.72 and 19m @ 2.76g/t.
During the year additional drill rigs were mobilised bringing the total on site
to seven by financial year end. These include two contract diamond rigs, two
contract multi purpose RC/diamond rigs and the company's three diamond rigs.
Access to previously inaccessible areas of the hill continues to improve with
the use of two rockbreaker-excavators, and no delays were experienced in
preparation of drill sites.
Significant intersections since the 2002 Annual Report are:-
Hole North East From To Inter. Grade Au
(m) (m) (m) g/t
259 10540 10580 252 264.9 12.9 5.45
incl 257 264.9 7.9 7.89
incl 263 264 1 38.50
265 11200 10958 25 27 2 6.86
270 10842 10718 84 100 16 2.24
272 10771 10651 70 82 12 2.02
273 10850 10700 59 66 7 3.03
274 10791 10742 413 414 1 11.80
428 431 3 10.20
275 10675 10611 259 359 100 1.71
306 313 7 2.60
275 328 337 9 2.86
incl 330 332 2 5.88
276 10801 10678 81 82 1 6.12
92 96 4 3.48
277 10575 10642 223 231 8 3.72
278 10650 10618 317 437 120 1.63
incl 341 348 7 3.29
incl 365 367 2 3.42
incl 385 423 38 2.27
Incl 413 414 1 10.10
279A 10791 10742 293 304 11 2.27
319 373 54 3.11
incl 326 328 2 5.03
incl 336 342 6 7.91
incl 353 356 3 11.80
280 10847 10718 66 115 49 2.10
incl 75 81 6 4.88
incl 109 114 5 4.89
281 10625 10606 339 345 6 5.25
368 394 26 1.65
incl 368 375 7 3.34
282 10611 10610 210 317 107 2.42
incl 264 266 2 8.77
incl 275 315 40 3.37
319 320 1 567.00
320 327 7 5.11
284 10900 10740 9 10 1 75.10
139 160 21 2.43
incl 144 149 5 5.79
183 216 31 2.74
312 352 40 2.09
incl 316 320 4 4.22
395 412 17 1.93
286 10575 10640 338 341 3 4.00
348 360 12 3.47
387 401 14 2.66
287 10900 10619 502 528 26 2.85
incl 511 521 10 4.89
567 569 2 5.51
288 10550 10619 377 386 9 5.72
290 10675 10612 186 193 7 5.06
211 215 4 2.10
292 10525 10575 176 189 13 2.26
284 297 13 2.64
306 318 12 2.04
293 10980 10800 314 318 4 4.03
358 360 2 11.24
Hole North East From To Inter. Grade Au
(m) (m) (m) g/t
294 10500 10572 222 278 56 2.45
incl 245 261 16 5.64
297 10942 10832 228 288 60 2.20
incl 274 288 14 4.43
311 315 4 3.72
456 475 19 2.76
298 10498 10575 151 198 47 2.29
incl 163 164 1 22.90
185 190 5 4.68
294 308 14 6.10
incl 294 295 1 29.20
306 307 1 50.80
307 308 1 19.10
300 10525 10490 99 104 5 3.47
301 10475 10580 236 269 33 2.58
incl 256 257 1 103.00
302 310 8 2.10
302 10850 10532 134 140 6 4.45
305 325 20 2.25
incl 318 319 1 11.00
339 349 10 5.83
incl 339 340 1 30.00
413 415 2 12.38
303 10350 10600 208 214 6 3.98
304 10750 10600 162 170 8 4.39
incl 162 163 1 40.10
306 10375 10600 262 274 12 2.29
incl 262 264 2 6.57
282 287 5 2.05
307 10950 10820 304 314 10 3.74
378 381 3 7.09
435 439 4 3.15
472 481 10 2.42
incl 479 480 1 12.10
308 10248 10597 214 226 12 8.65
incl 216 220 4 17.25
238 249 11 2.42
272 274 2 12.78
incl 272 273 1 103.00
309 10201 10587 154 185 31 2.32
incl 171 173 2 6.32
193 197 4 5.89
incl 194 195 1 19.60
257 268 11 4.15
incl 261 263 2 11.60
incl 266 267 1 11.80
286 289 3 11.49
287 288 1 23.40
312 10900 10581 167 173 6 3.42
169 170 1 9.22
252 302 50 2.05
254 257 3 6.71
273 276 3 5.77
314 50 51 1 5.74
54 55 1 2.14
84 86 2 5.30
175 176 1 8.40
10675 Surface Sampling 4 5.62
10900 Surface Sampling 1 4.13
Upgraded Bankable Feasibility Study (BFS).
As a result of the continued increase in the recoverable resource base at
Sukari, together with the potential to identify additional mineralisation, it
was considered appropriate to strategically review the results and concepts
employed in the 2.0Mtpa BFS carried out in 2002 and determine whether project
economics could be significantly enhanced by:
* increasing the size of the process plant;
* investigating alternative process flow routes to reduce capital and
operating costs;
* assessing the impact of using medium speed engines which have a lower
operating cost for power generation; and
* use of larger mining equipment to reduce unit mining cost.
As a result an upgraded BFS was commissioned which required a complete review of
existing data and concepts and included:
* a review of all geological logging;
* commencement of a geotechnical review and program that would incorporate a
larger, deeper open pit;
* an updated resource and grade estimate which would include an audit of
current procedures
and practices to ensure JORC compliance;
* a regional hydrogeological review to determine acquifer potential and
capacity;
* detailed survey of old underground workings; and
* review and optimization of previous metallurgical test work.
Various consultants were requested to submit proposals for carrying out the key
components of the upgraded study. As a result of this process, Ausenco Limited
(Engineering), AMC Consultants (Mining), Knight Piesold (Tails Dam and Plant
Geotechnical), Environics (Environmental Impact) and NSR Environmental
(Oceanographic) were appointed to carry out the various tasks, with Ausenco also
acting as the BFS study co-coordinator.
Utilising the increased resource base at Sukari, a scoping study was completed
by Ausenco to determine which throughput capacity, process design flow sheet and
degree of mining selectivity would best optimise project economics. The Scoping
Study was conducted on 3, 4, and 5 million tonne per year throughput scenarios.
The results of the study indicated that higher process capacities, flotation
followed by regrinding and leaching of concentrate (subject to confirmatory
metallurgical testwork) and a bulk mining method provide the most attractive
overall economics. These results will be used to focus the upgraded BFS now in
progress.
Mineral exploration and mining tenements held in Egypt:
Name Tenement reference Note Interest at 30th June 2003 Interest at 30th June 2002
Eastern Law 222 for 1994 1 100% 100%
Desert
Rosetta Concession 2 50% 50%
Notes:
1. Pharaoh Gold Mines NL (a wholly owned subsidiary of Centamin Egypt Ltd)
holds the Eastern Desert Concession that consists of three defined project
areas, and comprises a total area of over 4600km2. On 4th November 2001,
the Eastern Desert Concession was converted at ministerial direction into
an Exploitation Lease, with tenure of thirty years with the option to renew
for a further thirty years.
2. An Egyptian mineral concession held under application by Egyptian Pharaoh
Investment (EPI) an Egyptian company jointly owned by Centamin Egypt
Limited and Kara Gold NL under an agreement with the Egyptian Government.
Under the terms of this agreement to develop a heavy minerals project at
Rosetta on the Mediterranean coast, east of Alexandria, any profit from
mining and separation of the heavy minerals will be shared with the
Egyptian Government after EPI recoups all of its development expense. Any
profit from the upgrading of the ilmenite to pigment quality TiO2 (titanium
dioxide) will be 100% EPI.
AUSTRALIAN PROJECTS
Nelson's Fleet
The company is entitled to a royalty over the Nelson's Fleet gold project near
St Ives, Western Australia, from the St Ives Gold Mining Co Pty Ltd, a
subsidiary of Gold Fields Ltd. The company has not been informed of any mining
at the tenement as yet.
Nicholl's Diamonds
During the course of the year, Castlegem Pty Ltd withdrew from the joint venture
on the Nicholls Diamond prospect in Western Australia. This tenement had passed
its statutory tenure life of five years and it was highly unlikely that the
Department of Minerals and Energy would grant any further extensions of time. In
view of this and with the mutual consent of the company's joint venture parties
it was decided to surrender this tenement.
Mineral Exploration and mining tenements held in Western Australia:
Name Tenement reference Note Interest at 30th June 2003 Interest at 30th June 2002
Nicholls WA E80/1708 1 0% 10%
Note:
1. Joint venture with Mandor Mining Pty Ltd and Castlegem Pty Ltd earning up
to 80% through expenditure on exploration. This tenement was surrendered to
the Department of Minerals and Energy.
ASX Listing Rule 5.10.1
Information in this report which relates to exploration, geology, sampling and
drilling is based on information compiled by Mr M Kriewaldt who is a corporate
member of the Australasian Institute of Mining and Metallurgy with more than
five years experience in the fields of activity being reported on and is a part
time employee of the Company. His written consent has been received by the
Company for this information to be included in this report in the form and
context that it appears. Mr Kriewaldt declares an interest in shares of the
Company.
The information in this report that relates to mineral resources is based on
information compiled by Mr Gary Brabham, a member of the Australasian Institute
of Mining and Metallurgy. Mr Brabham is employed by Hellman & Schofield Pty Ltd
a consultancy primarily concerned with estimation of mineral resources
worldwide. Mr Brabham is a Competent Person under the meaning of the J.O.R.C.
code with respect to the mineralisation being reported in this report. Mr
Brabham has more than five years' experience in the mining industry and has
given his consent to the public reporting of this information in the section
headed Resource.
For this report, measured resources lie in areas where drilling is available at
nominal 25 x 25 metre spacing, indicated resources in areas drilled at
approximately 25 x 50 metre spacing and inferred resources in areas of broader
spaced drilling. The resource model extends to 750RL (approximately 400 metres
below surface), and resources are estimates of recoverable tonnes and grades
using Multiple Indicator Kriging with block support correction.
Appropriate check sampling has been undertaken to verify the gold assays used in
this estimate.
CORPORATE ACTIVITIES
On the 26th August 2002, Mr Sami El-Raghy stepped down as Managing Director and
Mr Josef El-Raghy was appointed. Mr El-Raghy holds a Bachelor of Commerce Degree
and was until his appointment to the board involved in the Australian stock
broking industry. He was formerly a director of both CIBC Wood Gundy and
Paterson Ord Minnett Limited.
In November 2002, the entire 7.7 million November 2002 unlisted options were
exercised raising additional working capital of A$1.54 million.
