26th Mar 2007 07:00
Kefi Minerals plc26 March 2007 AIM: KEFI 26 March 2007 KEFI Minerals Plc ("KEFI Minerals" or "the Company") Interim Results for the period ended 31 December 2006 KEFI Minerals, the gold and copper exploration company with projects in Turkeyand Bulgaria, is pleased to announce interim results for the period ended 31December 2006. HIGHLIGHTS •KEFI Minerals now has four projects in Turkey (following the addition of Derenin Tepe and Karalar in February 2007), while it also has one project in Bulgaria; •The Company owns an extensive exploration database which contains information regarding approximately 100 further prospective sites in Turkey; and •Since admission to AIM in December 2006, the Company has established field offices in Turkey and exploration has begun. KEFI Minerals' Managing Director, Jeff Rayner, commented: "The primary objectivefor 2007 is to rapidly assess the Company's current projects and to identify themost prospective areas in Turkey and Bulgaria for further evaluation. "We will continue to monitor the exploration licence status of geologicallyprospective areas on an ongoing basis so that KEFI Minerals can acquire furtherexploration opportunities as soon as they become available. We look forward tofurther growing our portfolio and updating shareholders in due course." EnquiriesKEFI Minerals WH Ireland Bishopsgate CommunicationsJeffrey Rayner Laurie Beevers Maxine Barnes Katy Mitchell Nick Rome+905 36963 0111 +44 161 832 2174 +44 20 7562 3350www.kefi-minerals.com CHAIRMAN'S STATEMENT I am pleased to present our first set of interim results for the period ended 31December 2006. KEFI Minerals Plc was formed on 24 October 2006 and commencedtrading on AIM (Code "KEFI") on 18 December 2006 following the successfulplacing of 46,666,667 shares at 3p to raise £1.4 million. The Company has since made good progress, developing its portfolio and raisingfurther funds which will be used by KEFI Minerals to continue to expand andprogress its gold and copper exploration assets in Turkey and Bulgaria in 2007. Finance The Company acquired the interests of EMED Mining Public Limited's ("EMEDMining") in Turkey and Bulgaria. EMED Mining retains a 34% interest in KEFIMinerals and has agreed to provide technical and administrative systems andpersonnel on a cost-recovery basis. Since the end of the financial period, we are delighted to have raised a further£350,000 by way of a placement in February 2007 of 11,666,667 ordinary shares at3p. In addition, trade debtors and trade creditors as at 31 December,principally associated with the admission to AIM on 18 December 2006, have beensettled. 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 capitalized. Exploration Strategy KEFI Minerals' exploration assets comprise exploration licences in Turkey andBulgaria and the ownership of a database containing information about furtherprospective sites in Turkey. The growth strategy will focus on continuing todevelop portfolios in those areas as the Company utilizes its explorationdatabase and strong domestic relationships. In Turkey, KEFI Minerals now has four projects (following the addition ofDerenin Tepe and Karalar in February 2007), while it also has one project inBulgaria. Both Turkey and Bulgaria are well established mining countries withsupportive governments. Moving forward we hope to continue to take advantage of recent changes to theTurkish Mining Law and the progressive development attitude of the TurkishGovernment, which have generated a current positive environment for explorationand mining activities. Recent progress on structural reforms in Bulgaria has led to an improvedbusiness environment since 2000 and an increase in foreign investment. It joinedthe European Union in January 2007. Our exploration strategy for operating in Turkey and Bulgaria is based on thefollowing concepts: •selecting areas within prospective stratigraphic and structural settings with a high potential for base metal or gold mineralisation; •acquisition of exploration licences are inexpensive to acquire and explore; •exploring projects as a package rather than individual isolated prospects; •rapidly identifying, prioritising and assessing targets; •rapidly progressing targets for further work or relinquish the licences; •utilising existing contacts and knowledge developed by EMED Mining; •creating new contacts and further developing knowledge using an established local team; and •utilising technical, commercial and political support from EMED Mining as required. KEFI Minerals owns an extensive exploration database which contains informationregarding approximately 100 further prospective sites in Turkey. This databaseprovides a competitive advantage in identifying prospective areas for projectgeneration 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. Exploration To Date Since admission to AIM in December 2006, the Company has established fieldoffices in Turkey and exploration has begun. KEFI Minerals now has fourexploration projects, having already added two new areas since admission to AIM: • At Artvin, areas of extensive hydrothermal alteration have been recognised in the project area, and there is evidence of historical workings indicating potential for economic mineralisation. • At