28th Mar 2008 16:11
Kefi Minerals plc28 March 2008 KEFI MINERALS PLC ("KEFI MINERALS" or the "COMPANY") PRELIMINARY RESULTS FOR THE FOURTEEN MONTHS ENDED 31 DECEMBER 2007 KEFI Minerals, the AIM quoted gold and copper exploration Company with projectsin Turkey, is pleased to announce preliminary results for fourteen months ended31 December 2007. HIGHLIGHTS • Since listing on AIM in December 2006, the Company's exploration portfolio has been expanded to seven projects in Turkey, comprising 26 exploration licences; • Strong exploration team and proprietary database enable the Company to rapidly identify and assess targets; • The Company has evaluated joint ventures and acquisitions of properties with known mineral resources; and • KEFI Minerals will also actively participate in the Government tender process so as to acquire further high quality tenure in due course. KEFI Minerals' Managing Director, Jeff Rayner, commented: "Since the admissionof our Company to AIM, there has been a great deal of activity. The primaryactivity for 2008 is to rapidly assess current projects, to advance them aswarranted by results and to identify the most prospective areas in Turkey forfurther evaluation. "We will continue to evaluate further opportunities and monitor the explorationlicence status of geologically prospective areas on an ongoing basis so thatKEFI Minerals can acquire further exploration opportunities as soon as theybecome available." EnquiriesKEFI Minerals plc WH Ireland Limited Bishopsgate CommunicationsJeffrey Rayner David Youngman Maxine Barnes Katy Mitchell Nick Rome+90 533 928 1913 + 44 161 832 2174 +44 20 7562 3350www.kefi-minerals.com CHAIRMAN'S STATEMENT I am pleased to present the inaugural annual report of KEFI Minerals Plc. Ouraim is to add value to our projects and create wealth for our stakeholdersthrough the cost-effective acquisition or discovery and subsequent developmentof mineral resources. KEFI Minerals will concentrate initially on exploring the prolific mineralsendowment of Turkey, which is widely recognised as being stable and foreigninvestment-friendly, and as having a long mining history, prospective geology,excellent infrastructure, and favourable mining, tax and investment laws. Turkey is considered to be very prospective for gold and base metals but is not,in our opinion, as intensively explored as many other countries. TheTethyan-Eurasian Metallogenic Belt extends for 1,500km across Turkey. Thisprovides, in our opinion, a great opportunity to make very valuable mineraldiscoveries in a well established mining country with a supportive government. Turkey has a long history of mining and is host to world-class gold and basemetal deposits that are being exploited commercially. Turkey recently revisedits mining law to encourage mineral exploration and mining. Within the lastdecade or so, numerous foreign mining companies, including Rio Tinto, TeckCominco, Newmont and Eldorado Gold, have become active in Turkey. Explorationlicences are granted for a maximum of five years and can potentially beconverted to operating licences for up to sixty years. Three major mines havebeen permitted in the last few years and there are more in the pipeline. The Directors and the Group's senior management have extensive experience inexploration, development, financing and operation of natural resources projectsin Australasia and many other countries. Your Company's approach is to combine international expertise with localexpertise in Turkey. This combines fresh exploration insights and methods withtalented Turkish prospectors. Exploration Strategy Your Company aims to grow rapidly through either grassroots discovery or byacquiring a project with a defined resource or mine. We welcome proposals fromowners of exploration properties in Turkey who are interested in either sellingor potentially partnering with KEFI Minerals. KEFI Minerals' exploration strategy is based on the following concepts: • Combining strong international and local knowledge in exploration models and techniques; • Selecting areas within prospective stratigraphic and structural settings with a high potential for base metal or gold mineralisation; • Exploring projects as a package rather than individual isolated prospects; • Rapidly identifying, prioritising and assessing targets; • Creating new contacts and further developing knowledge using an established local team; and • Utilising technical and commercial support from EMED Mining as required. The object of this strategy is to add value for shareholders by: • Advancing our projects to resource stage through drilling; • Targeting resources of >1 million ounces of gold or equivalent through exploration; and • Identifying and fostering high-quality joint venture opportunities, with both international and local partners, for early cash flow. KEFI Minerals owns an extensive exploration database which contains informationregarding approximately 100 further prospective sites in Turkey. Unlike mostcountries, Turkey does not have an open-file reporting system wherebyexploration data from previous work on an area can be made available to thecurrent titleholder. KEFI Minerals' database thus provides a competitiveadvantage in identifying prospective areas for project generation in Turkey. Monitoring of the exploration licence status of geologically prospective areaswill be carried out on an ongoing basis so that KEFI Minerals can acquirefurther exploration opportunities as soon as they become available. Major Shareholders KEFI Minerals Plc was formed on 24 October 2006 and shortly thereafter acquiredthe exploration assets of EMED Mining Public Limited in Turkey and Bulgaria.EMED Mining retains a 32% interest in KEFI Minerals and provides technical andadministrative systems and personnel on a cost-recovery basis, thus enablingKEFI Minerals to reduce overheads and spend more on exploration. The major shareholders in your company are EMED Mining (32%) and Starvest Plc(17%) with the KEFI Minerals' Directors and management owning 9%. Starvest is aUK-based company that provides early-stage finance to new businesses. EMED Mining is owned by a range of institutions and individuals, primarily fromAustralia, South Africa and the United Kingdom. Major shareholders include themajor copper-gold mining company Oxiana Limited and the world's fourth largestgold producing company Gold Fields Limited. Outlook KEFI Minerals is in a strong position in a prospective part of the world, andbelieves it has experienced management, a sound exploration strategy andsupportive shareholders. The capital base will be expanded in due course as warranted by the results ofexploration and prevailing financial market conditions. Our strategy includes building a shareholder base in Turkey as we believe thatTurkish people would like to share in the success of KEFI Minerals. On behalf of all shareholders, I wish to thank the members of our Board,management and staff for all of their dedicated efforts. As mineral explorationrequires a great deal of time away from home, I would also like to thank theirfamilies for their support and commitment. Their efforts during 2007 have placed your Company in a very good position tocreate significant value for shareholders. Harry Anagnostaras-Adams Chairman MANAGING DIRECTOR'S REPORT Since the Company's admission to trading on AIM in December 2006, there has beena great deal of activity. Our exploration portfolio has been expanded to sevenprojects in Turkey, comprised of 26 Exploration Licences. Our first drillingprogram intercepted gold-silver mineralisation in epithermal quartz veins workedextensively by ancient miners at the Derinin Tepe Project. Reconnaissancemapping led to our first grassroots discovery at the Artvin Project, YanikliProspect, which contains gold and base metals. The KEFI Minerals' team is targeting large epithermal gold or porphyrygold-copper systems analogous to several >1 million ounce deposits