In January 2003, Standard Bank London Limited was mandated as project finance
arrangers for a limited recourse project loan for the development of the Sukari
Gold Project.
In January 2003, the Company placed 22,580,127 million ordinary shares with a
United Kingdom institutional investor at a price of 9 pence (Sterling), raising
a total of #2.03million (AUD5.65 million).
In February 2003, the company appointed Mr Harry Michael as the Sukari project
development manager. Mr Michael is a mining engineer with considerable project
development experience whose role it is to manage and supervise the Company's
activities with respect to the Sukari Gold Project, including the preparation of
the upgraded project feasibility study to a bankable standard, subsequent key
personnel recruitment, development, construction and operation of the project.
He was previously the Chief Executive Officer of Geita Gold Mining Limited, the
manager of the Geita gold mine in Tanzania on behalf of the owners, Ashanti
Goldfields and Anglogold.
In March 2003, the conversion of the 111,244,446 'March 2003' options was
successfully completed with the underwriters subscribing for a small shortfall
of 10,586,335 shares. The option conversion and underwriting raised gross
proceeds of A$22,248,889.
The company has been in ongoing discussions with the Egyptian Geological Survey
and Mining Authority (EGSMA) and the Minister for Industry in order to obtain
the renewal of security passes for its staff and contractors, so that the work
programme at the Sukari project site can recommence.
As the renewal of these passes is still awaited, the company has taken the
decision to instigate Arbitration proceedings in the Regional Centre for
Commercial Arbitration, and an action in the Administrative Court of Cairo to
ensure a timely return to work.
The company has at all times fulfilled its obligations under the terms of the
Concession Agreement which was granted by an Act of the Egyptian Parliament
under the terms of Law 222 of 1994 and has not, during the course of its
discussions with EGSMA and the Minister, been advised formally of any reasons
for the continued delay in obtaining the security passes.
The company is confident that the approvals will be forthcoming and that it is
important to resolve all such procedural issues to the company's satisfaction
prior to the decision to commence development of the Sukari gold project.
DIRECTORS' REPORT
The Directors of Centamin Egypt Limited submit herewith the annual financial
report of the company for the financial year ended 30 June 2003. In order for
the company to comply with the provisions of the Corporations Act 2001, the
directors report as follows:
DIRECTORS
The names and particulars of the directors of the company during or since the
end of the financial year are:
Mr Sami El-Raghy B.Sc. (Hons), FAusIMM, FSEG
Chairman, aged 62
Director since 29 April 1993
A graduate of Alexandria University in 1962, Mr. El-Raghy worked in Egypt and
Europe before moving to Australia in 1968 and joining American Smelting and
Refining Company (Asarco). He was instrumental in the discovery and development
of a number of gold mines, including the Wiluna Gold Mine for Asarco and the Mt
Wilkinson Gold mine for Chevron Exploration. Mr. El-Raghy recognised the
potential of the Marymia Dome and the Barwidgee Yandal Belt long before these
areas became the most sought after mining areas in Australia. Mr. El-Raghy
brings to the board over 37 years' experience in the industry, both in Australia
and overseas.
Mr Josef El-Raghy B.Comm
Managing Director, age 32
Director since 26 August 2002
Josef El-Raghy holds a Bachelor of Commerce from the University of Western
Australia and has a ten year career in stock broking. He was formerly a director
of both CIBC Wood Gundy and Paterson Ord Minnett. His expertise in international
capital markets has greatly assisted the Company in its fundraising activities.
Mr Colin Cowden FAII, ASA, ACIS, ACIM, FNIBA, CD
Non Executive Director, age 59
Member Audit Committee
Member Remuneration Committee
Director since 8 March 1982
Colin Cowden is the Executive Chairman of Cowden Limited, a licensed insurance
broking company formed in 1972. Cowden Limited is a prominent broking firm in
Western Australia with branch offices in Sydney, Melbourne and Adelaide.
Mr G. Brian Speechly FAusIMM
Non Executive Director, age 70
Member Audit Committee
Member Remuneration Committee
Director since 15 August 2000
Brian Speechly is a Fellow of the Australasian Institute of Mining and
Metallurgy with over 45 years experience in the mining industry. During his
career, Mr Speechly has been involved in over 300 mining projects and is
recognised in Australia and overseas as an expert in both underground and open
pit mining and design. He is particularly noted for his innovative and low cost
approaches to mining issues.
Dr Thomas G. Elder PhD, FIMM, FGS
Non Executive Director, aged 64
Director since 8 May 2002
Tom Elder brings a wealth of experience to the Company and is currently
President and Director of Mano River Resources and non-executive Director of
Gold Mines of Sardinia Plc. He is a graduate geologist who has been involved
with companies such as BP Minerals, Rio Tinto and Cominco.
MANAGEMENT
Mr Michael Kriewaldt, MSc, FAusIMM, MGSA, FSEG, MAIG
Exploration Manager
Mr Kriewaldt holds the degree of Master of Science and has worked as a geologist
since 1955 with Mt Isa Mines, Broken Hill South, the Geological Survey of
Western Australia, Asarco Australia and Eon Metals, during which time he has
amassed considerable knowledge and experience in the exploration for gold and
base metals. He is credited with directing the attention of Asarco to the Wiluna
Gold Mines area and was instrumental in the success of the company in that area.
Mr Kriewaldt also recognised the potential of the Nelson's Fleet project and was
solely responsible for the success of Centamin's exploration effort in that
area. He is a member of the following professional bodies:
* The Australasian Institute of Mining and Metallurgy.
* The Australian Institute of Geoscientists.
* The Geological Society of Australia.
* The Society of Economic Geologists
Mr Harry Michael, BEng (Hons), MAusIMM, MAICD
Project Manager
Mr Michael has over 18 years industry experience predominantly in the gold
industry with both construction and operational roles within Australia and
internationally. Most recently he had the overall responsibility for the
feasibility study, construction and operation of the 500,000 ounce per annum
Geita Gold Mine in Tanzania. This operation was a joint venture between Ashanti
Goldfields Ltd and Anglogold Ltd. Prior to this he was the General Manager of
the Iduapriem Gold Mine in Ghana and has held various management positions at
Granny Smith (Australia) and Porgera (PNG) gold mines for Placer Dome Inc.
Mrs Cecilia Tyndall, B. Bus, CA
Company Secretary and Group Financial Controller
Mrs Tyndall holds a Bachelor of Business Degree with majors in Accounting and
Finance, is a member of the Institute of Chartered Accountants and has in excess
of ten years industry experience.
Mr John Lynch
Office Manager - Perth
Mr Lynch has been in the mining industry in a technical capacity for over 31
years, with Western Mining, Chevron Exploration and Eagle Mining.
Mr Youssef El-Raghy
General Manager - Egyptian Operations
An officer graduate of the Egyptian Police Academy Mr El-Raghy held senior
management roles within the Egyptian Police force for a period in excess of ten
years, having attained the rank of captain, prior to joining the Company.
Mr El-Raghy has extensive contacts within the government and industry and
maintains excellent working relationships with all of the Company's stakeholders
within Egypt.
Mr Richard Osman, B.Sc.(Hons.), M.Sc.
Senior Mine Geologist - Sukari
Mr Osman is an experienced mine and exploration geologist who was employed for 5
years at the Big Bell operation in Western Australia owned by Harmony Gold. Mr
Osman is responsible for drill hole planning, reserve definition and
implementation of and maintaining all of the mining data systems at Sukari.
directors' meetings
The number of directors' meetings and number of meetings attended by each of the
directors of the Company during the financial year were:
Director No of Meetings No of Meetings
Held Attended
Mr S El-Raghy 3 3
Mr C Cowden 3 3
Mr G B Speechly 3 3
Dr T G Elder 3 3
Mr J El-Raghy 2 2
---------- ----------
In addition to these formal meetings, during the year the Directors considered
and passed twenty (20) Circular Resolutions pursuant to clause 15.10 of the
Company's constitution.
AUDIT COMMITTEE MEETINGS
Director No of Meetings No of Meetings
Held Attended
Mr C Cowden 1 1
Mr G B Speechly 1 1
Since year end, the Audit Committee has met once to consider matters within its
terms of reference.
REMUNERATION COMMITTEE MEETINGS AND RESOLUTIONS
Director No of Meetings No of Meetings
Held Attended
Mr C Cowden - -
Mr G B Speechly - -
The remuneration committee considered and passed two (2) Circular Resolutions in
relation to matters within its terms of reference.
principal activities
The principal activity of the consolidated entity during the course of the
financial year was the exploration for precious and base metals. There were no
significant changes in the nature of the activities of the consolidated entity
during the year.
DIVIDENDS
No dividends have been declared or paid since the end of the previous financial
year.
CHANGES IN state of affairs
The following changes in the state of affairs of the consolidated entity
occurred in the financial year:
1 7,700,000 unlisted options with an expiry date of 30 November 2002 and an
exercise price of 20c were exercised during the financial year, raising
$1,540,000 in additional capital
2 The successful capital raising in London of $5,615,442 from the placement
of 22,580,127 ordinary shares.
3 The successful capital raising of $22,358,245 from the conversion of
111,791,226 options, being the exercise of the 3 March 2003 options.
4 On 15 May 2003 a Deed of Release of Settlement in relation to court action
COR350 of 1998 was agreed upon and signed by all parties.
5 In May the company acquired an additional two shares in Pharaoh Gold Mines
NL (PGM), consequently PGM is now a wholly owned subsidiary of Centamin
Egypt Limited.
6 The Company initiated a share roundup of unmarketable parcels of shares,
and as a result the number of registered shareholders decreased from 2,574
to 1,479.
FUTURE DEVELOPMENTS
It is the objective of the company, to continue to drill at the Sukari project,
so as to increase the overall size of the recoverable resource, whilst at the
same time, conclude the Bankable Feasibility Study into the proposed
construction of a processing plant with an annual capacity of up to 5 million
tonne per annum. Subsequent to this it is the company's intention to arrange
project development finance so as to commence construction of the processing
plant and ancillary infrastructure.
It is also the company's intention to explore and drill the surrounding gold
prospects with the objective to providing additional ore for the Sukari plant
for processing.
At the appropriate time, the company shall also systematically test the numerous
gold and base metals occurrences contained within the exploitation lease, with
the intention of bringing additional gold and base metal mines into production.
OPTIONS
OPTIONS ISSUED DURING THE FINANCIAL YEAR:
There were no options issued during the financial year.
