15th May 2007 07:04
European Goldfields Ltd15 May 2007 European Goldfields Limited Consolidated Financial Statements (Unaudited) First Quarter 2007 Disclosure of auditor review of interim consolidated financial statements The interim consolidated financial statements of the Company for the three-monthperiods ended 31 March 2007 and 2006 have not been reviewed by the auditors ofthe Company. Consolidated Balance Sheets 31 March 31 DecemberAs at 31 March 2007 and 31 December 2006(Unaudited - Prepared by Management)(in thousands of US Dollars, except per shareamounts) 2007 2006 $ $ Note Unaudited AuditedAssets Current assetsCash and cash equivalents 33,959 34,587Accounts receivable 19,672 14,945Prepaid expenses 1,381 1,270Inventory 3 3,801 854 --------- ---------- 58,813 51,656 --------- ---------- Non current assetsPlant and equipment 4 28,332 27,007Deferred exploration and development costs 5Greek production stage mineral properties 14,286 14,677Greek development stage mineral properties 184,907 182,157 --------- ---------- 199,193 196,834Romanian development stage mineral properties 33,175 31,782 --------- ---------- 232,368 228,616 --------- ---------- Restricted investment 6 4,000 3,926 Future tax asset 1,988 738 --------- ---------- 325,501 311,943 --------- ---------- Liabilities Current liabilitiesAccounts payable and accrued liabilities 13,612 9,802 Non current liabilitiesFuture tax liability 7 50,538 48,150Non-controlling interest 22,512 20,422Asset retirement obligation 8 6,133 6,031 --------- ---------- 79,183 74,603 --------- ----------Shareholders' equityCapital stock 9 247,290 246,890Contributed surplus 9 8,080 7,135Other comprehensive income 5,990 4,276Deficit (28,654) (30,763) --------- ---------- 232,706 227,538 --------- ---------- --------- ---------- 325,501 311,943 --------- ---------- The accompanying notes are an integral part of these consolidated financial statements. Approved by the Board of Directors (s) Timothy Morgan-Wynne (s) Jeffrey O'Leary Timothy Morgan-Wynne, Director Dr Jeffrey O'Leary, Director Consolidated Statements of Profit and Loss Three months endedFor the three-month periods ended 31 March 2007 and2006(Unaudited - Prepared by Management)(in thousands of US Dollars, except per shareamounts) 31 March 31 March 2007 2006 Note $ $ IncomeSales 17,083 9,083Cost of sales (6,944) (4,788) --------- ---------Gross profit 10,139 4,295 --------- --------- Other income --------- ---------Interest income 453 300 --------- --------- ExpensesCorporate administrative and overhead expenses 847 535Equity based compensation expense 456 673Foreign exchange loss/(gain) 152 (16)Hellas Gold administrative and overhead expenses 2,211 744Hellas Gold water treatment expenses (non-operatingmines) 1,102 493Hellas Gold non-recurring rehabilitation cost(Stratoni - 902mine)Accretion of asset retirement obligation 8 29 26Amortisation 119 201 --------- --------- (4,916) (3,558) --------- --------- --------- ---------Profit for the period before income tax 5,676 1,037 Income taxesCurrent taxes (1,161) -Future taxes (558) (876) --------- --------- (1,719) (876) --------- --------- --------- ---------Profit for the period before non-controlling 3,957 161interest Non-controlling interest (1,848) (475) --------- ---------Profit/(loss) for the period 2,109 (314) Deficit - Beginning of period (30,763) (33,765) --------- --------- Deficit - End of period (28,654) (34,079) --------- --------- Earnings/(loss) per share 15Basic 0.02 0.00Diluted 0.02 0.00 Weighted average number of shares (in thousands)Basic 115,827 112,658Diluted 117,636 112,658 The accompanying notes are an integral part of these consolidated financial statements. OtherConsolidated Statements Capital Contributed Comprehensive Deficit Totalof Equity Stock Surplus Income As at 31 March 2007 and $ $ $ $ $2006(Unaudited - Prepared by Management)(in thousands of US Dollars, except pershare amounts) ------- -------- ---------- -------- -------Balance - 31 December 240,234 6,197 (12,843) (33,765) 199,8232005 ------- -------- ---------- -------- ------- Equity basedcompensation - 816 - - 816expenseShare options exercisedor 100 (39) - - 61exchangedShare issue costs - - - - -Currency translation - - 2,931 - 2,931adjustmentRestricted share units 143 (143) - - -vestedLoss for the period - - - (314) (314) ------- -------- ---------- -------- ------- 243 634 2,931 (314) 3,494 ------- -------- ---------- -------- ------- ------- -------- ---------- -------- -------Balance - 31 March 2006 240,477 6,831 (9,912) (34,079) 203,317 ------- -------- ---------- -------- ------- Equity basedcompensation - 4,283 - - 4,283expenseRestricted share units 1,928 (1,928) - - -vestedShare options exercisedor 4,485 (2,051) - - 2,434exchangedCurrency translation - - 14,188 - 14,188adjustmentProfit for the period - - - 3,316 3,316 ------- -------- ---------- -------- ------- 6,413 304 14,188 3,316 24,221 ------- -------- ---------- -------- ------- ------- -------- ---------- -------- -------Balance - 31 December 246,890 7,135 4,276 (30,763) 227,5382006 ------- -------- ---------- -------- ------- Equity basedcompensation - 1,345 - - 1,345expenseRestricted share units 232 (232) - - -vestedShare options exercisedor 168 (168) - - -exchangedCurrency translation - - 1,714 - 1,714adjustmentProfit for the period - - - 2,109 2,109 ------- -------- ---------- -------- ------- 400 945 1,714 2,109 5,168 ------- -------- ---------- -------- ------- ------- -------- ---------- -------- -------Balance - 31 March 2007 247,290 8,080 5,990 (28,654) 232,706 ------- -------- ---------- -------- ------- The accompanying notes are an integral part of these consolidated financial statements. Consolidated Statements of Cash Flows Three months endedFor the three-month periods ended 31 March 2007 and2006(Unaudited - Prepared by Management)(in thousands of US Dollars, except per shareamounts) 31 March 31 March 2007 2006 Note $ $Cash flows from operating activitiesProfit/(loss) for the period 2,108 (314)Foreign exchange loss/(gain) 196 (27)Amortisation 419 418Equity based compensation expense 456 723Accretion of asset retirement obligation 8 29 26Taxation 1,720 876Non-controlling interest 1,848 475Depletion of mineral properties 473 237 --------- --------- 7,249 2,414 Net changes in non-cash working capital 11 (4,840) (909) --------- --------- 2,409 1,505 --------- --------- Cash flows from investing activitiesDeferred exploration and development costs - Romania (696) (848)Plant and equipment - Greece (1,577) (568)Deferred development costs - Greece (421) (478)Restricted investment (28) -Proceeds from disposal of equipment - -Purchase of equipment (11) (41) --------- --------- (2,733) (1,935) --------- --------- Cash flows from financing activitiesProceeds from exercise of share options - 61Share issue costs - - --------- --------- - 61 --------- --------- Effect of foreign currency translation on cash (304) 173 --------- --------- Decrease in cash and cash equivalents (628) (196) Cash and cash equivalents - Beginning of period 34,587 30,536 --------- --------- Cash and cash equivalents - End of period 33,959 30,340 --------- --------- The accompanying notes are an integral part of these consolidated financial statements. Consolidated Statements of Comprehensive Income Three months endedFor the three-month periods ended 31 March 2007 and 2006(Unaudited - Prepared by Management)(in thousands of US Dollars, except per share amounts) 31 March 31 March 2007 2006 $ $ Profit/(loss) for the period 2,109 (314) Other comprehensive income in the periodCurrency translation adjustment 1,714 2,931 --------- ---------Comprehensive income 3,823 2,617 --------- --------- The accompanying notes are an integral part of these consolidated financial statements. Notes to Consolidated Financial StatementsFor the three-month periods ended 31 March 2007 and 2006(Unaudited - Prepared by Management)(in thousands of US Dollars, except per share amounts) 1. Nature of operations European Goldfields Limited (the "Company"), a company incorporated under theYukon Business Corporations Act, is a resource company involved in theacquisition, exploration and development of mineral properties in Greece,Romania and South-East Europe. The Company's common shares are listed on the AIM Market of the London StockExchange and on the Toronto Stock Exchange (TSX) under the symbol "EGU". Greece - The Company holds a 65% interest in Hellas Gold S.A ("Hellas Gold").Hellas Gold owns the three major gold and base metal deposits of Stratoni,Skouries and Olympias in Northern Greece. Hellas Gold commenced production atStratoni in September 2005 and commenced selling an existing stockpile of goldconcentrates from Olympias in July 2006. Hellas Gold is applying for permits todevelop the Skouries and Olympias projects. Romania - The Company owns 80% of the Certej gold/silver project in Romania. TheCompany submitted in March 2007 a