recentlydiscovered and developed in the central and western regions of Turkey. We have established what we believe is a strong exploration group led byExploration Manager Malcolm Stallman and General Manager Omer Celenk with ayoung and highly motivated team of Turkish nationals. We are very proud to havesecured such a high quality team and their contribution to our successfuldevelopment has been invaluable. The Company is operated and administered inTurkey, with all management and staff based either in Turkey or in Europe. KEFI Minerals also hires local personnel from communities near its projects tohelp with exploration field work. This practice also assists the Company inbuilding relationships with the local community. Our proprietary database and experienced exploration team enables us to filterand evaluate exploration properties that are offered to us as well as tenementsrelinquished by other explorers. KEFI Minerals also encourages Turkishprospectors and miners to contact us with enquiries and proposals, and aims torespond to them promptly and fairly. Our geologists evaluated over 100 exploration properties during 2007, visited 30of these properties in the field, then selected the five best opportunities topursue further as a high priority. In addition to grassroots explorationproperties, we have also evaluated joint ventures and acquisitions of propertieswith known mineral resources. Turkey is a very large and rugged country. Our approach ensures that ourexploration team spends as much time as practical on the ground in areas thatare prospective for large and highly profitable mines. Exploration Portfolio KEFI Minerals currently has seven exploration projects - Artvin, Derinin Tepe,Gumushane, Karalar, Muratdag, Yatik and Meyvali. The Company's two most advanced projects are Artvin in northeast Turkey andDerinin Tepe in western Turkey. Artvin is very prospective for both volcanic-hosted massive sulphide andporphyry copper style deposits. Mining has been carried out at Artvin for overone hundred years with evidence of numerous base metals workings in the area.KEFI Minerals has identified a number of coherent zones of polymetallicvein-style and disseminated mineralisation over a large area. Derinin Tepe is an epithermal gold deposit that was mined by the Romans using aprimitive method of cut and fill mining. After further evaluation during the first half of 2007, the decision was made torelinquish KEFI Minerals' Lehovo Project in Bulgaria as the Company has moreprospective projects to explore in Turkey. Monitoring of the exploration licence status of geologically prospective areasin Bulgaria will continue to be carried out on an ongoing basis so that KEFIMinerals can acquire attractive exploration opportunities as they becomeavailable. Finance KEFI Minerals commenced trading on AIM (Code "KEFI") on 18 December 2006following the successful placing of 46,666,667 shares at 3p to raise £1.4million. During 2007, two placements of ordinary shares raised a further£542,000 at prices higher than 3p per share. The exploration team is cognisant of ensuring that shareholders funds are spenteffectively. To mitigate against excessive financial risk on an aggregate basis,any of KEFI Minerals' projects can be terminated by the Company at itsdiscretion and without penalty. The Company's accounting policy is conservative. All expenditure is written offuntil the Board decides to commence development of a project, from which pointdevelopment costs would be capitalised. Outlook for 2008 The primary objective for 2008 is to rapidly assess the Company's currentprojects, to advance them as warranted by results and to identify the mostprospective areas in Turkey for further evaluation. We will continue to evaluate further opportunities and monitor the explorationlicence status of geologically prospective areas on an ongoing basis so thatKEFI Minerals can acquire further exploration opportunities as soon as theybecome available. I would like to thank our employees for their hard work and commitment and ourshareholders for the ongoing support. KEFI Minerals' first year has been one ofsubstantial achievement and we now have built a strong foundation on which tocontinue growing and adding value. We look forward to further growing ourportfolio and updating shareholders of our progress in due course. Jeffrey Rayner Managing Director REVIEW OF EXPLORATION ACTIVITIES Historical records and such legends as those of Croesus and Midas indicate thatmining for metals has been undertaken in Turkey for over 7,000 years. Copper,gold, iron, lead, mercury, silver, tin, and other metals have been mined duringthis time by Phoenicians, Greeks, Hittites, Romans, Ottomans, Russians andmodern-day Turkish people. Despite this long history of mining and the country'ssignificant mineral endowment, today's exploration methodologies have only beenapplied in the last two decades. Turkey lies at the eastern end of the Alpine orogenic belt, part of theAlpine-Himalayan orogenic system that extends from Europe to Asia, which hasbeen active from the Jurassic-Cretaceous to the present. The complex tectonicactivity, and the processes of subduction, collision, post-collision andrifting, that occurred during this orogeny gave rise to many different types ofmineral deposits. Most mineral deposits in Turkey are found in rocks of LateMesozoic to Tertiary age. Since the Company's admission to trading on AIM in December 2006, KEFI Mineralshas undertaken the following activities: • Application for, and granting of, seven additional Exploration Licences, thus strengthening its tenement position within Turkey. • Field inspection, mapping, and sampling of each tenement. • Stream sediment, soil and rock chip sampling of priority targets throughout the tenement package. • Diamond drilling at the Derinin Tepe Project. • Identification of the Yanikli and Uzumlu prospects within the Artvin Project. • Desktop assessment of over 100 potential joint venture opportunities and field inspection and sampling of over 30 of these opportunities. • Study of KEFI Minerals' proprietary exploration database leading to the identification of targets for further assessment. The Company's major exploration focus during its first year of explorationactivities has been its two highest priority project areas, Derinin Tepe, wherethe target is low sulphidation epithermal-style gold-silver mineralisation, andArtvin, which the Company considers has potential for porphyry-style copper-goldmineralisation. Exploration activities are well advanced on these properties with the initialdrilling campaign being completed at Derinin Tepe during July 2007. Fieldreconnaissance and geochemical sampling at Artvin led to the discovery of theYanikli Prospect in September 2007. On the Company's other properties, firstpass exploration has commenced and we expect to advance a number of these todrill target status during the coming year. Additionally, in line with the Company's principal objective of the discovery ofeconomically mineable mineral deposits and its major focus being the explorationfor gold and base metals deposits, KEFI Minerals has significantly expanded itsexploration portfolio in Turkey during the year. KEFI Minerals has acquiredseven new Exploration Licences through successfully bidding in Governmentlicence auctions and now has granted title covering 373km2 in area. Derinin Tepe Project (100%) - Western Anatolia The Derinin Tepe Project is currently the most advanced project in the KEFIMinerals portfolio. Through systematic exploration, comprising rock chipsampling, mapping, trenching and diamond drilling over the past year, thepotential for the discovery of economic gold-silver mineralisation has beensignificantly upgraded. Derinin Tepe comprises a single Exploration Licence of 1,231 hectares inBalikesir Province, western Turkey. The project is located in a region ofmultiple low-sulphidation epithermal gold-silver