Gumushane, areas of extensive hydrothermal alteration have been recognised in the project area, as well as coincident areas of interest identified through interpretation of Aster data. • At Derenin Tepe (granted February 2007) in the Western Anatolia Region, epithermal quartz veins have been identified with gold and silver mineralisation. This licence covers an area of 12 sq km and hosts a series of parallel quartz veins that trend northwest and extend for at least one kilometre. • At Karalar (granted February 2007) in Central Anatolia, highly anomalous gold in stream sediments, draining from an area of granite intrusion and in an area of historic base metal mines. In southern Bulgaria, reconnaissance work in the Lehovo Project area hasidentified a structural corridor with a strike length of approximately eightkilometres with the potential for gold and base metal mineralisation. KEFI Minerals is targeting large epithermal gold or porphyry gold-copper systemsanalogous to several +1 million ounce deposits recently discovered and developedin the Western Anatolia Region of Turkey. Outlook for 2007 The Company has established itself quickly. Since Admission to AIM it has openeda field office in Turkey, started field work and added two new explorationlicences to its portfolio. The primary objective for 2007 is to rapidly assess the Company's currentprojects and to identify the most prospective areas in Turkey and Bulgaria forfurther evaluation. We will continue to monitor the exploration licence statusof geologically prospective areas on an ongoing basis so that KEFI Minerals canacquire further exploration opportunities as soon as they become available. Welook forward to further growing our portfolio and updating shareholders in duecourse. Harry Anagnostaras-AdamsChairman References in this report to exploration results and potential have beenapproved for release by Mr Jeff Rayner, B.Sc. (Honours). Mr Rayner is ageologist and has more than 20 years' relevant experience in the field ofactivity concerned. He is a member of The Australian Institute of Mining andMetallurgy (AUSIMM) and has consented to the inclusion of the material in theform and context in which it appears. KEFI MINERALS PLC BOARD OF DIRECTORS AND OTHER OFFICERS Board of Aristidis Eleftherios Anagnastoras-Adams Non executive -Directors: Chairman Jeffrey Guy Rayner Managing Director Ian Rutherford Plimer Non executive Director John Edward Leach Finance Director Company Secretary: Cargil Management Services Limited 22 Melton Street London NW1 2WB Registered Office: 27/28 Eastcastle Street London W1W 8DH Auditors: Moore Stephens Stylianou & Co Iris Tower, Office 602 58 Arch. Makarios III Avenue P. O. Box 24656 2132 Nicosia, Cyprus KEFI MINERALS PLC REPORT OF THE BOARD OF DIRECTORS The Board of Directors presents its report together with the condensed interimconsolidated financial statements of KEFI Minerals plc (the "Company") and itssubsidiaries (the "Group") for the period from 24 October 2006 to 31 December2006. Principal activities The principal activities of the Group for the period are: • To explore for mineral deposits of precious and base metals and other minerals that appear capable of commercial exploitation, including topographical, geological, geochemical and geophysical studies and exploratory drilling. • To evaluate mineral deposits determining the technical feasibility and commercial viability of development, including the determination of the volume and grade of the deposit, examination of extraction methods, infrastructure requirements and market and finance studies. • To develop, operate mineral deposits and market the metals produced. Results The Group's results for the year are set out on page 7. The Group's future operational success depends, mainly, on the followingfactors: • The discovery of economically viable mineral deposits and the availability of subsequent funding to extract the resources. • The availability of subsequent funding to extend the Company's exploration activities. Share capital There were no changes in the share capital of the Company. Future developments The strategic objectives for 2007 are to select the best target areas in Turkeyand Bulgaria for further exploration and drill as soon as targets aresufficiency defined. Subsequent events No events have arisen since the end of the financial period that havesignificantly affected the operations of the Group, other than the settlement oftrade debtors and trade creditors principally associated with the admission toAIM on 18 December 2006. Board of Directors The Directors of the Company as at 31 December 2006 and at the date of thisreport are shown on page 5. The Directors were members of the Board throughoutthe period from 24 October 2006 to 31 December 2006. There were no significant changes in the responsibilities and remuneration ofthe Directors. By order of the Board, Nicosia, 21 March 2007 KEFI MINERALS PLC CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE PERIOD FROM 24 OCTOBER 2006 TO 31 DECEMBER 2006 Note 24.10.06- ------ ----------- 31.12.06 ---------- GBP'000Exploration costs (122)Share-based benefits (79) ________(Loss) before tax 4 (201) Taxation - ________(Loss) after tax (201) ======= KEFI MINERALS PLC