technical feasibility study to the Romaniangovernment in support of a permit application to develop the project. The underlying value of the deferred exploration and development costs formineral properties is dependent upon the existence and economic recovery ofreserves in the future, and the ability to raise long-term financing to completethe development of the properties. For the coming year, the Company believes it has adequate funds available tomeet its corporate and administrative obligations and its planned expenditureson its mineral properties. These consolidated financial statements have been prepared on a going concernbasis, which assumes the Company will be able to realise assets and dischargeliabilities in the normal course of business for the foreseeable future. Theseconsolidated financial statements do not include the adjustments that would benecessary should the Company be unable to continue as a going concern. 2. Significant accounting policies These interim consolidated financial statements have been prepared on the goingconcern basis in accordance with accounting principles generally accepted inCanada ("Canadian GAAP") using the same accounting policies as those disclosedin Note 2 to the Company's audited consolidated financial statements for theyears ended 31 December 2006 and 2005. These interim consolidated financial statements should be read in conjunctionwith the Company's audited consolidated financial statements for the years ended31 December 2006 and 2005. Effective 1 January 2007, the company adopted the revised CICA Section 1506"Accounting Changes", which requires that: a voluntary change in accountingprinciples can be made if, and only if, the changes result in more reliable andrelevant information, changes in accounting policies are accompanied withdisclosures of prior period amounts and justification for the change, and forchanges in estimates, the nature and amount of the change should be disclosed.The company has not made any voluntary change in accounting principles since theadoption of the revised standard. Financial Instruments - Recognition and Measurement, Section 3855 This standard prescribes when a financial asset, financial liability, ornon-financial derivative is to be recognised on the balance sheet and whetherfair value or cost-based methods are used to measure the recorded amounts. Italso specifies how financial instrument gains and losses are to be presented. Effective 1 January 2007, the Company's cash equivalents, temporary investmentsand investments in marketable securities have been classified asavailable-for-sale and are recorded at fair value on the balance sheet. Fairvalues are determined directly by reference to published price quotations in anactive market. Changes in the fair value of these instruments are reflected inother comprehensive income and included in shareholders' equity on the balancesheet. All derivatives are to be recorded on the balance sheet at fair value.Mark-to-market adjustments on these instruments will be included in net profit,unless the instruments are designated as part of a cash flow hedge relationship.In accordance with the standard's transitional provisions, the Companyrecognises as separate assets and liabilities only embedded derivatives acquiredor substantively modified on or after 1 January, 2003. All other financial instruments will be recorded at cost or amortised cost,subject to impairment reviews. The criteria for assessing on other thantemporary impairment remain unchanged. Transaction costs incurred to acquirefinancial instruments are included in the underlying balance. The Company hasdetermined that the adoption of Section 3855 had no effect on these financialstatements. Hedges, Section 3865 This standard is applicable when a company chooses to designate a hedgingrelationship for accounting purposes. It builds on the previous AcG-13 "HedgingRelationships" and Section 1650 "Foreign Currency Translation", by specifyinghow hedge accounting is applied and what disclosures are necessary when it isapplied. The Company has determined that the adoption of Section 3865 had noeffect on these financial statements. Comprehensive Income, Section 1530 This standard requires the presentation of a statement of comprehensive incomeand its components. Comprehensive income includes both net earnings and othercomprehensive income. Other comprehensive income includes holding gains andlosses on available-for-sale investments, gains and losses on certain derivativeinstruments and foreign currency gains and losses relating to self-sustainingforeign operations, all of which are not included in the calculation of netearnings until realised. This statement has been included in the consolidatedfinancial statements starting this period. 