mineralisation occurrences. Itlies 125km northeast of Ovacik Gold Mine (1 million ounce gold deposit), 120kmsoutheast of Kucukdere Gold Mine (250,000 ounce gold deposit) and 20km northeastof the Kiziltepe Prospect (100,000 ounce gold deposit). KEFI Minerals is thefirst company to utilise modern exploration methods to explore at Derinin Tepe. The mineralisation at Derinin Tepe occurs within a Cretaceous ophioliticsequence and is hosted within a series of northwest-trending micro to coarsecrystalline quartz-vein structures with colloform-crustiform, cockscomb, comband carbonate replacement textures, locally containing manganese oxide,limonite, pyrite and malachite. The main vein (Western Vein) attains a truewidth of 8m and is >1km in strike length. Numerous ancient mine workings,possibly of Roman vintage, attain a maximum size of 200m along the vein and upto 5m width, have been excavated on the veins. Rock-chip sampling of the western quartz vein by KEFI Minerals personnelreturned up to 152g/t gold and 1,320g/t silver. Channel sampling of the westernquartz vein returned 6m at 3.3g/t gold, 2m at 9.6g/t gold and 1m at 7.2g/t gold. Trenching across the vein zones revealed large back-filled stopes fromhistorical mining. An initial diamond drilling program, targeting 50m verticallybelow the surface expressions of the veins, was completed in July 2007 withgold-silver mineralisation being intersected in six of the nine holes drilled. The first three drillholes (KDTD01-03) all intersected significant widths of 3to 4m of mineralised backfill associated with ancient workings at the expectedposition of the epithermal quartz veins at depth. It is interpreted that theancient miners backfilled the stopes to create greater stability for deeperunderground mining. Some of the backfill is comprised of lower grade wastematerial as was intersected in KDTD01 where a backfilled zone contains 3.1m at2.1g/t gold and 118g/t silver. The remaining drillholes all intersected epithermal quartz veins and associatedquartz-vein stockwork zones. Drillhole KDTD04 returned the best intercept of theprogram with 3.6m at 3.3g/t gold and 90g/t silver from 38m downhole and 1m at3.3 g/t gold and 327g/t silver. Other intercepts included 1.7m at 2.0g/t goldand 72g/t silver in KDTD05. Given that the ancient mining techniques required high gold grades in quartzveins for economic extraction, the significant lateral and vertical extent ofthe ancient workings attests to the potential of the epithermal quartz veins atDerinin Tepe to host shoots of high-grade gold mineralisation. A diamond drilling program is planned for 2008 that will test at greater depthsfor steep, north-plunging high-grade ore shoots below the old workings. Artvin Project (100%) - Northeast Pontides The Artvin Project comprises 15 Exploration Licences, which total 25,396hectares, in the Artvin Province, northeast Turkey. Exploration by KEFI Mineralspersonnel, comprising stream sediment sampling, rock chip sampling, soilsampling and mapping, over the past year returned encouraging geochemical assaysfrom the Uzumlu Prospect and discovered a new gold occurrence at the YanikliProspect. The project is located in a region with an extensive mining history. Earlymining activities for lead-zinc were carried out in the area by Turkish andRussian miners in the late 19th and early 20th centuries. In the 1990s, thearea was explored for copper by Placer Dome and BHP. However, their explorationwork was largely reconnaissance in nature. Rio Tinto also explored for copperand gold within the current project area in the 1990s. Currently, a Canadianjunior company is exploring the large Berta porphyry copper-gold prospect, whichis located adjacent to the southwest corner of the Artvin Project area. First pass exploration by KEFI Minerals in 2007 identified stream sedimentcopper anomalies (>100ppm copper) that focussed exploration to a 25km2 area, theUzumlu Prospect, with old workings, clay-pyrite alteration with base metalssulphide veining, and stratigraphically controlled silicification. Rock chipassays up to 0.5g/t gold, 104g/t silver and 1.4% copper have been returned fromthe old Uzumlu Copper Mine. Yanikli Prospect Reconnaissance mapping in September 2007, in an area 4km to the south of Uzumlu,resulted in a new gold discovery, called the Yanikli Prospect. Initial sampling of road-cut exposures returned 44m at 0.5g/t gold (including 1mat 8.2g/t gold), 45m at 1,202ppm lead and 36m at 1,840ppm zinc. Prospect-scale rock chip sampling and soil sampling has outlined a series ofgold-in-soil anomalies at >50ppb gold within a 1.7km x 1.5km area. Highlyanomalous gold and base metal results have been received with maximum soilvalues of 2.4g/t gold, 13.4g/t silver, 4,010ppm lead and 2,230ppm zinc, andmaximum rock chip values of 8.2g/t gold, 42.3g/t silver, 6,600ppm lead and4,790ppm zinc, have been returned. The Yanikli Prospect is located within a prominent northeast-trending structuralcorridor that also contains the large Berta copper-gold porphyry system,approximately 15km to the southwest. The vein-style and disseminated gold-basemetals mineralisation at Yanikli is hosted in altered felsic and mafic volcanictuffs. Vein-style and disseminated galena and sphalerite generally occursperipheral to the pyrite envelope of typical porphyry copper deposits. Thehighly anomalous lead and zinc +/- copper +/- gold mineralisation encountered atYanikli within structurally-controlled silica-clay alteration zones isindicative of the distal portions of a porphyry system. The Artvin Project area is located in mountainous terrain and is inaccessibleduring winter months due to snow cover. It is expected that exploration willrecommence in March-April 2008. Exploration in 2008 will consist of an IP geophysical survey to assist in targetdefinition for follow-up RC percussion drilling. Muratdag Project (100%) - Western Anatolia The Muratdag Project comprises two Exploration Licences, which total 1,466hectares, in the Usak Province, western Turkey. The tenements cover Mesozoiclimestone and ophiolite which have been intruded by Tertiary granite andoverlain by Tertiary sediments. Numerous old mercury mines and occurrences are found within the region. A soilgeochemistry survey undertaken by KEFI Minerals has defined a triangular shapedsoil anomaly up to 350m by 250m at >20ppb gold within this tenement. The sourceof the strong multi-element (gold, silver, arsenic, bismuth, mercury,molybdenum, antimony and base metals) anomalism is still enigmatic as much ofthe anomalism apparently overlies weakly recrystallised limestone with nosignificant alteration or veining. However, the geochemical associations suggestthe potential for skarn-style gold-base metals mineralisation and/orepithermal-Carlin style gold-silver mineralisation at depth. The tenements are strategically located, being adjacent to ground held by majorand junior companies who are undertaking active exploration programmes for gold,base metals and nickel. Meyvali Project (100%) - Western Anatolia The Meyvali Project comprises a single Exploration Licence of 700 hectares inBalikesir Province, western Turkey. The licence covers Palaeozoic schists.Reconnaissance prospecting identified gold anomalous gossanous shear zoneswithin schists and foliated porphyritic intrusives just outside the westernboundary of the tenement. However, detailed stream sediment sampling andfollow-up rock chip sampling returned disappointing results from within thetenement. The area was found to contain minor quartz veins and some weak gold and coppergeochemistry, however, the potential for gold and gold-copper mineralisedsystems of sufficient size and grade to be of interest to KEFI Minerals has beendowngraded. Therefore, the Meyvali Project will be divested or relinquished.This relinquishment is consistent with KEFI Mineral's objective to generate apipeline of high quality projects by rapidly assessing them, and