CONDENSED BALANCE SHEET 31 DECEMBER 2006 Notes The Group The Company ------- ----------- ------------- 2006 2006 ------ ------ GBP'000 GBP'000ASSETSNon current assetsGoodwill 13 366 -Investment in subsidiaries 7 - 2 ________ ________ 366 2 ________ ________Current assetsTrade and other receivables 8 1,420 1,892Bank and cash balances 11 128 122 ________ ________ 1,548 2,014 ________ ________Total assets 1,914 2,016 ======= =======EQUITY AND LIABILITIESCapital and reservesShare capital 9 887 887Other reserves 459 561 ________ ________ 1,346 1,448 ________ ________Current liabilitiesTrade and other payables 10 568 568 ________ ________Total liabilities 568 568 ________ ________Total equity and liabilities 1,914 2,016 ======= ======= On 21 March 2007, the Board of Directors of KEFI Minerals plc authorised thesefinancial statements for issue. KEFI MINERALS PLC CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD FROM 24 OCTOBER 2006 TO 31 DECEMBER 2006 Share Share Accumulated Share Exchange Total capital premium losses Options Difference Reserve Reserve GBP'000 GBP'000 GBP'000 GBP'000 GBP'000Issue of share capital 887 969 - - 1,856Share issue costs - (383) - - (383)Loss for the period - - (201) - (201)Exchange difference on translationof subsidiaries - - - (5) (5)Recognition of share-based payments 79 79 ________ _______ _______ _______ ________ _______Balance at31 December 2006 887 586 (201) 79 (5) 1,346 ======= ====== ====== ====== ======= ====== KEFI MINERALS PLC CONDENSED CONSOLIDATED CASH FLOW STATEMENT FOR THE PERIOD FROM 24 OCTOBER 2006 TO 31 DECEMBER 2006 Notes 24.10.06- ------- ----------- 31.12.06 ---------- GBP'000Cash flows from operating activities(Loss) for the period (201)Share-based benefits 79Exchange difference on translation of subsidiaries (5) _________Operating loss before working capital changes (127)Changes in working capital:Trade and other receivables (1,420)Trade and other payables 532 _________Net cash from operations (1,015) _________Cash flows form investing activities:Acquisition of subsidiaries 13 (330) _________Net cash used in investing activities (330) _________Cash flows from financing activities:Proceeds from issue of share capital 1,856Share issue and listing costs (383) _________Net cash from financing activities 1,473 _________Net decrease in cash 128 Cash at beginning of period - _________Cash at end of period 128 ======== KEFI MINERALS PLC NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD FROM 24 OCTOBER 2006 TO 31 DECEMBER 2006 1. General information Country of incorporation The Company was incorporated in United Kingdom as a public limited company on 24October 2006. Its registered office is at 27/28 Eastcastle Street, London W1W8DH. Principal activities The principal activities of the Group for the period are: • To explore for mineral deposits of precious and base metals and other minerals that appear capable of commercial exploitation, including topographical, geological, geochemical and geophysical studies and exploratory drilling. • To evaluate mineral deposits determining the technical feasibility and commercial viability of development, including the determination of the volume and grade of the deposit, examination of extraction methods, infrastructure requirements and market and finance studies. • To develop, operate mineral deposits and market the metals produced. 2. Summary of significant accounting policies The principal accounting policies applied in the preparation of these condensedinterim consolidated financial statements are set out below. These policies havebeen consistently throughout the period presented in these financial statementsunless otherwise stated. Basis of preparation The consolidated financial statements have been prepared in accordance withInternational Financial Reporting Standards (IFRs) as adopted by the EU andInternational Financial Reporting Standards (IFRs) as issued by the IASB. Thefinancial statements comply with both these reporting frameworks because at thetime of their preparation all applicable IFRs issued by the IASB have beenadopted by the EU through the endorsement procedure established by the European.The financial statements have been prepared under the historical costconvention. The preparation of financial statements in conformity with IFRs as adopted bythe EU requires the use of certain critical accounting estimates and requiresmanagement to exercise its judgement in the process of applying the Company'saccounting policies. It also requires the use of assumptions that affect thereported amounts of assets and liabilities and disclosure of contingent assetsand liabilities at the date of the financial statements and the reported amountsof revenues and expenses during the reporting period. Although these estimatesare based on management's best knowledge of current events and actions, actualresults ultimately may differ from those estimates. Adoption of new and revised IFRSs As from 24 October 2006, the Group adopted all the IFRSs and InternationalAccounting Standards (IAS), which are relevant to its operations. The adoption of these standards did not have a material effect on theconsolidated financial statements. At the date of authorisation of these financial statements some standards