3. Inventory This balance comprises the following: 31 March 31 December 2007 2006 $ $Ore mined 88 225Metal concentrates 2,773 154Material and supplies 940 475 ------------ ---------- 3,801 854 ------------ ---------- 4. Plant and equipment Exploration / office Land and Leasehold equipment Vehicles buildings Improvements Total $ $ $ $ $Cost - 2007 At 31 December 2006 13,220 1,236 15,608 256 30,320 Additions 1,575 - 13 - 1,588Disposals (14) - - - (14)Currency translationadjustment 152 12 188 - 352 -------- ------- -------- --------- --------At 31 March 2007 14,933 1,248 15,809 256 32,246 -------- ------- -------- --------- -------- Accumulatedamortisation -2007 At 31 December 2006 1,681 685 888 58 3,312 Provision for the year 296 68 195 6 565Disposals (10) - - - (10)Currency translationadjustment 23 8 16 - 47 -------- ------- -------- --------- --------At 31 March 2007 1,990 761 1,099 64 3,914 -------- ------- -------- --------- -------- -------- ------- -------- --------- --------Net book value at 31March 2007 12,943 487 14,710 192 28,332 -------- ------- -------- --------- -------- 5. Deferred exploration and development costs Greek mineral properties: Stratoni Olympias Skouries Total $ $ $ $ --------- --------- --------- ---------Balance - 31 December 2006 14,677 108,078 74,079 196,834 --------- --------- --------- --------- Deferred development costs - 130 517 647Depletion of mineral properties (521) (120) - (641)Currency translation adjustment 130 1,320 903 2,353 --------- --------- --------- --------- (391) 1,330 1,420 2,359 --------- --------- --------- ---------Balance - 31 March 2007 14,286 109,408 75,499 199,193 --------- --------- --------- --------- The Stratoni, Skouries and Olympias properties are held by the Company's65%-owned subsidiary, Hellas Gold. In September 2005, the Stratoni propertycommenced production. Romanian mineral properties: Baita- Certej Craciunesti Voia Cainel Total $ $ $ $ $ -------- -------- ------- -------- --------Balance - 31 December2006 26,862 3,064 844 1,012 31,782 -------- -------- ------- -------- -------- Drilling and assaying 37 1 1 - 39Geosciences and tech.consulting 135 7 14 - 156Samplers, miners andsurveying 15 - - - 15Project management 576 4 5 - 585Project overhead 539 8 29 - 576Amortisation 17 2 - 3 22 -------- -------- ------- -------- -------- 1,319 22 49 3 1,393 -------- -------- ------- -------- --------Balance - 31 March 2007 28,181 3,086 893 1,015 33,175 -------- -------- ------- -------- -------- The Certej exploitation licence and the Baita-Craciunesti exploration licenceare held by the Company's 80%-owned subsidiary, Deva Gold. Minvest S.A. (aRomanian state owned mining company), together with three private Romaniancompanies, hold the remaining 20% interest in Deva Gold and the Company holdsthe pre-emptive right to acquire such 20% interest. The Company is required tofund 100% of all costs related to the exploration and development of theseproperties. As a result, the Company is entitled to the refund of such costs(plus interest) out of future cash flows generated by Deva Gold, prior to anydividends being distributed to shareholders. The Voia and Cainel explorationlicences are held by the Company's wholly-owned subsidiary, European GoldfieldsDeva SRL. Individual property spending commitments for each of the Company's Romanianlicences have been met as at 31 March 2007. 6. Restricted investment The balance consists of an amount of $4,000 pledged by Hellas Gold to theNational Bank of Greece as collateral for a letter of guarantee issued by theNational Bank of Greece to the Greek Ministry of Development to guarantee HellasGold's environmental commitments under its mining permit at Stratoni. The letterof guarantee expires on 31 December 2010. The investment bears a rate ofinterest of Euribor plus 0.8% per annum. 7. Future tax liability The following table reflects future income tax liabilities: 31 March 31 December 2007 2006 ----------- ----------- $ $ ----------- -----------Mineral properties 47,366 45,674Plant and equipment 561 244Exploration and development expenditure 2,416 2,232Accrued expenses 195 - ----------- ----------- 50,538 48,150 ----------- ----------- The tax liability arises as a result of the increase in value placed on themineral properties held by Hellas Gold on acquisition by the Company. Thisfuture tax liability will reverse as the corresponding mineral properties areamortised. 