whereapplicable, surrendering those that do not meet the Company's explorationcriteria. Project Generation KEFI Minerals is pursuing an on-going regional project generation andacquisition programme that is targeting >1 million ounce gold or gold-copperequivalent deposits. The principal deposit types being explored for arelow-sulphidation epithermal gold-silver, porphyry-style copper-gold, andCyprus-type copper, associated with Tertiary and Cretaceous arcs within theTethyan-Eurasian Metallogenic Belt that extends from the Balkans in the west toIran and Pakistan in the east. The Tethyan-Eurasian Metallogenic Belt hosts anumber of significant gold and base metals deposits and has a current mineralendowment of 89 million ounces of gold and 34 million tonnes of copper metal. KEFI Minerals owns an extensive exploration database that contains individualtarget assessments of 100 prospects in Turkey. It comprises 14 hard copyreports, 38 hard copy maps and a large volume of other data in digital format.KEFI Minerals' extensive, and expanding, exploration database provides theCompany with a competitive advantage to identify prospective areas for projectgeneration in Turkey. During the year, KEFI Minerals' personnel have assessed many strategicopportunities, mostly exploration properties available for joint venture. Whilstall projects submitted to us have been reviewed, our main focus has been onthose opportunities which may provide an early entry to production. Turkey iscurrently perceived as being a country with high exploration potential, andalong with the mining and exploration industries in general, is experiencing aperiod of sustained strong competitive demand for resources. 2008 WORK PROGRAMME KEFI Minerals' budget for 2008 is planned to enable the Company to continue theevaluation and testing of the potential of the areas currently within theexploration portfolio and to generate new targets for evaluation. At the Derinin Tepe Project, exploration activities will consist of second andthird phase diamond drill testing of deeper targets potentially leading toresource-definition drilling of high-grade epithermal ore shoots. At the Artvin Project, which has attracted interest from a number of potentialfarm-in partners, the Company will undertake IP geophysical surveying in orderto assist in the definition of porphyry-style copper-gold target for follow-upRC percussion drilling. In addition to undertaking generative studies and greenfields exploration, theCompany is also assessing opportunities with the aim of acquiring advancedprojects in Turkey. Mapping, channel chip sampling, soil sampling andgeophysical surveys will be carried out so as to advance at least 1-2 otherprojects to the drill testing stage. KEFI Minerals will also activelyparticipate in the Government tender process so as to acquire further highquality tenure. CONSOLIDATED INCOME STATEMENT Period from 24 October 2006 to 31 December 2007 24 Oct 2006- Notes 31 Dec 2007 GBP'000 Revenue -Exploration costs (797)Gross loss (797)Administrative expenses (488) - share-based benefits (167)Impairment charge - goodwill (364)Operating loss 4 (1,816)Finance income 7 132Finance costs 8 (3)Loss before tax (1,687)Tax 9 -Net loss for the period (1,687) Loss per share (pence) 10 0.02 BALANCE SHEETS as at 31 December 2007 The The Group as Company at 31/12 as at 31/12 2007 2007 Notes GBP'000 GBP'000ASSETSNon-current assetsProperty Plant and Equipment 11 47 -Goodwill 12 - -Fixed asset investments 13 - 2 47 2Current assetsTrade and other receivables 14 43 1,136Cash and cash equivalents 15 502 472 545 1,608Total assets 592 1,610 EQUITY AND LIABILITIESCapital and reservesShare capital 16 1,088 1,088Share premium 16 991 991Share options reserve 17 167 167Exchange difference reserve (86) -Accumulated losses (1,687) (738)Total equity 473 1,508Current liabilitiesTrade and other payables 18 119 102 119 102Total equity and liabilities 592 1,610 On 13 March 2008, the Board of Directors of KEFI Minerals plc authorized thesefinancial statements for issue. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Period from 24 October 2006 to 31 December 2007 Share Exchange Share Share options Accumulated Difference capital premium reserve losses reserve Total GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Net loss for the period - - - (1,687) - (1,687)Issue of share capital 1,088 1,396 - - - 2,484Share issue costs - (405) - - - (405)Recognition of share based - - 167 - - 167paymentsExchange difference ontranslation of - - - - (86) (86) subsidiaries 1,088 991 167 (1,687) (86) 473 The company has taken advantage of the exemption conferred by section 230 ofCompanies Act 1985 from presenting its own income statement. Loss after taxation amounting to £738,391 has been included in the financialstatements of the parent company. CONSOLIDATED CASH FLOW STATEMENT Period from 24 October 2006 to 31 December 2007 24 Oct 2006 - 31 Dec Notes 2007 GBP'000CASH FLOWS FROM OPERATING ACTIVITIESLoss before tax (1,687)Adjustments for:Depreciation of property, plant and equipment 11 13Share-based benefits 17 167Impairment charge - goodwill 364Interest income 7 (39)Exchange difference on translation of subsidiaries (86)Operating loss before working capital changes (1,268)Changes in working capital:Trade and other receivables (76)Trade and other payables 119Cash flows used in operations 43Net cash used in operating activities (1,225) CASH FLOWS FROM INVESTING ACTIVITIESPayments for purchase of property, plant and equipment 11 (64)Proceeds from disposal of property, plant and equipment 11 7Acquisition of subsidiaries 19 (334)Interest received 39Net cash used in investing activities (352) CASH FLOWS FROM FINANCING ACTIVITIESProceeds from issue of share capital 2,484Listing and issue costs (405)Net cash from financing activities 2,079 Net increase in cash and cash equivalents 502 Cash and cash equivalents:At beginning of the period 15 -At end of the period 15 502 COMPANY CASH FLOW STATEMENT Period from 24 October 2006 to 31 December 2007 24 Oct 2006 - Notes 31 Dec 2007 GBP'000CASH FLOWS FROM OPERATING ACTIVITIESLoss before tax (738)Adjustments for:Share-based benefits 17 167Interest income 7 (39)Operating loss before working capital changes (610)Changes in working capital:Trade and other receivables (1,136)Trade and other payables 102Cash flows used in operations (1,034)Net cash used in operating activities (1,644) CASH FLOWS FROM INVESTING ACTIVITIESAcquisition of subsidiaries 19 (2)Interest received 39Net cash from investing activities 37 CASH FLOWS FROM FINANCING ACTIVITIESProceeds from issue of share capital 2,484Listing and issue costs (405)Net cash from financing activities 2,079 Net increase in cash and cash equivalents 472 Cash and cash equivalents:At beginning of the period 15 -At end of the period 15 472 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Period from 24 October 2006 to 31 December 2007 1. Incorporation and principal activities Country of incorporation KEFI Minerals plc (the "Company") was incorporated in United Kingdom as a publiclimited company on 24 October 2006. Its registered office is at 27/28Eastcastle Street, London W1W 8DH. Principal activities The principal activities of the Group for the period are: • To explore for mineral deposits of precious and base metals andother minerals that appear capable of commercial exploitation, includingtopographical, geological, geochemical and geophysical studies and exploratorydrilling. • To evaluate mineral deposits determining the technical feasibilityand commercial viability of development, including the determination of thevolume and grade of the deposit, examination of extraction methods,infrastructure requirements and market and finance studies. • To develop, operate mineral deposits and market the metalsproduced. 