werein issue but not yet effective. The Board of Directors expects that the adoptionof these standards in future periods will not have a material effect on theconsolidated financial statements of the Group. Consolidation The Group consolidated financial statements comprise of the financial statementsof the parent company KEFI Minerals plc and the financial statements of thefollowing subsidiaries: Company name Date of Country of % of-------------- --------- ------------ ------ acquisition incorporation shareholding ------------- --------------- --------------Mediterranean Minerals (Bulgaria) EOOD 8/11/06 Bulgaria 100%-DirectDogu Akdeniz Mineralleri Ltd 8/11/06 Turkey 100%-Indirect The consolidated financial statements incorporate the financial statements ofthe Company and entities controlled by the Company (its subsidiaries) made up to31 December each year. Control is achieved where the Company has power to governthe financial and operating policies of an entity so as to obtain benefits fromits activities. The financial statements of all the Group companies are prepared using uniformaccounting policies. All intra-group transactions, balances, income and expensesare eliminated of consolidation. Business combinations 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 IFR 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 IFS 5 Non-Current Assets heldfor sale and discontinued operations, which are recognised and measured at fairvalue less costs to sell. Goodwill arising on acquisition is recognised as an asset and initially measuredat cost, being the excess of the cost of the business combination over theGroup's interest in the net fair value of the identifiable assets, liabilitiesand contingent liabilities recognised. If, after reassessment, the Group'sinterest in the net fair value of the acquiree's identifiable assets,liabilities and contingent liabilities exceeds the cost of the businesscombination, the excess is recognised immediately in profit or loss. The interest of minority shareholders in the acquiree is initially measured atthe minority's proportion of the net fair value of the assets, liabilities andcontingent liabilities recognised. Goodwill Goodwill represents the excess of the cost of an acquisition over the fair valueof the Group's share of the net identifiable assets of the acquired undertakingat the date of acquisition. Goodwill on acquisition of subsidiaries is includedin "intangible assets". Goodwill on acquisitions of associates is included in"investments in associates". Goodwill is tested annually for impairment and carried at cost less accumulatedimpairment losses. Gains and losses on the disposal of an undertaking includethe carrying amount of goodwill relating to the undertaking sold. Goodwill isallocated to cash generating units for the purpose of impairment testing. Any excess of the interest in the net fair value of acquiree's identifiableassets, liabilities and contingent liabilities over cost is recognisedimmediately in the profit and loss. Revenue recognition Revenue comprises of the amounts receivable from exploration tenements,technical data, precious and base metals sold. The Group had no sales/revenue during the year under review. Exploration costs The Group adopted the provisions of IFRS6 "Exploration for and Evaluation ofMineral Resources". The Group's stage of operations as at the year end and as atthe date of approval of these financial statements have not yet met the criteriafor capitalisation of exploration costs. Foreign currency translation (1) Measurement currency The financial statements are prepared in British Pounds (measurement currency)which is the currency that best reflects the economic substance of theunderlying events and circumstances relevant to the Company. (2) Transactions and balances Foreign currency transactions are translated into the measurement currency usingthe exchange rates prevailing at the date of the transactions. Foreign exchangegains and losses resulting from the settlement of such transactions and from thetranslation at year-end exchange rates of monetary rates of monetary assets andliabilities denominated in foreign currencies are recognised in the incomestatement. Tax Income tax expense represents the sum of the tax currently payable and deferredtax. Current tax liabilities and assets for the current and prior periods aremeasured at the amount expected to be paid to or recovered from the taxationauthorities, using the tax rates and laws that have been enacted, orsubsequently enacted, by the balance sheet date. Deferred tax is provided in full, using the liability method, on temporarydifferences arising between the tax bases of assets and liabilities and theircarrying amounts in the financial statements. Deferred tax is determined usingtax rates and laws that have been enacted or substantively enacted by thebalance sheet date and are expected to apply when the related deferred tax assetis realised or the deferred tax liability is settled. Deferred tax assets are recognised to the extent that it is probable that futuretaxable profit will be available against which the temporary differences can beutilised. Share capital Ordinary shares are classified as equity. Cash and cash equivalents For the purposes of the cash flow statement, cash and cash equivalents compriseof cash in hand and balances with banks. 