OPTIONS CONVERTED DURING THE FINANCIAL YEAR:
7,700,000 unlisted options with an expiry date of 30 November 2002 and an
exercise price of 20c were exercised during the financial year, raising
$1,540,000 in additional working capital.
111,791,226 listed options with an expiry date of 3 March 2003 and an exercise
price of 20c were exercised during the financial year, raising $22,385,245.
Particulars of unissued shares under option as at the date of this report are:
Number of Ordinary Exercise Price Expiry Date
-------------- ------------- --------------
Unissued Shares
-------------- ------------- --------------
49,999,744 20 cents 9 November 2003
-------------- ------------- --------------
All options are for ordinary issued shares in Centamin Egypt Limited. The shares
will have the same rights and entitlements as all other issued shares.
OPTIONS GRANTED TO DIRECTORS
At the Annual General Meeting on 29 November 2002, shareholders conditionally
approved the issue of 4,000,000 performance based options to Mr Josef El-Raghy
under the terms of an Executive Service Agreement made between the Company and
Mr El-Raghy.
No options have been issued under that agreement to date.
EXECUTIVE SHARE OPTION PLAN
A performance based executive share option plan is in place for Mr Harry Michael
under the terms of an Employment Agreement made between the Company and Mr Harry
Michael on 4 February 2003. No options have been issued under that agreement to
date.
EMPLOYEE OPTION PLAN
At the Annual General Meeting on 29 November 2002, shareholders approved the
Employee Options Plan 2002. No options have been granted or issued under the
plan to date.
OPTIONS ISSUED SUBSEQUENT TO BALANCE DATE
No options have been issued subsequent to balance date.
Details of the number of options held by Directors or held in companies
controlled by them at the date of this report are set out in "Directors'
Shareholdings".
There are no unissued shares under option at the date of this report other than
the shares referred to above. These options do not entitle the holder to
participate in any share issue of any other corporation.
ENVIRONMENTAL REGULATIONS
The consolidated entity is currently complying with relevant environmental
regulations and has no outstanding environmental orders against it.
EVENTS SUBSEQUENT TO BALANCE DATE
On 23 May 2003 the company announced a Share Roundup Sale of unmarketable
parcels. The offer closed on 4 July 2003 and during the following two weeks the
company sold 461,023 shares on behalf of 1,095 minority shareholders. The sale
proceeds, totalling $87,456, were returned to shareholders on 28 July 2003.
REVIEW OF OPERATIONS
A review of the company's operations is located at the front of this report.
INDEMNIFICATION OF OFFICERS & AUDITORS
During the financial year, the Company paid a premium in respect of a contract
insuring the directors of the Company and any related body corporate against a
liability incurred as a director to the extent permitted by the Corporations Act
2001. The contract of insurance prohibits disclosure of the nature of the
liability and the amount of the premium.
The Company has not otherwise indemnified its officers or auditors.
DIRECTORS' REMUNERATION
The Remuneration Committee review the remuneration packages of all directors on
an annual basis. Remuneration packages are reviewed with due regard to
performance and other relevant factors.
Name Office Salary/ Directors Benefits Options Total
Fees Fees Issued
$ $ $ $ $
Mr S Chairman 212,833 - 21,075 - 233,908
El-Raghy
Mr J Managing 187,180 - 18,718 - 205,898
El-Raghy Director
Mr C N Non-Executive - 25,000 2,250 - 27,250
Cowden Director
Mr G B Non-Executive - 25,000 2,250 - 27,250
Speechly Director
Dr T G Non-Executive 6,516 25,000 - - 31,516
Elder Director ------- -------- ------- ------ -------
406,529 75,000 44,293 - 525,822
------- -------- ------- ------ -------
EXECUTIVES' REMUNERATION
Other than the Executive Directors' remuneration as set out above the following
table discloses the executives:
Name Office Salary Benefits Options Total
Issued
$ $ $ $
Mr H Michael Project Manager 83,333 8,333 - 91,666
Mrs C Tyndall Company Secretary 23,558 2,120 - 25,678
directors' SHAREHOLDINGS
The relevant interest of each Director in the share capital of the Company shown
in the Register of Directors' Shareholdings as at the date of this report is:
Fully Paid Ordinary Shares Options over
Shares
Opening Balance Additions/ Closing Balance
(Disposals)
Mr S 79,745,987 (1,510,233) 78,235,754 49,999,488
El-Raghy
Mr C N 223,026 - 223,026 -
Cowden
Mr G B - - - -
Speechly
Dr T G - - - -
Elder
Mr J 1,200,000 100,000 1,300,000 -
El-Raghy
The additional shares were acquired through on market transfers at the
prevailing share price on that day. The disposal of 233 shares by Mr S El-Raghy
was a result of a share roundup of unmarketable parcels which was announced to
the market on 23 May 2003 and closed on 4 July 2003. The disposal of 1,510,000
shares by Mr S El-Raghy was a result of a change in the trustee of an indirect
interest.
Since the end of the previous financial year no Director of the Company has
received or become entitled to receive any benefit (other than a benefit
included in the aggregate amount of remuneration received or due and receivable
by Directors shown in the consolidated accounts) because of a contract made by
the Company, its controlled entities or a related body corporate with the
Director or with a firm of which the Director is a member, or with an entity in
which the Director has a substantial interest.
Signed in accordance with a resolution of the directors made pursuant to s. 298
(2) of the Corporations Act 2001.
On behalf of the Directors
_________________________
Josef El-Raghy
Managing Director
Perth, * September 2003
CORPORATE GOVERNANCE STATEMENT
The Board of Directors of Centamin Egypt Limited is responsible for the
corporate governance of the consolidated entity. The Board guides and monitors
the business and affairs of Centamin Egypt Limited on behalf of the shareholders
by whom they are elected and to whom they are accountable.
To ensure the Board is well equipped to discharge its responsibilities it has
established guidelines for the nomination and selection of Directors and for the
operation of the Board.
Unless disclosed below, the best practice recommendations of both the ASX
Corporate Governance Council and the AIM Listing Rules (The Alternative
Investment Market of the London Stock Exchange), including the Combined Code On
Corporate Governance have been applied for the entire financial year ended 30
June 2003. Where there has been any variation from the recommendations it is
because the Board believes that the company is not as yet of a size, nor are its
financial affairs of such complexity to justify some of those recommendations
and as such those practices continue to be the subject of the scrutiny of the
full Board.
Board Composition:
The Board is comprised of five Directors, of which the Chairman and the Managing
Director are the only executive Directors. Both the ASX and AIM rules favour
that the Chairman be an independent Director, however as Mr Sami El-Raghy has
been primarily based in Egypt during this stage of the company's development,
where his knowledge of the company's projects, the Egyptian language, culture
and government contacts are invaluable, the Board believe that his role and
status be both as an executive and as Chairman.
The skills, experience and expertise relevant to the position of each Director
who is in office at the date of the annual report, their attendances at meetings
and their term of office are detailed in the Directors' Report. The majority of
the Board are independent Directors, the names of the Directors of the company
in office at the date of this statement are:
Name Position Committees
Sami El-Raghy Chairman - Executive Director
Josef El-Raghy Managing Director
Colin N. Cowden Independent Director Audit and Remuneration
G. Brian Speechly Independent Director Audit and Remuneration
Thomas G. Elder Independent Director
When determining whether a Director is independent, the Board has determined
that the Director must not be an executive and:
* is not a substantial shareholder of the company or an officer of, or
otherwise associated directly with, a substantial shareholder of the
company;
* within the last three last years has not been employed in an executive
capacity by the company or another group member, or been a Director after
ceasing to hold any such employment;
* within the last three years has not been a principal or employee of a
material professional adviser or a material consultant to the company or
another group member, or an employee materially associated with the service
provided;
* is not a material supplier or customer of the company or other group member,
or an officer of or otherwise associated directly or indirectly with a
significant supplier or customer;
* has no material contractual relationship with the company or another group
member other than as a Director of the company;
* is free from any interest and any business or other relationship which
could, or could reasonably be perceived to, materially interfere with the
Director's ability to act in the best interests of the company.
Independent Directors have the right to seek independent professional advice in
the furtherance of their duties as Directors, at the company's expense. Written
approval must be obtained from the Managing Director prior to incurring expense
on behalf of the company.
Sami El-Raghy, Josef El-Raghy, and Brian Speechly are also Directors of the
subsidiary companies, Pharaoh Gold Mines NL, Viking Resources Ltd, Eucalyptus
Nickel NL, and North African Resources NL.
The Board and Board Nominations:
The company does not presently operate a nomination committee however as the
company approaches the development of the Sukari project and as it shifts its
corporate profile increasingly towards the capital markets of Europe, the Board
is establishing guidelines for the future nomination and selection of potential
new directors. In the interim, the full Board (subject to members voting rights
in general meeting) is responsible for selection of new members and has regard
to a candidates experience and competence in areas such as mining, exploration,
geology, finance and administration that can assist the Company in meeting its
corporate objectives and plans.
Under the Company's Constitution:
* the maximum number of Directors on the Board is ten;
* a Director (other than the Managing Director) may not retain office for more
than three years without submitting for re-election; and
* at the Annual General Meeting each year effectively one third of the
Directors in office (other than the Managing Director) retire by rotation
and must seek re-election by shareholders.
Securities Trading Policy:
The company has not as yet adopted a formal securities trading policy however
the Directors and employees are restricted from acting on material information
until it has been released to the market in accordance with the ASX requirements
of continuous disclosure. Furthermore the ability of Directors and certain
employees of AIM listed companies to deal in the Company's securities is
restricted in a number of ways, by statute, common law and by Rule 19 of the AIM
Rules. This rule imposes restrictions beyond those imposed by law in that the
Directors and certain employees and persons connected with them do not abuse and
do not place themselves under suspicion of abusing, price-sensitive information
that they have or are thought to have, especially in periods leading up to
announcement of results (closed periods).
Remuneration Committee and Policies:
The remuneration committee is comprised of Colin Cowden and Brian Speechly, both
independent Directors.
All compensation arrangements for Directors and Senior Executives are determined
by the remuneration committee and approved by the Board, after taking into
account the current competitive rates prevailing in the market.
The amount of remuneration for all Directors including the full remuneration
packages, comprising all monetary and non-monetary components of the Executive
Directors and executives, are detailed in the Directors' Report.
All executives receive base salary, superannuation, fringe benefits and in some
cases, performance incentives. Executives and staff, if invited by the Board of
Directors, may participate in the Employee Share Option Plan. These packages are
reviewed on an ongoing basis and in most cases are reviewed against
predetermined performance criteria.