8. Asset retirement obligation Management has estimated the total future asset retirement obligation based onthe Company's net ownership interest in the Olympias, Skouries and Stratonimines and facilities. This includes all estimated costs to dismantle, remove,reclaim and abandon the facilities at the Stratoni property, and the estimatedtime period during which these costs will be incurred in the future. Thefollowing table reconciles the asset retirement obligation as at 31 March 2007and 31 December 2006: 31 March 31 December 2007 2006 $ $ ----------- -----------Asset retirement obligation - Beginning of period 6,031 5,307Currency translation adjustment 73 613Accretion expense 29 111 ----------- -----------Asset retirement obligation - End of period 6,133 6,031 ----------- ----------- As at 31 March 2007, the undiscounted amount of estimated cash flows required tosettle the obligation is $6,732 (31 December 2006 - $6,639). The estimated cashflow has been discounted using a credit adjusted risk free rate of 5.04%. Theexpected period until settlement is six years. 9. Capital stock Authorised: - Unlimited number of common shares, without par value - Unlimited number of preferred shares, issuable in series, without par value Issued and outstanding (common shares - all fully paid): Number of Amount Shares $ ----------- ---------Balance - 31 December 2006 114,801,848 246,890 ----------- --------- Restricted share units vested 100,000 232Share options exercised or exchanged 93,618 168Share issue costs - - ----------- --------- 193,618 400 ----------- --------- ----------- ---------Balance - 31 March 2007 114,995,466 247,290 ----------- --------- As at 31 March 2007, the Company had Nil common shares held in escrow or inrespect of which trading restrictions applied. Contributed surplus: 31 March 31 December 2007 2006 $ $Equity based compensation expense 7,502 6,557Broker warrants 578 578 ------------ ---------- 8,080 7,135 ------------ ---------- 10. Share options and restricted share units Share Option Plan The Company operates a Share Option Plan (together with its predecessor, the"Share Option Plan") authorising the directors to grant options to acquirecommon shares of the Company to the directors, officers, employees andconsultants of the Company and its subsidiaries, on terms that the Board ofDirectors may determine, within the limitations of the Share Option Plan. Themaximum number of common shares of the Company which may be reserved forissuance for all purposes under the Share Option Plan shall not exceed 15% ofthe common shares issued and outstanding from time to time (17,249,320 shares asat 31 March 2007). As at 31 March 2007, the following share options were outstanding: Exercise Number of price Options C$ Expiry date 2007 50,000 2.50 2009 325,000 2.80 2009 120,000 3.20 2009 250,000 4.20 2009 535,000 3.07 2009 75,000 3.15 2010 590,999 2.00 2010 50,000 2.11 2010 150,000 2.40 2011 100,000 3.25 2011 600,000 3.85 2011 200,000 4.10 2012 250,000 5.66 ---------- ---------- 3,295,999 3.30 ---------- ---------- During the three-month period ended 31 March 2007, share options were granted,exercised, exchanged and cancelled as follows: Number of Weighted Options average exercise price C$ ----------- ----------Balance - 31 December 2006 3,213,665 3.06 ----------- ---------- Options granted 250,000 5.66Options exchanged for shares (167,666) 2.34Options cancelled - - ----------- ----------Balance - 31 March 2007 3,295,999 3.30 ----------- ---------- Of the 3,295,999 share options outstanding as at 31 March 2007, 2,370,999 werefully vested and had a weighted average exercise price of C$2.95 per share. The weighted average grant date fair value of the 250,000 share options grantedduring the period ended 31 March 2007 (2006 - Nil) was C$5.66 (2006 - C$ Nil).For outstanding share options which were not fully vested during the periodended 31 March 2007, the Company incurred a total equity-based compensation costof $226 (2006 - $335) of which $181 (2006 - $335) has been recognised as anexpense in the income statement and $45 (2006 - $Nil) has been capitalised todeferred exploration and development costs. The fair value of the share options