2. Accounting policies The principal accounting policies adopted in the preparation of these financialstatements are set out below. These policies have been consistently appliedthroughout the period presented in these financial statements unless otherwisestated. Basis of preparation and consolidation The consolidated financial statements have been prepared in accordance withInternational Financial Reporting Standards (IFRSs) as adopted by the EuropeanUnion. They comprise the accounts of KEFI Minerals plc and all its subsidiariesmade up to 31st December 2007. Going concern The Directors have formed a judgment at the time of approving the financialstatements that there is a reasonable expectation that the company has adequateresources to continue in operational existence for the foreseeable future. The financial information has been prepared on the going concern basis, thevalidity of which depends principally on the discovery of economically viablemineral deposits and the availability of subsequent funding to extract theresource or alternatively the availability of funding to extend the Company'sexploration activities. The financial information does not include anyadjustments that would arise from a failure to complete either option. Functional and presentational currency Items included in the Group's financial statements are measured using thecurrency of the primary economic environment in which the entity operates (''thefunctional currency''). The financial statements are presented in British Pounds(GBP), which is the Group's functional and presentation currency. Foreign currency translation(1) Foreign currency translation Foreign currency transactions are translated into the measurement currency using the exchange rates prevailing at the date of the transactions. Gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.(2) Foreign operations On consolidation, the assets and liabilities of the consolidated entity's overseas operations are translated at exchange rates prevailing at the reporting date. Income and expense items are translated at the average exchange rates for the period unless exchange rates fluctuate significantly. Exchange differences arising, if any, are recognised in the foreign currency translation reserve, and recognised in profit or loss on disposal of the foreign operation. Revenue recognition Revenue consists of the amounts receivable from exploration tenements, technicaldata, precious and base metals sold. The Group had no sales/revenue during the period under review. Revenues earned by the Group are recognised on the following bases: Interest income Interest income is recognised on a time-proportion basis using the effectiveinterest method. Tangible fixed assets Tangible fixed assets are stated at their cost of acquisition at the date ofacquisition, being the fair value of the consideration provided plus incidentalcosts directly attributable to the acquisition less depreciation. Depreciation is calculated on the straight-line method to write off the cost ofeach asset to their residual values over their estimated useful life. The annualdepreciation rates used are as follows: Furniture, fixtures and office equipment 10%Motor Vehicles 20% Acquisitions and goodwill The acquisition of subsidiaries is accounted for using the purchase method. Thecost of the acquisition is measured at the aggregate of the fair values, at thedate of exchange, of assets given, liabilities incurred or assumed, and equityinstruments issued by the Group in exchange for control of the acquiree, plusany costs directly attributable to the business combination. The acquiree'sidentifiable assets, liabilities and contingent liabilities that meet theconditions for recognition under IFRS 3 are recognised at their fair values atthe acquisition date, except for non-current assets (or disposal groups) thatare classified as held for sale in accordance with IFRS 5 Non-Current AssetsHeld for Sale and Discontinued Operations, which are recognised and measured atfair value less costs to sell. Purchased goodwill is capitalized and classified as an asset on the balancesheet. Goodwill arising on acquisition is recognised as an asset and initiallymeasured at cost, being the excess of the cost of the business combination overthe Group's interest in the net fair value of the identifiable assets,liabilities and contingent liabilities recognised. Goodwill is reviewed for impairment on an annual basis. When the directorsconsider the initial value of the acquisition to be negligible, the goodwill iswritten off to the Income Statement immediately. Trading results of acquiredsubsidiary undertakings are included from the date of acquisition. Goodwill is deemed to be impaired when the present value of the future cashflows expected to be derived is lower than the carrying value. Any impairmentis charged to the Income Statement immediately. Finance costs Interest expense and other borrowing costs are charged to the income statementas incurred. Tax The tax payable is based on taxable profit for the period. Taxable profitdiffers from net profit as reported in the income statement because it excludesitems of income or expense that are taxable or deductible in other years and itfurther excludes items that are never taxable or deductible. Deferred tax is the tax expected to be payable or recoverable on differencesbetween the carrying amounts of assets and liabilities in the financialstatements and the corresponding tax bases used in the computation of taxableprofit and is accounted for using the balance sheet liability method. Deferredtax liabilities are generally recognized for all taxable differences anddeferred tax assets are recognized to the extent that taxable profits will beavailable against which deductible temporary differences can be utilized. Deferred tax assets and liabilities are offset when there is a legallyenforceable right to set off current tax assets against current tax liabilitiesand when the deferred taxes relate to the same fiscal authority. Investments Investments in subsidiary companies are stated at cost less provision forimpairment in value, which is recognised as an expense in the period in whichthe impairment is identified. Exploration costs The Group has adopted the provisions of IFRS 6 "Exploration for and Evaluationof Mineral Resources". The Group's stage of operations as at the period end andas at the date of approval of these financial statements have not yet met thecriteria for capitalisation of exploration costs. Share-based compensation benefits IFRS 2 "Share-based Payment" requires the recognition of equity-settled share-based payments at fair value at the date of grant and the recognition ofliabilities for cash-settled share-based payments at the current fair value ateach balance sheet date. The fair value is measured using the Black Scholes pricing model. The inputsused in the model are based on management's best estimate, for the effects ofnon-transferability, exercise restrictions and behavioural considerations. For 2007, the impact of share-based payments is a net charge to income of£166,894. At 31 December 2007, the equity reserve recognized for share basedpayments amounted to £166,894. Use and revision of accounting estimates The preparation of the financial report requires the making of estimations andassumptions that affect the recognised amounts of assets, liabilities, revenuesand expenses and the disclosure of contingent liabilities. The estimates andassociated assumptions are based on historical experience and various otherfactors that are believed to be reasonable under the circumstances, the resultsof which form the basis of making the judgments about carrying values of assetsand liabilities that are not readily apparent from other sources. Actualresults may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis.Revisions to accounting estimates are recognised in the period in which theestimate is revised if the revision affects only that period, or in the periodof the revision and future periods if the revision affects both current andfuture periods. Financial instruments Financial assets and financial liabilities are recognised on the Group's balancesheet when the Group becomes a party to the contractual provisions of theinstrument. Cash and cash equivalents For the purposes of the cash flow statement, cash and cash equivalents comprisecash at bank and in hand. Borrowings Borrowings are recorded initially at the proceeds received, net of transactioncosts incurred. Borrowings are subsequently stated at amortised cost. Anydifferences between the proceeds (net of transaction costs) and the redemptionvalue is recognised in the income statement over the period of the borrowingsusing the effective interest method. 