All remuneration paid to executives is valued at the cost to the company and
expensed. Shares issued to executives are valued as the difference between the
market price of those shares and the amount paid by the executive. Options are
valued using the Black-Scholes methodology.
The Board expects that the remuneration structure that is implemented will
result in the company being able to attract and retain the best executives to
manage the economic entity. It will also provide the executives with the
necessary incentives to work to grow long-term shareholder value.
The Board can exercise its discretion in relation to approving incentives,
bonuses and options and can recommend changes to the committee's
recommendations.
There are no schemes for retirement benefits other than statutory superannuation
for independent Directors.
EXTERNAL AUDITORS:
The auditors of the Company, Deloitte Touche Tohmatsu ("Deloitte"), have open
access to the Board of Directors at all times. Deloitte have audited the Company
and its subsidiaries for a number of years and have adopted a policy of rotating
audit partners every five years. The last rotation of the audit partner occurred
during the financial year ended 30 June 2003.
Although not mandatorily required to attend the company's annual general
meeting, Deloitte do and it is consistent with their current business practice.
AUDIT COMMITTEE:
The audit committee is comprised of Colin Cowden and Brian Speechly, both
independent Directors.
The Company has a duly constituted Audit Committee which is comprised of the two
Australia based independent Directors whose names and qualifications and
attendances are included in the Directors' Report. The responsibilities of the
Audit Committee are laid out in its terms of reference, and amongst other
things, includes the responsibility to ensure that an effective internal control
framework exists within the entity, to produce half year and annual financial
statements. This includes the safeguarding of assets, the maintenance of proper
accounting records, and the reliability of financial information as well as
non-financial considerations
MANAGING RISKS:
The Board meets regularly to evaluate, control, review and implement the
Company's operations and objectives.
Regular controls established by the Board include:
* detailed monthly financial reporting;
* delegation of authority to the Managing Director to ensure approval of
expenditure obligations;
* implementation of operating plans, cash flows and budgets by management and
Board monitoring of progress against projections; and
* procedures to allow Directors, and management in the furtherance of their
duties, to seek independent professional advice via the utilisation of
various external technical consultants.
The Board recognises the need to identify areas of significant business risk and
to develop and implement strategies to investigate these risks.
COMMITMENT TO STAKEHOLDERS & ETHICAL STANDARDS:
The Board supports the highest standards of corporate governance and requires
its members and the management and staff of the Company to act with integrity
and objectivity in relation to:
* Compliance with laws and regulations affecting the company's operations;
* The ASX's Corporate Governance and the AIM Listing Rules, including the
Combined Code On Corporate Governance;
* Employment practices;
Responsibilities to the community;
* Responsibilities to the individual;
* The environment;
* Conflict of interests;
* Confidentiality;
* Ensure that shareholders and the financial community are at all times fully
informed in accordance with the spirit and letter of the ASX's continuous
disclosure requirements and the AIM Rules;
* Corporate opportunities or opportunities arising from these for personal
gain or to compete with the company;
* Protection of and proper use of the company's assets and
* Active promotion of ethical behaviour.
Monitoring of the Board's Performance and Communication to Shareholders:
In order to ensure that the Board continues to discharge its responsibilities in
an appropriate manner, the performance of all Directors is constantly reviewed
by the Chairman. The company does not presently have an evaluation of the Board
and all the Board members performed by an independent consultant however may do
so once the company commences development of the Sukari project.
The Board of Directors aims to ensure that the shareholders, on behalf of whom
they act, are informed of all information necessary to assess the performance of
the Directors. Information is communicated to the shareholders through:
* the Annual Report which is distributed to all shareholders;
* the availability of the Company's Quarterly Report to shareholders so
requesting;
* the Half-Yearly Report distributed to shareholders so requesting;
* adherence to continuous disclosure requirements;
* the Annual General Meeting and other meetings so called to obtain
shareholder approval for Board action as appropriate; and
* the provision of the Company's website containing all of the above mentioned
reports and its constant update and maintenance.
Deloitte Touche Tohmatsu
A.B.N. 74 490 121 060
Central Park Level 16
152-158 St Georges Terrace
Perth WA 6000
Australia
DX 10307SSE
Telephone (08) 9365 7000
Facsimile (08) 9365 7001
www.deloitte.com.au
INDEPENDENT AUDIT REPORT TO THE MEMBERS
OF CENTAMIN EGYPT LIMITED
Scope
The financial report and directors' responsibility
The financial report comprises the statement of financial position, statement of
financial performance, statement of cashflows, accompanying notes to the
financial statements, and the directors' declaration for both Centamin Egypt
Limited (the company) and the consolidated entity, for the financial year ended
30 June 2003 as set out on pages 23 to 43. The consolidated entity comprises the
company and the entities it controlled at the year's end or from time to time
during the financial year.
The directors of the company are responsible for the preparation and true and
fair presentation of the financial report in accordance with the Corporations
Act 2001. This includes responsibility for the maintenance of adequate
accounting records and internal controls that are designed to prevent and detect
fraud and error, and for the accounting policies and accounting estimates
inherent in the financial report.
Audit approach
We have conducted an independent audit of the financial report in order to
express an opinion on it to the members of the company. Our audit has been
conducted in accordance with Australian Auditing Standards to provide reasonable
assurance whether the financial report is free of material misstatement. The
nature of an audit is influenced by factors such as the use of professional
judgement, selective testing, the inherent limitations of internal controls, and
the availability of persuasive rather than conclusive evidence. Therefore, an
audit cannot guarantee that all material misstatements have been detected.
We performed procedures to form an opinion whether, in all material respects,
the financial report is presented fairly in accordance with the Corporations Act
2001 and Accounting Standards and other mandatory professional reporting
requirements in Australia so as to present a view which is consistent with our
understanding of the company's and the consolidated entity's financial position,
and performance as represented by the results of their operations and their cash
flows.
The liability of Deloitte Touche Tohmatsu, is
limited by, and to the extent of, the
Accountants' Scheme under the Professional
Standards Act 1994 (NSW).
Our procedures included examination, on a test basis, of evidence supporting the
amounts and other disclosures in the financial report, and the evaluation of
accounting policies and significant accounting estimates made by the directors.
While we considered the effectiveness of management's internal controls over
financial reporting when determining the nature and extent of our procedures,
our audit was not designed to provide assurance on internal controls.
The audit opinion expressed in this report has been formed on the above basis.
Independence
In conducting our audit, we followed applicable independence requirements of
Australian professional ethical pronouncements and the Corporations Act 2001.
Audit Opinion
In our opinion, the financial report of Centamin Egypt Limited is in accordance
with:
(a) the Corporations Act 2001, including:
(i) giving a true and fair view of the company's and consolidated entity's
financial position as at 30 June 2003 and of their performance for the
year ended on that date; and
(ii) complying with Accounting Standards in Australia and the Corporations
Regulations 2001; and
(b) other mandatory professional reporting requirements in Australia.
DELOITTE TOUCHE TOHMATSU
Leanne Karamfiles
Partner
Chartered Accountants
Perth, Western Australia
22 September 2003
The liability of Deloitte Touche Tohmatsu, is
limited by, and to the extent of, the
Accountants' Scheme under the Professional
Standards Act 1994 (NSW).
DIRECTORS' DECLARATION
The directors declare that:
a) The attached financial statements and notes thereto comply with Accounting
Standards;
b) The attached financial statements and notes thereto give a true and fair
view of the financial position and performance of the Company and the
consolidated entity;
c) In the directors' opinion, the attached financial statements and notes
thereto are in accordance with the Corporations Act 2001; and
d) In the directors' opinion, there are reasonable grounds to believe that the
Company will be able to pay its debts as and when they become due and
payable.
Signed in accordance with a resolution of the directors made pursuant to s. 295
(5) of the Corporations Act 2001.
On behalf of the Directors
__________________________
Josef El-Raghy
Managing Director
Perth, * September 2003
STATEMENT OF FINANCIAL PERFORMANCE
for the FINANCIAL YEAR ENDED 30 JUNE 2003
Consolidated Company
Note 2003 2002 2003 2002
$ $ $ $
-------- -------- -------- --------
Revenue from 613,853 140,650 2,043,547 139,373
ordinary
activities
Administration (1,714,164) (607,785) (1,708,263) (584,843)
expenses
Foreign exchange (536,749) (346,986) (536,749) (346,986)
loss
Promotional (164,443) (131,524) (164,251) (131,524)
expenses
Travelling (168,896) (200,535) (167,708) (172,273)
expenses
Other expenses - (16,262) - (20,005)
-------- -------- -------- --------
Loss From (1,970,399) (1,162,442) (533,424) (1,116,258)
Ordinary
Activities Before
Income Tax
Benefit
Income tax 3 - - - -
benefit relating -------- -------- -------- --------
to ordinary
activities
Net Loss (1,970,399) (1,162,442) (533,424) (1,116,258)
Net profit 20 (3,747) - - -
attributable to -------- -------- -------- --------
outside equity
interests
Net Loss (1,974,146) (1,162,442) (533,424) (1,116,258)
Attributable to
Members of the
Parent Entity
-------- -------- -------- --------
Total Changes in (1,974,146) (1,162,442) (533,424) (1,116,258)
Equity Other than -------- -------- -------- --------
those Resulting
from Transactions
with Owners as
Owners
Earnings Per
Share:
Basic (cents per 32 (0.48) (0.34)
share)
Diluted (cents 32 (0.48) (0.34)
per share)
The statement of
financial
performance is to
be read in
conjunction with
the notes to the
financial
statements.