granted has been estimated at the date ofgrant using a Black-Scholes option pricing model with the following assumptions:weighted average risk free interest rate of 3.10% (2006 - Nil%); volatilityfactor of the expected market price of the Company's shares of 59%(2006 - Nil%); and a weighted average expected life of the share options of fiveyears (2006 - Nil years). Restricted Share Unit Plan The Company operates a Restricted Share Unit Plan (the "RSU Plan") authorisingthe directors, based on recommendations received from the CompensationCommittee, to grant Restricted Share Units ("RSUs") to designated directors,officers, employees and consultants. The RSUs are "phantom" shares that rise andfall in value based on the value of the Company's common shares and are redeemedfor actual common shares on the vesting dates determined by the Board ofDirectors when the RSUs are granted. The RSUs vest on the dates below howeverupon a change of control of the Company they would typically become 100% vested.The maximum number of common shares of the Company which may be reserved forissuance for all purposes under the RSU Plan shall not exceed 2.5% of the commonshares issued and outstanding from time to time (2,874,887 shares as at 31 March2007). As at 31 March 2007, the following RSUs were outstanding: Vesting date Number of Grant date RSUs fair value of underlying shares C$ 31 May 2007 75,000 3.2430 June 2007 60,000 3.241 July 2007 * 250,000 4.0431 August 2007 *** 50,000 5.3631 December 2007 350,000 2.1931 December 2007 235,000 4.0431 December 2007 ** 60,000 3.2431 December 2007 30,000 5.3631 May 2008 75,000 3.24 ------------- -------- 1,185,000 3.40 ------------- -------- * Or earlier if certain operational milestones are achieved. Vesting conditionalupon such milestones being achieved by 1 July 2007.** Provided certain operational milestones are achieved by 1 July 2007.*** Provided certain operational milestones are achieved by 31 August 2007. During the three-month period ended 31 March 2007, RSUs were granted, vested andcancelled as follows: Number of Weighted RSUs average grant date fair value of underlying shares C$ ----------- --------Balance - 31 December 2006 1,105,000 3.26 ----------- -------- RSUs granted 180,000 5.36RSUs vested (100,000) 5.36RSUs cancelled - - ----------- --------Balance - 31 March 2007 1,185,000 3.40 ----------- -------- The weighted average grant date fair value of underlying shares of the 180,000RSUs granted during the period ended 31 March 2007 (2006 - 165,000) was C$5.36(2006 - C$3.01). For outstanding RSUs which were not fully vested during theperiod ended 31 March 2007, the Company incurred a total equity-basedcompensation cost of $1,125 (2006 - $338) of which $275 (2006 - $338) has beenrecognised as an expense in the income statement and $850 (2006 - $Nil) has beencapitalised to deferred exploration and development costs. 11. Supplementary cash flow information 31 March 31 March 2007 2006 $ $ ---------- ----------Changes in non-cash operating accounts:Accounts receivable and prepaid expenses (4,838) (4,291)Inventory (2,633) 991Accounts payable and accrued liabilities 2,631 2,391 ---------- ---------- (4,840) (909) ---------- ---------- Supplemental disclosure of non-cash transactions:Share options issued for non-cash consideration 1,345 -Exercise or exchange of share options - Transfer fromcontributed surplus to share capital (168) (39)Vesting of restricted share units (232) (143) 12. Commitments As at 31 March 2007, the Company had remaining spending commitments of $1,080(2006 - $1,415) over the remaining term of its Voia exploration licence inRomania which expires in March 2007. The Company has spending commitments of $187 per year (plus service charges andvalue added tax) for a term of ten years under the lease for its office inLondon, England, which commenced in April 2004. The rent will be reviewed on thefifth anniversary of the commencement of the term to reflect any increase inrents in the market. As at 31 March 2007, Hellas Gold had entered into off-take agreements pursuantto which Hellas Gold agreed to sell the following quantities of metalconcentrates during the next three years: 1 Year 2-3 Years +3 Years (dry metric tonnes) ---------------------------------------- Zinc concentrates (Stratoni) 63,351 15,000 -Lead/silver concentrates (Stratoni) 35,265 20,000 -Gold concentrates (Olympias) 87,622 82,824 55,000 ----------- ---------- --------- 186,238 117,824 55,000 ----------- ---------- --------- As at 31 March 2007, 8,244 dmt of zinc concentrates, 3,744 dmt of lead/silverconcentrates and 12,882 dmt of gold concentrates had been sold on account of the2007 commitments. 