3. Financial risk management Financial risk factors The Group is exposed to interest rate risk, liquidity risk, currency risk andcapital risk management arising from the financial instruments it holds. Therisk management policies employed by the Group to manage these risks arediscussed below: Interest rate risk Interest rate risk is the risk that the value of financial instruments willfluctuate due to changes in market interest rates. The Group's income andoperating cash flows are substantially independent of changes in market interestrates as the Group has no significant interest-bearing assets. The Group isexposed to interest rate risk in relation to its non-current borrowings.Borrowings issued at variable rates expose the Group to cash flow interest raterisk. Borrowings issued at fixed rates expose the Group to fair value interestrate risk. The Group's management monitors the interest rate fluctuations on acontinuous basis and acts accordingly. At the reporting date the interest rate profile of interest-bearing financialinstruments was: 2007Variable rate instruments GBP'000Financial assets 502 Sensitivity analysis An increase of 100 basis points in interest rates at 31 December 2007 would haveincreased (decreased) equity and profit or loss by the amounts shown below. Thisanalysis assumes that all other variables, in particular foreign currency rates,remain constant. For a decrease of 100 basis points there would be an equal andopposite impact on the profit and other equity. Profit or Equity Loss 2007 2007Variable rate instruments GBP'000 GBP'000Financial assets 8 8 Liquidity risk Liquidity risk is the risk that arises when the maturity of assets andliabilities does not match. An unmatched position potentially enhancesprofitability, but can also increase the risk of losses. The Group hasprocedures with the object of minimising such losses such as maintainingsufficient cash and other highly liquid current assets and by having availablean adequate amount of committed credit facilities. The following tables detail the Group's remaining contractual maturity for itsfinancial liabilities. The tables have been drawn up based on the undiscountedcash flows of financial liabilities based on the earliest date on which theGroup can be required to pay. The table includes both interest and principalcash flows. 31 December 2007 Carrying Contractual 3 months or 3 - 12 1 - 2 2 - 5 More than 5 amounts cash flows less months years years years GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000Trade and other payables 53 53 53 - - - - 53 53 53 - - - - Currency risk Currency risk is the risk that the value of financial instruments will fluctuatedue to changes in foreign exchange rates. Currency risk arises when futurecommercial transactions and recognised assets and liabilities are denominated ina currency that is not the Group's measurement currency. The Group is exposed toforeign exchange risk arising from various currency exposures primarily withrespect to the Euro, Bulgarian Lev and Turkish Lira. The Group's managementmonitors the exchange rate fluctuations on a continuous basis and actsaccordingly. The carrying amounts of the Group's foreign currency denominated monetary assetsand monetary liabilities at the reporting date are as follows: Liabilities Assets 2007 2007 GBP'000 GBP'000Euro - 3United States Dollar - 5New Turkish Lira - 11 Sensitivity analysis A 10% strengthening of the British Pound against the following currencies at 31December 2007 would have increased/(decreased) equity and profit or loss by theamounts shown below. This analysis assumes that all other variables, inparticular interest rates, remain constant. For a 10% weakening of the BritishPound against the relevant currency, there would be an equal and opposite impacton the profit and other equity. Profit or Equity Loss 2007 2007 GBP'000 GBP'000Euro - -United States Dollar - -New Turkish Lira (1) 1 Capital risk management The Group manages its capital to ensure that it will be able to continue as agoing concern while maximizing the return to shareholders through theoptimization of the debt and equity balance. The capital structure of the Group consists of cash and cash equivalents (note15) and equity attributable to equity holders of the parent, comprising issuedcapital (note 16), reserves (notes 16 and 17) and accumulated losses. Fair value estimation The fair values of the Group's financial assets and liabilities approximatetheir carrying amounts at the balance sheet date. 4. Operating loss 2007 GBP'000Operating loss is stated after charging the following items:Depreciation of property, plant and equipment (Note 11) 13Share-based employee benefits (including directors) 167Directors' remuneration 158Auditors' remuneration - audit 24 - interim review 3 - listing fees 26 - subsidiary audit fees 2 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Period from 24 October 2006 to 31 December 2007 5. Staff costs 2007 GBP'000Salaries 74Social insurance costs and other funds 12 86 6. Business and geographical segments Business segments The Group has only one distinct business segment, being that of mineralexploration. Geographical segments The Group's exploration activities are located in Turkey and Bulgaria and itsadministration and management is based in Cyprus. Cyprus Turkey Bulgaria Consolidation Total GBP'000 GBP'000 GBP'000 GBP'000 GBP'0002007Operating loss (775) (676) (1) (364) (1,816)Financial income 39 83 10 - 132Financial costs (2) (1) - - (3)Net loss for the period (738) (594) 9 (364) 1,687 Total assets 1,610 118 6 (1,142) 592Total liabilities 102 996 160 (1,139) 119Depreciation of fixed assets - 13 - - 13 7. Finance income 2007 GBP'000Interest income 39Net foreign exchange transaction gains 93 132 8. Finance costsSundry finance costs 3 9. Tax GBP'000Loss before tax (1,687) Tax calculated at the applicable tax rates (225)Tax effect of expenses not deductible for tax purposes 59Tax effect of tax loss for the year 66Tax effect of allowances and income not subject to tax (3)Tax effect of tax losses brought forward (7)Tax effect on exploration expenses taxed separately 110Charge for the year 0 The Directors believe that the company is resident in Cyprus for tax purposes. A deferred tax asset of GBP255,737 has not been accounted for due to theuncertainty over the timing of future recoverability. Cyprus The corporation tax rate is 10%. Under certain conditions interest may besubject to defence contribution at the rate of 10%. In such cases 50% of thesame interest will be exempt from corporation tax, thus having an effective taxrate burden of approximately 15%. In certain cases, dividends received fromabroad may be subject to defence contribution at the rate of 15%. Due to tax losses sustained in the period, no tax liability arises on theCompany. Under current legislation, tax losses may be carried forward and be setoff against taxable income of the following years. As at 31 December 2007, thebalance of tax losses which is available for offset against future taxableprofits amounts to GBP661,799. Bulgaria Mediterranean Minerals (Bulgaria) EOOD, the 100% subsidiary of the Company, isresident in Bulgaria for tax purposes. The corporation tax rate is 10%. Due to tax losses sustained in the period, notax liability arises on the Mediterranean Minerals (Bulgaria) EOOD. Undercurrent legislation, tax losses may be carried forward and be set off againsttaxable income of the following five years. As at 31 December 2007, the balanceof tax losses which is available for offset against future taxable profitsamounts to GBP164,694. Turkey Dogu Akdeniz Mineralleri Sanayi ve Ticaret Limited Sirket (Dogu AkdenizMineralleri), the 100% subsidiary of Mediterranean Minerals (Bulgaria) EOOD, andultimately 100% subsidiary of the Company, is resident in Turkey for taxpurposes. The corporation tax rate is 20%. Under local tax legislation, exploration costscan only be set off against income from mining operations. As at 31 December2007, the balance of exploration costs that will be taxed separately againstfuture income from mining operations amount to GBP865,440. 