3. Financial risk management Financial risk factors The Company's activities expose it to currency risk arising from the financialinstruments it holds. The risk management policies employed by the Company tomanage the risk are discussed below: 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 Company's measurement currency. The Company isexposed to foreign exchange risk arising from various currency exposuresprimarily with respect to the Euro, Bulgarian Lev and Turkish Lira. The Group's management monitors the exchange rate fluctuations on a continuousbasis and acts accordingly. Fair values The fair values of the Groups financial assets and liabilities approximate theircarrying amounts at the balance sheet date. 4. Operating profit/(loss) The following items have been included in arriving at operating (loss): 2006 ------ GBP'000Recognition of share-based benefits 79Professional services 3 ======= 5. Tax Due to tax losses sustained in the period, no tax liability arises on the Group.Under current legislation, tax losses may be carried forward and be set offagainst taxable income of the following years. As at 31 December 2006, thebalance of tax losses which is available for offset against future taxableprofits amounts to GBP201,264. The Company is anticipated that it will be resident in Cyprus for tax purposes. 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%. Tax Loss Schedule Tax year Tax Losses Compensation Tax Losses Carried Forward---------- ------------ -------------- --------------------- GBP GBP GBP 2006 25,761 - 25,761 Bulgaria Mediterranean Minerals (Bulgaria) EOOD, the 100% subsidiary of the Company, isresident in Bulgaria for tax purposes. The corporation tax rate is 15%. 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 2006, the balanceof tax losses which is available for offset against future taxable profitsamounts to GBP2,257. Tax Loss Schedule Tax year Tax Losses Compensation Tax Losses Carried Forward---------- ------------- -------------- ---------------- GBP GBP GBP 2005 110,772 - 110,772 2006 39,734 - 39,734 Turkey Dogu Akdeniz Mineralleri Ltd, the 100% subsidiary of Mediterranean Minerals(Bulgaria) EOOD, and ultimately 100% subsidiary of the Company, is resident inTurkey for tax purposes. The corporation tax rate is 20%. Due to tax losses sustained in the period, no tax liability arises on the DoguAkdeniz Mineralleri Ltd. Under current legislation, tax losses may be carriedforward and be set off against taxable income of the following five years. As at31 December 2006, the balance of tax losses which is available for offsetagainst future taxable profits amounts to GPB24,882 (2005: GBP9,555). Tax Loss Schedule Tax year Tax Losses Compensation Tax Losses Carried Forward---------- ------------ -------------- ---------------- GBP GBP GBP 2005 9,555 - 9,555 2006 15,327 - 15,327 6. Deferred tax No provision for deferred taxation has been made as there are no differencesbetween the amounts attributed to assets and liabilities for tax purposes andtheir corresponding carrying amounts in the balance sheet. 7. Investment in subsidiaries On 8 November 2006, the Company entered into an agreement to acquire form 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 owns100% of the share capital of DoguAkdeniz Mineralleri Limited, a private limited liability company incorporated inTurkey, engaging in activities for exploration and developing of naturalresources. 2006 ------The Company GBP'000-------------Cost of investment 2 ======= Company name Date of Country of % of-------------- --------- ------------ ------ acquisition incorporation shareholding ------------- --------------- --------------Mediterranean Minerals (Bulgaria) EOOD 8/11/06 Bulgaria 100%-DirectDogu Akdeniz Mineralleri Ltd 8/11/06 Turkey 100%-Indirect Significant aggregate amounts in respect of subsidiaries: 2006 ------ GBP'000 Net liabilities 1 January 2006 (156)Net loss for the period to 8 November 2006 (208) _______Net liabilities at 8 November 2006 (364)Loss for the period to 31 December 2006 (91) _______Net liabilities at 31 December 2006 (455) ====== 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 EU and the IFRSs asissued by IASB. 8. Trade and other receivables 2006 ------The Group GBP'000-----------Amounts receivable from stockbroker in relation to issue of sharecapital 1,400Other amounts receivable 20 _______ 1,420 ======The Company-------------Amounts receivable from stockbroker in relation to issue of sharecapital 1,400Other amounts receivable 20Receivables from subsidiary undertakings 472 ______ 1,892 ====== 9. Share capital No. of Share Share Total -------- ------- ------- ------- shares capital premium -------- --------- --------- '000 '000 '000 '000Authorised Ordinary shares of £0,01 each 200,000 2,000 - 2,000 ====== ====== ======= =======Issued and fully paidSeed round 42,000 420 36 456IPO round 46,667 467 933 1,400Share issue costs - - (383) (383) _______ _______ ________ ________ 88,667 887 586 1,473 ======= ====== ======= ======= 10. Other payables 2006 ------The Group and the Company GBP'000---------------------------Trade payables 277Amounts due to EMED Mining Public