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2003
Consolidated Company
Note 2003 2002 2003 2002
$ $ $ $
CURRENT ASSETS
Cash assets 24,626,319 3,954,083 24,582,074 3,787,821
Receivables 5 27,631 23,548 7,028 579
Prepayments 6 85,018 45,430 27,519 -
-------- -------- -------- --------
Total current 24,738,968 4,023,061 24,616,621 3,788,400
assets -------- -------- -------- --------
NON-CURRENT
ASSETS
Receivables 5 - - 20,876,339 13,952,216
Plant and 7 133,264 99,387 49,794 29,769
equipment
Investments 8 - - 5,495,423 5,495,421
Exploration 9 25,262,458 21,092,284 - -
expenditure -------- -------- -------- --------
Total 25,395,722 21,191,671 26,421,556 19,477,406
non-current -------- -------- -------- --------
assets
-------- -------- -------- --------
Total assets 50,134,690 25,214,732 51,038,177 23,265,806
-------- -------- -------- --------
CURRENT
LIABILITIES
Accounts 10 534,110 574,509 142,339 99,257
payable
Non-Interest 11 - 141,961 - 141,961
bearing
liabilities
Provisions 12 64,923 - 64,923 -
-------- -------- -------- --------
Total current 599,033 716,470 207,262 241,218
liabilities -------- -------- -------- --------
NON-CURRENT
LIABILITIES
Accounts 10 224,952 1,556,909 - -
payable -------- -------- -------- --------
Total 224,952 1,556,909 - -
non-current -------- -------- -------- --------
liabilities
-------- -------- -------- --------
Total 823,985 2,273,379 207,262 241,218
liabilities -------- -------- -------- --------
-------- -------- -------- --------
Net assets 49,310,705 22,941,353 50,830,915 23,024,588
-------- -------- -------- --------
EQUITY
Contributed 13 68,568,240 39,669,533 68,568,240 39,669,533
equity
Reserves 14 2,809,287 3,368,243 3,409,287 3,968,243
Accumulated 15 (22,062,879) (20,088,733) (21,146,612) (20,613,188)
losses -------- -------- -------- --------
Parent entity 49,314,648 22,949,043 50,830,915 23,024,588
interest
Outside equity 20 (3,943) (7,690) - -
interest -------- -------- -------- --------
Total equity 49,310,705 22,941,353 50,830,915 23,024,588
-------- -------- -------- --------
The statement of
financial position is to
be read in conjunction
with the notes to the
financial statements.
STATEMENT OF CASH FLOWS
for the FINANCIAL YEAR ENDED 30 JUNE 2003
Consolidated Company
Note 2003 2002 2003 2002
$ $ $ $
CASH FLOWS FROM
OPERATING
ACTIVITIES
Cash receipts in 77,000 9,799 77,002 9,800
the course of
operations
Receipts from - - 1,478,174
controlled
entities
Cash payments in (2,177,579) (1,492,502) (1,948,568) (868,983)
the course of
operations
Interest 492,781 131,851 488,371 130,573
received -------- -------- -------- --------
Net cash used in (1,607,798) (1,350,852) 94,979 (728,610)
operating -------- -------- -------- --------
activities
CASH FLOWS FROM
INVESTING
ACTIVITIES
Payment for (80,938) (93,141) (37,642) (17,275)
plant and
equipment
Advances to - - (6,924,123) (3,738,349)
controlled
entities
Payments for (4,012,184) (3,724,903) - (1,083,779)
exploration
Refund of 18,000 - 18,000
tenement
security
deposits
Payment for - - (2) -
investment -------- -------- -------- --------
securities
Net cash used in (4,093,122) (3,800,044) (6,961,767) (4,821,403)
investing -------- -------- -------- --------
activities
CASH FLOWS FROM
FINANCING
ACTIVITIES
Proceeds from 5,615,442 7,750,485 5,615,442 7,750,485
the issue of
shares
Capital raising - (1,363,216) - (1,363,216)
costs
Proceeds from 23,898,245 377,613 23,898,245 377,613
the conversion
of options
Capital Raising (1,173,936) - (1,173,936) -
Costs
Repayment of - (280,000) - -
borrowings
Repayment of (1,473,918) (156,331) (141,961) -
borrowings - -------- -------- -------- --------
related
entities
Net cash 26,865,833 6,328,551 28,197,790 6,764,882
provided by
financing
activities
-------- -------- -------- --------
Net increase in 21,164,913 1,177,655 21,331,002 1,214,869
cash held
Effect of (492,677) (295,216) (536,749) (346,986)
exchange rate
changes on the
balance of cash
held in foreign
currencies
Cash at the 3,954,083 3,071,644 3,787,821 2,919,938
beginning of the -------- -------- -------- --------
financial year
Cash at the end 22 24,626,319 3,954,083 24,582,074 3,787,821
of the financial -------- -------- -------- --------
year
The statements of cash
flows are to be read in
conjunction with the
notes to the financial
statements.
NOTES TO THE FINANCIAL STATEMENTS
for the FINANCIAL YEAR ENDED 30 JUNE 2003
1. Statement of Significant Accounting Policies
The significant policies which have been adopted in the preparation of this
financial report are:
(A) BASIS OF PREPARATION
This financial report is denominated in Australian Dollars.
The financial report is a general purpose financial report and has been
prepared in accordance with applicable Accounting Standards, Urgent Issues
Group Consensus Views, the Corporations Act 2001, and complies with other
requirements of the law. They have been prepared on the basis of historical
costs and do not take into account changing money values or, except where
stated, current valuations of non-current assets. The accounting policies
have been consistently applied by the entities in the economic entity and,
except where there is a note of a change in accounting policy, are
consistent with those of the previous year.
(B) PRINCIPLES OF CONSOLIDATION
The consolidated financial statements are prepared by combining the
financial statements of all the entities that comprise the economic entity,
being the Company and its controlled entities as defined in accordance with
accounting standard AASB 1024 "Consolidated Accounts".
(C) TAXATION
The economic entity adopts the liability method of tax effect accounting.
Income tax benefit is calculated on the loss from ordinary activities
adjusted for permanent differences between taxable and accounting income.
The tax effect of timing differences, which arise from items being brought
to account in different periods for income tax and accounting purposes, is
carried forward in the statement of financial position as a future income
tax benefit or a provision for deferred income tax.
Future income tax benefits are not brought to account unless realisation of
the asset is assured beyond reasonable doubt. Future income tax benefits
relating to tax losses are only brought to account when their realisation
is virtually certain.
(D) NON-CURRENT ASSETS
The carrying amounts of all non-current assets, except exploration
expenditure, are reviewed to determine whether they are in excess of their
recoverable amount at balance date. If the carrying amount of a non-current
asset exceeds the recoverable amount, the asset is written down to the
lower amount. In assessing recoverable amounts the relevant cash flows have
not been discounted to their present value.
(E) INVESTMENTS
Investments in controlled entities are carried at recoverable amount.
Dividends and distributions are brought to account in the statement of
financial performance when they are proposed by the controlled entities.
(F) EXPLORATION, EVALUATION AND DEVELOPMENT EXPENDITURE
Exploration, evaluation and development costs are accumulated in respect of
each separate area of interest where rights of tenure are current. These
costs are carried forward where they are expected to be recouped through
sale or successful development and exploitation of the area of interest,
or, where activities in the area of interest have not yet reached a stage
that permits reasonable assessment of the existence of economically
recoverable reserves.
When an area of interest is abandoned or the directors decide that it is
not commercial, any accumulated costs in respect of that area are written
off in the year the decision is made. Each area of interest is also
reviewed annually and accumulated costs written off to the extent that they
will not be recoverable in the future.
As at balance date:
The economic entity is still progressing exploration to delineate reserves;
An upgraded feasibility study with respect to the areas of interest is in
the process of being completed; and
The realisable value is dependant upon the current and future gold and
mineral sands prices.
As a consequence of the above, the ability of the Company and economic
entity to recover the carrying amount of the investment and areas of
interest respectively, is dependant upon the successful development and
commercial exploitation and/or sale of the relevant areas of interest.
Amortisation is not charged on costs carried forward in respect of areas of
interest in the development phase until production commences.
When production commences, carried forward exploration, evaluation and
development costs will be amortised on units of production basis over the
life of the economically recoverable reserves.
Restoration costs are provided for at the time of the activities which give
rise to the need for restoration. If this occurs prior to commencement of
production, the costs are included in deferred exploration and development
expenditure. If it occurs after commencement of production, restoration
costs are provided for and charged to the statement of financial
performance as an expense.
(G) PLANT AND EQUIPMENT
Items of plant and equipment are recorded at cost and depreciated from the
date of acquisition on a reducing balance method over their estimated
useful lives. The following estimated useful lives are used in the
calculation of depreciation:
Plant, Equipment & Office Furniture - 4 - 10 years
Motor Vehicles - 2 - 8 years
(H) SUPERANNUATION FUND
The Company contributes to, but does not participate in, compulsory
superannuation funds on behalf of the Employees and Directors in respect of
salaries and directors' fees paid. Contributions are charged against income
as they are made.
(I) FOREIGN CURRENCY
All foreign currency transactions during the year have been brought to
account using the exchange rate in effect at the date of the transaction.
Foreign currency monetary items at balance date are translated at the
exchange rate existing at that date. All exchange differences are brought
to account in the statement of financial performance of the financial
period in which they arise.
The assets and liabilities of the controlled entity incorporated overseas
(being an integrated foreign operation) are translated using the temporal
method. Monetary items are translated using the exchange rate at balance
date and non-monetary items are translated at exchange rates current at the
transaction dates. The financial statements are translated at the exchange
rate current at the transaction date, except that non-monetary items are
translated at the original rates. Exchange differences arising on
translation are taken directly to the statement of financial performance.
(J) RECEIVABLES
Trade receivables and other receivables are recorded at amounts due less
any allowance for doubtful debts.
(K) ACCOUNTS PAYABLE
Trade payables and other accounts payable are recognised when the economic
entity becomes obliged to make future payments resulting from the purchase
of goods and services.
(L) INTEREST-BEARING LIABILITIES
Bank loans and other loans are recorded at an amount equal to the net
proceeds received. Interest expense is recognised on an accrual basis.
Ancillary costs incurred in connection with the arrangement of borrowings
are deferred and amortised over the period of the borrowing.
(M) DEBT AND EQUITY INSTRUMENTS ISSUED BY THE COMPANY
Debt and equity instruments are classified as either liabilities or as
equity in accordance with the substance of the contractual arrangement.
(N) REVENUE RECOGNITION
Sale of Goods and Disposal of Assets - Revenue from the sale of goods and
disposal of other assets is recognised when the economic entity has passed
control of the goods or other assets to the buyer.
Contribution of Assets - Revenue arising from the contribution of assets is
recognised when the economic entity gains control of the contribution or
the right to receive the contribution.
(O) JOINT VENTURES
Interest in joint venture operations are reported in the financial
statements by including the economic entity's share of assets employed in
the joint venture, the share of liabilities incurred in relation to the
joint venture and the share of any expenses incurred in relation to the
joint venture in their respective classification categories.
(P) GOODS AND SERVICES TAX
Revenues, expenses and assets are recognised net of the amount of goods and
services tax (GST), except:
i) where the amount of GST incurred is not recoverable from
the taxation authority, it is recognised as part of the cost of acquisition
of an asset or as part of an item of expense; or
ii) for receivables and payables which are recognised inclusive
of GST.