10. Loss per share The calculation of the basic and diluted earnings per share attributable to theordinary equity holders of the parent is based on the following data: 2007 GBP'000Net loss attributable to equity shareholders 1,687 '000Average number of ordinary shares for the purposes of basic earnings per share 102,392 Earnings per share: GBPBasic and fully diluted losses per share (pence) 0.02 The effect of share options on earnings per share is anti-dilutive; no separatedisclosure is required. 11. Property Plant and Equipment Furniture, fixtures and Motor office2007 vehicles equipment Total The Group GBP'000 GBP'000 GBP'000CostAdditions 47 17 64Disposals (7) - (7)At 31 December 2007 40 17 57Accumulated DepreciationCharge for the period 11 2 13On disposal (3) - (3)At 31 December 2007 8 2 10Net Book Value at 31 December 2007 32 15 47 The above fixed assets are located in Turkey. The Company has no fixed assets. 12. Intangible assets - goodwill 2007 Goodwill TotalCost GBP'000 GBP'000Additions 364 364At 31 December 2007 364 364Provision for impairmentProvision for the period (364) (364)At 31 December 2007 (364) (364)Closing Net Book Value at 31 December 2007 - - The impairment provision has been made based on the directors' assessment of thecurrent state of the group's development. 13. Investment in subsidiaries 2007The Company GBP'000Cost and Net Book ValueAdditions (note 19) 2At 31 December 2007 2 Date of Effective acquisition/ Country of proportion of incorporation incorporation shares heldSubsidiary companiesMediterranean Minerals (Bulgaria) EOOD 8/11/2006 Bulgaria 100%-DirectDogu Akdeniz Mineralleri Sanayi ve Ticaret Limited Sirket 8/11/2006 Turkey 100%-Indirect On 8 November 2006, the Company entered into an agreement to acquire from EMEDMining Public Limited (formerly Eastern Mediterranean Resources Public Limited)the whole of the issued share capital of Mediterranean Minerals (Bulgaria) EOOD,a company incorporated in Bulgaria, in consideration for the issue of 29,999,998ordinary shares in the Company. Mediterranean Minerals (Bulgaria) EOOD owns 100% of the share capital of DoguAkdeniz Mineralleri, a private limited liability company incorporated in Turkey,engaging in activities for exploration and developing of natural resources. Significant aggregate amounts in respect of subsidiaries: GBP'000Net liabilities 1 January 2006 (153)Net loss for the year (305)Net liabilities at 31 December 2006 (458)Loss for the year (574)Net liabilities at 31 December 2007 (1,032) Pre-acquisition reserves, mainly, exploration costs incurred by the subsidiariesprior to acquisition amounted to GBP364,000. The movement in the net assets of subsidiaries is based on their auditedfinancial statements which have been prepared on the basis of InternationalFinancial Reporting Standards (IFRSs) as adopted by the European Union and theIFRSs as issued by IASB. 14. Trade and other receivables 2007The Group GBP'000Other receivables 39Deposits and prepayments 4 43 The CompanyOwed by group companies 1,136 Amounts owed by group companies will not be repaid until the resources of thosecompanies permit. 15. Cash and cash equivalents 2007The Group GBP'000Cash at bank and in hand 502The CompanyCash at bank and in hand 472 16. Share capital Share Share Number of Capital premium Total shares '000 GBP'000 GBP'000 GBP'000 AuthorisedOrdinary shares of GBP0.01 each 200,000 2,000 - 2,000 Issued and fully paidSeed round 42,000 420 36 456IPO round 46,667 467 933 1,400Issued 19 February 2007 at GBP0.03 11,667 117 233 350 12 March 2007 at GBP0.03 250 2 5 7 4 June 2007 at GBP0.035 1,000 10 25 35 4 June 2007 at GBP0.035 1,250 12 32 44 3 October 2007 at GBP0.032 6,000 60 132 192Share issue costs - - (405) (405)At 31 December 2007 108,834 1,088 991 2,079 Authorised capital Under its Memorandum the Company fixed its share capital at 200,000,000 ordinaryshares of nominal value of GBP 0.01 each. Issued capital During the Seed Round the Company issued 42,000,000 shares. On admission of the Company to AIM in December 2006, 46,666,667 shares wereissued at the price of GBP 0.03. Upon the issue an amount of GBP 933,333 wascredited to the Company's share premium reserve. On 19 February 2007 11,666,667 shares of GBP 0.01 were issued at a price of GBP0.03. Upon the issue an amount of GBP 233,333 was credited to the company'sshare premium reserve. On 12 March 2007 250,000 shares of GBP 0.01 were issued to Mr. Omer Celenk atthe price of GBP 0.03. Upon the issue an amount of GBP5,000 was credited to theCompany's share premium reserve. On 4 June 2007 1,000,000 shares of GBP 0.01 were issued to Malcolm Stallman atthe price of GBP 0.035. Upon the issue an amount of GBP25,000 was credited tothe Company's share premium reserve. On 4 June 2007 1,250,000 shares of GBP 0.01 were issued for Muratdag Licence inTurkey at the price of GBP 0.035. Upon the issue an amount of GBP31,250 wascredited to the Company's share premium reserve. On 3 October 2007 6,000,000 shares of GBP 0.01 were issued at a price of GBP0.032. Upon the issue an amount of GBP 132,000 was credited to the company'sshare premium reserve. 17. Share option plan Details of share options outstanding as at 31 December 2007: Number of Grant date Expiry date Exercise price shares GBP '00018 December 2006 18 December 2012 0.030 16,00012 March 2007 11 March 2013 0.035 25018 April 2007 17 April 2013 0.035 1,20004 June 2007 03 June 2013 0.035 50008 October 2007 07 October 2010 0.040 300Total 18,250 The options expire six years after grant date and are exercisable at theexercise price in whole or in part no more than one third after one year fromthe grant date, two thirds after two years from the grant date and the balanceafter three years from the grant date. Number of shares '000 - granted 18,250 - cancelled/forfeited - - exercised - 18,250 The Company has issued share options to directors, employees and advisers to theGroup. All options, except those noted below, expire six years after grant dateand are exercisable at the exercise price in whole or in part no more than onethird from the grant date, two thirds after two years from the grant date andthe balance after three years from the grant date. On 8 October 2007, 19,531 options were issued to W.H. Ireland Limited whichexpire three years after the grant date, and are exercisable at any time withinthat period. On 8 October 2007, 280,469 options were issued to Loeb Aaron & Company Limitedwhich expire three years after the grant date, and are exercisable at any timewithin that period. The option agreements contain provisions adjusting the exercise price in certaincircumstances including the allotment of fully paid Ordinary Shares by way of acapitalisation of the Company's reserves, a sub division or consolidation of theOrdinary Shares, a reduction of share capital and offers or invitations (whetherby way of rights issue or otherwise) to the holders of Ordinary Shares. The estimated fair values of the options were calculated using the Black Scholesoption pricing model. The inputs into the model and the results are as follows: 8 Oct. 4 June 18 April 12 March 18 Dec. 2007 2007 2007 2007 2006 Closing share price at issue date 3.00p 3.62p 3.88p 3.30p 3.88pWeighted average exercise price 4.00p 3.50p 3.50p 3.50p 3.00pExpected volatility 85.58% 68.06% 68.06% 68.06% 50%Expected life 3 yrs 6 yrs 6yrs 6yrs 6yrsRisk free rate 4.75% 6.08% 5.95% 5.73% 5.97%Expected dividend yield Nil Nil Nil Nil NilDiscount factor 30% 30% 30% 30% 30%Estimated fair value 1.06p 1.71p 1.85p 1.50p 1.427p Expected volatility was estimated based on the likely range of volatility of theshare price. 