Ltd 291 _______ 568 ====== 11. Cash and cash equivalents Cash included in the cash flow statement comprise the following balance sheetamounts: 2006 ------The Group GBP'000-----------Bank balances and cash 128 =======The Company-------------Bank balances and cash 122 ======= 12. Share option plan Details of share options outstanding as at 31 December 2006: Grant date Expiry date Exercise price Number of shares------------ ------------- ---------------- ------------------ GBP '000 18/12/2006 18/12/2012 0,03 16,000 No. of shares --------------- '000 Outstanding options at 1 January 2006 16,000-granted --cancelled --exercised - _______ 16,000 ====== The Company has a share option scheme for employees and other parties of theGroup. The options expire six years after grant date and are exercisable at theexercise price in whole or in part no more than one third form at grant date,two thirds after one year from the grant date and the balance after two yearsfrom the grant date. The option agreement 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. 12. Share option plan-cont'd 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: 18 Dec. 2006 --------------Closing share price at issue date 3.88pWeighted average exercise price 3.00pAverage expected volatility 50%Expected life 6 yrsRisk free rate 5.97%Expected dividend yield NilDiscount factor 30%Estimated fair value 1.427p Expected volatility was estimated based on the likely range of volatility of theshare price. 13. 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: 8.11.06 31.12.05 --------- ---------- GBP'000 GBP'000Cost of investment 2Less: Fair values of net liabilities acquired 364 --------Goodwill 366 ======== 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 (36) - -------- -------- (364) 155 ======== ======== Consideration - shares issued at premium 336Cash and cash equivalents acquired (6) --------Cash outflow on acquisition 330 ======== 14. Related party transactions The following transactions were carried out with related parties: 14.1 Compensation of key management personnel The total remuneration of the Directors and other key management personnel wasas follows: 2006 ------ GBP'000Amounts paid to directors for expertise services 40Share-based benefits to directors 62Other key management personnel fees 33Share-based benefits to other key management personnel 17 ---- 152 ===== Share-based benefits The directors and key management personnel have been granted on 18 December 2006ordinary share options that expire six years after grant date and areexercisable at the exercise price in whole or in part no more than one third atgrant date, two thirds after one year from the grant date and the balance aftertwo years from the grant date. No options have been exercised during the periodfrom grant date to 31 December 2006. 15. 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 approximately €320.000 (£216.000) was to be settled by theissuance of 1.728.984 ordinary shares in EMED at 12.5p each if EMED secured atleast four tenements in Turkey or Greece identified from the database. Under the revised agreement of 22 November 2006, EMED transferred to DoguAkdeniz Minerally Ltd that part of the geological database that relates to areasin Turkey. Consequently, EMED has been discharged from the original contingentconsideration in respect of Turkey. Under the agreement, Dogu Akdeniz Mineralleri Ltd has undertaken to make apayment of approximately €63.000 (AUD105.000) for each tenement it issubsequently awarded in Turkey and which was identified from the database. Themaximum number of such payments required under the agreement is four, resultingin a contingent liability of up to €252.000. These payments are to be settled byissuing shares in KEFI Minerals plc. 16. Capital commitments The Group has no capital or other commitments as at 31 December 2006. 17. 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. 18. Post balance sheet events No events have arisen since the end of the financial period that havesignificantly affected the operations of the Group, other than the settlement oftrade debtors and trade creditors principally associated with the admission toAIM on 18 December 2006. REVIEW REPORT TO THE MEMBERS KEFI MINERALS PLC We have reviewed the accompanying balance sheet of KEFI Minerals plc at 31December 2006 and the related statements of income and cash flows for the periodthen ended. These financial statements are the responsibility of the company'smanagement. Our responsibility is to issue a report on these financialstatements based on our review. We conducted our review in accordance with the International Standard onAuditing applicable to review engagements. This standard requires that we planand perform the review to obtain moderate assurance as to whether the financialstatements are free of material misstatements. A review is limited primarily toinquiries of company personnel and analytical procedures applied to financialdata and thus provides less assurance than an audit. We have not performed anaudit and, accordingly, we do not express an audit opinion. Nicosia, 21 March 2007 MOORE STEPHENS STYLIANOU & CO CERTIFIED PUBLIC ACCOUNTANTS-CY This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Kefi Gold & Copper