The net amount of GST recoverable from, or payable to, the taxation
authority is included as part of receivables or payables.
Cash flows are included in the statement of cash flows on a gross basis.
The GST component of cash flows arising from investing and financing
activities which is recoverable from, or payable to, the taxation authority
is classified as operating cash flows.
(Q) EMPLOYEE BENEFITS
Provision is made for benefits accruing to employees in respect of wages
and salaries, annual leave, long service leave, and sick leave when it is
probable that settlement will be required and they are capable of being
measured reliably.
Provisions made in respect of wages and salaries, annual leave, sick leave,
and other employee benefits expected to be settled within 12 months, are
measured at their nominal values using the remuneration rate expected to
apply at the time of settlement.
Consolidated Company
2. Loss from Ordinary 2003 2002 2003 2002
Activities
$ $ $ $
Loss from ordinary activities has
been arrived at after including:
OPERATING REVENUE
Interest received or due and
receivable from:
Other entities in the - - - -
wholly-owned group
Other persons 492,781 131,850 488,371 130,573
Administration & Management - - 1,478,174 -
Fees - Other entities in the
wholly-owned group
Foreign exchange rate gain 44,072 - - -
Other income 77,000 8,800 77,002 8,800
-------- -------- -------- --------
613,853 140,650 2,043,547 139,373
-------- -------- -------- --------
OPERATING EXPENSES
Depreciation - plant and 17,617 12,873 17,617 12,873
equipment
Allowance for doubtful debts - - - 4,845 5,700
Subsidiaries - wholly owned -------- -------- -------- --------
controlled entities
--------------- ---------------
Consolidated Company
-------- -------- -------- --------
2003 2002 2003 2002
$ $ $ $
3. Taxation
The prima facie income tax
benefit on the Loss from
Ordinary Activities reconciles
to the income tax benefit in the
financial statements as follows:
Loss from Ordinary Activities 1,974,146 1,162,442 533,423 1,116,258
-------- -------- -------- --------
Income tax benefit calculated at (592,244) (348,733) (160,027) (334,877)
30% of Loss from Ordinary
Activities
Permanent differences:
Other (23,358) (87,310) (21,169) (87,943)
Tax benefit/(expense) of timing (1,420,973) (749,246) 175,799 166,350
differences not brought to
account
Tax benefit of losses not 2,036,575 1,185,289 5,397 256,470
brought to account
-------- -------- -------- --------
Income tax benefit attributable - - - -
to Loss from Ordinary -------- -------- -------- --------
Activities
The future benefit of tax losses and other timing differences have not been
brought to account because there is no virtual certainty as to their recovery.
They are estimated to be:
Consolidated Company
2003 2002 2003 2002
$ $ $ $
Tax Losses - revenue 26,932,558 20,143,975 4,707,130 4,689,140
Tax Losses - capital 600,000 600,000 - -
-------- -------- -------- --------
Tax Losses 27,532,558 20,743,975 4,707,130 4,689,140
-------- -------- -------- --------
Tax Effect at 30% 8,259,768 6,223,193 1,412,139 1,406,742
The above carried forward tax losses with respect to exploration expenditure can
only be utilised to offset foreign sourced mining income.
The future income tax benefit will only be utilised if:
* the companies that make up the economic entity derive future assessable
income of a nature and amount sufficient to enable the benefit from the
losses to be realised;
* the companies that make up the economic entity continue to comply with the
conditions for deductibility imposed by the law; and
* no changes in taxation legislation adversely affect the companies that make
up the economic entity in realising the benefit from the losses.
Legislation to allow groups, comprising a parent entity and its Australian
resident wholly-owned entities, to elect to consolidate and be treated as a
single entity for income tax purposes was substantively enacted on 21 October
2002. This legislation, which includes both mandatory and elective elements, is
applicable to the company. The impact of the mandatory elements of the tax
consolidation system on existing deferred tax balances of the economic entity
and parent entity has been reflected in the financial statements.
At the date of this report the directors have not assessed the financial effect,
if any, the legislation may have on the company and the consolidated entity and,
accordingly, the directors have not made a decision whether or not to elect to
be taxed as a single entity. The financial effect of the implementation of the
tax consolidation system on the economic entity has not been recognised in the
financial statements.
4. Segment Reporting
Primary reporting - Business Segments
The economic entity is engaged in the business of exploration for precious and
base metals only, which is characterised as one business segment only. As the
economic entity has only one business segment, all the necessary reporting
disclosures are disclosed elsewhere in the notes to the financial statements.
Secondary reporting - Geographical Segments
The principal activity of the economic entity during the year was the
exploration for precious and base metals in Egypt.
Consolidated Company
5. Receivables 2003 2002 2003 2002
$ $ $ $
CURRENT
GST receivable 27,631 23,548 7,028 579
NON-CURRENT
Loans and advances to controlled - - 24,068,926 17,139,958
entities
Less: Allowance for doubtful - - (3,192,587) (3,187,742)
debts -------- -------- -------- --------
- - 20,876,339 13,952,216
-------- -------- -------- --------
The loans to controlled entities are amounts that have been advanced for
expenditure on exploration, prospecting and development activities. The recovery
of these loans is dependent upon the successful development and commercial
exploitation and/or sale of the exploration leases.
Consolidated Company
6. Prepayments 2003 2002 2003 2002
$ $ $ $
CURRENT
Other 85,018 45,430 27,519 -
-------- -------- -------- --------
7. Plant and Equipment
CONSOLIDATED Plant, Motor Vehicles Total
Equipment &
Office Furniture
$ $ $
Gross Carrying Amount
Balance at 30 June 2002 783,753 99,220 882,973
Additions 55,530 25,408 80,938
Disposals - - -
----------- ----------- ----------
Balance at 30 June 2003 839,283 124,628 963,911
----------- ----------- ----------
Accumulated Depreciation
Balance at 30 June 2002 (702,532) (81,054) (783,586)
Depreciation expense (28,422) (18,639) (47,061)
Disposals - - -
----------- ----------- ----------
Balance at 30 June 2003 (730,954) (99,693) (830,647)
----------- ----------- ----------
Net Book Value
----------- ----------- ----------
As at 30 June 2002 81,221 18,166 99,387
----------- ----------- ----------
----------- ----------- ----------
As at 30 June 2003 108,329 24,935 133,264
----------- ----------- ----------
7. Plant and Equipment (continued)
COMPANY Plant, Motor Vehicles Total
Equipment &
Office Furnitre
$ $ $
Gross Carrying Amount
Balance at 30 June 2002 389,925 18,500 408,425
Additions 37,642 - 37,642
Disposals - - -
----------- ----------- ----------
Balance at 30 June 2003 427,567 18,500 446,067
----------- ----------- ----------
Accumulated Depreciation
Balance at 30 June 2002 (372,125) (6,531) (378,656)
Depreciation expense (11,086) (6,531) (17,617)
Disposals - - -
----------- ----------- ----------
Balance at 30 June 2003 (383,211) (13,062) (396,273)
----------- ----------- ----------
Net Book Value
----------- ----------- ----------
As at 30 June 2002 17,800 11,969 29,769
----------- ----------- ----------
----------- ----------- ----------
As at 30 June 2003 44,356 5,438 49,794
----------- ----------- ----------
Consolidated Company
2003 2002 2003 2002
$ $ $ $
Aggregate depreciation allocated,
whether recognised as an expense or
capitalised as part of the carrying
amount of other assets during the year:
Plant, equipment and office furniture 28,422 9,810 6,531 4,012
Motor vehicles
Included above, the following amounts
were capitalised within exploration 18,639 46,566 11,086 8,861
expenditure: -------- -------- -------- --------
47,061 56,376 17,617 12,873
-------- -------- -------- --------
Aggregate depreciation allocated,
whether recognised as an expense or
capitalised as part of the carrying
amount of other assets during the year:
29,444 43,503 - -
-------- -------- -------- --------
8. Investments
Consolidated Company
NON CURRENT Note 2003 2002 2003 2002
$ $ $ $
Shares in controlled - - 5,943,709 5,943,707
entities
Recoverable amount write - - (448,286) (448,286)
down -------- -------- -------- --------
- - 5,495,423 5,495,421
-------- -------- -------- --------
9. Exploration Expenditure
Exploration, Consolidated Company
evaluation and
development
expenditure
(a) - At Cost Note 2003 2002 2003 2002
$ $ $ $
Balance at the 21,092,284 17,376,083 - 5,985,851
beginning of the
year
Expenditure for the 4,170,174 3,716,201 - 1,083,779
year
Re-allocation of
expenditure to Pharaoh
Gold Mines NL
- - - (7,069,630)
-------- -------- -------- --------
Balance at the end of 25,262,458 21,092,284 - -
the year -------- -------- -------- --------
(b) - Included within the cost amount of assets is $5,311,744 being
the excess of consideration over the net tangible assets acquired on the
acquisition of Pharaoh Gold Mines NL in January 1999. This amount has been
treated as part of the cost of exploration and evaluation.
(c) - The recoupment of exploration and prospecting expenditure is dependent
on the successful development and commercial exploitation and/or sale of the
respective leases.
10. Accounts Payable
Consolidated Company
2003 2002 2003 2002
$ $ $ $
CURRENT
Trade payables 191,677 291,010 5,632 47,990
Other creditors and accruals -
director related entities - 11,959 - 11,959
Other creditors and accruals 342,433 271,540 136,707 39,308
-------- -------- -------- --------
534,110 574,509 142,339 99,257
-------- -------- -------- --------
NON-CURRENT
Other creditors and accruals -
director related entities 224,952 1,356,909 - -
Other creditors and accruals - 200,000 - -
-------- -------- -------- --------
224,952 1,556,909 - -
-------- -------- -------- --------
11. Non-Interest Bearing Liabilities
Consolidated Company
CURRENT 2003 2002 2003 2002
$ $ $ $
Loans and advances from director - 141,961 - 141,961
related entity -------- -------- -------- --------
Note (a) - El-Raghy Kriewaldt Pty Ltd - debt relating to various amounts
advanced to the company since Mr. S. El-Raghy and Mr. M. Kriewaldt commenced
their involvement with the Company. The debt was repaid in June 2003.