18. Trade and other payables 2007The Group GBP'000Trade payables 53Accruals 9Payable to related companies (Note 20) 57 119 The CompanyTrade payables 45Payable to related companies (Note 20) 57 102 19. Acquisition of subsidiaries On 8 November 2006, the Company entered into an agreement to acquire from EMEDMining Public Limited (formerly Easter Mediterranean Resources Public Ltd) thewhole of the issued share capital of Mediterranean Minerals (Bulgaria) EOOD, acompany incorporated in Bulgaria, in consideration for the issue of 29,999,998ordinary shares in the Company. This issue of shares was also partly insatisfaction of indebtedness due to EMED Mining Public Ltd. The consolidated net assets of Bulgaria and Turkey at the date of acquisitionand at 31 December 2005 were as follows: 8 November 31 December 2006 2005 GBP'000 GBP'000Cost of investment 2Less: Fair values of net liabilities acquired 362Goodwill 364 The net liabilities acquired were as follows:Cash at bank and in hand 6 12Payable to EMED Mining Public Ltd (334) (167)Payable to KEFI Minerals plc (34) - (362) 155 Consideration - shares issued at premium 336Cash and cash equivalents acquired (6)Net consideration in shares on acquisition 330 20. Related party transactions The following transactions were carried out with related parties: 20.1 Compensation of key management personnel The total remuneration of the Directors and other key management personnel wasas follows: 2007 GBP'000Directors' fees 158Share-based benefits to directors 114Other key management personnel fees 163Share-based benefits to other key management personnel 19 454 The Company has an ongoing service agreement with EMED Mining Public Ltd forprovision of management and other professional services (Note 22). Share-based benefits The directors and key management personnel have been granted ordinary shareoptions that expire six years after grant date and are exercisable at theexercise price in whole or in part no more than one third after one year fromthe grant date, two thirds after two years from the grant date and the balanceafter three years from the grant date. No options have been exercised during theperiod from grant date to 31 December 2007. 20.2 Payable to related parties 2007Name Nature of transactions GBP'000EMED Mining Public Ltd Finance 57 20.3 Transactions with related parties 2007Name Nature of transactions GBP'000EMED Mining Public Ltd Provision of management services and other professional services 50 20.4 Purchases geological survey data 2007 GBP'000Data acquisition 13 In June 2007, the Company issued the first tranche of shares in settlement ofits obligations under the terms of the agreement disclosed in Note 21. Theamount disclosed above, represents the share of a director. The transaction wasmade on commercial terms and conditions. 21. Contingent liabilities During the six months ended 30 June 2006, EMED Mining Public Ltd acquired aproprietary geological database that covers extensive parts of Turkey andGreece. The cost of obtaining the database was shared equally by the Company andEastern Mediterranean Resources A.E. (Greece) a wholly owned subsidiary of EMED. Under the terms of the original agreement, an additional contingentconsideration of GBP216,000 was to be settled by the issuance of 1,728,984ordinary shares in EMED at 12.5p each if EMED secured at least four tenements inTurkey or Greece identified from the database. Under the revised agreement of 22 November 2006, EMED transferred to the Companythat part of the geological database that relates to areas in Turkey.Consequently, EMED has been discharged from the original contingentconsideration in respect of Turkey. Under the agreement, the Company has undertaken to make a payment ofapproximately GBP46,000 (AUD105,000) for each tenement it is subsequentlyawarded in Turkey and which was identified from the database. The maximum numberof such payments required under the agreement is four, resulting in a contingentliability of up to GBP184,000. These payments are to be settled by issuingshares in the Company. The first tranche of shares was issued under thisagreement in June 2007 for GBP43,750, the equivalent of AUD105,000 (Note 16). 22. Relationship deed A Relationship Deed between EMED and the Company dated 7 November 2006, by whichEMED agrees not to operate in Bulgaria and Turkey, and the Company agrees not tooperate in Albania, Armenia, Azerbaijan, Cyprus, Greece, Hungary, Iran, Oman,Romania, Saudi Arabia, Serbia or Slovakia the "EMED Area". The Relationship Deedprovides that EMED has the right to appoint one non-executive director of theCompany. It also provides EMED with a right of first refusal in respect offunding any proposed mining or exploration project of the Company. TheRelationship Deed provides that the Company shall refer any opportunity toconduct mining or exploration activity in the EMED Area to EMED, and EMED shallrefer any such opportunity in Bulgaria or Turkey to the Company. 23. Capital commitments The Group has no capital or other commitments as at 31 December 2007. 24. Subsequent events There were no material subsequent events, which have a bearing on theunderstanding of the financial statements. 25. Standards effective but not in force The following standards and interpretations are in issue, but not in force at 31December 2007: New Standards and Interpretations IFRS 8 Operating Segments IFRIC 11 Group and Treasury Share Transactions IFRIC 12 Service Concession Arrangements IFRIC 13 Customer Loyalty Programmes IFRIC 14 The Limit on a Defined Benefit Asset, Minimum Funding Requirements andtheir Interaction Revisions to existing standards IAS 1 Presentation of Financial Statements IAS 23 Borrowing costs The directors do not expect the new standards and interpretations, or therevisions to existing standards, to have any impact on the primary statements.However: IAS 1 The revisions to this standard will require additionaldisclosures both qualitative and quantitative, concerning the income statementand the restriction of the statement of changes in equity to capital items. Therevisions to this standard are effective for accounting periods beginning on orafter 1 January 2009. IAS 23 The revisions to this standard will require capitalisation ofborrowing costs incurred on qualifying assets together with transitionalprovisions for companies who have previously written off such costs. Therevisions to this standard are effective for accounting periods beginning on orafter 1 January 2009. 26. Statutory Information The financial information set out above does not constitute the Company'sstatutory accounts for the period ended 31 December 2007, but is derived fromthose accounts. Statutory accounts for 2007 will be delivered to the Registrarof Companies following the Company's Annual General Meeting. The auditors havereported on those accounts and their report was not qualified. Copies of thestatutory accounts will be posted to shareholders shortly. 27. It is expected that the annual report will be dispatched to shareholders on31 March 2008. At that time a copy of the annual report and accounts will alsobe available from the Company's website: www.kefi-minerals.com 28. The Company intends to hold its AGM at 2.30pm on 23 April 2008 at theoffices of Field Fisher Waterhouse LLP at 35 Vine Street, London EC3N 2AA. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Kefi Gold & Copper