13. Transactions with related parties During the three-month period ended 31 March 2007, Hellas Gold incurred costs of$6,265 (2006 - $3,267) for management, technical and engineering servicesreceived from a related party, Aktor S.A., a 35% shareholder in Hellas Gold. Asat 31 March 2007, Hellas Gold had accounts payable of $7,409 (2006 - $3,597) toAktor S.A. These expenses were contracted in the normal course of operations andare recorded at the exchange amount agreed by the parties. 14. Segmented information The Company has one operating segment: the acquisition, exploration anddevelopment of precious and base metal mineral resources properties located inGreece and Romania. Geographic segmentation of plant and equipment and deferred exploration anddevelopment costs and operating liabilities is as follows: 31 March 31 December 2007 2006 $ $ ----------- -----------RevenueCanada - -Greece 17,083 52,438Romania - -United Kingdom - - ----------- ----------- 17,083 52,438 ----------- ----------- Plant and equipment and deferred exploration anddevelopment costsCanada - -Greece 227,021 223,286Romania 33,371 32,010United Kingdom 308 325 ----------- ----------- 260,700 255,621 ----------- ----------- Operating liabilitiesCanada 275 226Greece 12,334 7,625Romania 211 304United Kingdom 795 1,647 ----------- ----------- 13,615 9,802 ----------- ----------- 15. Earnings per share The calculation of the basic and diluted earnings per share attributable toholders of the Company's common shares is based as follows: 31 March 31 March 2007 2006 $ $ ----------- -----------Earnings 2,108 (314)Effect of dilutive potential common shares - - ----------- -----------Diluted earnings 2,108 (314) ----------- ----------- Weighted average number of common shares for thepurpose 115,827 112,658of basic earnings per shareIncremental shares - Share options 1,809 - ----------- -----------Weighted average number of common shares for thepurpose 117,636 112,658of diluted earnings per share ----------- ----------- 16. Reclassification of comparative figures Certain comparative figures have been reclassified to conform to the currentyear's presentation. 17. Legal proceedings The Company, from time to time, is involved in various claims, legal proceedingsand complaints arising in the ordinary course of business, including withrespect to its licences and permits. Such legal proceedings are, in the opinionof management, either unfounded (in fact or in law) or would not have a materialadverse effect on the consolidated financial condition or future results of theCompany. There are no such proceedings known to the Company to be contemplated. 18. Post balance sheet event Since 31 March 2007, the Company issued 9,155 common shares pursuant to theexchange of 14,000 outstanding share options under the Company's Share OptionPlan. In April 2007, Hellas Gold entered into a third take-off agreement with MRITrading AG of Switzerland for the sale of an additional 25,000 wet metric tonnes(wmt) of gold pyrite concentrates previously produced at the Olympias mine inGreece. MRI trading also has the option to increase its order by a further25,000 wmt, which is exercisable by 31 July 2007. In April 2007, Hellas Gold agreed to sell to Silver Wheaton Corp. all of thesilver metal to be produced from ore extracted during the mine-life within anarea of some 7km(2) around its zinc-lead-silver Stratoni mine in northernGreece. Silver production at Stratoni is a by product of lead-zinc operations.The sale was made in consideration of an upfront payment of Hellas Gold ofUS$57.5 million in cash, plus a fee per ounce of silver to be delivered toSilver Wheaton of the lesser of US$3.90 (subject to an inflationary adjustmentbeginning after year three) and the prevailing market price per ounce. Thecurrent Stratoni proven & probable silver reserve contains some 10Moz of payablesilver. The transaction does not apply to any additional silver resources withinHellas Gold's 317 km(2) of mining and exploration licences in northern Greece,including silver resources at Hellas Gold's other mine of Olympias, except for aright of first refusal granted to Silver Wheaton on similar future transactionsinvolving silver. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
EGU.L