12. Current Provisions
Consolidated Company
CURRENT 2003 2002 2003 2002
$ $ $ $
Employee Benefits 64,923 - 64,923 -
-------- -------- -------- --------
13. Contributed Equity
Consolidated Company
2003 2002 2003 2002
$ $ $ $
Balance at 39,669,533 32,895,211 39,669,533 32,895,211
beginning of year
7,700,000 30 1,540,000 - 1,540,000 -
November 2002
Unlisted options
converted to fully
paid shares @ 20c
each
Issue of 22,580,127 5,615,442 7,750,485 5,615,442 7,750,485
fully paid shares
(2002: 45,000,000)
111,791,226 3 March 22,358,245 377,613 22,358,245 377,613
2003 options
converted to fully
paid shares @ 20
cents each (2002:
1,888,067)
Cost of capital (1,173,936) (1,363,216) (1,173,936) (1,363,216)
raising
Transfer from 558,956 9,440 558,956 9,440
Option Reserve
following
conversion of
options
-------- -------- -------- --------
Balance at end of 68,568,240 39,669,533 68,568,240 39,669,533
year -------- -------- -------- --------
2003 2002
No. $ No. $
Fully Paid Ordinary
Shares
Balance at 359,839,016 39,669,533 312,950,949 32,895,211
beginning of year
Issue of fully paid 7,700,000 1,540,000 - -
shares following
exercise of 30
November 2002
Unlisted Options
Issue of fully paid 22,580,127 5,615,442 45,000,000 6,387,269
shares
Issue of fully paid 111,791,226 22,358,245 1,888,067 377,613
shares following
exercise of 3 March
2003 options
Transfer from
Option Reserve
Capital raising 558,956 9,440
costs
(1,173,936) -
-------- -------- -------- --------
Balance at end of 501,910,369 68,568,240 359,839,016 39,669,533
year -------- -------- -------- --------
Unlisted Options Listed Options Unlisted Options
Expiring 30/11/02 Expiring 3/03/03 Expiring 9/11/03
Options 2003 No. No. No.
(Exercise Price 20 cents each)
Balance 7,700,000 111,791,226 49,999,744
at beginning
of year
Issued - - -
during the year
Exercised (7,700,000) (111,791,226) -
during the year
----------- ----------- ----------
Balance - - 49,999,744
at end of year ----------- ----------- -----------
Options 2002
(Exercise Price 20 cents each)
Balance 7,700,000 109,679,293 49,999,744
at beginning of year
Issued - 4,000,000 -
during the year
Exercised - (1,888,067) -
during the year
----------- ----------- -----------
Balance 7,700,000 111,791,226 49,999,744
at end of year ----------- ----------- -----------
14. Reserves
Consolidated Company
2003 2002 2003 2002
$ $ $ $
Option reserve
Balance at the beginning of 2,832,669 2,842,109 2,832,669 2,842,109
the year
Transfer to Contributed (558,956) (9,440) (558,956) (9,440)
Equity following conversion -------- -------- -------- --------
of Options issued for
consideration
Balance at the end of the 2,273,713 2,832,669 2,273,713 2,832,669
year -------- -------- -------- --------
Reserve created from the issuing of options for
consideration.
-------- -------- -------- --------
Asset realisation reserve 535,574 535,574 535,574 535,574
-------- -------- -------- --------
--------
Reserve created from the realisation of
particular assets.
Capital reserve - - 600,000 600,000
-------- -------- -------- --------
Reserve created from the
cancellation of shares in -------- -------- -------- --------
the Company held by Pharaoh
Gold Mines NL.
2,809,287 3,368,243 3,409,287 3,968,243
-------- -------- -------- --------
15. Accumulated Losses
Consolidated Company
2003 2002 2003 2002
$ $ $ $
Balance at the beginning 20,088,733 18,926,291 20,613,188 19,496,930
of the year
Current year's loss 1,974,146 1,162,442 533,424 1,116,258
-------- -------- -------- --------
Balance at the end of 22,062,879 20,088,733 21,146,612 20,613,188
the year -------- -------- -------- --------
16. Employee Benefits
-------- -------- -------- --------
The aggregate employee benefit liability
recognised and included in the financial
statements is as follows:
Provision for employee benefits:
Current (note 12) - 64,923 - 64,923 -
-------- -------- -------- --------
17. Number of Employees
Consolidated Company
2003 2002 2003 2002
No. No. No. No.
Number of Employees 63 45 8 3
-------- -------- -------- --------
18. Contingent Liabilities
The details and estimated maximum amounts of contingent liabilities, classified
according to the party from whom the contingent liability arises, are set out
below.
-------- -------- -------- --------
Benefits payable on termination in
certain circumstances to directors under
service agreements: - Mr M Kriewaldt - 350,000 - -
-------- -------- -------- --------
19. Commitments for Expenditure
Consolidated Company
2003 2002 2003 2002
$ $ $ $
Lease of office premises
Not longer than 1 year 50,540 48,000 50,540 48,000
Longer than 1 year and not longer than 5
years 16,847 64,000 16,847 64,000
Consolidated
20. Outside Equity Interests 2003 2002
$ $
Interest in accumulated losses at the beginning of the (7,690) (7,690)
financial year
Interest in profit from ordinary activities after income 3,747 -
tax -------- --------
Interest in accumulated losses at the end of the financial (3,943) (7,690)
year
Interest in share capital - -
-------- --------
Total outside equity interests (3,943) (7,690)
-------- --------
Centamin Egypt Limited has a 50% interest in Egyptian Pharaoh Investment ("EPI")
with the balance being held by Kara Gold NL, a company in which a director Mr S
El-Raghy has a beneficial interest and is also a director. EPI was incorporated
under Egyptian law in January 1995, however, no shares have yet been issued in
EPI.
21. Particulars in Relation to Controlled Entities
Country of Incorporation 2003 2002
PARENT ENTITY % %
Centamin Egypt Limited Australia
CONTROLLED ENTITIES
Viking Resources Limited Australia 100 100
Eucalyptus Nickel NL Australia 100 100
Egyptian Pharaoh Investment Egypt 50 50
North African Resources NL Australia 100 100
Pharaoh Gold Mines NL Australia 100 99.99
22. Notes to the Statements of Cash Flows
(a) RECONCILIATION OF CASH
For the purpose of the Statements of Cash Flows, cash includes cash on hand and
at bank and deposits. Cash as at the end of the financial year as shown in the
Statements of Cash Flows is reconciled to the related item in the statement of
financial position as follows:
Consolidated Company
2003 2002 2003 2002
$ $ $ $
Cash 24,626,319 3,954,083 24,582,074 3,787,821
-------- -------- -------- --------
(b) RECONCILIATION OF LOSS
FROM ORDINARY ACTIVITIES TO
NET CASH USED IN OPERATING
ACTIVITIES
Loss from ordinary activities (1,970,399) (1,162,442) (533,424) (1,116,258)
before income tax
Add/(less) non-cash items:
Depreciation 17,617 12,873 17,617 12,873
Foreign exchange rate (gain)/ 492,677 346,986 536,749 346,986
loss
Changes in assets and
liabilities during the year:
(Increase)/decrease in (4,083) 10,394 (6,448) 6,583
receivables
(Increase)/decrease in 17,912 (22,607) (27,519) 12,256
prepayments
Increase/ (decrease) in trade (161,522) (536,056) 108,005 8,950
creditors & accruals -------- -------- -------- --------
Net cash used in operating (1,607,798) (1,350,852) (94,980) (728,610)
activities -------- -------- -------- --------
23. Related Parties
DIRECTORS
a) The names of each person holding the position of Director of Centamin Egypt
Limited during the financial year were Messrs S El-Raghy, C Cowden, G B
Speechly and Dr T G Elder. Mr Josef El-Raghy was appointed Managing Director
on 26 August 2002.
b) Details of directors' remuneration are set out in Note 24.
c) Directors' equity holdings in the Company:-
Fully Paid Ordinary Options to Acquire
Shares Ordinary Shares
2003 2002 2003 2002
Issued during the - - - -
financial year to
directors and their
director-related
entities by the
Company
Redeemed, exercised by - - - -
or bought back during
the financial year from
directors and their
director-related
entities by the
Company
Held as at the reporting 79,758,780 79,969,013 49,999,488 49,999,448
date by directors and
their director-related
entities in the
Company
Apart from the details disclosed in this note, no Director has entered into a
material contract with the Company or the economic entity since the end of the
previous financial year and there were no material contracts involving
directors' interests at year-end.
OTHER TRANSACTIONS WITH DIRECTORS
Mr. S. El-Raghy is also a director and shareholder of El-Raghy Kriewaldt Pty Ltd
("El-Raghy Kriewaldt"). El-Raghy Kriewaldt provides office premises to the
Company. All dealings with El-Raghy Kriewaldt are in the ordinary course of
business and on normal terms and conditions. Fees paid to El-Raghy Kriewaldt
during the year were $48,636 (2002: $16,000).
A director of the Company, Mr. C. Cowden has an interest as a director and
controlling shareholder of Cowden Limited, Insurance Brokers. This company
provides insurance broking services to the Company. All dealings with this
company are in the ordinary course of business and on normal terms and
conditions. Premiums paid to Cowden Limited during the year were $57,166 (2002:
$50,133).
LOANS RECEIVABLE
During the year the Company provided funds to its controlled entities. Refer
Note 5 for details.
LOANS PAYABLE
During the financial year ended 30 June 2003, the economic entity repaid all
loans owing to director related entities. There was no interest paid on the
loans during the year. Total amount repaid was $1,136,894 (refer to notes 10 &
11).
24. Directors' Remuneration
Consolidated Company
2003 2002 2003 2002
$ $ $ $
-------- --------
Aggregate of income paid or payable, or
otherwise made available, in respect of
the financial year, to all directors of
the Company, directly or indirectly, by
the Company or by any related party. 525,822 225,709
-------- -------- -------- --------
Aggregate of income paid or payable, or
otherwise made available, in respect of
the financial year, to all directors of
the each entity in the consolidated
entity, directly or indirectly, by the
entities in which they are directors or
by any related party.
525,822 295,006
-------- --------
No. No.
The number of directors of the Company whose total income falls
within each successive $10,000 band of income (commencing at $0)
$ 0 - $ 9,999 0 1
$ 20,000 - $29,999 2 2
$ 30,000 - $39,999 1 -
$160,000 - $169,999 - 1
$200,000 - $209,999 1 -
$230,000 - $239,999 1 -
25. Executives' Remuneration
No executives total income for the year ended 30 June 2003 was more than
$100,000 (other than directors: refer note 24).
26. Options granted to Directors
At the Annual General Meeting on 29 November 2002, shareholders conditionally
approved the issue of 4,000,000 performance based options to Mr Josef El-Raghy
under the terms of an Executive Service Agreement made between the Company and
Mr El-Raghy. No options have been issued under that agreement to date.
27. Options granted to Executives
A performance based executive share option plan is in place for Mr Harry Michael
under the terms of an Employment Agreement made between the Company and Mr
Michael on 4 February 2003. No options have been issued under that agreement to
date.
28. Options granted to Employees
At the Annual General Meeting on 29 November 2002, shareholders approved the
Employee Options Plan 2002. No options have been granted or issued under the
plan to date.
Consolidated Company
2003 2002 2003 2002
$ $ $ $
29. Auditors' Remuneration
Auditing the financial report 36,800 43,750 33,000 37,800
Other services - Tax 7,830 26,860 7,230 26,860
-------- -------- -------- --------
44,630 70,610 40,230 64,660
-------- -------- -------- --------
30. Interests in Joint Ventures
The consolidated entity has material interests in the following unincorporated
venture:-
JOINT VENTURES Principal Activities Percentage Interest
2003 2002
Australia - Nicholls - WA - EL80/ % %
1708
Castlegem Pty Ltd & Mandor Mining Exploration 0 10
Pty Ltd
During the course of the year Castlegem Pty Ltd withdrew from the joint venture
on the Nicholl's Diamond prospect. This tenement had surpassed its statutory
tenure life of five years and it was highly unlikely that the Department of
Minerals and Energy would grant any further extensions of time. In view of this
and with the mutual consent of the company's joint venture partners it was
decided to surrender this tenement.
The following amount represents the economic entity's interest in assets
employed in the above joint venture. The amount is included in the consolidated
financial statements under the respective category.
Consolidated
2003 2002
$ $
Non Current Assets
Exploration expenditure - 1
-------- --------
31. Superannuation
The Company contributes to, but does not participate in, compulsory
superannuation funds on behalf of its employees and Directors. Contributions are
charged against income as they are made.
32. Earnings Per Share
Consolidated
2003 2002
Cents Per Share Cents Per Share
Basic earnings per share (0.48) (0.34)
Diluted earnings per share (0.48) (0.34)
Basic Earnings per Share
The earnings and weighted average number of 2003 2002
ordinary shares used in the calculation of
basic earnings per share are as follows:
$ $
-------- --------
Loss (a) (1,974,146) (1,162,442)
-------- --------
2003 2002
No. No.
-------- --------
Weighted average number of ordinary shares 414,412,312 336,746,329
(b) -------- --------
(a) The Loss used in the calculation of
basic earnings per share equates to the Net
Loss in the Statement of Financial
Performance.
(b) The options are considered to be
potential ordinary shares and are therefore
excluded from the weighted average number of
ordinary shares used in the calculation of
basic earnings per share. Where dilutive,
potential ordinary shares are included in
the calculation of diluted earnings per
share.
Diluted Earnings per Share
The earnings and weighted average number of 2003 2002
ordinary shares used in the calculation of
diluted earnings per share are as follows:
$ $
-------- --------
Loss (a) (1,974,146) (1,162,442)
-------- --------
2003 2002
No. No.
-------- --------
Weighted average number of ordinary shares 414,412,312 336,746,329
and potential ordinary shares (b) -------- --------
(a) The Loss used in the calculation of
diluted earnings per share equates to the
Net Loss in the Statement of Financial
Performance.
(b) Weighted average number of ordinary
shares and potential ordinary shares used in
the calculation of diluted earnings per
share equates to the weighted average number
of ordinary shares used in the calculation
of basic earnings per share, because the
potential ordinary shares have no dilutive
effect.
(c) The following potential ordinary shares 2003 2002
are not dilutive and are therefore excluded
from the weighted average number of ordinary
shares and potential ordinary shares used in
the calculation of diluted earnings per
share:
No. No.
-------- --------
Other 49,999,744 169,490,970
-------- --------
33. Events Subsequent to Balance Date
On 23 May 2003 the company announced a Share Roundup Sale of unmarketable
parcels. The offer closed on 4 July 2003 and during the following two weeks the
company sold 461,023 shares on behalf of 1,095 minority shareholders. The sale
proceeds, totalling $87,456, were returned to shareholders on 28 July 2003.
34. Financial Instruments
a) Interest Rate Risk
The following table details the consolidated entity's exposure to interest
rate risk as at reporting date:
Average Variable Fixed Non Interest Bearing Total
Interest Rate % Interest Interest Rate (< than 1 yr)
Rate
2003 $ $ $ $
FINANCIAL
ASSETS
Cash 4.05 19,601,714 5,023,625 980 24,626,319
Receivables - - - 27,631 27,631
-------- -------- -------- --------
19,601,714 5,023,625 28,611 24,653,950
-------- -------- -------- --------
FINANCIAL
LIABILITIES
Accounts - - - 760,250 760,250
payable
Employee - - - 64,923 64,923
Benefits -------- -------- -------- --------
- - 825,173 825,173
-------- -------- -------- --------
2002
FINANCIAL
ASSETS
Cash 4.0 504,750 3,434,308 15,025 3,954,083
Receivables - - - 23,548 23,548
-------- -------- -------- --------
504,750 3,434,308 38,573 3,977,631
-------- -------- -------- --------
FINANCIAL
LIABILITIES
Accounts - - - 2,131,418 2,131,418
payable
Borrowings - - - 141,961 141,961
-------- -------- -------- --------
- - 2,273,379 2,273,379
-------- -------- -------- --------
b) Credit Risk
Credit risk refers to the risk that a counter-party will default on its
contractual obligations resulting in financial loss to the economic entity.
The economic entity has adopted a policy of only dealing with credit-worthy
counter-parties and obtaining sufficient collateral or other security where
appropriate, as a means of mitigating the risk of financial loss from
defaults. The economic entity measures credit risk on a fair value basis.
The economic entity does not have any significant credit risk exposure to any
single counter-party or any group counter-parties having similar
characteristics.
The carrying amount of financial assets recorded in the financial statements
represents the economic entity's maximum exposure to credit risk without
taking account of the value of collateral or other security obtained.
c) Net Fair Value
The carrying amount of financial assets and financial liabilities recorded in
the financial statements represents their respective net fair values,
determined in accordance with the accounting policies disclosed in note 1 to
the financial statements.
d) Currency Risk
The economic entity holds the majority of its funds in an Australian bank and
periodically forwards British Pounds to its office in Egypt. The majority of
transactions performed in Egypt are conducted in British Pounds or US dollars
however a small reserve of Egyptian Pounds is maintained to meet day to day
administration expenses.
The economic entity has not entered into any forward foreign exchange
contracts to hedge the exchange rate risk arising from any anticipated future
transactions. As at 30 June 2003, Egyptian #11,706 (2002: Nil), US$544,136
(2002: US$(224)) and GBP #2,180,914 (2002: #1,163,152), Euro Euro17 (2002: Nil)
bank balances were unhedged.
ADDITIONAL ASX INFORMATION
Additional information required by the Australian Stock Exchange Limited Listing
Rules and not disclosed elsewhere in this report is as follows. The information
is as at 1 September 2003.
SUBSTANTIAL SHAREHOLDERS
The number of shares held by the substantial shareholders listed in the
Company's register of substantial shareholders as at 1 September 2003 were:
Shareholder Ordinary Shares Quoted Options Unquoted
Options
Willbro Nominees Limited 65,144,644 - -
El-Raghy Kriewaldt Pty Ltd 55,299,372 - 37,820,028
DISTRIBUTION OF HOLDERS OF EQUITY SECURITIES
Holding Range Ordinary Shares Quoted Options Unquoted
Options
1 - 1,000 45 - 3
1,001 - 5,000 441 - -
5,001 - 10,000 286 - -
10,001 - 100,000 542 - -
100,001 and over 159 - 3
----------- ----------- -----------
1,473 - 6
=========== =========== ===========
Holding less than a marketable 216 - -
parcel =========== =========== ===========
STATEMENT OF SHAREHOLDINGS
(a) Shares Quoted Shares
Number % Held
Willbro Nominees Limited 65,144,644 12.98
El-Raghy Kriewaldt 55,299,372 11.02
NEFCO Nominees Ltd 24,522,399 4.89
HSBC Global Custody Nominee (UK) Limited < 24,196,508 4.82
767269>
Nordana Pty Ltd 17,595,714 3.51
C M Investment Nominees Limited 16,500,000 3.29
National Nominees Limited 14,169,677 2.82
Goldman Sachs Securities (Nominees ) Limited
HSBC Custody Nominees 11,598,500 2.31
BNY (OCS) Nominees Limited 10,879,070 2.17
Goldman Sachs Securities (Nominees) Limited < 9,450,000 1.88
CREPTEMP>
Mr Brian Peter Byass 8,263,636 1.65
Yandal Investments Pty Ltd 7,500,000 1.49
Merrill Lynch (Australia) Nominees Ltd 5,168,703 1.03
El-Mahfoza Real Estate 5,177,000 1.03
Colbern Fiduciary Nominees Pty Ltd 5,010,000 1.00
T Hoare Nominees Limited 5,000,000 1.00
Nordana Pty Ltd 4,990,668 0.99
Callion Capital Corporation 4,809,450 0.96
Equitas Nominees Pty Limited 4,800,000 0.96
----------- -----------
312,075,341 62.19
----------- -----------
Note: As at 01 September 2003, the percentage of shares held on the Australian
Register was 54.93%, and the percentage of shares held on the UK Register was
45.07%.
CLASS OF SHARES AND VOTING RIGHTS
The voting rights attaching to the ordinary shares, set out in Clause 12.8 of
the Company's Constitution are:
"Subject to any rights or restrictions for the time being attached to any class
or classes of shares" -
(a) at meetings of members or classes of members each member entitled to vote
may vote in person or by proxy or attorney; and
(b) on a show of hands every person present who is a member has one vote for
each ordinary share held and on a poll every person present or by proxy or
attorney has one vote for each ordinary share held."
VENDOR SHARES
There are no vendor securities on issue at the date of this report.
(b) Options
QUOTED OPTIONS UNQUOTED OPTIONS
NUMBER % HELD NUMBER % HELD
El-Raghy Kriewaldt Pty Ltd - - 37,820,028 75.64
Nordana Pty Ltd - - 7,051,192 14.10
Nordana Pty Ltd (Superannuation - - 5,128,140 10.25
Fund) -------- -------- -------- --------
- - 49,999,360 99.99%
-------- -------- -------- --------
Total number of Issued Options - - 49,999,744 -
-------- -------- -------- --------
VOTING RIGHTS
There are no voting rights attached to unissued ordinary shares. Voting rights
will be attached to the unissued ordinary shares when the options have been
exercised.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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